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Jeffrey schumacher helios towers

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Helios Towers Presentation at the IAD Summit
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Win-Win Opportunities of Infrastructure Sharing March 2014
Transcript
Page 1: Jeffrey schumacher   helios towers

Win-Win Opportunities of Infrastructure Sharing

March 2014

Page 2: Jeffrey schumacher   helios towers

Agenda

1. The Need for Infrastructure Sharing in

Africa

2. The Options Available

3. The Full Value of The Independent

TowerCo Model

Page 3: Jeffrey schumacher   helios towers

1. The Need for Infrastructure Sharing in Africa

Page 4: Jeffrey schumacher   helios towers

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.

Page 5: Jeffrey schumacher   helios towers

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.

Page 6: Jeffrey schumacher   helios towers

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

Page 7: Jeffrey schumacher   helios towers

2. The Options Available

Page 8: Jeffrey schumacher   helios towers

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

Page 9: Jeffrey schumacher   helios towers

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

Page 10: Jeffrey schumacher   helios towers

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

Page 11: Jeffrey schumacher   helios towers

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

Page 12: Jeffrey schumacher   helios towers

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

Page 13: Jeffrey schumacher   helios towers

3. The Independent TowerCo Model

Page 14: Jeffrey schumacher   helios towers

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

Page 15: Jeffrey schumacher   helios towers

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

Page 16: Jeffrey schumacher   helios towers

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

Page 17: Jeffrey schumacher   helios towers

Any Questions?


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