* Sale of transmitter towers could raise around $400 mln
* Etisalat Nigeria is the country's No.4 operator
* Tower sharing increasingly popular in Africa to cut costs
By Matt Smith and Dinesh Nair
DUBAI, Oct 29 Etisalat Nigeria, a unit of the
Gulf's top telecom operator Etisalat, is looking to
sell its transmitter towers in a deal that could raise about
$400 million, banking and industry sources familiar with the
Building and maintaining mobile towers in Africa is
typically more expensive than in other regions, because of
security costs and electricity shortages that often require
towers to be powered by generators, while new roads may need to
be built to reach rural areas.
This has increasingly prompted operators to seek to sell or
lease towers to specialist firms such as Eaton Towers, Helios
Towers Africa, American Tower Corp and IHS.
Etisalat Nigeria, 40 percent owned by Etisalat and 30
percent by Abu Dhabi state investment fund Mubadala, has
approached banks with a "request for proposal" (RFP) for
advisory roles on the sale, the two sources said on Tuesday.
The sources spoke on condition of anonymity and did not know
whether an advisor had yet been appointed.
Etisalat Nigeria was not immediately available for comment.
"Operating towers can be a taxing exercise for telecom
operators and we have seen several players looking to offload
the business to dedicated players," the banking source said.
"The success rates on these have not been too impressive but
that's because these deals take a lot of time to execute."
Etisalat is estimated to own about 2,500 towers in Nigeria.
Towers are often valued at around $150,000 each, making 2,500
potentially worth up to about $400 million.
Nigeria is an attractive market for tower firms as it has
169 million people and a relatively low mobile penetration of 68
percent. This indicates operators will need to extend their
networks to reach the one-third of the population that does not
not yet own a phone.
Etisalat Nigeria's network covers 78 percent of the
population, according to Etisalat's 2012 annual report.
"All tower companies in Nigeria would be interested, but it
requires careful analysis of how attractive those towers are
because just owning a tower is not the end game - you have to
figure out if that tower would be attractive to another operator
and enable the tower company to lease out more space on it,"
said the industry source.
Etisalat Nigeria had 15.5 million subscribers in July,
according to data from Nigeria's telecom regulator, making it
the country's number four mobile operator with 14 percent market
South Africa's MTN has 47 percent, Globacom 20
percent and Airtel - a subsidiary of India's Bharti Airtel
- 19 percent.
"You would need to look at the geographic location of each
tower in relation to other operators' network planning, given
that Etisalat has two very big competitors in Airtel and MTN who
also have their own networks and towers in potentially similar
locations," the industry source added.
Etisalat must decide whether to sell and lease back the
towers or outsource their management for a fixed period,
That will depend on Etisalat's need for cash because
outsourcing tower management is largely a means to boost margins
and reduce capital expenditure.
"The Nigeria tower business is a sizeable one and you could
see a wide array of interest ranging from tower companies to
private equity players who have the expertise in doing this,"
the banking source source.
"The business being in Africa means firms looking to beef up
their emerging markets presence will be more interested."