Africa's mobile tower trauma
Kevin Koch, chief operating officer of Helios Towers Africa (HTA), has to solve operational problems that most COOs would not recognise. HTA solves a lot of unconventional problems, because it acquires, builds and manages telecoms towers for operators in Africa.
Kevin Koch, chief operating officer of Helios Towers Africa (HTA), has to solve operational problems that most COOs would not recognise. He has recently been securing lifejackets in the Democratic Republic of Congo so that his employees can deliver some fuel in a canoe.
HTA solves a lot of unconventional problems, because it acquires, builds and manages telecoms towers for operators in Africa. Following a July deal to buy the facilities of Vodacom Tanzania Limited, it now owns 4,700 of them. The business is bringing the shared tower model to the continent, using sale and leaseback deals to acquire properties in the Democratic Republic of Congo, Nigeria and Ghana.
Typically the towers were created by single operators who then decided to use their working capital for their core business. HTA is the largest of a group of new operators that are bringing the model of tower sharing to the continent.
“Operating networks in Africa is complex both from an operational and capital point of view,” says Charles “Chuck” Green, chief executive officer at HTA, “penetration rates have historically been low, but they are rising. And new networks need to be more dense than 2G ever was. That means a huge capital commitment for many operators, just when their business is becoming more competitive. Another factor is propelling this change: there is increasing pressure from regulators for improving quality of service, with fines for poor quality.”
HTA uses tower sharing in a way that operators in the developed world recognise. As in Europe or the US – where Green helped introduce the model when he was CFO of Crown Castle International – sharing will cushion the capital impact of upgrading to 4G for local operators. In Africa, though, there is another problem to solve: many operators have towers that are inefficient, reducing profit and inhibiting investment.
“It was a fundamental error during the expansion in African markets, where the operators just wanted to capture the customer. They didn’t think about the efficiency of the towers,” says Koch, “They rolled our towers with air conditioning units and high power consumption, because they were not thinking about tower Opex.”
Koch should know, having run networks in Africa for many years when he worked as an operator. He estimates that less than 2 per cent of his time was spent thinking about towers, and then about placement rather than design. Yet with grid power unreliable or unavailable in many of the locations and thieves searching for unsecured fuel or a generator to steal, developed-world tower design is expensive and vulnerable. It costs about 40 cents an hour to run a tower in Europe, but in Africa grid electricity and diesel costs raise operating expenses to between $3 and $5 per hour in some locations.
Good design solves many problems at once. If HTA can change the tower so that it doesn’t need a generator, then it doesn’t need a security guard to protect the generator, enhanced security to protect the fuel, or deliveries of diesel. Even the installation of a simple solar cell on a tower can power a base station site for up to 12 hours a day. Backup batteries can power a site for more than a day, during which remote monitoring will trigger maintenance.
Therefore, if a backup diesel generator isn’t needed, there’s often more chance that the towers can achieve their 99.9 per cent availability targets. If there are lower operating expenses for remote towers, it means that it will make economic sense to expand networks further into the countryside.
“We have to build something with a cost structure that can address customers who have ARPU of $2-3,” Koch says, “We don’t have patentable IP, or a magic bullet. And it’s not that operators can’t manage the towers in this way. It’s just that they don’t want to. It’s not on top of the mind of management.”
Even if HTA’s programme of replacing generators with solar cells increases the availability and efficiency of existing towers, Koch can’t take the rest of the day off. If network operators expand further away from cities, HTA will be siting new towers. It’s not just power consumption of developed-world designs that’s not fit for purpose, it’s the entire structure.
“The first thing you think about when you are putting a tower up in the UK is where to get a crane. In the DRC we don’t have a crane like that. And even if we did, because of the roads, no trucks can carry more than three tonnes of cargo. You anchor a tower using micropiles, but we don’t have the drills.” HTA is developing tower designs that are both fuel-efficient and can be delivered almost as flat packs.
“That’s not the sort of problem you have to solve in Europe,” he says, drily.