The Impact of Private Equity in Emerging Markets Case Study: Helios Towers Africa (, , DRC) The Company HTA’s Story

Prior to the advent of the independent telecom tower model in Africa, wireless phone operators built and operated their Essentials own tower structures to house antennas. Each tower required its own power Company: Helios Towers Africa (HTA; generation, security and maintenance. www.heliostowersafrica.com) As a result, operators were duplicating A knowledgeable management team was recruited Countries: Ghana, Tanzania, Democratic efforts and operating towers were to run the company, including Chuck Green, not focusing on their core business former co-founding group member and senior of providing affordable, high-quality executive of Crown Castle International, one of the Sector: Infrastructure mobile connectivity to their customers. world’s largest operators of telecom infrastructure, Business focus: Telecom infrastructure In 2006, Helios Investment Partners, an Africa- as well as other senior executives with significant dedicated private equity firm, disrupted this African telecommunications experience. GP: Helios Investment Partners, an Africa-focused model by launching Helios Towers Nigeria, the private investment firm with approximately Under the HTA umbrella, country-specific companies first independent telecom tower company in US$2 billion in assets under management have been set up in Ghana, Tanzania and the Africa devoted to building and operating towers. (“Helios,” www.heliosinvestment.com) Democratic Republic of the Congo, as these This allowed mobile operators to outsource countries offer a combination of attractive market non-core activities and passive infrastructure, Shareholders: Quantum Strategic Partners LP dynamics (e.g., a large consumer base, multiple and to focus instead on end-user services. (“Soros,” 40%), Helios Investors II, L.P. (advised mobile operators and significant anticipated by Helios Investment Partners, 26.5%), Albright In 2009, seeking to capitalize on (i) the largely demand for towers), and a willingness of telecom Capital Management (ACM, 13.3%), RIT Capital virgin telecom tower market in Africa, (ii) Helios’s operators to have HTA acquire their existing Partners and Lord Rothschild’s family interests experience in telecom tower investments in tower assets in sale-and-leaseback transactions. (together, “RIT,” 13.3%) and International Africa combined with its partners’ involvement Building on shareholder relationships, a strong Finance Corporation (IFC, 6.6%) in the global wireless infrastructure space, and capital base, experience in tower infrastructure (iii) a dearth of capital given the global financial and transactions, and its management team, Date of investment: February 2010 crisis, active global investors Soros, ACM and RIT HTA was able to execute the first series of sale- joined Helios to form Helios Towers Africa (HTA), and-leaseback contracts for towers in Africa. The Investment: US$375 million a platform company dedicated to pursuing company counts among its customers the leading the tower opportunity on a Pan-African basis. mobile operators in the region, including Bharti Impact Highlights IFC joined the consortium in early 2011. Airtel, Millicom, MTN, Orange and Vodacom. Since its founding, HTA has grown rapidly— more than doubling revenues each year since 2010—to become a leading independent telecom infrastructure company in Africa, with one of the The Role Played by largest telecom tower portfolios on the continent By working with mobile operators and regulators, HTA has been able to change the Private Equity business model of operators; instead of running Helios Investment Partners played a Furthermore, HTA’s management team and their own towers, operators now outsource catalytic role in the formation of HTA. shareholders focused on evangelizing the industry management and ownership to tower companies Through its prior tower investments in in Africa into adopting the concept of infrastructure These business model enhancements reduce Africa, Helios had direct relationships sharing. While common practice in other markets, operational costs, allow mobile operators with a number of telecom operators in the model of independent telecom tower to focus on their core business, and free up the region, which helped it to identify companies was still in its infancy on the continent. capital for investments in coverage expansion initial management team members Developing the tower business required not only and end-user service improvement and facilitate business development the operators to be on board, but also regulatory HTA has been recognized for its energy management initiatives. Helios’s Africa know-how, buy-in. The Tanzania Communications Regulatory combined with investor activism, global Authority and the National Communications system, which has cut carbon dioxide emissions political and business networks, industry Authority of Ghana have focused on the problem across its towers by more than one ton each expertise and capital provided HTA with of tower proliferation—as operators look to month and is increasingly enabling connectivity, significant credibility and the ability to expand coverage, they have built additional towers including in remote, under-served areas acquire tower portfolios in Africa. in already crowded locations. Regulators have u

January 2014 Mobile Subscriptions Growth in Africa # of Subscribers (per 100 inhabitants) 600 64 70 n Number of subscribers (millions) 60 Number of subscribers 54 545 60 The (per 100 inhabitants) RHS 501 46 50 400 438 38 40 32 365 Company 298 30 24 200 246 18 20 12 # of Subscribers (millions) 129 174 10 View 87 0 0 2005 2006 2007 2008 2009 2010 2011 2012* 2013* * Estimates. Source: International Telecommunication Union.

“The telecom sector is one of the key sectors for us in Africa. What “As CEO, sometimes we’re particularly attracted to in the telecom towers sector is the you need to know you’re recurring nature of the revenues, the stability of the earnings stream and the ability to scale the business not only geographically but also working in an environment to expand into adjacent product areas.” that has certain structures Tope Lawani, Co-Founder, Helios Investment Partners where it’s safe for you to make the right decisions for the business. The corporate governance u also been keen to see price reductions from than US$150,000 in capital expenditures on gives you that safety net. increased competition, as well as improved health each tower and up to 25% in total operating and safety standards in building and operating expenses. HTA has also driven quality and For me, that was one of the towers. HTA demonstrated the cost- and space- efficiency gains: HTA towers guarantee over 99% biggest attractions. When saving benefits of collocation experienced in uptime (downtime is caused primarily by power Nigeria to regulators in other countries, which outages), and time-to-market for operators I look at the profiles of the led to regulatory support for the practice. looking to expand in a new region is cut from 80 shareholders, I feel I can By specializing in building and operating days to seven. The cost benefits of collocation manage this business in towers, HTA has been able to drive down continue to deliver new business opportunities costs measurably, a benefit passed to their for HTA. In July 2013, for example, Vodacom the most professional way clients, who can then reduce prices for end- agreed to sell its 1,149 towers in Tanzania to possible and I can deliver users. For example, operators can save more HTA, and now leases space on HTA towers. results to promise.” Norman Moyo, CEO, Helios Towers Tanzania Beyond the Bottom Line

Unreliable electricity supply across Africa forces tower operators to generate their own electricity, usually through diesel- fuelled generators. These generators are noisy, expensive (due to diesel costs and because they require constant monitoring) and emit 2.6 kilograms of carbon dioxide for every liter of diesel used. Moreover, diesel can be difficult to transport, easy to steal and harmful to the ones such as solar and wind, in addition to environment. Faced with these challenges, diesel. As a result of these changes, carbon HTA looked for solutions to improve the dioxide emissions were down by more than reliability of the energy supply, drive a ton per month by December 2012. down costs and generate electricity in This new system has been particularly impactful a more environmentally friendly way. in remote rural areas, where tower operators In 2012, HTA invested nearly US$40 million struggle to transport diesel and generate in an energy storage and remote monitoring electricity. As a result of HTA’s innovation, system that significantly reduces diesel hitherto unconnected regions are gaining access consumption while also providing enough to mobile networks and the related benefits of energy to power a tower station for up to 12 connectivity. HTA has been recognized for its hours a day. The new system can be powered by energy management system, receiving the Best different energy sources, including alternative Network Improvement award at AfricaCom 2012.

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