Tower Talk: a guide to the week’s major cell site developments

10 May 2016

Indian telecoms group Bharti Airtel has signed a sale-and-leaseback agreement with UK-based infrastructure firm Helios Towers Africa (HTA), under which the operator will offload around 950 of its towers in the Democratic Republic of Congo (DRC) to Helios, as well as a number of towers currently under construction. Airtel will continue to have full access to the towers via a long term lease contract with Helios. Commenting on the deal, a senior Airtel official noted: ‘We are pleased to strengthen our partnership with HTA in Africa. The agreement is in line with our stated philosophy of divesting passive infrastructure and promoting sharing of towers to enhance operational efficiencies that will further the growth of telecom services.’ As previously reported by CommsUpdate, Airtel agreed to sell towers in the DRC, Tanzania, Chad and the Republic of Congo to HTA in July 2014. The Congo transaction was completed in H1 2015, but the deals covering Chad and Tanzania lapsed in June 2015.

HTA’s Tanzanian division, Helios Towers Tanzania (HTT), meanwhile, has

announced plans to expand its tower footprint in the country, having secured a USD95 million upsizing of its syndicated term loan facility, led by Standard Bank Group. HTT notes that over the last five years it has acquired and upgraded 2,068 operator towers for colocation and built more than 1,000 multi-tenant towers.

Turkish mobile operator Turkcell has announced that it is starting the process to launch an initial public offering (IPO) for an undisclosed stake in its wholly owned tower arm Global Tower. In a statement to the Istanbul stock exchange, Turkcell said that the IPO could take place in Turkey, overseas, or both.

Mobile TeleSystems (MTS), Russia’s largest mobile provider by subscribers, has entered the tower infrastructure market inviting potential partners to apply for use of the equipment on its towers. In addition to renting space on its towers and antenna support structures, MTS suggested that it could potentially open up its fibre-optic networks to other companies. In a statement, the company said that during the first stage of the programme, it would rent space on 5,500 existing towers and antenna support structures, all of which are now ready for the installation of equipment from would-be partners. Looking ahead, the cellco will consider offering access to additional towers to meet demand. Commenting on the move, VP of Technology and IT Andrey Ushatsky explained: ‘Our business model allows us to provide potential tenants with favourable financial conditions. We would also like to announce that for our partners’ added convenience, we have devised a simple contact structure that does not require long-term obligations, additional fees for access to infrastructure, penalties for early termination and other factors that potential tenants will find attractive.’

US-based wireless communication infrastructure provider Vertical Bridge (VB) has signed a sale-and-leaseback deal with General Communication Inc. (GCI). Under the terms of the deal, valued at USD91 million, VB will acquire 275 sites from Alaska Wireless Network (AWN), a wholly owned subsidiary of GCI, and provide built-to-suit services to AWN for five years. AWN will remain as an ongoing tenant on all of the sites. Following the closing of the transaction, VB claims that it will be the largest tower owner in the state with around 300 sites.

Bharti Infratel, the tower arm of Indian cellco Bharti Airtel, has reported its quarterly and annual results for the period ending 31 March 2016, booking turnover of INR31.62 billion (USD474.09 million) for the three-month period (up 7.3% year-on-year) and INR123.08 billion for the full year (up 5.5% y-o-y). The operator registered EBITDA of INR14.44 billion for the quarter, up from INR13.30 billion a year earlier, with an EBITDA margin of 45.7% (45.1%). Annual EBITDA grew by 7.5% y-o-y to INR53.3 billion, with a margin of 43.9%. Net profit was INR23.82 billion for the year (up 19.6%), and INR6.62 billion for the quarter, up from INR5.58 billion in the three months ended 31 March 2015. In operational terms, Infratel owned and operated 38,458 towers with 81,632 colocations while Indus Towers – in which Infratel holds a 42% stake – operated 119,881 towers with 270,006 colocations, giving Infratel an economic interest in the equivalent of 88,088 towers and 195,035 colocations across India at the end of March 2016. Infratel’s average tenancy ratio for the year was 2.16, compared to 2.06 in the previous twelve months and 1.96 the year before that. On the back of its positive results, Infratel’s board approved a buyback of equity shares for up to INR20 billion, at a maximum price of INR450 per share.

US-based American Tower Corporation (ATC), which boasts a portfolio of more than 143,000 communications sites worldwide, has booked similarly positive results for its Q1 2016, registering a 19.4% y-o-y increase in turnover to USD1.29 billion. Adjusted EBITDA for the period, meanwhile, grew by 15.1% y-o-y to USD833.0 million, whilst net profit grew from USD195.5 million to USD281.3 million.

Also riding high was Bali Towerindo Sentra (Balitower), which has reported a 178.8% y-o-y increase in net profit for the first quarter of 2016. The tower firm booked turnover of IDR57.25 billion (USD4.29 million), compared to IDR35.85 billion a year earlier, whilst operating profit grew 65.7% y-o-y to IDR31.01 billion. This was boosted further by a substantial increase in fair value of investment property, which expanded from IDR10.67 billion in Q1 2015 to IDR37.97 billion. Consequently, Balitower registered net profit for the quarter of IDR39.95 billion, compared to IDR14.33 billion. The company has budgeted capex of around IDR400 billion for the year, and aims to install at least 2,000 towers. To that end, Balitower recently secured a IDR95 billion loan from Bank Sinarmas, IDR75 billion of which will finance the rollout of microcell poles (MCPs) across Indonesia, and particularly in the Greater Jakarta area.

Italian network infrastructure provider EI Towers, meanwhile, booked total revenue of EUR62.68 million (USD71.76 million) in Q1 2016 compared to EUR59.44 million twelve months earlier. EBITDA for the period rose 15.1% y-o-y to EUR30.49, leading to a 28.9% increase in net profit to EUR12.75 million.

Indian passive infrastructure provider GTL Infrastructure, which operates around 28,000 towers across the country, saw only marginal revenue growth in the year ended 31 March 2016. The gains proved insufficient to offset increases in financing costs and forex losses, however, and GTL registered a net loss of INR5.47 billion for the year, widening from INR5.15 billion. GTL reported turnover of INR6.19 billion for the twelve-month period, compared to INR6.0 billion in the preceding year, but forex losses increased from INR487.8 million to INR808.8 million, whilst financial costs rose by 5.4% y-o-y to INR4.14 billion. GTL also saw a 23.1% increase in costs from exceptional items to INR1.07 billion. The exceptional items relate to GTL’s attempts to recover advance payments for equipment that had been ordered for a deployment that was scrapped in the wake of the mass cancellation of cellular licences in 2012.

Finally, Bangladesh’s Minister for Post and Telecommunications Tarana Halim has confirmed that the government will look into developing a policy and guidelines to govern the renting of tower infrastructure. ‘Uncontrolled telecom towers harm [the] environment,’ the official was quoted by the Dhaka Tribune as saying. Speaking at a seminar on ‘The Prospect of the Tower Business in Bangladesh’, attended by representatives from major industry stakeholders, the minister added that the government will level the playing field to allow new players to enter the sector and to create a competitive market. Mrs Halim went on to say that measures to encourage or require operators to share infrastructure would also be considered, noting that the cost-sharing would benefit consumers. Dr Shahjahan Mahmood, the chairman of sector regulator the Bangladesh Telecommunication Regulatory Commission (BTRC), meanwhile, said that the watchdog would form a new tower company to manage the tower sharing initiative, and that tower sharing licences would be made available through an open tender. According to Dr Mahmood, 36,000 mobile towers have been installed so far in the country, whereas only 24,000 are needed. Despite the glut of towers, however, quality of service (QoS) remains subpar, the chairman added.

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