The telecommunications market in the Africa & Middle East (AME) region is growing, and, in some cases, seeing network buildout and expansion. Leading data and analytics company GlobalData notes that rising activity in the fibercos and towercos market will help build out infrastructure and allow telcos to free up Capex to reinvest in other growth drivers.

Madison Galati, Telecoms Market Data & Intelligence Analyst at GlobalData, comments: “Global towercos have been making inroads in the AME region, expanding their networks through mergers and acquisitions (M&As). For example, American Tower acquired Eaton Towers in 2019 in a deal worth $1.85bn that included towers across five African countries. While American Tower already had a presence in Africa, the acquisition was a significant deal, demonstrating the types of investment being made in the region – particularly in the tower market.”

There has been notable towerco activity in the Middle East, with STC Saudi Arabia having launched towerco subsidiary TAWAL in April 2019 to monetize its tower assets and invest in other revenue-generating streams such as 5G and fiber. In March 2021, Zain and Mobily received regulatory approval to merge their tower assets to create a towerco with Raidah Investment Company and IHS KSA. Towercos are much more active in AME compared to fibercos as the region develops its 3G and 4G networks and selected countries introduce 5G.

Galati continues: “The fiber network is still in the process of being installed in most countries in the AME region, with 61% of fixed-broadband lines being xDSL in 2020. Fiber will be the fastest-growing technology for fixed broadband in AME, expanding at a robust compound annual growth rate (CAGR) of 15.4% over 2020-2025.

“Due to the relatively limited fiber-network infrastructure in AME, fiberco activity has mainly occurred in countries that have more advanced fiber networks such as South Africa and Jordan. The South African market, for example, has several fibercos that lay, manage and operate regional FTTH/B networks.”

As the demand for fiber develops in AME, telcos can eventually turn to fibercos to help expand their fiber networks while monetizing their assets. Telcos have a few different options available to them. They can spin off part (or all) of their fiber assets to create their own fiberco – opening the opportunity to wholesale their network in an open access model to other market players – or they can open their fiberco’s capital to institutional investors such as pension funds and private equities to help fund their fiber rollouts; or even go a step further by conducting an IPO. In addition, they can offload part of their fiber assets to an existing fiberco or draw them into a joint venture with other telcos and infrastructure providers (e.g. electricity companies).

Galati concludes: “As 5G and FTTH/B expand, fibercos and towercos will become increasingly valuable strategies. In fact, fibercos and towercos can partner in preparation for the 5G network. For example, in January 2019, towerco Helios Towers partnered with fiberco Vulatel in South Africa to create Helios Towers South Africa. The partnership expanded Helios Towers’ presence in South Africa and positioned them to operate the network that will be required for 5G. Thus, the fiberco and towerco market in AME will become more prevalent as mobile broadband and fiber networks advance.”