* Sale of transmitter towers could raise around $400 mln-sources
* Etisalat Nigeria is the country's No.4 operator
* Tower sharing increasingly popular in Africa to cut costs
By Matt Smith and Dinesh Nair
DUBAI, Oct 29 (Reuters) - Etisalat Nigeria, a unit of theGulf's top telecom operator Etisalat, is looking tosell its transmitter towers in a deal that could raise about$400 million, banking and industry sources familiar with thematter said.
Building and maintaining mobile towers in Africa istypically more expensive than in other regions, because of security costs and electricity shortages that often requiretowers to be powered by generators, while new roads may need tobe built to reach rural areas.
This has increasingly prompted operators to seek to sell orlease towers to specialist firms such as Eaton Towers, HeliosTowers Africa, American Tower Corp and IHS.
Etisalat Nigeria, 40 percent owned by Etisalat and 30percent by Abu Dhabi state investment fund Mubadala, hasapproached banks with a "request for proposal" (RFP) foradvisory roles on the sale, the two sources said on Tuesday.
The sources spoke on condition of anonymity and did not knowwhether an advisor had yet been appointed.
Etisalat Nigeria was not immediately available for comment.
"Operating towers can be a taxing exercise for telecomoperators and we have seen several players looking to offloadthe business to dedicated players," the banking source said.
"The success rates on these have not been too impressive butthat's because these deals take a lot of time to execute."
Etisalat is estimated to own about 2,500 towers in Nigeria. Towers are often valued at around $150,000 each, making 2,500potentially worth up to about $400 million.
Nigeria is an attractive market for tower firms as it has169 million people and a relatively low mobile penetration of 68percent. This indicates operators will need to extend theirnetworks to reach the one-third of the population that does notnot yet own a phone.
Etisalat Nigeria's network covers 78 percent of thepopulation, according to Etisalat's 2012 annual report.
"All tower companies in Nigeria would be interested, but itrequires careful analysis of how attractive those towers arebecause just owning a tower is not the end game - you have tofigure out if that tower would be attractive to another operatorand enable the tower company to lease out more space on it,"said the industry source.
Etisalat Nigeria had 15.5 million subscribers in July,according to data from Nigeria's telecom regulator, making itthe country's number four mobile operator with 14 percent marketshare.
South Africa's MTN has 47 percent, Globacom 20percent and Airtel - a subsidiary of India's Bharti Airtel - 19 percent.
"You would need to look at the geographic location of eachtower in relation to other operators' network planning, giventhat Etisalat has two very big competitors in Airtel and MTN whoalso have their own networks and towers in potentially similarlocations," the industry source added.
Etisalat must decide whether to sell and lease back thetowers or outsource their management for a fixed period,retaining ownership.
That will depend on Etisalat's need for cash becauseoutsourcing tower management is largely a means to boost marginsand reduce capital expenditure.
"The Nigeria tower business is a sizeable one and you couldsee a wide array of interest ranging from tower companies toprivate equity players who have the expertise in doing this," the banking source source.
"The business being in Africa means firms looking to beef uptheir emerging markets presence will be more interested."
- Etisalat Nigeria