Eaton Towers to sell stake to ATC, creates monopoly

Tuesday June 25 2019

Monopoly. A telecom tower on Kibuli hill. The exit of Eaton will create a monopoly. PHOTO BY RACHEL MABALA

Discussions to acquire Eaton Towers by American Tower Corporation (ATC) have kicked off, according to details from Uganda Communications Commission (UCC).
The two companies were hosted by UCC about a week ago to discuss the planned acquisition.
“These multilateral engagements are aimed at reviewing the acquisition process together with the commercial and competition issues that may arise from this transaction,” details from UCC indicate.
On May 30, ATC announced a planned acquisition of Eaton Towers including the company’s debt at an estimated cost of $1.85b (Shs6.7 trillion).

Taking advantage
In a statement, Mr Jim Taiclet, ATC chief executive officer, said the transaction would augment the company’s existing footprint in Africa, noting that this “…positions ATC to take even better advantage of the growth opportunity in Africa as 4G mobile data technology is deployed.”
Uganda currently has only two tower companies: Eaton and ATC, from which telecoms hire network towers.
In 2012, telecoms sold all tower sites to third party operators in a bid to reduce operation and maintenance costs.
The transaction, expected to be concluded by the end of 2019, will see ATC acquire 1,460 towers from Eaton in Uganda.
The company, will also acquire other tower sites in Kenya, Burkina Faso, Ghana and Niger, according to information from towerXchange.
Eaton acquired 400 towers from Warid Telecom in 2012 while MTN and ATC created a joint venture firm, ATC Uganda in 2011, which acquired all MTN towers.
MTN holds a 49 per cent stake in ATC, which acquired all its 1,000 towers at a cost of $175m (Shs649b) in 2012.
However, the company has since added approximately 280 tower sites on the network.

Unfair Competition
However, this is likely to create a monopoly that will largely be controlled by MTN.
MTN and ATC’s terms of operation are still being investigated by UCC on claims that MTN has preferential treatment over other telecoms.
In its evaluation report, UCC noted that MTN, based on the partial ownership of ATC enjoys an exchange rate freeze on its rental charge, which was effected in June 2012.
This, UCC says, shields it from forex losses yet the same is not extended to other tenants.
Eaton’s acquisition means that its major customers including Airtel, MTN, Africell and Etisalat, will now rent off ATC sites.

What they say about the tower industry in Uganda
Avoiding a monopoly: According to Mr Godfrey Mutabazi, the UCC executive director, told Daily Monitor they are engaging ATC and Eaton to avert possibilities of unfair competition resulting from the acquisition.
“We are looking at so many things before we give them a go ahead, we must investigate and ensure we balance it. We have a lot of procedure we have to go through,” he said adding some headway regarding this deal might be made this week.
Leader in shared telecoms infrastructure: Mr Terry Rhodes, Eaton chief executive officer, said the company has grown from an idea of a few people 10 years ago to becoming a leader in Africa shared telecoms infrastructure with approximate annual revenue of $250m (Shs918b).
Stunted growth: The exit of Eaton, Mr Micheal Niyitegeka, the Uganda, International Computer Driving License country manager, noted could be a result of stunted growth in the telecom industry.
Acquired towers: The transaction, projected to be concluded by the end of 2019, will see Eaton Towers hand over 1,460 towers in Uganda.

Planned acquisition. On May 30, ATC announced a planned acquisition of Eaton Towers in five African countries including Uganda and the company’s debt at an estimated cost of $1.85b (Shs6.7 trillion).