Post on 14-Jan-2015
description
Win-Win Opportunities of Infrastructure Sharing
March 2014
Agenda
1. The Need for Infrastructure Sharing in
Africa
2. The Options Available
3. The Full Value of The Independent
TowerCo Model
1. The Need for Infrastructure Sharing in Africa
Telecom Infrastructure Growth
Population Growth
Penetration
Increase
Infrastructure Need
2000 2012 2018E
2%
69%95%98%
31%5%
Penetration rateUnconnected population
2010 2012 2014E
2016E
2018E
106 117 124 131 139
2011
42%
54%
3%
Ages 0-14Ages 15-65
Demand for
MobileUsage Increase
2012E 2014E 2016E
34.581.2
160.2CAGR 12-16E:
46.8%
MOU
Africa Mobile BB Connections
Source: WCIS, WB Development Indicators (As of 2011) and Sub-Saharan Africa Mobile Observatory 2012.
Need for Colocation
$Ghana:
Need for Efficiency
Declining ARPU
Colocation
DRC:
Tanzania:
Competition
2000 2012
28.8
7.1
CAGR 00–12:
(11.0)%
Source: World Cellular Information Service.
Need for Towers in Africa
Total Number of Points of Service (PoS) in Africa (2005-2018)
(1) Assuming an operator “go-it alone” strategy and construction cost of $150k / site
000’~$25bn of Stranded
Value
15 14 16 18 18 21 20 27 38 33 33 24 18 40
55 69
85 103
121 142
162 188
226
259
292 316
334
0
50
100
150
200
250
300
350
400
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
~$22bn of Capex(1)
New PoS added / year PoS required to normalise at 3,500 subs. / PoS in 2018
2. The Options Available
Operators Option 1: Do It Yourself
“Do it yourself”: sharing between mobile telecom operators
8
Pros
•Keep control of the asset
Cons
•Relies on co-operation between competitors
Leads to low levels of sharing
Roll out plans need agreement
•Value remains trapped on Balance sheet
•Roll out requires MNO capital
•No guarantee on cost structure
Maintain temporary network advantage at cost of immediate savings
Operators Option 2: Managed ServicesRetaining owner whilst handing over management to a third
party
9
Pros
•Contracted performance guarantees (SLA)
•Potential Cost savings
•Better visibility on cost structure
•Higher share levels vs. Option 1 with 3rd party marketing sites
•Retain optionality around asset use
Cons
•Opex efficiencies but value remains trapped on BS
•Towers still not seen as full independent reducing sharing
•Issues around incentives for 3rd Party to invest with lack of ownership
•Complicated contractual relationship to manage
Who owns investment new equipment?
Partially realising efficiencies whilst keeping optionality
Operators Option 3: Build-To-Suit
Partnering with a TowerCo to build, own and operate new sites
10
Pros
•Contracted performance guarantees (SLA)
•Capex efficiencies
•Better visibility on cost structure
•Retain control of existing “core network”
High levels of sharing on new
Towers
Higher level of efficiencies
Higher level of savings
Cons
•Opex and Capex efficiencies limited to new infrastructure
•Value remains trapped on BS
•Duplication of teams managing passive infrastructure
Maximising effectives on new infrastructure
Operators Option 4: Sale & Lease BackSells passive infrastructure & lease it back under a long
term agreement
11
Pros
•Capital realised
•BS optimization & capex efficiencies
•Contracted performance guarantees (SLA)
•Full visibility on cost structure
•Full alignment of interests
High levels of sharing on all
towers
Highest level of efficiencies
Higher level of savings
Cons
•Fully open up network
Maximising value of historic investment before lost
Outsourcing Options
Spectrum of MNO’s options and resulting efficiencies
Self Funding
Managed
Services
Build-to-Suit
Sale-and-
Lease-Back
Opex Savings
x
DYI Colocati
on
Financial Visibility
x
x
≈
Lower Capex
x
Cash Considerati
on
x
x
≈
x
TowerCo Independe
nce
x
x
≈
Effi
cien
cy
12
3. The Independent TowerCo Model
What does a TowerCo Do?
HTA supplies the passive infrastructure necessary for wireless network operators to provide communications services
14Source: World Cellular Information Service.
Revenue
Tower capacity1
Tenant Contracts2
Opex
Ground rent costs3
Energy4
Maintenance / First Level Maintenance
Capex
Expansion / Upgrade
7
Maintenance / Energy Renewal
8
Landlords
TowerCo MNO
Land Infrastructure+ Energy
FeeRent
Other Costs6
5
Mast
Physical site
Shelter
Cooling
HTA
Power grid
Generator
Batteries
Fence
panel antennas
Tenant A Tenant B
microwave antennafeeders & connectors
BTS rack
Assets Ownership Split between HTA and Tenants
Efficiencies from a TowerCo
Towers
Generators
Hybrids
= 3
= 1
= 1
= 3
= 1
= 3
Full Duplication Lack of Focus on
Efficiencies No Focus on Maximising
Sharing No SLA - Suboptimal QoS No CO2 savings
= Sometimes
= Sometimes
= Key priority
One Tower One Generator Focus on Capital
efficiencies Focus on Operating
Efficiencies Active marketing driving
sharing SLA - Optimal QoS Maximised CO2 savings
One Tower Power Systems Usually
Duplicated Lack of Focus on
Efficiencies Limited Focus on
Maximising Sharing No SLA - Suboptimal QoS Limited CO2 savingsSource: World Cellular Information Service.
15
No Sharing Sharing between Operators TowerCo Model
Takeaways• Delivering Africa’s coverage and service
requirements Requires capital efficiencies Require more sharing Requires investment Reduces tower mast requirements and improves urban
landscape
• Towerco model maximises value compared against other alternatives Capital realised Opex guaranteed Ongoing capital requirement reduced
Any Questions?