Atlas Tower Is Said to Hold Talks With Empowerment Partners

(Bloomberg) -- Atlas Tower Pty Ltd. is in talks to bring in partners from South Africa's black majority to help the telecommunications tower company expand at home and enter new markets on the continent, according to people familiar with the matter.

Chief Executive Officer Nathan Foster has relied mostly on wealthy individual investors for funds since he founded the business in 2007 and is looking to do additional private fundraising and equity deals. The company has an enterprise value of about 3 billion rand ($210 million) based on a multiple of tower cash flow, said the people, who asked not to be named because the matter is private.

Bringing in new partners under South Africa's black economic empowerment rules could put Atlas Tower in a stronger position as the industry prepares for a wave of new investment. The government plans to auction frequencies for fifth-generation mobile services and wants to develop an open-access mobile network to reach far-flung rural areas.

Demand for mobile internet services is growing fast across Africa, where 60 percent of the population is under 25 years old, fueling rapid growth for tower companies such as IHS Towers Ltd., Helios Towers Plc and Eaton Towers Ltd. The three companies abandoned plans for initial public offerings this year, which valued them at almost $15 billion.

Helios has indicated that it's seeking a local partner to enter the South African market next year. There are about 30,000 telecommunications towers in South Africa, a small proportion of which are held by independent companies. Atlas says it owns and operates more than 600 towers worldwide.

“We are starting investment in Kenya and Botswana and the first towers will be operational before the end of the year,” said Foster by email. “We are growing at 130 percent a year in terms of tower growth rate.” He declined to comment on the talks with potential partners.

South Africa's empowerment policies are designed to rectify the economic exclusion of black people during the country's era of segregation and provide additional capital to fund private business. Critics say the rules have further enriched a black elite while failing to improve the lives of most South Africans.

To contact the reporter on this story: Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Thomas Pfeiffer, John Bowker

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