Etisalat set to cut costs and improve coverage in Nigeria

Etisalat has concluded a sale-and-leaseback deal of its telecommunications towers in Nigeria that will help its local subsidiary to improve its coverage and cut costs.

The company has sold 555 towers to IHS, a telecoms infrastructure group, and is leasing them back.

That is in addition to 2,136 telecom tower sites that were transferred in August last year.

IHS did not disclose the value of the deal.

The transaction would accelerate Etisalat’s rollout of 2G, 3G and 4G coverage across Nigeria, said IHS.

Sale-and-leaseback deals involving telecom towers are becoming popular in Africa, as they improve operating efficiency and reduce expenses.

“Many African telecoms markets, including Nigeria, are highly competitive, as well as often being difficult and expensive places in which to operate. So telecoms have come to accept the case for outsourcing passive infrastructure such as towers,” said Matthew Reed, the market research company Ovum’s practice leader for the Middle East and Africa.

The concept of tower-sharing has been tried in markets such as the United States, Britain, India and Africa. But experts say that it has not become popular in the Middle East owing to government protection of telecom operators, a reliable power supply and relatively high revenue per user.

With the transaction’s conclusion, IHS will have about 15,500 towers in Nigeria and about 23,100 towers throughout Africa under management, the company said.

It plans to run 80 per cent of its towers using hybrid solar solutions and reduce its use of diesel by the end of next year.

“In Nigeria, Airtel and mobile market leader MTN have also recently sold towers, to American Tower Corporation and IHS respectively,” said Mr Reed.

“And elsewhere on the continent, African operating groups such as Airtel, Millicom and MTN have struck similar deals with towers companies including Eaton and Helios as well as American Towers and IHS.”

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