05 September 2024
As Africa’s wireless industry evolves toward an increased share of independent tower companies, policies mandating passive infrastructure sharing can play a pivotal role in the buildout of 5G networks across the continent, according to a groundbreaking whitepaper titled “The Independent Tower Industry as a Key Enabler of the Development of African Telecommunications.”
Commissioned by SBA Communications, a leader in the independent tower industry, and conducted by international consultancy firm Telecom Advisory Services, the study examines the telecommunications landscape across 14 African countries. It explores key aspects of the continent’s wireless industry, the expansion of 3G, 4G and 5G networks, broadband adoption, wireless competition and wireless capital spending.
The findings highlight the significant impact independent tower companies have on enhancing wireless connectivity in Africa. Countries with a higher proportion of independent tower companies have better coverage, use, affordability and quality of wireless connectivity. Furthermore, the study outlines a variety of proactive policies and regulations designed to incentivize the development of the tower industry. The study’s recommendations illustrate how African governments and regulators can maximize the potential of tower deployment, foster competition and facilitate the growth of 5G networks.
The Development of 3G, 4G and 5G Networks
The development of the African wireless industry over the past two decades has been remarkable. The deployment of 3G and 4G networks has enabled consistent increases in wireless broadband coverage and is expected to reach high deployment by 2030. By the end of 2023, 3G coverage reached 92.46% of the continent’s population, according to GSMA Intelligence. This is in line with other developing regions and exhibits little difference between North and sub-Saharan Africa.
In parallel, 4G coverage reached 80.37% of Africa’s population in 2023 with sub-Saharan Africa at 77.49% and North Africa at 99.23%. 5G coverage, however, remains in an early stage at 5.05% in 2023. Projections indicate that by 2030, 3G and 4G coverage will reach 95.93% and 87.56%, respectively, while 5G is expected to grow to 36.84%, according to the white paper.
Despite the impressive increase in 3G and 4G coverage, 7.5% of Africa’s population lacks access to basic mobile broadband service via 3G while 19.6% cannot access via 4G networks. Beyond the supply gap, the digital divide identified in the study is the result of a demand gap characterized by the non-subscribers living in areas already served by broadband. As of 2023, limited affordability remains the primary barrier to adoptions, affecting 62.10% of the population.
Moving forward, the growth of the wireless industry, including the implementation of 5G, faces constraints due to limited capital spending.
Infrastructure Sharing is a Vital Strategy
The study identifies passive infrastructure sharing as a vital strategy that would enhance network deployment and reduce costs. An analysis of a simulated African country with an average digital divide of 69.64% suggests that mandating infrastructure sharing could increase unique mobile broadband users by 14.63%. This would drive GDP per capita growth by 4.82% over eight years. Such policies would not only help bridge the digital divide but also facilitate the development of 5G technology and improve rural connectivity.
The study’s correlational and econometric analyses reveal that African countries with more than 40% of tower stock owned by independent tower companies and tower deployment in excess of 150 per million population exhibit higher wireless industry performance metrics than those with less than those figures. They have better 4G coverage, faster network speeds, more capex, better affordability, higher adoption of mobile broadband and more intense competition.
Policy and Regulatory Initiatives: Essential Drivers
A review of research literature and interviews with regulators and policymakers identifies several initiatives that can significantly contribute to the development of the independent tower industry:
- Passive infrastructure regulatory framework
- Specific tower regulation
- No need for service concession agreements for tower operators
- Regulatory harmonization between central government and municipalities
- Need for fast permit approvals driven by consistent and reasonable time frames
- Establishment of a cap of fees and taxes, and rights of construction
- Regulations to prevent over-deployment
- Implementation of policies to promote development of shared infrastructure for deployment of 5G
- No need of price regulations of tower company contracts with service providers
- Define long-term guarantees in regulations and permits
While some African countries have adopted certain initiatives, most currently lag, hindering progress and limiting connectivity advancements across the continent.
The growth of an independent tower industry is crucial for enhancing telecommunications across Africa, especially given the high level of service penetration. To leverage the potential for tower sites to support edge computing, network distribution nodes for both fiber and wireless networks and future generation of alternative energy, the study notes that it is imperative for governments to enhance policies and regulations that create the right incentives for sector growth.
The successful development of the wireless and independent tower industries is closely intertwined. Independent tower companies play a critical role in enabling the future deployment of 5G, especially considering ongoing capital expenditure pressures facing mobile network operators. By acknowledging this relationship, regulators and policymakers can support the growth of independent tower companies.
Read the full report: The Independent Tower Industry as a Key Enabler of the Development of African Telecommunications
Note: This article contains extracts from the white paper, “The Independent Tower Industry as a Key Enabler of the Development of African Telecommunications.” The report was written by Telecom Advisory Services and commissioned by SBA Communications. Extracts have been used with permission.
