Although in most African countries, the sharing of mobile telecoms infrastructure has been integrated into market regulations, this common-sense approach is slow to fully materialize on the continent, due in particular to the attachment of operators to retaining their dominant positions and fears of anti-competitive practices on the part of regulators, underlines a report published on December 9 by Ecofin Pro, the Ecofin agency platform dedicated to professionals.

Entitled “Why Africa is slow to realize the potential of sharing telecoms infrastructure” , the report specifies that the sharing of mobile telecoms infrastructure has many advantages, including increasing the coverage rate of the mobile network, improving the quality of services on which regulators have continued to insist for several years or even the reduction of operating costs for the various operators.

In 2012, the strategy consulting firm Booz & Company (which became Strategy& after its acquisition by PricewaterhouseCoopers) already indicated that a network operator can save up to 40% of investment expenses by sharing telecoms infrastructure.

A network operator can save up to 40% of capital expenditure with telecom infrastructure sharing.

The International Finance Corporation (IFC) estimates that the cash flow of network operators could increase by 31% thanks to this sharing.

The report also indicates that there are two types of mobile telecom infrastructure sharing. This first concerns passive infrastructure sharing, which amounts to sharing non-electronic infrastructure such as towers, poles, conduits and premises. But the entire active electronic system of the network remains the exclusive property of each of the partner operators. This form of sharing is technically the simplest, but it offers fewer savings opportunities than active infrastructure sharing, which also includes electronic infrastructures such as switches and radio access nodes.

According to data from the International Telecommunications Union (ITU), 38 African countries have already integrated the sharing of mobile telecom infrastructure into their market regulations, in order to encourage the pooling of investments between different telecom operators and to promote use more judicious use of capital.

Two major obstacles

This strong regulatory adoption, however, remains ineffective on the ground, hampering African ambitions for accessible connectivity for all and digital transformation. This difficulty has also pushed Ghana to adopt a new approach: creating a neutral shared telecoms infrastructure company. Through this company, the State will make adequate telecom infrastructure and telecom networks available to operators who will only have to rely on them for monthly or annual remuneration to provide their various services to the populations.

The two main obstacles to more efficient sharing of mobile telecoms infrastructure on the continent are operators’ desire for leadership and regulators’ apprehensions about the risk of collusion which could endanger competition.

The various telecom operators present above all want to gain as much market share as possible and establish their domination. Having a larger commercial footprint is for them the guarantee of a larger subscriber base and therefore greater revenue. As a result, sharing a few physical telecom sites is still tolerable, but allowing competitors to exploit its technical presence to reach previously exclusive market niches is more delicate, even for a fee. The revenues generated as the only player present in a market niche are more interesting. This also explains why the sharing of passive telecoms infrastructure is more widespread than that of active infrastructure.

On the other hand, regulators in several African markets do not ensure rigorous application of regulations providing for the sharing of active infrastructure out of an abundance of caution. Especially since in their eyes it is a warning sign of commercial collusion and an increased risk of anti-competitive behavior.

The report prepared by our colleague Muriel Edjo points out in this context that the main challenge to be taken up in Africa, as in several other telecoms markets, concerns the reorganization of regulations to establish conditions which maximize the advantages of sharing infrastructure and minimize its consequences. disadvantages.

A new approach is all the more necessary as several studies have concluded that mandatory infrastructure sharing has proven counterproductive, given that it often leads operators to engage in passive collaboration to meet regulatory requirements minimal and makes them hesitant to invest in new networks or engage in network upgrades and technological development due to the absence of institutional incentives.

Conversely, in contexts where a “softer” approach was adopted or in those where infrastructure sharing was not mandatory at all, economically efficient sharing practices based on commercial negotiations emerged over time. with the encouragement of regulators.

Source: Agency EcoFin