TowerXchange’s analysis of the global and African tower markets · IHS 85 Portfolio Acquisition 2016 Nigeria HTN Towers IHS 1,211 Company Acquisition*** 2015 Nigeria Etisalat IHS

TowerXchange’s analysis of the global and African tower markets

Laura Graves, Managing Director, EMEA, TowerXchange Kieron Osmotherly, Founder and CEO, TowerXchange

Join the conversation: @TowerXchange

Community: http://www.linkedin.com/groups/TowerXchange-4536974

Research: www.towerxchange.com

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The new market structure in which towercos own 67% of towers

TowerXchange is tracking 276 towercos that now own 67% of the world’s 4.4mn towers

* China Tower Corporation area reduced to better illustrate the relative global market share of the other towercos – if illustrated to scale, China Tower Corporation’s area would be almost double the scale of the rest of the industry combined

disclosed updated counts

China Tower Corporation*1,900,000

29 other towercos with 5,000-20,000 towers286,590

235+** other towercos with <5,000 towers213,175

American Tower169,534

Indus Towers 122,962

IHS Towers 22,860

Cellnex 21,770

SBA Communications28,380

GTL Infrastructure27,759

edotco 40,481

Deutsche Funkturm34,700

Bharti Infratel39,363

Crown Castle40,039

RCOM / RJio towerco43,000

Towerco penetration and business models in different regions

Source: TowerXchange

China

India

CALA Oceania

S & SE Asia(Exc India)

Europe

N & E Asia(exc China)

97.3% 2.7%

15.4%

15.5%

9.6%

59.6%46.6%

21.8%

31.5%

14.7%66.1%

19.2%100%

11%

36.1%48.2%

13%

87%

USA & Canada

7%

66%

27%

15.6%

SSAMENA99.5%

0.01%0.04%

4.5%33.9%

61.6%

Operator-led towerco Pureplay independent towerco Joint venture infraco MNO-captive sites

China

India

CALA Oceania


Europe


97.3% 2.7%

15.4%

15.5%

9.6%

59.6%46.6%

21.8%

31.5%

14.7%66.1%

19.2%100%

11%

36.1%48.2%

13%

87%

USA & Canada

7%

66%

27%

15.6%

SSAMENA99.5%

0.01%0.04%

4.6%59.2%

36.2%

Global

52.6%

13.5%1.3%

32.6%

Estimated tower counts for selected countries in Sub-Saharan Africa


Nigeria 29,652

SouthAfrica28,581

Tanzania 8,278

Kenya6,629

Ghana6,296

Mozambique

4,400DRC4,293

Uganda3,554

Cote d’Ivoire

4,142

Senegal3,151

Angola2,600

Namibia2,000

Rwanda1,300

Gabon1,000

Malaawi1,000

BurkinaFaso1,700

Niger1,800

Chad2,000

Botswana850

Congo B 800

Zambia2,300

Madagascar2,020

Cameroon3,200

Zimbabwe2,700

Ethiopia6,600

Towercos now present in 19 (soon to be 20) Sub-Saharan African countries

Owning 39% of the continent’s 150,834 towers

123456

Towercos activeNew tower deal announcedNo known towerco activity

Legend


Pureplay independent towercooperator-led towercoMNO captive

34%

61%

5%

Africa’s biggest tower transactions to date

| TowerXchange Africa 2018 Dossier | www.towerxchange.com/meetups/meetup-africa4

* announced, not yet closed ** 101 closed as of 31 Dec 2017 *** Deal included 368 SWAP sites under MLL; agreement since cancelled **** MTN’s equity since restructured for additional shareholding at IHS group level + Vodacom acquired a 24.5% stake in HTT, which Helios has since purchased for $58.5mn

Figure 4: MEA’s biggest tower transactions to date Source: TowerXchange

Year Country Seller Buyer Tower count Deal value US$

Cost per tower US$

Deal structure

2018 Kenya Telkom Kenya American Tower 723 SLB*

2016 Tanzania Zantel HTA 185 6,700,000 36,216 SLB**

2016 Senegal Expresso Telecom

Al Karama Towers 450 SLB*

2016 South Africa Eaton Towers American Tower 300 Portfolio Acquisition2016 DRC Airtel HTA 967 165,000,000 170,631 SLB

2016 Nigeria Hotspot Network IHS 85 Portfolio Acquisition

2016 Nigeria HTN Towers IHS 1,211 Company Acquisition***2015 Nigeria Etisalat IHS 555 SLB 2014 Rwanda Airtel IHS 164 SLB2014 Zambia Airtel IHS 949 150,000,000 158,061 SLB

2014 Nigeria Airtel American Tower 4,717 1,060,000,000 224,719 SLB

2014 Niger Airtel Eaton 600 SLB

2014Ghana, Burkina Faso, Kenya &

UgandaAirtel Eaton 2,681 540,000,000 201,417 SLB

2014 Nigeria MTN IHS 8,850 984,000,000 226,911 Joint venture (IHS 49%, MTN 51%)****

2014 Nigeria Etisalat IHS 2,136 485,000,000 227,060 SLB

2014 Congo B Airtel HTA 393 50,000,000 127,226 SLB

2014 Rwanda MTN IHS 550 48,000,000 87,273 SLB

2014 Zambia MTN IHS 748 57,000,000 76,203 SLB

2013 Tanzania Vodacom HTA 1,149 75,000,000 65,274 SLB with direct investment in HTT+

2013 Kenya Telkom Kenya Eaton 1,000 MLL (Contract since cancelled, towers currently for sale)

2013 Cameroon & Cote d'Ivoire Orange IHS 2,000 MLL

Africa’s biggest tower transactions to date (continued)

| TowerXchange Africa 2018 Dossier | www.towerxchange.com/meetups/meetup-africa5

Figure 4: MEA’s biggest tower transactions to date Source: TowerXchange

Year Country Seller Buyer Tower count Deal value US$

Cost per tower US$

Deal structure

2012 Cote d'Ivoire MTN IHS 911 141,000,000 154,775 SLB

2012 Cameroon MTN IHS 820 143,000,000 174,390 SLB

2012 Uganda Warid Eaton 400 SLB2012 Uganda Orange Eaton 300 SLB

2011 Uganda MTN American Tower 962 89,250,000 181,912 Joint venture (AMT 51%, MTN 49%)

2010 Tanzania Millicom/Tigo HTA 1,200 81,000,000 112,500 Joint venture (HTA 60%, Milicom 40%)++2010 DRC Millicom/Tigo HTA 521 41,500,000 132,758 Joint venture (HTA 60%, Milicom 40%)++2010 Ghana MTN American Tower 1,856 218,500,000 230,835 Joint venture (AMT 51%, MTN 49%)2010 South Africa * Cell C American Tower 1,400 200,000,000 142,857 SLB with BTS+++2010 Nigeria Starcomms SWAP 407 81,000,000 199,017 SLB2010 Ghana Vodafone Eaton 750 MLL2010 Nigeria Visafone IHS 800 67,000,000 83,750 SLB2010 Nigeria Multilinks HTN 400 MLL2010 Ghana Millicom/Tigo HTA 831 54,000,000 108,303 Joint venture (HTA 60%, Milicom 40%)++2010 Ghana Millicom/Tigo HTA 750 54,000,000 120,000 Joint venture (HTA 60%, Millicom 40%)

Totals / average 41,248 4,726,950,000 187,486

* announced, not yet closed ++ Millicom restructured their equity into Helios’ operations into a 24% stake at group level (since reduced to 22.83%) which Millicom is now looking to monetis +++ Cell C deal included 1,400 existing towers plus 1800 to be constructed. Total acquisition cost of US$430mn excluded here because the BTS component distorts the average

with Orange. Orange manage 100 sites outside of their arrangement with IHS.

Chad

Subscribers: 8.8mn* Tower count: 2,000 MNOs: Three Towerco activity: None ESCOs: Aktivco

There are three MNOs (Airtel, Tigo and Sotel) and an estimated 2,000 towers in Chad, a country where electrification sits at just 4%.

Airtel had previously agreed the sale of their towers to Helios prior to the transaction being cancelled because of an unfavourable regulatory environment.

To address power issues, Millicom’s Tigo has signed an ESCO contract in the country with Camusat’s

Aktivco. Millicom are looking to exit the African market, with Econet reported to have expressed an interest in acquiring their remaining opcos in Chad and Tanzania

Congo Brazzaville

Subscribers: 5.1mn* Tower count: 800 MNOs: Three Towerco activity: Helios Towers

Gold sponsor: Diamond sponsors: Silver sponsors: Bronze sponsors:

R

Africa’s towerco-owned towers: 2009-2018

0

10,000

20,000

30,000

40,000

50,000

60,000

20182017

20162015

20142013

20122011

20102009

Tower ownership by Africa’s four largest independent towercos


5000 10000 15000 20000 25000 30000 35000

2284

1200 1300 600

2276 2575 1490

2518 171415503

4757 723*

Nigeria

Ghana

Burkina Faso

DRC

Cote d’Ivoire

Cameroon

Niger

Rwanda

Zambia

Congo B

Uganda

Tanzania

Kenya

South Africa1200

700

870

3508 3841771

814

*Pending closure of Telkom Kenya deal

Towerco footprints in Sub-Saharan Africa

Senegal

AlKarama

Towers*

Helios Towers Africa

Tanzania Congo BrazzavilleDRC

Eaton TowersNigerBurkina Faso

Kenya TowerCo of Madagascar

Madagascar

PowerCom

EightyFour

Dynamics

Zimbabwe

Namibia

Botswana

AfricanTowers

Antosc

Angola

SEAL Towers

Uganda

SouthAfrica

Ghana

Gyro Towers, Atlas Towers, Coast to Coast,

Blue Sky Networks, Sentech, Comco, Eagle

Towers, SA Towers, International Tower

Corporation

IHS Towers

CameroonRwandaZambiaCote d’Ivoire

Nigeria

Nigeria

BCTek Engineering

Hotspot Networks

Communications Towers Nigeria

Pan-AfricanTowers

Atlas Tower

American Tower

PulaTowers

MNO infrastructure sharing strategies

Joint venture

Barter agreements

Towercos Co-location sales

Active sharing

ESCOs

$

Towerco penetration and business models in different regions


China

India

CALA Oceania


Europe


97.3% 2.7%

15.4%

15.5%

9.6%

59.6%46.6%

21.8%

31.5%

14.7%66.1%

19.2%100%

11%

36.1%48.2%

13%

87%

USA & Canada

7%

66%

27%

15.6%

SSAMENA99.5%

0.01%0.04%

4.5%33.9%

61.6%


China

India

CALA Oceania


Europe


97.3% 2.7%

15.4%

15.5%

9.6%

59.6%46.6%

21.8%

31.5%

14.7%66.1%

19.2%100%

11%

36.1%48.2%

13%

87%

USA & Canada

7%

66%

27%

15.6%

SSAMENA99.5%

0.01%0.04%

4.6%59.2%

36.2%

Global

52.6%

13.5%1.3%

32.6%

Operator carve out towercos: Europe

Ownership Europe’s ~600,000 towers


China

India

CALA Oceania


Europe


97.3% 2.7%

19%

10%

40%47%

22%

32%

20%66%

14%

100%

11%

40%49%

8%

92%

USA & Canada

7%

66%

27%11%

SSAMENA99.99%

0.01%0.2%

61%

39%

361,750 104,706

72,994

58,000

IPO

Retain

Sale

Attempted IPO

Equity sale

Equity saleSFR Towerco & Towers of Portugal

First Tower Company

SSA tier 1 MNOs: Number of markets in which their towers are operator or towerco owned and managed

* Opco acquired from Tigo which had previously sold towers to Helios (Orange did however sell its Ugandan towers to Eaton prior to selling its opco to Africell) ** In some deals, MNOs have retained equity in either the towers or the towerco parent company (see deal table)

MNO owned MNO owned but towerco managed Towerco owned**

Airtel

Millicom

MTN

Orange

Vodacom/ Vodafone/

Safaricom 1 7 132 8 143 9 154 10 165 11 176 12

+5 ESCO contracts signed

+1 ESCO contract signed

Number of markets

+1 ESCO contract signed

*

Breakdown of Orange’s tower ownership and sharing in Sub-Saharan Africa

0 500 1000 1500 2000 2500Owned (not shared with other MNOs) Owned (shared with other MNOs)Owned (but under towerco mgmt) Leased from other MNOsLeased from towercos (BTS or co-lo)

BotswanaBurkina Faso

CARCameroon

Cote d’IvoireDRC

Guinea BissauGuinea Conakry

LiberiaMadagascar

MaliNiger

SenegalSierra Leone

The emergence of ESCOs in SSA

Who owns the energy equipment on SSA’s cell sites?

ESCOs already have 10.8% of Africa’s cell sites


ESCOsPower-as-a-service towercos*MNOs15,880

39,443

91,624

*Towerco count excludes 10,284 sites in South Africa, where power-as-a-service is not provided (inc in MNO section), as well as 10,000 IHS Nigeria sites managed by third parties under the ‘Big Five’ initiative (inc in ESCO section)

Comparing towerco growth in MEA from 2009 with ESCO growth six years later

60,000

50,000

40,000

Site

s

30,000

20,000

10,000

20092015

20102016

Towerco sitesESCO sites

20112017

20122018

20132019

20142020

20152021

20162022

20172023

20182024


Launch velocity: 17,600 MEA cell sites contracted by ESCOs since Q216


R


July2017

August 2017

September 2016

August 2016

July2016

Undisclosed date

April2018

July2018

August2018

August2018

August2018

Aktivco secures contract with Millicom

Chad (500 sites)

GreenWish Partners secures contract with Orange DRC (then 250

sites, now 300)

Econet carves out Distributed Power Africa

(then "Econet Power") initially managing 1,380 sites

in Zimbabwe (now 1,600)

IHS ‘Big Five’ initiative POs issued to partners Biswal, IPT PowerTech, Makasa

Sun+Ascot, M-P Infrastructure and Uppercrest (then 12,000

sites, now 10,000)

Energy Vision secures contract with Airtel

Gabon (280 sites deployed to date)

Ascot supplies 200 sites in Sudan for Sudatel under ESCO model

Aktivco secures contract with Orange Niger

(500 sites)

Aktivco takes on an existing ESCO contract with Orange

Burkina Faso (site count undisclosed, estimated as 300)

Aktivco secures contract with Orange Côte d'Ivoire

(site count undisclosed, estimated as 500)

IPT PowerTech secures contract with Orange Guinea

Conakry (1,500 sites)

IPT PowerTech secures contract with Alfa in Lebanon (1,600 sites)


The fragmented global ESCO market,by site count

IPT PowerTech9,800

Enertika3,500

M-P Infrastructure2,000

Applied Solar Technologies4,000

Ascot2,110

Distributed Power Africa1,600

Aktivco2,000

Biswal2,000

Bhaskar Solar800

Ardom Towergen500

Cambridge Clean Energy, 464

Pace Power, 400

GreenWish Partners300

MediPower, 150

Energy Vision280

ACME Group, 100

Voltalia, 171

HYBRICO, 40

OMC, 150

Yoma Micro Power, 10

The addressable market for ESCOs in MEA

IHSTowers 12,860

MTN 23,000

Orange MEA

20,000Airtel Africa 4,500

Other MEA MNOs 20,000

Etisalat / Moov ~10,000

Zain 8,337

American Tower9,246

HeliosTowers

6,485

EatonTowers

5,000

Other MEA towerco sites

5,852

39,443 towerco sites

17,800 contracted


Already under ESCO contract 17,800MNO sites addressable by ESCOs in short to medium termMTN 23,000Orange MEA 20,000Airtel 4,500Zain 8,337Etisalat / Moov 10,000Other MEA MNOs 20,000

Towerco sites addressable by ESCOs in medium to long term (exc SA)IHS Towers 12,860American Tower 9,246Helios Towers 6,485Eaton Towers 5,000Other MEA towercos 5,852

ESCO sites anchor tenants worldwide: MNOs compared to towercos


20,000

15,000

10,000

5,000

MNOs (36%)

10,950

Towercos (63.1%)

19,165

SSA ESCO sites by grid status


R

On grid

Unreliable grid

(<16 usable hours per day)

Off grid

Undisclosed (none)

14.5% 26.9% 58.6%


Example capex invested into a SSA ESCO site

Source: Industry sources, TowerXchange presentation

4.5kW solar, 1,000AH battery capacity: total capex $38,650

$14,800

$3,700$7,900

$8,500

$3,000$750

Battery, cabinet and accessoriesSolar systemHybrid cabinet (core, controllers, solar chargers, rectifiers, AC&DC dist.)Genset, controller and fuel tankInstallation materialsIn-country logistics and installation

ESCO sites by geographical market


6.3%

21.1%

7.8%

6.7%0.1%5.6%

52.3%

SSAMENAIndiaMyanmarIndonesiaCALAEurope

Current and prospective ESCO projects, MEA


Guinea Conakry: IPT with further RFP rumored

Burkina Faso: Aktivco Côte d'Ivoire: Aktivco Chad: Aktivco DRC: GreenWish+Sagemcom Gabon: Energy Vision Niger: Activco Nigeria: IHS ‘Big Five’: IPT, Makasa Sun, M-P Infrastructure, Biswal Lebanon: IPT Sudan: Ascot Zimbabwe: Distributed Power Africa

TowerXchange forecasts ESCOs will have 43,800 cell sites in SSA by 2024


Representing 65% of the global total of 67,300 ESCO sites

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

ESCO conclusions

< ESCOs have achieved launch

velocity in SSA

< ESCOs will own the power systems

at 25% of SSA towers by 2024

< ESCOs push beyond towercos in

energy efficiency

< ESCOs compliment rather than

competing with towercos

“Generally speaking, in markets where we have a small number of towers, our plan would be to hand the full portfolio over to an ESCO, whereas in our larger markets it will most likely be a subset of towers” - Nat-sy Missamou, Orange MEA

Data from TowerXchange’s annual telecom ESCO market report 2018

Available soon at www.towerxchange.com/esco-report

SSA headlines and trends in 2018 (and late 2017)

< 4 ESCO contracts signed by Orange< Energy upgrades ongoing< Telkom Kenya agrees tower sale with ATC< Viettel hint at towerco formation in Vietnam< Tigo M&A and exit: Ghana, Rwanda & Senegal and now Tanzania< New mobile licensees plus 4G licenses< New build picks up plus rural rollout focus< IHS, Helios and Eaton IPO talks< Nigeria 9mobile sale ongoing< ECA bill, WOAN and 5G talks in SA< Towerco business model diversification steps up


R

Energy upgrades and optimisation

< Management of meter top ups< Grid connection < Outdoorisation < Better usage of data< Lithium ion and supercapacitors< DC vs AC DG debate< Plug and play and integration into existing supply chains< Carbon reduction plans< Extending power beyond tower

Power responsibility across Africa’s 150,834 towers

Helios Towers’ 2017 annual cost of power per tower25,000

20,000

15,000

10,000

5,000Congo B DRC Ghana Tanzania

$7,089

$23,271$16,110

$10,144

66% 24% 10%

MNOs

Towercos

ESCOs

Figures calculated as a total cost of power divided by number of towers at year end

Kenya

Towerco activity:<Eaton acquire Airtel sites (2014)<Telkom Kenya agree tower sale to ATC<Safaricom proactively lease space<Atlas Tower begin building sites<SEALTowers present

Key dynamics<Strong economy<Safaricom dominance<4G rollout ongoing<Rural coverage focus<Safaricom commit to going green

Ownership of Kenya’s 6,629 towers and MNO market share

Safaricom Eaton Towers Telkom Kenya Other

4,406

1,200

723300

*Tower sale to American Tower agreed

Nigeria

Key dynamics<Huge market with major growth<9mobile sale<Power upgrade projects<Fibre plans?

Ownership of Nigeria’s 29,652 towers+30,000 needed!

*National Population Commission; **NCC (Aug 2018)

Population: 198mn*Projected to become 3rd most

populous country by 2050 (currently 7th)

MNO market share**

IHS Towers

American Tower

Pan African Towers

BCTek Engineering

Communication Towers Nigeria

Hotspot Network

Other small Nigerian towercos

Globacom

NATCOM

SWAP Technologies

6,000

369550

20075500

7001,000

15,503

4,757

MTN

Airtel

Globacom

9mobile

40% 25% 25% 10% 160.9mn**

Mobile connections

South Africa

Key dynamics<Gyro Towers – Telkom carve out <New build ongoing<New models for rural rollout

<ECA bill and WOAN <Helios considering entry<Towercos exploring fibre and small cells

American Tower

Atlas Tower

SENTECH

SA Towers

Blue Sky Towers

International Tower

Corporation

Eagle Towers

Coast to Coast

Pro High Site

Communication100 200 300 400 500 600 700 800 3000

2,575701

340

323

66

61

50

38

11

Towerco diversification - examples

Source: Delta Partners

Country/Region Towercof Logo # of towers Service types offered

China CTC 1900k

China Guodong 20k

Czech Republic CETIN 5k

Europe Cellnex 25k

India Bharti Infratel 40k

Indonesia Protelindo 15k

Indonesia Tower Bersama 13.5k

Indonesia STP 6k

Italy INWIT 11k

Malaysia, Myanmar, Vietnam OCK Group 3k

Nigeria & Central Africa IHS 23k

Russia Russian Towers 3k

UK Arqiva 9k

UK, Ireland, Netherlands Wireless Inf. Group 2k

US AMT 170k

US Crown Castle 40k

US Digital Bridge 3k

US Uniti Towers <1K

Data centre Wi-FiGlobal TowerCo P&S benchmark Towers DAS Exploring serviceSmall cells Fibre

Through acquisiDon ofKIO Networks

Have a license todeploy

Investment in thecreation of micro-coverage and fibrebackhauling

Through acquisitionof iForte

From towerco to infraco: Crown Castle

30,000 small cells deployed

+30,000 in the pipeline

TowersSmall cellsFibre solutions

60,000 miles (100,000km) fibre

deployed

Breakdown of Crown Castle new lease revenue

$110mn

$55mn

$45mn


R

Looking ahead


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< SLB transactions limited< ESCO model to gain further traction< Healthy macro-site new build still ahead< Fibre partnerships and exploration into small cells

Thank you!

Kieron OsmotherlyFounder and CEO

TowerXchangeMobile: +44 7771 148001

Email: [email protected]

Laura GravesManaging Director EMEA

TowerXchangeMobile: +27 72 815 9052

Email: [email protected]

TowerXchange’s analysis of the global and African tower markets · IHS 85 Portfolio Acquisition 2016 Nigeria HTN Towers IHS 1,211 Company Acquisition*** 2015 Nigeria Etisalat IHS

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