Telecoms companies can save on operational costs by sharing communications towers

Tower sharing had not become popular in the Middle East owing to government protection of telecom operators, high mobile penetration rates in the region, a reliable power supply and relatively high revenue per user.

Telecoms companies can save up to 30 per cent in operational expenses if they share their phone masts, according to an industry executive. Middle East telecoms operators, however, still lag behind their counterparts elsewhere, said Mohamad Darwish, the co-founder and deputy chief executive of IHS, a telecommunications infrastructure group

The concept of tower sharing has been tried in markets such as the United States, the United Kingdom, India and Africa. But experts said that it had not become popular in the Middle East because of government protection of telecoms operators, high mobile penetration rates in the region, a reliable power supply and relatively high revenue per user.

“You like to see regulators open to tower sharing,” said Mr Darwish. “You would like to see markets that still have potential for growth to justify tower share. You have to see consolidation and companies looking for synergies. Operators need to have mentality that tower sharing is a solution their issues.”

It was reported in May that Etihad Etisalat (Mobily), Saudi Arabia’s second-largest mobile operator, was considering the sale of its tower portfolio to raise between US$1.5 billion and $2bn.

Asked if IHS would be keen to bid for this deal once it is official, Mr Darwish said “we are observing”, emphasising that the company’s prime focus was the African market.

The UAE's Etisalat concluded a sale-and-leaseback deal of its telecommunications masts in Nigeria last month, selling 555 towers to IHS. An additional 2,136 telecoms tower sites were transferred in August last year. The deal is meant to help Etisalat's subsidiary in Nigeria to improve its coverage and cut costs.

IHS manages 23,100 towers in Africa and operates in Ivory Coast, Zambia, Nigeria, Cameroon and Rwanda. The telecoms infrastructure company has deals with telecoms operators such as Etisalat, MTN and Airtel.

Mr Darwish declined to disclose how many deals his company expects next year, but said: “Right now the telecoms sector in Africa hasn’t got really saturated. There’s still potential.”

He added that as telecoms operators in Africa roll out infrastructure in urban and rural areas, demand for infrastructure companies such as IHS will emerge.

“There aren’t many companies in Africa that have come to tower deals and outsourcing their towers. There are so many countries in Africa that are starting this process,” he said.

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