Tower xchange issue 3 featuring Broadnet Telecom

Tower Xchange

Tower Xchange

Top 200 decision makers in African towers invited to TowerXchange Meetup

ISSUE 3 | April 2013 | www.towerxchange.com

Marc Rennard: Why Orange is sharing towersStructuring deals to meet the requirements of each affiliate

Why IHS invested in Cameroon and Cote d’Ivoire

Eaton CTO Thomas Jonell’s procurement priorities

Egypt’s 4 companies licensed to lease infrastructure

Growth stock ATC vs the PE-backed towercos

Africa’s New telecoms infrastructure journal

With special thanks to the TowerXchange “Inner Circle”About TowerXchange

TowerXchange is your independent community for operators, towercos, investors and suppliers interested in African towers. We’re a community of practitioners formed to promote and accelerate infrastructure sharing in Africa. TowerXchange don’t build, operate or invest in towers; we’re a neutral community host and commentator on African telecoms infrastructure.

The TowerXchange Journal is free to qualifying recipients. We also provide webinars and regular meetups. TowerXchange monetizes this community through the sale of advertising and sponsored content, without compromising editorial integrity.

TowerXchange was founded by Kieron Osmotherly, a TMT community host and events organizer with 16 years’ experience, and is governed with the support and advice of the TowerXchange “Inner Circle” – an informal network of advisors

Our informal network of advisers:

Alan HarperCEOEaton Towers

Michel FaivreDirecteur Programme Partaged’Infrastructure AMEAFrance Telecom-Orange

Nina TriantisManaging Director, GlobalHead of Telecoms & MediaStandard Bank

Jeffrey EldredgePartnerVinson & Elkins

Torsten EsbjørnRegional Director, AfricaRamboll

Zouhair KhaliqConsultant, Executive DirectorWarid Telecom, Former CEO,Orascom Int’l Investment

Laurentius HumanCEOInala

Chuck GreenCEOHelios Towers Africa

Riana DonaldsonManager: International NetworkOperations SupportVodacom

Chris Gabrielformer CEO, Zain AfricaSenior Adviser, Macquarie GroupChairman, Clean Power Systems

Natasha GoodPartnerFreshfields

Ayman Al AdlAssociate Director – TMTStandard Chartered Bank

Ahjeeth JaiJaiConsultantInvestec

Gary StauntonCEOLikusasa Group

Daniel LeeFormerly Managing DirectorCitigroup

Fazal HussainCEOSWAP International

Andrew DoyleManaging DirectorTech & Comms PracticeMott MacDonald

Johan SmithHead – Africa Telecoms GroupKPMG

Rajat MalhotraCEO, Middle East & AfricaHayat Communications

Adeel BajwaSenior GM of Legal Affairs andContractsWarid Telecom

Tunde TitilayoVice ChairmanSWAP International

© 2013 Site Seven Media Ltd. All rights reserved. Neither the whole nor any substantial part of this publication may be re-produced, stored in a retrieval system, or transmitted by any means without the prior permission of Site Seven Media Ltd. Short extracts may be quoted if TowerXchange is cited as the source. TowerXchange is a trading name of Site Seven Media Ltd, registered in the UK. Company number 8293930.

www.towerxchange.com | TowerXchange Issue 2 | XX| TowerXchange Issue 3 | www.towerxchange.com2

Cover image © François Maréchal pour Orange

Contents

Departments

5 Tower People6 News< Etisalat seeking buyers in Tanzania< Telma’s towers for sale< Airtel to acquire Warid Uganda< African MarketWatch

14 Cover story: Why Orange is sharing towers19 BMI Analysis: Why Kenya could be next23 Editorial: Announcing the TowerXchange Meetup50 How to guide: Understanding FX risk in Africa

92 Beyond passive infrastructure:93 The case for transmission sharing99 Wholesale network sharing

29 54 63

117102

Towerco perspectives

Egypt case study

Who’s who in tower design, manufacture, installation & MS

TowerPower – reducing Africa’s reliance on diesel, part two

From RMS to monitoring and management platforms

30 How IHS creates shared value35 Eaton’s procurement priorities40 Helios on H&S, ethics and compliance45 Growth stock ATC vs PE-backed towercos

55 The Mott MacDonald Share Square: Egypt57 Mobiserve believe a tower deal is imminent60 EEC Group are positioning themselves to partner towercos

71 Mer Telecom’s one-stop-shop76 End-to-end services from NETIS81 Static asset manufacturers TESA & GSM TP85 How to design towers for easy installation90 Fast deployment by Viettel’s rollout consultants

118 Power beyond the tower122 The dawn of the green energy era126 Why you should re-think charging batteries with DG129 Achieving desired autonomy

103 How to combat fuel theft109 How to create actionable intelligence from your Infrastructure data114 How to measure what matters

www.towerxchange.com | TowerXchange Issue 3 | 3| TowerXchange Issue 2 | www.towerxchange.com3

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Tower People IHS appoints new Chief Commercial Officer to drive continued growth IHS has appointed Rhys Phillip as Chief Commercial Officer. Mr Phillip joins IHS from Ernst & Young where he was Partner and Global Head of Transaction Advisory Services for the Telecommunications Sector.

In addition to advising tower businesses on many of the African transactions since 2007 – particularly focusing on deals in Cameroon, Cote d’Ivoire, Ghana, Kenya, Nigeria, South Africa, Tanzania and Uganda – Phillip led cross border transactions for leading operators, infrastructure businesses, financial investors and Managed Service Providers. Prior to Ernst & Young, Mr Phillip led M&A transactions in house for Vodafone and BT Group and spent a number of years in Investment Banking in the UK and Europe. Issam Darwish, CEO, IHS commented on the appointment: “Rhys has been one of the most impressive experts on African infrastructure in the market for years. Having advised some of the world’s largest mobile network operators, he is an exciting addition to the IHS leadership team as we continue to grow our business. He is an expert in constructing value driven acquisitions, ensuring efficacy and accuracy throughout. We are looking forward to benefiting from Rhys’ knowledge and network in the telecoms sector at this important stage of our growth.” Rhys Philip said: “IHS’ recent deals with Orange

Daniel Lee developed the leading tower advisory practice at Citi where he advised on the sale of over 10,000 towers (with a corresponding deal value of US$1.75bn) from mobile operators primarily in the emerging markets. Daniel brings incredible insight and tremendous relationships across the sector.

Daniel advised on the first sale-leaseback in Africa and many other ground breaking transactions, each representing the first tower transaction in a number of different markets (e.g. Ghana, Tanzania, DRC, South Africa, Uganda, Cameroon, Cote d’Ivoire). Daniel has broad experience in

working with a variety of different mobile operators including MTN, Millicom and Cell C among others. Additionally, Daniel successfully advised a number of towercos in Africa in their critical early funding rounds, raising more than US$500mn in equity.

Daniel recently departed from Citigroup, but we’re delighted to announce he has accepted our invitation to join the TowerXchange Inner Circle advisory board, and you’ll hear more from him in an in-depth interview to appear in the June edition of TowerXchange

Daniel Lee leaves Citigroup, joins TowerXchange Inner Circle informal advisory board

www.towerxchange.com | TowerXchange Issue 3 | 5| TowerXchange Issue 3 | www.towerxchange.comXX

Newsin Cameroon and Cote d’Ivoire highlights the dynamism of the management team and the momentum they have created for IHS, Nigeria’s most exciting telecommunications infrastructure provider. The focus on providing cutting edge technology solar energy innovations in addition to terrific growth over the last 18 months makes me very proud to join Issam’s team and I am thrilled to be part of IHS’ continued growth story and increase the tower portfolio while attracting supportive investors.”

You can read an interview with Mr Phillip on pages 30-34

Etisalat seeking buyers for Zantel Tanzania or for Tanzanian towers

TowerXchange understands that Etisalat is concurrently seeking a buyer either to acquire Tanzanian subsidiary Zantel, of which Etisalat owns 65%, or to acquire the 600-700 towers Zantel has in the region. Standard Chartered have been appointed as Etisalat’s advisors.

Helios Towers Africa would be favourites to acquire Zantel’s towers, if sold separately, as Chuck Green’s pioneering towerco acquired a 60% stake in a joint venture with Millicom-Tigo in 2010, to which Millicom-Tigo’s 1,020 Tanzanian towers were transferred.

Market conditions in Tanzania appear very favourable to the towerco business model. Tanzania has four licensed tier one mobile network operators; Etisalat’s Zantel, Airtel, Vodacom and Millicom Tigo. There’s room for growth in the market – according to the GSMA, Tanzania has 62% mobile subscriber penetration, growing at 4.4% CAGR 2011-2012, with 75.8% population coverage.

Diesel and maintenance costs push opex in Tanzania to a point where the efficiencies offered by the towerco business model makes sense. Tanzania had 4,593 base stations in 2012, a 25% growth from 2011, of which 1,442 were off grid and another half

on unreliable grids experiencing power outages of more than six hours per day – statistics again from the GSMA.

Rumours persist that Etisalat is still seeking to sell it’s 3,000 towers in Nigeria, but securing the buy-in of local stakeholders is believed to continue to hold up any potential transaction.


With the appointment of Thomas Sonesson, former CEO at managed services company Reime Group, as CEO of ATC Ghana, Gordon Porter has moved from Ghana to become CEO of American Tower’s other joint venture with MTN, ATC Uganda.

Both Ghana and Uganda share a similarly challenging operating environment with high capex and particularly high opex due to only around half of cell sites benefitting from grid connections

American Tower swaps CEOs in Ghana and Uganda

According to Bloomberg, Madagascan telecoms firm Telecom Malagasy (Telma) has asked investment bank Lazard to explore options for the complete disposal of its business or the divestment of its portfolio of 500 towers, believed to be valued at between US$50-70million. Several towercos are believed to be interested. Telma recently created one of Africa’s first operator-led towercos, TowerCo of Madagascar, to which 100 sites were transferred.

Telma competes with Bharti Airtel, who hold a similar number of towers, and Madagascan market leaders Orange who have an estimated 700 sites.

According to BuddeComm, mobile penetration in Madagascar remains at a modest 47%. 3G was launched in 2012

Telma’s towers for sale

Asset

Management System(AIMS)

Passive Infrastructure Monitoring Data

Passive InfrastructureFinancial and Technical

Data

• Availability•••• SLA Support

•• Asset Register•• Hierarchical Dashboards• GIS

Bharti Airtel has acquired 100% of the equity in Warid Telecom Uganda for an estimated US$100million, in news broken by Reuters just before TowerXchange issue 3 went to print. The deal was expected to bring Airtel’s market share in Uganda to around 39%, very similar to MTN who have around 40%. Also competing in the market are Uganda Telecom Ltd (UTL), Orange Uganda and iTel.

The implications for the tower industry could be significant. In 2012, Eaton Towers acquired an estimated 400 towers from Warid Telecom Uganda, combining them with a further 300 sites acquired from Orange Uganda. With 260 of those cell sites

already shared between the two operators at the time of the transaction, as a result of a conscious, co-ordinated rollout, the deal to buy Orange and Warid’s networks gave Eaton Towers over 1,000 tenants, meaning they had “scale, pre-existing revenue, and an ability to run a bigger business from day one,” according to CEO Alan Harper in his interview in issue 1 of TowerXchange.

In 2011 American Tower paid US$89m to MTN Uganda for 51% equity in joint venture towerco ATC Uganda, to which 1,000 of MTN’s towers were transferred. UTL’s towers had also been believed to be on the market recently, although towerco’s appetite for the portfolio may have been limited due the proximity of so many UTL sites to the ATC Uganda and Eaton towers already being marketed for co-location. Over half of of Uganda’s towers are operated by independent towercos. According to the GSMA, there were a total of 3,067 cell sites in Uganda in 2012, 1,249 of which were off-grid.

This month’s deal between Airtel and Warid was described by Airtel’s Managing Director and CEO (International) Manoj Kohli as the “first in-market acquisition” in the telco’s history, and remains subject to regulatory and statutory approval. With Airtel’s Africa Towers towerco strategy still unclear, the Indian-owned operator has been an enthusiastic tenant of shared towers in the recent past in several of the seventeen African countries in which they operate

Atlantique Telecom, which has operations in Benin, the Central African Republic, Cote d’Ivoire, Gabon, Niger and Togo, and part of The Etisalat Group, announced that it has entered a five year multi-country managed services agreement with Ericsson to manage its entire mobile networks. This agreement enables Etisalat to focus even more on their core business - delivering innovative offerings to their customers.

Nagi Abboud, CEO of Atlantique Telecom said: “With the evolution of the competitive landscape in our markets, we need to adapt our operating model to provide a better service to our end users. Adopting this business outsourcing model is therefore an important step in our group strategy execution that will be for the benefit of our subscribers, who remain our top priority, and this will, as well, open new growth opportunities to our employees.”

Lars Lindén, Head of Ericsson in region sub-Saharan Africa says, “Managed services is a proven business model to support operators in growth mode and it is one of the most dynamic areas in our industry. Our work together will support Atlantique Telecom in defining a new generation of operators in Africa.”

The contract covers network operations, field maintenance, network optimization and spare parts management for Etisalat’ s multivendor mobile networks, including access, core and transmission, as well as value added services


Bharti Airtel to acquire Warid Telecom UgandaAtlantique Telecom awards Ericsson five year managed service contract

Accelerate your sales cycle and close your next major deal in AfricaAdvertise in the TowerXchange Journal, circulated to a highly targeted community of the 1,868 most influential tower decision makers

To book your advertisement, contact: Kieron Osmotherly | [email protected] | M. +44 (0) 7771 148001

27%

4%

16%

11%11%

10%

10%

9%

3%

OperatorsTurnkey & managed servicesTowercosPower equipment & ESCOsInvestors & advisersPassive equipment providersActive equipment & servicesRegulatorsOthers

Sub-Saharan Africa

MENA

Americas

Europe

Asia

45%

10%

22%

18%

5%

C-level

VP, Exec Director, Partner

Director-level/Dept Head

Senior Manager/Managing Exec

Middle & Junior Manager

24%

17%

13%

2%

44%

MTN and Airtel CEOs on the profitability of African mobile network operators

any one market?” Asked Dabengwa, referencing countries with five of six operators serving populations of 30 million. “I’m not sure how many operators in Africa are actually profitable.”

“Lots of African operators are making losses,” agreed Manoj Kohli, CEO of Airtel Africa. “The time has come to turn around Africa into a profitable sustainable, healthy business. We’ve placed a big bet on Africa, which has cost us US$13.5bn in cash.”

“We think Africa is a great market with a great future, and a great frontier. With population of two billion, median age of eighteen, we can grow voice, data and m-commerce.” Kohli added that it was tough to maintain infrastructure in Africa, with site running costs up to US$5,000 per month at off-grid sites in some markets, compounded by high taxes and levies.

“Operators are losing money at the point of acquisition, which leads to taking multiple SIM cards,” continued Airtel’s Kohli, adding that he had been surprised at the low elasticity in Africa, with usage of minutes per month being half India’s.“Competitive intensity can be harmful rather than fruitful,” said Kohli, agreeing with Dabengwa’s concern about saturation of markets by adding “While Africa’s 54 countries can digest more operators, countries with 10-25 million population and three to five operators are a non-viable situation. Governments and regulators should build agenda of consolidation, otherwise a lot of operators’ investments will be pulled back, which will not be good for Africa.”

“The mobile market in Africa has had ten to fifteen years of good growth. Penetration levels are at 50%, but with up to 30% of consumers using multiple SIMs, real penetration is below 50%. Nonetheless data penetration, internet penetration, is still no more than 10%, so overall the opportunity is still very significant,” declared MTN Group CEO Sifiso Dabengwa.

Challenges to long term sustainability identified by Dabengwa included aggressive price competition (“operators selling product below cost is a bit of a problem”), and the need to avoid regulations stifling the industry, as seen in Europe where the market capitalisation of telecoms companies is in many cases in decline.

“What is the sustainable number of operators in


Sifiso Dabengwa, CEO of MTN Group, and Manoj Kohli, CEO of Airtel Africa appeared on the Sub-Saharan Africa regional focus panel at Mobile World Congress 2013. Here are the highlights of their contribution.

Manoj Kohli, CEO, Airtel Africa and Sifiso Dagengwa, CEO, MTN Group

While they agreed on competition, the CEOs of MTN and Airtel Africa disagreed on the regulation of infrastructure sharing. “We expect regulators to lead on infrastructure sharing,” suggested Airtel’s Kohli.

“I don’t agree that regulators should be involved in infrastructure sharing,” said MTN’s Dabengwa. “Operators should do that among themselves.”

Continuing the discussion of infrastructure sharing, Kohli added: “I believe if Africa is to achieve full coverage of voice and data, all towers have to be shared. Towers are expensive and the revenues in small towns are small. Similarly, for voice and data we need fibre. No single operator can bear the cost of fibre,” added Kohli, referencing a consortium of three operators and government in Tanzania as an example model. “Tower and fibre sharing will pave the way for fantastic penetration tomorrow.”

“In Africa generally every site, even if connected to grid, needs to have pair of backup generators. This can be hugely expensive, complex and frankly wasteful,” said Kamar Abass, Country Manager for Nigeria and Head of Regional Accounts, RSSA for Ericsson. “However, the power consumed by our equipment is on a downward trajectory.”“Nigerian regulators are insisting on infrastructure investment – coverage requirements are ‘baked in’ to licenses – so the mindset of operators is focused on physical investment; on RAN and on building significant transmission networks that didn’t exist in the pre-mobile world,” added Abass.

“Property rights aren’t enshrined in Nigeria as they are in other countries – land may be owned by families, with no paperwork,” continued Ericsson’s Country Manager for Nigeria. “Passive infrastructure has been a key focus for network sharing in Nigeria, but nothing is happening yet with active infrastructure sharing, and we think that’s a major oversight. Passive infrastructure sharing has the potential to halve the infrastructure requirement, and gives you capacity to densify the network and improve QoS, but the operational complexity of running a secondary power network means active infrastructure sharing is something Nigeria simply has to explore.”

Kamar felt that the intensity of competition in Nigeria may be preventing operators from opening


Speaking at the Reuters Africa Investment Summit, MTN Group CEO Sifiso Dabengwa said: “Growth through mergers and acquisitions is still an important part of our strategy. Anything between ZAR35.56 billion and ZAR71.12 billion is something that we could look at.”

MTN’s US$8 billion M&A war chest

When challenged by Nic Rudnick, CEO and Founder of Liquid Telecommunications, that Africa’s mobile network operators were sharing with each other but not with smaller ISPs trying to enter new markets, Manoj Kohli responded: “We have towercos in seventeen countries. Give me a list of countries and towers you need, you’ll get it in 24 hours!” Perhaps Africa Towers have a few more towers on the market than we realised!

Q&A soundbyte: Airtel offers shared towers in all 17 countries

“ “I believe if Africa is to achieve full coverage of voice and data, all towers have to be shared – Manoj Kohli, CEO, Airtel Africa

Low energy active equipment and active infrastructure sharing

a conversation about active infrastructure sharing, while many operators felt there might be a potential regulatory objection. “The only possible regulatory objection would be how to aggregate the spectrum when you combine two networks. Beyond that issue, we suspect the regulator would no have objection to active infrastructure sharing as it helps improve QoS.”

TowerXchange wanted to learn more about

Ericsson’s Managed Rural Coverage. “As long as the top of a tower is at 10m then it can often give the right level of coverage in a rural context. Ericsson’s solution supports 2G and 3G (and LTE if required), with a satellite uplink opportunity, solar power, and a pair of standard 12v batteries that will power base station for four and a half days if fully charged if there’s a failure of the weather.”

“There is no need for microwave re-planning – we buy satellite capacity and manage the whole piece, so we can charge the operator an installation fee to cover part of cost of the hardware and installation, then Ericsson recovers the rest of the cost and a small margin from a share of the revenues generated.”

“The model is one of national roaming, and it will take calls from any operator. In reality local subscribers will buy whichever prepaid cards the supervisor sells. If you put it in a village where the community leader takes responsibility for security, if you’ve chosen the right person that security tends to be assured.”

“We think Managed Rural Coverage works in villages of more than 1,000 people, but there’s a new satellite that offers a lower price point. While the operator could claw back some installation costs from Universal Access Funds in certain markets, it’s a modest capital outlay: around US$5,000 per site depending on the situation and installation conditions.”

“From our point of view, the rural market is

lacking investment,” said Gerry Collins, Head of Business Development at Altobridge. “I think towercos will put up more sites in rural areas if they can get into active infrastructure sharing, and if low energy equipment continues to reduce opex requirements.”

“In remote communities, energy and backhaul costs can make rural mobile communications uneconomic. Altobridge believe we have the best balance of energy usage (90% of our sites exclusively use solar power) and coverage with a 7-10km radius. We have an optimised satellite backhaul band that can bring the price down to US$300-400 per month.”

It seems that in rural contexts, coverage remains king. “Rural telecoms is a land-grab. If an operator extends coverage on their own, they can acquire most of the potential minutes, data and subscribers within the first three months, destroying the business case for other operators,” said Altobridge’s Collins. “I’m not convinced that building and sharing towers makes sense in these finite rural markets.”

“If you put our solution in a market town, traffic might increase four-fold on market day, and traders all need to have the local operator’s SIM card. So the key is for mobile network operators to be where people live, work, are educated, and where they trade,” added Collins. “With on network call plans, you’re going to persuade urban migrants to switch to the same network as their home village.”


Kamar Abass, Ericsson

XX | TowerXchange Issue 3 | www.towerxchange.com

News TMT Finance reports that MTN has appointed Citi to advise on the sale of towers in Rwanda,

with talks under way with American Tower

Korea Times reports that KT Corp has signed an MoU with the Rwanda Development Board to

establish a joint venture to develop, install and operate a nationwide LTE network, providing wholesale LTE services to MNOs and MVNOs

Unitel emerged as the sole applicant to meet the technical and financial requirements of the

tender, and so were awarded the islands’ second fixed and mobile license, according to Panapress

President Macky Sall has asked his government to “take practical steps” toward the launch of a

fourth MNO license, according to Agence Ecofin

Cell C CEO Alan Knott-Craig was quoted on mybroadband.co.za stating that the network

now has around 4,000 cell sites nationally, having added 1,223 new 3G sites in 2012. Cell C has 100 active LTE sites, targeting to increase to 1,000 by the end of 2013

The Lusaka Times reports Zamtel CEO Dr Mupanga Mwanakatwe as saying the operator

will deploy 400 2G and 3G base stations in less connected areas, with LTE expected in Livingstone by late May 2013

Aquiva Wireless plans to invest US$80mn over the next three years to deploy LTE nationwide,

according to Chief Executive Brian Maphosa, quoted in The Herald. Meanwhile Telecel Zimbabwe say they will expand their network of 437 BTSs by 120 by July 2013

Having been openly discussed since 2011, it seems that licensing of 3G may finally be

imminent. Moussa Benhamadi, Minister of Posts, IT and Communications, told Agence Ecofin: “The administrative record, which allows us to embark on the introduction of 3G and 3G+ is completed. In the meantime, ATM Mobilis, Nedjma and Djezzy have been encouraged to prepare their 2G networks for the transition to 3G”

It seems that the government of Burundi is again interested in selling a majority

stake in national public operator Office National des Telecommunications (Onatel), with a view to modernising the network

BiztechAfrica quotes Patrick Benon, CEO saying “Orange is now the first operator to

operate a 3G + network in Central African Republic, and it reinforces our position as an innovative operator”

Vodafone Egypt and Etisalat Misr have both appointed Ericsson to manage and operate

their base stations in Egypt, according to Daily News Egypt

Ghana’s operators must first focus on developing 3G before implementing LTE,

according to Albert Enninful, Acting Deputy Director

General of the NCA. Meanwhile, MTN Ghana have announced their intention to deploy more base stations, bringing their total number of 3G sites to 994

A press statement from Orange Guinea CEO Alassane Diene announced plans to invest

US$56mn in network upgrades and extensions over the next three years

Mauritania’s third telecoms operator Chinguitel may be up for sale. Chinguitel is

a subsidiary of Sudanese telco Sudatel which is also rumoured to be considering the sale of its licensed operators in Ghana, Guinea, Senegal and South Sudan

Who will acquire Maroc Telecom? With the preliminary bid deadline of 22 April looming

as we went to print, MTN were rumoured to be late entrants into the auction, joining Qatar Telecom, Etisalat and possibly STC

According to the Daily Trust, MTN will invest US$1.5bn rolling out 5,000 2G and a further

4,000 3G base stations in Nigeria in 2013. At the recent Reuters Africa Investment Summit, Etisalat Nigeria Commercial Officer Wael Ammar revealed that the operator was raising US$500mn in debt finance, with a view to expanding their network and services. Etisalat is believed to have 3,000 cell sites in Nigeria.

African MarketWatch: New licenses, acquisitions and upgrades in briefAlgeria

Burundi

Central African Republic

Ghana

Egypt

Mauritania

Rwanda

Rwanda

Sao Tome & Principle

Morocco

Senegal

Nigeria

South Africa

Zambia

Zimbabwe

Guinea

www.towerxchange.com | TowerXchange Issue 3 | 13

Why Orange is sharing towersStructuring deals to meet the specific requirements of each Orange affiliate

Marc Rennard, EVP, AMEA, France Telecom-Orange

© François Maréchal pour Orange

TowerXchange: Why is Orange sharing their towers in Africa? Marc Rennard, EVP, AMEA, France Telecom-Orange: Where passive infrastructure once represented a third of the cost of a new site, it now represents at least two thirds of the cost of a new tower. As African markets mature and ARPU continues to decline, we feel there’s an increasing necessity for Orange affiliates to share passive infrastructure with other operators. However, the way infrastructure sharing is structured in each country will be different according to the requirements in each market. With coverage of the major cities in Africa now complete, nobody will be able to invest $150-300k to build and manage a single tenant cell site in a remote area without a sufficient concentration of population to enable a return on investment. This is why Orange is in favour of sharing towers. TowerXchange: Please could you tell us a little about how Orange makes strategic decisions about when and how to work with towercos when sharing infrastructure – what is the involvement of the Group strategy team at headquarters, and the involvement of the local affiliates? Marc Rennard, EVP, AMEA, France Telecom-Orange: For the reasons that I just mentioned, Orange has given guidance to our affiliates in Africa encouraging them not to build new sites alone (there are always exceptions of course), and to

Read this article to learn:< Why France Telecom-Orange encourages infrastructure sharing, supporting and empowering their affiliates to structure deals to meet their needs< Does Orange prefer to retain control and ownership of their towers?< The role of infrastructure sharing in reducing CO2 emissions< Orange’s objectives in their recent managed services and build-to-suite deal in Cameroon and Côte d’Ivoire, and why they partnered with IHS< The prospects for future infrastructure sharing deals in Orange’s other AMEA markets

Marc Rennard was appointed International Executive Vice-President in charge of AMEA (Africa, Middle East and Asia) in 2006, and he joined Orange’s Group Executive Committee in 2010. Marc ran leading French towerco TDF for eleven years prior to joining France Telecom-Orange in 2003.

Michel Faivre reports to Marc and is responsible for defining passive infrastructure sharing strategy in the AMEA region.

Orange’s AMEA division is responsible for 81m customers at Orange affiliates in 20 countries, with 21,000 staff, and global income of €5bn.

Keywords: Who’s Who, Interview, MNOs, Deal Structure, Managed Services, 3G, Capex, Transfer Assets, Opex Reduction, QoS, Build-to-Suite, Densification, Hybrid Power, Renewables, Solar, Sale and Leaseback, C-level Perspective, Infrastructure Sharing, Africa, Cameroon, Côte d’Ivoire, Kenya, Uganda, Eaton Towers, IHS Africa, France Telecom-Orange


consider infrastructure sharing. Each Orange affiliate has its own momentum, its own ecosystem and environment, its own regulatory context and, crucially, each has a different position in the local market – much depends on whether they are a new entrant or market leader, and on the

number of operators on the market. So each affiliate moves at its own speed. But the global trend is for everyone to move toward infrastructure sharing. Michel Faivre runs a dedicated team, studying the different cases in each market and helping local affiliates build their own business case to share maintenance, existing towers and/or new towers. Each affiliate then presents their proposed infrastructure sharing strategy to Orange’s investment committee, and we give a red, amber or green light to their strategies. So local affiliates are empowered to implement infrastructure sharing, and the final decision will rest with that local affiliate’s board of directors. In summary, the Group provides guidance and agreement on the investment case to share passive infrastructure. Implementation and the run period is handled by our local affiliate. TowerXchange: Please explain what you mean by ‘run period’. Marc Rennard, EVP, AMEA, France Telecom-Orange: For example, I just returned from Côte d’Ivoire and Cameroon, where I joined senior executives of IHS for the signature of our agreement with them. Once the infrastructure sharing agreement has been signed, the Group team’s direct involvement comes to an end and the local team takes over operations. Implementation over the ‘run period’ requires the transfer of sites and of staff, the organisation of maintenance and other contractors. The local team handles all this.

TowerXchange: What are your objectives when outsourcing passive infrastructure to towercos, especially in markets such as Cameroon and Côte d’Ivoire where 3G is in its infancy? Marc Rennard, EVP, AMEA, France Telecom-Orange: Working with professional towercos enables us to improve Quality of Service (QoS) and reduce the costs of maintaining and managing passive infrastructure. We did not want to sell our towers in Cameroon and Côte d’Ivoire but we did want to open them to new customers, while securing an opportunity to co-locate on IHS’s sites and to ask them to build new sites for us in remote areas. So our objectives are to save opex and capex, improve QoS and extend our network. TowerXchange: Do you feel that in markets where towercos are active, they will build most if not all the new sites, rather than the MNOs? Marc Rennard, EVP, AMEA, France Telecom-Orange: There is no exclusivity under our agreement with IHS, we are allowed to build our own towers, but the spirit of the agreement is that the towerco builds new sites. There’s no obligation to have IHS build all new sites, but it’s our intention to work with them if the price and quality of service is right. TowerXchange: Does Orange have a preference to maintain control and ownership of towers, as opposed to selling towers and leasing them back?

Marc Rennard, EVP, AMEA, France Telecom-Orange:


Guidance from Paris HQ, © Stéphane Foulon

We will review infrastructure sharing opportunities in each country according to the specific needs of each market. It depends on our affiliate’s competitive position, whether they are number one or number five in the market, and it also depends on the maturity of the market. In Africa, we have very different cases: for example, if you take DRC, the penetration rate is about 18%, and yet in Tunisia, it’s over 100%. Our markets are extremely diverse.

However, at this time, Orange is not engaging in a global strategy of selling our existing towers. One year ago, we chose to sell our towers in Uganda to Eaton Towers, and we are open to selling towers in other countries as well. When there is no direct need of cash, like in Côte d’Ivoire and Cameroon, we retain ownership of the assets. The deal in these countries could become a reference model for markets with similar conditions. All options remain open and we will review each country on a case by

case basis. If you are the owner of a site one day, and if you sell those towers the next day, all you do is change capex into opex. The value comes from the number of tenants on each tower. Africa accounts for 70% of the total diesel consumption of France Telecom-Orange worldwide, so the real battle is to save opex in energy and maintenance. TowerXchange: Please tell us about Orange’s commitment to reduce CO2 emissions and how infrastructure sharing and working with towercos on build-to-suite programmes helps to increase usage of renewable energy sources. Marc Rennard, EVP, AMEA, France Telecom-Orange: Our Corporate Social Responsibility policy puts a lot of emphasis on our efforts to reduce CO2 consumption, so we are involved in several initiatives to develop and use solar energy. Our interests are aligned with those of the towercos. For example, IHS have established a dedicated programme to reduce fuel consumption, which is a critical way to increase site level profitability for them. Telcos benefit from working with passive infrastructure professionals to help to reduce diesel generator runtime and optimise the recharging of batteries, thereby reducing CO2 emissions. We have a specific requirement for partner towercos to be ‘best in class’ when it comes to these environmental questions, as reducing emissions is key for us.


Reducing CO2 emissions, © Orange

TowerXchange: Thanks Marc! Moving on to speak to Michel, who has agreed to speak to us in more detail about Orange’s latest infrastructure sharing deal with IHS. Michel, please could you introduce us to the Cameroon and Côte d’Ivoire markets to put this in context. Michel Faivre, Directeur Programme Partage d’Infrastructure AMEA, France-Telecom Orange: The two markets are significantly different, with different situations when it comes to infrastructure sharing. Cameroon has only two competing

operators at present and only 2G services. A new 3G license has been attributed to Viettel, and they will have 3G exclusivity for two years. The three main players in Côte d’Ivoire are Orange, MTN and Etisalat, with two further operators covering part of the country. With five operators, the potential for co-location is larger in Côte d’Ivoire. TowerXchange: What were Orange’s objectives in agreeing this deal? Michel Faivre, Directeur Programme Partage d’Infrastructure AMEA, France-Telecom Orange: Our objective is same as for all mobile network operators; cost reduction, especially opex but also capex. Sharing towers shares renewal capex, primarily to modernise energy units, and shares the cost of new towers. Even with Orange’s large network, we are still adding sites to cover rural regions. As Marc mentioned, we want to improve QoS, even though our QoS is not bad. In the past, competitive mobile network operators were fighting on geographical coverage, now we are fighting on QoS – and that is especially true for 3G. In Côte d’Ivoire, Orange is more present in the South than in the North of the country, while MTN’s network (recently acquired by IHS) is stronger in the North than the South. Working with IHS therefore improves our coverage and gives us capacity for nationwide services. The development

of 3G also requires us to densify the network.Sharing infrastructure enables us to focus on other tasks such as modernising, increasing and improving capacity, rather than focusing on energy efficiency. Eventually, we are also sensitive to government and community objectives to reduce the number of towers by adding tenants to existing towers. TowerXchange: Should we refer to the deal structure in Cameroon and Côte d’Ivoire as an “operational lease”? Michel Faivre, Directeur Programme Partage d’Infrastructure AMEA, France-Telecom Orange: We refer to our agreement with IHS as managed services with a build-to-suite programme. Orange has not sold its towers in Cameroon and Côte d’Ivoire. TowerXchange: Are the 2000+ sites included in the deal all Orange’s towers in those two countries?

Michel Faivre, Directeur Programme Partage d’Infrastructure AMEA, France-Telecom Orange: In Cameroon, the deal includes all the towers, while in Côte d’Ivoire it includes all the towers on which we have mobile RAN equipment. It doesn’t include our Ivorian fixed telecom towers, although the option to negotiate their inclusion in the future remains in the contract, as we did not have time to include them in the first place.


Michel Faivre, Orange

TowerXchange: Why was IHS a good partner for Orange in Cameroon and Côte d’Ivoire? Michel Faivre, Directeur Programme Partage d’Infrastructure AMEA, France-Telecom Orange: IHS was very professional in the way they negotiated with us, and they understood the technical aspects of what we were trying to achieve. However, we have no exclusive relationship with IHS elsewhere in Africa, and we will work with the right towerco for each market. TowerXchange: What are the benefits for the development of telecoms infrastructure in Cameroon and Côte d’Ivoire, and benefits for Orange, of the same towerco managing the towers of both market leaders, Orange and MTN? As opposed to for example Ghana, where each operator partnered with a different towerco… Michel Faivre, Directeur Programme Partage d’Infrastructure AMEA, France-Telecom Orange: We felt that having two towercos in Cameroon was not possible for the market. There were only two operators when we started the negotiation, so how could we share and get the benefits of co-location if we partnered with different towercos? Even with a third operator, we are still not sure if it is possible to have two towercos.

On the other hand, in countries like Côte d’Ivoire with three tier one operators and five in total, we could imagine having two towercos.

Working with the same tower provider helps to shorten the process. If we had partnered with another towerco, we would need to negotiate a service management contract and build-to-suite programme with them, but we would need to negotiate another contract to co-locate on the towers IHS acquired from MTN. Working with one towerco was simpler, and resulted into a better price. TowerXchange: What is the power grid availability like in Cameroon and Côte d’Ivoire, and how important is hybrid energy in cell site efficiency? Michel Faivre, Directeur Programme Partage d’Infrastructure AMEA, France-Telecom Orange: There is grid power in most places, but there is an issue with some power cuts for which we need alternative solutions. Orange already has some solar powered base stations in Cameroon and Côte d’Ivoire, but our build-to-suite contract with IHS will increase the percentage of solar sites in these countries. TowerXchange: Did Orange work with any advisers on the Cameroon and Côte d’Ivoire deal with IHS? Michel Faivre, Directeur Programme Partage d’Infrastructure AMEA, France-Telecom Orange: No, we did not appoint a bank or a legal adviser for this deal. We handled it 100% in-house – we have a very efficient team!

TowerXchange: Finally, in the press release about the deal, Marc was quoted as saying “this agreement leaves open the possibility for Orange subsidiaries elsewhere in Africa and the Middle East to look into similar partnerships.” Are there any other markets in which Orange is actively exploring infrastructure sharing? Any update on Kenya? Michel Faivre, Directeur Programme Partage d’Infrastructure AMEA, France-Telecom Orange: We will implement this kind of passive infrastructure sharing contract in other countries. The competition is still open – we will work with any of the towercos according to what is best in each country. We have started a similar project in Kenya. We are in the final stages. During the negotiation phase, we try to sort out the maximum of issues in order to decrease the risks during the migration phase


“ “We have started a similar project in Kenya. We are in the final stages. During the negotiation phase, we try to sort out the maximum of issues in order to decrease the risks during the migration phase

Why Kenya could be next for tower sharingBMI Analysis: a new guest column by Ken Okeleke, Senior Analyst at Business Monitor International

Ken Okeleke, Senior Analyst, BMI

Kenya’s mobile market – Safaricom dominant, price wars raging

Kenya’s mobile market reached the 30m mark for the first time during the three months to September 2012. According market data published by the Communications Commission of Kenya (CKK), there were 30.433m mobile lines in the country at the end of September 2012. This was a 2.5% q-o-q growth and 14.9% y-o-y growth, making it one of the fastest growing markets in the region. However, a considerable number of lines were not registered at the end of the latest mandatory SIM registration exercise in December 2012 and a grace period was granted by the regulator until the end of March 2013. The disconnection of these lines could push the country’s mobile penetration rate below the 70% mark it attained in September 2012, according to BMI data.

Safaricom remains the dominant player with a market share of over 63%. Airtel Kenya is in a distant second position with a market share of less than 20%, while Orange Kenya and Essar-backedYU Mobile are separated by less than 1ppt in their market shares, which jointly account for around a fifth of the mobile market.

Safaricom’s smaller rivals tried to erode its market share through intense price competition, which set off a brutal price war that ravaged the market for most of the last three years. The impact of this development on operators’ financial indicators, along with rising opex, has brought the need to improve operational efficiencies in the

Read this article to learn:< Why market growth, price wars, declining ARPU and the struggle to achieve profitability attract

Kenya’s MNOs to consider tower-sharing

< Country risk perspectives on Kenya’s economy and election results

< The Kenyan regulator’s stance on tower-sharing

< BMI’s view on which MNOs and towercos are likely to be most active in Kenyan tower-sharing

Kenya is arguably the largest of the remaining mobile markets in Sub-Saharan Africa yet to see the uptake of independent tower-sharing services. However, some key market dynamics make the service almost inevitable to ensure that some operators in the market remain competitive and for a general improvement in network quality of service and coverage. The leading independent tower sharing firms operating in the region have all set their sights on the Kenyan market, which may finally yield to independent tower-sharing services in 2013.

Keywords: BMI Analysis, MNOs, Towercos, Research, Market Overview, Country Risk, Market Forecasts, ARPU, Operator-led JV, Regulation, Infrastructure Sharing, Africa, Kenya, Safaricom, Airtel, FT-Orange, Essar, Helios Towers Africa, IHS, Eaton, Business Monitor International


Kenyan mobile market to the fore. Although not independently confirmed, local media reports,citing key stakeholders in Kenya’s telecoms markets,suggest that only market leader Safaricom is in theblack among the country’s four mobile operators, largely due to its scale and success of key non-voice services such as M-PESA.

Lagging behind peers...

Mobile network operators across Africa currently face the task of developing new revenue streams and reducing input costs in order to improve their bottom-line figures and remain competitive in the market. In Kenya, the focus over the past three years seems to be on driving revenue growth through voice tariff increases, as in the case of Safaricom, or through the rollout of non-voice high-value services such as mobile data and m-commerce services, as in the case of the three smaller operators. However, declining revenues from traditional voice services due to increasing competition and the sluggish take-up of high-value services due to low income levels make it inevitable for operators to look in the direction of reducing input costs as a means of improving their profitability.

One of the key strategies for efficiency improvement for most leading operators in Africa are tower-sharing deals with independent tower firms. Tower deals took off in Africa in 2011 and 2012 after a wave of price wars swept across most markets in the region. Surprisingly, Kenya, which is widely regarded as the source of the price war, is lagging

behind other major markets in the region in the tower-sharing business.

The closest the country has come to tower sharing was an announcement by Safaricom and Orange Kenya in mid-2011 to form a jointly owned, independently managed infrastructure company to acquire and manage their portfolio of towers. There is no update on this development, although we would not be surprised if the operators are separately exploring alternative tower sharing options.

Tower sharing deal may be imminent in Kenya

It is increasingly unlikely the Kenyan mobile market will buck the trend towards tower-sharing services for much longer. There are a number of factors expected to push the case for the market to open up to independent tower firms, possibly before 2013 runs out. Some of these factors, which will likely strengthen over time, are highlighted below.

Downward pressure on ARPUs

Market average mobile ARPU in Kenya is below US$5 and is forecast to trend downwards over the five years to 2017, according to BMI data. Meanwhile, Kenyan operators have witnessed a steep rise in opex over the past three years, mostly due to external factors such high inflation, currency instability and high diesel prices. Although adverse macroeconomic factors that plagued the country in 2011 and early 2012 appear to have abated, according to BMI’s Country Risk team, network


63.2%

9.9%

10.2%

9.9%16.8%

Safaricom

Airtel

YU

Orange

Source: BMI, CCK, operators

operators are unlikely to see a significant easing in opex. This, along with declining ARPUs, will further squeeze operators’ margins and strengthen the case for more aggressive cost-cutting measures, of which we expect tower sharing to be at the top of the list.

Regulatory environment

Kenya’s code of practice for the deployment of communications infrastructure is silent on the role of independent tower firms. Instead, it outlines a framework for operators to engage in site sharing or co- location. However, we do not expect the regulator to hinder the operations of independent tower firms in view of the potential for tower-sharing services to contribute to the faster roll out of network services to underserved areas and other operational targets set for the mobile market. The fact that there is no express prohibition of the

Multiple operators drive competitionKenya Mobile Operators By Market Share, September 2012


e/f = BMI estimate/forecast. Source: BMI, operators

operation of tower firms suggests that a framework for their services could be prepared once the country’s operators make significant moves towards engaging the services of independent tower firms.

Willingness of tower firms to enter the market

Kenya is perhaps the most attractive ‘new’ market for the tower firms operating in the region and those looking for a foothold owing to the market size, the number of operators in the market and the country’s positive economic outlook, which will inevitably drive growth in the telecoms sector. Helios Towers was previously reported to be interested in the joint tower company proposed by Safaricom and Orange Kenya. The company,

along with other leading firms including IHS and Eaton Towers, have been open about their desire to enter the Kenyan market. We believe competition by the tower firms for the Kenyan market will be a key factor in the conclusion of a tower deal in the mobile market.

Election results will not affect investor confidence

There were concerns over the possible reaction of Western investors if the PNU won the March 4 2013 presidential elections due to the indictment of Uhuru Kenyatta and his running mate, William Ruto, for war crimes by the International Criminal Court (ICC).

BMI Country Risk team’s assessment of the situation is that the impact of Western action against Kenya would be far more pronounced if that action involved the imposition of sanctions that precluded Western companies and individuals from investing in and trading with Kenya. Europe remains an important market for Kenya’s horticulture industry and the source of a large proportion of the country’s tourists. Western portfolio and FDI flows also play a meaningful role in plugging Kenya’s large current account deficit. A reduction in these inflows would have a significant impact on the currency, inflation and macro stability generally. However, as things stand, the chances of sanctions being imposed are close to nil. That could change if Kenyatta reneges on his commitment to comply with the ICC process but there is little reason to believe that he is about to backtrack. On the whole, we believe that the election of an ICC indictee to the presidency is unlikely to have as meaningful an impact on the economy and investor confidence as some might fear.

Which Kenyan operators are candidates for tower-sharing

Kenya’s four mobile operators have a combined towers portfolio of around 6,000 towers. This is grossly insufficient for the country’s population of almost 45mn and land area of around 570,000 sq km. Meanwhile, operators’ poor financial results over the last three years raise significant concerns about their ability and willingness to invest in new tower deployments to underserved areas, especially where ARPUs are likely to be lower than in major

Kenya’s mobile ARPU (KES) heading south

100

2010 2011 2012e 2013f 2014f 2015f 2016f 2017f

200

300

400

500


towns and cities.

All four network operators are potential candidates for tower deals in view of the market dynamics and factors mentioned in the previous section. However, Orange Kenya and Safaricom are the most likely to move first in the market, mainly because of their proposal to form an infrastructure company that may seek to partner with an established tower firm in the region. Furthermore, both companies are closely associated with operators that have adopted the tower-sharing strategy in other markets. Orange and Safaricom’s parent companies, Orange Group and Vodafone Group respectively, have implemented the tower-sharing strategy in some other markets in which they operate, including South Africa, Ghana and Uganda.

YU Mobile is close behind Safaricom and Orange as a likely candidate for a tower deal. The operator’s lack of 3G network services limits its ability to expand its high-value data offerings, making it almost entirely dependent on voice revenues. The operator is keen to invest in 4G LTE services when spectrum becomes available. However, this may not happen soon and it will need to aggressively reduce costs in order to remain competitive in the mobile market. For its part, Airtel Kenya is likely to follow a group strategy, which is yet undefined for tower sale and leaseback deals. The operator subscribes to the services of tower firms in other markets it operates and will likely do so when independent tower firms launch operations in Kenya

www.businessmonitor.com/bmo

Tower Xchange

Participate in the TowerXchange community

Join the TowerXchange LinkedIn™ group atwww.linkedin.com/groups/TowerXchange-4536974

Investors & advisers

Decision makers at operators

Independenttowercos

Tower manufacture &

installation

Equipment & managed

services

Regulators & policy makers

The TowerXchange Meetup will accelerate the transactions, innovations and partnerships that unlock new efficiencies for the African tower industry.

TowerXchange has created a unique community of 1,868 decision makers in African passive infrastructure, and set out to share best practices through this journal. Insights can be found on a page, but new relationships are formed and deals agreed face to face, so it’s time to invite you all to the inaugural TowerXchange Meetup Africa.

The leaders of the African tower industry have warned us that they don’t want or need a conference; there is too much competitive sensitivity for the pioneers to say anything interesting “on the record”. That’s why TowerXchange have created a Meetup, not a conference.

The TowerXchange Meetup is designed around structured networking round tables held under the Chatham House Rule, plus “Shootouts” in which buyers shortlist the energy equipment, RMS and managed services partners they need to stabilise and reduce opex.

Business leaders in passive infrastructure feel disenfranchised by today’s telecoms exhibitions, overrun as they are by devices and VAS.

TowerXchange maintains a laser-beam focus on towers, on passive infrastructure, and on the low

EditorialTop 200 decision makers in African towers to gather at TowerXchange Meetup

Kieron Osmotherly, TowerXchange Founder

www.towerxchange.com | TowerXchange Issue 3 || TowerXchange Issue 3 | www.towerxchange.comXX 23

TowerXchange Passive

Infrastructure footprint AfricaCom:

5% passive infrastructure

Mobile World Congress: 1% passive infrastructure

Devices & VAS footprint

Mobile World Congress footprint

Africacom footprint

TowerXchange: 100% passive infrastructure

energy, compact active equipment that stretch the capacity of Africa’s towers. So while 1% of Mobile World Congress exhibitors are from passive infrastructure, and 5% of AfricaCom, everyone you meet at TowerXchange will be a passive infrastructure decision maker.

Let me tell you how the TowerXchange Meetup will work. The TowerXchange Meetup is by invitation-only, and those invitations will be extended in early June. However, you can e-mail me to apply for your place now. The open, strategic debates hosted at the TowerXchange Meetup require that the event is for decision maker level people only. Usually that means Director, VP or C-level only, but if you’re the top tower decision maker for your business and you’re a manager or executive, drop me an email and we’ll confirm whether we can extend you an invitation.

| TowerXchange Issue 3 | www.towerxchange.com24

TowerXchange carefully manages the ratio of buyers to sellers, and plans seating so that each round table includes a senior representative of a towerco, an investor, advisor, RMS or static equipment manufacturer, a tier one OEM, a managed service provider, and two senior decision makers from an operator. Attendees will participate in four different round tables, each with a regional or topic matter focus chosen to meet their specific objectives. So attending the TowerXchange Meetup guarantees you an agenda tailored to answer your questions, and guarantees “face time” with 28 decision makers at prospective clients, suppliers or partners interested in the same segment of towers and sharing the same round table as you. Of course, attendees also have lavish networking receptions to network with the rest of the top 200 African telecoms infrastructure decision makers.

Finally, if you are one of African towers’ thought leaders and you want to share your expertise by hosting a round table at the TowerXchange Meetup, please contact me.

I look forward to meeting you in Cape Town at the end of September!

All the best,

Kieron OsmotherlyFounder, TowerXchange

M. +44 (0) 7771 [email protected]

www.towerxchange.com | TowerXchange Issue 3 | XX

Backhaul, FTTT, Core Network Active equipment

Tier 1 OEMs

Mobile Network Operators

Investors: private equity, debt finance, infrastructure funds

Law firms

Group level strategistsC-suite & network planners at local OpCos

Outsourceto

Strategic consultancyDue diligenceDemand forecastsValuations

Independent TowercosSell co-locationsUpgrade capacityBuild-to-suitMaximise uptimeReduce opexInvest in network

Transfer assets to

Construction servicesTurnkey infrastructure rolloutManufacture of steelworkImport, customs & deliveryLeasing & permittingInstallation of towersUpgrades for capacityO&M services

Dynamic assets

Energy equipmentDiesel gensetSolarWindFuel cell

BatteriesRectifiersInvertersLine conditioningPIUs

Air conditioning Lightning protectionControllerVoltage regulator

Managed service providers

ESCOs

Static assetsTowers & mastsSheltersBracketsEnclosuresLightingFencing

0&M servicesMaintenanceStaffingSpare partsVMI?Refueling

Energy as a service

Monitoring & managementRMSIntelligence/analysisSite managementJob ticketingAsset lifecycle platform

Access control

Subcontract

MicrogenerationCommunity power

Subcontract or in-house

Outsourceto

Som

e be

com

e to

wer

co

Tower Industry Value Chain

Investment management advisors

Source: TowerXchange

TowerXchanges’ unique structured networking round tables

Energy Provider shootout in Progress

Small groups of buyers recieve 5 minute demonstrations

200 Director, VP and C-level Decision makers broken down as follows:

Mobile Network Operators (50)

Towercos (25)

Investors and Investment Management Advisors (25)

Lawyers and Strategic Consultants (25)

Energy Equipment Providers (25)

OEMs & Managed Service Providers (25)

Static Assets (10), Access Control (5) & Monitoring and Management (10)

TowerXchange roundtables bring together 1 representative from each of 8 segments of the tower industry, brought together by a common geographical focus or hot topic. There are 4 roundtable sessions at the Meetup, each new roundtable "reshuffles" the decision maker-level participants at your table so you will meet 28 different prospective partners.

25| TowerXchange Issue 3 | www.towerxchange.comXX www.towerxchange.com | TowerXchange Issue 3 |

TowerXchange Meetup Africa 2013 AgendaRound table topicsEach “Round table” is a 90-minute structured networking session assembling participants in groups of 8, brought together by a common regional or topic matter interest, and arranged so each group ideally includes 2 MNOs, a towerco, investor, advisor, OEM or managed service provider, energy equipment and a static asset or RMS manufacturer.

Buying and selling towers�< How to determine your organisational goals from tower sharing; balancing opex reduction with cash released and equity stake retained�< How to structure a tower sharing deal to meet your requirements: operational lease vs sale and leaseback vs joint venture�< Would an Indus Towers-like operator-led JV work in certain countries in Africa?�< Creating shareholder value by retaining an equity stake in a JV-towerco�< How to prepare the data room; from asset registers, permits and leases to tower designs, load valuations, maintenance logs and DG runtime data�< How to structure MLAs, SLAs and anchor tenancy agreements�< Transferring assets from MNOs to towercos: confirmation of permits, novation of leases, transfer of staff and evaluation of contractors

Financing African towers�< Are towercos paying a premium for first mover advantage? When will the gold rush end?�< Are African towers a bankable investment? What level of gearing will investors permit before waiting for proven results?�< How to measure, manage and mitigate country risk and operational risk�< What are my / those towers worth? How to use demand-side models, lease pricing benchmarks and GIS information to assess the commercial potential of a tower portfolio�< How to conduct a tower load valuation to unlock hidden capacity and prioritise upgrades�< How tower auctions work, what terms are variable and which are non-negotiable, and what separates the winners from the losers?

A dedicated round table for each of the following countries: Cameroon, Côte d’Ivoire, DRC, Egypt, Ghana, Kenya, Mali, Nigeria, South Africa, Tanzania and Uganda.

One roundtable for the rest of North Africa (Morocco, Tunisia, Algeria, Libya and Western Sahara)

One roundtable for the rest of East Africa (Burundi, Djibouti, Eritrea, Ethiopia, Rwanda, Somalia, South Sudan and Sudan)

One roundtable for the rest of SADC (Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, Swaziland, Zambia and Zimbabwe)

One roundtable for the rest of Central Africa (Central African Republic, Chad, Congo Equatorial Guinea, Gabon)

One roundtable for the rest of West Africa (Benin, Burkina Faso, Gambia, Guinea, Guinea-Bissau, Liberia, Mauritania, Niger, Senegal, Sierra Leone and Togo)One roundtable for the rest of Africa’s Islands (Cape Verde, Comoros, Madagascar, Mauritius, Mayotte, São Tomé and Principe, Seychelles)

| TowerXchange Issue 3 | www.towerxchange.com26 www.towerxchange.com | TowerXchange Issue 3 | XX

Towerco business models�< Are tenancy ratios above two achievable in Africa? And how towercos can improve their margins by optimising site level profitability�< What are the criteria that govern how many towercos can operate in a given market? How does competition between towercos affect markets such as Ghana?�< Are there still opportunities in Africa for new entrant towercos?�< What infrastructure sharing needs (and does not need) from regulators

Build-to-suite and refurbishment programmes �< How to determine your O&M requirements, select the right partner and structure BTS and refurbishment programmes�< How to accelerate time to market in roll outs and network extensions�< Key performance indicators for the management of African towers; how to meet SLA clauses concerning uptime, site visits and MTTR�< How to optimise logistics from manufacture to port to site�< Cell site densification and equipment amendment implications of 3G and LTE�< How to reverse-engineer tower designs�< How to upgrade the structural capacity and power systems at a cell site to support multiple tenants�< How to evaluate whether to upgrade or replace a tower to add capacity for multiple tenants, and how to maintain service when consolidating towers�< From corrective to preventative to just-in-time maintenance�< Vendor Managed Inventory for the tower industry�< Health and safety, ethics and compliance - from policy to practicalities

How to reduce energy opex�< How to combat fuel theft�< How access control systems reduce vandalism and fuel theft while helping to integrate maintenance logs with job ticketing and asset life cycle platforms�< How to measure the performance of Integrated Power Management Solutions�< Which hybrid and solar hybrid energy solutions are proven in Africa?�< How to evaluate a cell site’s suitability for hybrid energy solutions�< How to proactively manage power to optimise MTTR�< How to get the most out of unreliable grid sites�< How to future proof power at a cell site to accommodate multiple tenants�< What will it take for the ‘energy as a service’ proposition to work in Africa?�< Selecting the right battery supplier to minimise diesel consumption and extend replacement cycles�< Defining a business model to pay for energy by the kWh�< Community power initiatives

Site intelligence�< How to leverage RMS to identify the smallest capex that yields the biggest return�< How to translate RMS data into actionable intelligence�< How to demonstrate and optimise performance against SLAs�< How to measure, monitor and extend the life cycle of passive (and active) infrastructure assets

Beyond passive infrastructure sharing�< Active infrastructure sharing in Africa�< How transmission sharing creates new revenues/efficiencies whilst freeing load capacity for additional co-locations�< FTTT�< Wholesale infrastructure sharing

Day one 9:00 Welcoming Remarks from TowerXchange9:30 Towerco CEO panel10:30 Morning coffee and networking10:50 First structured networking round table12:20 Networking lunch1:40 Second structured networking round table3:10 Afternoon coffee and networking3:30 Mobile network operator tower decision makers panel4:30 Partner selection shootout: innovations to reduce energy opex5:30 Close of Day one

Evening drinks receptions, awards and dinner

Day two9:00 Third structured networking round table10:30 Morning coffee and networking10:50 Investor panel11:50 Partner selection shootout: managed services12:50 Networking lunch2:10 Fourth structured networking round table3:40 Afternoon coffee and networking3:30 2020 vision of African tower industry and action points for 20134:30 Close of day two

TowerXchange Meetup Schedule

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TowerXchange Meetup Benefits & Packages

MNOsTowercosInvestors & advisorsManaged servicesTier 1 OEMsLawyers & consultantsEnergy equipmentOther passive infra

AttendeesSponsors/exhibitors

Pass discount

5025252525252525

2449367

10

*100%50%0%0%0%0%0%0%

e.g. RMS, site management, job ticketing & asset lifecycle platforms Static asset manufacture and distribution Access control systems

*100% discounts for qualifying Director to C-level execs from MNOs

By invitation only: restricted to Director, VP and C-level attendeesMaximum of 2 delegate passes per company except for MNOs, towercos and sponsors

*Expo only pass only available to exhibitors and sponsors

Bronze, Silver, Gold and Platinum Sponsorship Benefit Options - choose one Capacity Limits

*Expo onlypass Delegate pass Exhibitor Bronze

SponsorSilver

SponsorGold

SponsorPlatinum Sponsor

Diamond Sponsor

1 pass 1 pass

90 secs

100

180 secs

100

180 secs

200

up to 5 mins

200

up to 5 mins

200

up to 10 mins

200

1 pass

with booth with booth

either

or or or or

either either either

with booth with booth with booth

2 passes 2 passes 3 passes 3 passes

Benefits

Exhibition access

Daytime catering

Complimentary volume one TowerXchange

Access to Meetup

Round table interactions with 28 selected prospects

After hours networking receptions & catering

Acess to VIP lounge

Dedicated post event e-mailshot to all attendees

Presentation in Shootout to shortlist RFPs

Video on TowerXchange TV

Profile in show guide and directory word limit

Logo on backdrop, podium, signage, fliers & invites

3x3 turnkey booth

Private meeting room

Your choice of bronze sponsorship benefit

Your choice of silver sponsorship quality benefit

Your choice of gold sponsorship premium benefit

Your choice of platinum business-class benefit

Your choice of diamond first-class benefit

Contact Annabelle Mayhew, [email protected], for price information

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Special Feature:

TowerXchange will take you on a virtual tour of Africa’s leading towercos, building an holistic view of the key roles within the towerco business, and an appreciation of the differences between Africa’s ‘Big Four’ towercos and the local tower operators hoping to develop a pan-African towerco footprint.

This first installment concentrates on the ‘Big Four’ towercos. We introduce you to IHS Africa’s new CCO Rhys Phillip as he discusses their recent transactions in Cameroon and Cote d’Ivoire. Eaton Towers’ CTO Thomas Jonell provides a revealing insight into their procurement processes and priorities. Helios Towers Africa’s Nick Summers explains their Health and Safety and anti-corruption policies. And we hear from American Tower’s CEO Jim Taiclet and CFO Tom Bartlett as TowerXchange examines ATC’s 2012 annual results for insights into their international strategy.

Towerco perspectives

Four perspectives from towerco leaders:30 How IHS creates shared value35 Eaton’s procurement priorities40 Helios on health and safety, ethics and compliance45 Growth stock American Tower playing a different game to PE-backed towercos

How IHS creates shared valueThe rationale for IHS’s acquisitions in Cameroon and Cote d’Ivoire and their plan to scale to 25,000 co-location towers in the next five years

Rhys Phillip, CCO, IHS

IHS’s twelve-year track record of success and leadership position in Africa

CEO Issam Darwish and CTO William Saad created IHS in Nigeria in 2001, establishing IHS as “commercially the leading independent towerco in Nigeria.”

“We started out as a builder,” said IHS’s Director of Business Development Romain de Villeneuve. “This enabled us to develop operational excellence and build mobile network operators’ confidence in the quality of service we provided, which led to us offering managed services. Becoming a towerco was a natural next step after our huge operational experience in Nigeria.”

IHS targeted a move up the value chain from managed services into tower acquisition and leaseback, described as “great for investors, for network operators and for consumers.” 2012 was a transformational year for IHS, trebling their number of towers owned and managed through the agreement to acquire 1,758 towers from MTN in Cameroon and Cote d’Ivoire. This deal made IHS Africa’s number one towerco by number of towers owned and managed, and gave them a substantial footprint in these two high growth countries through ownership of the market leader’s towers. According to IHS’ Chief Commercial Officer (CCO), Rhys Phillip, “IHS was chosen over competing bidders because of our engineering expertise – over 80 percent of our 1,000 staff are technical engineers.” IHS has built over 3,000 sites and maintains 99.95 percent power uptime.

Read this article to learn:< Why IHS invested in Cameroon and Cote d’Ivoire< The 14 new African markets IHS have targeted< Why towercos will build most new towers in Africa< How IHS buys and their views of renewable energy and ESCO propositions< How IHS extend operator relationships from one country to the next

IHS has risen from a proven engineering and managed services business partner in Nigeria to become the largest towerco in Africa, by number of towers owned and managed. IHS were in the headlines again in early April 2013, taking over the management and marketing rights of over 2,000 towers from Orange to add to the 1,758 towers they acquired from MTN in Cameroon and Cote d’Ivoire in 2012. Selected members of the press and analyst community joined three senior members of the IHS management team for a breakfast briefing in Barcelona during Mobile World Congress, where they explained their breakthrough year in 2012 and ambitions to scale to over 25,000 towers owned or managed in MEA within the next five years.

Keywords: Who’s Who, Interview, Towercos, Managed Services, Acquisition, Investment, 3G, EBITDA, Tenancy Ratios, Infrastructure Sharing, QoS, Build-to-Suit, Exit Strategy, Regulation, Anchor Tenant, ESCOs, Hybrid power, Procurement, Sale & Leaseback, Operational Lease, Private Equity, C-level Perspective, Africa, Cameroon, Cote d’Ivoire, Nigeria, Sudan, South Sudan, Viettel, Orange, MTN, IHS


“This transaction has accelerated revenue growth, extended our reach and extended the amount of help we can deliver to MNOs,” added Rhys Phillip.

The transaction also saw the introduction of new investors, with new 25 percent equity holders, Wendel, providing guidance and support at a shareholder level. The October 2012 deals with MTN were followed in early April 2013 by the announcement that IHS has taken over the management and license to market a further 2,000 sites from Orange in Côte d’Ivoire and Cameroon. In this latest deal the towers will remain the property of the Orange subsidiaries: IHS will manage the towers for Orange for an initial term of 15 years, whilst Orange subsidiaries will benefit from access to available slots on towers that IHS currently owns in both countries.

IHS’s rationale for the acquisition and long-term lease of towers in Cameroon In acquiring 827 towers from MTN in Cameroon, IHS secured the largest and most exciting tower portfolio in a country with plenty of capacity for growth in mobile penetration. Mobile subscriber numbers

grew from 3.1m in 2006 to 10.5m in 2011 at a CAGR of 38 percent, and are projected to increase to 17m by 2016, at a CAGR of 10 percent. Cameroon’s two active operators, MTN and Orange, are looking to expand coverage to rural areas and second tier cities. 3G services are yet to be launched; however regulatory guidelines encourage co-location in Cameroon.IHS’ anchor tenancy agreement with MTN, the most profitable and creditworthy MNO in Africa, also locks-in fulfillment of future build-to-suit requirements from the number one operator. IHS has positioned itself as the natural partner for new MNO entrants in Cameroon. IHS noted that Viettel had acquired a 3G license in Cameroon late in 2012, and that the company was well financed with annual sales over US$6bn and profits over US$1bn. IHS also noted the presence of eleven WiMAX/ISP players in Cameroon as potential tenants.

IHS’s rationale for the acquisition and long-term lease of towers in Cote d’Ivoire In acquiring 931 towers from MTN in Cote d’Ivoire, IHS secured the largest tower portfolio with the

highest potential for co-location in another country with plenty of capacity for growth in mobile penetration. Mobile subscriber numbers in Cote d’Ivoire have grown at a CAGR of 26 percent since 2007, and are projected to increase from 18.7m in 2011 to 24.2m by 2016, at a CAGR of 5.3 percent. Cote d’Ivoire’s three major operators are seeking to expand capacity, while a further two tier two operators are expanding to rural areas and second tier cities. 3G services are in their infancy. The Cote d’Ivoire government has hinted at the potential creation of a legal framework making tower sharing mandatory for MNOs. IHS also noted the presence of eight WiMAX/ISP players in Cote d’Ivoire as potential tenants. IHS’ anchor tenancy agreement is again with creditworthy MTN and, like in Cameroon, locks-in future build-to-suit requirements. Strong build-to-suit demand is expected from all existing MNOs in Cote d’Ivoire. The lease conditions released for IHS in Cote d’Ivoire were the same as in Cameroon: the lease


term was ten years with annual renewals for the following five years.

3G and cell site densification in Cameroon and Cote d’Ivoire “With the development and rollout of 3G in Cameroon and Cote d’Ivoire comes a need for densification. Where a network planner might have needed three towers to cover in 2G, 3G might require five towers. We are still at the start of investment in 3G in these countries; more investment is needed in build-to-suit and we anticipate 3G requirements driving more tenancies on the towers we’ve acquired. On top of that there is still a need for the improved voice call quality and growth in the number of voice customers – the 50-60 percent penetration in these countries is quite low,” said IHS’s Director of Business Development, Romain de Villeneuve.

IHS targets 25,000+ co-location towers over the next five years

“We retain an ambition to keep the growth curve steep and maintain IHS’s leadership position in Africa,” said CCO Rhys Phillip, showing a slide that highlighted that Senegal, DRC, Kenya, Mali, Zimbabwe, Mozambique, Morocco, Tunisia, Guinea, Egypt, Madagascar, Rwanda, Ethiopia, and Zambia are countries particularly targeted by IHS.As for the Middle East, “we have a relationship with Etisalat and a presence in the Middle East, but for moment IHS is an African towerco. The Middle East

will always be part of our plans at the right time,” said Phillip.

IHS is targeting over 25,000 co-location towers in the next five years. “We will work on group level relationships with mobile network operators and partner with those operators as they explore new opportunities, evaluating the attractiveness of individual markets from a macro economic point of view as well as the telecommunications and network opportunity,” said Phillip.

“We have built up a reputation for performance


“ “Senegal, DRC, Kenya, Mali, Zimbabwe, Mozambique, Morocco, Tunisia, Guinea, Egypt, Madagascar, Rwanda, Ethiopia, and Zambia are countries particularly targeted by IHS

IHS CEO Issam Darwish signing the Orange deal

and quality of service in our markets and it is one we are very proud of. It’s important that we consolidate what we have in Nigeria, Cote d’Ivoire and Cameroon, North and South Sudan, investing in energy innovations, while leveraging our commercial teams to build IHS’s revenue profile and margins, enabling further investment in R&D,” added Phillip. What defines IHS’ interest in a region - does IHS have an appetite to acquire any of the big portfolios rumoured to be coming to market?

“We’re often interested if penetration of mobile gives us room to improve,” said the Director of Business Development, Romain de Villeneuve. “It’s important to be the first towerco in a country, to secure first mover advantage. There is greater or lesser demand from all 54 countries in Africa, of which we’ve prioritised 17 or 18. And then there’s the operational challenge: it’s not easy to operate towers in Africa, so risk monitoring is vital.”

“If any big tower opportunities arise from MTN, Airtel, Orange, Etisalat, Vodafone/Vodacom or Millicom take place, IHS will want to play a role,” added the CCO Rhys Phillip.

“IHS are not risk averse. Our founders set up a company in Nigeria when few would have wanted to startup in such a complex market. As an organisation, we like challenges: it has to be large, growing market with potential tenancy growth. If there is a large portfolio, we’d go for it,” added Rajiv

Jaitly, IHS’ CEO, Nigeria.

Towercos will build the majority of new sites in the markets in which they operate “We believe few new towers will be built by mobile network operators in the future; they will look to outsource. In markets where there are towercos, I don’t think operators are going be building any more towers,” continued Rhys Phillip. “When operators outsource their towers, much of their network rollout and management expertise is transferred to the towerco. Subcontractors will continue to do much of the actual building, but towercos will take over those relationships and be responsible for the tower, for power, security and maintenance.”

Is there enough incentive to build towers in rural areas with low ARPU? “This is an age old dilemma, how do we make rural connectivity commercially viable?” said Rhys Phillip. “Governments remain keen to push the rural agenda, and the World Bank and others support that ambition. IHS is keen to play our part in driving that, and we structure our pricing in rural areas so that it makes sense for both the operator and us. The investments we’re making into power solutions, such as uninterrupted solar, makes it easier for us to develop in rural areas.” Romain de Villeneuve took on the debate: “Where there is a lack of RoI in rural area networks, subsidies may be needed. But if we can build one site for three operators and share the revenue, then the mobile network operator doesn’t have to take the risk. Rural networks will benefit from huge growth thanks to tower sharing. We can be neutral and independent in network rollout, enabling the industry to invest together without acting anti-competitively.”

“It’s not our policy to ‘build it and they will come’. We talk to RF departments, and we know where they want to go,” added CCO Rhys Phillip. Given that the entry of towercos will transform the passive infrastructure supply chain, how do you buy? “The towerco will be a filter in front of all suppliers and subcontractors,” said IHS’s Director of Business


“ “IHS are not risk averse... As an organisation, we like challenges: it has to be large, growing market with potential tenancy growth. If there is a large portfolio, we’d go for it

unreliable grid power, and rising fuel prices, we are interested in opportunities to share the risk with energy innovators who are key to effectiveness and profitability. Something like 80 percent of IHS staff are African engineers, and we like to find new solutions, not only through solar panels but deep cycle batteries, the latest gensets, and remote monitoring – we’re interested in innovations across the whole passive infrastructure supply chain. With every new tenant, our cost of energy decreases by approximately 40 percent, so the infrastructure sharing business model is aligned with energy opex reduction models.” “Power uptime is so critical, and the implications of failures so huge, that giving that responsibility to an unproven ESCO partner would be a step too far,” added CCO Rhys Phillip. “But that’s probably what CTOs were saying about towercos a few years ago! Towercos had to prove themselves in Africa, and they’ve done that over the last three years. I feel the ESCO proposition will take a similar number of

years to mature.” “African telecoms remains around 95 percent prepaid, which means if there’s no power, there’s no revenue. So our head is on the block. We have to provide excellent Quality of Service (QoS) to ensure our operator tenants do not lose revenue. QoS in energy is a priority for IHS, and our mobile network operator partners’ first expectation is that we improve energy QoS and increase network availability,” concluded IHS’ Director of Business Development Romain de Villeneuve.

Extending operator relationships from one country to the next

Ken Okeleke, Senior Analyst at Business Monitor International asked an excellent question: “MTN also work with IHS’s competitors – how easy is it to establish relationships in one country and extend those relationships to other countries?”

“Trust is a major requirement,” said CCO Rhys Phillip. “Once you’ve attained the trust of a mobile network operator it’s easier to get into another country. Our experience is that the relationship has to be right at country level, but relationships with the head office are also important of course.”

“We’re very proud of what we’ve achieved to date – we won those deals in Cameroon and Cote d’Ivoire on merit. MTN will doubtless continue to make decisions based on what’s best for them in each market, but we’re confident we can maintain and deepen our relationship with MTN,” concluded Rhys Phillip


“ “With every new tenant, our cost of energy decreases by approximately 40 percent, so the infrastructure sharing business model is aligned with energy opex reduction models.

Development Romain de Villeneuve. “We buy like all towercos: we research partnerships, we seek loyalty, quality, and a competitive price.” “Operators have their suppliers on a country by country basis,” added CCO Rhys Phillip. “Our due diligence process includes stepping into their shoes, conducting our own due diligence on those suppliers, looking at alternatives and leveraging relationships with trusted existing partners.” “IHS replaces the mobile network operator in managing subcontractors,” added de Villeneuve. “We have the time to focus on acquiring the best engineering systems, the best innovations combining grid, batteries, genset and renewables. It’s a major change from mobile network operators managing passive infrastructure, which is not their core business. We know the passive infrastructure industry, where fuel, steel and concrete are 75 percent of costs.” “There has been an acceleration in solar energy innovation. We won’t develop solar ourselves, but will select the right partners with time and focus on energy. Builders of towers will stay builders of towers, and we’ll maintain our 10-year relationships with companies on the ground,” concluded IHS’ Villeneuve.

IHS’s view of the ‘energy as a service’ proposition “Energy is our number one cost,” said Romain de Villeneuve. “With many sites off-grid or on

Eaton’s procurement prioritiesCTO Thomas Jonell reveals what opex saving equipment and services Eaton are buying, and how they buy it

Thomas Jonell, CTO, Eaton Towers

TowerXchange: Thanks for speaking to us today Thomas. Please tell us about Eaton’s procurement processes. Thomas Jonell, CTO, Eaton Towers: Eaton Towers puts a lot of emphasis on procurement – deploying capital effectively is critical to our ability to create value for our customers, our investors and ourselves. We’re always very specific in defining and writing up the scope of our requirements before we go to market. We think it’s critical to establish what we want and how we want it, including specifications of work and material use, expectations of rollout and internal rate of return (IRR). We typically use two official rounds. First, we send our RFP to at least ten vendors. Responses to that RFP are scored on quality of submission, compliance with the specification, and adherence to guidance pricing. By the second round it’s usually down to two or three suppliers, with whom we’ll exchange a framework agreement for the product and related rollout requirement. TowerXchange: Tell us about Eaton’s procurement decision making unit. Thomas Jonell, CTO, Eaton Towers: Eaton Towers has a Planning Board Committee that approves all O&M subcontracting and capex deployment. Decisions are made based on our requirements and on our annual budgeting and reforecasting processes. I chair the Planning Board Committee,

Read this article to learn:< Eaton’s 25% IRR and opex criteria when selecting equipment and services, and their use of VMI

< 5-year contracts with pan-African O&M partners to implement refurbishment plans

< Using site management systems to display alarms from RMS in the NOC

< Eaton’s installation of a “Rolls Royce” access management system

< Analysing data and designing energy solutions tailored for each individual site

Thomas Jonell has been a CTO in African telecoms for more than ten years. He served as Celtel’s CTO in Nigeria and DRC before spending the last five years at the helm of the technology side of Eaton Towers’ business. TowerXchange wanted to know which categories of partner selection merited the most attention from the CTO, and to understand how one of Africa’s ‘Big Four’ towercos define their requirements, select partners and evaluate performance of key equipment and service partners.

Keywords: Capex, Procurement, O&M, SLA, RMS, Site management system, Job ticketing, NOC, Energy, PIUs, Line conditioning, Batteries, ESCOs, Access control, Air conditioning, Active infrastructure sharing, Infrastructure sharing, Africa, Ghana, Uganda, Eaton Towers


which also includes our CFO Peter Lewis, our Group Technical Manager and our Financial Business Planner. We review the capex that each of our local OpCos want to spend based on the budget and the expected IRR on that specific build out. In order for the Planning Board to grant permission for a new purchase, we require at least three, sometimes as many as five quotes from approved suppliers contracted under our framework agreement. So we secure firm quotations based on volumes and lead times, and we select not just on price but on ability to deliver and over the lifetime of the equipment. Assuming the selected supplier’s presentation matched up to their quotes and our expected IRR, then the Planning Board’s approval is granted. TowerXchange: What are the most strategic investments on which you spend the most time – which categories of equipment and service provider are most critical? Thomas Jonell, CTO, Eaton Towers: The answer differs according to the needs of each market and depending on the timing within a tower transaction. If we close a new deal where a number of existing assets are taken over then the number one priority is identifying the right O&M service partner to maintain these assets. Can they execute? Do they have a clear scope? Our second priority is often the immediate rollout of a management system so we can understand how the O&M subcontractor is

delivering against our expectations and SLAs. TowerXchange: Do you often inherit legacy O&M contractor relationships? Thomas Jonell, CTO, Eaton Towers: We may be asked to maintain existing O&M relationships with some tower transactions, and we usually don’t have any problem with that. Our thinking is that if things are working well, we are unlikely to have any issue with maintaining that relationship. However, the mobile network operator’s relationships and requirements may be very different compared to those of a towerco. For example, when we came into Uganda the operator’s O&M contractor had 30 people. As towercos have fundamentally different processes this has increased to nearly 70 since we’ve taken over.

We like to encourage healthy competition by having at least two, maybe three or four, O&M partners in each country to make sure they are benchmarked, that they can flex their muscles, fight for the business, and receive more sites or lose sites according to their ability to meet KPIs and SLAs. TowerXchange: Do you have a preference to work with pan-African O&M contractors who can replicate service levels in multiple countries? Thomas Jonell, CTO, Eaton Towers: Yes. In the next country in which Eaton will operate, we will maintain our existing contractor relationship formed in Uganda and Ghana. We know their management team, they know what we expect, and we have pre-agreed price lists. TowerXchange: How long are your typical O&M contracts? Thomas Jonell, CTO, Eaton Towers: We’ll often award a three to five year agreement to give our O&M partners a longer term view and sense of security. This enables them to make investments in fuelling trucks, tracking systems and training, and ultimately to see Eaton as a bit more serious than the other clients who might offer only a six to twelve month contract. TowerXchange: What are your key performance metrics for O&M contractors? Thomas Jonell, CTO, Eaton Towers: We prefer to use the same KPIs and the same expectations


“ “We like to encourage healthy competition by having at least two, maybe three or four, O&M partners in each country to make sure they are benchmarked… and receive more sites or lose sites according to their ability to meet KPIs and SLAs

of optimised opex in multiple markets, which is why establishing relationships with pan-African partners with local expertise is so important. When we first acquire assets, the scope of maintenance requirements and frequency of visits will be high. In order to achieve the cost reductions critical to our business plan, we invest in a refurbishment program that upgrades access control, RMS, power equipment and control systems. Our refurbishment program drives efficiencies in partnership with our O&M subcontractor who will also deploy most of this works. Africa’s maintenance subcontractors need to progress into this long term service environment, with its focus on partnering to reduce opex, rather than living on a month to month basis. Ultimately there are a limited number of strategic partners who understand how the African tower industry works, who qualify when you overlay all the different capabilities we require, and who we can talk to about this kind of deal. There are perhaps a dozen such companies with a pan-African footprint. TowerXchange: Going back to your priorities after acquiring new assets, you mentioned that the second priority is often the immediate rollout of a management system. Do the assets you acquire usually have a good quality site management system in place to collate alarms from Remote Monitoring Systems (RMS)? Thomas Jonell, CTO, Eaton Towers: Unfortunately

operators seldom have a system in place specifically for site management. Some operators have basic site management systems monitoring passive assets, but typically that might include only five or six basic temperature and generator failure alarms, and those alarms are not always functioning. Our due diligence will identify which alarms are working and where we have to rectify the ones which are not. The use of our own robust trouble ticketing system will have a tremendous and immediate effect on controlling opex. TowerXchange: What site management solution does Eaton Towers use? Thomas Jonell, CTO, Eaton Towers: We have a full blown NOC which utilizes a robust trouble ticketing system able to handle significant complexity. The system the NOC utilizes is used for more than just reporting of problems; we use it for incident management, asset management and access management. Our O&M contractors have presence in the NOC, so they’re very much part of the process of seeing and managing any problems. TowerXchange: Getting back to site level, what’s your view on the key requirements from RMS systems? Thomas Jonell, CTO, Eaton Towers: When it comes to RMS, you’re not just buying black boxes; it’s critical that alarm systems are displayed correctly in the NOC. We’re particularly focused

on power management. We have a good historical relationship, an agreed price and deployment plan with our selected supplier for rollout in Uganda, but ultimately we’ll use whatever RMS system best suits the requirements of a specific portfolio. TowerXchange: How does Eaton source energy equipment and services? Thomas Jonell, CTO, Eaton Towers: We source energy equipment a little bit differently from how the other towercos do it. We use Vendor Managed Inventory (VMI) partners to do the dirty work for us. One VMI partner company in each country has to keep stock of equipment and spare parts from a selection of suppliers in their warehouse, which they supply to us at an agreed margin.

Our VMI partners are not a generator resale agents, but rather they’re site construction companies whose management has taken a long term strategic view at getting beyond the business of building sites into buying, managing and servicing passive infrastructure equipment. They’ve built the facilities to store couple of hundred gensets and spare parts for us, which eases a lot of our challenges around planning and forecasting. VMI is especially important in battery replacement, as it can take up to three months to ship in replacement batteries. Through our RFP process we have selected two VMI partners who currently support our business in Ghana and Uganda. Going forward and depending on their presence and understanding of the other


markets Eaton move into we could possibly expand their business, however as we all know each market has its own unique requirement and the selection of our VMI partner is key in understanding these unique conditions. TowerXchange: What are your key performance metrics in energy opex? Thomas Jonell, CTO, Eaton Towers: For hybrid systems, Power Interface Units (PIUs) and passive cooling, Eaton has two basic criteria: first we want an IRR of over 25%, taking all costs into consideration; and secondly when we evaluate specific products the opex over a five year period must not be more than double the initial purchase cost. Selecting the right investment in hybrid systems can be particularly challenging. There are more than two hundred companies! Many look cheap when you buy them, but much depends on the battery replacement cycle. We often find it’s better to incur a higher initial capex if the battery lifecycle is longer, particularly for systems that have little or no need for cooling. This is also why it’s important for hybrid energy systems to have a demonstrable track record of success in Africa – so we can see proof of the IRR in a comparable market. Eaton’s VMI partners are responsible from a service point of view, so we might give them a couple of potential replacement batteries, get them trained up so they report monthly on whether they meet our requirements. If a battery fails, our O&M partner

contacts our VMI partner to replace the battery at the initial supplier’s cost, so we’re passing on responsibilities paying for a fixed service level as much as we can. TowerXchange: Do you buy in to the ESCO (Energy Service Company) business model – that energy providers need to progress from selling equipment to selling a service? Thomas Jonell, CTO, Eaton Towers: Personally I’ve always found the business of buying generators somewhat absurd. Given that so much of the complexity is in maintenance and refueling, I would like to buy energy as a service. I feel that service should be a fixed SLA for a fixed price per kWh. The ESCO model has been talked about for years, but I still don’t see a credible ESCO proposition that looks after refueling and service as well as equipment supply.

Will it happen? I don’t know if anyone has the capability and the cash to do it right. In my opinion, too many vendors still take a short-term view, with the initial capital outlay high, and a reluctance to buy in to shared energy risk on anything beyond a small scale. TowerXchange: What can towercos like Eaton do to maximise use of Africa’s unreliable grid power? Thomas Jonell, CTO, Eaton Towers: Tower operators’ hunger to stablise the grid is massive. We use grid power as far as possible, and recently invested in


Aiming for an IRR of over 25%

400 PIUs to ensure the right level of grid quality. The PIUs provide three critical functionalities: AVR, line conditioning and a phase selector. This enables us to run on mains as long as possible.

TowerXchange: How big a priority are access control systems? Thomas Jonell, CTO, Eaton Towers: It varies from country to country. In Uganda the number two problem with fuel is theft, so we’ve invested in a “Rolls Royce” of access management systems. When we took over the sites, we felt there were too many keys with ex-contractors, and when things were moved or stolen from a site, there was a lack of accountability. So we opted to install electro-mechanical locks, for

which keys are only given to designated people, and the ability to activate selective regions’ sites on each key. When our subcontractors go to a site they receive a unique code over the telephone. They input that code into a key, only then can it open the locks which it has been preprogrammed to, and for a limited time only. The system allows us visibility if someone tries opening a lock without the right code or with appropriate access and we can act appropriately. We would look at installing the same solution in our next country if the condition of that country requires it; Ghana for example does not have the same problem and priority for access management as Uganda. TowerXchange: What can towercos do to reduce the burden on cell site energy consumption caused by cooling? Thomas Jonell, CTO, Eaton Towers: We’re working on managing cooling requirements now. Many operators have containers on sites with active cooling systems, window shakers or split units. When you use active cooling, every genset start and stop requires you to re-dimension the power requirement. Installing passive cooling can free up the energy capacity to add one GSM tenant without doing anything else with the power on a site, so the cost per tenant goes down quite dramatically. But one solution doesn’t fit all; you’ve got to assess requirements site by site.

Intelligence requires good analysis, so we’re in the process of analysing data from our management systems to derive tailored solutions to optimise the cost of running each individual site; from power availability and genset start and stop, to the installation of PIUs. We’re currently exploring the option of installing NiCd batteries with a view to adding renewable (solar) energy in the next phase. Our objective is to achieve a 40% saving in energy costs. Our choice of hybrid system was a good example of Eaton’s focus on IRR. Candidly, this system is initially expensive, but the total cost of ownership over the lifetime of the system and the project management skills of the supplier make it a good medium to long-term investment. TowerXchange: Finally, what’s your view of the role active infrastructure sharing could play in the future of African telecom networks?

Thomas Jonell, CTO, Eaton Towers: Eaton are starting to explore areas where an infraco can continue to add value to market beyond passive infrastructure sharing. TowerXchange: Is active infrastructure sharing almost the enemy of the tower business? Thomas Jonell, CTO, Eaton Towers: Only to people who don’t understand it. From the tenants’ point of view, active infrastructure sharing in Africa now would be like walking before you can crawl. Before that there is a major need for much better


backhaul to support the growth in data traffic. But I think in due course towercos would be able to provide ducting for fibre, maintenance of active equipment, even work with the OEMs to provide active antennas that look like single tenant solutions on the outside, but support up to three tenants. Towercos are used to such changes: rooftops cannot be shared without changing the lease agreement. We’ve been talking to numerous telco equipment vendors about potential models of active infrastructure sharing involving the towerco, and we’re interested in exploring whether we can get operators to buy-in to active infrastructure sharing. We saw an initiative along these lines in Kenya six months ago, where the regulators issued one wholesale LTE license. It would be useful for TowerXchange to stimulate open discussions around the evolution of infrastructure sharing and the effect of sharing active equipment – it’s certainly a hot topic!

“ “Eaton are starting to explore areas where an infraco can continue to add value to market beyond passive infrastructure sharing

Health and safety, ethics and compliance – from policy to practicalitiesHow Helios Towers Africa keep staff, subcontractors and customers safe

Nick Summers, Helios Towers Africa


TowerXchange: Thanks for speaking to us today Nick. Please tell us a bit about your background and your role at Helios Towers Africa. Nick Summers, Director of Compliance and Safety, Helios Towers Africa: I started off on the property and site acquisition side of the industry at Andrew Wilkes and Associates and then at Vodafone, where over nine years I progressed into the end to end management of site deployment, culminating in a 16 month stint at Vodafone Ghana as head of rollout. In Ghana a moratorium on new tower construction came into force, so I took the opportunity to move over and develop the policy and governance elements of site deployment. I joined Helios Towers Africa two and a half years ago and after a stint in Ghana, I volunteered to assist with writing the group’s Health & Safety (H&S) manual, before adding responsibility for our Ethics & Compliance (E&C) and Corporate Social Responsibility (CSR) programmes. Helios Towers Africa has group-level EH&S governance, with a dotted line reporting to me from the Safety, Health, Environmental and Quality Manager in each local operation. We’ve also appointed Ethics and Compliance champions at each local operation to assist with driving forward group level requirements. CSR is coordinated locally with group level approval. TowerXchange: What Health, Safety and Quality standards are used in Africa? Do requirements vary substantially from country to country?

Read this article to learn:< How achieving OSHAS18001 instigates a systemic approach to the identification and management of risk

< The need to properly train, equip and supervise tower climbers

< How to ensure the H&S policy compliance of subcontractors

< How to develop a zero tolerance policy toward Facilitation Payments, and where there is the highest risk

that they might be requested

< The criticality of H&S, E&C policies in investors’ due diligence

Keywords: How to Guide, Interview, Towercos, Access Control, Monitoring & Management, O&M, Construction, Installation, Fuel Security, Risk, Health & Safety, SLA, Hybrid power, Skilled Workforces, RMS, Infrastructure Sharing, Africa, Ghana, Tanzania, DRC, IFC, Helios Towers Africa

Does operating a tower business in Africa require the turning of a blind eye toward a “Facilitation Payment” to expedite a lease negotiation or customs clearance? Or does it require a relaxed attitude toward health and safety? “This is Africa,” is often rolled out as an excuse. That excuse is not accepted at Helios Towers Africa. Compliance and Safety boss Nick Summers explains the policies and procedures that protect tower climbers, electricians and drivers, and that create a culture of zero-tolerance of bribery and corruption at Africa’s pioneering towerco.

Nick Summers, Director of Compliance and Safety, Helios Towers Africa: It doesn’t vary much from country to country, particularly when using international standards. Helios Towers Africa is working towards achieving OSHAS18001, which is the Health and Safety equivalent of the ISO14001 Environmental quality standard. OSHAS18001 is internationally recognised, many of our customers recommend it, and our investors are fully aware of what it is, which is obviously beneficial. Achieving OSHAS18001 means you have a risk based management system. It means that you can demonstrate that you know about the specific Health and Safety risks facing your business, and have a system in place to mitigate that risk. It requires creating a culture striving for continual

improvement, while encouraging those working on your behalf to work to the same standards and also obtain certification. We have a Helios Towers Africa group Environmental, Safety, Health and Social Management System (HSESMS) with associated policies which our local operations must abide by. Each operation in turn develops its own management system to take into account specific legal requirements and local nuances in each country. TowerXchange: So where are the key areas of H&S risk in the African tower industry?

Nick Summers, Director of Compliance and Safety, Helios Towers Africa: In our business in Africa I see the main areas of risk relating to climbing towers without the necessary training, supervision and protection; people working with electricity; and the risk of driving on Africa’s notoriously poor roads. People must be trained in climbing towers, but if they are not properly supervised, or indeed not supervised at all, then they might take shortcuts and not protect themselves fully, they might not use the right equipment, and then there’s a much greater risk of falling, and that means a risk of fatalities. In Africa I have seen too many instances of people climbing towers without the right equipment, not attaching themselves on properly, and putting themselves in danger. We take the safety of tower climbers very seriously


– we’re talking about our staff, our contractors and our customers. On a multi-tenant site many people have legitimate access, so we put checks in place to ensure that everyone is certified, trained, supervised and medically fit to go up the tower. There are also safety issues around the EMF (Electro Magnetic Fields) that come from antennas. In my experience, African operations appear to be lagging behind many other areas of the world where there appears to be far greater awareness of this issue. We work hard to increase the awareness of those needing to climb towers and ensuring that they do not put themselves at risk by manoeuvring in front of live antennas. As well as working with towers and the risk to tower climbers, we’re also working with electricity and the risk to electricians. We only permit qualified, certified electricians that meet certain standards to work on our sites. Finally, Africa has a terrible record for road safety in comparison to many other areas of the world. Helios Towers Africa encourages driver training – in our operations we make drivers pass a driving test. All our vehicles have tracking systems that monitor speed and where they are and enable us to ensure safe driving and to expedite rescue in the event of an incident. We encourage contractors to abide by our driving policies, and select vehicles suitable for the road conditions and load concerned. My personal view is that Health and Safety standards in the African telecom industry are

“ “

In Africa I have seen too many instances of people climbing towers without the right equipment, not attaching themselves on properly, and putting themselves in danger

lagging behind the mining and international manufacturing industries in Africa. H&S is of paramount importance at Africa’s top mines and, for example, I’ve seen excellent practices in the Guinness breweries all over Africa. The controls in Mining and Manufacturing are not always as rigorously enforced in the telecoms sector. Helios Towers Africa is joining some of the big global operators in trying to change the Health & Safety mind-set in African telecoms, which can only be beneficial. TowerXchange: Where does responsibility for defining and maintaining H&S standards

fall between Helios Towers Africa and your subcontractors? How does H&S figure into procurement and partner selection processes? Nick Summers, Director of Compliance and Safety, Helios Towers Africa: Our view is that all of Helios Towers Africa’s suppliers should be OSHAS18001 compliant within a given period. The effort to achieve certification will raise the standard of our contractor base, and provides a level of reassurance that they’re conversant with what is required of them, All our suppliers have Environmental, Health


and Safety clauses in their contracts that align to Helios Towers Africa’s policy. Each local operation manages its own suppliers and audits their performance, while I in turn audit our operations to ensure that they are in compliance. Helios Towers Africa conducts comprehensive due diligence on every prospective new supplier covering the likes of Health and Safety, Ethics & Compliance, financial history, Human Resources et cetera. H&S features very highly, if a supplier cannot demonstrate that they can abide by our policies, they will not be selected. TowerXchange: Does having multiple tenants, and multiple teams, on a cell site multiply the EHS issues? Whose EHS policies apply? Nick Summers, Director of Compliance and Safety, Helios Towers Africa: It’s our site and we set the policies in conjunction with our customers. On our sites, Helios Towers Africa’s EHS policies set the minimum standards expected and customers and contractors are required to abide by them. Our policies were defined taking into account the most stringent of our customer requirements, so in many instances we are very much aligned. It’s written into tenants’ Master Lease Agreements that they must abide by our H&S policies, and our H&S managers at local operations work to make our customers aware of our H&S policies, and that our customers in turn make their subcontractors aware of the policies by which they must abide.

On the rare occasion that it happens, we have had no qualms about preventing access if customer isn’t appropriately prepared with the right equipment or the right certifications. TowerXchange: I saw that Helios Towers Africa recently received an award for investing US$40m in energy storage and RMS to reduce your carbon footprint. Tell us about Helios Towers Africa’s carbon management strategy. Nick Summers, Director of Compliance and Safety, Helios Towers Africa: We won that award for installing Remote Monitoring Systems on all our sites and deep cycle batteries on about 40% of them. Helios Towers Africa conducted a carbon footprinting exercise in 2011, and will use that as

Business Conduct is not just about anti-corruption and anti-bribery as it also covers a number of other areas such as due diligence, work place conduct, conflicts of interest and so on. Transparency International’s “Global Corruption Perception Index” (http://cpi.transparency.org/cpi2012/results) shows that Africa is a particularly challenging environment when it comes to corruption and bribery. Of the three countries in which we’re currently operating, Ghana is ranked 64th out of 176 countries, Tanzania 102nd and DRC 160th. We’re working in a difficult environment, in markets where the regulators know that opportunities for corruption and bribery are likely to occur and we have to be prepared for that. TowerXchange: Where are the highest risk areas of the business where you might encounter issues of corruption or bribery? Nick Summers, Director of Compliance and Safety, Helios Towers Africa: Both in site acquisition and in the logistics of clearing customs there can be a risk of exposure to what are called Facilitation Payments, which are strictly prohibited under our code of conduct. This is not specific to our business or industry. Wherever there is the need for official paperwork or signatures there is the possibility that Facilitation Payments may be requested. We have to do everything we can to mitigate corruption and bribery. We have a substantial


an initial benchmark to compare our 2012 data once it’s collated. So we’re actively monitoring our carbon footprint – developing KPIs with the aim of continually reducing our relative footprint will be our next step. Incidentally, when we conducted that carbon footprinting study in 2011, we tried to benchmark against other towercos worldwide, but we could not find any evidence that any other towercos had conducted a similar exercise and certainly not in Africa. TowerXchange: I’ve just read Helios Towers Africa’s Code of Business Conduct, which is downloadable from your website. Please could you summarise your ethics and anti-bribery policies, and talk about the practicalities of compliance? Nick Summers, Director of Compliance and Safety, Helios Towers Africa: We have to abide by two principal sets of legislation; the UK Bribery Act 2010, and the US Foreign Corrupt Practices Act 1977. There are six fundamental areas that need to be addressed and managed to ensure that we have adequate procedures in place to satisfy the legislative requirements. Having policies and procedures that are proportionate to the risks faced by the business is one of the fundamental areas. Therefore our policies and procedures have been written taking into account the challenges and risks that we face in our business and they provide our employees with guidance and advice with how to overcome certain situations. Our Code of

“ “On the rare occasion that it happens, we have had no qualms about preventing access if customer isn’t appropriately prepared with the right equipment or the right certifications

education programme in which all staff are trained, but you can’t just train staff the once, you’ve got to keep a constant flow of information to keep these issues front of mind. We aim to ensure that all staff within the business come into contact with some form of E&C education or literature once a quarter. TowerXchange: What can towercos do to reduce fuel theft? Nick Summers, Director of Compliance and Safety, Helios Towers Africa: One of the primary steps we’re taking to reduce the amount of diesel we need to use is through the introduction of hybrid batteries. In Tanzania we have some LPG generators

which have been trialled in Ghana too.

Diesel theft is an area of great concern for every African tower operator. Whether it’s by security guards, local people outside the site, maintenance people on site the site, or administrative theft, we all suffer diesel theft to greater or lesser extent. Helios Towers Africa are tracking fuel usage through the RMS that give alarms when an unusual amount of fuel is being drained from the tank, and we can cross check fuel usage against DG runtime and invoices to ensure there is no administrative theft. We’re also increasing access controls, giving NOCs greater control over who has access, when and for


how long so that individuals can be pinpointed.

Ultimately all our maintenance contractors are responsible for site security too. The O&M contractor is the “single point of failure” and has the financial incentive to minimise pilferage as we only pay for diesel burned. The Operations & Maintenance contractor is held financially accountable for any theft which gives them added incentives to ensure that security is properly maintained. TowerXchange: Thanks Nick, please could you sum up the importance of H&S, E&C issues for the African tower industry. Nick Summers, Director of Compliance and Safety, Helios Towers Africa: Our policies are driven not just by our own ethics but also by our investors. For example, the IFC have invested in us, and with their investment comes many obligations which we have to meet. When towercos seek new funding, a lot of the focus of the due diligence is related to H&S and E&C. It’s important that we have the policies and management systems in place because we should be continually seeking to increase standards in Africa. We must be striving to leave a positive legacy and raise the bar in the African telecoms/towerco industry. “This is Africa” is not an excuse for accepting poor H&S standards or tolerance of corruption and bribery. We’re not saying we’re perfect, and it’s not easy, but we can all improve, and that’s what we’re continually trying to do

“

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When towercos seek new funding, a lot of the focus of the due diligence is related to H&S and E&C. It’s important that we have the policies and management systems in place because we should be continually seeking to increase standards in Africa

Growth stock American Tower playing a different game to PE-backed towercosAnnual results reveal American Tower sees international markets as the “turbo charger” of their “domestic market Ferrari engine”

TowerXchange has sifted through the American Tower 2012 annual report, associated webcast and dialed into a couple of the conferences on the recent investor junket to share highlights with our readers. Our selective coverage of the international aspects of American Tower’s annual report is a result of TowerXchange’s pre-occupation with emerging market towers, and our current focus on Africa. For the full picture we recommend you download the full 2012 annual report from:www.americantower.com. American Tower aims to again double the size of their business in the next five years

The announcement of American Tower’s 2012 annual results re-emphasised their status as the “corporate” towerco participating in emerging markets. American Tower is a growth stock, delivering an impressively consistent 14-15% CAGR in rental and management segment revenue, adjusted EBITDA and AFFO per share over the last five years, targeting a “lengthening and strengthening” of that growth trajectory over the next five to ten years.

While nearly 60% of American Tower’s towers are now situated outside the US, and international markets are growing faster than the mature US tower market, the US continues to represent around 70% of American Tower’s revenue. American Tower Chairman, President and CEO Jim Taiclet describes international markets as the “turbo charger” of their “domestic market Ferrari,” painting a picture of a phased influx of amendment revenue as the US and German markets mature; followed by South Africa, Brazil, Mexico and Columbia; before finally markets like India and Ghana mature on their

Read this article to learn:< The role of international markets in “lengthening and strengthening” American Tower’s growth

trajectory, targeting a doubling of assets and profitability in next 5 years

< The impact of 4G on amendment revenue and cell site densification

< American Tower’s strategy to secure first mover advantage in “cornerstone” international markets

< American Tower’s M&A war chest of approximately $1bn

< A comparison of per site capex costs and tenancy ratios in the US, LatAm, Germany, India and Africa

Keywords: Annual Report, Cost of Capital, Towercos, Country Risk, 3G, 4G, VoLTE, Amendment Revenue, Cell Site Densification, Acquisitions, Build-to-Suit, Tenancy Ratios, Capex, Infrastructure Sharing, Africa, South Africa, Ghana, Uganda, Germany, LatAm, Brazil, Mexico, Columbia, American Tower


respective migration paths to 3G and 4G.Low cost of debt compared to the high cost of capital for PE-backed competitors will continue to give American Tower a financial edge when bidding for assets in “cornerstone” international markets such as Brazil and South Africa. But American Tower has had, and seems likely to continue to have, a limited appetite for country risk. American Tower’s unique global footprint gives them the ability to pick and choose markets, and the discipline to walk away from auctions where bidding has outstripped their valuation. Nonetheless, American Tower remains in pole position for any assets that come to market in premium emerging markets like South Africa. Growth stock “American Tower’s growth strategy is based on a simple observable premise: that consumers’ appetite for mobile communications and entertainment is growing dramatically in the US and around the world,” said Taiclet, opening

American Tower’s full year 2012 earnings release webcast. “Mobile data traffic grew five times in the first two years of this decade. Moreover, the most recent Cisco forecast predicts that mobile network traffic will grow another ten times over the next five years. The Cisco study also estimates that approximately 75% of this growth will be delivered over traditional macro sites, primarily towers.” Taiclet continued: “Macro site network infrastructure, which is predominantly tower based, will shoulder the bulk of network expansion, and is expected to grow at a 50% CAGR over the next five year period.” Taiclet emphasised that the

installation of additional antennae for 4G or LTE was a key driver of “amendment” revenue, where existing tenants buy additional capacity to hang next generation technology active equipment, increasing the value of existing client relationships. 3G and 4G driven cell site densification to spread from US to international markets “As the level of penetration of LTE devices (increases) and VoLTE is added to carriers’ offerings, it is our view that additional cell sites will be needed as a result of the higher signal strength required to effectively deliver acceptable video,


Amercian Tower Growth

US Dollars(Billions) Total revenue

Adjusted EBITDA

3.0

0

0.5

2008 2009 2010 2011 2012

1.0

1.5

2.0

2.5

1.6

1.11.2

1.3

1.6

1.91.72.0

2.4

2.9

“ “So as site proximity, and consequently network density, increases, American Tower expects to secure additional leases on our existing towers, as well as more opportunities for new tower construction


and VoLTE applications, to large numbers of users,” said Taiclet. “So as site proximity, and consequently network density, increases, American Tower expects to secure additional leases on our existing towers, as well as more opportunities for new tower construction.” “Today the US is among the leaders in moving to 4G technology, with the four largest domestic carriers in the process of national deployments right now. However, we believe that access to the broadband data and entertainment services enabled by 4G will be in high demand not only in the US but worldwide.” Taiclet classified South Africa, Mexico, Brazil and Colombia as markets where “3G is still in the process of deployment, while 4G is either in the planning or very early initiation phase... In these countries, the lag time behind the US

schedule is we believe about two to five years.” Taiclet described American Tower’s Ghana and India markets as characterised by the continuing expansion of voice coverage, with 3G service still in the introductory stage and 4G to come down the road. Taiclet described such markets as being six to ten years behind the US schedule. “We believe our international presence will lengthen and strengthen AT’s domestic growth trajectory,” concluded Taiclet. American Tower targets “cornerstone” international markets “Beginning in 2007 we established regional teams around the world to explore and cultivate growth opportunities, leveraging our US knowledge base, and our early experiences operating in Mexico and Brazil,” continued American Tower’s Chairman

Jim Taiclet. “These teams use their first mover advantage to build leading franchise positions in the most critical and attractive markets in each region. For example, expanding dramatically in Mexico and Brazil, while adding new cornerstone markets such as India, Columbia, South Africa and most recently Germany. Moreover, our teams have secured deeply rooted strategic relationships with some of the world’s leading multi-national MNOs such as Telefonica, MTN and Millicom, further strengthening our international position. So given our geographic strength, and MNO partnerships, I‘d argue that our strategic positioning on the international front is truly exceptional.” “As a result of our growth prospects in the US and around the world, we’ve set a new aspirational goal to once again double our asset base, and our financial performance, over the next 5-6 year planning horizon,” added Taiclet. When asked in Q&A how this doubling of the business would breakdown, Taiclet suggested half was supportable

The engineering community refers to the rollout of 4G or LTE in three phases. “Phase one build is dominated by overlays on existing sites, which is driving most of the tower industry’s 4G business right now,” said Jim Taiclet, Chairman, President and CEO of American Tower during his recent 2012 annual report webcast. “Verizon and AT&T are the two leaders in the deployment schedule. Our expectation is for Verizon to have phase one essentially complete, which in our view is 300m pops or more, by the end of 2013. With AT&T our expectation is that they’ll be in the same situation, with 300m pops covered, by the end of 2014. Sprint and T-Mobile will get there in our estimation by the end of 2015. As you sequence those phase one schedules out, phase two tends to follow very quickly after, you’ll see through the end of 2015 overlaps between phase one and phase two among the carriers. And in phase two you see the densification (including commissioning new build to suit towers) happening,” added Taiclet. So we’re still at the beginning of the impact of LTE, even in the US where less than 10% of handsets are 4G LTE. Given that the monthly network burden goes up five fold when you swap a 3G for a 4G handset, when penetration reaches 30-50% on these phones that need 5x capacity, you can understand why American Tower is bullish that operators will have to keep investing capex and adding more sites to their networks.

Phases of LTE deployment and implications for towers, using US market as an example

“ “we’ve set a new aspirational goal to once again double our asset base, and our financial performance, over the next 5-6 year planning horizon


from internal growth – leasing on existing sites, with 10-15% from construction of new build to suit sites and the balance from new acquisitions. “We anticipate that much of this growth will be generated organically through our worldwide portfolio of more than 54,000 sites. We also anticipate that our strategic relationships with our key customers around the globe should support a construction program of 2-3,000 sites per year,” continued Taiclet. “Our significant cash flow generation capabilities should in turn enable us to choose to invest in additional acquisitions that meet our investment criteria. Our management objective is to deliver mid-teens growth and AFFO per share for our investors as we strive to double the business again over these next five years.” American Tower’s international revenue up 34% in 2012 “As a result of the nearly 18,000 sites we’ve added to our international portfolio since the beginning of 2011, and the associated impacts of increased pass through revenue, as well as record levels of organic new business, our international rental and management segment reported revenue increased over 34% to US$863m, with over 50% core revenue growth for the full year,” said Tom Bartlett, EVP and CFO of American Tower. “Core organic growth within our international segment was 13.6%. In 2012 our international pass through revenue was $229m, reflecting an increase of about $53m,” added Bartlett. In 2012 American Tower constructed 2,111 sites internationally and acquired 5,738 sites, including acquisitions in the Ugandan and German markets

with an average tenancy ratio of over 1.3 across the acquisitions. “Given the low average tenancy, expect these sites to generate growth over future years,” added Bartlett. EBITDA growth and capex forecasts for 2013 “We currently expect our reported 2013 adjusted EBITDA to increase to between $2.08 and $2.13bn, representing reported growth of over 11% and core growth of 14.8% at the midpoint,” said American Tower’s CFO Tom Bartlett. “In 2013, we expect to carefully deploy our capital through our capital expenditure programme and selected acquisitions. We currently plan to spend between $550-650m in capex during the year, which includes the construction of 2,250-2,750 new sites.”

M&A strategy In Q&A American Tower Chairman Jim Taiclet indicated that American Tower expected to fund most acquisition opportunities from internal cash flow and access to debt markets. He went on to describe how American Tower had about $2bn of available capital as of the end of 2012 that, after the aforementioned $550-650m capex deployment, and distribution of dividends, left an M&A war chest of approximately $1bn. Taiclet described this as sufficient to fund “mid-sized acquisitions,” adding “if there’s a compelling large scale acquisition that might mean an exception in terms of issuing equity money”. This clearly indicates that American Tower continues to have a lower cost of capital than the PE-backed rival towercos bidding for tower


portfolios in emerging markets. American Tower also believes an increasing number of mobile network operators are opening up to the idea of selling and leasing back tower portfolios. “The willingness of wireless carriers around the world to sell tower assets is increasing. It’s not increasing across the board with every multi-national coming to the same conclusion at the same time, but we do believe that there will be opportunities and activity in pretty much every region that we’re operating in, and we will use our standard evaluation process to determine if any of those assets should trade to us. If we meet our criteria you’ll see us act, and if we don’t you may not see a trade or someone else may get it. But I do think it’s something that many carriers are considering, but they also view it as important and strategic, and that attitude moves over time and not necessarily instantly to sell,” concluded Taiclet. Comparing tenancy ratios and capex costs across regions Core organic growth or “same tower growth” is expected to be around 10% in American Tower’s international markets. When asked which international markets were expected to have outperformed that number in 2012, Taiclet said “I’d put South Africa right at the top of the list. It’s an incredibly busy leasing environment with Telkom, Vodacom and MTN all deploying 3G data at a pretty rapid rate. We were the first mover commercial leasing company in South Africa with our Cell C acquisition and the timing happened to be very fortuitous for us on that one.” “In Latin America, both Brazil and Mexico drove

excellent new business. Both of them had Nextel deploying 3G aggressively, but in Brazil you also had America Movil, Telecom Italia and Oi filling out their 3G networks as well at a pretty rapid pace. All five of those carriers in Brazil are trying to get ready for the World Cup and the Olympics, and there are some requirements for them to have coverage for those events that are pretty extensive. In Mexico, Telefonica was also very active along with Nextel as they tried to stay competitive with Telcel in 3G,” Taiclet added. In Q&A American Tower were asked to compare the typical capex per site in the different regions in which they were active. Jim Taiclet suggested that while capex varies significantly between and even within markets, a rough average cost per site might be around $250k in the US, $175k in Latin America, $50-60k in India, and $190-200k in Africa. American Tower were also asked about the average number of tenants on each of their sites, to which they responded “in international markets right now

it’s about 1.5 times, 2.6 in US, so overall it’s about 2 times. In our Asian markets it’s up in the 1.7 range, in our African markets it’s probably in the 1.4 range where we’re getting into some of those markets with single tenant towers out of the gate. And in Latin America we’ve picked up some single tenant towers there and it’s probably in the 1.5 times. And in Germany in the deal that we’ve just done, it’s 1.6-1.7 times.” American Tower’s total revenue increased 17.7%, adjusted EBITDA increased 18.6% in 2012. Let’s conclude with a few headlines numbers from American Tower’s FY2012 annual report. Total revenue increased 17.7% to US$2,876m. Adjusted EBITDA increased 18.6% to US$1,892.4m, with an adjusted EBITDA margin of 66%. Focusing on American Tower’s international business, international rental and management segment revenue increased 34.4% to US$862.8m, or 30% of total revenues, with a gross margin increase of 30.5% to US$548.7m. International rental and management segment operating profit increased 33.9% to $453.1m at an operating profit margin of 53% (72% excluding the impact of pass-through revenues). That compares to a 77% operating profit margin in American Tower’s domestic rental and management segment. American Tower’s tower count in Africa increased very slightly in Q4 2012 with the construction of eighteen towers in Ghana, bringing the total to 1,926, two in South Africa (1,604 total) and twelve in Uganda (1,043 total). American Tower owns more towers in Africa than any other independent towerco

“ “in our African markets (the number of tenants on each tower is) probably in the 1.4 range where we’re getting into some of those markets with single tenant towers

Understanding FX risk in AfricaWhat are your hedging options?

TowerXchange: Please tell us about the FX risks related to investing in African countries.

Scott Gooch, Director, Corporate Foreign Exchange, Wells Fargo: When making a decision to invest or grow business in an African country there are several key risks that companies must weigh including their overall business model risks, economic risk, and geopolitical risk. Once a company has made a decision to investment in a business, then FX risk becomes another key risk factor that must be addressed.

FX risk encompasses everything from the basic ability to successfully manage cross-border cash transactions to hedging future cash expenditures. Converting from one currency to another and delivering cross border can create operational and market risk.

TowerXchange: Please explain the cross border transaction risks and the steps that can be taken to mitigate that risk.

Scott Gooch, Director, Corporate Foreign Exchange, Wells Fargo: The initial FX risk factor is to determine how to successfully wire funds from the country of origin to the bank within the African country, and which currency to transact business in order to facilitate the transaction.

On the surface this sounds simple, but within the African continent there are over fifty different countries and most have their own local currency. While many of the local currencies are

Read this article to learn:< The challenges of delivering currencies into certain African countries

< What you need to know to determine which currency to transact business in

< How to use hedging tools to “lock in” budgeted FX rates

< Comparing “Forward rates” and “currency options”

< What happens when a currency crashes?

One of the most important components of country risk is foreign exchange (FX) risk. TowerXchange spoke to Wells Fargo’s FX expert Scott Gooch to learn how companies investing and operating in Africa could hedge to “lock in” an FX rate, or range of rates, thereby controlling exposure to FX risk in their budgets and transactions.

Keywords: Country Risk, Towercos, Investment, Valuation, Capex, Bankability, Africa, Zimbabwe, Wells Fargo


Scott Gooch, Wells Fargo

liquid and fairly easy to deliver, others may be very illiquid or even restricted. An analysis is initially needed to determine the best currency to transact business (i.e. local currency or an acceptable base currency such as Euros (EUR), US Dollars (USD), or South African Rand (ZAR)). Successful delivery of funds to an in-country bank must be timely, as these funds are often time sensitive as they relate to closing a business transaction (ie. fund an acquisition, invest in capital expenditure), maintaining ongoing operations, funding payroll, et cetera. So it is important to select a financial partner that has experience delivering currencies into the African country of focus. Electronic wires are the most widely used method of transacting business.

Paying for most transactions generally involves a basic Spot FX trade, which is a market exchange of one currency for another currency which is agreed upon at a rate at a fixed point in time. The spot rate is the agreed upon rate to exchange one currency for another currency with the actual exchange generally occurring between two banks two business days later.

Once the best currency to transact in has been determined, then a company must understand its ongoing FX risk which can create changes in value. This risk to value is due to potential changes in the underlying FX rates between the time a future transaction is identified and the time that transaction actually closes. The economic value of the transaction will change with the change in the underlying FX rate between the time a decision is made to invest and the future date that the

investment is actually made.

To give an example of the FX risk due to changes in the underlying spot rate: at time of writing the ZAR is trading in the FX market at 9.2 ZAR/USD, which means a company can buy 9.2 ZAR for each $1.0 USD.

Thus, a US company contracts to buy towers priced in ZAR for 920 million ZAR in a transaction which will close in three months.

The company uses the current spot rate of 9.2 as its budget rate, which at the time the contract is signed equates to $100million USD.

Assume that three months later when the transaction is closing the ZAR is then trading at 8.0 ZAR/USD. The USD cost required to close the 902 million ZAR transaction would then be $115

million. Thus, it would cost the company 15% more in USD terms to buy the equipment which it had budgeted at only $100 million.Such a move could create funding issues if the company only budgeted to fund $100 million.

TowerXchange: How can companies mitigate FX risk by hedging?

Scott Gooch, Director, Corporate Foreign Exchange, Wells Fargo: This FX currency risk or market exposure can often be mitigated by utilizing a hedging tool. In the financial world, Hedging is a term describing the act of utilizing a financial contract or instrument to mitigate future financial market risk, by fixing the underlying market variables. In this case the underlying market variable is the unknown future spot rate compared to the initial spot rate. In the example above, the spot rate changed unfavorably for the client from 9.2 ZAR/USD to 8.0 ZAR/USD. When the company originally ordered the equipment it budgeted for the cost of the ZAR at the then-current spot rate of 9.2 ZAR/USD. When the equipment was delivered the then current spot rate was 8.0 ZAR/USD. The company could have considered Hedging by locking in a future ZAR rate for purchasing its ZAR three months into the future. This type of hedge is known as a “forward rate.” These hedging products are generally offered by FX banks to clients if the banks are comfortable with the underlying credit exposure of the company.

If the company had been able to work with a bank that was comfortable with the company’s


“ “FX currency risk or market exposure can often be mitigated by utilizing a hedging tool

credit risk and able to provide the company with a forward rate, then the company could have locked in a forward rate contract to buy its ZAR in three months. When the then-current spot rate was 9.20, the then-current forward rate the company could have locked in to buy 920 million ZAR in three months was 9.25 ZAR/USD*. Thus, if the company entered into a forward hedge with the bank, it would be agreeing to buy 920 million ZAR at a rate of 9.25 ZAR/USDS in three months for $99,460,000, regardless of the future spot rate. In this example the company has hedged its risk to changes in the underlying spot rate over the next three months, and the forward rate it locked in is actually more favorable than the then-current spot rate.

For many emerging market currencies the forward rate is often more attractive than the initial spot rate. This is because forward rates are based on the spot rate adjusted for the interest rate differential between the two underlying courtiers and adjusted

for the company’s credit risk. Because interest rates in most emerging markets are higher than in the US this means that the forwards will generally be equal to or more favorable than the underlying spot rate.

TowerXchange: Are there alternative methods for mitigating against FX risk? Scott Gooch, Director, Corporate Foreign Exchange, Wells Fargo: The other common way of hedging FX risk is to protect yourself with a “currency option”. This is more like a company buying insurance. The company pays an up-front premium to the bank, and the bank agrees to provide currency at no worse than a specific future exchange rate. So if you win a major project generating revenue a year from now, you could pay to take a currency option to protect your budgeted FX rate. If the currency you’re exposed to weakens, then you simply let the contract expire. The more FX risk you can take, the cheaper that up front premium.

TowerXchange: What are the risks involved in hedging?

Scott Gooch, Director, Corporate Foreign Exchange, Wells Fargo: There are risks involved in hedging which should be closely considered prior to entering into any hedge. The primary risk of hedging with a forward hedge is that even if the currency weakens and it would be more favorable for the company to purchase the ZAR in the then-current spot market at an all-in lower price, it must still honor its forward hedge with the bank. In the example above we outlined the risks to the

company if the ZAR strengthened against the USD and the company was not hedged. In similar fashion, if the company does hedge and for example the future spot rate is 10.0 ZAR/USD it would have proven more beneficial with the benefit of hindsight not to have hedged. Additionally, if the underlying transaction to purchase the towers for 920 million ZAR is terminated for unforeseen reasons, the forward hedge is still in place and must be terminated with the bank which could result in a loss. Because of these potential risks the company should work with its FX bank closely to consider


“ “manage the risks that are easy to manage, and mitigate at least the risks that you can mitigate

these and other risks that could be created by hedging.

TowerXchange: What happens in extreme examples, such as the crash of the Zimbabwe dollar in 2008-9?

Scott Gooch, Director, Corporate Foreign Exchange, Wells Fargo: Sometimes the degree of political risk restricts your options to mitigate FX risk. It’s very hard to hedge currency exposure in volatile circumstances such as we saw in Zimbabwe, so it becomes critical to limit your exposure as much as possible by not holding cash in country, and by knowing the risk-return profile. The general rule of thumb is to manage the risks that are easy to manage, and mitigate at least the risks that you can mitigate


“ “For many emerging market currencies the forward rate is often more attractive than the initial spot rate. This is because forward rates are based on the spot rate adjusted for the interest rate differential

* Currency Restrictions may apply - OFAC Sanctions Programs and Country Information provided by the U.S. Department of Treasury at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx (Information correct as at 20 March 2013)

African currencies and any restrictions*

Algeria -- Algerian dinar (DZD)Angola -- Kwanza (AOA)Benin -- West African CFA (XOF)Botswana -- Pula (BWP)Burkina Faso -- West African Franc (XOF)Burma -- Burmese kyat (MMK) Restrictions *Burundi -- Burundi franc (BIF)Cameroon -- Central African franc (XAF)Cape Verde -- Cape Verdean escudo (CVE)Central African Republic -- Central African Franc (XAF)Chad -- Central African Franc (XAF)Comoros -- Comorian franc (KMF)Cote d’Ivoire (Ivory Coast) West African Franc (XOF) Restrictions*Republic of the Congo -- Central African CFA (XAF)Democratic Republic of the Congo -- Congolese franc (CDF) Restrictions*Djibouti -- Djiboutian franc (DJF)Egypt -- Egyptian pound (EGP)Equatorial Guinea -- Central African Franc (XAF)Eritrea -- Nakfa (ERN)Ethiopia -- Ethiopian birr (ETB)Gabon -- Central African Franc (XAF)Gambia -- Dalasi (GMD)Ghana -- Cedi (GHS)Guinea -- Guinean franc (Franc Guineen) (GNF)Guinea-Bissau -- West African Franc (XOF)Kenya -- Kenyan shilling (KES)Lesotho -- Loti (LSL)

Liberia -- Liberian dollar (LRD)Libya -- Libyan dinar (LYD) Restrictions*Madagascar -- Malagasy ariary (MGA)Malawi -- Malawian kwacha (MWK)Mali -- West Africa Franc (XOF)Mauritania -- Ouguiya (MRO)Mauritius -- Mauritian rupee (MUR)Morocco -- Morrocan dirham (MAD)Mozambique -- New Mozambican metical (MZN)Namibia - Namibian dollar (NAD)Niger -- West African Franc (XOF)Nigeria -- Naira (NGN)Rwanda -- Rwandan franc (RWF)Sao Tome and Principe -- Sao Tome Dobra (STD)Senegal - West African Franc (XOF)Seychelles -- Seychellois rupee (SCR)Sierra Leone -- Sierra Leonean leone (SLL)Somalia -- Somali shilling (SOS) Restrictions*South Africa -- South African rand (ZAR)Sudan -- Sudanese Pound (SDG) Restrictions*South Sudan -- South Sudanese Pound (SSP) Restrictions*Swaziland -- Lilangeni (SZL) Tanzania -- Tanzanian shilling (TZS)Togo -- West African Franc (XOF)Tunisia -- Tunisian dinar (TND)Uganda -- Ugandan shilling (UGX)Zambia -- Zambian kwacha (ZMK)Zimbabwe – U.S. Dollar (USD) Restrictions*


Special Feature:

With three tier one operators vying for market share, a fourth license imminent, 110% subscriber penetration and a maturing 3G rollout, the Egyptian market is ripe for infrastructure sharing. But what form will it take?

Will Vodafone Egypt, MobiNil and Etisalat Misr agree an operator-led joint venture towerco? Could one of the operators secure first mover advantage by selling and leasing back their towers? What role will be played by the four managed service providers licensed to lease infrastructure? Is there a role in Egypt for Africa’s ‘Big four’ towercos? And how has the revolution impacted the Egyptian telecom industry?

In this case study, TowerXchange draws on independent analysis from strategic consultants Mott MacDonald, and speaks to business leaders at Mobiserve and EEC Group to answer these questions and evaluate the prospects for a major infrastructure sharing deal in Egypt.

Egypt case study

Three viewpoints on Egypt:55 The Mott MacDonald Share Square: Egypt

57 Mobiserve believe a tower deal is imminent

60 EEC Group are positioning themselves to

partner towercos

Share Square: Egypt

Share Square - Egypt

A new regular feature with Mott MacDonald

Egyptian Mobile Operators

The Egyptian National Telecommunication Regulatory Authority (NTRA) awarded a licenses to Alkan, EEC Group, HOI-MEA and Mobiserve Holding, under the name MobiTower, to implement and deploy tower sharing infrastructure. There are now four tower infrastructure license operators in Egypt and it will be interesting to see whether MobiTower, or possibly one or more of the three other licensees, will focus on a build-to-suite business model (building towers to order) or seek to purchase the assets of one of the three mobile network operators.

At least part of the growth in new towers will come from a fourth mobile license, set to be announced by the NTRA in mid-2013. It is expected that this concession will be issued to Telecom Egypt - the fixed-lined provider in the region who also has a stake in Vodafone Egypt - who plans to launch an LTE network. The three incumbents are running trials of LTE networks in anticipation of 4G services.

Egypt is an attractive market for a tower operating company. Despite mobile penetration of over 100%, 3G penetration in Egypt is low, while the subscribers per BTS ratio is high (well over 6,0004), indicating relatively low Minutes of Use. With the mobile network operators keen to move subscribers to what are hopefully higher ARPU5 services, it is expected that 3G (and to a lesser degree 4G) will grow strongly over the next few years6: data from the International Telecommunication Union indicates that 3G handset penetration should exceed


MobiNil

Vodafone

Etisalat Misr

Egypt has a population of 85.3 million1 and is served by 3 mobile network operators: Vodafone, Etisalat Misr and Mobinil2. With 93.7 million subscribers, penetration stands at 110%, and has grown almost 7% over the past 12 months3. All three operators offer advanced 3G services.

Opportunity for TowerCo entry with focus on high Lease Up Rate (LUR)

Opportunity for Outsourcing by MNO to TowerCo

Limited opportunity for new entrant TowerCo

Egypt

3G 4G

Cu

rren

t Sh

arin

g

Non

ePa

ssiv

eA

ctiv

e

Technology Development

24.3%

40.8%

34.9%

3 MNOs: Vodafone, Etisalat Misr, Mobinil (FT/Orascom)4th operator - Telecom Egypt - expected to enter market 2014Subscriber Penetration at 110% and growing at >5% a year - but 3G penetration low at 12.5%Alkan, EEC Group, HOI-MEA and MobiTower (Mobiserve) awarded licenses to provide passive infrastructure sharingMarket suited to outsourcing agreement between MNO and TowerCo as well as opportunity to drive up LUR as 3G penetration increases

50% by 20167. This growth in 3G penetration and capacity will drive the demand for additional towers. Given the capex investment required by 3G and 4G deployment, the capex/ opex savings of tower deployment that a tower company can offer are compelling.

It is the anticipated 3G growth that will provide the opportunity for a tower operating company with a portfolio of towers to focus on driving up their Lease Up Rate. The subsequent move to 4G is unlikely to contribute significantly to tower growth: the 4G macro layer will be rolled out mainly on existing 3G sites and much of the capacity expansion will be handled using small cells and micro sites located on buildings and street furniture.

Given such an attractive market for tower sharing it is almost certain that the other tower infrastructure licence holders will also look to offer or expand tower sharing services.

1 CIA World Factbook – data is estimate for July 2013

2 Mobinil is majority owned by France Telecom, with just under 94% of the shares, and Orascom, with 5%

3 Africa & Middle East Telecom Week (North Africa States Mobile Network Subscriber Statistics: 3Q 2012)

4 Data taken from number of base stations and subscribers for one of the three incumbents

5 ARPU: Average Revenue Per User

6 3G Subscribers in Egypt to Grow Five Fold till 2012 by Shushmul Maheshwari

7 http://www.itu.int/ITU-D/arb/ARO/2012/ICTIndicators/Presentations/s3/S3-04.pdf

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Tower Xchange

Tower deal imminent in EgyptNorth Africa’s leading managed service provider Mobiserve is well positioned to be a credible partner for potential multiple operator JV towerco

Tarek Aboualam, CEO, Mobiserve

TowerXchange: Are Mobiserve interested in moving up the value chain and becoming a towerco? Tarek Aboualam, CEO, Mobiserve: We are certainly interested in the tower acquisition and leaseback business. We are one of three companies that have acquired a license in Egypt as a tower operator, which enables us to build and share towers. MobiTower is our towerco subsidiary based in Egypt. The towerco business is just starting in Egypt. We are in deep talks with all the operators, in some cases in advanced negotiations. When Mobiserve decided to move into the towerco business, we knew we lacked some experience and know-how. So we are in serious talks with a major international player working in the tower business in other countries. While Mobiserve bring the local knowledge of operations and rollout in North Africa, this other company are more experienced in how to negotiate a deal, structure a contract and build revenues. One of Mobiserve’s shareholders is Delta Partners, another expert in the tower industry, and they are helping too. TowerXchange: Tony Dolton, CTO of Vodafone Egypt said “I believe it would be difficult to make a traditional towerco business case without some sort of network consolidation so for a towerco model to work in a country like Egypt we probably have to have a slightly different model than the traditional one” (see TowerXchange issue 1, pages 24-26 ). Tarek, do you think a

Read this article to learn:< The status of discussions concerning a potential tower transaction or operator-led JV in Egypt

< The credibility of Mobiserve, who manage 18,000 cell sites, as a licensed towerco in Egypt

< The criticality of ‘street-level’ knowledge in overcoming local electricity and fuelling challenges

< Standardising KPIs across a multi-vendor environment

< A comparison of infrastructure sharing drivers in North Africa, SSA and Europe

Mobiserve has an outstanding pedigree in managed services, rollout and equipment installation. They manage 18,000 cell sites, primarily in MENA. With the towerco business model spreading to North Africa, particularly Egypt, Mobiserve has licensed and launched MobiTower, backed by Delta Partners and INVEST AD. TowerXchange caught up with Mobiserve CEO Tarek Aboualam, and Chief Commercial Officer Karim El Azzawy, who also serves as Managing Director of MobiTower, in a busy café at Mobile World Congress…

Keywords: Managed Services, Rollout, tenders, Maintenance, Operator-led JV, Local Knowledge, Alarms, Preventative Maintenance, Inventory Management, KPIs, Multiple Vendors, Infrastructure Sharing, MENA, Egypt, Morocco, Vodafone Egypt, Delta Partners, Mobiserve


multi-operator joint venture towerco, like Indus Towers, could work in Egypt? Tarek Aboualam, CEO, Mobiserve: That is a valid option. The operators are certainly seriously considering retaining a portion of the equity and retaining more control over their networks. Once the tenders published their requirements, which could be as soon as Q2 2013, everything will be clearer. The three major operators in Egypt Mobinil (France-Telecom), Vodafone Egypt and Etisalat are talking to each other, and talking separately to tower licensees. Infrastructure sharing is going to happen in Egypt, and it will be good for everyone. Each operator seems to be taking a slightly different position, but variety enriches the discussion!

TowerXchange: Is the regulatory environment in Egypt conducive to infrastructure sharing? Tarek Aboualam, CEO, Mobiserve: The regulator has done their part regarding issuing permits and licenses to be able to build towers and sell tenancies to all mobile network operators, and Mobiserve has secured one such license. TowerXchange: Thanks for your views on the potential tower deal in Egypt. Please introduce us to Mobiserve so we can understand your role in the market. Tarek Aboualam, CEO, Mobiserve: Mobiserve is a regional company managing 18,000 sites across eight markets covering North Africa, the Middle East and

Southern Asia. We have also worked in East Africa when projects require. Our customers include all the big operators plus equipment manufacturers like Huawei and Ericsson. Mobiserve was formed in 1999 by Orascom to help with their subsidiaries’ rollout. Five years ago, in December 2008, Mobiserve was sold to InvestAD, our major shareholder, and Delta Partners. We are mainly in managed services, network rollout, and equipment installation. We also build towers and shelters in our own factory, Mobifactory, although we also install third party steelwork. TowerXchange: Tell us about the biggest new contract Mobiserve won last year.

Tarek Aboualam, CEO, Mobiserve: One of the

greatest challenges we faced last year was increasing the scale the business by 50%. Rather than the usual one-year, annually renewed outsourcing agreement, we signed a major telecom operator to a three-year, full turnkey and maintenance contract covering preventive maintenance, corrective maintenance for active and passive equipment, generators, refueling, security, O&M and backhaul; a full outsourcing agreement for 6,000 cell sites. TowerXchange: What are the critical success factors behind managing such a substantial and distributed managed service contract? Karim El Azzawy, Chief Commercial Officer, Mobiserve: The key to success is the use of local resources. Local knowledge at a regional, even street-level. These important team members know the local electricity and fuelling challenges, so it is


Infrastructure sharing comes to Cairo

essential for us to maintain close contact with street-level. The co-ordination of managed services depends mainly on human capital, which in turn depends on the capability of senior project managers in regional offices that control 29 local offices spread all over Egypt. On top of those human resources, Mobiserve have developed our own software to monitor alarms that come from sites, and to manage maintenance job ticketing, so we know where we need to intervene to fulfill SLAs. We develop weekly reports to show the status of every region and to ensure we’re in line with SLAs and KPIs, and those reports are shared with the client. TowerXchange: How do you maximise maintenance performance? Karim El Azzawy, Chief Commercial Officer, Mobiserve: Preventative maintenance is of course a key part of the O&M activity within our turnkey solution. We have a program to check every site according to the client’s need. It might be once every week or fortnight – a scheduled check that the site is functioning within norms. Any deviation from standards is reported to the client, and our supply chain management team handles the logistics of spare part inventory management. We are able to install, manage and maintain equipment manufactured by all the vendors. Each vendor has its own system for control, monitoring and quality, and each has it’s own KPIs. We try to

normalise our way of doing business to develop standard, comparable KPIs. This enables us to compare different regions to see areas where we can enhance, and areas where have we mastered the job so the people concerned can spread their know-how from one region or country to the next. For the third year in a row, Mobiserve have been awarded best partner of the year by one of our key clients, including being top ranked for both managed service KPIs as well as for new sites rolled out. Also, for the 5th year in a row, Mobiserve were invited by a major Chinese equipment vendor to attend their prestigious engineering conference. TowerXchange: How would you compare the tower industry in North Africa to that in Sub-Saharan Africa? Tarek Aboualam, CEO, Mobiserve: I feel that North African operators’ tower strategy is more similar to European rather than Sub-Saharan Africa thinking. It’s a balance sheet rather than operationally motivated transaction, with objectives to free cash,

lower capex, and focus on the core business, rather than the more technically motivated decisions in Sub-Saharan Africa, which aim to pass on operational challenges to specialist towercos. TowerXchange: Are there opportunities for towercos in North Africa beyond Egypt? Tarek Aboualam, CEO, Mobiserve: There is interest from at least two other North African countries, albeit in much earlier stages than in Egypt. In one country interest is led by the regulator, which is in talks to shape infrastructure regulation before the market pushes them to a new reality. In another country the push is coming from the Group level of a local one of the local OpCos. TowerXchange: Thank you gentlemen, would you like to wrap up the interview by summing up Mobiserve’s capabilities in the tower industry? Tarek Aboualam, CEO, Mobserve: It all boils down to our ability to manage our teams in the field, and to deliver against SLAs. That’s what makes Mobiserve interesting; our hands-on experience of managing 18,000 towers, and trust we have earned from operators. Our model has evolved to meet the demands of the telecom industry today. Every operator is seeking to reduce their cost level while enhancing their service level, and that means they need to master and control the network. Infrastructure sharing is where the industry is going. A serious partner like Mobiserve, with local experience and know-how, can really add value to the tower industry


“ “I feel that North African operators’ tower strategy is more similar to European rather than Sub-Saharan Africa thinking. It’s a balance sheet rather than operationally motivated transaction

EEC Group positioning itself to partner towercos in EgyptIntegrated manufacturer, turnkey construction and O&M service provider brings local knowledge and has Egyptian infrastructure leasing license

Samih Wahid Adly, VP & COO, EEC Group


TowerXchange: Thanks for speaking to use today Samih. What are the drivers for infrastructure sharing in Egypt? Samih Wahid Adly, VP & COO, EEC Group: There are two main drivers for infrastructure sharing in Egypt. The first is the usual balance sheet reason – mobile network operators want to get their assets off their hands to stabilise opex and capex, and to outsource the challenge of operating and fuelling sites. The second reason is due to the changes in Egyptian society, which means we need to deal with more stakeholders and local pressure groups. So what started as a purely financially motivated issue now has technical and operational drivers too. TowerXchange: How do you see the current state of infrastructure sharing in Egypt? Samih Wahid Adly, VP & COO, EEC Group: Egypt’s three main operators have been working together for three to four years, having regular meetings to share their sites. But the percentage towers shared still hasn’t reached what it could be. The potential for co-location and tower sharing in Egypt is huge, especially for greenfield sites – there’s a lot of work to be done in rural areas. Egypt’s three operators have held discussions about forming a joint venture towerco between them, run by a towerco. There has been some interest in that model, but I can’t see it happening at the moment.

Read this article to learn:< How the need to stablise opex and capex, and the changes in Egyptian society, are driving infrastructure

sharing

< The progress of operator-led joint venture and tower acquisition and leaseback discussions

< EEC Group’s pilot project to build independent towers

< The prospects for build-to-suite contracts to replace operators’ own rollouts

< The criticality of building local knowledge and relationships with local stakeholders

Keywords: Who’s Who, Interview, Managed Services, Steelwork, O&M, Construction, Installation, 3G, Co-locations, Network Rollout, Build-to-Suite, Densification, Skilled Workforces, Operator-led JV, Sale & Leaseback, Stakeholder buy-in, Infrastructure Sharing, Africa, Algeria, Egypt, Libya, Mali, Senegal, South Sudan, Sudan, EEC Group

EEC Group (Engineering Enterprises for Civil & Steel Constructions SAE) is a family business established in 1977 as a construction company. EEC moved into the manufacture of steel structures and towers in 1983, and they have been a passive infrastructure turnkey subcontractor since 1996 with Vodafone Egypt and Algeria’s Djezzy among their first clients. EEC Group is now an integrated manufacturer, turnkey construction and O&M service provider with 1,500 employees and projects in eight countries.

TowerXchange: Are any of the four companies licensed for infrastructure leasing in Egypt (EEC Group, Alkan, Mobiserve and HOI-MEA) actively building independently owned towers and selling tenancies? Samih Wahid Adly, VP & COO, EEC Group: Two of the four licensees are actively building towers, one of which is EEC Group. We have started a pilot project, having been assigned one of Egypt’s 25 regions. We’ve just finished our surveys and are now in the construction phase, building 10-12 initial cell sites, and should have them “on air” next month. We have also signed build-to-suite contracts with two of Egypt’s operators, and hope to sign the third this week. TowerXchange: What’s your 18-24 month vision for EEC Group’s role as infrastructure sharing accelerates in Egypt? Samih Wahid Adly, VP & COO, EEC Group: If we are successful in this pilot project, I believe the operators will commission and co-locate in more and more sites through independent infrastructure leasing companies– they’ll stop doing their own rollouts. We think there could be 1,200-1,500 new sites per year in Egypt, and we believe that as first movers, EEC Group has the potential to build 30-50% of those new towers.

The second part of our vision concerns strategically important opportunities that could arise if one of Egypt’s operators were to sell 1,500 towers. EEC Group would like to bring our local and political knowledge to a joint venture with one of Africa’s established major towercos bidding for those assets. We’re aggressively pursuing conversations with two major towercos, who would bring their experience with deal structuring and setting up the NOC. We feel the towercos need a local partner with regional exposure, so there’s considerable synergy in us working together. TowerXchange: Egypt is a mature market in terms of penetration, but I understand 3G is only used by a small proportion of subscribers – as 3G becomes more widespread, will there be a need for significant cell site densification? Samih Wahid Adly, VP & COO, EEC Group: As I understand from Egypt’s operators, 3G only generates 5-7% of total revenue. While 3G is still very new, wireless broadband has significant potential in remote areas, where the landline infrastructure isn’t extensive.


In my opinion 3G will require a lot more sites. The most efficient option is to co-locate, but as demand for data grows, we are going to run out of sites and capacity, so we will have to build more towers and densify networks to support 3G. TowerXchange: What was the impact of the recent unrest on the management of tower networks in Egypt, and what has changed? Samih Wahid Adly, VP & COO, EEC Group: The unrest post revolution is certainly impacting the telecom business. Operationally, the situation is much more complex and challenging - from the lack of security affecting transportation and materials, economic instability causing an increase in virtually all operational costs, and fiscal policies potentially bringing in higher taxes and removal of subsidies. This hasn’t stopped the operators or the companies like ours. The telecom business will definitely bounce back when the situation stabilises. TowerXchange: Thanks Samih. With all this talk about Egypt, I wouldn’t want readers to think EEC Group is focused solely on Egypt. Tell us about your experience, footprint and business development objectives outside Egypt. Samih Wahid Adly, VP & COO, EEC Group: We’re exporting to more than 25 countries. EEC Group has been in Algeria since 2002 providing full turnkey infrastructure services, now also O&M for one of Algeria’s mobile network operators – we

Cell on Wheels by TowerWorx

have more than 30% of O&M market share. We’ve been in Senegal and Mali for the last five years, offering full turnkey services from towers and equipment supply, construction, telecom installation to commissioning. EEC has been in Sudan since 2003, working with three operators in Sudan and one in South Sudan – again offering full turnkey services and some O&M. We also have 10 years experience in Libya, but had to withdraw from the market during the recent conflict. We’re just about to return to Libya by winning a portion of 3,000 full turnkey sites up for contract. We expect to win at least 1,000 sites. So EEC Group is focused on Egypt, Algeria and Libya in North Africa, and we also specialise in Sub-Saharan African countries where it’s difficult to rollout. TowerXchange: Tell us about the people and the project cycle when setting up a new operation in a country “where it’s difficult to rollout”. Samih Wahid Adly, VP & COO, EEC Group: EEC Group has a specialised team with lots of experience setting up operations in countries where it’s difficult to rollout towers. We feel it is critical to build relationships with local stakeholders and to build local knowledge as fast as possible. We tend to start with a core Egyptian team who are used to moving into new countries, but

as we acquire local expertise the project becomes more streamlined, and the team consists of an increasing proportion of local people. For example, EEC Group has been in Algeria since 2002, where the local team consists of five Egyptians and 250 Algerians – you can see how the operation matures. In contrast, in Mali where we’ve only been for five years, I think EEC Group’s team is about 45% Egyptian and 55% local. EEC Group is becoming used to the protocols and processes of working in areas of political unrest – it’s becoming part of the job! Our project cycle for opening up a new operation is fairly straightforward. First, our client provides engineering approval on our designs for towers, shelters, and rapid deployment sites, and we start manufacturing. At same time we dispatch our team on the ground to mobilise, prepare for implementation and support logistics. We have a strong logistics partner, which can be particularly critical in landlocked countries like Ethiopia. TowerXchange: How do EEC Group differentiate yourself from other turnkey infrastructure partners in MENA and SSA? Samih Wahid Adly, VP & COO, EEC Group: As an integrated manufacturer, EEC Group controls the supply chain, giving us a cost advantage in turnkey jobs that is a win-win for us and for the client. More importantly for client, EEC Group’s integrated design, manufacturing, commissioning,


construction and O&M services means we have the flexibility to deploy rollouts a lot faster than our competition – for us, everything is in-house. This is especially important in countries “where it’s difficult to rollout” as we were discussing earlier. And EEC Group’s integrated package drives our competitiveness when it comes to offering towercos solutions for co-location. But that’s only half of the story. EEC Group thinks of itself as an engineering / innovation company. We try to present as many innovations as we can, such as new designs for integration, rapid deployment sites, or partnerships with specialist hybrid energy equipment manufacturers that can achieve 50-60% savings in diesel fuel consumption

Hybrid power solutions

Special Feature:

TowerXchange continues our profiles of leading infrastructure partners with proven experience in Africa.

In this edition, we introduce you to the “Hands-Dirty Dozen;” the leading pan-African managed services partners evolving to meet the changing requirements of tower operators. We feature interviews of senior executives at four of the hands-dirty dozen in this edition; NETIS and Mer Telecom in this special feature, plus Mobiserve and EEC Group in our Egypt case study on pages 57-62.

TowerXchange also introduces you to two innovative static asset manufacturers; TESA, whose recent partnership with Ramboll will vault the renowned fencing supplier into the short notice tower manufacturing market in SADC; and GSM Telecom Products, who have led some interesting projects in Burkina Faso, Benin and Niger. Finally, we also introduce readers to Viettel’s consultants VNTower, who share some insights into the fast deployment of towers in Mozambique.

Who’s who in tower design, manufacture, installation and managed services, part two

In this feature:64 The hands-dirty dozen71 Mer Telecom’s one-stop-shop76 End-to-end services from NETIS81 Time to market a critical differentiator for TESA85 GSM TP on how to design towers for easy installation90 Fast deployment by Viettel’s rollout consultants VNTower


Image courtesy of Camusat


(In alphabetical order. This is not yet a complete matrix - further companies will follow in parts 3 and 4 of this special feature)Matrix of African tower design, manufacture, installation and managed service providers

Company

Company

Company

Company

Tower Design

Tower Design

Tower Design

Tower Design

Camusat

GangesInternationale

GSM TP

EEC Group

Tower Manu

Tower Manu

Tower Manu

Tower Manu

Install

Install

Install

Install

ManagedServices

ManagedServices

ManagedServices

ManagedServices

TOC

TOC

TOC

TOC

Acquire &lease

Acquire &lease

Acquire &lease

Acquire &lease

Permits & licenses

Permits & licenses

Permits & licenses

Permits & licenses

African Footprint: Botswana, Cameroon, Central African Republic, Congo Brazzaville, DRC, Egypt, Guinea Bissau, Guinea Conakry, Ivory Coast, Kenya, Madagascar, Mali, Mauritius, Morocco, Niger, Senegal, Uganda

Footprint: “Many countries in Africa”

Footprint: Burkina Faso, Uganda

Footprint: Algeria, Egypt, Mali, Senegal, South Sudan and Sudan

Sample clients: France Telecom/Orange, Digicell, Eaton Towers, Bulgaria Telecom, ZTE, Telma, TowerCo of Madagascar

Sample clients: Airtel, Vodafone, Huawei (MTN), Orange, Helios, Eaton, Ramboll and Safaricom directly and through partners

Sample clients: Telecel, Benin Telecom, STE

Sample clients: Vodafone Egypt, MobiNil, Etisalat, Comium, Djezzy, Sudatel, Sotelma MaliTel, Alcatel, Ericsson, Huawei, ZTE

Company profile: TowerXchange issue two, pages 96-99 or visit www.towerxchange.com/whatever-it-takes-to-get-it-done

Company profile: TowerXchange issue one, pages 32-33 or visit www.towerxchange.com/driving-down-the-cost-of-multi-tenant-towers

Company profile: TowerXchange issue three, pages 85-89 or visit www.towerxchange.com/how-to-design-towers-for-easy-installation

Company profile: TowerXchange issue three, pages 60-62 or visit www.towerxchange.com/eec-group-positioning-itself-to-partner-towercos-in-egypt

1,500 worldwide, 843 in Africa

500 perminant, 1,000 contractors

8

1,500

1940s

1991, in towers since 2004

2012

1977

5,000

4,000

100

20,000

TP

TP

TP TP

India TP Africa

India TP Africa

Capabilities

Capabilities

Capabilities

Capabilities

Approx # of towers in Africa




Founded

Founded

Founded

Founded

Staff

Staff

Staff

Staff

TP = Through Partners


Company

Company

Company

Company

Tower Design

Tower Design

Tower Design

Tower Design

Hayat Communications

Leadcom

Likusasa

Mer Telecom

Tower Manu

Tower Manu

Tower Manu

Tower Manu

Install

Install

Install

Install

ManagedServices

ManagedServices

ManagedServices

ManagedServices

TOC

TOC

TOC

TOC

Acquire &lease

Acquire &lease

Acquire &lease

Acquire &lease

Permits & licenses

Permits & licenses

Permits & licenses

Permits & licenses

Footprint:

Footprint (Africa): Benin, Burkina Faso, Chad, DRC, Gabon, Ghana, Ivory Coast, Niger, Rwanda, Tanzania, Uganda, Togo

Footprint: Mauritius HQ, Mozambique, Zimbabwe, Zambia, Malawi, South Africa, Lesotho, Angola, Cameroon, Nigeria, Ghana, Liberia, SDR Guinea, Sierra Leone, Kenya, Tanzania

Footprint: Angola, DRC, Ghana, Guinea-Conakry, Mozambique, Niger, Rwanda, Senegal, Tanzania – able to perform and supply anywhere in SSA (also active in LatAm, Russia and CIS countries)

Sample clients: Etisalat, Qtel, Vodafone, Bharti, Wataniya, Ericsson, NSN, Alcatel-Lucent and Huawei

Sample clients (Africa): Alcatel-Lucent, Ericsson, NSN, Huawei, Airtel, Atlantique Telecom, MTN, Orange, Tigo, Vodafone, Helios TA, Eaton, ATC

Sample clients: MTN, Econet, Cell C, Vodacom, Huawei, Ericsson, NSN, American Tower, Helios

Sample clients: Vodacom, Vodafone, Airtel, Tigo, FT-Orange, Celcom, American Tower, Huawei, ZTE

Company profile: TowerXchange issue two, pages 22-23 or visit www.towerxchange.com/are-there-opportunities-for-new-market-entrant-towercos-in-africa

Company profile: TowerXchange issue two, pages 100-102 or visit www.towerxchange.com/the-marriage-of-passive-and-active-infrastructure-management

Company profile: TowerXchange issue two, pages 86-89 or visit www.towerxchange.com/the-future-is-now

Company profile: TowerXchange issue three, pages 71-75 or visit www.towerxchange.com/one-stop-shop-turnkey-wireless-infrastructure-provider

1,200-1,500

700

250 permanent, 500-750 contractors

1,400 total, 800 in telecoms

1997

1982

1995

1948

3-5,000

3,000

3-4,000

Capabilities

Capabilities

Capabilities

Capabilities





Founded

Founded

Founded

Founded

Staff

Staff

Staff

Staff


TP

TP

TPTP

TP

TP

TP



Company

Company

Company

Company

Tower Design

Tower Design

Tower Design

Tower Design

Mobiserve

Reime Group

NETIS

Ramboll

Tower Manu

Tower Manu

Tower Manu

Tower Manu

Install

Install

Install

Install

ManagedServices

ManagedServices

ManagedServices

ManagedServices

TOC

TOC

TOC

TOC

Acquire &lease

Acquire &lease

Acquire &lease

Acquire &lease

Permits & licenses

Permits & licenses

Permits & licenses

Permits & licenses

Footprint: Algeria, Egypt, Morocco, Tunisia, plus East Africa on a project basis. Also Saudi Arabia, UAE, Pakistan and Bangladesh

Footprint: DRC, Ghana, Cote d’Ivoire, Kenya, Madagascar, Malawi, Nigeria, Republic of the Congo, Tanzania, Uganda, Zambia plus satellite operations in Burkina Faso, Rwanda and Sierra Leone

Footprint (Africa): Burkina Faso, Cote D’Ivoire, Ghana, Uganda (with offices opening soon in Kenya and Cameroon)

Footprint: Pan African, continental HQ in South Africa

Sample clients: Mobinil, Vodafone, Etisalat, Djezzy, Mobilink, Banglalink, Inwi, Meditel, Orange , Zain, Mobily, Huawei, Ericsson

Sample clients: Airtel, Alcatel-Lucent, Eaton, Helios TA, Helios TN, Huawei, IHS, MTN, NSN, Safaricom, SWAP, Tigo, Vodacom, ZTE

Sample clients: Eaton, Helios, ATC, IHS, Ericsson, Alcatel-Lucent, MTN, Orange, Comium, Vodafone, Mobitel, Airtel

Sample clients: (In Africa) Huawei, NSN, ZTE, Ericsson, American Tower, IHS Africa, Helios, Airtel, Vodafone, MTN

Company profile: TowerXchange issue three, pages 57-59 or visit www.towerxchange.com/tower-deal-imminent-in-egypt

Company profile: TowerXchange issue two, pages 91-94 or visit www.towerxchange.com/what-gets-measured-gets-done-at-reime-group

Company profile: TowerXchange issue three, pages 76-80 or visit www.towerxchange.com/end-to-end-services

Company profile: TowerXchange issue one, pages 34-36 or visit www.towerxchange.com/design-for-shareability

5,000

360

375

10,000

1999

1912

18,000 in MENA & Asia

3-4,000

Interested

2009

1945

1,600

7,000

Capabilities

Capabilities

Capabilities

Capabilities





Founded

Founded

Founded

Founded

Staff

Staff

Staff

Staff

TP Software


If you would like to refer us to other turnkey infrastructure companies that should be featured in this Who’s who, then please contact TowerXchange at [email protected].

We are generally interested in companies that have manufactured, installed or maintained at least 1,000 cell sites in Africa, or smaller companies with a unique capability within this segment of the tower industry supply chain.

Please note that inclusion in the TowerXchange Who’s who is based solely on the proven capabilities of the companies profiled, usually on the basis of client recommendation. It is not possible to “buy” coverage in our Who’s who, but we are very grateful to the advertisers in this special feature, GSM, Mer Telecom,

NETIS and TESA, as their support helps TowerXchange keep our publication free to 1,868 African tower industry decision maker readers.In future editions TowerXchange hope to profile Alkan, Egypro, Lemcon Networks, Linksoft, Plessey, QTE, Radio Network Solutions, Tricom and Zamil Infrastructure.

The TowerXchange Meetup will feature a unique “Shootout” of managed service providers; five minute demonstrations and differentiations of the leading players in this category, giving buyers an opportunity to compare their capabilities, match them to their organisational requirements, and identify potential pan-African manufacturing and service partners to receive RFPs.

Inviting other static asset manufacturers and managed service providers to be profiled in TowerXchange


Company

Company

Tower Design

Tower Design

TESA

VNTower

Tower Manu

Tower Manu

Install

Install

ManagedServices

ManagedServices

TOC

TOC

Acquire &lease

Acquire &lease

Permits & licenses

Permits & licenses

Footprint: South Africa. Supplied to 16 countries

Footprint: Currently seeking African partner

Sample clients: Ericsson, ZTE, NSN, MTN, Cell C, Likusasa, Plessey, QTE, Radio Network Solutions

Sample clients: Viettel, Ericsson, Vietnamese Navy, Huawei, Vimpelcom, Telenor

Company profile: TowerXchange issue three, pages 81-84 or visit www.towerxchange.com/time-to-market-a-critical-differentiator-within-the-tower-industry-supply-chain

Company profile: TowerXchange issue three, pages 90-91 or visit www.towerxchange.com/fast-deployment-at-a-reasonable-price

100

60

2001

2007

Tens of thousands of fences

1500 project managed

Capabilities

Capabilities



Founded

Founded

Staff

Staff

TP

TP TP

The hands-dirty dozenTowerXchange introduces the top pan-African managed service providers

TowerXchange calls them the hands-dirty dozen. They are the pan-African managed service providers manning the front lines of the African tower industry.

In a region where engineering skills are a scarce resource, and in an era when MNOs and towercos alike are strongly inclined to outsource tower installation, upgrade and maintenance, there are a dozen or so managed services partners with broad, proven capabilities to support telecoms infrastructure rollouts and retrofits in multiple African markets.

Where once these companies specialised in expedited network rollouts for MNOs who were competing on coverage, as African markets mature and competition is increasingly on QoS and customer experience, the sale and leaseback of towers and the importance of towercos increases. Always adaptable, the hands-dirty dozen are now adapting to also service towercos’ needs to survey, strengthen and service acquired tower portfolios.

While MNO’s rollouts demand staffing-up for equipment import, warehousing, inland logistics, and civil works projects at hundreds of new cell sites, tower transactions unlock pent up maintenance and investments in structural capacity and energy efficiency, which create a similar upsurge in demand for managed service capabilities. Tower transactions can be a particularly exciting opportunity for the hands-dirty dozen in instances where transferred towers don’t all come with the original design drawings,

Keywords: Who’s Who, Managed Services, O&M, Construction, Installation, Transfer Assets, Opex Reduction, Capacity Enhancements, Network Rollout, Logistics, Site Visits, Site Surveys, Skilled Workforces, Warehousing, Reverse Engineering, Multi-country Partner, VMI, Spare Parts, Africa, Alkan, Camusat, EEC Group, Leadcom, Likusasa, Mer Telecom, Mobiserve, NETIS, Plessey, QTE, Reime Group


requiring the towercos to undertake a substantial programme of reverse engineering.

Both MNO’s rollout and towercos’ retrofit assignments yield contracts of similarly finite duration and declining value, at least for managed service providers flexible enough to become genuine strategic partners. Towercos want to work together with managed service partners on a refurbishment programme, which may typically be 18-24 months in duration, aimed at increasing autonomy of cell sites through energy equipment upgrades and RMS, thus reducing site visits and ultimately reducing opex. As a result, contracts with towercos can feature a planned, phased reduction of contract value as a function of reduced maintenance headcount and reduced site visits as sites become more efficient.

You might think these declining-value contracts destroy value in the managed services business, but TowerXchange doesn’t think so. As new builds and refurbishments are completed and site visits reduce, managed service providers can unlock economies of scale by partnering with additional towerco and MNO clients in the same country. By corralling together denser concentrations of towers from multiple clients, local maintenance teams are able to concentrate their services on smaller areas, spending less time on the road and more time getting on the front foot of preventative maintenance.

The value added service proposition offered by the hands-dirty dozen can be deepened by the provision of supply chain management services – importing,


< Alkan< Camusat< EEC Group< Leadcom< Likusasa< Mer Telecom< Mobiserve< NETIS< Plessey< QTE< Reime Group

Yes, we know there are only eleven!

Here’s some potential additions, pending our research:

< Egypro< HOI-MEA< Lemcon Networks< Linksoft< Radio Network Solutions

TowerXchange’s hands-dirty dozen

warehousing, delivering and installing passive (and potentially active) equipment and spare parts, provided on-demand at a modest mark up. We’ve even seen fully-fledged Vendor Managed Inventory services starting to be requested by at least one towerco, and delivered by a couple of members of the hands-dirty dozen.

Provision of VMI services has the potential to deepen the commitment of the tower operator–managed service provider relationship, and may result in the managed service partner being

entrusted with an ever-growing number of sites within the original, then neighbouring countries.Provision of energy as a service may be the next opportunity for the hands-dirty dozen to deepen their relationships and add a new revenue stream to their business models.

Meanwhile, TowerXchange has noted the emergence of crack teams of nomadic turnkey infrastructure deployment and network upgrade specialists. These elite teams are dispatched from the hands-dirty dozen’s headquarters to use their

premium engineering and project management skills to oversee the critical formative months of new managed services engagements, marshaling local resources who are upskilled and who are ultimately destined to take on the “long tail” of post-installation maintenance. As each project matures, these nomadic project leaders move from country to country, contract to contract, and it’s their reputation as proven strategic partners that means the hands-dirty dozen are trusted by MNOs and by towercos to move one challenging rollout or retrofit assignment to the next.

Should your company be mentioned in TowrXchange?

If you work for an innovative managed service provider with a pan-African footprint that has deployed at least 1,000 sites, TowerXchange would be delighted to profile your company – email us at [email protected]


“ “elite teams are dispatched from the hands-dirty dozen’s headquarters to use their premium engineering and project management skills to oversee the critical formative months of new managed services engagements

Images in this article courtesy of Camusat

One-stop-shop turnkey wireless infrastructure providerUpgrading towers, accelerating rollouts and overcoming logistical challenges in some of the world’s most challenging emerging markets

Arie Ben-Dayan, Marketing & Sales Director, Mer Telecom

TowerXchange: Thanks for speaking to us today Arie. Please tell us where Mer Telecom fits in the emerging market tower industry. Arie Ben-Dayan, Marketing & Sales Director, Mer Telecom: Mer Telecom has manufactured or installed almost 30,000 towers in emerging markets, mainly in Latin America and Africa. We offer our customers a one-stop-shop and single point of accountability for network deployment; from network design, to transmission planning, site pre-qualification & evaluation, site design and engineering, customs clearance and inland logistics, civil works and the supply and installation of passive and active equipment. Mer Telecom is certified by NSN, Ericsson, Huawei and the other major equipment vendors for the installation and commissioning of all active equipment such as BTS and Core network elements. After implementation, we also offer maintenance and optimisation services, including drive testing and optimisation of the active network, as well as preventive and corrective maintenance of the passive network. Mer Telecom covers wireless infrastructure from pre- to post-deployment. We also provide hybrid energy systems, sites remote monitoring and control and a platform for VAS such as mobile financial services, however, those are topics for a future discussion – let’s focus today on our turnkey wireless infrastructure capabilities.

Read this article to learn:< The importance of a single point of accountability from tower design and manufacture to

installation and maintenance

< How to audit and analyse tower capacity in the absence of original design data

< How to determine whether it’s more cost effective to upgrade or replace a tower

< How to accelerate time to market in network rollouts

< How to overcome the challenges of inland logistics when installing towers in Sub-Sahara region

Arie Ben-Dayan is a thirteen-year veteran at Mer Telecom, one of the world’s longest established tower manufacturers and turnkey wireless infrastructure service providers. Mer Telecom are one of those rare breeds of company that are comfortable leading rollouts and retrofits in emerging markets, overcoming all the challenges around infrastructure transport, permit clearances, climate and political risks that entails.

Keywords: Network Rollout, Construction, Masts & Towers, Installation, Reverse Engineering, Capacity Enhancements, Loading, Foundations, Permits, Logistics, Warehousing, Customs, O&M, Health & Safety, Infrastructure Sharing, Africa, Americas (South), Mer Telecom


TowerXchange: Is the transfer of assets from mobile network operators to independent towercos a good thing from your perspective? Arie Ben-Dayan, Marketing & Sales Director, Mer Telecom: The transition of passive infrastructure from operator-captive to independent towerco is a substantial market change for tower manufacturers and site builders. Mer Telecom has worked with leading towercos such as American Tower and others. The main towercos’ challenges are to audit, analyse and reinforce existing infrastructure to enable multi-tenant co-locations. The fact that Mer Telecom offers in-house structural and CW engineering, design and manufacturing abilities is a major benefit for towercos; as tower experts, we are able to offer the ultimate efficient and cost effective solution. Towercos have complex requirements with which smaller construction subcontractors, who might not have tower design and manufacture capabilities as a core competency, may struggle. TowerXchange: How do you upgrade a tower’s capacity for multiple tenants? Arie Ben-Dayan, Marketing & Sales Director, Mer Telecom: The process of upgrading legacy towers designed for single tenants to accommodate additional operators starts from an analysis of the full tower design data. Unfortunately for the majority of sites in Africa this data is not available,

so we perform a detailed tower audit and in some cases reverse engineering. Based on many engineering and logistical parameters, we’re able to compute the total cost of required upgrades, compare that to the cost of a new tower, and recommend the most cost effective solution. When we undertake upgrades we typically strengthen the structure, extend height and load capacity, and may need to reinforce the existing foundation. When we’re designing and installing new towers for multiple tenants, it’s obviously much simpler.

The EPA (Effective Projected Area) of a single tenant tower is usually much lower – typically 7-10m2. For multi-tenant towers the EPA is typically 20-30m2. As a result, multi-tenant towers are generally higher, require a larger foundation and a larger site to install multiple base stations and often a second generator. TowerXchange: Roughly how frequently do you find that a tower has to be refurbished or replaced when additional load capacity is needed for multiple tenants?


In-house design and manufacturing

Arie Ben-Dayan, Marketing & Sales Director, Mer Telecom: The percentage of towers needing replacement depends largely on the age of the network. Towers designed before people thought about co-location might only have capacity for a few 2G antennas and a microwave backhaul dish. Towers less than five years old tend to have more capacity for equipment and therefore co-locations. In approximately 90% of cases the tower has to be substantially refurbished, reinforced or replaced – it’s rare to find a site in Africa or Latin America ready to immediately add multiple tenants. TowerXchange: It’s impressive how quickly Mer Telecom are able to engage in a new country, build your local team and establish the logistical capabilities to rollout twenty or more towers per month. Tower owners have tight timescales for the installation of new sites – please tell us how Mer Telecom optimises shipment, customs clearance, warehousing and delivery of materials to new sites. Arie Ben-Dayan, Marketing & Sales Director, Mer Telecom: Being the designer and manufacturer of towers is a key element and a critical differentiator in our ability to deploy networks quickly. It means we fully control the whole supply chain from tower design to customs clearance, inland logistics and installation. As a manufacturer it’s obvious that Mer Telecom has the ability to anticipate customer needs and expectations. We retain permanent available stock

at plants and in local operations to enable us to respond as fast as possible to our customer’s needs. The tower is the critical element of a site, if the turnkey installation partner is not controlling this element, deployment can be delayed. When it comes to staffing new projects, Mer Telecom has hundreds of people on the ground in Africa and Latin America able to move from one country to the next. This makes it easy for us to allocate right resources according to local needs. When starting a new deployment, the first phase is the manufacture and shipment of long lead items. Whilst that’s going on, we have time to set up ourselves in the new country, so that when the materials arrive, our local operation is ready to deal with logistics and implementation phases.

Mer Telecom combines manufacturing and logistics capabilities with ground staff available anywhere from East to West Africa. Lead time is never a problem for us, in fact in most cases we move faster than the operator’s own permitting processes!

TowerXchange: What are the most common causes of delays in rollout projects? Arie Ben-Dayan, Marketing & Sales Director, Mer Telecom: Those legal issues around site acquisition and building, environment and civil aviation permits remain the biggest challenge for rollouts. As soon as they have spectrum and budget, operators want immediate deployment. I liken deployment to rolling out slot machines – the sooner you install it and plug it in, the sooner you can generate revenue whether it be coins in the slot or ARPU. Permitting is becoming more and more difficult in Africa. I’d distinguish between francophone Africa, where it’s not so complicated, and anglophone countries like Kenya, Tanzania and Ghana, where it can more often be an issue. TowerXchange: How do you overcome the challenges of inland logistics, especially in Central Africa? Arie Ben-Dayan, Marketing & Sales Director, Mer Telecom: A smooth logistics process requires first to know the logistic challenges in the specific country. There are always many such challenges including choosing the right port of entry, taking into consideration the lack of road infrastructures, import regulations, the impact of climatic conditions and so on.

It is critical to partner with the best in class shipping, clearing and in country transport agents and companies.


“ “we fully control the whole supply chain from tower design to customs clearance, inland logistics and installation

Mer telecom has an experienced and informed Logistics Officer in each of its branches to ensure an efficient and smooth port to site logistic chain. For example, the Democratic Republic of Congo presents one of the most complex in-land logistic challenges in Africa and possibly in the world. We have developed logistic capabilities in all ports of entry including clearing agents, warehousing et cetera.

As a true to life story, we had a case in which a truck which carried site equipment was forced to unload

tons of equipments in order to cross an unstable bridge; that required securing the help of local villagers to assist in hand carrying the equipment across the bridge. In some cases, we had to transport the equipment and Civil Work materials along the river in small canoes! Mer Telecom’s ability to controlling the whole supply chain is definitely an advantage in those challenging countries where the lack of infrastructure, unstable political situation and climatic hazards are a daily reality. We feel “comfortable” and at home in challenging countries.


TowerXchange: Does Mer Telecom operate it’s own fleet and drivers, or do you use local subcontractors? Arie Ben-Dayan, Marketing & Sales Director, Mer Telecom: We normally use local subcontractors for inland logistics, selected according to our standards. We strongly believe that some tasks have to be outsourced like site acquisition, transportation and customs clearance to local companies that are more familiar with local business culture and conditions. TowerXchange: How do you ensure the health and safety of your staff and contractors? Arie Ben-Dayan, Marketing & Sales Director, Mer Telecom: Mer telecom is an ISO9000, 14000 and 18000 certified company. As a global provider, Mer Telecom attributes special importance to Health & Safety issues and employs dedicated H&S officers to ensure full compliance with Health and Safety rules and regulations. Therefore, our own staff and subcontractors have strict rules, standards and policies that each has to follow, and are under constant supervision. Mer Telecoms maintains an ongoing training programme to refresh and implement new health and safety rules and regulations, this helps maintain awareness among our staff and subcontractors, and brings the risk of accidents as near to zero as possible

Rural hybrid site in Congo

End-to-end servicesHow Netis became a trusted infrastructure partner of all four towercos

Jean Farhat, Managing Director, NETIS

TowerXchange: Thanks for speaking to us today Jean. First please tell us where NETIS fits into the passive infrastructure ecosystem?

Jean Farhat, Managing Director, NETIS: NETIS is a trusted partner for any requirement related to cell sites. Whether through our internal expertise or through our network of experts, we can respond to any request, whether for manufacture of an accessory, site construction, surveys and upgrades for multiple tenants, maintenance, power, RMS – we’ve even trained our competitors! For example, when Vodafone came into Ghana there was a lack of work at height certified riggers, so we arranged training both for our staff and for our competitors.

When Vodafone Ghana signed an operational lease agreement with Eaton Towers, we were drawn into the towerco business. We later also started working with Helios Towers Africa and American Tower in Ghana as well as with IHS in Cote d’Ivoire, and again with Eaton in Uganda. Netis also provides O&M services to mobile network operators such as Airtel, and Comium, as well as working with Ericsson and Alcatel-Lucent.

TowerXchange: When towercos are considering entering a new market, when do they start dialogue with key strategic partners like NETIS?

Jean Farhat, Managing Director, NETIS: When towercos first came into Africa, it took them longer to become established in a new country and to start creating efficiencies. But now towercos have their own established processes and procedures, and are

Read this article to learn:< Why towercos negotiate with key strategic partners even before winning bids in new markets

< The implications of tower transactions for staff transfers and for unlocking pent up investments

< Towerco key performance indicators: power uptime, time to access sites and MTTR

< How NETIS support Eaton Towers with VMI

< How rapid deployment towers are used for major events, for industry and for tower replacements

Jean Farhat and his business partner Jean-Claude Figali started NETIS (Network Industry and Services) as an end-to-end service and infrastructure partner in 2009. NETIS provides services in three main fields: building and upgrading telecom towers and power solutions, provision of comprehensive O&M services, and manufacture of towers and accessories in their factory in Abidjan, Cote d’Ivoire.

Keywords: Who’s Who, Interview, Managed Services, Steelwork, Masts & Towers, O&M, Construction, Installation, Transfer Assets, Capacity Enhancements, Network Rollout, Uptime, MTTF, KPIs, Site Visits, Skilled Workforces, Warehousing, Multi-country Partner, VMI, Spare Parts, Infrastructure sharing, Africa, Burkina Faso, Cote d’Ivoire, Ghana, Uganda, Eaton, Netis


ready to move in new countries even before they win the bid. Towercos prepare their supply chains, engage strategic partners like NETIS, and agree prices in each new country while they’re bidding. Yes, this means a loss of time if they’re not awarded the contract, but a huge gain of time if they win the deal.

Within three to five months of signing a sale and leaseback or managed services agreement, the towercos can stabilise the network and start recording improvements to SLAs. Of course, much depends on the state of the network before the towerco takes over, but they conduct a detailed due diligence so they can identify priority investments.

TowerXchange: Tell us about the transfer of assets and staff when a tower transaction takes place.

Jean Farhat, Managing Director, NETIS: When assets are transferred to towercos, an efficient team of the best staff will be transferred from mobile network operators to contractors like NETIS. These staff know the history of the sites and understand the weaknesses in the network, and they can perform more efficiently now they’re managed by a company whose core business is the installation and maintenance of passive infrastructure.

Initially the towerco keeps a close eye on contractors through a network of regional managers and O&M managers who stay in touch through weekly meetings. Once they have confidence in the contractor, the towercos are able to reassign some

of those supervisory staff. And as that confidence in the partnership with companies like NETIS continues to improve, they become comfortable with us mutualising O&M and other services, and working with other towercos. This unlocks shared benefits such as local teams being able to cover a smaller area with a greater concentration of sites. With smaller distances to cover, there is less fatigue, and more time for preventative maintenance.

TowerXchange: Does the transfer of assets from mobile network operators to towercos unlock “pent up” passive infrastructure maintenance and renewal programmes?

Jean Farhat, Managing Director, NETIS: Every deal is different, but it’s true that tower transactions unlock a lot of activity. Mobile network operators may put projects on standby while seeking buyers or partners to manage their towers.


After the towerco takes over, they know the budget they have in place, they have their contractors “on the starting blocks” with vehicles ready, so there is almost immediate action. Tower transactions unlock investments in batteries, generators, RMS and tower reinforcement. Storage battery replacements are key to achieving SLAs, as are generator refurbishments, replacements and upgrades. Towercos will often deploy RMS and undertake structural analysis projects and tower strengthening to co-locate new tenants as quickly as possible to create additional revenues. Within two years towercos will have undertaken most planned investments. These new activities of towercos require new expertise from suppliers, such as the aforementioned structural analysis and strengthening.

TowerXchange: What are towercos’ key performance indicators?

Jean Farhat, Managing Director, NETIS: There

are few KPIs and they are very similar for all the towercos and in all the countries we’ve worked in.

Towercos will monitor AC and DC power uptime, time to access sites, and MTTR (Mean Time To Repair) – which includes the time taken between an alarm going on and the when the failed component is repaired. And of course they all have zero tolerance of tower falls.

TowerXchange: How is the concept of Vendor Managed Inventory (VMI) applied to towers?

Jean Farhat, Managing Director, NETIS: VMI is a new concept introduced by Eaton Towers. Eaton has outsourced part of it’s supply chain and stock management to NETIS in Ghana, requiring the stock be available any time, in the right place, at the right price, enabling them to react as quickly as possible without incurring additional financial, administrative and stock costs.

VMI requires proper planning – we need to know the sales objectives and needs of the towerco. It helps that as O&M partner we have direct experience of what is needed in terms of spare parts.

VMI can’t work on “just-in-time” basis as many spare parts and equipment are manufactured in Asia or in Europe, so transit and delivery time needs to be managed properly, and stock need to be managed sharply and smartly. Too much stock exhausts capex, but holding too little means a risk of being out of stock of a critical component.


“ “Tower transactions unlock investments in batteries, generators, RMS and tower reinforcement

TowerXchange: Please tell us about NETIS’s experience with rapid deployment sites.

Jean Farhat, Managing Director, NETIS: One of our specialities is the roll out of rapid deployment and mobile sites. NETIS has a strong partnership with companies that manufacture telescopic masts, so we’ve imported, deployed and maintained these

Mobile telescopic tower

sites in Cote d’Ivoire, Ghana, Equatorial Guinea and Niger.

There are two versions of the mobile telescopic mast: self-support and guy-masts, which tend to be deployed for longer terms or in windy environments. Mobile towers are mainly used for events such as football matches or elections; anywhere with crowd that would overload the local base stations without the additional capacity. It can be deployed and ready for telecom equipment installation in just 2-3 hours.

For example, in December 2011, we air-freight five units to Malabo. The five units were assembled and deployed at the stadiums in Malabo and Bata in just a week.

Rapid deployment sites can be installed in just two to three days as they don’t need foundations. For example, an operator in Ghana uses them to provide coverage for mines as rapid deployment towers can be relocated without the need for substantial civil works.

Rapid deployment units can be up to 40m, offering a greater load capacity than mobile sites. This can be useful when you have to replace a tower and transfer the antennas without interrupting the traffic.

TowerXchange: How important is it to control the whole supply chain by owning your own factory in Cote d’Ivoire?

Jean Farhat, Managing Director, NETIS: We acquired a factory in Abidjan in 2009. This gives us an advantage over competitors in West Africa as NETIS is able to respond with faster delivery time for galvanised materials such as tower accessories and tower strengthening members. Once you can provide the steelwork you can go further, often winning the contract for the full refurbishment of sites.

TowerXchange: Thanks Jean, please could you wrap up the interview by summing up how NETIS are differentiated from other managed service providers?

Jean Farhat, Managing Director, NETIS: There are few companies that cover both O&M and projects as deeply as NETIS. We are also distinguished by having our own manufacturing facility in Cote d’Ivoire.

NETIS is small enough to be reactive and responsive to our clients’ needs. Our top management remains involved on a daily basis – we are often out at sites. This enables us to understand and anticipate the needs of our clients, and win their trust.

We have some big, strong competition in managed services and site-build, and we respect our competitors. Despite NETIS being relatively young in the market, we’re proud of what we have achieved


“ “Our top management remains involved on a daily basis – we are often out at sites. This enables us to understand and anticipate the needs of our clients, and win their trust

Bruno Voron: Managing Director [email protected] + 226 763 084 84 (m)

Jean Farhat: Managing [email protected]+233 24 995 5555 (m)

NETIS UgandaSherif Maher: Managing [email protected] +256 (0) 776 352 231

NETIS Cote D'Ivoire Jean- Claude Figali: Managing [email protected]+225 507 478 992 (m) Jean Eric Ribourt: Operations & Projects [email protected]+225 087 915 15 (m) Serge Couliraly: Services & Energy [email protected]+225 078 108 25 (m)

NETIS Ghana NETIS Burkina Faso

Time to market a critical differentiator within the tower industry supply chainLeading steel fabrication specialist TESA explains their move into tower manufacture

Anni Bodington, MD, TESA


TowerXchange: In the telecommunication infrastructure ecosystem, where does TESA fit in? Anni Bodington, Managing Director, TESA: While it is not our intention to compete with the mass tower manufacturers established in the market, TESA possesses much knowledge and expertise in the field of mass light steel fabrication and design, earning a reputation within the telecoms community for quality products, exceptional service offerings and adaptability to ever changing specifications within the market. Continuous improvement to meet blue chip and international quality and audit requirements through innovation with integrity in business has been our focus. Key competencies are many and diverse with high volume manufacturing processes winning significant market share in our core products. The company is a specialised steel manufacturer, with a broad product range aligned for BTS sites. Our commitment to superior service levels and viewing our customers as long term partners has resulted in a series of lasting value partnerships. TESA was founded in 2001 only entering the telecommunications sphere with steel perimeter products in 2008. Initial product offerings have shifted and the company has evolved and diversified to include many of the steel products required on a BTS site providing a single point of contact, enabling the sourcing of most steel products required for passive infrastructure, now including towers and audit, strengthening and

Read this article to learn:< The evolution of the total passive infrastructure solution model

< The importance of a single point of contact for all steel products

< How to manage customer relationships, stock levels and logistics to deliver on short notice

Keywords: Who’s who, Steelwork, Passive Equipment, Build-to-Suite, Logistics, Warehousing, Masts & Towers, Solar, Fencing, Africa, Infrastructure Sharing, Ramboll, TESA

TESA is a specialist steel manufacturer with a broad range of products aligned for BTS sites. In 2012 TESA ventured into manufacturing of towers. TESA has historically manufactured steel perimeter fencing for various network operators in Africa, while also manufacturing other steel passive infrastructure sub-components required on BTS sites. After recently partnering with Danish tower design engineers Ramboll Telecom as the official licenced partner for the SADC region, with exclusive manufacturing and distribution rights, the outcome of this exciting partnership sees both companies combine their respective expertise in steel fabrication and tower design which adds to TESA’s bundling of passive infrastructure products. The alliance provides the industry with an alternative for optimised designs, manufactured in Cape Town and bundled with current product offerings.

validation services. It was a natural progression to tower manufacture. TowerXchange: Where do you see yourselves fitting into the market now that you have recently manufactured your first towers? Anni Bodington, Managing Director, TESA: We believe the market has dictated our diversification. The total passive infrastructure solution model is increasingly in demand as a result of the change in the towerco landscape with operators aggressively pursuing tower sharing to reduce costs. It is our belief that TESA needed to diversify and to do this, set ourselves apart by bundling our current steel products with towers. Traditional products included perimeter fences, solar panel structures and supports, generator enclosures, antennae brackets, gantry poles and tower templates. The ability to offer these components to the client from a single point of contact, in a timely manner is advantageous


to our market base. Partnering with Ramboll for tower design was the next step in our efforts to provide a full steel product offering. The first towers were manufactured in the last quarter of 2012, which attracted positive comments and feedback from our clients regarding the ease of erection with the Ramboll tower design and short lead times with SADC content towers. The plan is to focus on a niche within the tower manufacturing market, namely short notice requirements within the SADC, Central and East Africa region, offering certain tower families within the Ramboll design, and quick build solutions. TESA recently undertook a project in Lesotho working with the client to design a solar structure for off grid sites. The client needed short notice towers, fencing, solar panel structures and TESA met their challenging requirement within a couple of weeks. All the steel work required for the project, namely towers, solar structures, gantry poles, generator cages, antenna brackets and perimeter fencing arrived simultaneously in the same containers. We are also currently working with an OEM for a hybrid solution, to increase our bundling options. TowerXchange: Time to market is critical when rolling out new sites and upgrading sites for capacity or hybrid energy. How is TESA able to ensure the fulfilment of purchase orders in a timely manner?

Ramboll Telecom Africa’s Regional Director, Torsten Esbjørn: “Ramboll has long standing partnerships with manufacturing partnerships in India, and based on experiences built over many years, set out to find a partner in the SADC region with a similar business outlook and understanding of quality and service. TESA is such a partner and the best match for Ramboll in the SADC region. Through TESA, Ramboll expect to be able to reach mutual customers more comprehensively enabling them to understand and service their customers in each situation. Ramboll’s footprint in the SADC region is limited with relations newly built. By bringing TESA to the marketing front, we expect to build a significantly larger footprint while building more mature and developed partnerships with customers.”

“ “The total passive infrastructure solution model is increasingly in demand as a result of the change in the towerco landscape with operators aggressively pursuing tower sharing to reduce costs

Ramboll’s enthusiastic referral to TESA

Anni Bodington, Managing Director, TESA: We really do concentrate on the logistics side of the business, planning for short notice orders and are also known for quick response and supply. This requires a lot of careful planning of stock levels, as well as careful procurement given fluctuations in currency. TESA specialises in projects that do not have time to wait 12-16 weeks to import steel or completed steel products. Our niche is supporting rollouts and retrofits where time to market recan be a significant differentiator. Our setup may be small, but it allows for us to manage every detail. We forecast and hold certain elements in stock, with absolute attention to detail which enables us to meet essence timelines. Of course, it also helps that we communicate with our clients as the pipeline knowledge is critical for effective and efficient manufacturing and logistics planning. Innovative solutions to maintain margins and reduce price are constantly explored. Creative ways to increase capacity, infrastructure and engineering resource offer solutions to meet demands. The re-design and ramp up in our factory for tower manufacture is on track. Recent developments at SA steel mills however have added a further supply challenge which makes communication more critical than ever before. TowerXchange: Who are TESA’s clients? Who are your operators? Do you use manufacturers such as Ericsson or ZTE? Or do you sell through turnkey infrastructure subcontractors? Anni Bodington, Managing Director, TESA: TESA partner with turnkey infrastructure

implementation companies assisting and advising on steel work components and designs to meet specific client requirements. We are fortunate to have preferred vendor status and approved specification with a number of African networks but most mobile network operators do not order directly. MNO’s would specify and approve the order, but the PO is issued to the OEM, who in turn orders through their turnkey infrastructure subcontractors. It is our hope that with the support of Ramboll, we will be specified as tower suppliers shortly and are already working at network level to ensure this. A large majority of our business comes from turnkey contractors with whom we have formed


lasting relationships and who year after year consistently rate TESA above average in the annual ISO 9001:2008 customer satisfaction survey. We have received four international awards and yes, TESA are preferred vendors to Ericsson and ZTE, amongst others. TowerXchange: Finally Anni, what is it like for a woman running a business in the “old boys network” that is the African tower network? Anni Bodington, Managing Director, TESA: To be frank, it took a number of years for the company to be considered serious contenders as suppliers in the industry. Having a woman at the helm was not to our credit. Over time though, jokes have emerged that TESA is a woman-run company with ‘balls of steel’. Balls we have plenty of and steel manufacturing is our game. I simply am not one of the boys and have focused on areas which are beneficial to growing the business through membership, boards and Advisory Councils such as Enterprise for Woman, Councillor of the Cape Chamber of Commerce, Head of the Woman’s President Organisation (WPO) of South Africa, member of International Woman Entrepreneurial Challenge (IWEC). These have all been great initiatives in opening doors as well as aiding the growth of TESA. The company values partnerships. Partnerships are built over time with exceptional service and we endeavour at all times to partner with exceptional companies. The company vision is to be a leading supplier of steel passive infrastructure products and this is not gender specific

Leading & preferred steel fabrication- Towers, perimeter

fencing and passive infrastructure products for the

telecommunications industry.

AWARD

WINNING

COMPANY

5 Marconi Crescent Montague Gardens, Milnerton, Cape Town, South Africa, 7439

Tel: +27 21 551 2955 Fax: +27 21 551 2985 Email: [email protected] Website: www.tesafencing.com

mailto:[email protected]

How to design towers for easy installationHow GSM TP’s flexible, light weight, low cost towers have been installed into Burkina Faso, Benin and Niger

Torstein Grytting, COO, GSM TP

TowerXchange: Please introduce us to GSM Telecom Products (GSM TP) and tell us where you fit in the infrastructure telecoms ecosystem. Torstein Grytting, COO, GSM TP: Launched in 2012, GSM TP designs and manufactures all the NRO materials a tower operator or installation service provider needs. Our team has a background in tower installation, so we believe there’s a market for tower designers focused on easing installation while manufacturing light weight, low cost towers and accessories to our own designs to meet client specifications. TowerXchange: Please tell us about GSM TP’s experiences in Africa – I understand your towers have been deployed in Burkina Faso, Benin and Niger – how did you meet the client’s requirements in each country? Torstein Grytting, COO, GSM TP: We started out focusing on Burkina Faso as our analysis suggested that was where we had the highest probability for success, given the relatively low mobile penetration and growth potential. As a new player in the market, we used traditional and non-traditional ways of contacting the right people; for example our first contact was established through LinkedIn. Then it was a case going over and meeting people locally, securing references and growing our network into Niger and Benin. GSM TP’s first project was for 21 towers for Telecel

Read this article to learn:< How GSM TP designed a heavy data centre tower to load with 69.5 sqm of equipment

< The importance of good NRO planning skills in avoiding installation delays

< How towers can be packed to prevent damage in transit and colour coded to ease installation

< How to deliver low cost towers through volume orders and by switching between factories to get

the best steel price

< How to design and upgrade towers for multiple tenants

Selecting the right static asset manufacturer isn’t just about price – although the ability to produce light weight, low cost towers is critical to being competitive in this category of the passive infrastructure ecosystem. With so many providers offering essentially similar designs, manufacturing services and delivery schedules, differentiation is often on the ease of installation and the quality of project management received. TowerXchange spoke to NRO material manufacturers GSM Telecom Products to learn more.

Keywords: Who’s Who, Interview, Steelwork, Energy, Passive Equipment, Construction, Installation, Capacity Enhancements, Loading, Foundations, Build-to-Suit, Unreliable Grid, Hybrid Power, Solar, Retrofitting, Warehousing, Masts & Towers, Infrastructure Sharing, Africa, Benin, Burkina Faso, Niger, Telecel, GSM Telecom Products


in Burkina Faso. They had followed their own tower design criteria, and their requirements were different from other operators. The order was for 20 backbone towers, plus a heavy 50m tower close to their data centre, which hosted 69.5 sqm of antennae! Fortunately the client had really thought-through that big data centre tower, which was a challenging design as is had antennas on more or less every sqm! Tower designers work to three general categories: seaside towers that have to cope with gusty wind, inland rural towers exposed to direct wind, and urban towers where wind is deflected by buildings. Ouagadougou is such a low-rise city that it has to be considered like a rural area, so designing a 50m tower to support 69.5sqm of antenna isn’t easy in such wind conditions!

The structure also could not flex as much as the

usual 1° - we had to work within a maximum of ½° of deflection, which made the design challenging with such a substantial antenna loading. We overcame these challenges by making the tower broader, moving the stress outward, and angling the exposed projected area. We also had to create bigger foundations with stronger reinforcing steel and use higher quality steel to ensure the main structure had appropriate tensile strength. This meant it was quite a heavy tower. We received the contract for 21 towers from Telecel in Burkina Faso last May, completed the shipment in July, and had photos of the towers being installed by the subcontractor by October. We’ve subsequently received orders for another 49 towers from the same client. We’ve also put 15 towers into Niger with a local partner. The biggest challenge there was logistical as the shipping company didn’t want to release the containers in Niger, so they eventually had to be re-packed and trucked in from Ghana. It’s much more economical when we can ship to a local port where the contractor picks up the shipment directly and ensures it clears customs. TowerXchange: What are the critical success factors tower operators should consider when selecting a design and manufacturing partner? Torstein Grytting, COO, GSM TP: It’s important to do a proper analysis in advance, and to objectify things buyers tend to look at subjectively. We think buyers should include “soft factors” in their RFP

scoresheet, such as how well logistics work, or whether the supplier offers a single point of contact. We believe in having one person in charge of the project to answer all questions, and in installing that project manager before the deal closes to ensure they have good chemistry with the client. GSM TP offer complete manufacture and delivery of all NRO materials; not just the tower but aviation lights, fences, generators, power supply systems – all through a single point of accountability. We also think it’s important to look at more than just price! For example, we once tendered to a contractor who just wanted a price per kilo of steel, which disincentivised efficient light-weight designs! It’s important to consider a contractor’s NRO planning skills. Do they have an after-sales project management system to use after the PO is issued? When will they start talking about foundations? How will they run the project through? Project materials often need to be onsite two weeks before the tower as the concrete needed to dry, yet I’ve encountered too many cases where the project manager only realises this one week before the towers are shipped, which means incurring extra cost flying in raw materials, or warehousing the tower components for days if not weeks whilst the project “catches up”! That doesn’t happen with GSM TP – we’ll be running the project from the moment the tower manufacture starts. TowerXchange: How does GSM TP package your deliveries to ease the installation of your towers?


“ “Ouagadougou is such a low-rise city that it has to be considered like a rural area, so designing a 50m tower to support 69.5sqm of antenna isn’t easy in such wind conditions!

Torstein Grytting, COO, GSM TP: We look at things from the installer’s point of view, and continuously seek to improve how we package our towers to make them easier to install. Currently, the only way many tower parts are identified is with a small stamp of the part number. We use strong, bright colours to indicate which section is which – almost like a Lego™ set!

But GSM TP’s “smartPack” is offers more than colour coding. It starts from how we pack the towers into shipping containers at the factory; we use round wood between each layer to avoid damage in transit and to make it easier to manually pull out of the container onsite. We’re currently conducting a QR code test project, where our customers could download our app, scan the QR code on any section of the tower, and get links to the digital drawings, packing list and colour codes enabling them to identify each component easily.

TowerXchange: How do you ensure GSM TP is able to compete on price? Torstein Grytting, COO, GSM TP: Being a lean organization with a very low cost of sales, being a low cost provider is part of our business model. As our designs are produced in-house, it gives us the flexibility to move between factories depending on fluctuations in steel price, so we can use factories in

Thailand, India, Korea or China for example. TowerXchange: At what sort of volume of orders can clients unlock the best economies of scale? Torstein Grytting, COO, GSM TP: Like any business, tower manufacturing needs high volumes and fairly standardised orders to realise the best prices. We feel the best prices are found around the 2,000 tonne mark (150-200 towers), although we can still leverage a volume discount on 100-150 towers. The more variation within the project specification, the higher the price; 35 different towers are significantly more expensive to manufacture than 35 the same! TowerXchange: How does the design of a single tenant tower differ from a multi-tenant tower? Torstein Grytting, COO, GSM TP: A single tenant tower is lighter, with a smaller wind and antenna load. Multi-tenant towers require capacity for more antennas, so need a higher wind load, and are heavier. Structurally, with multi-tenant towers you want more straight sections in the premium locations in the top ten metres of the tower, whereas a normal tower has an angle tapering from a broad at base all the way to the top to move stresses away from the tower. Multi-tenant towers with more straight sections require stronger steel, which again adds weight.

Despite the additional weight and therefore cost of


“ “We use strong, bright colours to indicate which section is which – almost like a Lego™ set!

GSM TP Smart packs

multi-tenant towers, building a multi-tenant tower is still a lot cheaper than building three towers. TowerXchange: After a site has been installed, how can it be upgraded to add capacity for multiple tenants? Torstein Grytting, COO, GSM TP: To add capacity for multiple tenants, we need to evaluate which sections of the tower aren’t utilised to their maximum capacity, and we need to evaluate which sections of the tower are most vulnerable for wind distress, and any remove instabilities in the tower that may result when the towerco increases antenna loading. There are two potential design solutions to increase a tower’s maximum capacity. The first is to add strength by installing more steel, for example by adding flat steel inside the angle, or by strengthening tower legs. In such instances engineers would have to calculate the required thickness and any need to increase the size of foundation. The second alternative is to move antennas lower on the structure, but you have to calculate the affect on range, and you have more options on an 80m tower than a 50m tower. It’s important towers are designed to have microwave antennas low on the structure. Upgrades are much easier when the tower operator has the original manufacturer’s drawings. When you have to design upgrades based on onsite checks,


tests and measures there’s a danger you can miss something, such as accurately assessing the quality of steel used. Exhaustive checks of towers, especially after acquisition by towercos, make this process easier, but they can be costly. TowerXchange: What quality standards does GSM TP you manufacture to? Torstein Grytting, COO, GSM TP: We design to an American TIA standard, but we can design to an Eurocode or local standard where necessary. We respond to any requirements in the customer’s specification, for example their minimum thickness of galvanization. We generally work to our own internal quality manual, which factories have to follow, and which also defines the quality of steel and care of steel; to date we’ve found no operator with quality standards stricter than our own. Our internal standard complies with any ISO standard – for

example we consider ISO 14000 or 14001 gives a minimum level of quality, but we want more above and beyond that. We always buy from ISO certified suppliers of course. TowerXchange: GSM TP is developing a power solution too I believe – tell us about that. Torstein Grytting, COO, GSM TP: Our smart site hybrid power solution for unreliable grid sites, which combines line conditioning, phase selection, renewables and a controller to optimise everything, is reaching final stages of testing. We’re funded by Innovation Norway, so we have governmental support. We have a tral site live in Afghanistan, and are in negotiation to install into 56 sites in Guinea. TowerXchange: Summing up, how do you differentiate GSM TP’s tower design and manufacture services from competitors’? Torstein Grytting, COO, GSM TP: I believe our design is incredibly flexible. GSM TP designs and manufactures highly optimised, very low weight towers, and is therefore able to offer them at a very competitive price. We tailor to the project specifications, using our experience in installations, skills in the supply chain and our smartPack strategies to ensure our towers are quickly and easily installed. We offer a single project manager point of contact and use our own materials, creating a single point of accountability


Fast deployment at a reasonable priceHow the consultants to Viettel’s rollout in Mozambique helped accelerate time to market

Dzung Nguyen, Director, VNTower


TowerXchange: Thanks for speaking to us today. Where do VNTower fit into the passive infrastructure ecosystem? Dzung Nguyen, Director, International Business, VNTower: I’m one of the founders of VNTower, a telecommunication infrastructure and construction service provider established as a private company in 2007. VNTower provides services such as the analysis, design and supply of masts, towers and poles; consultant resource services; construction and project management; specifications; inspection and maintenance and specially FTK (full turn key) service for the rollout of mobile networks. VNTower has performed services on nearly 2,000 sites, including new builds, upgrades, modifications, and strengthening. We moved into tower fabrication with some good steel factory partners in Vietnam and China enabling us to deliver volume orders rapidly and at a competitive price. We’ve recently been focusing on fast deployment tower solutions, both self supporting up to 45m and 60m guy-masts that can be installed within one week, including foundations, tower erection, fence, equipment and accessories. VNTower is a certified supplier to Ericsson Corporation, and we’ve been focused on the Asian market; Vietnam, Laos, Philippines, Thailand, and looking at Myanmar. And we’ve project managed Viettel’s rollout in Mozambique. TowerXchange: Please tell us some of your

Read this article to learn:< How cell sites with guy-mast towers can be fully installed in just one week

< Designing light weight towers for helicopter delivery

< Insights into the project management of Viettel’s rapid rollout in Mozambique

< The international quality and safety standards followed by VNTower

Keywords: Who’s who, Interview, Managed Services, Steelwork, O&M, Construction, Installation, Health & Safety, Foundations, Network Rollout, New Market Entrant, Masts & Towers, Asia, Africa, Mozambique, Viettel, VNTower

Viettel rolled out 1,000 towers and a fibre transmission network in Mozambique in just 10 months. The keys to rapid deployment were cash flow, support and planning, and the use of fast deployment guy-mast towers with prefabricated concrete anchor blocks; much faster to install than traditional towers relying on substantial reinforced concrete foundations. To learn more, TowerXchange spoke to Viettel’s project managers VNTower, who have also deployed or upgraded nearly 2,000 sites in Asia.

clients and project experience? Dzung Nguyen, Director, International Business, VNTower: Ericsson Vietnam needed 200 towers in three to four months for sites with limited land leasing area – many of the towers were in cities. We provided 45m fast deployment towers, a self supporting tower that can carry 2 microwave 1.2m and 9 radio antennae. These towers are pre-fabricated in our factory. On the first day, the tower and all accessories can be delivered in one truck. On the second day the team installs the steel beams of foundation. On the third and fourth days

the tower and accessories will be done. On the fifth day we pour the concrete inside the beams of the foundation. Grounding, fencing, BTS and power connection will be finished on the sixth and seventh days. It’s that quick to install. In the unlikely event that the site has problems with the landlord, land permissions or village protests, it’s easy to move – designed for a “quick runaway”. In another example, Papua New Guinea requested 30m towers light enough for helicopter delivery. We designed a solution that didn’t use concrete to minimise weight. In that instance we were able to finish towers in three days. TowerXchange: Tell us about your work with Viettel in Mozambique. Dzung Nguyen, Director, International Business, VNTower: We have provided Viettel with management services, including setting up their rollout schedule and rollout plan in Mozambique. We sent highly skilled engineers and project managers there for one year. As the third licensed operator in Mozambique, Viettel’s challenge was to build coverage by rolling out as quickly as possible. With our help Viettel was able to install 1,000 sites in just ten months. Delivery was very fast. We worked with them to prepare the plan; targeting the number of towers rolled out per month, building the tower team. We divided the country into several regions, allocated skilled people to each region, and trained the team on the


ground. We prepared various procurement and quality templates and checklists. The key to success was buying at a very competitive price, using a good supplier system. Cash was not a problem as Viettel is government owned. Transportation was not a problem because all the towers were close to highways, so delivery was easy. The tower designs mixed traditional mast towers with guy-masts, the pre-fabricated anchor blocks of which were made in our factory. Guy-mast towers are fast to deploy because most of the installation time is usually taken up with foundations. Guy-mast towers are much cheaper than self-support towers. They’re also much faster to install because self-support towers take a long time to complete the foundation block. Viettel try to offset costs by using guy-masts as much as possible, but they need more space. However, they can be up to 60m high, which is good for coverage. TowerXchange: What are the safety and quality standards you use? Dzung Nguyen, Director, International Business, VNTower: Our towers are manufactured to international quality standards: ISO standards and environment standards, while our materials follow international standards set by Ericsson and our operator partners. On the tower erection side of the business, we use climbing and health certification, relevant safety equipment such as harnesses, safety belt, and ensure working conditions and times of working follow international standards

VNtower guy mast base

Special feature:

In this new special feature, TowerXchange considers business models to extend network sharing beyond towers and other static assets to include active infrastructure and transmission, enabling operators to unlock substantial asset savings and cash flow improvements, while enabling infracos to create new recurring revenue steams and new capital value.

In this first installment of “Beyond Passive Infrastructure,” John Earley, President of the African region for Ceragon, advocates that towercos consider transmission sharing as a means of freeing up tower load capacity while generating new revenue up to US$5-6k per site per month; while Ericsson’s Patrik Jakobson makes the case for bundling passive and active infrastructure sharing under wholesale agreements that could be a potential model for open access LTE.

Beyond passive infrastructure

Featuring two insightful articles:93 The case for transmission sharing

99 Wholesale network sharing


The case for transmission sharingSharing microwave backhaul would create new revenues for towercos and free up significant load capacity on towers

John Earley, President Africa Region, Ceragon Networks


TowerXchange: Is the transfer of assets from operators to towercos good news for backhaul specialists like Ceragon? John Earley, President Africa Region, Ceragon Networks: The transfer of assets from operator-captive to towercos can be both a threat and an opportunity for network equipment providers. It’s a threat if we had an agreement with the operator who built the towers, but we have to start again with the new third party owners. But it’s also an opportunity; as sites become co-location sites, the new tower operators are required to make investments to upgrade sites for multiple tenants, and in the majority of cases the transmission network was not planned with co-location in mind. Backhaul could require substantial capital investment, otherwise a lot of sites may be rendered unusable for co-location due to the needs of operators for more and larger antennas to support higher bandwidths and more cluster sites. But in these early stages of passive infrastructure sharing, the transfer of assets has little effect on backhaul. Most the transactions to date remain focused on passive infrastructure; African operators are firmly holding on to their active infrastructure, and base stations and transmission have remained part of the mobile network operators’ strategic inventory. However, with the increasing desire for mobile network operators to push responsibility for more commodity assets to third parties, managed services

Read this article to learn:< How transmission sharing could generate new revenues of US$5-6,000 per month per site additional

< How sharing microwave antennae that represent up to 80% of wind loading would free up capacity to

increase tenancy ratios

< Should towercos acquire transmission assets or build a parallel transmission network?

< The imperative to share transmission when consolidating and decommissioning towers

Keywords: Interview, Towercos, Beyond Passive Infrastructure, Core Networks Backhaul & FTTT, Capacity Enhancements, Loading, Site Level Profitability, Decommissioning, C-level Perspective, Stakeholder Buy-in, Infrastructure sharing, Africa, Ceragon Networks

John Earley served as CTO for Millicom Tigo in DRC and for Celtel / Zain in Nigeria, in the latter where an initiative to divest passive infrastructure was being explored prior to the sale of the business to Airtel. John then joined microwave transmission market leaders Ceragon Networks as President of the Africa region, growing the business from $15m to $85m revenue between 2010 and 2012. John continues his interest in infrastructure sharing, and maintains close relationships with several of Africa’s towercos. In this interview, John puts forward a case for the towercos to offer transmission sharing alongside passive infrastructure sharing services.

agreements and tower transactions could extend to active infrastructure management including transmission in the future. TowerXchange: Tell us about the shared transmission opportunity as you see it. John Earley, President Africa Region, Ceragon Networks: Towercos should extend their business model to include shared transmission services. They have two alternate business models. They could offer shared transmission as an additional revenue stream and service to existing tenants as part of the initial deal – acquiring both towers and transmission assets for leaseback, with a view to upgrading or replacing those assets to support multiple tenants. Or they could build a parallel transmission network and use an attractive pricing model to incentivise co-locating tenants to use their shared transmission. This would provide additional revenue for the towerco while reducing capex and potential opex for the operator. One of the towercos’ major challenges when acquiring new physical assets is that the data doesn’t always reflect the reality on the ground. Towercos try to mitigate this risk through comprehensive due diligence, but their business case has to be conservative to allow replacement and the structural re-engineering of towers where necessary to support additional tenants. Shared transmission has the added advantage of freeing up capacity to add more equipment to towers, driving up towerco revenues, tenancy ratios and profitability.

Imagine if a towerco had four tenants on a specific tower, all sharing a single transmission network. With heavy microwave antennas representing as much as 80% of wind loading capacity, having one set of microwave dishes rather than four could free significant Exposed Projected Area to sell to additional tenants or for next generation equipment upgrades. The radio base station antennas are relatively small, with minimal additional load and


more freedom on where to place them. On the other hand microwave transmission involves large antennas, often requiring a specific location in terms of height and direction. So you can see how shared microwave transmission creates both new revenues and frees up capacity enabling towercos to drive their core co-location revenues.

TowerXchange: Do you see any of the African towercos moving towards transmission sharing? John Earley, President Africa Region, Ceragon Networks: The African towercos are listening, but we don’t see a serious drive to turn transmission sharing into a reality yet. I don’t think the towercos realise the potential of backhaul – I’m not sure they’ve analysed the upside to the extent that they have a business case to present to operators. It’s not a question of skills. The engineering staff transferred to towercos and their contractors carry broad based skills, including first line maintenance on transmission equipment. Some further upskilling would be required, but it’s really about a change of mentality: towercos have to have a desire to move in this direction. One of the African towercos hired a consultant to examine transmission sharing, but the project died off as they focused on different things. To my knowledge, none of the African towercos has completed a viability study into transmission sharing. The more towers the towercos acquire, the more neglecting transmission sharing is going to look a bit short-sighted. TowerXchange: With IHS announcing recently that they have secured a fifteen year lease of Orange’s towers in Cameroon which, in combination with their previous acquisition from MTN, gives IHS all the towers in Cameroon (Viettel notwithstanding), would a market such as that be a good platform for a shared

transmission play? John Earley, President Africa Region, Ceragon Networks: Shared transmission is going to work particularly well in markets such as Cameroon, where consolidation and decommissioning of towers will maximise long term efficiencies. In many cases, mobile networks in Africa were rolled out on a copycat basis. The first mover put their tower on one hilltop, their competition put a tower almost adjacent to that; when the first mover took a rooftop, the competition took an adjacent rooftop. When launching, sometimes copying your competition is the fastest way to rollout a network. But we’re reaching a point where some critical hilltops and metropolitan locations don’t have enough real estate available.


For companies in IHS’s position in Cameroon, the best way to reduce opex in the long-term in scenarios with two towers on essentially the same grid reference is to decommission one tower and co-locate on the stronger tower. With ten to fifteen year commitments to two key anchor tenants, you can’t just tear down the tower. If you want to combine the sites, you’ll have to move equipment from one site to other. Unless you share transmission assets, the wind loading requirements may necessitate building a third tower whilst tearing down both original sites, all at significant cost. On the other hand, if you shared transmission, you could fit radio antennas from both operators onto one of the original towers, and you’d have ability to maximise service continuity, with a seamless transfer from one site to the other. TowerXchange: What is the revenue potential from shared transmission? John Earley, President Africa Region, Ceragon Networks: A good benchmark would be the cost for leasing capacity from fibre or fixed line operators. That varies from country to country, and the more you buy, the less you pay of course, but if I had to pick a figure for a 100MB connection, the market price for shared transmission would be around US$5-6,000 per month per site, depending on the distance involved and the cost of spectrum. TowerXchange: Is the target “client” within the operator the same for shared transmission as for shared towers, thus making shared transmission a simple upsell?

“ “Shared transmission is going to work particularly well in markets such as Cameroon, where consolidation and decommissioning of towers will maximise long term efficiencies

John Earley, President Africa Region, Ceragon Networks: I think the decision makers for sharing towers and sharing transmission are different people. Most tower transactions are motivated by the reduction of opex and by stretching capex, and are driven by corporate financial and strategy people in head office. In order to sell shared transmission, towercos would have to engage the local opco’s technical

network people to convince them tht this wouldn’t adversely affect their ability to control and operate their networks. TowerXchange: Are mobile network operators prepared to share transmission? John Earley, President Africa Region, Ceragon Networks: There’s no difference between leasing microwave capacity and leasing fibre capacity, which the mobile network operators are already doing.


The major objections to transmission sharing are coming from operators who are keeping control of assets they consider to be a strategic. Yet only certain elements are strategic, such as the core network for example. Transmission isn’t strategic. TowerXchange: How would shared transmission service providers ensure availability? John Earley, President Africa Region, Ceragon Networks: If you’re going to have multiple operators sharing transmission, then you’re going to require increased resilience. If all five licensed operators in a country were using shared transmission, you might not just need dual route redundancy but tertiary resilience to provide comfort that they’ll all get the same or better availability than their current network provides. TowerXchange: Tell us about the capacity constraints affecting Africa. John Earley, President Africa Region, Ceragon Networks: The major capacity constraint in Africa is the availability of spectrum. Spectrum is a finite resource with limited re-usability in a given geography. Africa and Latin America have relatively poor regulatory control of spectrum, which leads to problems with interference, for example through the use of low frequency spectrum in metropolitan areas. There is also a problem with the unknowing illegal use of frequencies due to errors in configuration where transmission links

are accidentally put in on the wrong frequency. The lack of pervasive fibre rollout means Africa has a reliance on microwave backhaul, which in turn leads to constraints on the use of microwave. However, Ceragon and our peers have made a lot of progress to make sure the maximum can be squeezed out of available bandwidth, helping improve resilience to interference to overcome the poor operating environment in Africa. There is no hard limit on microwave – the only limit is how much spectrum you can use and the cost of that spectrum. For example, in South Africa and in Kenya there is a charge per MHz of spectrum used, so when you have four mobile network operators using the same network topology, they incur four times the fees even if in practice they are actually utilizing one and a half times the spectrum due

to trunking and combining – not sending data at a constant stream or bit-rate, rather than the full four times. So one can gain advantages in terms of overall bandwidth utilised, but the cost is still substantial. TowerXchange: Is transmission sharing happening anywhere else in the world? John Earley, President Africa Region, Ceragon Networks: Transmission sharing has been going on since the beginning of transmission. For example, in the UK BT had a monopoly on transmission – you had to rent it from them. Only with the advent of mobile networks was there a push to build multiple parallel independent transmission networks as BT’s transmission infrastructure couldn’t support the growth in requirements from GSM transmissions, and a lot of expansion involved building masts in


fields and along roads where fixed lines never went. The regulators were forced to allow microwave transmission. It stuck, and they’ve never looked back. Meanwhile in Africa there was no such alternative because the incumbent fixed line network was not extensive (except in South Africa), so there was no fixed line operator from whom to lease transmission services. TowerXchange: Thanks John, would you like to sum up the business case for shared transmission as you see it. John Earley, President Africa Region, Ceragon Networks: I foresee an increasingly compelling business case for shared transmission. Once it starts, the market will be quick to move in this direction. We’re seeing an exponential increase in the use of backhaul capacity, driven by huge appetite for data which is driving bandwidth utilisation like never before. Operators will simply run out of capacity, and there won’t be enough spectrum for each operator to have their own pipe. We see this happening already with shared fibre infrastructure. My analogy, which applies equally to towers, fibre or transmission, is that the current situation is like five bus companies each building their own highway between two major cities. Why tear up the landscape to build five highways for different bus companies when it’s more economical to build one shared five lane highway, and manage timetables and traffic?

TowerXchange: Please contrast the business models of today’s passive infrastructure sharing with the concept of wholesale network sharing - how does each model create value for operators and for third party network partners (“NetCos”)?

Patrik Jakobson, Head of Network Sharing, Ericsson Global Services: I see differences along two different dimensions. Firstly, passive network sharing includes only towers, shelters, fencing et cetera, while the wholesale model includes active components – RAN, radio base stations, backhaul, controllers, even in some cases the core network (there’s a trade off between complexity and savings when it comes to the core network). The second difference is the involvement of a third party. Passive network sharing can be bi-lateral between two operators or through a third party towercos, whereas wholesale network sharing bundles interdependent passive and active components to be managed by a third party NetCo. The wholesale model can be a good option when consolidating operators, when sharing a build out, or as an alternative to RAN sharing. Ericsson see wholesale network sharing as an extended managed services proposition. It’s different from the towerco model in that we don’t make money from the real estate business, we take out more costs year on year, creating efficiencies and scale. TowerXchange: What kind of entity could provide these NetCo wholesale network sharing services – is it an opportunity for towercos to move up the

Wholesale Network Sharing


Creating a new breed of NetCo to manage and share Africa’s passive and active network assets

Read this article to learn:< Why wholesale network sharing might offer opportunities for your business

< The value proposition of passive versus wholesale network sharing

< Why infrastructure funds are interested in a new breed of NetCo bundling passive and active

network services

< How wholesale network sharing offers a potential model for open access LTE

< Wholesale models as a means of third, fourth and fifth ranked operators acquiring scale

Patrik Jakobson, Ericsson Global Services

Keywords: Wholesale network sharing, passive

infrastructure sharing, active infrastructure

sharing, NetCo, infrastructure funds,

RAN sharing, open access LTE, valuations,

technology risk, Africa, Ericsson

Patrik Jakobson is Head of Network Sharing at Ericsson Global Services. His area is focused on developing the wholesale network sharing business as an evolved Managed Services model to support operators to achieve further opex and capex savings. TowerXchange spoke to Patrik to find out how he thought Wholesale Network Sharing could work in Africa.


value chain, an opportunity for active equipment specialists like Ericsson, or an opportunity for a new breed of NetCo? Patrik Jakobson, Head of Network Sharing, Ericsson Global Services: Wholesale network sharing could be an opportunity for newcos, or it could be an opportunity for companies like Ericsson to offer the service with the support of an infrastructure fund. Infrastructure funds are attracted by the lure of long-term cash-generating contracts, with the possibility to create extra value by bundling passive and active network segments. Towercos might be interested to move up the value chain, but wholesale network sharing is closer to Ericsson’s core business, and we’re interested in taking on operational and technology risks over long-term contracts. TowerXchange: Some African operators remain reluctant to share even passive infrastructure in markets where coverage remains a critical differentiator, what are the drivers that would compel operators to participate in Wholesale Network Sharing?

Patrik Jakobson, Head of Network Sharing, Ericsson Global Services: Lack of spectrum and licenses provides an incentive to share. For example at the 800MHz band there’s often only enough frequency for three different LTE licenses, so if you have four or more 2G and 3G operators then someone is going to have to share, or lose out.

The wholesale model also offers sustainable economics for operators that are subscale, for example operators ranked third, fourth or fifth in some African markets. Such players often have scale disadvantage compared to the market leaders, which might mean they can’t rollout scalable LTE. Wholesale network sharing can be a means to acquire scale. Wholesale network sharing can also be compelling in rural areas in which there’s less traffic, the relative cost per minute or cost per gigabyte of data is higher than in areas with greater population density. Finally, the wholesale model offers an opportunity for operators to divest active and passive networks, leasing them back from a NetCo, releasing cash, reducing debt and easing their balance sheet. This

might be especially relevant in circumstances of consolidation, where there is typically a 3-4 year cycle to payback – an asset divestiture can release cash to offset that loan payback period. TowerXchange: In our experience, many African regulators have yet to draft or are still drafting explicit passive infrastructure sharing regulations. There may be no explicit policy concerning active network sharing. What should be the role of the regulator in Wholesale Network Sharing?

Patrik Jakobson, Head of Network Sharing, Ericsson Global Services: I agree that regulators in some markets haven’t drafted explicit regulations about active or wholesale network sharing. We advocate that regulators continue to take a liberal approach

Comparing different sharing models

Model

Roaming N/A

-10%

-20%

-20%

-40%

N/A

Up to 13%

Up to 17%

Up to 23%

Up to 31%

Models including active sharing Source: Ericsson

Passive JV

TowerCo

Wholesale

Active & passive JV

Asset saving Cash-flowimprovement


to new technologies, active network and spectrum sharing. Opening up markets for active infrastructure sharing supports sustainable mobile broadband, and we all know that there’s a correlation between mobile broadband and GDP growth. So regulators recognise that if they can facilitate infrastructure sharing it can reduce price points for the rollout of LTE as mobile broadband infrastructure, which might achieve wider adoption than expensive fixed broadband. It’s important for regulators to allow wholesale sharing among different operators, and allow a neutral third party to own, manage and provide that capacity without their own operator license. The NetCo could be seen as a type of subcontractor of shared capacity. TowerXchange: Is there a role in wholesale network sharing for specialist passive infrastructure management companies, such as towercos and fibrecos, as well as for and “InfraCos” or “NetCos” – companies focused on active infrastructure? Patrik Jakobson, Head of Network Sharing, Ericsson Global Services: Towercos are becoming established in Africa, but there remains an interdependence between passive and active network components. Many operators are consolidating 2G and 3G at same time as building LTE, and there are interdependences in the design of the network. It’s important to keep passive and active components together to create an end-to-end service offering encompassing capacity and coverage, governed by NetCo’s Service Level Agreements. There’s a clear advantage to holding passive and active together to reduce complexity.

TowerXchange: How could wholesale network sharing work in Africa? For example, are initiatives such as Open LTE in Kenya illustrative of how the wholesale business model could work in Africa?

Patrik Jakobson, Head of Network Sharing, Ericsson Global Services: The open access network model, where a single license is offered to a wholesale player (as has been discussed in Rwanda and Kenya) is one a sub-segment of the potential Wholesale NetCo model. But wholesale network sharing doesn’t have to mean only one open network in each market. In established markets you might see two or three operators coming together to share under a wholesale model, while the market leader takes a traditional model. TowerXchange: Can you give some examples of how the wholesale network sharing model has been implemented outside Africa? Patrik Jakobson, Head of Network Sharing, Ericsson Global Services: Ericsson is working with Deutsche Telekom Germany where Ericsson acquired 5000 micro-wave hops from DT and are providing shared capacity based on Key Performance Indicators/Service Level Agreement to DT and other operators, in a third party set-up spanning a long-term contract period. We’re engaging with other operators and infrastructure funds in Europe about other potential wholesale network sharing opportunities. There is also lots of activity around LTE auctions, with some operators left without licenses and needing to look at new wholesale business models.

TowerXchange: Please sum up the benefits of wholesale network sharing. Patrik Jakobson, Head of Network Sharing, Ericsson Global Services: Wholesale network sharing unlocks capex and opex savings from passive and active infrastructure. Operators can use wholesale business models to release cash by divesting passive and active assets and leasing them back, relieving themselves of operational and technical risk, securing operational capacity at a known price, and securing performance commitments over a long term contract. Even we don’t know what products there will be in the portfolio in five +/- years, but we have the technology insights through our R&D arms, so we advocate transferring technology risk to a technology leader who can commit to price/performance improvements. Working with a NetCo also offers flexibility: neutral governance overcomes the challenges faced by operators who are bi-laterally sharing assets, who often have confidentiality and prioritization concerns, and who may wish to expand networks at a different pace. Finally, splitting the value chain into NetCos with high capital requirements yet predictable revenue, separated from operators subject to ‘retail risk’ can yield an increased valuation. Service-centric operators benefit from volume discounts from NetCos and can realize higher yield from divestitures and/or lower leaseback costs over long term contracts, when spinning-off networks that can achieve a higher valuations if classified as infrastructure rather than bundled with retail risk

Special feature:

This special feature is an expansion of the “How to leverage RMS to optimise preventative maintenance” article which included profiles of Inala SAM and Kentrox ISM in issue two of TowerXchange. We’ve broadened the scope of this feature to connect RMS with analysis, job ticketing, workforce management and asset lifecycle platforms.

In this edition, we start at the sharp end of RMS, with Telemisis’ solution to the acute problem of fuel theft – not just theft of diesel, but theft of generator equipment and the practice of cutting fuel tanks with water or, in particularly damaging cases, kerosene. Broadnet then take you on a journey back to the NOC and into the integration of RMS data with “manager of manager” platforms. Finally, we revisit Inala for a look at their new Infrastructure Intelligence service, blending feeds from any RMS with asset management data to unlock actionable insights.

From RMS to monitoring and management platforms – analysing and optimising asset utilisation

Three unmissable interviews:103 How to combat fuel theft

109 How to measure what matters

114 How to create actionable intelligence from your

infrastructure data


How to combat fuel theftTamper protected sensors reveal fuel theft at sites while comparing fuel alerts with invoices deters fraud

Chris Begent, Commercial Director, Telemisis

TowerXchange: Thanks for speaking to us Chris. Let’s be honest, a lot of fuel pilferage originates within the supply chain, so is there a risk of remote monitoring sensors being damaged by staff or subcontractors? Chris Begent, Commercial Director, Telemisis: Unfortunately much of the fuel fraud or theft is internal, so interference with sensors is a common problem we pick up. For example, one of our clients was aware of regular small amounts of diesel theft, enough to supply one or two vehicles, at one of their sites. The parties responsible tried to sabotage the sensors by disconnecting the power. They thought they’d disabled the system and started draining the fuel. Fortunately our devices are extremely resilient to tampering (our systems have independent power systems, internal disconnection sensors, tamper protection on fuel probes and fuel hatches), so the thief triggered an alarm and the client was able to dispatch someone to the site, where they discovered the security guard was pilfering fuel. We can also combat fraud by cross-referencing fuel alerts against invoices. On one fairly large system we picked up invoices routinely 10% above what the subcontractor said had been delivered. We conducted an accuracy test on our system and found it was accurate within 1 litre. In that particular instance, we found that the metering on delivery vehicles was 10% high across the board, so the error was corrected.

Read this article to learn:< The importance of tamper-protected RMS in minimizing fuel theft within the supply chain

< How to prevent the damage caused by kerosene contamination

< The importance of remote upgrade and reprogramming of RMS to minimize site visits

< How self-configuring RMS reduces reliance on high skilled deployment technicians

< How data from RMS is filtered to support different users, from technicians monitoring local alarms

to management comparing and selecting equipment and service providers

Fuel theft is believed to add up to 30% to energy opex in Africa. In the battle with the diesel mafia, how can RMS tip the conflict in favour of the tower owner? TowerXchange wanted to learn more about fuel theft, and learn more about how to configure and filter RMS data to meet the needs of different users. So we spoke to Telemisis, who have an installed base of tens of thousands of RMS systems from small deployments at fifty sites to many thousands. In Africa, Telemisis’ SitePro RMS systems have been deployed in Egypt, Tanzania, Kenya, Ghana and Nigeria.

Keywords: RMS, Fuel Security, Installation, O&M, Capex, Batteries, Site Level Profitability, DG Runtime, Site Visits, Skilled Workforces, KPIs, Job Ticketing, Opex Reduction, Infrastructure Sharing, Africa, Telemisis


In Tanzania we had a site where the client was burning 1,000 litres of diesel per month in two deliveries of 500 litres… yet the tank capacity was only 430 litres! After we deployed our RMS the system didn’t need refueling again all year, as the grid supply was reliable. So on a single site the operator was paying for 12,000 litres of diesel per year that they were not actually using! Multiply that kind of saving across many sites, and add in the savings from reduced truck rolls, and it pays for an RMS system in no time at all! In another example, I remember one of our Caribbean customers had installed one of our main units into their gensets when they experienced the theft of one of their generators from a site. The system has GPS ring-fencing, so they dispatched someone to the site with local law enforcement, noticed on the way that the GPS said they’d just passed the generator, stopped, turned around and found the dumper truck the thieves had used to rip the generator off the site! Unfortunately theft of the actual generator itself is a common occurrence in

Africa so GPS tracking provides the potential for the equipment to be tracked and recovered. TowerXchange: Is watering down of diesel another common problem? Chris Begent, Commercial Director, Telemisis: Yes, so fuel quality monitoring is also essential. Water in the fuel is actually relatively easy to detect. On the other hand, kerosene or biodiesel contamination is extremely difficult to detect. If you put kerosene into a diesel generator, it will keep on running, but the generator will run until it destroys itself, so it can be extremely harmful. We have a solution for monitoring kerosene and unexpected hyrdocarbons contamination that costs a tenth of the price of the other solutions available on the market. TowerXchange: How do you differentiate Telemisis from competitive RMS solutions? Chris Begent, Commercial Director, Telemisis: Telemisis has a background in electricity monitoring, security and automation, using small format solid-state site equipment designed to work in harsh environmental conditions meaning that reliability and ease of deployment are designed in. Our rugged SiteNode telemetry device is capable of withstanding operating temperatures from -30oC to +80oC. A lot of competitors’ RMS systems come from a background of IT monitoring where environmental conditions are benign and communications are reliable which means that some struggle in

the environments experienced in Africa. Our experience in power source management on cell sites, whether utilising green energy sources or maximising battery usage within operational limits before remotely starting the genset, means that we can provide a solution for the most important aspect of cell sites; the power source. Because Telemisis SitePro is designed as a remote telemetry system from the ground up, it largely self-configures, which reduces the need for highly skilled technicians to deploy the system. Site owners can install all elements of the system supplied by Telemisis, or it can be designed to work with equipment and sensors already on site. Our system ranges from small format, solid-state devices deployable for machine monitoring and GPS tracking on generators or off grid solar-powered sites, to larger switch sites. TowerXchange: How have your clients’ requirements changed and how has your solution evolved over the last ten years? Chris Begent, Commercial Director, Telemisis: Our system has evolved in many ways over the past ten years from feedback from our customers’ requirements and to take advantage of new technologies as they become available. Some of our systems have been installed for many years, and over that time our clients’ requirements have evolved and their site monitoring solution from Telemisis has expanded to meet these needs. If you can address changes without sending people to


“ “On a single site the operator was paying for 12,000 litres of diesel per year that they were not actually using!

TowerXchange: How do your sensor devices in the field communicate with the NOC? Chris Begent, Commercial Director, Telemisis: The information collected on site is intelligently processed and transmitted to the NOC through the most applicable route such as Ethernet, GPRS or SMS. Multiple back-up communications options are available to ensure the information gets back, particularly when there are problems on site that may affect the primary transmission path. Integration with the NOC systems is often implemented by Telemisis at an SNMP level but higher levels of integration provided by SitePro provide valuable insight into site condition allowing proactive site visits or reduced site visits by diagnosing the faults remotely and responding accordingly. The more detailed information is useful particularly where customers want integration with back-office systems. This makes business intelligence more powerful through the integration of live, real-time data. Our ability to buffer data in the event of a communication problem is critical to the integrity of the system but fallback transmission means the data is available to the engineers when it is most needed, when normal site communications are down. TowerXchange: Tell us where the Telemisis SitePro system fits within the systems and processes within the NOC. Chris Begent, Commercial Director, Telemisis: It

Chris Begent, Commercial Director, Telemisis: Our devices automatically configure themselves to connect to the server. For example the system recognises the SIM card and the settings it needs. Our temperature and humidity sensors are all pre-calibrated and fuel sensors are automatically calibrated as part of the startup procedure. Once we’ve established communications with the central server, the intelligence in that server enables a project manager in the NOC to rapidly apply the correct configuration. The system only presents options that are viable in terms of the equipment that is connected on site. So we only need a skilled technician at the NOC, who configures and commissions the site with the person on site processing through physical tests by walking in front of sensors, closing breakers etc.

the site, that fulfills one of the key aims of RMS; to reduce site visits. We don’t want to create site visit requirements for the telemetry, so remote upgrade and reprogramming is made possible though our secure interface. We understand that once you’ve gone down a route partnering with a telemetry supplier in your network, it is expensive and difficult to change so to a certain extent you’re committed to that supplier. For this reason we think it’s critical that new hardware retains backwards compatibility so that expansion and upgrade is easy. Our SitePro system is backwards compatible to the equipment we installed in 2002-3. TowerXchange: Tell us more about deployment of your systems, from self-configuration to communication with the NOC.


SiteNode

depends what systems the client already has and what information they want. Typically the NOC has basic alarms transmitted to it through BTS inputs which typically offer very little useful information on the site systems, or in some cases by SNMP which can generate a large amount of alarms which are too numerous to handle at the NOC. The SitePro system collects a lot more than alarms, by providing readings that enable the user to have valuable additional information enabling them to act more efficiently. SitePro passes the clear cut alerts that the NOC operators want to the NOC screens but makes the extended information available to the engineers or managers providing them with the information they need so that they have a good idea what to expect before they go onsite and can respond efficiently, maximizing productivity and site availability. For example, an operator might see a generator alarm from a remote site two and a half hours drive away. From the NOC he can see that the charger alternator has failed. He can then dispatch a maintenance person equipped with a replacement charger alternator to replace then and there, rather than having to make a five hour round trip for diagnostics and another to perform the actual repair. TowerXchange: How do RMS support decision making processes? Chris Begent, Commercial Director, Telemisis: We think it’s important that we provide genuine Remote

Management not just Remote Monitoring. Our job doesn’t end with the installation of sensors; it’s critical to feed back management information into the decision making processes of site owners and operators to support their tendering with provable information on service patterns, fuel use, and fuel theft. Our information helps identify patterns in faults and equipment degradation, informing battery replacement decision-making processes by assessing battery performance over time against specifications laid out by the client. We provide accurate data on fuel delivered and fuel burned, which is critical when re-tendering for fuel supply and delivery.

TowerXchange: Why is RMS so critical for towercos?

Chris Begent, Commercial Director, Telemisis: The intelligence from RMS enables towercos to optimise their site operations, which is critical for improving site level profitability. The visibility of site condition is of prime importance because if you don’t know what is happening on site you can’t respond, and failure to meet SLAs can be costly to towercos.SitePro also provides remote control capabilities meaning that action can be taken either without sending an engineer or while the engineer is en-route. For instance you receive a generator “fail to start” alarm from site, meaning the site is running on the batteries and so time is ticking away towards a site outage. Remote control of the generator means that the engineer can take remote control of the generator and manually start the set and check its condition so keeping the site operational. In the unlikely event of disputes, towerco’s can use SitePro to prove the achievement of SLAs. Towercos also often install tracking devices on their fleet of vehicles. With SitePro this can be integrated within the same monitoring system, providing a more comprehensive enterprise solution. If fuel delivery vehicles are included on the system, the fuel supply chain information is condensed into a single point of interface. TowerXchange: Tell us about the scale of human intervention required to respond to remote monitoring alarms – at what point is the network


“ “

Our job doesn’t end with the installation of sensors; it’s critical to feed back management information into the decision making processes of site owners and operators to support their tendering

systems? Chris Begent, Commercial Director, Telemisis: That really is a “how long is a piece of string” question as so much depends on the client’s objectives, and that may differ from site to site. In general, you’re probably looking at an average capex of around £2-3,500, depending on which country you’re in. That’s the installed price including a reasonable base of sensors. Installation costs vary significantly and some countries you need to add £1,000 per site just for labour costs. So I’d estimate maybe £2,500 for the equipment in a well equipped system, plus £1,000 for installation since you don’t need technical guys on site. TowerXchange: Please tell us an example of the Telemisis solution in action. Chris Begent, Commercial Director, Telemisis: When Hurricane Dean struck Jamaica in 2007, the incident really illustrated the benefit of RMS. The network equipped with our telemetry was able to get up and running within 24 hours, while a competitor’s network took many days to get back into full operation. Telemisis monitored the shut down of grid power at the peak of the hurricane (so 240V weren’t running through the systems during extreme weather!), and the immediate start of generators afterwards. Vital information on site alarms allowed the prioritisation of visits to affected sites keeping active sites on air and enabling rapid repairs to be undertaken efficiently with best use of resource

means that the users don’t need to login to the system for day to day information, it is in their inbox each day that they need it, for that region, for that person in the org-chart. Automation is important if you’re managing more than ten sites, and it’s critical if you’re managing thousands. For example, a towerco they may want to make some fuel data available to a subcontractor, so that data can be filtered by geography and by subcontractor, and only the information important to that subcontractor is shared. Similarly, towercos can allow network managers and operator tenants to login and examine certain data across multiple regions, but only seeing sites on which they are tenants. The central monitoring team in the NOC can use their normal screens, other users can use our web-based interface, while the field engineers use integrated mobile apps for industrial tools and smartphones. The management team typically uses business intelligence tools fed with information from our system. We can provide trouble-ticketing and service management alerts, or our data can be fed into existing systems if preferred. Ours is a scalable system able to manage ten to twenty sites on a Telemisis hosted system, or up to tens of thousands of sites where operators typically host their own systems and often have data fed into their existing business intelligence systems. TowerXchange: What is the estimated capital outlay per site to acquire and install your

too big for one person to manage alarms and manually integrate with job ticketing? Chris Begent, Commercial Director, Telemisis: You need to set up a tree structure and group sites by area to keep supervision to perhaps a maximum of one hundred or so sites per region. It varies according to the requirements of the network concerned. Some operators might only be able to cope with ten or so sites, but automated processing and filtering of information is critical. With Telemisis SitePro, automatic reporting is supplemented by a unique user login that filters the information to just the information at the level of concentration that user needs to see. Auto reporting


User interface examples

SitePro—Remote Monitoring

SitePro the intelligent solution for remote site and machine monitoring. Automatic alerting, reporting and data analysis means the information you need to minimise your costs and maximise performance is in your hands simply and easily.

SitePro—Quality by Design

SitePro - Monitoring and Control Solutions for -

On Site Power Generation including Fuel

Rectifiers and Off Grid Power Systems

Grid Power

Batteries and DC Power

Security & Safety including Tower Lights

Environmental systems

Site Management Optimisaton

Vehicle and Mobile Plant Tracking

Small size for flexibility of location and solid-state reliability, with a broad range of interfaces to provide a solution for all

site needs.

Tel: +44 (0) 3333660088 Web: www.telemisis.com

Fax: +44 (0) 3333660089 Email: [email protected]

How to create actionable intelligence from your infrastructure dataNew service unlocks insights from RMS and other asset data sources to ensure better asset utilisation, lower cost of ownership and an increase in availability

Jannie van Rhyn, GM Infrastructure Intelligence, Inala


TowerXchange: What is the Infrastructure Intelligence proposition?

Jannie van Rhyn, GM Infrastructure Intelligence, Inala: Inala Infrastructure Intelligence is a service designed to effectively and efficiently optimise, maintain and manage passive assets. The service correlates the technical and financial data of passive assets with their performance and operational data through the collaboration of systems, processes and people. The resulting reports, dash boards and recommendations allow for the efficient management of the infrastructure through systems like job cards, contractor management, maintenance management and SLA management. This helps to improve asset availability and utilisation while providing more effective decision making support.

Although most of the RMSs do an excellent job of real time monitoring, controlling and alarming of the of sites and its assets, they are not optimised for historical data analysis, failure prediction and trend analysis. RMS are also usually not integrated with ticketing and job cards systems, and not integrated with asset registers to allow for more efficient asset utilisation and decision making. By implementing our Infrastructure Intelligence service alongside the client’s preferred RMS, the tower operator will have a much enhanced and complete asset management solution. This allows for improved life expectancy and ROI in passive infrastructure, as well as better financial and resource planning for maintenance and capital expenditure.

Read this article to learn:< How to translate RMS and asset management data into actionable intelligence< How to connect that intelligence with job ticketing and contractor management to optimise preventative maintenance < How to tailor dash boards to meet the needs of different departments and individuals< How to base End of Useful Life estimation on actual usage rather than on accounting principles or the subjective opinion engineers< How to attain a single view of the network, even if different RMSs are deployed

Keywords: Who’s Who, Monitoring & Management, RMS, Capex, O&M, Valuation, Batteries, Uptime, Energy, Dimensioning, Asset Register, Procurement, Site Management System, Asset Lifecycle Platform, Job Ticketing, Africa, Infrastructure Sharing, Inala

RMS provides invaluable alarms, but the majority of the performance data generated by RMS is seldom used. Inala Infrastructure Intelligence saw an opportunity to harvest and analyse operational, environmental, performance and utilisation data from any RMS (not only Inala RMS), marry it with the actual asset data, and use the resulting intelligence to power predictive maintenance, allow for site and/or asset comparisons, assist with capex estimation and provide intelligent reporting and dashboards to assist in decision making, thus deploying opex and capex more effectively.

TowerXchange: Who should be using Infrastructure Intelligence?

Jannie van Rhyn, GM Infrastructure Intelligence, Inala: Our ideal client is either responsible for or will benefit from more efficient management of the passive assets on mobile telecommunication sites. It could be a Mobile Network Operator, it could be an independent towerco, or could be a managed service provider managing the network, including the passive assets, such as NSN or Ericsson. Even if a network is too small to make the implementation of the service viable on its own, one can easily implement the service cost effectively over more than one network to the benefit of all network owners involved.

TowerXchange: With which RMS’s can the Infrastructure Intelligence service be used?

Jannie van Rhyn, GM Infrastructure Intelligence, Inala: Our service and its implementation is independent of the RMS system and its hardware. All we need is access to and an understanding of the data or the data strings from the client’s RMS. This allows for the service to be implemented over more than one RMS within the same network. In such a case the user will have a combined single view of the network even though it has more than one RMS deployed.

We can also interface with existing ticketing systems, job cards systems, and ERP systems if the client already has these systems implemented.

TowerXchange: How does Infrastructure Intelligence present insights?

Jannie van Rhyn, GM Infrastructure Intelligence, Inala: The service presents insights through dash boards, regular and ad hoc reports. These dash boards are not only hierarchically differentiated but also department specific, and can be tailored to needs of the specific post or department.

For example, the Group CFO’s dash board and reports will look totally different from that of the Group CTO’s, as the one will see current value of assets, depreciation, End of Useful life et cetera, the other will see the high level status of sites, total fuel on hand, cost of sub-contractors et cetera. Similarly will there be a difference between the dash boards


and reports of the Group CTO and the field engineer responsible for a specific number of sites.

TowerXchange: What kind of asset data does the service need?

Jannie van Rhyn, GM Infrastructure Intelligence, Inala: To improve the RMS data analysis and to make a meaningful recommendation on the management of the assets, it is important to have as much information about the physical asset as possible. Typical information needed about the passive assets on telecommunication sites are the make, model and the capacity of the asset, when it was procured, the price at procurement, the maintenance schedules et cetera. This asset data can be generated within our system through tools and processes or can be obtained from existing asset registers, financial systems and ERP systems through relatively simple interfaces.

TowerXchange: Why is it important to have the RMS data AND the asset data?

Jannie van Rhyn, GM Infrastructure Intelligence, Inala: By combining the data of the asset with its performance data, the value of the actionable intelligence for decision making is just so much more than without one of the data sets. It is typically the principle of one plus one equals three and not two.

For example, from the discharge cycle data of a battery, from the RMS, the service will indicate if the battery autonomy is below a certain threshold

Elements of Inala Infrastructure Intelligence

but the best corrective action to be taken is not so obviously apparent. But with the information on the age of the battery, the capacity of the battery and the average energy consumption of the site a much better corrective action recommendation can be made. If you now superimpose the battery performance (or lack of it) onto the average battery temperature of the specific site, you can prevent future battery degradation.

Similarly estimation of End of Useful Life, replacement timing and the depreciation of an asset

can be so much more accurate if based on actual usage, environmental conditions and performance rather than based on accounting principles over the complete asset class or based on the subjective opinion of a field engineer. That is the reason why it is important for us to have the performance data and the asset data combined as the level of insight is so much more enhanced.

TowerXchange: How do you deliver this actionable intelligence to the client?


Jannie van Rhyn, GM Infrastructure Intelligence, Inala: This is done through a combination of systems and tools, people and processes. Although part of the system is software based, much of the analysis and execution needs interpretation and supervision. For that reason, Infrastructure Intelligence is offered as a value-adding service rather than a self-supporting product or system.

The service can be implemented on two levels. Level 1 displays information in various dashboards and reports, identifies preventative maintenance tasks and makes recommendations, but does not take responsibility for the implementation and execution of the tasks and recommendations. This Level includes an Asset Management Centre (AMC) with one system operator located within the client’s environment who will operate the system ensure that the dash boards and reports are delivered, and who will handle all client queries and new requirements. It also includes analysts at Inala that continuously analyse that data, look for trends and exceptions, create ad hoc reports.

Under Level 2 the AMC is expanded with more people (depending on the size of the network) as they will now take responsibility for the execution of the tasks and recommendations by ensuring the necessary job cards are issued to the correct contractors and ensuring that the contractors are effectively managed. This Level can include the takeover of the client’s current field engineers and associated resources. Level 2 service is recommended as it ensures that the management of the site maintenance is done by dedicated and

Diagram of AIMS

trained asset management staff, that will ensure that the completed job card information is fed back into the system to ensure the data in the system is complete and up to date.

Ideally we want to take on the complete management of the passive infrastructure, while providing the tower owner with sufficient information to make the correct investment decisions based on their goals and objectives.

TowerXchange: What are the benefits of using the Infrastructure Intelligence service?

Jannie van Rhyn, GM Infrastructure Intelligence, Inala: In the short term we will lower the cost of managing the assets and increase the availability of the assets. This is ensured through intelligent and focused reports and dash boards, more

efficient maintenance management, more efficient contractor management, improved NOC operations, comparisons of costs and performance between regions, sites or assets and the identification of over designed or underperforming assets.

Further benefits include recommendations based on continuous analysis and trend analysis, predictive maintenance, valuation of assets based on actual


usage, capex projections and benchmarking of costs, performance and manufacturers.

There are no extra costs for general system upgrades and improvements.

Infrastructure Intelligence can be particularly useful for towercos integrating and upgrading legacy acquired towers that might have a range of

“ “Ideally we want to take on the complete management of the passive infrastructure, while providing the tower owner with sufficient information to make the correct investment decisions based on their goals and objectives

different RMS solutions installed.

Infrastructure Intelligence also provides independent third party verification on sites with more than one operator or where the operator is only a tenant. This improves transparency when it comes to SLAs and penalties.

TowerXchange: What does Infrastructure Intelligence cost?

Jannie van Rhyn, GM Infrastructure Intelligence, Inala: The business model for the Infrastructure Intelligence service is based on a per site per month basis and the cost should be covered over time by the lower maintenance costs and higher availability. There is an implementation fee that is very much dependent on the client, the maturity of its asset management environment including systems, people and processes. The more mature it is, the easier it is to implement our service. If very few processes exists, then we need to define and implement that with the client which increases the implementation fees.

The cost of the service depends on the number of sites, the location of the sites/network, the data available from the client and the requirements of the client. For a typical network in say East Africa of 750 sites the implementation fee will be from US$50,000 to US$100,000.

The monthly fee for such a network and the Level 1 service will be from as little as US$30 per site per month the Level 2 service from as little as US$100.

For Level 2 service, where we take over the most of the maintenance management staff, the client will save those costs immediately.

TowerXchange: What are the practicalities around implementing Intelligent Infrastructure?

Jannie van Rhyn, GM Infrastructure Intelligence, Inala: The implementation of the service have very little impact on the clients current environment.

Inala will, with the client, review the client’s current relevant systems and processes in order to define the scope of the service. Together with the client the configurable parameters, rules, dashboards and report layouts, access control, frequency of report delivery and the distribution lists are finalised and documented.

The recommended location for the hosting of the Asset Information Management System (AIMS) is in the cloud to ensure quick and effective access for stakeholders, but it can also be hosted in any environment specified by the client, if required.

TowerXchange: Can Infrastructure Intelligence deliver insights fast enough to be used as a tool supporting the sale of tower assets, as I’d imagine the level of visibility and control over passive assets could have a multiplying effect on the valuation of tower portfolios?

Jannie van Rhyn, GM Infrastructure Intelligence, Inala: If it is a new client, the speed at which we can deliver insights to be used in due diligence

for a tower transaction depends what data the MNO has. Specifically, do they have an up to date and complete asset register? If they don’t have a complete asset register, Infrastructure Intelligence can pull in data from RMS and from those various orphaned databases that field engineers have on their laptops, and we can pull all of that into one database. We can also physically survey sites using mobile applications with barcode scanners and digital check lists that can send the information back to our central database, but of course that takes more time.

If the MNO is an existing Inala Infrastructure Intelligence client then the passive asset information and knowledge of the assets will be so much better and independent, giving you more confidence in the data presented to prospective buyers, leading to an improved valuation


“ “passive asset information and knowledge of the assets will be so much better and independent, giving you more confidence in the data presented to prospective buyers, leading to an improved valuation

How to measure what mattersBroadnet on the integration of RMS alarms into the NOC, and the importance of IPMS

Andy Richardson, VP Sales, Broadnet Telecom

TowerXchange: What’s your footprint in Africa, and who are your target clients? Andy Richardson, VP Sales, Broadnet Telecom: We are active today in sub-Saharan Africa. For the last eighteen months we’ve been working with a number of Africa’s leading operators to prove our technology proposition. We are under NDA, therefore, the specifics are somewhat guarded, although we’re very close to securing two significant opportunities. Broadnet’s solution is designed by Africans for the African market, at a price point that makes it very appealing. Two thirds of our R&D team are from Cameroon, Egypt, Algeria, Nigeria and South Africa. These individuals offer the best possible insight into the needs of the African continent. The reality is that we understand better than most the challenges of operating wireless solutions in the emerging markets. Therefore, we have taken a different approach: one we will teach the client how to make the solution work in challenging environments, two we will give some ideas of how they can mine the “big data” and present the analytics in a meaningful manner and three we enable the client to be more efficient. Our solution has been designed for the co-location / tower operator market. We have been very deliberate in the way we have engineered our SiteOSS solution. Many African MNOs and tower operators have or will be acquiring intelligent solutions to more

Read this article to learn:< How smart, SNMP enabled devices significantly reduce installation costs

< How RMS data is integrated with “manager of manager” platforms

< Mining “big data” to present meaningful analytics and support efficient resource utilisation

< The importance of keeping RMS simple and focusing on IPMS

Broadnet Telecom fit at the centre of everything that a tower operator would need from a site management vendor. Broadnet provides passive infrastructure and remote management, monitoring and control, enabling: hybrid power management, smart metering (kWh utilisation) and billing validation, verification of fuel usage, workforce automation, and SLA management linked to trouble ticketing module thereby allowing tower owners to manage their subcontractors and link their performance directly to SLAs. Andy Richardson a veteran of the African Telecoms Industry. Well known as a WiMAX pioneer and more recently the architect of Kentrox’s success in the tower market, he’s now spear-heading Broadnet Telecom’s foray into Africa.

Keywords: Who’s Who, Monitoring and Management, Installation, NOC, RMS, Rectifiers, Site Management System, Asset Lifecycle Platform, Job Ticketing, Spare Parts, Infrastructure Sharing, Africa, Broadnet Telecom


efficiently manage their remote infrastructure assets, motivated by the desire for increased productivity and containment of costs, which is impacted by: covering large distances with under-developed road networks, seasonal weather, crime, low policing, escalating fuel costs, and intermittent RF propagation and coverage all throwing up significant challenges which permit remote management, monitoring and control to add significant and tangible value. TowerXchange: How do you configure an RMS system to overcome those African challenges, and to meet the differing needs of each site? Andy Richardson, VP Sales, Broadnet Telecom: There are three critical components: SiteOSS software, the remote unit and the people. In many of the locations where legacy devices are installed, it’s vital to have a controller that can hook up serial and analogue devices, send information to the NOC, and present it in a meaningful though simple graphical format allowing management to make informed decisions that maximise network uptime by pre-emptively determining where there may be a potential issue. If the site devices are intelligent SNMP enabled units then there’s minimum configuration required, thus, reducing the installation time. The biggest cost is often getting to the site. For those sites needing to wire up lots of third party equipment our product has a considerable amount

of smart functionality built into the installation process, without compromising quality, which means we don’t need to rely on highly qualified engineers. As many have discovered maintaining network uptime is a huge challenge in Africa, regardless of whether the site is on-grid, off-grid or on an unreliable grid that might only be available for limited periods. Bandwidth limitations can make troubleshooting extremely difficult and in some cases undermine the value proposition, so pushing opex off the scale, even though raw materials and labour maybe cheaper. However, we have completed major advancements in our solution that have made remote management, monitoring and control more efficient and effective.

TowerXchange: Tell us about the communication between devices at sites and the NOC.

Andy Richardson, VP Sales, Broadnet Telecom: In essence, the site controller gathers and stores information from each monitored asset, communicating back to the NOC at intervals pre-determined by the client – whilst being sensitive to the critical market conditions. Communication can be by Ethernet, GPRS, SMS or GSM. TowerXchange: Tell how RMS data is integrated into the different software systems at the NOC. Andy Richardson, VP Sales, Broadnet Telecom: At the NOC we’ll feed data into SiteOSS software, which can communicate through an integration layer with a “manager of managers” system, such as NetBoss, NetCracker, Netcool or Openview. For example, we have our system which monitors a number of different devices, performs thresholding and finally generates alerts or alarms which are forwarded to the next level of the management system, which then takes those alerts or alarms, aggregates them further to send a more concise status report up to the next level. The integration layer or “northbound interface” is simply an interface over which the system can generate or report its output “north” to the next layer, typically a “manager of managers” platform. TowerXchange: How do you present the RMS data to allow management to derive actionable analytics? Andy Richardson, VP Sales, Broadnet Telecom: The system interface presents data either as statistical figures, or graphical representation options such


“ “maintaining network uptime is a huge challenge in Africa, regardless of whether the site is on-grid, off-grid or on an unreliable grid that might only be available for limited periods

as line charts, bar charts and pie charts. For tower operators with a large portfolio of sites with differing levels of sophistication and multiple tenants, capturing site information in nearer real time using a fully integrated asset registry will ensure efficient resource utilisation. TowerXchange: What differentiates Broadnet’s solutions from your competitors?

Andy Richardson, VP Sales, Broadnet Telecom: Broadnet Telecom is an RF company. The company heritage dates back to Harris Farion; RF engineering and manufacturing. We fulfill a lot of work for leading Microwave OEM’s, and that gives us an

advantage in understanding RF communications and in maintaining wireless connectivity. We bring together hardware, software, connectivity and machines. Furthermore, we consider our core competencies as absolutely vital to the co-location providers achieving their immediate business objectives and maintaining their long term competitiveness. So, whether that’s a services organisation to accomplish backhaul dimensioning, network optimisation, network design, engineering services; or they need operation and maintenance activities such as asset management, reverse logistics, remote site management, hybrid power management

and utility verification or back-office trouble ticketing and work force automation, we are one of a few companies who can make all this happen. Combining hardware, software and wireless services in a unique business model that appeals to the operators we’re speaking to in Africa. The convergence of the tower operators in Africa, the advancements in remote management technology and the change of customer business models, provides us with an opportunity to demonstrate our differentiated service delivery capabilities with integrated tools and processes that enable operational productivity and transparency. In my opinion, RMS should focus on three critical aspects; intelligent rectifiers, batteries and generators, categorised as an Integrated Power Management Solution (IPMS). If you can cost effectively crack IPMS you’ll have solved the secret to long-term success in passive infrastructure management. Everything else is noise


“ “RMS should focus on three critical aspects; intelligent rectifiers, batteries and generators, categorised as an Integrated Power Management Solution (IPMS).... Everything else is noise

Monitoring & management system architectureUser Groups

Users Interface - Dashboard - Reports

Asset Lifestyle Management

Worforce Management

TroubleTicketing

MgmtPreventive

Maintainance

Fault & PerformanceMonitoring

Energy Management

Security/ Surveillance

Polling Engine Bandwidth Management Routing Engine

NOC Platform

ControllerRemote Site SNMP Devices

SET

Applications

Processes

GET

Rules and Thresholds Scripting Engine

Special feature:

With the commoditisation of solar technologies and the falling cost of PV panels, solar power now offers the sub-24 month RoI that tower operators crave. With many network extensions beyond the reach of the grid, and many countries in Africa suffering from unreliable grid power, part two of TowerXchange’s TowerPower special feature profiles three innovative solar energy companies: Flexenclosure, Apollo Solar and SolarBK.

We start this special feature with a report from the Energy + Mobile for Development seminar at Mobile World Congress, where Bharti Infratel, Fenix International, M-KOPA, OMC Power and Vodafone all shared insights into their community power initiatives.

TowerPower – reducing Africa’s reliance on diesel, part two

Featuring five insightful articles:118 Power beyond the tower

122 Flexenclosure declare the dawn of the

green energy era

126 Why you should re-think charging your

batteries with a DG

129 Achieving desired autonomy


Power beyond the towerHow RESCO entrepreneurs are empowering Mobile Enabled Communities

© OMC Power

“The mobile industry has built three million towers worldwide – including one of the largest off-grid energy developments the world has even seen,” said Chris Locke, Managing Director of the GSMA’s Mobile for Development Group, opening the Energy + Mobile for Development session at Mobile World Congress, and inaugurating the GSMA’s new Mobile Enabled Community Services programme.

Locke continued: “The mobile industry enables over 500m off grid mobile connections. Many of those connections are in Africa, the biggest and fastest growing mobile market in the world. As we know when we travel to emerging markets, mobiles are charged chaotically and expensively. The Mobile Enabled Community Services programme has been started to look at how energy at base stations can be used to provide power to the communities around them,” concluded the GSMA’s Locke.

TowerXchange attended this packed seminar, which was moderated by José María Figueres, former President of Costa Rica and President of the Carbon War Room. Figueres challenged participants in the seminar to look beyond the horizon to engage with two fundemental challenges facing humanity – connecting and empowering the next two billion mobile subscribers, and winning the war on carbon emissions.

“Mobile is strategically situated to help us win both wars and move the envelope on both challenges – mobile is a tremendous enabler,” said Figueres. “We’ve got to take Mobile for Development out of Corporate Social Responsibility and into strategy

Read this article to learn:< The extension of Bharti Infratel’s P7 Energy program from 1,200 sites to almost 5,000, and how they

pilot and scale RESCO innovations

< The role of telecom towers as anchor tenants in Community Power initiatives, and of MNOs as key

distribution partners

< The opportunity to “spend shift” household expenditure on kerosene, which often exceeds expenditure

on airtime, to distributed energy and battery boxes

< How Vodafone reduced opex by 61.4% at a cell site while providing power to a community in Kwazulu Natal

Is provision of community power services a CSR exercise to generate brand warmth, or is there a commercially viable business model extension here for MNOs, tower operators and RESCO partners? TowerXchange reports from the Energy + Mobile for Development session at Mobile World Congress, where Bharti Infratel, Vodafone, OMC Power and Fenix International shared their experiences deploying community power solutions in rural India and Africa.

Keywords: Beyond Passive Infrastructure, Opex Reduction, Batteries, Anchor Tenant, Off-grid, ESCOs, Hybrid Power, Renewables, Solar, Next Billion, Microgeneration, Community Power, Africa, Asia, India, Kenya, South Africa, GSMA, Carbon War Room, Bharti Infratel, OMC Power, Vodafone, Fenix International, M-KOPA


?

departments, developing proper business models that make sense for the CFO because they enable medium to long-term growth and sustainability.”

Bharti Infratel re-engineer tower power to achieve renewable energy targets

DS Rawat, CEO of Bharti Infratel took up the dialogue, explaining that meeting exacting uptime targets in the service level agreements with tenants on Bharti Infratel’s 80,000 towers meant a dependence on backup diesel generators. Yet with diesel costs rising 10-15% per year and the cost of solar panels falling, there was an enthusiasm to explore renewable energy alternatives.

Rawat explained that Bharti Infratel had progressed from the early days of the tower business, when energy costs were passed through to operator tenants. Under their P7 Energy Program, Bharti Infratel have installed 1,200 solar powered sites, and are looking at a further 3,500 4kW solar sites. They have also invested in a further 6,000 sites with IPMS, free cooling systems and variable speed DC/DG. The P7 Energy Program has reduced Bharti Infratel’s carbon footprint by tens of thousands of metric tonnes per year, and helped India’s operators with their efforts to achieve the regulator’s target of a 5% reduction in their carbon footprint.

Infratel see Renewable Energy Service Companies (RESCOs) as critical business partners. “Infratel’s core strength is bringing together more sharing operators, making the package cheaper and delivering economies of scale. RESCO’s core

strength is energy; bringing the benefit of scale, lower costs, and the ability to attract better talent. So we scan the horizon for RESCO innovations with sustainable business models that make economic sense.”

Rawat talked of a process where Infratel trial RESCO innovations initially on five to ten sites then, if successful, scale up to fifty sites to test the ecosystem, before rolling out energy innovations on all sites that meet their criteria.


9.9%

Rawat concluded by highlighting their work with partners OMC in sharing power with local communities, handing over to OMC Power CEO Anil Raj.

RESCO and community power pioneer OMC Power explain “spend shifting”

CEO Anil Raj described OMC Power as “a pureplay powerco with close links to telecom industry.” OMC’s business model is to build a power plant,

© OMC Power


with a preference for renewable energy sources, use two to four telecom towers as anchor tenants, and provide energy to the local community.

Raj enthused that there was a misconception about so-called ‘bottom of the pyramid’ markets, and explained that there is another pyramid at the bottom of the pyramid. “Rural societies are not homogenous societies, there are sustenance farmers living off US$2 per day but there are also successful land owners with hundreds of acres. Providing power in rural emerging markets is not scraping bottom of a barrel, it’s serving a prosperous segment of society deprived of energy and the huge opportunities that energy offers.”

Raj introduced the concept of “spend shifting;” shifting households from dependence on fossil fuel such as kerosene for lamps, to distributed energy. OMC started with charging cellphones, progressing to the provision of illumination and cooling, taking their customers on a journey of energy access that

might culminate in provision of domestic televisions or industrial water pumps.

For Community Power initiatives like OMC’s to work, distribution is everything. OMC use a home delivery system to deliver lanterns to customers’ doorstep.

OMC have targeted using renewable microgeneration to power 3,500 telecom towers and two million homes in 2,000 communities by 2015.

How Vodafone provide power for a school and a water pump in Kwazulu Natal while reducing opex by 61.4%

Joe Griffin, Group Environmental Manager at Vodafone explained that the network generated 80% of Vodafone emissions, and that 16% of the energy that Vodafone buys came from green energy, hence the imperative to accelerate the deployment of low carbon technologies.

Griffin presented a case study of one of Vodafone’s pilot sites in Emfihlweni, a small community in Kwazulu Natal, South Africa, where an extensive community consultation was carried out in order to understand real needs. Vodafone found that if they wanted to provide energy to the local school, rather than increasing footprint of base station, it would be better if the school housed solar foil on their roof. This 14kW (100m2) solar foil replaced the diesel power source for the local base station, while excess energy was used by the school for lighting and power, and by a water pump which improved sanitation for the school and drove fresh drinking water to the community.

Griffin emphasised that the model worked in this instance because it wasn’t a purely philanthropic exercise – the business case was sound. Diesel costs and CO2 emissions were reduced by 90%, and maintenance costs fell by 24%, cutting total opex at the site by 61.4%.

A snapshot of energy access across Vodafone OpCos in 2011

Vodafone operating company

DRC 59 89%

Tanzania 38 86%

Kenya 33 84%

Other SSA 310 68%

Worldwide 1,317 19%

India 289 25%

Population without access to modern electricity services (millions)

Share of population

“ “Diesel costs and CO2 emissions were reduced by 90%, and maintenance costs fell by 24%, cutting total opex at the site by 61.4%


Battery boxes

Mike Lin, CEO at Fenix International, was working on the US$100 laptop when he realised solving the dilemma off grid mobile phones being charged from diesel generators and car batteries might be a more immediate opportunity. One in fifty rural businesses in Africa are focused on mobile charging! This inspired Lin to create the “ReadySet” solar powered phone charger which for around US$150-200 can charge six to eight phones per day at around 25 to 50 USD cents per charge, generating income for a mobile charging entrepreneur of around US$40 per month.

Fenix leverages sales, marketing and distribution partnerships with MTN in Uganda and Rwanda and with Vodafone in Tanzania. Using Uganda as an example, Lin explained that with 90% of the 35 million population off grid, there were some 500,000 entrepreneurs who could become “microutilities” – rolling up to a US$70 million addressable market in Uganda alone. Fenix has sold 2,000 units to date.

Another battery box, Jesse Moore’s M-KOPA leverages the M-PESA payment infrastructure in Kenya to distribute and collect income from his US$200 solar system. Six million households in Kenya are reliant on kerosene, spending US$ cent 60-65 per day on kerosene lamps and mobile phone charging – that’s an annual bill of US$200-250, significantly more than those households spend

on airtime! M-KOPA replaces kerosene lamps with modified “d.light” solar lanterns with embedded SIM cards, to remotely meter and collect credits.

Moore’s feeling is that the off-grid African consumer doesn’t want cheap solutions as much as they want high quality, risk-free, affordable systems with superior build quality. Those same qualities enable M-KOPA to partner with Safaricom, both for the same distribution network that Fenix craved, and for access to critical credit profiles, GIS and usage data that extend the longevity of the product. To date, M-KOPA has secured points of sale at 400 of the 50,000+ M-PESA agents.

M-KOPA and Fenix both demonstrate the unique alignment of mobile distribution networks and brands with the community power opportunity. Community power opens up another revenue stream for airtime and mobile money dealers, and leverages the trust consumers intrinsically built from that first digital good, airtime, and the trust they have in services like M-PESA

Battery boxes versus microgrids

“When energy needs are moderate and can be met with a battery box then I think we can work without microgrids,” suggested OMC’s Raj. “Microgrids are expensive, regulated, and require complicated rights of way. Using energy boxes, we can provide energy today. In the long term, when energy needs of rural households go beyond what battery power can provide, then we’ll provide microgrid solutions.”

If you’d like to recommend a company to be profiled in TowerXchange’s TowerPower special feature, please contact [email protected]. We are generally interested in companies who have installed at least 100 hybrid power sites and/or 1,000 DGs in Africa.

Index of TowerPower profiles in TowerXchange

Apollo Solar

Clean Power

ELTEK

Flexenclosure

Orun Energy

PowerOasis

Solar BK

Issue 3, pages 126-128







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Alternatively, the TowerXchange website has an in-build search bar on the homepage - simply key in the company you wish to view and all the related articles will be found. There is also an archive and catagory section in the sidebar on any page.

The dawn of the green energy eraRoI in less than two years means energy efficient power solutions with or without renewable energy are now the most affordable way to power many off grid and unreliable grid cell sites

Ann Louise Johansson, VP Strategy, Flexenclosure & David King, CEO, Flexenclosure

TowerXchange: Where do Flexenclosure fit in the telecoms infrastructure ecosystem?

David King, CEO, Flexenclosure: Flexenclosure provides eSite, a hybrid power system for off-grid and unreliable grid cell sites that enables mobile network operators or tower companies to make radical reductions in diesel costs. We use our patented control system Diriflex to manage a unique charging strategy designed to maximise battery life and minimise genset runtime. We’ve reduced diesel consumption by 80- 90%, while still keeping payback to less than 2 years.

TowerXchange: What has been Flexenclosure’s experience in Africa?

David King, CEO, Flexenclosure: We have installed around 460 sites, of which 252 are in Nigeria, 52 in Chad, 95 in Tanzania, and 14 in Ghana.

Ann Louise Johansson, VP Strategy, Flexenclosure: Our eSite solution has achieved good results from installations in Sudan, South Sudan, Nigeria, Ghana, Kenya, Tanzania, Madagascar and Chad. We’ve installed sites in some of the harshest environments in Africa. Most of these have been upgrades to existing sites and they have included solar power. One of our biggest deployments is with Airtel Nigeria.

In addition we build and deploy eCentre, a pre-fabricated, pre-equipped, modular data centre. In 2001 in Nigeria we installed our first eCentre, and since then we have deployed more than 6,000 m2

Read this article to learn:< Why advances in energy technology can give tower companies radically improved opex for off-grid and unreliable grid cell sites< How it is possible to take a modular approach to the installation of hybrid energy at shared sites enabling easy expansion as the number of tenants increases < How to install the intelligence needed to separately bill tenants for energy consumed< How to reduce site visits by slashing DG runtime and reducing scheduled maintenance to a single annual visit< Why the telecom industry should dimension remote cell sites with capacity for Community Power

The economics of cell site energy are changing – for the better. Where the energy opex at a single cell site once had to cost upwards of US$40,000 a year, now the increased efficiency of power solutions and the falling costs of renewable energy sources offers an opportunity to reduce energy opex by 80-90%, and to cut scheduled maintenance to a single annual visit. To learn more, TowerXchange spoke to David King and Ann Louise Johansson at Flexenclosure, who specialise in green, fully integrated and optimised power systems for cell sites – not only for the sake of the environment, but because their products prove that switching to green energy is an incredibly efficient way to cut opex.

Keywords: Opex Reduction, Renewables, Hybrid, Off-Grid, Unreliable Grid, DG Runtime, ESCOs, Retrofit, Solar, Wind, Capex, RoI, Upgrading Power for Multiple Tenants, KPIs, RMS, Maintenance, Change Management, Community Power, Infrastructure Sharing, Africa, Airtel, Flexenclosure


of eCentre data centre facilities there and in other countries such as Ghana and Sudan. TowerXchange: Do you see Flexenclosure as a pure product provider or an ESCO?

Ann Louise Johansson, VP Strategy, Flexenclosure: Flexenclosure is a product company. We offer a complete system, including batteries, electronics, cabinet, control and management systems. Further options include solar panels, cooling systems, grid

manager and multi-tenant capability. We’re not an ESCO. We focus on providing solutions that manage power in the most economical way with or without renewables. We are happy to work together with ESCOs to serve both Tower Companies and MNOs as appropriate.

TowerXchange: What’s been the balance between installing just CDC batteries, solar and wind power at the cell sites you’ve retrofitting and rolled out in Africa?

Ann Louise Johansson, VP Strategy, Flexenclosure: So far almost all of our sites in Africa have included renewable power sources. MNOs in Africa have been keen to try renewable energy and most of our work has been on upgrades to solar hybrid rather than greenfield sites, where wind power might be a more viable option. The falling cost of solar panels and commoditisation of solar equipment has supported this trend. Wind power is a less mature market. We can get a lot of power out of wind, and have a 6kW wind turbine but it is currently more challenging to introduce.

eSite provides a great economic solution either with or without renewable energy. The addition of renewable power increases the cumulative savings from an eSite but also stretches the pay-back time. So inclusion of renewables really depends on our customers’ preferences and financial time horizons.

What is important is flexibility. We take a modular approach, starting with an energy efficient system built around an intelligent controller, Diriflex, and

batteries. Renewable energy sources can always be added at a later stage.

TowerXchange: How do the requirements of multi-tenant towercos compare to those of single tenant MNOs?

David King, CEO, Flexenclosure: One marked difference between the towercos and the MNOs is the priority and focus on site profitability. Towercos are taking a more proactive approach to improving site economics. The other main difference is that towercos require a flexible system that can grow with the addition of tenants and cope with the additional load. It is with this in mind that we have developed our eSite k6, which can host up to four tenants. In a typical scenario, a towerco starts with a relatively low load, single to two tenant environment. The savings achieved mean that investment in the eSite is paid off in 18-24 months. As the load increases and additional tenants are added, the towercos just need to add additional batteries when required.

The eSite k6 includes a bigger cabinet with capacity to add strings of batteries and multi-tenant functionality such as metering and independent disconnection.

We have a bold vision of the African tower industry. For towercos it’s currently a land-grab of sites, but then it’s all about site profitability, and we’re pretty certain we’ve got the best product on the market to support them.


eSite – a super hybrid system

Ann Louise Johansson, VP Strategy, Flexenclosure: Scalability and multi-tenant handling are key to towercos. Towercos will likely start with a single tenant on a tower, which means they’re faced with high costs relative to lease income, so it’s crucial to implement an efficient and modular power solution to minimise energy opex from day one. The investment for multi-tenant functionality, additional batteries and possibly solar components can be added in a modular fashion as additional tenants are added.

Flexenclosure’s bundles eManager, a power management and optimisation system together with eSite. eManager is used by towercos to ensure optimised performance over a whole network. eManager is not just a monitoring system, it is used as an energy data warehouse, for alarm handling, to track energy cost KPIs, to conduct detailed power analysis, to manage diesel consumption logistics, for asset management, and also to remotely monitor and trouble shoot sites. Some problems can be solved remotely but if not at least they can identify

the problem and bring the right tools. Flexenclosure provides an intelligent tool enabling towercos to control, measure and bill separately for the energy consumption of each tenant. To date, the model of towercos selling power to tenants on a kWh basis is not being widely used, but the tools are there for towercos to change their model.

For MNOs and towercos alike, Flexenclosure enables the optimisation of the network from an energy perspective. This can make a huge difference to our customers to be able to see what’s going on at their sites. If we can improve performance by an

extra 10% that could be US$4,000 of opex per site. Across a portfolio of 1,000 sites that’s US$4million per year!

TowerXchange: What typical capex is required to fit Flexenclosure’s solutions and what’s the RoI?

Ann Louise Johansson, VP Strategy, Flexenclosure: When we’re building business cases, we’re always looking for payback in less than two years. That can be achieved on opex savings of 80-90% based on typical opex of around US$40,000 per site per year. Based on that, you can work out what kind of capex is involved!

Renewables have reached a price point where they make sense for MNOs and towercos because the RoI payback is short enough, and the subsequent savings can add up to many US$millions over the lifetime of the equipment and over hundreds of sites.

TowerXchange: What kind of maintenance opex savings can be realised with hybrid energy?

Ann Louise Johansson, VP Strategy, Flexenclosure: We enable MNOs and towercos to have maintenance costs at a fraction of current costs. From Flexenclosure’s perspective, it’s about reducing site visits and cost of maintenance. Our remote management and energy optimisation system eManager is a standard part of eSite, so as soon as you’ve commissioned and finalised a site you can log in and see what’s happening at a site from the NOC.


eSite with a solar installation

“ “the model of towercos selling power to tenants on a kWh basis is not being widely used, but the tools are there for towercos to change their model

Refuelling visits obviously drop dramatically with DG runtime reduced by 80-90%, and due to careful design and a fully integrated system our equipment requires only a single annual maintenance visit. The business case for renewable energy has to work, so we’ve designed solutions as maintenance free as they can be.

TowerXchange: Is there a big change management challenge – do you need new skills in the maintenance team if you install renewables?

Ann Louise Johansson, VP Strategy, Flexenclosure: Part of the eSite concept of a carefully designed and fully integrated system is that the solution is

easy to maintain, so operators wouldn’t require specialist skilled personnel. While they don’t need new people, their people need to be trained so they understand different ways of working and running a site with energy efficient power solutions and renewables. For example, cooling is a major part of any cell site energy solution, and our system has been designed to run at quite a high temperature, but if people think it’s too hot they’ll open the door!

TowerXchange: Looking beyond the cell site at community power initiatives – what are the benefits for the telecoms industry to support rural electrification?

Ann Louise Johansson, VP Strategy, Flexenclosure: Providing power will be the next revolution after the current mobile telephony revolution. Providing power to rural communities will have a similar impact in developing and changing lives.

From the telecoms industry’s point of view, Community Power projects charge mobile phone batteries, which means more minutes and data can be consumed. At one of our Community Power projects there’s a parallel project to help a village to develop sustainable business plans using the power that is now available. More productive businesses ultimately means more need for communication.

We need to dimension cell sites for additional community power in remote villages. It’s challenging to find the right business model to meet small, localised power requirements as they’re almost always more costly than larger


sites. Nonetheless, African governments should see microgeneration with telecoms (or agricultural) anchor tenants as legitimate alternatives to extending power grids.

TowerXchange: Finally, how would you sum up how Flexenclosure differentiate yourselves from competitors?

David King, CEO, Flexenclosure: Simply eSite delivers the best sustained performance of any hybrid energy system. That is, we provide the lowest diesel and energy related costs and the best site economy over a network of sites and for a longer period of time.

In addition Flexenclosure is a great business partner. We’re small enough to be technically and financially flexible – nothing is off limits. For example, we’ll consider putting the equipment in place and sharing savings, helping towercos find capital by working with third party export credit financiers.

Ann Louise Johansson, VP Strategy, Flexenclosure: We achieve the greatest energy savings and the best price:performance ratio. The way we achieve this is through an integrated and optimised solution design that is modular to fit the towercos business model. We have an intelligent controller, Diriflex, network based power management and energy optimisation using eManger, and remote support and software maintenance. We deliver the most for your money, not just in the first six months but going forward

eSite k2 with solar option

Why you should re-think charging your batteries with a diesel generatorThe rocket scientists of solar apply their technology to reducing DG runtime to close to zero

TowerXchange: I’ve just listened to the CEO of MTN and MD of Airtel Africa explain that the biggest threat to the profitability of the African telecom business is the logistics, cost and scarcity of power – has solar technology evolved to the point where it could be the solution? John Pfeifer, President and CEO, Apollo Solar: We all know that the cost of diesel is going up. In sub-Saharan, Central, a Southern African countries the current cost of diesel ranges from 80 US cents to US$ 1.80 per liter. When we include maintenance and delivery costs plus a factor for theft, we agree that the diesel generator solution should be avoided. Meanwhile, since 2007 the cost of installed solar has dropped dramatically. Solar power is now about half the cost of diesel power, depending of course on the local cost of the diesel fuel and of the capex funding amortized to install the PV system. Any operator reliant on diesel has a real problem. And in Africa, that means all the operators have a real problem, as do towercos acquiring passive infrastructure assets. Apollo has identified a significant paradigm shift. Based on the new much lower cost of solar, we advise our customers to avoid charging batteries with a diesel generator. The batteries themselves represent about a 20% power loss over the charge-discharge round trip, so every dollar spent on diesel burned then stored in a battery becomes 20% more expensive. Just use the expensive diesel fuel for power to the BTS directly and only when the weather makes solar power un-available. Once the

Read this article to learn:< Why charging batteries from your DG wastes 20% of fuel opex

< How to compare the reliability and maintenance costs of high-quality solar hybrid solutions versus

the low-cost, ‘cheaper’ options

< How to easily upgrade modular solar hybrid cell sites to add tenants

< How an efficient MPPT Charge Controller extends battery life and saves even more opex

< The capex costs of installing power electronics, solar panels, and batteries

Keywords: Reducing Energy Opex, Cost of Diesel, Solar, Hybrid, Renewables, DG Runtime, Autonomy, Batteries, Uptime, SLA, Installation, RMS, Capex, Infrastructure Sharing, Africa, France Telecom-Orange, Camusat, Leadcom, Apollo Solar


The Pfeifer family has been in the energy delivery business for three generations. John’s grandfather delivered coal, his father delivered fuel oil, now John Pfeifer delivers sunshine! John is President and CEO of Apollo Solar, a designer and manufacturer of hybrid power equipment, who in 2002 was asked by NASA to get more power out of the solar panels and batteries on a high altitude balloon mission. They were able to harvest 30% more power from the same system. Apollo commercialized that solution and began deployment of the technology to the global market in 2005. The Apollo telecom power systems are now in their 3rd generation and installed on every continent with over 100 cell sites in Africa by way of an installation partnership with Camusat. TowerXchange met John Pfeifer at the Mobile World Congress in Barcelona to learn more…

John Pfeifer, CEO, Apollo Solar

PV system is installed, the sunshine is free. Use it to charge the batteries. The smarter and higher-ROI solution for off-grid base stations is to operate on 100% solar, with enough PV and battery capacity for just over one day of autonomy. When you need additional days of autonomy, add a small generator just to power the telecom equipment, rather than doubling or trebling solar panels or batteries. There’s a sweet spot in the calculation of capex and opex where you’ve minimized cost of diesel – DG runtime might be reduced to just a few hours per month depending on the weather – essentially just what is required to maintain service on extremely dark days. Of course

every site is different and local parameters must be carefully analyzed to optimize the design for each specific site. TowerXchange: Service level agreements often demand 99.5% uptime – tell us about the reliability of solar. John Pfeifer, President and CEO, Apollo Solar: Solar is certainly much more reliable and maintenance-free than a generator of any description, but the electronics used to be the weakest part of solar power system. If you want to damage electronics, heat it up, or if that doesn’t destroy it, subject it to repeated temperature cycles. Solar

is the application from hell for electronics! The electronics are subjected to the heat of the African sun during the day, and turned off at night when the ambient temperature is lowest. That type of heat and temperature cycling still won’t break Apollo systems, but it will break a lot of the low-cost solar solutions that are now available the market, and the logistical costs of replacing a US$2 electronics part when it might take days to reach the site will wipe out any capex savings pretty fast! Apollo Solar’s charge controller was the only system to pass the US Army field test – they dragged it around behind a humvee over a bumpy track for 2000 km and then baked it in an oven but they couldn’t break it. The military rated DG wouldn’t start because it thought it was already over-heated, but the Apollo system continued to charge the battery. Our equipment has been field tested by the US Army and Navy in temperature extremes, and it keeps working. Because we design all the hardware, develop our own software and assemble the telecom cabinets, we can provide standard five year warranties, extensions to ten years, and an SLA for the complete system, giving clients the reliability and operations security of a single point of responsibility. TowerXchange: Procurement executives, CTOs and COOs at operators and towercos want to know that the equipment they’re considering installing is battle-hardened in Africa. What’s Apollo’s installed base in Africa? John Pfeifer, President and CEO, Apollo Solar: We have a partnership with Camusat to deploy Apollo


Apollo-Camusat Installation in Madagascar


Solar sites for France Telecom-Orange. Camusat has installed over 100 Apollo Solar units in Africa including in Madagascar, Egypt, Mali, Central African Republic and Kenya. Our equipment has also been installed in the US, Canada, Mexico, Peru and Chile – the latter installed by Leadcom. Our first units were deployed in 2005, so they’re battle-hardened. We’ve taken the lumps, learned some lessons – this is our third generation system. TowerXchange: Do you need a rocket scientist field engineer to install your kit? John Pfeifer, President and CEO, Apollo Solar: We offer an Apollo person onsite for commissioning. But we supply an IP66 sealed electronics enclosure – the only requirement at installation is to bring in wires from PV array, battery and load, and maybe

include optional alarms (for site security). The electronic cabinets are all factory programmed, pre-wired and tested, so limited engineering expertise is required. Getting the modem to work with the local telco tends to be the most complicated part of the process, as it has to be configured with a SIM card to talk on the network. As for overcoming the logistics of getting equipment to remote cell sites, that’s why we partner with Camusat as they have earned a reputation for doing “whatever it takes to get it done” (see the Camusat profile on pages 96-99 of issue 2 of TowerXchange). TowerXchange: How can you upgrade the system to provide power for multiple tenants? John Pfeifer, President and CEO, Apollo Solar: We offer the cabinet in sizes from 4.2 to 33.6kW PV power. That means we can cover any telco DC load requirement from 500-4000W and have some power left over to charge mobile phones or provide some local lighting or refrigeration. The largest tower owners in the world commonly use 4kW to 8kW of PV per base station. The Apollo outdoor cabinet has slots for four times 4kW of PV, supporting up to 16kw of PV. The cabinet can be installed with one 4kW Charge Controller and more can be added as more tenants sign up. Upgrading for additional tenants is modular and simple - putting in an extra charge controller requires pushing a couple of buttons, supported by our guys who can be on the phone 24/7.

TowerXchange: What is unique about Apollo Solar’s charge controller? John Pfeifer, President and CEO, Apollo Solar: Any rechargeable battery is only as good as the charging electronics. Our charge controller runs at 98% or better efficiency. Some of our best competitors run at 96.5%. Each of our T80HVs is able to deliver 80 amps at ambient temperatures up to 45°C, which is the highest temperature and highest battery current output of any charge controller in our market. To extend the life of the battery, it is important to charge the system quickly and accurately and avoid overcharge. We know how to protect the battery life and prioritize that objective because batteries are an extremely large cost of remote cell sites. The Apollo System also has integral, near real-time remote monitoring – it’s updated every six seconds where some of our competitors update every hour. Our robust RMS monitors system access and PV theft, with alarm alerts to the NOC. The solar-hybrid systems also monitor all the essential details of the coupled generator. TowerXchange: Tell us about the capital outlay required. John Pfeifer, President and CEO, Apollo Solar: The cost of solar panels has plummeted to 60-70 US cents per watt. Our electronics cabinets start at $1 per watt, and we can do better than that in volume. The rest of the capex costs are related to installation logistics and the choice of batteries so the estimates are based on the site locale and battery market prices

Apollo Solar cabinet

Achieving desired autonomyInnovative Vietnamese manufacturer and system integrator leverages microgrids, renewable energy and deep lifecycle batteries to deliver more days of autonomous power and extend asset lifecycles

Nguyen Tuy Anh, Solar BK

TowerXchange: Thanks for speaking to us today. Where do Solar BK fit into the passive infrastructure ecosystem? Nguyen Tuy Anh, Partner, Business Development, Solar BK: Solar BK is based in Ho Chi Minh City, Vietnam. We design alternative power supply solutions, including solar, wind and DG complete energy systems. Our solutions are derived from the Research Center for Thermal Equipment and Renewable Energy (RECTERE) in the Ho Chi Minh City University Technology R&D Centre, and we became a registered company in Vietnam in 2007 serving renewable energy Vietnam, Laos, Cambodia and Burma to telecoms and other industries. Solar was expensive five years ago, but the industry has changed, and we’ve been able to bring costs down by localising a lot of material. We’re interested in the African market. There’s lots of potential for alternative power suppliers and we’re finalising a deal with a local agent. We’ve installed 20MW of alternative energy solutions in Vietnam; primarily wind and solar systems on our islands. Inland Vietnam has high penetration of electricity, but our islands are highly dependent on expensive diesel, and delivery is expensive, so the environment is similar to some parts of Africa. We’ve also completed off-grid projects in Myanmar and Cambodia, where there’s lower electricity penetration. TowerXchange: Please tell us some of your clients and project experience?

Read this article to learn:< Designing, supplying and installing alternative hybrid power supply to provide power to isolated

islands and off-grid and unstable grid remote areas

< How to choose the right combination of DC hybrid Generator set, solar and wind to achieve the

desired level of autonomy

< How to leverage outdoor solutions and active cooling to keep the energy footprint of cell sites down

to 2kW and minimise TCO

< Choosing the right batteries to extend the lifecycle of your assets

< Comparing the performance life of solar versus diesel generators

TowerXchange continues our tour of some of the world’s most interesting TowerPower solutions by speaking with Solar BK, who have installed award-winning microgrids on some of Vietnam’s isolated islands, and who are now seeking to apply similar technologies in Africa.

Keywords: Who’s Who, Interview, Energy, Batteries, Outdoor Equipment, Air Conditioning, Off-grid, Hybrid power, Renewables, Solar, Wind, Microgeneration, Community power, Asia, Africa, VNTower, Solar BK


Nguyen Tuy Anh, Partner, Business Development, Solar BK: We won a Global Energy Award for our work designing, delivering and installing off grid alternative power supply on some of the isolated islands in South East Asia. There was an urgent need to supply power to the Navy and to these islands, which can take weeks to reach, and which had no grid power previously. We installed 10MW of solar and wind energy systems in 6 months, and Viettel – a leading mobile operator in Vietnam - connected to our installed hybrid wind and solar system. The choice of renewable energy solution depends on site load and climactic conditions. Not everywhere works for wind energy, so we need a good survey to get information about a site. For example, Kenya, Uganda, Rwanda and Ethiopia all have good solar conditions, but there may not be adequate wind available. A full hybrid could have any combination of energy sources, such as 70% solar, 20% wind, 10% genset; much depends on how many days autonomy are desired. TowerXchange: What is Solar BK’s interest in Africa? Nguyen Tuy Anh, Partner, Business Development, Solar BK: We’ve been talking about all 54 countries in Africa, but their requirements vary significantly. Some are very developed, such as South Africa, Egypt and Algeria. Others have a very unstable grid, with mobile penetration still low, lots of room for growth, and the potential for more licenses to be issued.

We’ve noted the trend to transfer assets from MNOs to towercos. Towercos need focused solutions for off-grid and unstable grids, and our DC solar hybrid with monitoring system is the right product with the right design to reduce Total Cost of Ownership (TCO). We’re able to leverage outdoor solutions and active cooling to keep the energy footprint down to 2kW. It’s critical to choose the right product for the market. A good battery backup, lead-acid for good grid sites or deep cycle batteries for unreliable grids, extends the lifecycle of your assets. Choosing the wrong battery can mean opex costs exceed capex savings, and if you need to change batteries every six months, you risk downtime. In combination with VNTower (see pages xx-xx) we’re able to offer a total site solution including the tower, power supply, civil work and project management. The investment will be less than buying each component separately, while a ready made complete solution also saves time – and time to market is money! TowerXchange: How do you design a site to future-proof for upgrade to battery hybrid or eventually renewable energy? Nguyen Tuy Anh, Partner, Business Development, Solar BK: The operator or towerco needs to make the right business case for each site. I don’t believe every site should be a hybrid. In cities, tower operators will use the grid. Tower operators will choose the right hybrid solutions for off-grid sites based on the TCO, taking into account opex such

as the local fuel delivery costs, and capex, such as the fact that the performance life of solar can be fifteen years, while you may have to change the DG every three years. So renewables often won’t be feasible if you only look at a three to four year TCO. For example, in Cambodia Viettel calculated an RoI payback on hybrid energy in three to four years. The capex per site is hard to estimate – much depends on site load. Old generation BTS’s consume 3kW. New 1kW base station technology from Ericsson and Huawei makes the hybrid business case more feasible. Capex ranges between US$30-100k depending on load. TowerXchange: What are the safety and quality standards you use? Nguyen Tuy Anh, Partner, Business Development, Solar BK: Both Solar BK and VNTower are certified suppliers to Ericsson and Huawei, and we follow their standards


“ “the performance life of solar can be fifteen years, while you may have to change the DG every three years

Tower xchange issue 3 featuring Broadnet Telecom

Business

Transcript of Tower xchange issue 3 featuring Broadnet Telecom