Monday, 5 November 2012

Tower heist: a busy October for infra' sales, but has Africa lost out?

The market went tower mad (or should that be "mast crazy"?) in October, with large sales of cellular towers in the USA, Brazil, Cameroon and Cote d'Ivoire. Nearly $3b was spent on assets that the buyers - generally infrastructure or private equity funds - thinking they will represent an excellent long term investment as the market goes increasingly mobile.*

One thing I noticed in analysing the amounts being paid was that once again African operators sold off their assets on the cheap. The chart shows valuations of tower infrastructure globally for the last three years. The orange dots are African.
Even if you remove the inflating effects of the USA from the data, it's clear that African countries underperform in asset sales. And these aren't wartorn countries ruled by tinpot dictators. Both Cameroon and Cote d'Ivoire are reasonably stable growth economies with 20m citizens.

I suppose we should thank market capitalism for asset owners seeking an early exit from their assets, but I can't help thinking if they held on a bit longer they'd make rather more. Perhaps they have some other clever scheme in which to invest? Or perhaps the African mobile boom is slowing to such an extent that wise investors are exiting?

I suspect that the answer is simple opportunism.

*I'm not convinced about it personally, or at least, I'm not sure about the large valuations in developed markets where smaller scale networks be they micro cell or even ad-hoc peer-to-peer networking will likely take up a large volume of traffic over the next decade.

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