Few people have heard of Eaton Telecom, but that looks set to change soon. The UK-based company, founded by three top-level telecommunications industry executives, has set its sights on what could soon be a booming business in Africa: buying and managing base stations on behalf of cellular operators.
Eaton, which is understood to be one of three companies in talks with Cell C regarding the SA operator’s plan to sell its national network of base stations, was founded a year ago by three of the telecoms world’s most senior executives — Alan Harper, Sanjiv Ahuja and Terry Rhodes.
Harper (pictured) is a former board member at Vodafone, where he was head of business strategy and development. He’s also a former MD of Vodafone’s important UK operation. Ahuja is ex-CEO of France Telecom’s giant mobile arm, Orange. And Rhodes is a cofounder of Celtel (now Zain).
Management holds a significant minority stake in Eaton Telecom, with the majority of shares in the hands of Development Partners International, a UK-based private-equity company that focuses exclusively on investments in Africa.
“Two years ago, the three of us happened to be coming out of our respective companies,” says Harper. “We sat down and chatted about what we might do next.”
Eaton Telecom was the result.
“We realised a large number of operators around Africa will be moving to the shared tower model over the next few years,” says Harper.
At the end of last year, Eaton merged with a Johannesburg-based tower construction company called Venture Communications, which has built infrastructure for operators in markets such as SA, Madagascar and Ghana.
Eaton’s plan is to build new towers of its own and to buy existing infrastructure from operators and to manage it on their behalf.
Operators are expected to turn to tower sharing business models to help reduce operating costs and capital expenditure, says Harper. This is becoming more important and competition squeezes operators’ margins.
Harper says there’ll be considerable investment in tower infrastructure in SA in the next few years as MTN, Vodacom and Cell C build out their 3G networks and as Telkom enters the mobile market for the first time.
To take advantage of this growth, Eaton has appointed former Plessey CEO Pieter Nel to head up its tower sharing business in SA.
“Clearly, SA is where we see big opportunities,” says Harper. “We’re already in discussions with a couple of operators in SA about what they might want to do with their towers.”
Harper says the third-party tower management companies are well established in North America, Europe and Asia. However, the concept of infrastructure sharing involving third party tower operators is fairly new in Africa. He expects that to change quickly in the next couple of years.
Though selling their infrastructure helps operators reduce costs and complexity in their operations, it does have a few drawbacks. The chief among these is that competitor operators are able to emerge more easily, piggybacking on the infrastructure the incumbents have sold off.
On the plus side, though, it reduces costs for everyone and is also more environmentally friendly as it reduces the need to build more power-hungry base stations that blight the landscape. — Duncan McLeod, TechCentral