A Conversation With Keith Boyd Of Eaton Towers

Recently, I exchanged emails with Mr. Keith Boyd, of Eaton Telecom. Today, with his kind permission, I am publishing replies to some questions that I posed to him in a number of emails, in interview form. It is for the elucidation of those Ghanaians, who like me, are interested in getting to know exactly what the outsourcing of the management of Vodafones' 750 masts to Eaton Telecom entails. On 5 October 2010, it was reported in London that: "Eaton Towers, the African tower company, has signed a 10-year contract to take over the operations and co-location management of 750 telecom towers for Vodafone Ghana." Please read on:

KT: How did Eaton Telecom come to 'buy' Vodafone’s masts - and what is its track record?

KB: Eaton Towers was formed from the merger of 2 companies, and through investment from a number of different sources. The company has been building and maintaining towers in 13 countries in Africa since January 2002, and has an experienced management team including:
- The ex CEO of Orange group (a multinational company with many licences around the world, including Africa
- An Ex director of Vodafone Group
- A co-founder of Celtel (the Pan African operator founded by Mo Ibrahim, that MTC (Zain) bought and then sold to Bharti recently)
- Ex CTO of Celtel
- Ex CFO of a Johannesburg and LSE listed Technology company (turnover > $4 Billion per annum in 2008)
- And many more
I can assure you that we are a very focused, experienced management team, who are absolutely committed to the ongoing development of the African Telco market. We believe that the underlying costs of running a telco network can be cut very dramatically through tower sharing (as we have seen in India, where, despite regular power outages, costs are far lower than in Africa). And we are willing to invest our time and money in making this happen.

KT: Can Ghanaians rest assured that there was no use of insider information: leading to the contract signing?

KB: Absolutely. I give you my personal and professional insurance that there was no access to, nor use of, “insider information” leading to the contract signing. I know this for certain, as I was the first person in our team to start the dialogue with Vodafone 18 months ago, and remained as company lead executive for Eaton throughout the process. In fact, the process has taken this long as Vodafone deployed some of their most experienced international financial and commercial people to oversee that the contract discussions and negotiations were in the best interests of all Vodafone Stakeholders – and they made certain that Vodafone got a very good deal, which is in the interests of their shareholders, staff, and customers.

KT: It is said that Eaton Towers is owned by a private equity company. Is that true? If that is not true, who are the owners of the company, then - and are there any Ghanaian interests in the company's shareholding?

KB: Eaton Towers has a number of shareholders, including Private equity and Management at present. This shareholding base will continue to widen as we go through further rounds of fundraising in the months and years ahead, in order to expand our investments in Ghana and other countries of operation. I cannot disclose any Ghanaian shareholder interests presently, but can assure you that we would welcome further investment in the company – and if you have some suggestions of Ghanaian institutions or individuals of good standing and repute, who would wish to invest in the company, I give you my assurance that we would welcome entering into discussions in this regard. Please feel free to work with me on this in the months ahead.

KT: What would you say to the cynics in Ghana who say that Eaton Towers' presence in Ghana will help widen the footprint of Britain's GCHQ in Africa?

KB: Kofi, our main board has directors from America, Nigeria, Bangladesh, South Africa, Sweden and Britain. And we will widen this to better reflect our companies main shareholder base and objectives as we grow.
We do not report to David Cameron, nor do we seek to advance any political agenda – from any country. We are business people and investors, who seek to make a difference, and make a reasonable profit for our risks and efforts over the years. I am sure you will agree that Mo Ibrahim made a positive difference to our continent, by pioneering Telecommunications developments, and creating healthy competition in countries where other operators were perhaps too scared, or to uninformed, to go in the early 1990’s. By the way, he made himself very, very wealthy. But he took massive personal risks, and he invested a very large part of his life in trying to make life better for many Africans. And I would be very happy to walk, in some small way, in his shadow – by doing well, whilst doing good.

KT: Will Vodafone be paying Eaton Towers during the contract period - and if yes, precisely how much?

KB: Remaining within the bounds of the confidentiality agreements, I can say that the nature of the deal has been published, and it is essentially as follows: Eaton take over responsibility for, and subsidise the costs of maintaining and upgrading the passive (non RF / Telecomms) infrastructure from Vodafone, and we charge Vodafone a reduced amount for this. In other words, Eaton makes a loss, as our charge to Vodafone is significantly lower than their current costs to maintain the infrastructure. We are also responsible to invest in new Capex items (e.g. generators, fuel tanks, fences, air conditioners, tower components) at our own expense, once they become end-of-life. And – most obviously – the maths behind this has been checked again, and again, and again over the last 18 months, by the Vodafone people related to the deal. Our only chance of making any profits is to sell a lot of co-location slots on Vodafone’s towers to other operators. So we are risking our hard earned money on this deal, whilst Vodafone has immediately transferred costs and risk to Eaton. That is the nature of business – you have to risk money, effort and time, in order to have any chance of making a profit.

KT: Many thanks, Keith. Incidentally, there are many Ghanaians who are of the view that if investors were to take a long-term view (in getting a return on their investments in our country!), they need never fear reading news reports with banner headlines screaming (to quote your previous email, Keith!): “…another operator goes bankrupt in Ghana!”

KB: Thanks also from my side for the opportunity to put some things straight. We appreciate that Ghanaians want the best possible deal for themselves and the country. And that has to be finely counterbalanced by a mature view towards long term investment from “foreigners” – people who were unfortunately (through no fault of their own) not born in Ghana! And I am on record as advocating that investors take African investments seriously – and invest for the long term.
We appreciate all the support that we can get in Ghana. We do hope to make a success of this investment, whilst playing a key role in bringing telecoms costs down for everyone in Ghana.


Post Script.

I sent the email that follows below, to thank Mr. Boyd, after recieving the email from which the above interview was taken. His permission to me to publish his replies in the above interview, came in reply to the said email below. It has been edited slighty to correct a few typos! Please read on:

Email from Kofi Thompson to Keith Boyd: 25 October 2010

"I am emailing you to acknowledge receipt of your email with the replies to a number of questions I posed in my email of 23/10/2010. I am grateful to you for endeavouring to answer them. It was very noble of you to do so. I guess one would first have to get an estimated value of Vodafone's masts, if one is to make any meaningful comments on the deal itself. Is that information you can divulge?

I suppose that any gentleman would treat this as private correspondence - and I will treat it as such. However, just as a matter of interest, would you object to my making it public: so that other Ghanaians too can see the positive side of what in effect is the spinning off of Vodafone's masts?

As regards making friends in Ghana, I am sure you will find that there will be a surfeit of Ghanaians with high net worth, happy to invest in your company if given the opportunity to do so. Ditto institutional investors. I am sure they would all tell you that getting Ghanaian shareholders on board via the Ghana Stock Exchange, will satisfy most of the critics of the deal – as in their view it will make Ghanaians see Eaton Towers as contributing to wealth-creation in our share-owning democracy: and also ensure a degree of transparency in its operations.

Hopefully, when you do make any future profits, you will engage in corporate-giving that will help protect Ghana's biodiversity, and also enhance your company’s green credentials locally. Look up the Ghana Wildlife Society; A Rocha Ghana; Rain Forest Alliance Ghana; WWF Ghana; and the Nature Conservation and Research Centre. They are all doing what they can to help preserve our country's natural heritage, and would welcome your widow's-mite-contribution, over the ten years you are contracted to be in Ghana for! Many thanks, once again. I will be in touch again, when I have digested all the information you provided.

Best wishes,

Kofi."


Tel(powered by Tigo - the one mobile phone network in Ghana that actually works!): + 233 (0) 27 745 3109.