Telco firm Eaton Towers plans $350m expansion in Africa

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By Larry Banks

African telecoms company Eaton Towers has raised $350m to fund its expansion across the continent. Eaton Towers, which builds masts for mobile phone networks, has also inked a deal with Mobinil in Egypt, a part of Orange, to buy 2000 towers. The company installs telecom networks and also works with rival phone operators to share the towers, which reduces costs.

Chief executive Terry Rhodes said recently: “Sharing masts is good for everybody”. Investors in the financing for Eaton Towers include Capital Group Private Markets, the firm’s major shareholder, and a consortium led by Ethos Private Equity, a South African fund manager, and Standard Chartered Private Equity.

Eaton Towers across Africa

Eaton Towers operates a network of mobile phone masts in seven African countries including Ghana, Kenya, South Africa and Uganda, as well as Egypt in the near future.

“We’ve signed other deals in West and East Africa which will be concluded soon”, says Rhodes, who also believes it is becoming easier to convince mobile phone companies to co-operate and share infrastructure.

“Five or six years ago there was a reluctance, but I think that the increased load on the networks, as more customers come on, want more services and particularly more data, then networks need to do more to cut their costs and focus on their services. They’ve all agreed, all the major ones have done this, that sharing their towers is a good way to go”, he says.

Growth in Africa

Many African nations are expecting around 5% growth this year, and that will undoubtedly lead to more people spending money on mobiles.

“The mobile business, like services in general, benefits from two deep drivers of change that are especially important in Africa – population growth and urbanisation”, says Francois Conradie of NKC in South Africa.

“It’s a profitable sector and will continue to be so, even more so as mobile data and smartphone technology penetrate more widely and deeply on the continent. Disposable incomes are going up, while technology and services are getting cheaper”, says Mr Conradie.

Smartphones accessible to all

Meanwhile, sales of smartphones have shot past normal ‘feature phones’ in the world’s richest nations, but that’s not quite the case yet in Africa.

Many experts say that will happen in the continent in the next three to five years however. And at that time, more Africans will use social media than today, rather than just sending SMS messages, which is the most prevalent use in Africa today.

Eaton Towers Terry Rhodes
Eaton Towers’ Terry Rhodes.

Research group Pew says that only one in five phone users in sub-Saharan African use social network sites on their mobiles.

Eaton Towers’ Rhodes says that more affordable phones will make all the difference.

“I think the key is getting the price points down to make smartphones more affordable for more and more consumers”, he told the BBC recently.

No more landlines

Thanks to the rise of the mobile phone, landline usage is on the wane in Africa. Fewer people than ever are using them, and they may soon be relegated to use primarily to major corporations and official government offices. Perhaps the era of the landline is really coming to an end…

“I think with a few exceptions, say South Africa or Egypt, it’s already a thing of the past, frankly”, says Rhodes.


Images Courtesy of DepositPhotos