Tower Sharing in Telco Industry : Its

Leverage and Economic Value

Engr . Paul N. Jacob

Project PlanningUST Grad School

Tower Sharing Benefits

BenefitsSharing of infrastructure can lead to several benefits. Operators resorting to infrastructure sharing would reduce their payback time significantly by reducing both their operating expenditures and capital expenditures.

Infrastructure sharing can be used in both the start-up phase to build coverage quickly and longer term, and to build more cost effective coverage in rural areas. Sharing arrangement provides the highest savings in cases of low traffic demand and more efficiency is achieved by pooling resources.

For new telecom companies such infrastructure sharing will mean not just faster rollout but also savings in billions of Peso’s. To set up every telecom towers the cost ranges between Php 1.5 to Php 4.0 million

Shared Infrastructure

Sharing can be broadly classified into 2 groups

Passive Infrastructure sharing Active Elements

Passive Infrastructure sharing (tower sharing) : Passive infrastructure being one of the most important components of a mobile network, the same has been a critical area of operations for telecom companies in the past. With increasing competition posing an urgent need for telecom companies to expand their coverage and sharpen their focus on core operation.

Active Elements: Two or more operators deploy a completely shared radio network and in some case, a partly shared core network. The shared radio network consist of Radio base station, Radio network controllers, Transmissions. Active sharing is not allowed by regulations

Passive Infrastructure

or Non-Electronic Infrastructure

Tower Type:

Telecom towers are broadly classified as:

Greenfield sites Rooftop sites

Typical rooftop sites:

• Pole mount• 25 m Mast

Medium Duty Angular & Tubular Tower Type:

Heavy Duty 4-legged Angular Towers:

WIRELESS NETWORK

Mobile Network

Network Plan

Naga City Network Plan

RF Survey Report

Economic Side

Key benefits relating to the tower sharing :• Greenfield tower sites requires a capital expenditures of Php 1.5 to Php 4m. Given the high capital investments required in the business, tower sharing are highly leveraged.

• Stable and predictable cash flow. Once a tower asset is rented out, it usually generates a stable and predictable cash flow of tower rentals.

• Tower operating expenses can be shared, such as site rentals, O&M expenses, and energy and fuel expenses

• Enhancement of profitability. Tower sharing can help operators lower their operating cost and capital expenditures and earn better margins.

• Shorter and faster Roll out time

Construction CostGreenfield SST MD Sites

30m Tower 36m Tower 45m Tower 53m Tower 65m Tower 71m Tower

Construction plan & As-built drawings 14,000.00 14,000.00 14,000.00 14,000.00 14,000.00 14,000.00 Site Design

GF OD SST MD 458,918.91 513,055.91 690,068.06 946,149.75 1,137,130.15 1,477,529.82 Foundation and Earth Work

Masts, Towers and Monopole Work

Equipment Stand and Housing Work

Electric and Mechanical Systems Work

SST MD 30m, material 275,875.37 348,468.60 467,770.58 707,096.13 1,132,826.89 1,229,596.13 Masts, Towers and Monopoles

Electrical and Mech. Systems-Material

ME Outdoor 59,669.58 59,669.58 59,669.58 71,794.58 71,794.58 71,794.58 Site Preparation

Masts, Towers and Monopoles

Electrical and Mech. Systems-Material

Base frame2/3G(WF200x100-L4900m) 43,565.08 43,565.08 43,565.08 43,565.08 43,565.08 43,565.08 Equipment Stands and Housings-Material

Transp. cost for CME Kitting 14,132.26 14,132.26 14,132.26 30,179.82 39,874.13 95,208.93 Transportation

Fence & Yard 146,845.85 146,845.85 155,901.87 180,845.66 166,128.13 184,652.50 Site Preparation

Transp. Tower materials 19,691.06 24,921.74 33,518.01 76,062.03 110,774.18 322,362.97 Tower Transportation

Power Connection 170,000.00 170,000.00 170,000.00 170,000.00 170,000.00 170,000.00 Electrical and Mechanical System Work

Amount 1,202,698.09 1,334,659.01 1,648,625.42 2,239,693.05 2,886,093.13 3,608,709.98

Site Acquisition / Permits 350,000.00 350,000.00 350,000.00 350,000.00 350,000.00 350,000.00

Permits : Pre-Con to Post-Construction

Total Cost 1,552,698.09PHP 1,684,659.01PHP 1,998,625.42PHP 2,589,693.05PHP 3,236,093.13PHP 3,958,709.98PHP

CONSTRUCTION COSTCo-Location

CO-LOCATE 30 - 35m CO-LOCATE 36 -45m CO-LOCATE 46 - 55m CO-LOCATE 56 - 65mPermits 110,000.00 110,000.00 110,000.00 110,000.00Technical Site Survey 33,550.00 33,550.00 33,550.00 33,550.00Site Design 4,270.00 4,270.00 4,270.00 4,270.00Tower Services 14,487.50 14,487.50 14,487.50 14,487.50 Materials 33,791.35 33,791.35 33,791.35 33,791.35Baseframe + Foundation Services 54,961.00 54,961.00 54,961.00 54,961.00 Materials 32,268.24 32,268.24 32,268.24 32,268.24Electrical & Mechanical Services 196,091.14 201,276.14 206,461.14 211,646.14 Materials 77,081.26 80,950.67 84,820.09 88,689.50TOTAL 556,500.48 565,554.89 574,609.31 583,663.72

Conclusion:

• Sharing of infrastructure reduces significantly the capital expenditures of every mobile operators, and provides faster rate in terms of roll out activities. •The concept will provide savings on operational expenses.

•Tower sharing is a viable alternative in rural areas, and for the purpose of road coverage.

References :

Growth Opportunities in the Philippines, Frost & Sullivan Press Release 2009

Philippines Telecom Brief, Ken Zita

Trends of Technological Innovation style in the Philippine Mobile Telecommunication Industry

Philippine Economic Growth: Can it last? , Emmanuel S. De Dios