Rural renewal: telcos and sustainable energy in Africa

The economics of rolling out telecoms networks in rural areas have long proved challenging. The difficulties centre on running a high fixed cost business against a lower revenue base, considering the low population density compared to cities and suburban areas.

A base station in a remote rural area costs, on average, 35–40% more for an operator to run than in a city, though this can be higher in some countries. This places significant strain on the profit & loss (P&L) from the higher opex, which ultimately acts as a brake on the free cashflow driving future network investment. The higher energy costs largely come from having to use diesel where grid access is often patchy or non-existent, meaning low electrification rates.

To examine the state and outlook for energy use among African telecoms operators, GSMA Intelligence ran a data gathering exercise involving most of the largest telecoms operators in the region. The exercise included seven operator groups (Airtel Africa, Axian, Ethio Telecom, MTN, Orange, Safaricom and Vodacom), 34 countries and 45 individual mobile networks.

The next step is to develop more granular feasibility assessments for renewable energy deployments in the rural areas highlighted in this report. These are likely to involve a mix of financing partners, telecoms operators, tower companies, energy specialists and government.