Tower Rentals now the Biggest Cost to 4G ISPs

By Adedeji Fakorede

Even as it is economical compared to ownership, tower rental is now the biggest cost outlay for most 4G internet service providers (ISPs) as the major players in the space lament increasing cost of doing business.

The three major players in that space include, IHS with 14,000 towers, Helios with 2,000 towers and the new entrant American Towers Company (ATC) with 7,000 towers.

Presently the 4G ISPs are charged between N3.6million to N4million per tower for a year.

This cost depends on the type of the equipment being hung on the tower as some equipment consume more power than others so does some take space more than others.

Chief executive officer, Spectranet, a 4G LTE internet service provider, David Venn said that before now, their biggest cost outlay was cost of national and international bandwidth, “but today the cost of bandwidth is coming down which leaves cost of tower rental our biggest cost of operation. Though the cost of tower rental in Nigeria is high compared to other countries I have worked, considering operational cost in this environment in terms of maintain of the towers, it is reasonable. But in Zambia where there is also power challenge, there is no need for operators to provide security at towers as security challenge is serious,” he said.

There three 4G LTE operators in the country which include Spectranet, Swift Networks and Smile Communications

In his own opinion the president, Internet Service Providers Association of Nigeria (ISPAN), Sunday Folayan said that tower rental cost in the country will not be cheap as it is determined by some factors which include number of user on the tower as well as power and security provided in the base stations.

“I’m not surprise that tower rental cost is high because the cost of powering base stations with generators is high. If we fix power problem in this country every other thing will take shape,” he added.

Lanre Ajayi, president, Association of Telecommunications Companies of Nigeria (ATCON), identified two factors as responsible for high cost of tower rental in the country, which are competition and service cost.

According to him, ‘competition in the co-location business is not deep enough to bring about reduced cost. Presently, there are few companies providing co-location facilities in the country’.

He added that high cost of tower rental is also occasioned by service cost provided at the base stations such as power and security. “Most base stations are powered by generators and the cost of gas is high, they provide security at the towers. These are outside the control of co-location operators,” he said.

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He however, urged government to set up an intervention fund to support the growth of ICT in the country just as she did in the entertainment industry, from where small operators could borrow to expand their network.

Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), agreeing on local cost of services at tower as determinate factor, noted that cost of service provision in two different environments are not the same as in Nigeria and India.

“In Nigeria, tower operators are faced with problems of approval cost, multiple regulations, multiple taxations and maintenance cost. Power is a challenge as cost of diesel is high; today you buy N140 per litre tomorrow you buy it for N150. These costs are not insignificant and affect the business,” he said.