Business

Africa telecoms firm Eaton Towers plans $350m expansion

Terry Rhodes CEO Eaton Towers
Image caption Eaton Towers chief executive Terry Rhodes targets expansion in Africa

African telecoms company Eaton Towers has raised a $350m war chest to fund expansion across the continent.

Eaton, which builds and operates masts for mobile phone networks, has also signed a deal with Mobinil in Egypt, an arm of Orange, to buy 2,000 towers.

The company installs telecom networks and persuades rival mobile phone operators to share the same tower, thereby cutting costs.

Chief executive Terry Rhodes said: "Sharing masts is good for everybody."

Investors in the latest round of financing for Eaton Towers include Capital Group Private Markets, the firm's controlling shareholder, plus a consortium led by Ethos Private Equity, a leading South African fund manager, and Standard Chartered Private Equity.

African footprint

Eaton Towers currently operates networks of mobile phone masts in seven countries, including Ghana, Uganda, Kenya and South Africa. Now Egypt will be added to the company's footprint in Africa.

Image copyright PA
Image caption Mobile phone towers are becoming more common across Africa

"We've signed other deals in West and East Africa which will be concluded soon," says Mr Rhodes, who also believes it is getting easier to convince rival mobile phone companies to co-operate and share infrastructure.

"Five or six years ago there was a reluctance, but I think that the increased load on the networks, as more customers come on, want more services and particularly more data, then networks need to do more to cut their costs and focus on their services. They've all agreed, all the major ones have done this, that sharing their towers is a good way to go," he says.

Africa's economic growth

Some estimates put economic growth for many countries in Africa at about 5% this year and and that will lead to more people having money to spend on mobile phones.

"The mobile business, like services in general, benefits from two deep drivers of change that are especially important in Africa - population growth and urbanisation," says Francois Conradie, an economist at NKC in South Africa.

"It's a profitable sector and will continue to be so, even more so as mobile data and smartphone technology penetrate more widely and deeply on the continent. Disposable incomes are going up, while technology and services are getting cheaper, says Mr Conradie.

Cheaper Smartphones

Sales of smartphones, devices that access the internet, have long since over taken purchases of traditional mobile phones in the world's richer countries, but that is not yet the case in Africa.

However, many predictions point to that happening in the continent within three to five years.

When it does, the experts are convinced more Africans will use social media websites than today and it is interesting to note that a majority of people just use their mobile phone to send SMS text messages.

According to the research group Pew, only one in five phone users in sub Saharan Africa access social networking sites through their devices.

Eaton Towers' Mr Rhodes believes affordable phones will make the difference. "I think the key is getting the price points down to make smartphones more affordable for more and more consumers," he told the BBC.

Landlines dead

Fewer people are using landlines in Africa and that may soon be restricted to major corporations and official government offices.

Is the era of the landline coming to an end?

"I think with a few exceptions, say South Africa or Egypt, it's already a thing of the past, frankly," says Mr Rhodes.

Then again, it is worth remembering he has a vested interest in seeing the demise of landlines.

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