The drivers of SBA Communications ` expansion

Transcription

Tower
Xchange
The journal for the emerging market telecom tower industry
ISSUE 6 | December 2013 | www.towerxchange.com
The drivers of SBA
Communications ’ expansion
Exclusive interview with Kurt Bagwell,
President - International, SBA Communications
TowerXchange Africa:
< Airtel’s 15,000 African towers may be sold country by country
< The risks and rewards of operating towers in DRC
< Rural infraco pioneers Connect Africa and AMN
< Insights and images from the TowerXchange Meetup Africa
TowerXchange Americas:
< Brazil case study: 9,000 new towers needed for World Cup
< Accelerating new tower construction - the Lei das Antennas
< Brazil’s Ministry of Communications’ view of the tower industry
< LatAm transactions to date, plus new deals by AMT and SBAC
TowerXchange extends our coverage to include Africa and the Americas!
Tower
Xchange
With special thanks to the TowerXchange “Inner Circle”
Our informal network of advisers:
About TowerXchange
Chuck Green
CEO
Helios Towers Africa
Alan Harper
CEO
Eaton Towers
Daniel Lee
Managing Director
Intrepid Advisory Partners
Michel Faivre
Directeur Programme Partage
d’Infrastructure AMEA
France Telecom-Orange
Riana Donaldson
Manager: International Network
Operations Support
Vodacom
Adeel Bajwa
Senior GM of Legal Affairs and
Contracts
Warid Telecom
Fazal Hussain
CEO
SWAP International
Laurentius Human
CEO
Inala
Inder Bajaj
CEO
Helios Towers Nigeria
Nina Triantis
Managing Director, Global
Head of Telecoms & Media
Standard Bank
Andrew Doyle
Managing Director
Tech & Comms Practice
Mott MacDonald
Chris Gabriel
former CEO, Zain Africa
Senior Adviser, Macquarie Group
Chairman, Clean Power Systems
Jeffrey Eldredge
Partner
Vinson & Elkins
Natasha Good
Partner
Freshfields
Areef Kassam
Director of Infrastructure
GSMA Mobile for Development
Ayman Al Adl
Director, TMT, Middle East & Africa
Standard Chartered Bank
Ahjeeth JaiJai
Consultant
Investec
Tunde Titilayo
Vice Chairman
SWAP International
Torsten Esbjørn
Regional Director, Africa
Ramboll
Rajat Malhotra
CEO, Middle East & Africa
Hayat Communications
Zouhair Khaliq
Consultant, Executive Director
Warid Telecom, Former CEO,
Orascom Int’l Investment
Gary Staunton
CEO
Likusasa Group
2
David Meganck
Founder & COO
Acsys
| TowerXchange Issue 6 | www.towerxchange.com
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 hosting annual
Meetups and the sale of advertising, 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
© 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
www.towerxchange.com || TowerXchange
TowerXchangeMeetup
Issue 5 |
9
XX
Contents
23
Brazil
case study
26 SBA Communications interview
35 Lei das Antennas - Ministry and legal perspectives
42 Lemcon Americas on infrastructure invesments
75
RMS and site management,
part five
47
Democratic Republic of the
Congo case study
82 azeti on how to protect your sites from theft
48 BMI: country risk factors weigh on investment
strategies
85 infraSTAT’s passive operations management system
52 TowerXchange’s DRC case study
77 AKCP integrate access control and sensors
Regular features
5 Editorial: TowerXchange Meetup event report
16 News for Africa: Airtel selling 15,000 towers
20 TowerXchange tower transaction heatmap
21 News for LatAm: AMT and SBA close deals
24 Mott MacDonald Share Square: Brazil
57 Tower counts and transaction history for Africa
- reducing Africa’s
112 TowerPower
reliance on diesel, part five
55
114 Heliocentris propose Managed Power Services
119 FG Wilson sooth tower industry pain points
123 EnerSys: why 90% of sites use lead-acid batteries
3
Rooftops, masts and towers
Towerco
perspectives
61 Connect Africa’s proof of concept for rural infracos
66 AMN helping operators connect 108mn new subs
73 New towerco Infratel prepares to launch
91 Intelli Towers: evaluating and upgrading towers
97 Valmont: what differentiates quality towers?
101 NATE membership growth in emerging markets
106 Tower designers and manufacturers Metalogalva
109 ASE Structure Design’s tower drawings
www.towerxchange.com | TowerXchange Issue 6 |
3
Africa’s leading,
independent,
telecom tower
company
HTA acquires, builds and manages wireless
telecom infrastructure, leasing it to mobile
network operators across Ghana, Tanzania
and the Democratic Republic of Congo.
HTA’s model of shared telecoms infrastructure,
and its scale, helps to deliver improved
efficiency and network quality and reliability
for operators, reduced costs for users and
increased accessibility.
Find out more about our business
www.heliostowersafrica.com
TowerXchange Meetup Africa
2013: Event Report
Unique interactive format and focus on the tower industry attracts
rave reviews
only Director to C-level delegates to attend. No
sales pitches were permitted at the round tables,
enabling conversation to be kept at a strategic
level, with the Chatham House Rule protecting
confidentiality and enabling a forthright exchange
of views.
We’ll report on some of the round tables in this and
future editions of the TowerXchange Journal, but
the only way to benefit from the unique learning
and networking opportunities is to attend, so if you
didn’t join us this year, please make a note in your
diary to join us at the next TowerXchange Meetup
Africa on September 30 and October 1 2014!
TowerXchange is a Meetup not a Conference driven by small group interactions. But we did
feature a few presentations and panel sessions
to put the round tables in context. You’ll see
a preview of the operator keynote panel in
TowerXchange Journal #5 - you can download
back issues free at www.towerxchange.com/
publications.
Kieron Osmotherly, CEO, TowerXchange delivers the opening address
Thank you to all the key stakeholders in African
towers who made the TowerXchange Meetup
2013 such a success!
TowerXchange were pleased to host a gathering of
170 of the top decision makers in African towers
for this unique two-day networking retreat. The
networking opportunities offered by our round
XX | TowerXchange Issue 6 | www.towerxchange.com
table sessions were particularly popular, with each
round table structured to create a complete tower
industry ecosystem, with towercos, operators,
investors, equipment and service providers all
represented.
The TowerXchange Meetup proved to be a uniquely
interactive event, hence our decision to invite
TowerXchange opened the Meetup with our
own forecast that a further 31,500 towers would
transfer from operator-captive to independent
towerco owned or operated in the next five
quarters. Today 15% of Africa’s towers (23,000)
are owned or operated by towercos. We forecast
that proportion to climb to 30% over the next year,
requiring over US$2bn of acquisition capital. The
prevailing opinion was that investors had sufficient
appetite for the proven cash flows generated by
African towers to fund the transactions, but the
5
TowerXchange Meetup Africa 2013 audience breakdown
Towercos
of which new market entrants
MNOs
Turnkey infrastructure / managed
service provider
Investors
Energy equipment and services
Strategic advisers
Static asset manufacturers
RMS providers
Site management platforms
H&S equipment and services
Unique round table sessions facilitated open networking
main challenge for towercos remains finding and
training enough ‘Tower People’ - management with
knowledge and experience of the tower industry
and of African telecoms. TowerXchange also shared
our views on the ten countries most likely to see a
tower transaction in the next year, an insight we’ll
restrict to those who attended the event (the slides
are on your Acsys-branded pen drive, in case you
haven’t found them!)
In the many private meeting areas, deals were
made, new contacts were established and old
6
relationships were deepened. Delegates enjoyed
live demonstrations and C-level dialogues with a
hand-picked group of the top 26 equipment and
service providers participating in TowerXchange’s
curated exhibition. We’re delighted to have
received excellent feedback from all our exhibitors,
and we’re delighted to have already rebooked
74% of our sponsors and exhibitors to repeat
their participation in the TowerXchange Meetup
Africa 2014. Meanwhile, we continued several
strategic dialogues helping us prepare to extend
TowerXchange’s footprint into South and Central
Americas, Southeast Asia, Russia and the CIS.
Our take-aways for 2014: more round tables, more
exhibit space in an upgraded facility, and more
of the same please! The TowerXchange Meetup
promised and delivered a uniquely targeted
networking forum bringing together empowered
buyers and proven suppliers to emerging market
tower industry. It wouldn’t have worked without
your participation, so thanks once again to our
delegates, and we look forward to seeing you again
at the TowerXchange Meetup Africa 2014!
XX
The verdict of our sponsors, exhibitors and delegates
Even if, through my role managing the passive infrastructure sharing projects within Orange AMEA,
I have met and am working with the management teams of all the African towercos, TowerXchange
offers the possibility to share information outside the usual business process and relationships. In
addition, it brings aggregated information related to the subject, and also provides a thorough and
independent view of all key suppliers of technical solutions such as energy, remote supervision and
security. I share the bi-monthly TowerXchange Journal with my team and the Program Steerco.
“
TowerXchange has also had a good idea to organize a two day Meetup in October where the 200
towercos executives meet and participate to round tables mixing operators, such as me, with
towercos, bankers, consultants and vendors. It was the right format in terms of duration as well in
the number of participants.
- Michel Faivre, Directeur Programme Partage d’Infrastructure AMEA, Orange
“
It was great to meet with almost all of the main
executives of the different tower companies in
Africa. The TowerXchange gave us a unique
forum to share experiences and knowledge
with one another, and interact with the
finance and the legal communities who work
with the tower companies.
- David Porte, VP International,
SBA Communications
“
“
170 of the top decision makers in African towers gathered for the TowerXchange Meetup
7
“
“
I had a great time and found the TowerXchange Meetup to be a very
useful opportunity to reconnect with old friends and meet new
potential business partners in the tower industry. The round table
sessions were particularly useful for networking and sharing best
practices.
- Fazal Hussain, CEO, SWAP International
TowerXchange’s curated exhibition - 26 proven product and service providers to the tower industry
“
8
“
After hours networking at The Local Grill
“
“
As the leading independent towerco in Africa, Helios Towers Africa are
delighted to be the Diamond Sponsors of TowerXchange. Kieron and his team
are providing an important information service to the emerging market
tower industry by sharing news, independent analysis and best practices
through the TowerXchange Journal, and by bringing together the leading
decision makers at the TowerXchange Meetup - an invaluable networking
and knowledge sharing event focused specifically on the industry dynamics
among tower companies, their customers and suppliers. As market leaders,
we look forward to continuing to share our expertise and experiences through
TowerXchange.
- Chuck Green, CEO, Helios Towers Africa
Very well done on the Towerxchange Meet-up. It was well constructed
and valuable. Look forward to next time.
- Nathan Foster, CEO, Atlas Tower
XX
“
I would like to congratulate you on a good
conference. The round table discussions
were very interesting - everyone
contributed well. Generally speaking it
has been a long time since we have had
anything so relevant to our market and
we look forward to supporting you in the
future
- Gary Staunton, CEO, Likusasa
“
“
Networking lunch in one of two exhibition halls
TowerXchange Americas launches in this edition!
I have attended many of these such events and a lot have
been absolutely unproductive. But I can’t say the same
about the TowerXchange event. The format was very
conducive for both networking and knowledge sharing,
and in particular the quality of the attendees was superb.
All key people who matter were there.
- Norman Moyo, CEO, Helios Towers Tanzania
“
We’re delighted to commence our coverage of the tower industry in the
Caribbean, South and Central Americas in this edition of the TowerXchange
Journal.
Arianna Neri ([email protected]) has recently joined our team to
focus on the Americas, and we are currently recruiting for a new member of the
TowerXchange team to cover Asia.
I will continue to cover Africa ([email protected]), while we’ve
also commenced preliminary work to engage with key tower industry decision
makers in Southeast Asia and Russia and the CIS, with a view to launching local
Meetups for those regions next year. As ever, we welcome readers’ input and
suggestions on any of our current and future markets!
9
From state-owned
telecommunication companies
to a booming tower industry
An introductory analysis of the Latin American tower sector
We are very proud to publish Latin America related
content as the result of our initial research and
findings with key industry professionals who offered
their insight and expertise. At this stage, our aim is
to provide a broad overview of the key dynamics of
the tower industry in both Central and South America
while laying the foundations for more detailed,
market-specific and topical analyses in the months to
come.
Keywords: Editorial, Towercos, MNOs, Energy, South America,
Central America, North America, Acquisition, Market overview,
2G, 3G, 4G, Investment, Co-locations, Business model, Chile,
Colombia, Costa Rica, Guatemala, Nicaragua, Panama, Bolivia,
Mexico, Argentina, Peru, Venezuela, Brazil, American Tower,
Highline do Brazil, BR Towers, Cell Site Solutions, Torres Unidas,
Telefónica, Global Tower Partners, Oi, SBA Communications,
Arianna Neri, Head of Americas, TowerXchange
Claro, Movistar
Read this article to learn:
< An historical look at the evolution of the telecom sector in Latin America
< From 2G to 4G LTE: a market changing at a swift pace
< Key differences between the African and Latin American tower industry
< Which companies are leading the change and the new players entering the market
The Latin American telecommunication sector
was historically a state-owned business. With
State-owned entities increasingly unable to keep
up with the swift pace of technology innovation,
many carriers have been privatized over the
course of the 90s. Globalization and deregulation
accelerated the process and the 90s have seen a
persistent wave of privatizations in Chile, Mexico,
Argentina, Peru, Bolivia, Venezuela and Brazil,
among others.
The following years saw countries breaking
through the transitional period and moving from
a publicly owned telecom system to a relatively
modern privatized model whose characteristics
differ from country to country and which we will
be able to analyze in more detail in the future.
While certain restructuring processes are still
ongoing, one aspect is clear: innovation has
not stopped. On the contrary, it has pushed the
boundaries of what we thought was possible and
technology has evolved swiftly from 2G all the
way to 4G LTE.
And innovation is one of the keys that opened
doors to tower companies in the region.
If initially Latin America tower transactions were
restricted to big, international tower companies,
the region now is in constant ferment with
new players, transactions and projects being
announced often enough to capture international
attention and investment.
11
In order to fully understand the Latin American
operational model, we need to think about its
proximity with North America. North America
serves as a global benchmark for its telecom and
passive infrastructure models’ efficiency. With
dozens of tower companies and over 100,000
independently owned towers (not including
managed towers, DAS structures and rooftops),
North America is host to a healthy, competitive
and highly profitable tower industry. By market
cap, some of the largest corporate entities in US
telecoms are towercos.
While Latin America is still in the process of fully
adopting the tower model and embracing it for
the purpose of efficiency and profitability, the
“
the Latin America tower
industry is on the verge of
becoming a highly lucrative
real estate business with lean
and efficient operations and
top global companies leading
the expansion
“
12 | TowerXchange Issue 6 | www.towerxchange.com
region does not encounter certain key challenges
faced by Africa.
Key operational issues such as energy logistics
and site security are only marginal problems
throughout Central and South America. Despite
substantial differences between the countries, the
Latin America tower industry is on the verge of
becoming a highly lucrative real estate business
with lean and efficient operations and top global
companies leading the expansion.
Surely the proximity with North America and its
highly developed tower industry has helped key
tower companies to break the boundaries and
enter the Latin American market while exporting
know-how and entrepreneurship.
Another key factor that is pushing the tower
industry development in Latin America is
the credibility and expertise of its pool of
professionals. Local and foreign renowned
business experts with years of experience in
leading telecoms infrastructure businesses
have formed their own tower companies. Lean
companies with highly credible top management
are the perfect target for investment companies
looking at entering a developing, lucrative and
relatively safe market like Latin America.
When looking at the regional map, it is hard not
to focus on its largest state - Brazil. However,
TowerXchange’s analyses will offer insights to
the various dynamics governing the markets
from Mexico all the way to the southern areas of
XX
Argentina and Chile, spanning South and Central
Americas and including even the smallest coastal
and island states.
Major tower transactions in Latin America 2012/2013
Expected/Closing
date
Seller
Buyer
Country
Value in USD
Q4 2013
Oi
SBA
Brazil
645 million
2,007
Q4 2013
NII Holdings
America Tower
Brazil
413 million
2,790
Q4 2013
NII Holdings
America Tower
Mexico
398 million
1,483
Q4 2013
Oi
BR Towers
Brazil
225 million
2,113
Q4 2013
Oi
Grupo Torresur
Brazil
225 million
2,113
Q4 2013
Global Tower
Partners*
American Tower
US
4.8 Billion
15,700 in US and
Costa Rica
Q4 2013
Oi
SBA
Communications
Brazil
300 million
2,113
Q4 2013
Axtel
American Tower
Mexico
250 million
883
Q4 2012
Telefonica
Movistar
American Tower
Chile
96 million
558
Q4 2012
Telefonica
American Tower
Colombia
4.7 million
31
Q4 2012
Telefonica Brazil
American Tower
Brazil
311 million
1,692
Q4 2012
Telefonica Brazil
GP Investments/
BR Towers
Brazil
250 million
2,000
Q4 2013
Telefonica Brazil
SBA
Communications
Brazil
178 million
800
Q4 2012
Oi
Grupo Torresur
Brazil
251.7 million
1,208
Q4 2012
Telefonica
American Tower
Mexico
323.3 million
1,554
Tower Sites
* company acquisition
Special thanks to Jonathan Atkin, Managing Director at RBC Capital Markets for his contribution
Quite some time has passed since American
Tower de Mexico was founded back in 1999, and
since then, the market dynamics have changed
sensibly. AMT has been expanding into the
region with operations in Brazil, Peru, Colombia
and Chile, and SBA Communications has acquired
and is now operating towers in Brazil, Canada,
Costa Rica, El Salvador, Guatemala, Nicaragua
and Panama. Furthermore, highly experienced
telecom professionals have teamed up and
formed a new array of regionally focused tower
companies, turning Latin America into an
exciting and highly competitive market.
This all adds up to an irresistible opportunity for
TowerXchange to dig deeper into Latin America’s
tower dynamics and deliver essential information
for anyone interested in the international
expansion of the tower industry.
We firmly believe that local tower companies and
local investors will play a key role in contributing
to the growth of each country’s industry as
they aren’t subject to any currency risk when
operating in their own local markets. Even just
over the course of the past 18 months, several
new tower companies have been created with
the aim of acquiring existing portfolios of towers
while exploring greenfield opportunities in the
region. Highline do Brazil, BR Towers and Cell
Site Solutions are just a few of the new players in
13
“
the Brazilian market alone.
In the meantime, Peruvian based Torres Unidas
acquired over 400 wireless towers in Chile from
Telefónica Moviles, commencing its expansion in
the Andean region.
Costa Rica has stepped up as yet another
interesting country with mobile penetration
exceeding 100% in 2012, less than five years
since the end of the telecom monopoly. With few
greenfield projects being permitted, the potential
for co-location in the country is considerable.
With the recent acquisition of Global Tower
Partners, American Tower has consolidated its
position in Costa Rica with a new portfolio of 500
towers to manage.
Brazil is at the heart of the tower industry
development with new and highly qualified
One of the latest transactions saw Oi - the fourth
major carrier in Brazil serving over 48 million
customers - entering a sales and lease-back
deal with SBA Communications which led to its
acquisition of over 2,000 towers in Brazil.
However, managing telecoms infrastructure
in emerging markets is not without its risks.
Illustrative of the continuing country risk in
emerging markets, the Constitutional Court
in Colombia has recently ruled that Claro and
Movistar - two of its major carriers - will have to
hand over all their telecoms infrastructure when
the concessions expire in Q1 of 2014.
One key driver to the expansion of the tower
industry in South and Central America is
the growing opposition of governments to
allow too many new towers to be built. With
tourism offering great economic development
opportunities, it is key to preserve the visual
appeal of these landscapes and somehow limit
the proliferation of greenfield projects.
This limitation offers even greater opportunity
for tower companies to enter these markets with
“
the Constitutional Court in
Colombia has recently ruled
that Claro and Movistar - two
of its major carriers - will have
to hand over all their telecoms
infrastructure when the
concessions expire in Q1 of 2014
“
“
Costa Rica has stepped up as yet
another interesting country with
mobile penetration exceeding
100% in 2012, less than five years
since the end of the telecom
monopoly
players entering the market and competing with
established tower companies in the rush towards
portfolio acquisitions. With the upcoming World
Cup followed by the 2016 Summer Olympics,
the National Broadband Plan (PNBL) will likely
push carriers and tower companies to cooperate
even further to reach highly ambitious network
expansion targets.
co-locations being at the core of their activity hence offering the opportunity for carriers to
enhance their coverage and capacity without
compromising the environment by building new
towers. Meanwhile, progression toward 4G, and
the associated need for cell site densification,
promises at boost amendment revenue.
With multiple opportunities for expansion in
a relatively stable and modern environment,
the tower industry is set to achieve great things
in Central and South America. TowerXchange
will cover major industrial developments and
interview key executives from the region in
the hope to serve the industry and once more,
deliver high quality content for our readers, and
bring the community together at our annual
TowerXchange Meetup Americas, scheduled for
May 2014
XX
Tower People
Marc Ganzi, formerly CEO of GTP, has founded Digital
Bridge Management. Dagan Kasavana, formerly SVP
M&A at GTP, is now Founder and CEO of Phoenix
Tower International.
HIGH EFFICIENCY
Axiata staffing up with tower industry thoroughbreds
in preparation to spin off 19,000 towers under newco
towerco e.co. Former Helios Towers Africa CFO James
Maclaurin will be the CEO of e.on, and is reportedly
being joined by HTA CTO Tony Pretorius.
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HYBRID EXCELLENCE
Steven Evans has parted company with Etisalat
Nigeria, where he was CEO. Etisalat Nigeria are
considering selling their towers.
MTN has appointed Ebenezer Asante as CEO of their
local OpCo in Rwanda, replacing Khaled Mikkawi.
MTN Rwanda are believed to be in the process of
selling their towers.
Congratulations to TowerXchange Inner Circle
member Ayman Al Adl, who has been promoted to
Director, TMT, Middle East and Africa at Standard
Chartered.
Tony Worthington, until recently Global Head of TMT
at Standard Chartered, has been promoted to Head up
Global Corporates for Europe.
TAP Advisers are renowned for supporting tower
industry deal-making and capital raising, and the
company has hired Bill Kennish from Macquarie
Capital. Bill joins as a Managing Director
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Airtel’s African tower sale is not
a portfolio transaction
out, and it made us late to market. Now we take a
more opportunistic, country by country approach,
considering tower transactions if it makes sense for
the local OpCo.”
Africa’s #2 operator will consider breaking apart their portfolio of 15,000
towers country by country
Taking an opportunistic, country by country
approach has enabled MTN, Vodacom and Orange
to sell to, or partner with, towercos in other African
countries, and it seems Airtel are now set to follow
a similar strategy.
TowerXchange has confirmed that Airtel is seeking
third party buyers for an estimated 15,000 towers,
representing all their towers in the 17 African
countries in which Airtel operates. The transaction
may not be a portfolio deal as Airtel is entertaining
bids for towers in individual countries.
The move is believed to be motivated by Airtel’s
desire to reduce debts of just under US$10bn,
which is almost exactly the amount Airtel paid
(US$10.7bn) to acquire Zain’s operations in Africa.
Reports have attached a US$1.8bn price tag to
Airtel’s towers, but this has not been confirmed by
the operator. The potential sale of Airtel’s towers
Bharti Airtel’s CFO recently quashed rumours of
a potential sale of Airtel’s African towers to Bharti
Infratel, seemingly leaving the way clear for Africa’s
‘Big Four’ towercos (American Tower, Eaton Towers,
Helios Towers Africa and IHS), or a well-financed
new market entrant, to acquire tranches of Airtel’s
towers in selected markets.
Portfolio sale approach unsuccessful in
the past
Airtel may have learned from Etisalat’s experience.
Towards the end of 2012, Etisalat sought bidders
for their entire portfolio of African towers. The
complexity of the deal, particularly when it came to
engaging local shareholders, stalled the process.
In a recent interview with TowerXchange, Etisalat’s
Head of M&A Tim Knowles said “Etisalat tried
to do pan-African tower deal, but it didn’t work
Changing the shape of the African tower
industry
If all the Airtel towers were sold, it would almost
double the current size of the African independent
tower industry. Since the inception of the
independent towerco industry in Africa, 15,800
towers have been sold by operators to towercos.
A further 7,200 towers have been transferred on
a managed services basis - they are managed and
“
This opportunistic, country by
country approach has enabled
Etisalat, MTN, Vodacom and Orange
to sell to or partner with towercos in
other African countries, and it seems
Airtel are now set to follow a similar
strategy
“
follows previous rumours that the operator would
set up it’s own towerco, indeed Airtel registered
Africa Towers subsidiaries in all 17 countries. This
process may mean that some of the legal and due
diligence work required to separate infrastructure
assets, the complexity of which often delays tower
transactions, is already under way.
XX
Airtel has towers in the following countries
Burkina Faso, Chad, Congo Brazzaville, Democratic Republic of Congo, Ghana, Gabon, Kenya,
Madagascar, Malawi, Niger, Nigeria, Rwanda, Seychelles, Sierra Leone, Tanzania, Uganda and
Zambia
marketed but not owned by towercos - according
to TowerXchange’s tower count (see page xx). The
23,000 towers currently owned or managed by
independent towercos represents around 15% of
Africa’s towers.
Transactions will take time
TowerXchange does not forecast any of the Airtel
towers to be sold in 2013, in fact it may be Q2 or
Q3 2014 before deals start closing. Financial and
technical due diligence processes will take time.
We also do not forecast that all 15,000 Airtel towers
will necessarily be sold, as some of Airtel’s markets
are more attractive to towercos than others, if for
no other reason than purely on the basis of scale. It
will be interesting to see if Airtel is able to bundle
towers in less attractive countries with assets in
towercos’ priority countries, and whether Airtel will
have any recourse should towers be left unsold in
unattractive markets.
Raising capital
As well as Airtel’s 15,000 towers, TowerXchange’s
Tower Transaction Heatmap (see page 57) is
tracking up to an additional 15,000 African towers
in the pipeline for sale or transfer to towercos, with
towers believed to be on the market in Egypt, the
Guineas, Mali, Nigeria, Rwanda, Senegal, South
Africa, Tanzania and Zambia.
At least one of Africa’s three leading VC-backed
towercos is believed to be actively raising capital,
and TowerXchange has had an unprecedented
volume of visitors from investors to read our
exclusive research on emerging market towers in
the last month.
Impact on the tower industry supply
chain
Transferring many thousands of towers from
operator-captive to independent towercos will
accelerate the transformation of the passive
infrastructure supply chain. An early priority for
towercos acquiring Airtel’s towers will be to secure
a relationship with a reliable local maintenance
contractor, while remote monitoring systems
are often an early investment as towercos seek
to evaluate the performance of newly acquired
assets. Tower transactions tend to unlock
pent up maintenance spend, while A&E firms,
managed service providers and tower component
manufacturers benefit from a wave of tower
evaluation and upgrades.
CDC batteries tend to be first stage energy
equipment investments, with investments in longer
payback innovations such as renewables following
12-18 months after acquisition.
Does one tower transaction opportunity
delay another?
Does the Airtel towers coming to market delay other
potential tower transactions? Yes and no. There
isn’t particularly a shortage of capital interested
in African infrastructure opportunities, and with
so many current opportunities in African towers,
that brings a certain level of comfort to investors in
itself. However, significant additional capital may
need to be raised in the near-term by VC-backed
towercos interested in multiple opportunities in
Africa - right now the ‘Big Four’ towercos appetite
for deals doesn’t always match their financial
wherewithal.
Another challenge is that towerco management
bandwidth is finite, and trusted, proven advisers
with experience of African tower transactions are
a similarly scarce commodity. CEOs and CFOs can
only be in one place at a time and, while periods
of “fast and furious” deal closing have happened
before in the tower industry, the 30,000+ African
towers for sale are not all going to close in the next
year.
For example, a common complaint when Mobinil’s
towers came to market in Egypt was that many
towercos were distracted from other opportunities.
Now ironically that Egyptian opportunity may
suffer in comparison to the opportunity Airtel’s
towers may represent
17
Passive Infrastructure
Financial and Technical
Data
Passive Infrastructure
Monitoring Data
Asset
Management
System
(AIMS)
• Availability
•
•
•
• SLA Support
•
• Asset Register
•
• Hierarchical Dashboards
• GIS
Updates on potential African tower transactions
Egypt
Interest in Egyptian towers
cooling
The deadline for Mobinil’s proposed sale and
leaseback of approximately 2,500 towers has
reportedly been extended, and the opportunity
remains ‘on the radar’ for several towercos and
local market investors.
South Africa
MTN towers in South Africa too
strategic to sell?
TMT Finance reports that a strategic review has
concluded that MTN’s towers in South Africa are
“too strategic to sell,” apparently quashing a longrumored deal with American Tower.
Continuing civil unrest means TowerXchange has
downgraded this transaction from “imminent”
to “rumours of a potential transaction have been
confirmed.”
Tanzania
Zantel towers still on the block in
Tanzania
Helios Towers Africa and IHS are the believed to
still be interested in Zantel’s 711 towers for sale in
Tanzania, the majority of which are in Zanzibar.
Senegal
Mali
Guinea
Bissau
Guinea
Conakry
Sontatel towers
still available
TowerXchange understands that approximately
2,800 towers in Senegal, Mali, Guinea Conakry
and Guinea Bissau remain on the market. The
operations are all affiliates of Sonatel Group,
which in turn is 42.33% owned by Orange, and all
trade under the Orange brand.
Etisalat are reportedly in the early stages of a
tower sale in Egypt.
Burundi
Nigeria
Tower deal imminent in Burundi
Tier one MNO towers coming to
market in Nigeria?
TowerXchange has confirmed that Etisalat has
appetite and intent to sell around 4,000 towers
in Nigeria, and that a green light from the board
is all that remains before bringing the towers to
market. Standard Bank has been appointed to
advise on the deal.
Meanwhile, a TMT Finance reports that MTN
has cooled on the idea of selling their 12-13,000
towers in Nigeria.
Rwanda
Zambia
MTN pressing ahead with
tower sale in Rwanda and
Zambia
MTN continue to take a selective, country by
country approach to tower sale and leaseback. IHS
are rumored to be bidding aggressively against
American Tower to acquire approximately 1,500
MTN towers in Rwanda and Zambia
Frontier Tower Solutions are closing in on an
opportunity to acquire 43 towers, and operate a
build-to-suit programme, with Lacell, East Africa
Telecom’s subsidiary in Burundi.
Unconfirmed rumours
Orange interested in partnering with a towerco in
DRC... Millicom rumoured to be considering tower
sales in Senegal, Rwanda, Mauritius and Chad...
Ooredoo reportedly interested in kicking off tower
sales in North Africa, which could affect their
subsidiaries in Algeria and/or Tunisia...
19
TowerXchange tower transaction heatmap - current state
Index of countries
Algeria
Malawi
Angola
Mali
Benin
Mauritania
Botswana
Burkina Faso
Burundi
Cameroon 2
Cape Verde
Central African Republic
Chad
Comoros
Congo Brazzaville
Cote d’Ivoire 2
1
2
3
4
5
6
Mauritius
Mayotte
Morocco
Mozambique
Namibia
Niger
Nigeria 2
Rwanda
Réunion
Senegal
Democratic Republic of the Congo
Seychelles
Djibouti
Sierra Leone
Egypt
Somalia
Equatorial Guinea
South Africa
Eritrea
South Sudan
Ethiopia
Sudan
on at least one towerco’s hit list, or there is a
Gabon
Swaziland
registered Africa Towers subsidiary in the country
Gambia
São Tomé and Príncipe
Rumours of a potential tower transaction have
Ghana 3
Tanzania 2
been confirmed by TowerXchange
Guinea
Togo
Tower transaction believed to be imminent
Guinea-Bissau
Tunisia
One or more tower transactions have taken place,
Kenya
Uganda 2
no more transactions expected imminently
Lesotho
Western Sahara
Liberia
Zambia
Libya
Zimbabwe
Legend
No tower transaction completed or rumoured
Either rumours of a tower transaction
(unconfirmed), or the country is known to be
One or more tower transactions have taken place,
more transactions are expected imminently
Number of tower deals in this market if more
than one
Source: TowerXchange
Madagascar
19
LatAm tower deals gain pace
AMT and SBAC close deals in Mexico and Brazil
Brazil
Mexico
American Tower and Nextel
American Tower is once more
in the news for its recent acquisition from NII
Holdings (operating in Latin America as Nextel) of
1,483 towers in Mexico for approximately US$374.3
million. With more than 7,000 towers and an
early market entry dated back to 1999, AMT is the
leading tower company in Mexico.
Peru
The deal includes a 12 year lease back clause
for Nextel with the option to extend the lease
for additional renewal periods. The portfolio
includes towers in densely populated areas with
an average tenancy ratio of one tenant per tower,
leaving great opportunities for AMT to increase the
ratio in the upcoming months. The final sale will
be announced once the post-closing adjustment
period comes to an end - possibly by the end of
2014.
The deal is expected to be completed in Q1 2014 and
it will bring SBA’s Brazilian tower count to over 5,000.
With over 20% of its tower portfolio now in Brazil,
SBA is now directly competing with AMT in the rush
Chile
At the same time of the deal, Nextel
towards portfolio acquisitions. And both companies
Mexico announced investments
will play a leading role along with carriers in the
worth US$1.5 billion to upgrade its current 4G network
upcoming 2014 World Cup.
and its plans to launch 4G LTE by Q2 of 2014. In order
to raise capital needed for its 4G and 4G LTE plans
Oi is among the four top carriers in Brazil with over 50
in Latin America, earlier this year, NII Holdings sold
million subscribers and will lease back the sites from
its Peruvian operations to Chilean Entel - or Empresa
SBA.
Nacional de Telecomunicaciones - for over US$410
The portfolio includes sites leased with all major
million.
Moreover, the deal between NII Holdings and AMT
includes 2,790 towers in Brazil which were sold for
US$413 million. AMT has acquired and operates
more than 5,000 towers in Brazil since its entry in
2000.
from the carrier at US$300 million.
carriers in Brazil, with an average tenancy ratio of 1.6.
USA
Prior to the Nextel deal, AMT acquired
Brazil
Global Tower Partners for US$4.8 billion -
Telecom Italia rumoured towers sale
It has been announced that Telecom Italia will
incorporating US$3.3 billion in cash and US$1.5 billion
of existing indebtedness. With the deal, AMT added
look at selling its passive infrastructure in Italy and
5,400 towers to its portfolio and management rights of
Brazil over the course of 2014. With 7,000 sites in Brazil
over 9,000 sites.
and 12,000 in Italy, the company could raise almost
EUR 2 billion by releasing its tower portfolio.
Earlier this year, AMT bought 883 towers from Mexican
telecom operator Axtel for US$250 million.
Brazil
Brazil is heating up
In spite of various transactions by AMT and
Brazil
SBA Communications and Oi
SBA, Brazil still offers huge growth opportunities. In
SBA Communications is expanding its
fact, as mentioned in our editorial on page 32, the
Brazilian portfolio at a swift pace with the third major
country would require over 9,000 towers to be built to
deal of the year announced earlier this month.
reach its 4G coverage goals ahead of the upcoming 2014
World Cup.
In fact, Oi and SBA have entered into an agreement
Both NII Holdings and AMT have been very active
in Latin America over the past few months.
for the purchase of 2,007 towers by SBA for US$645
TowerXchange will keep reporting on tower companies’
million. This is the second consecutive deal between Oi
acquisitions in Brazil, Mexico and beyond in the next
and SBA, which earlier this year acquired 2,113 towers
editions of the journal
21
Special feature:
Brazil case study
With a calendar filled with major international events, over USD 2 billion in tower
transactions in the past 18 months and 260 million mobile connections (and
counting), Brazil is leading the Latin American tower industry growth. And experts
say that this is only the beginning.
During the 2012 London Olympics, the Olympic Park was hosting, along with major
sport events, an average of 60 GB of data traffic per second. The US Super Bowl
between the New York Giants and the New England Patriots in February 2012
recorded one of the highest data usage ever for a sporting event, at more than 500GB.
We are left wondering whether Brazil will be able to cope with the expected - and
yet somehow unpredictable - growth in traffic that the World Cup’s hosting cities will
experience this coming June. Such an exponential increase in traffic will require a
joint effort from carriers, tower companies, investment firms and service providers
to build new infrastructures and enhance existing networks to meet new coverage
and capacity needs over the course of the next few months.
In this special feature, TowerXchange analyses the current status of the Brazilian
tower and telecom market with views from government officials, major tower
companies, leading lawyers and experienced service providers all actively involved
in the densification and extension of Brazil’s telecoms infrastructure.
Don’t miss:
24 The Mott MacDonald Share Square for Brazil
26 SBA Communications’ expansion into Central and South America
32 Over 9,000 towers needed ahead of the Brazil World Cup
35 A legal perspective on the Lei das Antennas
37 Exclusive: How Brazil’s Ministry of Communications is encouraging tower
industry growth
42 Investments will surge where people connect
23
Share Square: Brazil
Major tower transactions in Latin America 2012/2013
Subscriber penetration at ~130% - with
24% 3G penetration and of subscribers
and 89% coverage. LTE launched in
preparation for 2014 world cup
Passive
Brazil
Sharing mandated by regulator –
with 50% target for LTE roll-out and
sharing deals announced by all 4 major
operators. Several new independent
tower companies established recently in
addition to presence of American Tower
Market opportunity dictated by on-going
3G and 4G rollout – meaning demand
for significant increase on existing tower
stock of c.60,000 towers
None
Current Sharing
Active
4 MNOs: Vivo, Claro, TIM and Oi
3G
4G
Technology Development
Opportunity for TowerCo entry with
focus on high Lease Up Rate (LUR)
Brazil Mobile Operators
19%
Vivo
29%
TIM
Claro
25%
Oi
27%
Others
Opportunity for Outsourcing
by MNO to TowerCo
Limited opportunity for new
entrant TowerCo
Brazil has a population of 201.0m and is served by 4 principal mobile
network operators: Vivo (Telefónica), TIM, Claro (América Móvil) and
Oi – which between them account for 99.6% of subscribers. Vivo is the
only operator using CDMA as the principal technology – the others all
adopted GSM, which Vivo also implemented in 2006. With 268.3 million
subscribers (September 2013), penetration is estimated at 135% - up
from 132% in September 2012. 79% of mobile subscribers had a pre-paid
account in September 2013, down from 81% a year earlier.
3G was launched in Brazil in 2007-8. By September 2013
Brazil had 88.3m mobile broadband subscribers, of which
80.7m were via a 3G (WCDMA) handset, 7m via broadband
data terminals and 552,600 via LTE.
LTE is the 4G standard adopted in Brazil by all operators.
In 2012 Anatel (the Regulatory Authority) carried out an
auction of 2500 MHz frequencies in order to enable 4G
networks. The main companies to acquire frequencies
were Vivo, TIM, Claro, Oi, Sky and Sunrise. As part of
the rules following the auction Anatel set a deadline
for winning operators to provide 4G coverage in the six
host cities for the FIFA Confederations Cup by April 30
2013, and all cities hosting and co-hosting the 2014 FIFA
World Cup must be covered by December 2013. Anatel
has pushed hard for operators to roll-out 4G, including
issuing an ultimatum to pay-TV providers to vacate the
2.5-2.6MHz bands reserved for 4G, which helped the April
30th deadline to be met.
This has led to rapid LTE growth in 2013 – with Vivo and
TIM leading the way with 40% and 28% LTE market share
respectively. In September alone there were 154,000 new
LTE subscribers. Vivo covers 64 cities and nearly 30% of
the population. In November 2013, Anatel published a
decree formalising the allocation of the 700MHz spectrum
for 4G mobile broadband in Brazil. The new 700MHz
assignment will take place after the publication of the
tender terms in 2014. The next auction then is expected
in 2014, as Anatel aims to make use of 700MHz spectrum
freed by analogue to digital TV migration – anticipated
to occur before 2016. SindiTelebrasil, the Brazilian
association of telecommunications companies, announced
in May 2013 that operators have invested US$2.5bn in 4G
spectrum and network infrastructure – leading to in the
roll-out of circa 3,500 antennas for 4G, with another 6,000
estimated to be installed by the end of 2013.
XX
There have been a number of recent developments
in the Brazilian market regarding tower sharing and
outsourcing. In 2012 Vivo announced its intention to
move away from owning and managing towers, and sold
2,000 of them to BR Towers – a new company established
by investment firm GP Investiments and Bradesco Private
Equity Fund. It also sold 1,800 towers to American Tower.
According to Valor Economico, Vivo sold 3,925 towers
between late 2010 to Q3 2012, for a total of BRL 1.1 billion.
BR Towers itself absorbed another tower company
SiteSharing, an organisation created in 2003 which
manages towers leased to operators across Brazil.
Another recent entrant, US company SBA
Communications (SBAC), purchased a further 800 towers
from Vivo in December 2012, and announced in July 2013
it would buy 2,113 towers from Oi for US$302.6 million,
bringing its tower count in the country to over 3,000.
Oi will sign a long-term lease agreement with SBAC.
Meanwhile, SBAC will maintain and commercially operate
all the towers and have the right to enter into leasing
agreements with other operators. The tenancy ratio on
the towers currently stands at 1.15.
TorreSur is also investment fund owned and operates
4.000 towers, 65 percent of which it owns – with the rest
involving a right of use arrangement.
Highline do Brasil - with a focus on building and buying
wireless infrastructure such as distributed antenna
systems and towers – was also established in 2012.
American Tower’s website lists 4,343 sites in Brazil
– and in August 2013, it announced plans to acquire
an additional 2,790 towers from Nextel for c. US$413
million. The new towers were said to be mostly located
in and around major population areas and along major
highways, and to have a tenancy ratio of just over 1 tenant
per tower, with Nextel Brazil the primary tenant – having
agreed to lease back the towers from American Tower for
a minimum of 12 years.
In March 2013 BNAmericas reported that TIM Brasil had
approved an infrastructure sharing deal with Oi. The
online journal stated that the LTE Ran sharing project
is limited to the physical sharing of towers and network
equipment for the provision of LTE services in the 2.5GHz
band. Each of the operators is responsible for roll-out in
a different set of cities, relating to the Confederations and
World Cup targets. This is in contrast to Telefonica (Vivo),
which is apparently also looking to share frequency
spectrum. In May 2013, Brazil’s antitrust regulator,
Conselho Administrativo de Defesa Economica (CADE),
approved a network sharing partnership between Vivo
and Claro - to share part of their backhaul network and
transmission sites.
In total, Highline do Brasil estimates that there are 60,000
cellular sites in Brazil – with independent tower operators
owning about 15% - but this number, and the tendency to
share, are expected to increase significantly over the next
few years as operators strive to meet 3G and 4G coverage
targets. Sharing in Brazil may also be stimulated by the
significant amount of time it takes to acquire a tower in
Brazil and high property prices in urban areas.
Regulation is also playing a part. The operators which
secured 4G spectrum in the 2012 auction were obliged
to sign an agreement committing to share at least 50% of
their 4G towers. Brazil’s communications minister, Paulo
Bernardo, declared in July 2012 that Brazil will make
infrastructure sharing mandatory, with Anatel regulating
the sharing of mobile towers. He went on to state that later
in the year he would be sending a proposal to Congress to
define the parameters for the installation of antennae in
Brazil. Whilst municipalities cannot be obliged to change
local legislation, he stated a desire to open dialogue
with them – necessary given a statistic highlighted by
SindiTelebrasil which revealed that there are currently
over 250 laws governing the installation of cellular masts.
In 2012 Anatel also approved a new plan, called the
General Plan of Competition Goals (PGMC) which includes
rules for network sharing.
Whilst the market for tower sharing offers a lot of
potential the degree of existing market activity means that
any company considering market entry needs to act now
Ed Siegle
Ed Siegle is a Principal
Consultant in Mott
MacDonald’s Technology
& Communications
Division. He has 20 years of
experience as a consultant,
primarily focused on
the telecommunications
industry, working for
operators, vendors, investors, regulators and public
sector organisations. His particular expertise lies
in market analysis, commercial due diligence,
product and market strategy development, demand
forecasting and business case production.
In the course of his career he has worked for clients
in the UK, Europe, the USA, Africa and Latin America.
He has spent over 2 years living and working in Latin
America, including 18 months in Brazil where he
helped establish new offices for two consultancies.
Over the past 3 years he has been part of a Mott
MacDonald team commissioned to execute a series
of advisory projects for towercos looking to invest in
developing markets
25
The drivers of SBA
Communications’ expansion
into Central and South America
With countless opportunities and a relatively young market, what is the
future of the tower industry in Central and South America?
Kurt Bagwell joined SBA Communications 2001 and since
then, his career has changed dramatically. After becoming
COO of US Operations in 2002, he is now in charge of the
company’s thriving international operations in Canada,
Central and South America.
In an exclusive interview with TowerXchange, Kurt shares
an insight into the company’s Latin American expansion and
his views on the future of the tower industry in Brazil and
beyond.
Kurt Bagwell, SBA Communications
Keywords: Who’s Who, C-level Perspective, Towercos, Acquisition,
3G, 4G, Urban vs Rural, Tenancy Ratios, Co-locations, Build-to-Suit,
Business Model, Regulation, EBIDTA, Market Overview, Market
Entry, North America, Central America, South America, Brazil,
Canada, Nicaragua, Panama, El Salvador, Guatemala, Costa Rica, US
Virgin Islands, Puerto Rico, SBA Communications
< SBA Communications’ footprint in Central and South America
< The key components of Tower Cash Flow in Latin America
< What is the status of the Brazilian tower market and its future outlook?
< 700 MHz auctions and their impact on tower companies and carriers’ expansion plans
< The attractiveness of Build-to-Suit projects in the region
SBA Communications is a leading tower company
established in 1989 and headquartered in Boca
Raton in South Florida. In 2012, SBA accomplished
its first successful Brazilian acquisition of 800
towers from VIVO, a Telefonica subsidiary and,
in recent months, it announced the deal with Oi
for an additional 2,113 Brazilian towers, which
closed in late November, and an additional deal
with Oi for 2,007 more sites, expected to close
on or before March 31, 2014. In addition, SBA
purchased Redesul/Telcom Towers, a small build
to suit firm with 250 towers in the Sao Paulo area,
in September 2013.
TowerXchange: Please introduce us to SBA
Communications, including your footprint in
South and Central America.
Kurt Bagwell, President - International, SBA
Communications: SBA Communications is a
publicly-traded company that has been active
for 24 years and is currently a 1,100 employee
organization with revenues over US$1 billion
annually and over 20,000 towers in its portfolio.
We have thousands of rooftops and managed
towers in eight countries: United States of
America, Canada, Nicaragua, Panama, El Salvador,
Guatemala, Costa Rica, Brazil, US Virgin Islands
and Puerto Rico.
We have local offices in each of the six countries
we operate in Central and South America.
Our tower portfolio counts 2,000 towers in Central
America and with the near term closing of our
XX
announced Oi deal we will be at over 5,100 sites in
Brazil, so roughly 7,100 total in the region.
TowerXchange: For the benefit of
TowerXchange’s readers who focus on other
markets, please could you introduce us to the
South and Central American tower market
by comparing it to the North American tower
market.
Communications: First and foremost the
independent tower business in these countries
is typically not as old as in the US. In the US
towercos really got going in the mid to late 1990s.
In Latin America, while there may have been a
small player or two in some markets who built
sites, the business developed much later than the
US. In the past five years it really took off, with
carrier tower sales and multi site developers in
almost every market. With a less mature business
comes settling in and learning for both sides
on many issues including pricing, service, new
tower builds, equipment loads and technology
migration. The main characteristics though
of the business are generally the same ones:
the concept of the carrier not owning all their
assets is accepted. It’s all about each company
focusing on their core strengths and outsourcing
the infrastructure portion of the network to
companies like SBA and others who focus on this
specific skill-set.
TowerXchange: What are the key components
of Tower Cash Flow in Latin America - for
São Paulo
example, what is the balance of revenue from
additional tenants versus amendment revenue
from existing tenants? And are the significant
opportunities to improve site efficiency
and therefore site level profitability, again
improving EBITDA?
Communications: In most markets new tenant
leases still drive new incremental revenue, but
that is starting to shift in some places that are
advancing to 4G. In cases where a carrier tower
portfolio is offloaded to an independent towerco
there can often be pent up demand, especially
in cases where the former infrastructure owner
had volume limits like one-for-one swaps or caps
in place to create equal trade. A towerco buys
those towers, opens them up freely to the tenant
universe, and often the initial lease-up for new
tenancies is very strong for the first year or two.
Amendment revenue is happening as well, for
additional equipment and/or larger equipment.
Much of this depends on the frequency sets in
the market. A big part of what has driven high
amendment volume in the US is due to the 700
MHz frequency used for most 4G.
If you use lower frequency, you will need a
bigger antenna. Although some antennas do
27
So the key for a tower operator is to have clear
equipment right contracts with each of their
customers - matching price and load - and then
being very diligent about working together and
applying incremental pricing as load increases
due to spectrum and/or technology changes. There
is also a lot more microwave in Latin America
than in the US, and that is a factor to consider,
given that microwave dishes represent a major
load on any tower asset. So EBITDA will improve
at existing sites from amendments, but it will vary
by carrier and by country based on the maturity
of the technologies and spectrum holdings.
TowerXchange: SBA Communications has
recently contracted or closed to purchase over
4,000 sites from Oi and closed on 800 from
Telefonica/Vivo in Brazil. What’s your view
of the attractiveness of the Brazilian market
and what’s your vision for SBA’s role in the
market? Do you have an appetite for further
acquisitions in the country?
Communications: Brazil is a massive marketplace,
“
quality coverage. Carriers are balancing their
needs to invest in metropolitan areas with the
requirements of the suburban and rural areas.
with a population near 200 million
people, a geography larger than
the mainland US, and a couple of
the largest cities in the world such
as São Paulo and Rio de Janeiro, in
addition to special events like the
2014 World Cup and 2016 Summer
Olympics headed there way, this
market has a long runway of needs
for the wireless infrastructure
business
“
work with various frequencies, this does have
an impact on performance. Carriers offering
4G won’t stop delivering 3G services. They are
adding services, not swapping them. Therefore,
we are now experiencing an overlay in terms
of services offered. This development means
more equipment added to existing towers, and
new towers being constructed, hence more
opportunities.
and one we feel is far less developed in terms
of site density than the US. While the wireless
carriers in Brazil have large, strong subscriber
bases, the networks have much room for
advancement on many fronts. Cell density needs
to increase to handle capacities and to help
optimize network performance. Moreover, the
current higher frequency set being deployed for
4G LTE requires higher density for basic coverage,
and there is still good old fashioned geographic
coverage growth that each of the carriers needs to
continue to fill in various areas.
In suburban and rural areas, there is still a
lot of work to be done as well to ensure high
With a population near 200 million people, a
geography larger than the mainland US, and a
couple of the largest cities in the world such as
São Paulo and Rio de Janeiro, in addition to special
events like the 2014 World Cup and 2016 Summer
Olympics headed their way, this market has a long
runway of needs for the wireless infrastructure
business, and we are glad we made the decision
to go in this marketplace. As of now, 5,100 towers
are good, but we are definitely interested in
more. One of the core fundamentals of any tower
company is scale - in any country you go into you
have a certain level of fixed costs with personnel,
offices, financial and legal support, etc. That base
cost scales very well in the tower business, so
after you make a decision to go into a country, you
can achieve even greater efficiencies in the future
as you grow the total size of the asset base.
SBA is one of two major, long term public players
in the Brazilian market and we foresee our future
being much larger and very bright in this country
over the next 5 to 10 years.
TowerXchange: What is the progress toward
Heterogeneous Networks in Brazil? Is SBA
interested in opportunities in small cells?
Communications: The ratio between towers and
small cells being used very much depends on the
XX
geography and density of the areas in question.
We will see more small cells being used for
hotspots in high density areas. Small cells will
work as underlay of the existing macro-system in
urban areas.
For example, in São Paulo there are various
rooftop sites complementing the macro-system the towers already in place. Antenna centerline
mounting heights are getting lower in urban
areas, and a variety of cell implementation forms
will be used to support RF equipment - whether it
is shorter towers, small poles, low rooftops, etc.
SBA is definitely looking at being active on the
small cell side. However, our core business
remains the acquisition and ownership of macro
site tower portfolios.
TowerXchange: Brazil’s 700 MHz auction
will take place sometimes in 2014. How will
that change the landscape and dynamics of
carriers/tower companies? And which impact
is that going to have on companies like SBA
Communications?
Communications: 700 MHz brings with it some
physical changes in terms of larger antenna sizes
and less opportunities for the carrier to share
existing infrastructure with current technologies
and frequencies, which will continue to be
broadcast by them for the next several years at a
minimum. While the auctions will happen in 2014,
there is still spectrum clearing to be done and the
STOP PRESS… Kurt Bagwell adds extra colour on SBA
Communications’ latest deal with Oi
TowerXchange: How do the new 2,000 sites
acquired from Oi compliment your existing
portfolio in Brazil?
Kurt Bagwell, President – International, SBA
Communications: The latest Oi deal is pure Oi
Wireless sites in some of the highest density
population areas, with current high tenancy.
They fit into our existing 3,100 site footprint
extremely well.
TowerXchange: Cost per tower is a pretty
crude measure of a tower transaction, but
one cannot help but notice that this latest
deal with Oi works out as US$321k per tower,
whilst the previous deal works out at US$143k
exact implementation will be farther out. We will
work together with the carriers - our customers
- to prepare for this, and the typical topics will
include loading, pricing, tower modifications if
needed, and priority geographies.
TowerXchange: Beside Brazil, SBA is very
involved in Central America. Which countries
are leading tower industry development in
Central America? And what makes those
countries more attractive than others?
Communications: In Central America we are very
per tower. Does that give us an indication of
the impact of the relatively high tenancy ratio
(1.6 in the recent deal compared to 1.15 in the
previous deal), or are there other significant
differences between the portfolios?
Kurt Bagwell, President – International, SBA
Communications: Yes, this tenancy ratio does
create the premium value, in addition to
other metrics around carrier leaseback rate,
guaranteed term length et cetera. Price per tower
can be a deceiving metric given all of this. It all
comes down to the mix of these variables, in
addition to the growth factor we assume on these
assets. We expect over time to see a mid-teens
rate of return.
active in five of the seven countries. We are in
Panama, Costa Rica Nicaragua, El Salvador and
Guatemala. We are not in Honduras nor Belize
due to recent carrier consolidation and size issues
which would both prohibit scale and strong
growth. We have been in some of these markets
since 2009, four years now, and others since 2010
and 2011. We have almost 2,000 sites in the region,
and we are active in all of our markets. We built
these markets by buying carrier towers and/or
locally owned developer towers, and once we set
up shop in each market we do our traditional
three sets of activities, which is to build more
towers in select locations, buy more towers that
29
fit our financial and operational model, and lease
up more spots, or co-locations, on our existing
towers.
These markets range from having two to four
broadband carriers each, and that is a big factor
in the volume of activity on a daily basis. In
general these markets have more lenient zoning
than the US, but it is increasing daily in each
country, which over the long term is key for
our business and makes our assets even more
valuable.
Capital and operating costs are very reasonable
in Central America, land costs are rising but still
in a good zone, and the labor workforce is strong
and efficient. We have experienced great success
in Central America, we have five main offices
and a regional hub and we are the dominant
tower company in the region with large bases of
tower sites and high levels of new activity in each
market. These markets are generally 2G/3G/3.5G
markets, with 4G LTE still in the future. Electric
power availability is great in Central America, as
are resources for tower steel and an experienced
contractor base for all activities - site acquisition,
engineering, construction and maintenance. We
are very happy we chose to concentrate in these
markets and like our dominant position.
TowerXchange: Puerto Rico seems to have lots
of co-location/sharing opportunities. How is
SBA involved in the development of its tower
market?
Communications: SBA has been involved in Puerto
Rico and the US Virgin Islands market since
1998, when we started to develop sites for Sprint.
We have over 100 towers in the market place
and have been there a long time. The market
is very mature and is more on the timeline of
the US market, given the carrier base that exists
there, and we actually run this as part of our
US operations. It has been a strong co-location
market, the zoning rules are tough, the terrain
presents challenges, and the carrier networks
have been strained from the high end growth of
all services, especially in the San Juan metro area
where the population is large and dense.
TowerXchange: How are regulators supporting
the development of the tower industry in South
and Central America? What more can be done
to stimulate investment and accelerate value
creation?
Communications: The regulators have been
welcoming to the tower business in every country
we are in and for all the right reasons. They see the independent sharing of assets as a
way to keep tower proliferation to a minimum.
Generally, regulators welcome companies
like ours who bring incremental capital to
the equation so the carriers can spend on
their network needs and less on the physical
infrastructure, and the regulators like our
process and procedure where we treat the
infrastructure like long term assets which they
are, in terms of having the proper approvals
from airspace to land-use. In many cases there
are buildout requirements put on the carriers
for rural areas that would not be economically
feasible without a tower sharing company
stepping up and taking the risk, so in that regard
our business fits well with the regulators general
goals of ubiquitous wireless service offerings to
the entire geographic footprint. We have not seen and do not expect to see any
regulation of our business that would interfere
with our basic business plans. In some countries
the regulators have been more active than others
in helping work with the federal, provincial
and local governments to standardize land use
approval for cell towers, as many jurisdictions
have unclear or cumbersome rules on how to deal
with approvals of cell towers, similar to the US
market in the early 1990s. This issue has gotten
much better in some countries but still has a way
to go in others.
In Brazil the regulator is very strong with carrier
buildout and performance standards, which in
general is a major positive for our business as it
forces constant investment in the networks, which
we are in the middle of.
It is important to highlight that approximately
two thirds of new towers in Latin America are
being built by non-carriers, e.g. tower companies.
Our model and Build to Suit (BTS) are becoming
widely accepted in the region so tailor-made
XX
TowerXchange: What is the balance of sale
and leaseback versus build-to-suit (BTS)
programmes in Latin America?
Communications: Build to suit is strong in Latin
America. There has also been a lot of saleleaseback in Latin America, and once a carrier
embraces sale-leaseback, they typically then opt
for build to suit for most new sites, as they have
made the internal decision to move out of the
infrastructure ownership side of the equation.
Some carriers still prefer to own and operate
their tower sites and limit co-location based on a
perceived competitive advantage theory, but that
is becoming the exception instead of the rule. The
demands on the carriers are so strong to become
more efficient on all fronts that build to suit and
sale-leaseback have been happening in a big way
in every country, and with almost every carrier.
In terms of suppliers to our development business,
I believe that the suppliers enjoy working with us
just as much as they enjoy working with carriers.
Towers are our core business and with 3/4 of
new towers now being built by non-carriers,
it is obvious that most of these infrastructure
development vendors will deal directly with
companies like ours on those projects.
TowerXchange: Growth in the Latin American
tower industry is accelerating and being
labeled by some as the “new North America”.
What are the major challenges that must be
overcome to for the tower industry in South
and Central America to deliver the kind of
returns achieved in North America?
Communications: In my mind it is more
about time and less about the challenges. The
challenges will be the same - deeper education
and further experience between the local
carriers on how to best operate within a towerco
environment, the balance of pricing and loads,
more decisions on sale-leaseback and their
internal capital structures, more commitment to
BTS and the related structure and pricing, and
towerco service quality. The business is inherently the same as in the
US - you have carrier revenues (hopefully multi
carrier revenues) on a tower, and then five
basic operating costs - land rent, maintenance
and repairs, utilities, property taxes and
insurance. Those are the five main cost of goods
sold drivers in the US market and the Latin
American market that define the gross profits of a
tower company business.
As I said earlier, electric power supply is not a
major part of this business challenge as much as
it is in some emerging markets, especially Africa.
That brings on an entire different facet to the
business, but the issues just don’t exist with power
in Latin America like they do in other places.
“
I predict that tenancy ratios
will get closer to the US
standards in the future.
Currently, the US tenancy
ratio is 2 and above
whereas we see it at an
average of approximately
1.5 in Latin America
“
regulations will continue to be refined in the
future.
Therefore, the model is roughly the same as in
the US market, it’s just about the maturity of the
marketplace and the continued development of
the market. The movement has started in a big
way, it is gaining speed, and the model works, just
as it has in other areas.
In terms of its maturity and growth, I predict that
tenancy ratios will get closer to the US standards
in the near future. Currently, the US tenancy ratio
is roughly 2.0 and above whereas we see it at an
average of approximately 1.5 in Latin America
31
Over 9,000 new towers needed
in Brazil ahead of the World Cup 2014
With a highly complicated licensing system for
greenfield projects, Brazil is currently struggling
to meet its ambitious coverage and capacity goals
ahead of the 2014 World Cup.
Regulators’ efforts to simplify the procedure for permitting new towers
TowerXchange’s aim is to keep track of the
progress the country makes in its attempt to
simplify the existing legislation for new towers’
installation while providing an insight into the
various bodies involved in the process.
At 8,511,965 km², Brazil is the 5th largest country on
earth and, with over 260 million connections, the
fourth largest mobile market in the world. Therefore,
it comes as no surprise that the Brazilian tower
industry is expanding at a very swift pace.
But what is the legal context in which telecom and
tower companies operate? How easy is it for them to
obtain licenses for new towers? And how likely is this
system to change?
Keywords: Regulation, MNOs, Masts & Towers,
Construction, Installation, South America, Brazil,
New license, Leasing & Permitting, Build-to-Suit, 4G,
3G, Legislation, SindiTelebrasil, CONAMA, Ministry
of Telecommunications, 2014 World Cup, VIVO, Oi,
Claro, TIM, Paraíba, Rio de Janeiro, Rio Grande do Sul,
Rondônia
< The telecom legal framework of Brazil
< The proposed law 5.013 and how its approval would change the current tower legislation
< Active players in the legal arena and their role: Ministry of Telecommunications, CONAMA and
SindiTelebrasil
< Brazilian 4G requirements ahead of the 2014 World Cup
< How many new towers are needed in Brazil?
Brazil is at the very heart of the South American
tower industry with plenty of opportunities
for tower companies to establish successful
businesses in the land-grab for portfolio
acquisitions and BTS projects.
But what is the legal context in which tower
companies operate? And how is it likely to change
in the near future?
The Brazilian Constitution establishes that each
municipality has to set its own rules to deal with
telecommunication towers, their construction
and regulation.
At present date, Brazil has 5,564 municipalities,
making the average municipality population
34,361. The average state in Brazil has 214
municipalities.
In a recent statement, the Executive Secretary
of the Ministry of Telecommunications of Brazil,
Mr Cezar Alvarez, stated that the country needs
to further develop the dialogue with each
XX
municipality and city hall for the implementation
of a national law (Lei Nacional) to govern the
installation of telecom towers in the country.
In his views, each municipality issued laws
defending their own historical heritage,
landscape and urban plans. But these times of
exceptional growth require a consolidated and
more organised effort.
A proposed legislation is seeking to solve the
problem of the lack of points of service in Brazil,
but it is not without controversies and has
attracted the opposition of some municipalities.
But what do we mean by a lack of points of
service? It is estimated that the ratio of new
SIM cards being activated in Brazil is one per
second, reaching an astounding 2 million per
month. Therefore, it is obvious that the need for
added capacity, as well as expanded coverage, is
growing by the hour.
“
“
it is estimated that the ratio of
new SIM cards being activated
in Brazil is one per second,
reaching an astounding 2
million per month
However, permits and licenses are not being
issued as fast as this swift market development
would need. In fact, some Brazilian municipalities
require as many as seven different licenses to
build a new tower.
A Special Commission has been created recently
within the Brazilian House of Representatives
(Câmara dos Deputados) to rapidly approve
the proposed legislation referred to as Lei das
Antennas or Towers Law (PL 5.013).
The law would allow the CONAMA (Conselho
Nacional do Meio Ambiente or National Counsel
of Environment) to create a simplified procedure
to analyse requests for new towers’ erection.
The Minister of Telecommunications, Mr Paulo
Bernardo, recently stated that the main point of
the law is to enable the CONAMA to vote on new
projects within a “reasonable time scale”.
One of the key points to date is that telecom is not
33
“
treated like energy when it comes to the power
of municipalities to charge telecom companies
or other tower operators for the right of passage.
The proposed Towers Law would change this
aspect, hence treating telecom and tower
companies like energy providers and freeing
them of these charges.
Finally, another major point of discussion is that
the new law would introduce a rule whereby
without a decision within 60 days with regards
to new installations, the company applying for
the permit would be allowed to proceed with the
construction.
The Minister stated with this regards: “At
first sight, this rule can create controversy.
This legal debate is expected to culminate
towards the end of the year when several
roundtables will be hosted in Brasilia to listen
to the opinions and views of a Brazilian States’
representatives including Paraíba, Rio de Janeiro,
Rio Grande do Sul and Rondônia.
In the meantime, the imminent 2014 World
Cup is pushing telecom companies to ensure 4G
coverage in the 14 cities that will host the event.
SindiTelebrasil (Sindicato Nacional das Empresas
de Telefonia e de Servçio Môvel Celular e
Pessoal) is a Brazilian association created
in 2003 to coordinate and legally represent
companies that operate in both fixed and mobile
telecommunications.
In order to reach the 4G coverage goal,
SindiTelebrasil has stated earlier this year that
9,556 new towers should be installed - or 30
new towers per day. While the main carriers
operating in Brazil (VIVO, Oi, Claro and TIM) have
agreed to reach 100% 4G coverage by December
2013 for the cities involved in the upcoming
World Cup, this aggressive target creates a
tension with the aforementioned restrictions set
“
in order to reach the 4G
coverage goal, SindiTelebrasil
has stated earlier this year
that 9,556 new towers should
be installed - or 30 new
towers per day
by municipalities.
“
“
the new law would introduce
a rule whereby without a
decision within 60 days with
regards to new installations,
the company applying
for the permit would be
allowed to proceed with the
construction
However, why do we have to wait for one year
or more? Our idea is to slowly push towards
simplification.” TowerXchange notes that
similar laws have accelerated the deployment
and extension of mobile phone networks in
Africa (see the DRC case study in this edition of
TowerXchange).
It is estimated that to allow 4G to function
properly, Brazil will need two or three 4G towers
for each 3G tower already in place. This increase
in quantity is due to the different characteristics
of the frequency needed to enable 4G.
According to SindiTelebrasil, the proposed
Towers Law will simplify the much needed
network expansion to reach 4G coverage.
We will keep following the legal debate as it
develops in the hope that a decision is reached
in a timely manner, not only to ensure coverage
ahead of the World Cup but to unlock further
possibilities to develop the thriving national
tower market in Brazil
XX
A legal perspective on the
Lei das Antenas
TowerXchange: Guilherme, can you please
introduce yourself and your expertise in the
telecom industry?
Guilherme Ieno, Partner, KLA: I am a Partner
at KLA-Koury Lopes Advogados, a Brazilian
law firm acting across all sectors. At KLA, I
am responsible for the telecommunications
regulatory sector where the firm assists
clients with structuring, acquisitions, joint
ventures, and operations financing in the
telecommunications sector. I have been
practicing law for over fifteen years with a focus
on telecoms.
TowerXchange: What is the role of the
Brazilian Law Association for Information
Technology and Communications (Associação
Brasileira de Direito das Telecomunicações e
Tecnologia) of which you are Executive VicePresident?
Guilherme Ieno, Partner at the KLA Law Firm
Guilherme Ieno is Partner at KLA-Koury Lopes Advogados in Sáo Paulo. He is a
telecommunications expert with over 15 years of experience providing legal and regulatory
assistance to telecom operators, tower companies and other entities. In this interview,
Guilherme discusses the Lei das Antenas and its potential impact on the building of LTE
networks in advance of the World Cup.
Guilherme Ieno, Partner, KLA: Currently I
am Director of ABDTIC, the Brazilian Law
Association for Information Technology and
Communications. ABDTIC’s role is mainly
to propose legal and regulatory discussions
related to the Information Technology and
Communications areas. The association
actively contribute in a large number of Public
Consultations held by Anatel through which
the Agency proposes the telecom regulation,
organizes Seminars and stimulate discussion
through its Specific Commissions.
35
TowerXchange: What is the status of the
governmental discussion on the proposed Lei
das Antenas?
Guilherme Ieno, Partner, KLA: Executive branch,
specially the Communications Ministry support
the discussion and the approval of the Lei das
Antenas that may ease the building of antennas
throughout the country, considering the
investments on the 4G networks, which should
be ready for the 2014 World Cup.
TowerXchange: Some municipalities
are against the proposed law because of
landscape preservation. Do you think this
environmental concern will stop the law from
being approved?
Guilherme Ieno, Partner, KLA: No. However
the text approved should define the patterns,
TowerXchange: With so many licenses and
permits needed for new projects, can Brazil
meet its 4G coverage goals without a more
streamlined, unified procedure?
Guilherme Ieno, Partner, KLA: Certainly it
should be hard (but not impossible) without this
unified procedure.
TowerXchange: What’s your view on
the option for carriers to outsource the
management of the passive infrastructure to
specialist towercos?
Guilherme Ieno, Partner, KLA: My advice to a
carrier is to strongly evaluate the alternative of
outsourcing its infrastructure (all or a great part
of it).
“
“
Guilherme Ieno, Partner, KLA: ABDTIC does not
express position with regards to the matters
that are of the industry’s interest. Obviously,
everything can be discussed in the association,
which supports every proposal that aims
innovation, development of the industry and
increase of competition.
including the procedures, number of licenses
etc but not simply release the companies from
complying with other environmental legislation.
my advice to a carrier is
to strongly evaluate the
alternative of outsourcing
its infrastructure
“
the tower business sector has
been well developed in the
past years due to the new
vision of most of the Mobile
Operators which have decided
to outsource their networks
“
TowerXchange: What is the position of the
Brazilian Law Association for Information
Technology and Communications with
regards to the proposed law? Is the
Association actively participating in the
debate?
TowerXchange: Have you advised or dealt
with any tower companies in the country? If
so, how do you see the tower model evolving
in Brazil?
Guilherme Ieno, Partner, KLA: Yes, we at KLA
currently assist some Tower Companies. The
tower business sector has been well developed
in the past years due to the new vision of most
of the Mobile Operators which have decided to
outsource their networks.
TowerXchange: Does real estate law in Brazil
permit foreign investors to own land?
Guilherme Ieno, Partner, KLA: Yes. There is a
specific regulation, which requires a permit
from foreigners (individuals and legal entities),
but there is no general prohibition
XX
Exclusive: How Brazil’s
Ministry of Communications is
encouraging tower industry growth
Updates on frequency auctions, 4G coverage objectives and permitting simplification
In an exclusive interview with TowerXchange, Mr Artur
Coimbra de Oliveira, Director of the Department of
Broadband within the Ministry of Communications of Brazil,
shares his views on the current and future status of the
Brazilian tower industry.
Mr Coimbra de Oliveira’s background includes experience
within the Brazilian telecommunication agency, Anatel, as
Regulatory Specialist, and within the Personal Cabinet of the
President of Brazil as Digital Inclusion Advisor.
Artur Coimbra de Oliveira, Ministry of
Communications, Brazil
Keywords: Who’s Who, Interview, South America, Brazil, Ministry
of Telecommunications, 4G, LTE, Urban vs Rural, Market Forecasts,
Infrastructure Sharing, Frequency, Auction, New Market Entrant,
Permits, Tax, Regulation, Greenfield, Investment, Market Overview,
World Cup, Lei das Antennas, Anatel
< How past and future frequency auctions in Brazil will drive 4G coverage
< Working with municipalities to accelerate permitting and deployment of infrastructure prior to
the World Cup
< How the ministry intends to extend benefits from telcos to towercos to encourage tower industry growth
< How the Lei das Antennas would unify tower development under Federal Law
< The availability of capital and expertise to establish local towercos
TowerXchange: Could you please introduce
the activities that the Ministry is currently
overseeing and developing to ensure 4G
coverage in the country?
Artur Coimbra de Oliveira, Director of the
Department of Broadband, Ministry of
Communications, Brazil: The Ministry of
Communications is currently developing a series
of activities to foster 4G in the country. The first
and key aspect is the radio frequency auctions our
regulator is holding.
The 2.5 GHz auction took place in June 2012
and its target is to guarantee 4G coverage to all
Brazilian municipalities with a minimum of 30,000
residents. In 2014, we are planning a 700 MHz
auction with the goal to enable 4G coverage in all
municipalities under 30,000 residents.
With the completion of these auctions, we aim at
extending 4G coverage to all 5,570 municipalities
in Brazil.
Moreover, the 2012 auction included the 450
MHz spectrum for rural access. The aim is
to enable the 4G technology for this specific
radiofrequency band, which may allow an almost
full LTE coverage in Brazil by the end of 2015 - the
450 MHz coverage obligations reach 91% of all
Brazilian rural population. With the support of Brazilian government, 3GPP
has just concluded the standardization process of
the LTE 450. Now we are working with a handful
37
of manufacturers which are able to provide this
highly advanced equipment.
TowerXchange: What is the carriers’ deadline
to ensure 4G coverage?
Communications, Brazil: Each bid is different and
the national telecommunication agency, Anatel,
sets the rules for each auction. With regards to
the 450 MHz auction, the obligation is to ensure
coverage in all municipalities by 2015.
4G coverage should be provided throughout the
nation, in both urban and rural areas, by 2020.
However, we think that urban areas could already
be covered by the end of 2015 as established by
the auction.
“
4G coverage should be provided
throughout the nation, in both
urban and rural areas, by 2020.
However, we think that urban
areas could already be covered by
the end of 2015 as established by
the auction
“
Downtown Sao Paulo from Viaduto do Cha
TowerXchange: How is the Ministry supporting
telecom companies and tower operators to
work towards achieving the coverage goals
ahead of the 2014 World Cup?
das Antennas, we appreciate that this process can
take quite some time and we need to work towards
our coverage milestones ahead of the 2014 World
Cup.
Communications, Brazil: While the Congress is
currently working towards the approval of the Lei
Therefore, we are in the process of consulting with
each municipality that will be hosting the games to
ensure they accelerate the local permitting process
and contribute to a swift deployment of much
XX
Most of these municipalities are already changing
their local legislation to allow quicker processes
for greenfield projects to be approved and
developed.
Moreover, we are working with 3G and 4G
carriers that want to deploy connectivity inside
the World Cup’s arenas to make it easier for them
to develop these projects.
TowerXchange: Tell us about the 2014 4G
auction: what expectations does the Ministry
have with regards to the companies bidding,
the outcome and the switch off of the analogue
signal?
Communications, Brazil: With regards to the
analogue signal, our goal is to firstly switch it
off in the biggest cities such as Sao Paulo, Rio de
Janeiro, Brasilia and Belo Horizonte. These are
also the richest cities in the country so we believe
the switch off process will be fairly quick as
digital television sets are becoming very popular
already. Also, we will try to include some switch
off incentives in the 2014 700 MHz auction.
Anatel is designing the auction with the specific
goal to entice new players - new carriers - to bid.
In fact, the most established carriers in Brazil
do bid at auctions because they already have a
network deployed in the country, they have an
“
From our side, we are looking
at extending a series of
benefits currently available to
telecom companies to tower
companies. I am referring to
tax benefits for new entrants
as well as the special tax
regime for companies involved
in the national broadband
deployment
“
needed infrastructure.
established presence and an interest to expand
their footprint.
However, it is harder to attract new companies
and new investments during these bids and Anatel
is working on the 700 MHz bid with that in mind.
Finding the right answer to allow new entrants
into Brazil is a key target for us at the moment.
TowerXchange: Is the Ministry involved in the
development of the passive infrastructure
sector - hence in the further expansion of tower
companies in the country? If so, how are you
working with them?
Communications, Brazil: We have been observing
the growth of the tower industry very closely
in the past few years. Tower companies are
becoming very strong players and we believe this
can only be a positive factor to ease the process of
infrastructure sharing. Moreover, with carriers
focusing solely on their network and with capital
to be invested thanks to the sale of their passive
infrastructure, coverage expansion should become
a quicker process too.
From our side, we are looking at extending a
series of benefits currently available to telecom
companies to tower companies. I am referring to
tax benefits for new entrants as well as the special
tax regime for companies involved in the national
broadband plan deployment.
These are just examples of our activities but in
summary, we aim at making it easier for tower
companies to operate in the country.
TowerXchange: Can you introduce us to the
proposed Lei das Antennas and your views on
it?
Communications, Brazil: The Ministry is working
very hard to promote new legislation in favour of
passive infrastructure sharing.
Last year, Anatel published the General Plan
39
for Competition (PGMC) aimed at encouraging
and promoting free competition in the
telecommunications industry, as well improving
regulation. Infrastructure sharing is a key
component of a free and competitive telecom
sector and with the Plan, Anatel will enhance
transparency and access to market for both
carriers and tower companies.
At the same time, the proposed Lei das Antennas
would further contribute to the development
of the sector. Municipalities have jurisdiction
over new tower deployment and each local law
is different. We are trying to solve this issue by
Federal Law - specifically through a homogeneous
law such as the proposed Lei das Antennas which
is currently being discussed in Congress.
The proposed law was first presented and
approved by the Senate. Then it moved to the
House of Representatives where it’s currently
being voted. We think the text will be amended
and go back to the Senate for the final vote but we
don’t think that the amends will be too radical.
My view is that the law could get approved in
the first half of 2014. The goal was for it to pass
by the end of 2013 but I think my projection is
more realistic in light of the current stage of the
discussion.
The aim of the Lei das Antennas is to create a
harmonised procedure for tower deployment and
we think that tower companies can actually be
ally of municipalities - rather than the opposite.
Brasilia
In fact, municipalities’ main concern with regards
to tower deployment is related to the conservation
of landscapes and historical sites which can be
compromised in the case of too many projects
being developed in the same area.
Tower companies’ core business is co-location and
sharing, hence creating the perfect environment
for carriers to deploy their network by using the
same tower and with fewer new towers being
built.
From a different perspective, there is a Federal
Law which makes infrastructure sharing
mandatory for radio stations closer than 500
meters to each other. So the sharing trend is
ongoing and is becoming widely accepted and
even protected at a legislation level.
TowerXchange: The majority of telecom towers
in North America, and other mature tower
industries like India and Europe, are owned
by specialist towercos rather than by carriers.
Would you anticipate a similar trend in Brazil?
XX
In fact, it’s no secret that profit margins in the
telecommunication sector are constantly shrinking
while larger investments are needed to develop
new technologies and networks.
As mentioned before, carriers are selling their
tower portfolio to become nimble and to be able
to compete in their core business. This industry
wouldn’t expand without investments and tower
companies are facilitating the process.
This is a global trend and it’s happening in Brazil,
too.
What’s your view of the capital and expertise
available in Brazil to foster a local-owned tower
industry, given that international towercos
investing in Brazil are exposed to forex risk?
Communications, Brazil: I think Brazil has
plenty of local capital and expertise to develop a
national tower market. However, this is mainly a
commercial issue. We are very interested in the
“
inherently global and therefore, have reduced
forex risks.
The tower market is and
will remain a local game.
Therefore, its forex risk will be
somehow larger. However, I
think this concern is somehow
mitigated in Brazil as we see
more and more international
companies looking at us as
a good place where to invest
capital
“
Communications, Brazil: Definitely so. We are
seeing it happening in Brazil right now. In the
past few years, there have been a sharp increase
in the number of tower companies that have
been created and personally, I think this is a
positive development for the country and for the
telecommunication industry as a whole.
establishment of local companies while we also
welcome foreign investments in the local tower
sector.
We are seeing that local banks and investments
firms have a growing interest in the national
tower sector and are more aware of its potential.
This will surely foster the development of local
tower companies.
With regards to forex risk, it must be said that
the risk exists in every market. Obviously there
are some markets, such as commodity, which are
The tower market is and will remain a local
game. Therefore, its forex risk will be somehow
larger. However, I think this concern is somehow
mitigated in Brazil as we see more and more
international companies looking at us as a good
place where to invest capital.
That said, we have a solid capital and expertise
basis that is allowing us to expand at a local level
through the establishment of national tower
companies.
TowerXchange: Which other plans are
being developed in Brazil to modernise its
telecommunication and internet sector?
Communications, Brazil: We are very involved
in the fibre-optic network expansion which will
enable greater and faster internet access.
Mobile technologies are greatly contributing to the
growth of internet usage in the country. People
that never had access to internet suddenly have a
smartphone and can quickly learn how to connect,
browse and even work.
In Brazil, we are experiencing an exceptional
growth in data traffic. Therefore, we will soon
need more speed. Fibre-optic network will be key
to achieve our speed goals
41
LatAm infrastructure
investments will surge where
people connect
Cell site densification, DAS and Wi-Fi in stadiums, shopping malls and high
density areas add urgently needed capacity
Alexandre Tude, Vice President Latin America at Lemcon
Americas, is a civil engineer with a MBA by background
and has been with Lemcon since the very beginning
of its American operations, back in 2000. He leads the
Latin American operations of this originally Finnish
company which has recently been acquired by American
telecommunications company, Blue Skies Networks.
Alexandre Tude, Lemcon Americas
Keywords: Who’s Who, Interview, Managed Services, Central
America, South America, Construction, O&M, Investment, 3G,
4G, DAS, Urban vs Rural, Co-locations, Build-to-Suit, Tax, Nokia,
Brazil, Colombia, Mexico, Argentina, New License, Fuel Security,
Lemminkäinen Group, Blue Skies Networks, American Tower,
SBA Communications, Lemcon Americas
TowerXchange: Alexandre, tell us about Lemcon
and its overall operations
Alexandre Tude, Vice President Latin America,
Lemcon Americas: Lemcon Networks was part of
the Lemminkäinen Group, the number two Finnish
construction company, which entered the telecom
projects market in 1996. Originally the Group was
involved in the construction of the Nokia factories in
Finland and when we entered the telecom business,
we started working with them on the equipment
side.
So we started as a construction business for
companies like Nokia and our core activity was
tower installation. Then we got involved in the
installation of all active equipment needed for the
network.
In 2000, we started our Latin American operations
with contracts in Brazil. From there, we expanded
into Argentina, Colombia, Mexico and to date, we
have presence in 8 countries in the region.
Since April 2013, Lemcon is part of Blue Skies
Networks, an American telecommunications
company headquartered in Boston, and we changed
name to Lemcon Americas.
<
<
<
<
<
Insights into the regional market from a newly all-American leading managed service provider
From DAS to Google: Lemcon’s varied portfolio of activities in Latin America
What are carriers doing to enable 4G LTE in the World Cup’s hosting cities?
From security to fuel theft: a comparison between Africa and Latin America
Beyond towers: DAS, Wi-Fi and other coverage and capacity solutions
TowerXchange: Who are your main clients in
Latin America?
Lemcon Americas: We are currently working with
SBA Communications in Brazil and with American
XX
Tower in Brazil, Colombia and Mexico. We keep
serving Nokia Solutions and Networks, which
remains one of our core customers.
For example, we are serving American Tower in
Colombia for their site management programme
following the site acquisition of over 2,100 towers
from Tigo.
Moreover, we are very active in the deployment
of wireless networks. We have been contracted by
Comba Telecom, a leading supplier of infrastructure
and wireless enhancement solutions, to deploy DAS
in some of the stadiums that will be used for the
2014 World Cup.
We are not very active in Argentina at the moment
but we hope to be able to do more in the country
in the future and we do have some projects being
discussed at the moment with Telecom Personal.
“
we have been contracted by
Comba Telecom, a leading
supplier of infrastructure and
wireless enhancement solutions,
to deploy DAS in some of the
stadiums that will be used for the
2014 World Cup
“
Mexico City
Other projects we are developing include a
collaboration with Google in Bolivia, Ecuador and
Venezuela.
TowerXchange: How does Lemcon adapt your
offerings to serve customer needs across Latin
America?
Lemcon Americas: Our company has been very
flexible in adapting to market changes. When you
work in a large and sometimes unstable region, you
need to be ready to move from country to country,
chasing projects.
Our main team is constantly in the field. Whether
it’s in Peru or in Brazil, we are ready to go where
there are new opportunities. Moreover, our local
footprint in Brazil, Mexico, Argentina and Colombia
has greatly contributed to our growth.
43
Lemcon Americas: Due to recent acquisitions of SBA
and ATC, there is a huge demand to adapt sites to
host co-locations. At the same time, we remain very
active on the maintenance side.
This year, carriers haven’t invested a lot of capital
yet to expand their LTE network. I think they are
somehow assessing the market while some of them
are also very active in selling their tower portfolios.
In my opinion, the next phase will be of network
expansion and investments on LTE.
On the other hand, tower companies have been
extremely active and we are increasingly working
with them.
For vendors, we are carrying out a lot of BTS
projects. Companies like Nokia and Ericsson
contract us on a BTS basis so that they can sell their
equipment while we cover all the other aspects of
the project.
TowerXchange: How easy is it in the region
to access permits and licenses for greenfield
projects?
Lemcon Americas: I have been involved in permits
and site acquisition for a long time and I don’t think
that Latin America faces different challenges from
“
related requirements are for each state and each
municipality in Brazil.
“
TowerXchange: Which of Lemcon Americas’
service offerings has seen the most growth this
year?
Due to recent acquisitions of SBA
and ATC, there is a huge demand
to adapt sites to host co-locations
anywhere else in the world, in terms of permitting.
The real issue is bureaucracy and the length of the
procedures. It can be very time consuming to get all
the various licenses needed for a new site.
Every area is different though. Some areas have
rules to protect landscapes and historical sites and
in those places, it will always be very hard to get
permits. And once you do get it, most likely you will
need to build a tower that respects certain criteria,
for example, that is hidden so that it doesn’t have a
visual impact on the area.
In less urban areas, it is definitely less complicated
to develop new projects and receive permits.
Taxation is another issue for new sites. For
example, in Brazil, the service tax for new towers
is established by each city hall and the whole
taxation system is very complex. So companies
looking at building new sites really need to get
informed beforehand on what the legal and tax-
Overall, the demand for connectivity is very high but
it clashes with bureaucracy. The proposed Lei des
Antennas, which could simplify this issue, is a long
way to being approved and I think it will take some
time before we see it in action. However, carriers
and other parties involved have a lot of interest in it
being carried forward.
TowerXchange: Carriers in Latin America are
divesting their tower portfolios. What are the
drivers behind this trend?
Lemcon Americas: Carriers are focusing more and
more on their core activity especially at this time,
with 4G LTE requirements coming into play. Their
business is to increase the level of voice and data
connectivity among the population, to expand their
network and to acquire new customers. Not to
operate and maintain passive infrastructure.
Needless to say, the operational and maintenance
requirements of passive infrastructure can be very
costly.
By selling their tower portfolios, carriers are able to
raise capital which is fundamental if they want to
improve and expand their network.
On the other hand, portfolios in Latin America are
now being sold for higher prices than a few years
ago. Still not as high as in the United States but high
XX
Lemcon Americas: Fuel and security are an issue
in the region. The difference is the scale of the
problem compared to Africa.
Whereas most sites in the region are connected to
the grid, fuel theft is still a concern in some areas.
In areas like the Caribbean and other islands, fuel
security is a major problem. Some areas of Mexico
can be very risky too.
Brazil: hosting country of the 2014 World Cup
enough to make the divestiture of infrastructure
very attractive for carriers.
These transactions are still very convenient for
US based tower companies used to paying huge
amounts of US Dollars for portfolios in North
America, which is a riper market that Latin
America. Acquiring assets in Brazil or elsewhere in
the region is still a very convenient move for them
at this stage.
The length of these contracts, sometimes as long as
40 or 50 years, is another big driver. We are really
moving towards a real estate business and we will
see more transactions in the near future in Latin
America.
TowerXchange: Energy and site security play a
big role in Africa. How big of an issue are they in
Latin America?
Another example is Colombia, where American
Tower contracted us to provide a connected alarm
system to monitor all their sites. Our system enabled
American Tower to keep their sites secure against
robbery which is a problem in the country. Beside
fuel and the overall security of sites, another trend
is to steal copper.
So I’d say that although less common, security is a
concern and tower operators are geared with all
sorts of equipments to control their sites. Fuel theft
is a reality in the region, not as big as in Africa but
definitely disturbing in some off-grid areas.
TowerXchange: Beyond towers, tell us about the
expansion of DAS in the region
Lemcon Americas: DAS is a massive trend. Carriers
are very interested in enabling 4G LTE connectivity
especially in the areas of high concentration like
shopping malls and stadiums.
We are currently developing a project to install and
own the DAS in a shopping mall which will give us
the opportunity to lease to various carriers, like a
small scale tower company.
Moreover, we are in talks with Claro to cover
their shopping mall project. You see, carriers have
agreed to enable 4G LTE throughout Brazil but
obviously they will start from the areas where there
are more business opportunities, hence the high
concentration ones.
Another growing trend is to enable Wi-Fi in
stadiums, especially in Brazil due to the World Cup.
Stadium projects are very exciting and relatively
easy to develop as we are focused on one site only at
any given time.
We have already completed one stadium in Bahia,
Arena Fonte Nova which took us approximately five
months. Sometimes these projects can actually take
even less time. The average is between three and
five months.
And Comba got four new World Cup stadiums which
we hope to get the contract to built the DAS system.
TowerXchange: On that note, can the World
Cup’s hosting cities be connected to 4G LTE on
time, as planned by the government?
Lemcon Americas: I am not sure if we will achieve
100% coverage in all the cities. It is more likely that
carriers will guarantee coverage in the central areas
and stadiums.
45
“
“
we are actively involved in the
deployment of 4G LTE in those
cities but we haven’t seen huge
investments from the carriers
in 2013
We are actively involved in the deployment of
4G LTE in those cities but we haven’t seen huge
investments from the carriers in 2013.
Some carriers are finding alternative ways to
enable 4G LTE that don’t necessarily involve huge
investments. For example, TIM and Oi as well as
Claro and Vivo have entered into an agreement to
share the LTE network rather than creating two
separate ones.
Personally, I think that Brazil is far behind the US
in terms of 4G coverage, let alone LTE. I have a
software called Netcover to detect the presence of an
LTE network and there aren’t many sites covered to
date.
That said, we are expecting a great start of 2014
from a business standpoint. And we are ready to
serve our customers to achieve coverage targets
ahead of the World Cup
Lemcon Americas has over 300 staff supporting over
20 project management and implementation services
for telecom network projects across North, Central and
South America.
Lemcon can help carriers and towercos with any aspects
of GSM, UMTS, WiMAX, LTE, Wi-Fi or DAS network
deployment and management on a turnkey basis.
To contact Lemcon Americas, email Alexandre Tude at:
[email protected]
www.lemcon-americas.com
XX
Special Feature:
DRC case study
How do you deploy and manage a distributed tower
network in a 2.3mn sq km country with only 2,700km
of paved roads? In a country where the grid doesn’t
extend far beyond the three major cities (Kinshasa,
Lubumbashi and Goma)? And in a country that
continues to be beset with conflict in the East?
The pragmatic approach that has enabled Helios
Towers DRC, mobile network operators and
local turnkey infrastructure providers to thrive
in the challenging but rewarding DRC market
was discussed at an insightful round table at the
TowerXchange Meetup. Some of the advice and
recommendations from that discussion, as well as
a snapshot of the current state and future potential
of the tower market in the DRC, are shared in this
special feature.
However, we open with BMI’s excellent analysis of
the risks and rewards for investors, operators and
suppliers targeting Africa’s third most populace
country.
In this special feature:
48 BMI: Country risk factors weigh on
investment strategies
52 Democratic Republic of the Congo case study
XX | TowerXchange Issue 6
| www.towerxchange.com
47
Country risk factors
weigh on investment
strategies
Guest columnist Kenechi Okeleke examines the risks and
rewards of investing in the tower industry in the DRC
Keywords: BMI Analysis, MNOs,
Towercos, Research, Market
Overview, Investment, Capex,
Opex Reduction, Tenancy Ratios,
Market Forecasts, Bankability,
Country Risk, Sale & Leaseback,
Africa, DRC, Vodacom, Airtel, Tigo,
Orange, Supercell, Africell, MTN,
Viettel, Helios Towers Africa, Eaton
Towers, BMI
Kenechi Okeleke, Senior Analyst, BMI
< Scale and growth opportunities for the tower industry in DRC; high population, low but fast
growing subscriber base
< The market share of the DRC’s six MNOs and prospects for MTN or Viettel to enter the market
< How declining ARPU and high opex and capex are driving efficiency improvements such as
infrastructure sharing
< Political and macroeconomic risks in DRC
< How a vibrant independent tower market could help MNOs ride out political and economic storms,
rewarding towercos with high tenancy ratios
From a purely telecoms perspective, the Democratic
Republic of the Congo (DRC) is one of the most
attractive markets for investment in Sub-Saharan
Africa. The country has the third highest population
in region, after Nigeria and Ethiopia, but one
of the lowest penetration rates at 36.8% at the
end of September 2013, according to BMI data.
Furthermore, the intense competition between
six active operators in the mobile market, four of
which are backed by major regional players, creates
significant opportunities for vendors and other
third-party service providers, including tower firms
and their suppliers. However, the market is not
for the faint-hearted given the myriad of country
risk factors at play. BMI expects these factors to
play a major role in the financial and operational
strategies of firms throughout the entire
value chain of the telecoms sector.
DRC mobile market overview - major
regional operators in the fray
There are six active mobile network operators in
the DRC - Vodacom, Airtel, Tigo, Orange, Supercell
and Africell. Based on market data published by the
operators, BMI calculates that there were around
24.9mn mobile subscriptions in the country at the
end of September 2013. This means growth of 31.7%
in the first nine months of the year, albeit from a
low base. We expect this trend to continue over our
forecast period to 2017, but caution that there are
considerable risks to our outlook. BMI’s current
forecast expects the number of mobile subscriptions
and the country’s mobile penetration rate to reach
30.6mn and 40.7% respectively by the end of 2017.
XX
Fierce Competition
Under pressure: Vodacom monthly blended ARPU (US$)
BMI calculations also show that Vodacom currently
leads the market with a share of 35.4%, while
Supercell lags the market with a share of just
2%. It is worth mentioning that available market
share statistics are skewed by the different metrics
employed by the operators in calculating the
number of active subscriptions. For example, Tigo
uses a 60-day definition for active subscriptions,
while Orange and Vodacom use the 90-day
definition. The newest market entrant Africell
said its subscriber base reached 2.4mn eight
months after it launched commercial operations
in November 2012, a figure that could be heavily
discounted if measured against a narrower
activation period.
6
4
2
0
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
Q313
Source: BMI, Vodacom
DRC Mobile Operators By Market Share (%),
September 2013
2%
9.7%
Supercell
Africell
7.7%
35.4%
14.6%
Orange
Tigo
Airtel
30.6%
Vodacom
Source: BMI, operators
There is a strong likelihood for another major
regional player to enter the market in the future,
possibly through consolidation as opposed to
launching greenfield operations. While Vodacom
has settled its dispute with its local partner and
now wants to remain in the market over the long
term, Supercell remains an acquisition target.
The operator continues to underperform in the
market, despite launching commercial operations
in 2002, mainly due to its limited network coverage.
Supercell is active only in the eastern cities of Goma,
Bukavu and Uvira and would need significant
capital injection and technical expertise to expand
its network and improve its competitiveness in
the mobile market. MTN has been open about its
interest to enter the market through consolidation
having previously expressed interest in Supercell
and Vodacom’s stake in its local joint venture.
Vietnam’s Viettel is another operator that could
consider entering the DRC market if the opportunity
arises.
Efficiency improvement tops strategy list
The DRC’s large population, albeit predominantly
rural, points to significant subscriptions growth
49
opportunities for mobile operators. This could
be matched by considerable revenue growth in
the long term from data services and corporate
solutions in view of the rising demand for those
services on the back of the country’s resourcedriven economic growth. However, a combination
of declining ARPUs, owing to fierce competition
in the voice market, and high capex and opex,
owing to the country’s geography, poor social
infrastructure and security challenges, makes
it inevitable that operators will prioritise cost
efficiency in their operational strategies.
BMI believes that the need to manage costs and
expand network coverage to underserved areas
will be a major driver for infrastructure sharing
services in the telecoms market. Helios Towers
Africa was the first independent tower firm to
move into the market following a deal with Tigo in
late 2010. The firm would be keen to add Vodacom
DRC to its portfolio following a deal with Vodacom
Tanzania in July 2013. Eaton Towers is likely to join
Helios in the market if it extends its relationship
with Orange into the DRC. Eaton is already working
with the operator in Uganda and Kenya.
Underperforming regional peers
Country risk will influence investment
decisions
Although the crushing defeat inflicted by UN-backed
Congolese troops on the M23 rebels offers hope
that Kinshasamay succeed in imposing government
control over the chaotic province of North Kivu,
it remains to be seen whether President Joseph
Kabila’s unpopular government can enact the
sweeping political and economic reforms necessary
to address the underlying causes of conflict in the
war-torn region.
The DRC presents a wide range of political and
macroeconomic risks, almost on the same scale as
its opportunities, which investors along the entire
telecoms value chain would need to factor into their
strategies and growth projections. Some of these
factors as analysed by BMI’s Country Risk team are
highlighted on the right:
GDP Per Capita Of Top Three Most Populated African Countries (US$)
3,000
2,000
1,000
2010
Nigeria
2011
Ethiopia
2012
2013f
Congo (DRC)
M23 defeat no panacea for peace
2014f
2015f
2016f
2017f
f = BMI forecast. Source: BMI
Falling commodity prices weigh on
economic growth
Economic growth in recent years has been heavily
dependent on the mining sector, which we predict
will see slower expansion over the coming years.
This is due to a rising statistical base as well
as lower commodity prices, which will deter
investment in an economy that remains unstable
and difficult to operate in. We predict that real
GDP growth will fall from the 7.9% that we are
forecasting for 2013 to just 6.0% in 2014, and that
XX
Weak State institutions
Huge distances, a largely nonexistent transport
network, and a weak administrative structure mean
that the Congolese central government has limited
authority in many outlying areas. Some regions in
North Kivu are under the direct control of rebel
groups that have displaced government forces. In
more stable provinces, local governments often
disregard national policies and enforce their own
laws. This is especially common in copper-rich
Katanga, which has refused to implement policies
that it sees as harmful to the mining sector.
Unbalanced economy
Though the DRC has experienced rapid GDP
growth, BMI stresses that the country’s economy
remains highly fragile and that growth has been
far from inclusive. Given the economic disaster of
the 1990s, the country only regained its 1990 level
of production in 2012. GDP per capita remains
among the lowest in the world, and we predict
that the gap between Congolese GDP per capita
and that of Sub-Saharan Africa will continue to
diverge. It is also important to note that growth is
highly dependent on the mining sector, making the
economy vulnerable to shifts in commodity prices.
This dependence on the mining sector also means
that much of the past decade’s economic growth had
a minimal effect on much of the population. The
formal economy is small, constraining government
revenues and causing widespread unemployment.
Growing demographic stresses
One reason why the DRC’s per capita GDP growth
has been so slow is that the country’s population
is expanding rapidly. This offers an economic
opportunity as not only is the total population
growing, but the share of Congolese people in the
‘economically active’ period of their life (aged 1564) is also. This will create a surging workforce,
and could boost growth. Unfortunately, given the
fact that BMI expects the growth to be driven by
the capital-dependent mining sector, a growing
population will contribute to rising unemployment.
Given the weakness of the Congolese formal
economy, we believe that youth unemployment
will remain endemic, especially in urban areas.
BMI notes that high levels of unemployment and
disenfranchisement among youthful populations
are a powerful predictor of social instability.
DRC risk/reward - a tough balancing act
The extreme nature of the opportunities and risks
in the DRC market makes an assessment of the
country’s risk/reward outlook a tough balancing
act for investors. Considering the consumer-centric
nature of the telecoms market, BMI believes that
network operators would maintain their interest
in the market and find ways to ride out different
political and economic storms. This may include
a long-term strategy to minimise their stock of
physical assets, such as telecoms towers, in order
“
“
economic expansion will remain in the 5.5%-6.5%
range for the duration of our 2013-2017 forecast
period.
BMI believes the size of the DRC
market - geography and population would support multiple independent
tower firms, we caution that the
risks of operating in the country are
significant
to focus on the provision of core telecoms services.
However, this would require the existence of a
vibrant and reliant independent tower market
capable of taking on the risks of managing physical
assets across the country, including the less stable
regions.
Although BMI believes the size of the DRC market geography and population - would support multiple
independent tower firms, we caution that the risks
of operating in the country are significant and
partly explain the seeming lack of appetite by tower
firms to expand into the market despite its growth
potential. On the positive side, tower firms that
do make it into the market can look forward to a
relatively high tenancy rate given the large number
of operators and other communications service
providers in the country
www.businessmonitor.com/bmo
51
Democratic Republic of the
Congo case study
Tower industry thriving despite challenging logistics and conflict in the East
Participants in the DRC round table at
the TowerXchange Meetup were treated
to insights from local operators, turnkey
infrastructure contractors and the
encyclopedic knowledge of Helios Towers DRC
Chief Commercial Officer Jeffery Schumacher,
who moderated the discussion. Respecting the
Chatham House Rule and not disclosing the
source of insights, here we share some of the
key lessons learned about one of Africa’s most
attractive and challenging tower markets.
Keywords: TowerXchange Meetup Review,
Towercos, Market Overview, 3G, Fuel Security,
New Market Entrant, Leasing & Permitting,
Regulation, Country Risk, Off-Grid, Logistics,
Warehousing, Infrastructure Sharing, Africa, DRC,
Africell, Airtel, Africa Towers, Orange, Supercell,
Tigo, Vodacom, Camusat, QTE, Leadcom, MER
Telecom, Reime Group, Helios Towers Africa
< Import delays, inland logistics challenges and cost implications
< A snapshot of current tower networks in DRC, plus targets for expansion of the network
< Grid availability in Kinshasa, Lubumbashi and Goma, with the majority of towers elsewhere off-grid
< Introduction to real estate law, leasing and permitting in DRC
< The specific impact of conflicts in the East of DRC on the tower industry
Introduction to DRC
The Democratic Republic of the Congo is one of the
poorest countries in the world - BMI had GDP of
US$292 per capita in 2012. The population of DRC
is 75.5mn (Source: CIA Factbook), with different
definitions suggesting the urban population is
between 35 and 50mn. The GSMA reports GSM
penetration in DRC is at 17.5% and subscriber ARPU
at US$6.
With only 2,700km of paved road in a 2.3mn sq
km country, inland logistics in the DRC are often
dependent on plane or boat, and the cost of a
delivered litre of diesel at a cell site is doubled by
logistics costs, compounded by the challenges of a
rainy season that effectively lasts nine months of
the year. The last mile is often a lot more than one
mile, and may require transportation by canoe and
the help of local villagers.
The DRC’s five major mobile network operators
(Africell, Airtel, Orange, Tigo and Vodacom) compete
keenly for market share in the capital Kinshasa,
where ARPU is significantly higher than the rest of
the country thanks to the presence of an affluent
minority. A sixth operator, Supercell, is active in
Eastern cities. The copper belt mines in Katanga
make the region attractive for MNOs. Mbuji-Mayi
is relatively underserved in terms of coverage. The
Kivu province remains war torn, but there is some
economic growth and the political climate looks
more promising than two years ago.
3G was launched in 2012, stimulating demand for
infill sites in the DRC.
XX
Orange invested US$95m in network upgrades in
the first year after it’s acquisition of CCT in October
2011.
Vodacom has proved the potential for substantial
growth in DRC, growing it’s subscriber base by
36.6% in 2012.
There has been speculation suggesting MTN may
enter the DRC market, but with limited spectrum
available, acquisition would seem the most likely
route for any would-be new market entrant.
Nonetheless, Africell entered the market recently
and swiftly secured significant market share,
particularly in Kinshasa, thanks in no small part to
tenancies on independently owned towers.
Africell made waves by competing aggressively
on price. Tariffs in DRC remain around 12-13 US$
cents per minute at time of writing (October 2013),
but have come down 20-30% in the last year.
The last mile is often a lot more than one mile, and may require transportation by canoe and the help of local villagers (image courtesy of Camusat)
Towers and tariffs
There are around 3,500-4,000 base stations in
DRC. It’s estimated a further 3,000 base stations
would be required in order to increase mobile
penetration to a targeted 50-60% within three
years.
The sheer size of the DRC necessitates tower
sharing, with bi-lateral swaps commonplace,
although co-locations on independently owned
towers are fulfilled more quickly and are backed
by SLAs governing uptime. Helios Towers Africa
acquired 729 towers from Tigo in 2010 paying
US$45mn, with Millicom retaining 40% equity.
Helios Towers DRC’s shared sites are mainly in
urban areas, with around half in Kinshasa. Helios
has a strong appetite to build more towers in DRC.
Vodacom’s network is somewhat more rural, as
is Airtel’s, which is generally acknowledged to
have the biggest presence and coverage in DRC. It
is believed tenancies on Airtel’s towers are now
being marketed on a cash agreement basis rather
than swaps, a possible precursor to the full launch
of Africa Towers in the DRC.
The government and World Bank propose to
start connecting fibre along the SNEL power line
between Kinshasa and Lubumbashi.
Power
DRC has significant hydropower resources, with two
large dams on the Congo River. However, currently
only one of the five turbines is operational - fixing
the others would treble capacity, although the
substations may prove inadequate.
There is typically 20 hours per day of good grid
available in Kinshasa. Elsewhere power is at 140v,
53
Pros and cons for the tower industry
While it can be tough to identify the real land
owner and to track down complete documentation
relating to leases in the DRC, foreign companies
are permitted to own land, which is preferable
for the protection of assets. Permitting may not be
swift, but permits are issued automatically if not
granted within a certain number of months, again
advantageous to towercos.
While forex risk is always an issue, the local
currency is pegged to the USD which hedges the risk
somewhat.
Implications for tower industry
suppliers
Import and clearing through Matadi port is
challenging - shipments from South Africa are
reported to take 4-6 weeks. As a result, the delivered
cost of a US$10,000 battery might be US$18,000
in DRC. This makes the choice of import partner
critical. Needless to say, premium static assets and
power solutions can be prohibitively expensive by
the time they arrive in DRC.
The challenges of import and inland logistics in
DRC make it incumbent upon tower operators to
maintain a substantial inventory of spare parts and
complete towers.
The majority of towers in urban areas of the DRC
are 50m, with 70-80m towers used to accommodate
microwave dishes on transmission towers.
Established pan-African turnkey infrastructure
companies with a presence in the DRC include
Camusat, QTE, Leadcom, MER Telecom and Reime
Group.
Security considerations
Conflict in the East of DRC has resulted in
intermittent militia roadblocks, and other
significant interruptions to logistics, but nothing as
significant as the siege of Goma in 2012. Ongoing
tension between militia groups has resulted in a
number of towers being offline. Isolated instances
of tower sabotage have been reported.
Fuel theft is a problem in DRC, with local tower
operators reporting pilferage initially over 30%,
subsequently halved by the installation of RMS.
Significant though they are, security problems have
not been prohibitive to tower operators achieving
profitability targets in DRC.
Conclusions
The independent towerco business model has
delivered considerable value to the ICT sector in
DRC, and Helios Towers DRC seems to be thriving,
if the usual metrics are anything to go by. There are
plenty of towers with three or more tenants.
With a culture of tower sharing in DRC, substantial
“
With a culture of tower sharing
in DRC, substantial network
extension and densification
required, plenty of creditworthy tenants, and a very long
runway for subscriber growth,
independent towers have a
major role to play
“
single phase, and needs line conditioning. There
is typically 12-14 hours of grid availability in
Lubumbashi and 8-10 hours in Goma. Cell sites in
the majority of the rest of the country are off-grid.
Solar is part of several tower operators’ strategies in
DRC, but has not yet been widely deployed.
network extension and densification required,
plenty of credit-worthy tenants, and a very long
runway for subscriber growth, independent towers
have a major role to play, whilst remaining mindful
of the significant country risk. With Africa Towers
potentially bringing the Airtel towers to market in
DRC, operators considering selling their towers in
DRC would be well advised to do so sooner rather
than later to avoid their assets becoming stranded
on the balance sheet.
In August 2013, TMT Finance has reported that
Orange had commenced a process to sell its towers
in the DRC
XX
Special Feature:
Towerco perspectives: the
emergence of the middle
market towerco in Africa
Africa’s ‘Big four’ towercos, American Tower, Eaton Towers, IHS and Helios
Towers Africa, dominate bidding for portfolios of 500+ towers in African
countries offering scale and growth, as you’ll see from the latest TowerXchange
Tower Count. TowerXchange asks; is there an opportunity for ‘middle market’
towercos, targeting smaller or higher risk markets? Or for developing business
models to lower the ‘glass ceiling’ of rural connectivity?
In this edition, TowerXchange examines examples from two distinct breeds of
new entrant towerco; build-to-suit startups and rural infracos.
Connect Africa are leveraging low cost, low energy base station technology to
prove their passive and active infrastructure sharing strategy in Zambia, with
ambitions to deploy 2,000 cell sites in the next 30 months.
Meanwhile Africa Mobile Networks (AMN) are evangelising a similar revenue
sharing, rural infraco business model, and have broken ground at their
first site in Benin. AMN are targeting a presence in at least a dozen African
countries. Could these and other rural infracos play an important role in
connecting the 300mn Africans who have no mobile services?
Finally, we also chat with Sibysiso Mvelase, Chairman of Infratel, a new
towerco with ambitions to build 100 towers per year in Southern Africa.
Don’t miss:
57 Updated independent tower counts and transaction history for Africa
58 The prospects for ‘middle market’ towercos in Africa
61 Connect Africa’s proof of concept for rural infracos
66 AMN helping operators connect 108mn new subscribers in rural Africa
73 New towerco Infratel prepares to launch in Southern Africa
55
Updated independent tower
counts and transaction
history for Africa
Count differentiating towers that are
owned from those that are managed and
marketed by towercos
10000
8000
Estimated number of towers owned or managed by towercos in Africa
Source: TowerXchange research, quarterly filings, site lists
American Tower
1931
Helios Towers Africa
750 750
Eaton Towers
700 700
2435
2230
1800
2449
1000
720
Unknown Country
965
6000
Uganda
1120
Tanzania
South Africa
751
4000
Nigeria
Ghana
100
DRC
Cote d’lvoire
250
4700
2000
3500
Cameroon
1300
Kenya
MTN, Orange
Nigeria, Cote d’Ivoire, Cameroon,
Sudan, South Sudan
American
4,851
Cell C, MTN
Ghana, South Africa, Uganda
Helios
4,700
2,500
Millicom, Vodacom
Tanzania, Ghana, DRC
Eaton
Vodafone, Orange, Warid
Ghana, Uganda, Kenya, South Africa
SWAP
1,459
Starcomms
Nigeria, Ghana, Cote d’Ivoire
Helios TN
1,300
Multi-Links
Nigeria
800
To
we
rs
8,250
0
fri
ca
IHS Africa
1300
SA
10000
IH
8000
He
Af lios T
ric
a owe
rs
6000
To
we
r
4000
eri
can
2000
759
Am
Helios Towers Nigeria
1700
Ea
ton
700 509
4851
He
Ni lios T
ger
ia ower
s
SWAP Technologies
4750
Sudan & S Sudan
700
S
no WA
log P
ies
1900
Te
ch
IHS Africa
Filled bars = Owned Towers
Unfilled bars = Managed and marketed towers
57
The prospects for ‘middle
market towercos’ in Africa
Are second tier towercos investible?
By Kieron Osmotherly, CEO, TowerXchange
A hot topic on two round tables at the recent
TowerXchange Meetup was the potential for a ‘middle
market’ of towercos in Africa. Does the aggressive
bidding and accumulated experience of Africa’s “Big
Four” towercos preclude new international, local or
niche towercos from acquiring assets? Could new
entrant towercos target markets too small or too risky
to attract interest from the “Big Four”? Could debt and
equity capital be accessed by niche towercos targeting
BTS opportunities in urban areas, or by ‘rural infracos’
managing passive and active infrastructure and building
low energy cell sites in rural areas?
Keywords: TowerXchange Meetup Review, Towercos, Investment, Build-to-Suit, First Mover Advantage, Exit
Strategy, Bankability, New Market Entrant, Country Risk, Anchor Tenant, Sale & Leaseback, Private Equity,
Debt Finance, Africa, North America, Standard Bank, Infratel, Sworn, Pro Hi Site Communications, SWAP
Telecoms, Helios Towers Nigeria, TowerCo of Madagascar, Connect Africa, AMN, Rural NetCo, Atlas Tower,
Frontier Tower Solutions
< Five different breeds of African middle market towerco
The role of ‘middle market towercos’ in more
mature tower markets - a comparison with the US
One always has to be cautious when comparing the
mature tower market in the US with the relatively
immature tower market in Africa, but perhaps it
provides a hint as to how middle market towercos
could fit into the African tower industry.
While the US market is dominated by it’s ‘Big
Three’, Crown Castle, American Tower and SBA
Communications, who between them operate 81.6%
of independent towers, Wireless Estimator counts 89
different towercos in North America that own 10+
towers. Source: www.wirelessestimator.com/t_content.
cfm?pagename=US-Cell-Tower-Companies-CompleteList
These US middle market towercos fall into two camps;
some buy and hold telecom towers satisfied with
the solid cash flow they yield, others are built to be
sold. Much depends on the investment horizon and
source of capital. If they are built to sell, the hold
might be five to seven years, whilst the towerco builds
value through the lease up rate. There are several
consolidators eager to gobble up middle market North
American towercos but, despite a healthy volume
of acquisitions, the middle market category keeps
growing at a steady rate - well connected local tower
developers always have pipeline of 50-100 sites they
can build on when needed.
< How middle market towercos fit into the North American tower industry
< Reasons for operators’ scepticism about the credibility of middle market towercos as bidders
< Opportunities in smaller, higher risk markets or with second tier anchor tenants
< Last mover disadvantage - should anyone be interested in late to market towers?
A lot of these North American middle market towercos
have their roots in relationships with one of the
carriers, for whom they may have initially built to suit
a dozen or so towers. If a regional RF manager has
XX
Different breeds of ‘middle market towerco’
Regional, urban-focused
tower operators acquiring
individual sites on a
build-to-suit (BTS) basis,
typically prompted by the
requirements of an anchor
tenant
TowerXchange categorises the African middle market towercos into five broad categories:
Larger countrywide towercos,
often initiated through
acquisitions from tier two
operators but growing
through BTS, and driving
toward tower counts in triple
or low quadruple digits
‘Rural infracos’ managing
active as well as passive
infrastructure and specialising
in provision of low capex,
low opex, high autonomy
Aspiring new market
entrants established in
International markets and
seeking to transfer their
expertise to Africa
Managed service providers
leveraging their experience
of constructing, fueling
and maintaining cell sites
in Africa, and seeking to
‘move up the value chain’
to own and market towers,
following a similar strategy
to IHS
E.g. Atlas Tower (see page
24 of issue 2), Frontier
Tower Solutions (see page
59 of issue 5)
Confidential - but
TowerXchange are tracking
several such companies
sites, usually dependent on
renewable energy, for lower
ARPU areas. ‘Rural infracos’
typically operate on a revenue
share basis
E.g. Infratel (South
Africa) (see page 73 of
this edition), Pro Hi Site
Communications, SWORN
E.g. SWAP Telecoms (see page
45 of issue 4), Helios Towers
Nigeria (see page 40 of issue
4), TowerCo of Madagascar
(see page 54 of issue 5)
E.g. Connect Africa (see page
61 of this edition), Africa
Mobile Networks (see page 66
of this edition), Rural NetCo
a hole in his coverage, he may go to his trusted local
The leaders of the African tower industry’s views
portfolios. Though these portfolios may have lesser
towerco to lease from a their site if they have one, or
Opportunities for middle market towercos were
quality anchor tenants,” summed up Standard Bank’s
he may bring them the BTS contract.
debated passionately at the recent TowerXchange
Nina Triantis.
Meetup Africa. Round table host Nina Triantis,
TowerXchange wish to acknowledge the contribution
Managing Director and Global Head of Telecoms and
“Key considerations against investment in second
of Ryan Lepene, Managing Director of Peppertree
Media at Standard Bank, summarised discussion on
tier towercos were their African track record and
Capital, who kindly shared his views of how the
her ‘Investibility’ round table.
relationships, particularly as the continent is not
middle market of towercos functions in the US.
homogeneous as the US, and whether the big operators
Peppertree has invested in or acquired over 2,500
“There was scepticism among established towercos, as
would entrust the running of their infrastructure by
tower sites across 17 different towercos, mostly in the
well as some other parties (including operators), as to
the new entrants,” continued Standard Bank’s Nina
US, and they specialise in towerco investments in the
whether there is really room for second tier towercos.
Triantis. “Another consideration would be funding,
US$10-70mn range, hence their expertise in this topic.
But there was consensus that the ‘Big Four’ will not
both equity and debt, as even the existing players
want to venture everywhere (also due to the issue of
had to put some effort to get to the funding position
So, the question remains, is there a role for middle
management capacity) and therefore, there should be
they currently enjoy. It is possible that there would
market towercos in Africa?
opportunity for others to acquire and manage other
be other pockets of money for these new players, for
59
example from the US who are very familiar with the
Airtel’s towers coming to market, TowerXchange
African country now comes from their anchor tenant,
tower model and its success.”
counts over 30,000 towers (worth approximately
diversification achieved in less than three years since
US$2-3bn) coming to market in Africa. But not all
acquiring the towers. However, the credit worthiness
We should emphasise that Nina Triantis is
those towers are in countries that meet the ‘Big Four’s’
of anchor tenants remains critical to the emerging
summarising a round table debate featuring over a
different criteria, and some are in markets perceived
market tower industry - cautionary tales can be found
dozen participants in her remarks in this article. As
to have substantial political and sovereign risk.
in Nigeria where the financial difficulties of CDMA
operators were disruptive for the local towercos.
such Nina’s words don’t necessarily represent either
her personal opinion or the views of Standard Bank.
There certainly seem to be markets where country
risk precludes American Tower’s interest, but Helios
Last mover disadvantage
Operator scepticism about middle market towercos
Towers Africa is in DRC and IHS is in Sudan, so the
Representatives of the ‘Big Four’ seem to agree that
Let’s analyse the conclusions Triantis reported from
‘Big Four’ have been active in markets affected by
‘first mover advantage’ for operators selling towers
the TowerXchange Meetup round table, starting with
conflict.
is largely a myth - second movers can realise value
from their assets. But there is a risk of ‘last mover
established players’ scepticism that there is room in
the market for second tier towercos.
Perhaps a better gauge of the ‘Big Four’s’ interest in
disadvantage’ for operators who wait too long to bring
acquisition opportunities is a simple tower count.
their assets to market, especially if their network
One operator TowerXchange spoke to suggested that
Given the number of substantial tower transaction
rollout mirrored competitors’. Late to market towers
smaller towercos were not credible bidders because
opportunities on the market and coming to market in
seem to hold little interest for the ‘Big Four’ - while the
they wanted to know their towerco partner would
Africa (see the Tower Transaction Heatmap on page
opportunity might be there, should a middle market
still be around in ten plus years. They felt that new
20 of this edition), it’s difficult to see the ‘Big Four’
towerco really consider acquiring assets under such
entrant towercos in Africa would be a pure private
taking the time to do the due diligence on a portfolio
circumstances?
equity-play, picking up a “few crumbs” in terms of
with a tower count in double digits. There may be an
assets in smaller or higher risk markets, with a view
opportunity for ‘middle market towercos’ to acquire
Investibility
to quickly adding tenants then selling to one of the ‘Big
and consolidate assets in smaller markets.
By way of a conclusion, what does this all add up to
in terms of the prospects of middle market towercos
Four’. The operator suggested they had a willingness
to take tenancies on towers built by new entrants,
Counterparty risk
securing funding, both equity and debt? Cautious
particularly in rural areas, but didn’t see them as
What of the suggestion that sale and leaseback
investors are going to want to see proof of concept
viable partners for a substantial sale and leaseback
opportunities accessible to middle market towercos
before they commit limited capital, debt will not be
transactions. Middle market towercos clearly have a
may have “lesser quality anchor tenants.” With few
cheap or they’re likely to want substantial equity.
long way to go to achieve the scale to become credible
second tier MNOs profitable in Africa, substantial
But there are investors with an appetite for smaller
bidders.
consolidation is forecast among the 176 operators in
emerging market tower acquisition opportunities and
the region.
BTS startups. I think we’ll be counting the towers of
10-12 African towercos in our tower count (see page
Sale and leaseback opportunities
Next, let’s examine the “consensus that the ‘Big Four’
Adding more tenants offers towercos an opportunity
57) by this time next year - there is a middle market
(American Tower, Eaton Towers, Helios Towers Africa
to diversify from counterparty risk; one towerco
for towercos in Africa, but it’s a high risk opportunity
and IHS) will not want to venture everywhere.” With
reported that less than half their revenue in one
until the concept is proven
XX
Proof of Concept for
Rural Infracos
The origins, business model, funding and future plans of Rural Infraco
Connect Africa
“It’s easy to underestimate how much money is in these rural
areas,” suggests our next interviewee Dion Jerling of Connect
Africa. Rural farmers and communities may not have the
population density to attract coverage from licensed MNOs,
but a new breed of Rural Infraco is emerging to connect and
deliver services to rural Africa. Connect Africa has two low
power, low tower base stations installed in Zambia, helping
them perfect a business model and long term roadmap that
targets 2,000 sites across rural Africa in the next 30 months.
Dion Jerling, Director of Special Projects, Connect Africa
Keywords: Who’s Who, Rural Infraco, Towercos, Business
Model, Universal Access, Outdoor Equipment, Off-Grid,
Hybrid Power, Solar, Fuel Cell, Next Billion, Debt Finance,
Community Power, Stakeholder Buy-In, Africa, South
Africa, Zambia, MTN, Vanu, Altobridge, Connect Africa
< Connect Africa’s journey: from mobile services in South Africa to satellite payphones and rural cell sites
in Zambia
< Challenges for those evangelising the Rural Infraco zero capex, zero opex, revenue share business model
< Supplementing rural coverage with VAS and phone charging to engage with local communities
< How Connect Africa’s Service Centres provide a valuable point of presence to reach small scale farmers
< Deploying outdoor lightweight BTS using solar+batteries at a fraction of the cost of traditional macro
infrastructure
TowerXchange: Please introduce our readers
to Connect Africa - where do you fit into the
telecoms infrastructure ecosystem?
Dion Jerling, Director of Special Projects, Connect
Africa: Connect Africa are happy being described
by TowerXchange as a ‘Rural Infraco’. We tend to
describe ourselves as a ‘Rural GSM Carrier’ - we
focus on the rural telecoms market, providing
the infrastructure to carry traffic on behalf of an
existing licence holder.
TowerXchange: What are the origins of Connect
Africa?
Africa: Connect Africa has been operating for 10
years, mostly under the radar.
We started our proof of concept in South Africa
with a mobile services model - a van with a booster
antenna driving from remote village to village,
working with Vodacom Community Services on
airtime sales and added values services. This was
supplemented by MOUs with various municipalities
and provincial governments, who used our vehicle
to transport health, education and municipal
extension officers to the communities we serviced.
Correctional Services showed particular interest our vehicle could carry the necessary biometrics for
parolees to check-in.
As demand for these mobile services grew beyond
what we could provide in a few hours per week, we
developed a mobile trailer concept that could be
61
dropped off for days at a time, until we reached a
tipping point when a permanent connection could
be justified.
TowerXchange: Tell us about Connect Africa’s
recent activity in Zambia and what you’ve
learned.
Africa: Four years ago we moved our focus to
Zambia when we established five satellite payphone
service sites in the Mumbwa area (Central and
Western Provinces) with one in Zambia’s Kafue
National Park, a remote area poorly connected by
infrastructure.
We consulted local chiefs and trained local
operators to ensure good integration with the
local community. The technology was provided in
partnership with Iridium Satellite and Thuraya,
powered by zinc-air fuel cells, which cost less than
a lead-acid battery. This power solution also gave
local micro-enterprises the opportunity to offer
recharging services for fuel cells, which can power
four LED light clusters (which provide enough
light for a typical home) for four hours a day for
a month. Recharging a zinc-air battery would cost
less than the price of candles for a month, and the
power can be used and sold to charge other small
electronic devices such as mobile phones. The
commercialisation of the zinc-air fuel cell concept
is on-going and we are keeping an eye on it as a
possible solution for our base stations in remote
regions where cloud cover often impedes solar
power solutions.
Connect Africa’s mobile service at Monte Christo Village in rural Limpopo
We initially forecast turning over around US$50
per week on the payphones at US$0.40 per minute,
the same as the cell rate in Zambia at the time,
so we put a US$250 credit on one phone - it was
used up in two days - leaving us with a vending
challenge! It would take a week for funds to clear
with the satellite operator before the credit would
be transferred to the pay phone - all part of the
learning curve in rural Africa.
It was also interesting to note that within three
months a macro base station had been erected by
one of Zambia’s biggest MNOs at the same site. The
site was admittedly on a main line of rail but we like
to think we contributed to “rural coverage” being
fast tracked back then.
The satellite payphones portion of our project came
to an end when the satellite firms had to increase
62
Base station vendors Vanu subsequently
contacted us. They were looking to field test their
SuperPico base stations in Africa and together we
implemented a trial site in Lusaka and one in the
farming district of Mkushi. The SuperPico has
since been superseded by Vanu’s CompactRAN and
we now have two of these base stations that have
been running for over three months. Running on a
power requirement of just 80W they are ideal for a
solar+battery power supply and provide a coverage
footprint of up to 5km radius.
TowerXchange: Where is your rollout plan now,
what are the next steps and what is your long
term vision?
Africa: Connect Africa has a full CORE, EMS and
sufficient CompactRAN BTS in stock to move onto
the next phase deployment in Zambia. We’ll use
results from this deployment to perfect our model
and frame commercial agreements that works for
everyone.
We want to get up and running on a solid
commercial basis and only then look at new
countries although we are exploring several
opportunities that have presented themselves in
the region. Our long term roadmap is to deploy
“
We can adapt our business model to accommodate
Universal Service Funds - we can do the installation,
operations, management, backhaul and service
centre, but they (the USF) own the infrastructure.
We want to get up and running
on a solid commercial basis and
only then look at new countries.
Our long term roadmap is to
deploy 2,000 sites in the next
two and a half years
“
their economy rate from US$0.40 back to US$1,
but we’d achieved what we needed, and were able
to propose a network of service centres to our
project partners MTN Zambia, combining electronic
vending and distribution plus mobile money.
2,000 sites in the next two and a half years. Our
partnership with Likusasa, one of Africa’s leading
telco infrastructure specialists, gives us a strong
implementation capability and access to new
regions.
TowerXchange: What is Connect Africa’s
business model and how does interface with
Universal Service Funds, for example?
Africa: Connect Africa has developed a zero capex,
zero opex business model to offer operators a rural
network based on a revenue share. Connect Africa
works on a revenue share, per minute, or managed
service model - the exact combination depends on
the preferences of the operator. We would own the
infrastructure, and would effectively lease it on a
traffic rate to the operators.
The Universal Service Fund (USF) model is
interesting - if it works it would be the perfect
solution, but in reality execution is proving
challenging. As such, we decided we couldn’t hang
our hats on USF - we needed solid commercial
agreements.
TowerXchange: What’s your view on the
maturity of the Rural Infraco category?
Africa: There is a huge rural infrastructure market,
targeted by Connect Africa as well as several similar
operations. It is only recently that technology has
evolved, through the likes of Vanu and Altobridge,
to the point that it should be feasible to sustainably
provide rural GSM coverage.
This sector, rural coverage, is still in its infancy in
Africa with very few working solutions actually
deployed and generating revenue. The Rural
Infraco model is even newer and, like all disruptive
innovations, we have to force a mind shift in a very
traditional business environment. There is much
talk about rural coverage but very little being done
about it.
TowerXchange: What are the main obstacles to
the Rural Infraco business model achieving scale
in Africa?
63
Africa: Our biggest challenge remains the caution of
tier one operators about revenue sharing business
models. Operators are used to and comfortable with
their traditional infrastructure models but there is
growing interest in towerco and managed services
solutions. Deploying US$200,000 traditional macro
infrastructure in low ARPU rural environments
does not make sense and, to date, the rural market
has been of little or no interest to them.
a transformational business model, and climbing a
steep learning curve.
Innovative newcos like Connect Africa have a
challenge to be credible. There is still a skepticism
among operators as to the revenues to be generated
in rural areas - understandable when one considers
that they are used to high urban revenues. We are
where towercos were three years ago - evangelising
Regulators and politicians are also now waking to
the fact that rural areas have been underserviced
for too long so, despite some initial hurdles
experienced with USFs, we can expect some support
for sustainable rural coverage solutions from them
too.
“
Our biggest challenge remains
the caution of tier one operators
about revenue sharing business
models. Operators are used
to and comfortable with their
traditional infrastructure
models
“
Technology is no longer an obstacle. Low power,
solar PV solutions are now proven in the field.
One of our advantages is that Connect Africa is
technology agnostic - we can work with the tier
one OEMs or small, niche, low power equipment
manufacturers - and we can even partner with
other Rural Infracos.
This nature of this clever low power technology
probably explains why we find CTOs more receptive
to our business model. The innovative business
models are however more challenging and
pushback frequently comes from the commercials
being questioned and ExCo being hugely protective
about sharing the technical heart of their business
- sharing revenue is unpopular and active
infrastructure outsourcing is unprecedented. But
rural towers in rare greenfield sites are great for
marketing messages and for regulator relationships.
With GSM licences coming up for renewal in several
key markets with aggressive rural coverage targets,
it’s a good time for operators to consider zero capex,
zero opex business models that extend their rural
coverage in return for a share of the revenues from
Connect Africa Rural GSM Coverage Trial Site - Chief Shakumbila’s village
64
ARPU, rural locations we’re targeting. We can
deploy one of these low power base stations,
along with a Service Centre providing added value
services directly to the local community at a cost
that will ensure sustainability. Maintaining and
adding value to a rural coverage network is what
we do.
There are several credible outdoor lightweight BTS
vendors worldwide. The OEMs have stripped down
versions while Altobridge, VNL and Vanu all have
smaller units. Vanu has developed and built their
CompactRAN from new and they’re all proven in
the field.
TowerXchange: Please explain your Service
Centre concept and how it adds value.
Lloyd, Connect Africa’s local regional coordinator in Zambia, liaising with a Headman, Makunku Village, Central Zambia
traffic generated and delivered.
seeking to attract finance.
TowerXchange: How can Rural Infracos raise
capital?
TowerXchange: Tell us about the power solutions
you’ve used and capital outlay required per site.
Africa: It’s tough for Rural Infracos to raise funds
until we sign substantial contracts - Rural Infracos
need a lot of patience and deep pockets!
Africa: We have low power requirements - 80w for
a single sector 02 TRX omni-directional installation
and 180w for a tri-sector 02dTRX installation. To
date we’ve mainly used solar - four 24v panels and
a set of batteries is usually sufficient, but we’ve
dabbled with zinc-air fuel cells and will consider
any alternative energy solution that works.
With a business model based on revenue sharing,
we have open-ended, unpredictable cash flow,
which makes it difficult for banks to lend against.
We’re at the initial stages, putting our hands in our
own pockets to rollout on a manageable scale in
one or two countries, proving the model, and then
Standard macro base stations are simply too
expensive to be commercially viable in the low
Africa: The Service Centre is how we add value to
local communities and to our clients. Our Service
Centres provide a point of presence for the MNO,
for the government and agricultural services, for
banks and for insurance companies, all struggling
to reach small scale farmers.
There is a considerable cost associated with
providing a service centre so the economics, staffing
and management have to be carefully controlled
and monitored.
The experience of rural “telecentres” in Africa
has not been good and we are looking to change
that. Our rural coverage solution is the catalyst for
this change
65
AMN helping operators
connect 108m new subscribers
in rural Africa
Pioneering access service commissions the first of 200 sites in Benin
Africa Mobile Networks (AMN) has an interesting business
model. They target similar opportunities to conventional
independent towercos, only with the key parameters
reversed! Where towercos provide passive infrastructure
only to tier one MNO anchor clients needing extra
capacity in high value, dense urban areas of established
countries, AMN targets either tier one or tier two anchor
tenants with a proposition that combines active and
passive infrastructure and which focuses on rural areas of
countries with less mature coverage.
Michael Darcy, CEO, AMN
Keywords: C-Level Perspective, Towercos, Active Equipment,
Capex, Universal Access, Business Model, Exit Strategy, New
Market Entrant, Tender, Off-Grid, Solar, Procurement, Next
Billion, NOC, Private Equity, Debt Finance, Africa, Ghana,
Benin, Togo, Cote d’Ivoire, AMN
< AMN’s target market: 108mn unserved Africans in villages with populations >4,000
< Inside AMN’s procurement process: what they are deploying and why
< Why AMN is getting into the airtime distribution business
< How AMN’s revenue share business model works
< How AMN is financed, their long term vision and exit strategy
TowerXchange: Where does AMN fit in the tower
industry ecosystem?
Michael Darcy, CEO, AMN: AMN is a towerco with a
difference!
AMN is essentially a tower company but managing
the active as well as passive components on a
turnkey basis and taking a share of the risk on
the revenue side. AMN handles O&M and traffic
management - we even handle airtime distribution!
We deliver traffic to the operator’s switch; they don’t
have to deploy any capex.
AMN provides an access service to connect an
operator to their own subscribers, enabling
operators to increase their penetration deeper into
rural communities.
TowerXchange: How would you describe the
market segment AMN is addressing?
Michael Darcy, CEO, AMN: About two thirds of the
population in Sub Saharan Africa (SSA) are served
by the mobile industry today. But 300mn Africans
have no service whatsoever. In the next five years,
200mn of that remaining 300mn population will
be served - representing a US$4bn revenue annual
market. We divide those 300mn people into three
groups:
< 100m who are likely to be served by existing
MNOs through normal expansion over the next
two years as they push from high density urban
areas (which are increasingly saturated and highly
66
Benin Market Overview
Population: 9.9mn
Penetration: 85-90%, depending on source
GDP per capita (PPP): US$1,700 (CIA Factbook)
Operator market share in Benin
BBCOM 1,078,625
Glo 1,505,956
Libercom 277,687
Moov (Etisalat)
2,897,644
MTN 2,987,504
(source: ATRPT, June 2013)
competitive) into rural areas in search of growth
them profitably under our business model.
< Around 73mn people who nobody, including
TowerXchange: What has been your progress to
date in your first country, Benin?
AMN, can serve commercially - there are just too
few people spread across too wide an area. These
people should be the focus for the investment of
Universal Access or Universal Service Funds, whose
objective should be to build infrastructure where
nobody else ever will
< AMN is interested in a middle segment of a
little over 100mn unserved people, where we’re
not competing with existing operators today. This
segment is not likely to be served anytime soon, but
there is still sufficient population density to serve
Michael Darcy, CEO, AMN: We aim to build 200
towers in Benin.
We’ve built up some good momentum and are
aiming to have our first site in Benin commissioned
in the next couple of months, achieving our
objective to become a revenue generating company
by the end of the year.
Our first site is in Koabagou in northern Benin, over
500km north of Cotonou. The main settlement has
a population close to 4,000, then the site will also
cover three other communities with populations of
500-1,000, meaning we’re giving access to 6-7,000
people, well in excess of our minimum criteria. This
pilot site will give us key operational data, which
we’ll use to update our models and inform our full
rollout.
TowerXchange: What are AMN’s minimum
criteria for site selection?
Michael Darcy, CEO, AMN: We’re interested in sites
serving a population of over 4,000, with no existing
service whatsoever from operators. That generates
67
of the first “proof of concept” base station in
Benin. Once they grasped the project, Leadcom
decided they wanted to be part of it - they’ll do the
installations, civil works, site surveys and O&M.
Leadcom already had people on the ground in
Benin, and they’re already shipping the tower and
solar EPS.
Altobridge has agreed to ship a BSC and BTS to
Benin together with their engineer to start core
network integration.
enough traffic and enough revenue to make our
business model work.
TowerXchange: Low capex and, in particular,
opex are critical to your business model - tell us
about your procurement process.
broken down into fundamental components:
towers, communications equipment, solar power
systems, VSAT and satellite capacity, which is the
biggest single item in our opex budget.
Michael Darcy, CEO, AMN: Minimising both capex
and opex are indeed critical - over a number of
years opex becomes the dominant component of
TCO.
TowerXchange kindly introduced us to a good
number of very solid potential partners, and we
had over 30 proposals in response to our multiple
RFPs. We do our due diligence to ensure we’re
getting the best value and to ensure we choose
partners we can rely on.
We have a very thorough procurement process,
We selected Leadcom for the turnkey build work
It was interesting to see the differences
between proposals from several different tower
manufacturers. Some quotes at the bottom end
were remarkably close to each other, while we
received other bids that were double the cost of the
cheapest! We gave candid feedback, without giving
away anything confidential, but as a buyer I’m not
going to waste my time negotiating with the most
expensive bidder! From our experience in Ghana,
we know what the market price levels are; once you
know you’re at right level on price, it’s important to
select right partner, not just the cheapest.
TowerXchange: What have you found to be
the more economical approach, buying and
integrating best of breed solutions from each
component category, or buying an end to end
turnkey solution?
Michael Darcy, CEO, AMN: When we sent out our
RFP, we were contacted by a number of suppliers
suggesting they deliver an end to end service. We
encouraged them to take any multiple components
68
“
While a conventional cell
site might cost US$200-250k,
including active components,
we can reduce our capex to 3035% of that figure and TCO to
20-25% by deploying a solution
optimised for rural markets
“
of our RFPs, and to send their proposal. Generally
the end to end proposals were not attractive.
There’s always a tradeoff between the margin a
consolidated turnkey supplier would have to add,
versus buying equipment direct. We thought that
their economies of scale might offset their margins,
but ultimately the end to end service providers
proposals have turned out to be quite disappointing.
So we reverted to Plan A; to do things ourselves!
TowerXchange: What is deployed at a standard
AMN cell site, and what does it cost?
Michael Darcy, CEO, AMN: We undertake a huge
amount of analysis to optimise our approach for
each cell site. While a conventional cell site might
cost US$200-250k, including active components,
we can reduce our capex to less than one third of
that figure and our TCO to 20-25% by deploying
a solution optimised for rural markets. We have
a large, low power cell that runs on solar power
and batteries, so there’s no diesel logistics, which
minimises truck rolls. Our MTBF is 2.5-3 years.
We deploy a two TRX, 2G site, with a lower cost
base that means a lower population can be served
economically, but can expand in a very modular
fashion to add 2G capacity as required and - if
demand justifies - also 3G functionality.
TowerXchange: How has AMN overcome the
transmission challenges of connecting remote
rural settlements?
Michael Darcy, CEO, AMN: When I was previously
deploying rural telephony for one of Africa’s
leading MNOs, they couldn’t economically connect
to settlements as large as 14,000 population because
they would have needed three repeaters just to
get the traffic back, and repeater stations cost
almost the same as a BST since diesel is the biggest
cost. AMN’s sites don’t burn any diesel, and we
use a VSAT link so there aren’t the transmission
constraints you get with microwave backhaul.
For this first site we’ve built a point to point satellite
link with a 2m dish on top of a building in Cotonou,
and a direct link to the switch from there. Our plan
will be to build a mini teleport with a 4.5m dish to
connect to remote terminals on all our planned 200
sites. We are currently evaluating proposals from
Hughes, iDirect and Gilat for the mini teleport in
Cotonou. Both Hughes and iDirect have included
loan of equipment for the p2p link for the first link.
We’re also evaluating VSAT bids - SES and Eutelsat
have both submitted a proposal which includes six
months free of charge capacity for the first site.
TowerXchange: How is the network designed in
terms of equipment onsite in each country and
your Global Network Operations Centre (GNOC)?
Michael Darcy, CEO, AMN: Our network is designed
to have a local gateway in close proximity to the
MNO in each market. We build it, set it up, lock the
door and monitor and manage it remotely from
our GNOC in Milton Keynes, with local technical
support, provided by a company called CBC in
Benin.
I’ve relocated to Milton Keynes, from where we’ll
be managing all our networks. The GNOC will also
oversee traffic management, looking for anomalies,
growth and congestion. Our philosophy is to
minimise duplication of expertise by centralising
these capabilities.
TowerXchange: AMN also get involved in airtime
distribution - tell us how that works.
Michael Darcy, CEO, AMN: When we were rolling
out rural base stations with K-NET in Ghana,
sometimes the infrastructure network would
be extended faster than the retail network, but
we found that even if you don’t make available
handsets, SIMs and airtime, people will find a way!
69
Cash management is crucial in Africa, so we’ve
developed robust business process to ensure
airtime distribution and cash is managed securely.
We’ll recruit three or four independent dealers in
each settlement connected by our base stations.
Each dealer is given unique retailer ID, which they
can use to pay in to an AMN bank account at our
local bank partner. Their account gets accredited
with whatever they play in, plus their margin, then
they use an app on a smart phone to distribute
topups. This ensures a plentiful supply of airtime,
and facilitates cash management, without having to
send people round on scooters to collect cash.
Our margins are around 5% after we’ve paid
dealers - but the margin this isn’t the reason for
getting into the retail business; it’s about ensuring
airtime is available, and becoming a net payer to
the operator at the end of the month, which puts is
in a stronger position in our relationship with the
operator.
“
AMN offers a no-risk, zero
capex, shared revenue model
which offers a guaranteed
positive EBITDA contribution
“
However, making airtime easily accessible will
boost revenues and, since our model is based on a
revenue share, it’s in our interest to ensure there’s
a good distribution channel in rural locations. So
we reached agreement with our operator partner
in Benin that we’ll become an authorised airtime
distributer. Like most of Africa, Benin is dependent
on pre-pay scratchcards, which are subject to costs
of production, physical distribution and retail
margins. So we’re in the process of procuring
an e-commerce platform for mobile topup, to be
electronically integrated with the operator and to
one or more local banks.
TowerXchange: So how does AMN make money?
Michael Darcy, CEO, AMN: We work on a 50-50
revenue share basis.
Operators love that we’ll fund and build the
towers - the revenue share tends to be a longer
discussion! Initially we got a lot of “how about
70-30” counterproposals, but I know at 30% I can’t
even borrow the money. After dealer margins of
5-15%, depending on incentives and promotions,
our operator partners are typically left with about
15% operating profit, and we are at a similar level.
AMN unlocks incremental revenues. To the
operator this is ‘found money’ - connecting areas
with populations of 4,000 people is not in their
business plan. I’ve tried selling rural sites to
operators and towercos in my previous roles,
but their capex is drawn toward higher yielding
investment in additional capacity in dense urban
areas, rather than in connecting rural villages. So
AMN offers a no-risk, zero capex, shared revenue
model which offers a guaranteed positive EBITDA
contribution.
TowerXchange: You have a very different model
from conventional towercos, who tend to prefer
to work with tier one MNOs as the most credit
worthy anchor tenants. How does your different
business model affect AMN’s preferences for
which operators you work with?
Michael Darcy, CEO, AMN: We find that our
proposition is most compelling to the number
two or three operator in a market. For us, the
credit worthiness of the partner operator is less
important than it is for the towerco since we are
willing to manage the airtime distributions and
cash collections up front; all we need is a good
partner with a license and a switch to put the traffic
through.
In Benin, our proposition to our client is to access
the 200 base stations we’re building in rural areas,
and attract around 700,000 additional subscribers,
strengthening and consolidating their competitive
position.
AMN are also interested in working with the
multinational, tier one MNOs, but frankly we’ve
found it easier and faster to build relationships
with smaller entities with local decision making
authority.
70
TowerXchange: Does your model lead to
significant counterparty risk?
Michael Darcy, CEO, AMN: Not really - there’s no
reason we can’t be connected to more than one
operator in any given market. Once we have our
BSC connected to different operators’ switches,
we can connect a BST to an additional operator at
touch of a button, and we’ll already have the airtime
distribution network.
TowerXchange: How does AMN create capital
value? And do you have an exit strategy?
Michael Darcy, CEO, AMN: Investors always need an
exit strategy!
Our business plans show a five-year model making
a couple of hundred million dollar EBITDA, so
creating shareholder value of over a billion dollars.
While AMN are creating infrastructure that
generates revenue and margin - the kind of solid
financial investment that might be of interest to
a towerco or financial investor, my preference
would be an IPO. The AMN topco is a UK registered
company and, once our networks are rolled out
and generating revenue, I’d like to do an AIM listing
- giving an option for a partial or full exit to our
investors. Another option might be local IPOs in
Africa for some of our operating companies.
TowerXchange: What can you tell us about the
financing of AMN?
Michael Darcy, CEO, AMN: AMN already has
access to significant capital, and we plan to raise
US$375mn.
AMN is currently funded with seed capital from
more than one private investor, enabling us to
progress with stage one of our business plan;
business development, engagement with operators,
establishing our local entity (AMN Benin Ltd),
building the proof of concept site in Benin and
bringing it into commercial service.
The investment required to build a network of
200 towers is a different order of magnitude
growth investment, and we’ll be seeking equity
and institutional investors. We’ll also apply to the
debt funds established by DFIs - funds which exist
solely for the purpose of infrastructure investment
in emerging markets. That debt funding is at
competitive rates and can be secured over longer
term periods than normal bank funds. Of course we
can’t secure growth funding until we’ve got a local
OpCo in commercial service and revenue generating
71
“
We plan to replicate what
we’re doing in Benin at least
tenfold. We’re targeting a
presence in a dozen African
countries
“
- for the DFIs it has got to be a growth investment
not a greenfield investment. But if we can prove the
concept with one tower generating US$7,000 pcm,
we can demonstrate that building ten means we can
generate US$70,000 pcm.
TowerXchange: The experience of the
management team is obviously critical to
investors - please introduce our readers to
yourself and your team.
Michael Darcy, CEO, AMN: I have 20 years
experience in mobile and satellite communications,
including nearly 10 years as CEO of the EMEA
business of Hughes Communications, where I
doubled revenues to over US$100mn. Prior to this
I was responsible for the design, development and
launch of digital communication satellites, and
also for managing multiple large R&D projects for
2G mobile communication systems over satellite.
More recently I served as the CEO of K-NET in
Ghana, serving West and Central Africa, where
we developed a model for rural telephony and
deployed base stations for major MNOs. I’m a UK
national with an engineering degree and an MBA.
Simon Watts, our CTO, was my Chief Engineer
at Hughes Europe for 10 years - he’s one of the
world’s foremost experts in VSAT technology. Simon
developed the architecture for the Camelot network
which runs the UK lottery and connects to teleports
in Italy and Germany, as well as large-scale wide
area networks for many tens of blue-chip corporate
clients across the EMEA region. Simon is now
refining the architecture for our total SSA network.
VP Engineering, he also worked with me at
K-NET in Ghana where he was responsible for
implementation and operation of rural base
stations for Tigo and MTN.
TowerXchange: What is your long-term vision for
the expansion for AMN?
Michael Darcy, CEO, AMN: We plan to replicate
what we’re doing in Benin at least tenfold. We’re
targeting a presence in a dozen African countries we’ll respond opportunistically as markets evolve
Terry Reynolds is our Chief Operations Officer.
Terry managed the Camelot delivery with me at
Hughes, installing 28,000 sites in ten months.
We also have a growing team based in Africa,
including our VP Business Development Jules
Dégila, who is a dual Benin and Canadian national,
and got his PhD in Canada. Jules won the contract
for us in Benin, and has opportunities lined up in
Togo and Cote d’Ivoire, which we’ll address after
executing in Benin. Jules does more than business
development - he manages local site acquisition,
negotiates land lease contracts, and arranges local
support partners.
Jules is joined by Emmanuel Pobee on the ground
in Africa. Emmanuel is a Ghanaian national
with a degree in IT and an MBA. Now AMN’s
72
New towerco Infratel
prepares to launch in Southern Africa
Infratel targets building 100 towers per year in South Africa, building
credibility to bid for acquisition opportunities
Sibusiso Mvelase has over eight years of experience
of supplying, constructing and providing power
to cell sites across 16 countries in Africa, and
includes MTN, Vodacom, Etisalat, Econet, Huawei,
ZTE, Telecom Mozambique, Telecom Namibia
and Vodacom among his clients. He’s taking that
experience to launch a new towerco, Infratel. For
an insight into the formative strategies of a new
entrant towerco, TowerXchange spoke to Sibusiso
earlier this month.
Sibusiso Mvelase, Chairman, Infratel
Keywords: Who’s Who, Interview, Towercos,
Construction, Installation, Acquisition, Market
Entry, Build-to-Suit, New Market Entrant, Masts &
Towers, Infrastructure Sharing, Africa, South Africa,
Zimbabwe, Botswana, Zambia, Infratel
< The objectives of new towerco Infratel, targeting building 100 sites per year in South Africa,
Zimbabwe, Botswana and Zambia
< In-house site build, tower and power system design capabilities as a differentiator
< How Infratel is financed
< How Infratel plans to become a credible bidder for acquisition opportunities and a leading
towerco in Southern Africa
TowerXchange: Please introduce us to yourself
and to Infratel.
Sibusiso Mvelase, Chairman, Infratel: Infratel
is headquartered in Johannesburg. Infratel is
a boutique towerco, seeking to build minimum
of 100 sites per year. We’re focused on building
and leasing telecom towers, and we’re looking
at opportunities in South Africa, Zimbabwe,
Botswana and Zambia.
I’ve been selling towers to various operators
and building sites for my clients for over five
years. So we know the market, we understand
telecommunication infrastructure acquisitions,
planning and building, and that gives us an
advantage toward input cost per site. We have
an in-house site build team (RF, power and civil
works), as well as tower and power system design
which gives us an ability to implement faster than
the other tower companies in the market. The
benefits to operators in offering these services
in-house are: faster revenue generation, shorter
site build lead times and consolidated project
implementation.
TowerXchange: Will Infratel focus on sites in
urban or rural areas?
Sibusiso Mvelase, Chairman, Infratel: Our
main focus will be on dense urban areas where
there are capacity problems on a daily basis,
such as Sandton, Fourways and Cape Town.
We are applying for permits in Johannesburg,
Bloemfontein, Cape Town, Durban and
73
TowerXchange: How is Infratel financed?
Sibusiso Mvelase, Chairman, Infratel: We have
an initial fund of US$20m with which to finance
the initial building of towers, but we have access
to a big International investor if the right assets
become available to acquire.
TowerXchange: Is your strategy to build or buy
assets?
Sibusiso Mvelase, Chairman, Infratel: Our initial
strategy is to build sites and build our experience
and credibility as a bidder for sale and leaseback
opportunities. American Tower and Eaton
Towers are already here in South Africa, so the
independent towerco model is familiar. Infratel
is 100% black owned, 100% South African - a
local company providing local services - we
understand the environment, we understand
telecoms, we understand the continent, and we
understand the dynamics of market.
TowerXchange: What is Infratel’s proposition
to landlords and anchor tenants?
Sibusiso Mvelase, Chairman, Infratel: We offer
a complete turnkey tower service programme.
Our team handles everything from marketing to
construction to long-term management. Infratel
has refined a process that requires very little
“
we’d like to grow from our
experiences as a small tower
construction and service
company to become a leading
towerco for Southern Africa
“
Kimberley. We won’t just be deploying towers but
also going aggressively after rooftops and our inhouse street pole solutions.
effort and capex from our landlord partners and
anchor tenants.
TowerXchange: What is the long-term plan for
Infratel?
Sibusiso Mvelase, Chairman, Infratel: We have
a ten year plan to increase the size of our tower
portfolio organically by at least 100 sites every
year, and to be a credible bidder to acquire
existing towers from operators. We’re not
planning to build and sell the company in 4-5
years.
Participate in the
TowerXchange
community
Tower
manufacture
& installation
Investors &
advisers
Tower
Independent
towercos
Xchange
Decision
makers
at
operators
Regulators
& policy
makers
Equipment
& managed
services
Join the TowerXchange LinkedIn™ group at
Infratel is a new market entrant serving an
urban capacity niche, but with the potential to
address bigger opportunities. Like IHS, we’d like
to grow from our experiences as a small tower
construction and service company to become a
leading towerco for Southern Africa
www.linkedin.com/groups/
TowerXchange-4536974
74
Special feature:
From RMS to monitoring and
management platforms, part five
We continue TowerXchange’s review of the leading RMS and site management
systems, which play a critical role in the monitoring and control of distributed
networks such as cell sites.
In this edition, we introduce the new InteliTower solution, a new telecoms
focused offering from AKCP, the world’s oldest and largest supplier of SNMP
monitoring and control solutions. AKCP uniquely integrate access control,
video security and RMS sensors to create an holistic view of events and
intelligence at cell sites.
We also introduce infraSTAT, an analytics based passive operations
management system being used to manage 10,000 towers across Africa.
Finally, we also include azeti’s report on their roundtable at the TowerXchange
Meetup: How to protect your sites from theft of fuel and equipment.
Don’t miss:
77 AKCP’s new InteliTower solution integrates access control,
video security, sensors
82 How to protect your sites from theft of fuel and equipment
85 infraSTAT’s passive operations management system rolled
out by Africa Towers and NSN
Here’s an index of TowerXchange’s RMS and site management vendor profiles
to date: AIO Systems, azeti Networks, Broadnet, Galooli, HMS Industrial Networks,
InfraStat, Inala SAM, Inala Infrastructure Intelligence, Invendis, Kentrox, Qowisio,
Quintica, Tarantula, Telemisis
You can download past editions of TowerXchange free at
www.towerxchange.com/publications
75
AKCP’s new InteliTower
solution integrates access control,
video security, sensors
The world’s oldest and largest supplier of SNMP monitoring and control
solutions launches a new division focused on telecoms
When an alert shows fuel levels have
dropped unexpectedly at a cell site,
would it be useful to have instant
access to live CCTV footage from the
site and employee access records?
Would it be even more useful if that
access control data were stored in
the same system as video, sensor
monitoring and control data?
Nick Barrowclough, VP Manufacturing, AKCP
Keywords: Who’s who, Access
Control, Monitoring & Management,
Fuel Security, Shelters, RMS, Site
Management System, Africa, Americas
(South), AKCP, InteliTower
< The advantage of using a single supplier for access control, video security, sensor management
< How InteliTower ensures retention of sensor, video and access control data during a network outage
< Ensuring scalability by offering modular solutions for access control, power, fuel, video, security
and sensor monitoring
AKCP products are unique in their ability to
integrate remote monitoring and access control.
Decades of experience have taught us how to build
a distributed, intelligent system. Remote control
systems record events and make local decisions
when communications are unreliable. Advanced
central control systems make management of a
large distributed system easy and reliable.
InteliTower benefits from this experience by
focusing on telecoms. The needs of telecoms are
special. High volume, low cost, high reliability
systems are crucial. Telcos need easy management
of large distributed nodes with unreliable
communications. AKCP’s decades of experience
with successful implementation of large
distributed systems gives you the edge to profitably
manage your network.
TowerXchange: Where do AKCP fit in the
telecoms infrastructure ecosystem?
Nick Barrowclough, VP Manufacturing, AKCP:
AKCP uniquely combines access control, video
security, sensor management and control. This
enables operators of multiple remote sites to
integrate video, sensor data and control within
our centralised management software, AKCess Pro
Server.
AKCP launched our InteliTower division
specifically tailored to provide an integrated
solution for remote sites, wireless communications
infrastructure and DAS. AKCP has 30 years
of experience - we’re the world’s oldest and
77
TowerXchange: How would you differentiate
AKCP from other access control or remote
monitoring systems?
There are companies that specialise in EMS
and companies that provide access control and
companies that supply video security, but AKCP
is unique in providing an all-in-one hardware
and software integrated solution. We design and
manufacture our own hardware and software and
we’re excited to launch InteliTower to apply our
unique experience and capabilities to the telecom
tower industry.
Our solutions are developed in-house. We don’t
resell repackaged third party solutions. We are
able to reduce costs and maintain higher quality.
We’re an established business with a large staff of
senior engineers. Our products are manufactured
in our own factories. This means we can be agile
and flexible to react to market need and deliver
customised engineering, such as designing a new
sensor, adding a software feature or integrating
with an existing CCTV system. We integrate with
“
runs through one IP address.
Unifying monitoring control
data in a single piece of
software enables users to
review alerts with access to
synchronised sensor, video and
security events
“
largest supplier of SNMP based sensor and
security monitoring solutions with over 100,000
installations worldwide. Our origins are in
computer rooms and data centers. We developed
the first SNMP based temperature sensors,
adding power monitoring and video security
capabilities. We provide complete cabinet
monitoring integrating video surveillance, EMS,
environmental and security monitoring.
most third part CCTV systems. Remote telecom
sites seldom have IP cameras due to bandwidth
limitations, so our control unit has analogue
camera inputs meaning we can support analogue
cameras too.
TowerXchange: What are the benefits of
consolidating access control, fuel and
environmental data?
Nick Barrowclough, VP Manufacturing, AKCP: One
supplier means one PO and one point of contact to
design and deliver hardware and software. Using
AKCP’s InteliTower solutions means you don’t
have to deal with a chain of suppliers and resellers
- we can solve any problems ourselves. Your site
engineers need be familiar with only one product,
one base unit to setup and power, and everything
Unifying monitoring control data in a single piece
of software enables users to review alerts with
access to synchronised sensor, video and security
events. With our integrated mapping interface, if
there’s an access or sensor event we can flash up
the location, and the user can mouse-over for a
video feed.
TowerXchange: How do you ensure ongoing
access and data continuity in the event of a
network interruption?
AKCess Pro Server uses buffered file transfers.
Anytime the access control database is updated
a copy of the database is distributed and stored
locally at each site on the base unit, so if an
interruption to network communications occurs
access will function as normal. We also continue
to log sensor data, system information and capture
video images on the remote node. All of this
information is then automatically sent to AKCess
Pro when full network connectivity has been
restored.
Similarly, thanks to our centralised management
software, if the site is damaged, or if someone
steals the DVR, the video is backed up in a central
location.
TowerXchange: How can users adapt
InteliTower to meet their changing
requirements?
XX
through which engineers scan in and out. The DCU
connects with a biometric device or RFID reader
- just about any device that uses the Wiegand
protocol for access control.
We can use a variety of different 12v door locking
mechanisms - we provide an electromagnetic lock,
but you can put on a shoot-bolt lock.
Nick Barrowclough, VP Manufacturing, AKCP: If
we have any firmware updates to the base units,
you can update remotely through our software.
Configuring sites is similar - once you’ve optimised
configuration of monitoring and control systems
for one site, you can send that configuration
to all similar sites, and you can backup that
configuration so it can be changed then restored
seasonally.
Our software is customisable for each installation,
so the engineer can see only sites he is managing,
and you can restrict what he is allowed to do.
We have a hierarchical database for access to
information.
InteliTower is a modular system. So you can
decide what capabilities you want on which date
and still have only one system to monitor, adding
components as you need them; access control,
power, fuel, security and environmental and video
monitoring. We have an expansion module for
additional sensors, and can integrate third party
sensors.
TowerXchange: Appreciating a lot of value is in
the software, could you tell us a little about the
hardware you deploy at cell sites.
Our systems typically include a door control unit
(DCU) at the main entrance gate or on the shelter,
Our DCU includes sensor ports for EMS sensors,
or motion detectors, such as perimeter beam
sensors. Dry contact sensors can monitor Genset
equipment, voltage sensors for batteries and
ultrasonic fuel level sensors in diesel tanks. The
DCU connects back to our central server (AKCess
Pro Server) through Ethernet or GSM, enabling
us to manage the database and track which users
accessed at which time. For example, you can
set an expiry time for access or check that the
engineer showed up and how long he was there,
and with InteliTower you can synch video with
these events.
It’s a scalable solution - we can connect up to 50
cabinet controllers to one of our base DCU’s, so
that provides plenty of capacity to manage, control
and monitor, for multiple tenants’ equipment
through a single IP address.
TowerXchange: I appreciate it varies according
to the needs of each site, but what is the
approximate cost of implementing AKCP’s
Intelitower solutions on a per site basis?
Nick Barrowclough, VP Manufacturing, AKCP: It
79
“
We can provide our access
control capabilities for under
$1,000 per site. If you add
power, fuel, security and
environmental monitoring,
it’s closer to $2,000 per site.
Of course there’s always room
for negotiation if we’re talking
about a large portfolio of
towers
TowerXchange: Tell us about installation of
your systems.
Compared to traditional access control systems,
InteliTower is quicker and easier to install. Our
solution is rack mountable; you basically screw the
base unit into place, attach standard 12v power
supply and configure remotely - no specialised
electricians are needed. The most time consuming
part is running the cables to the locks and sensors.
Our local dealers will often provide installation
services. Our sensors, door control units and RFID
readers just need an RJ45 cable (like an Ethernet
cable) - they need no complicated wiring - as long
as you have a pre-existing rack you could be set up
in 90 minutes.
TowerXchange: What have been AKCP’s
experiences in telecoms and media,
particularly emerging markets? I understand
you have a project live in Argentina - what can
you tell me about that?
“
depends on what capabilities you need. We can
provide our access control capabilities for under
$1,000 per site. If you add power, fuel, security and
environmental monitoring, it’s closer to $2,000 per
site. Of course there’s always room for negotiation
if we’re talking about a large portfolio of towers.
Our Argentinian distributor Raien has installed
the AKCP solution into remote broadcast towers
for INVAP. This is in use as a standard remote
monitoring solution for the shelters at 500 sites.
We were able to swiftly adapt our solution to the
specific requirements of the customer - during
the implementation of the project AKCP released
an improved base unit, which was upgraded the
already installed sites free of charge so all sites
were on the latest hardware
XX
How to protect your sites
from theft of fuel and equipment
azeti Networks report on their roundtable at the TowerXchange Meetup
During the TowerXchange
Meetup at the beginning
of October in South Africa,
azeti Networks had a unique
chance to discuss best
practices in fuel security
with market experts from
the African tower business.
Among the participants
were professionals from
RMS and Managed Service
companies, towercos, as
well as representatives from
companies specialised in fuel
delivery, site security and
power supply.
< A comparison of energy costs on-grid versus off-grid
< What percentage of fuel intended for African cell sites is stolen
< Options to combat administrative theft, including watering down of diesel
< Options to combat on-site theft by staff and by third parties
< Tools at tower operators’ disposal including RMS, CCTV, access control systems with RFID or biometric,
upgraded or duel perimeter fencing, security patrols and improved relations with local communities
As the demand for mobile services increases
steadily around the world, the telecom industry
is facing certain challenges regarding the power
supply of towers. Running a BTS in densely
populated areas with full access to a power grid is
in most cases unproblematic, but the whole story
changes in remote places, where power supply
is unsteady (unreliable grid) or is not given at all
(non-grid).
The installation of around 75,000 new towers
around the world every year that are off-grid,
shows clearly the rising importance of this topic. In
some African countries, up to 80% of the tower sites
have no access to the power grid. Those sites have
to be powered by other sources; in most of the cases
diesel generators and batteries. But the operating
cost compared to grid power is tremendous.
While supplying a tower with commercial grid
power costs about US$150 per month, these costs
can easily rise to US$1,200-2,200 per month if the
power supply solely depends on diesel, with an
average price per gallon of US$4.50. This leads to
soaring OPEX costs; up to 60% of OPEX is due to
fuel expenditures for non-grid installations. Besides
higher costs for running non-grid tower sites,
another factor complicates the situation further:
fuel theft.
Between 20% and 35% of the fuel intended for
powering the tower site in Africa is stolen. However
the theft does not take place at only one specific
point; it differs by location, time and person. We
distinguish between two forms: administrative
theft and on-site theft.
XX
Administrative theft
Administrative theft accounts for 50% of the total
stolen fuel. In this case, staff charged with the
provisioning of diesel for tower sites are involved in
criminal activities. Theft can take place at different
stages of the delivery process. The fraud can already
happen at the gasoline station, when trucks are not
filled up correctly. Or during the transport to the site,
substantial quantities (100 litres or more) can get
stolen. Another opportunity to defraud is given when
fuel tanks are filled up on the site. A common practice
for concealing the short delivery is to replace part of
the diesel by some other liquid in order to meet the
billed quantity. If the fuel is contaminated with water,
generator damage will be the consequence, which
can easily cause costs of up to US$1,500.
One solution to tackle those issues is to outsource the
delivery process to a fuel supplier together with the
installation of a RMS (Remote Management Solution)
based fuel management solution at the site, which
gives detailed information about fuel level and purity.
Another option besides the deployment of a RMS at
the site would be to put one on the truck in order to
maintain visibility throughout the transportation
process and track down exactly where and when the
fraud happens.
On-site theft
It is not only the delivery of fuel that offers a number
of risks of thievery. The remote location of certain
towers facilitates theft either carried out by insiders
(staff) or other third parties with no work-related
reason for accessing the site. The focus of criminal
activities extends beyond fuel to include other site
equipment like batteries or even whole tanks. Since
two different groups are involved, measures have to
be more comprehensive in order to secure on-site
assets.
For work-related theft, a solution to counter those
incidents can be the deployment of electronic key
access mechanisms including person and role based
access control. By using pin pads, electronic keys
or other devices with RFID or biometric features,
the security level of the site can be increased
substantially. An even more efficient solution would
be the installation of surveillance cameras with
access control as well as motion control. In addition,
fuel level and also fuel contamination monitoring
including energy management capabilities like
generator status checks will provide a comprehensive
set of measures to keep tower sites up and running.
integrating locals into tower securing measures and
explaining how they benefit personally (network
coverage, phoning).
As mentioned before, batteries are also considered to
be a target for theft, each worth of about US$5,00020,000 per site. In order to reduce incentives for
stealing batteries, one way could be not to source
batteries inside the country. This means you’re
not supporting the creation of a local market for
stolen batteries. Underground installations or even
concrete shelters would help to discourage external
persons from entering the sites violently, as would
the deployment of a RMS with energy management
features including DC control combined with access
control.
But in some cases, thieves do not worry about
concealing their theft of equipment and fuel. They
exploit the remote location of tower sites and the
fact that they do not have to expect resistance. In
those instances, only massive security provisions
can help to protect assets. The main challenge is to
impede or prevent external persons from accessing
the tank by means of high fences, secure containers
or underground installations. A dual fence concept
could pay off, including a semi-secure fence for
alerting and a hardened inside area, which keeps
thieves out of the shelter until security patrols have
reached the position.
Conclusion
The theft of diesel or tower equipment is a
widespread problem that needs to be addressed
with appropriate measures. Specific threats require
adjusted solution approaches. The deployment of a
RMS with fuel management features would help to
decrease administrative fuel theft. If this solution is
extended by a role and person based access control
system, theft committed by insiders could be lowered.
Keeping external parties out of the tower site proves
to be more difficult, since they have the advantage
of the remote tower location. Therefore, only a
combined solution that comprises underground
installations or concrete shelters and camera-secured
fences will be an effective protection.
Maintaining a relationship with the local community
could also help to prevent site downtime by
Thanks to Thorsten Schaefer, CEO of azeti
Networks AG for preparing this report
83
Site Management - Made Intelligent
With SiteOne, azeti and Lemcon address the most common
remote Site issues like fuel and equipment theft, unauthorized
access, role and person based access control as well as SMS
and email notiﬁcations. This enables you to manage your Sites
with the highest level of security.
developed by
infraSTAT’s passive
operations management system
rolled out by Africa Towers and NSN
Combining data from multiple sources and providing the visibility necessary
to optimise network efficiency
infraSTAT’s telecom analytics based passive operations
management system is being used to manage 10,000
towers across ten different countries in Africa. infraSTAT
deciphers and combines data from RMS sensors, OSS
external alarms, infraSTAT’s own field force governance
interface, financial, contractual and procurement
sources to provide a real time flow of information
that improves visibility into cell site operations, and
enables the transition from of reactive to preventative
management of the network.
Arun Sarma, VP (Marketing), infraSTAT
Keywords: Who’s Who, Monitoring & Management, O&M,
Opex Reduction, Fuel Monitoring, DG Runtime, Procurement,
Asset Register, RMS, Site Management System, Job Ticketing,
Spare Parts, Africa, Africa Towers, NSN, infraSTAT
< Energy Management: reconciling fuel and service bill, improving governance for fueling and
maintenance activities
< Supporting the transition from reactive to preventative management of passive networks
< Cross-pollinating data from multiple sources to undertake variance analyses
< Vendor performance and SLA management
< A common platform for all passive operations data and rich analytics
TowerXchange: What is infraSTAT’s role in the
telecom tower industry?
Arun Sarma, VP (Marketing), infraSTAT: infraSTAT
has evolved over the last three years from a real
time status reporting and field force governance
system to become a comprehensive passive
operations management system for telecom
towers.
Our system was piloted by NSN in Uganda in 2010
as a fuel management system, and subsequently
evolved to provide robust real time status
reporting and field force governance for other
important passive operations activities like PM and
breakdowns, using mobility tools and analytics.
Today, infraSTAT is capable of collecting all passive
operations data by writing interfaces to collect
inputs from hardware and IT systems that are
already in place; this data is then cross-pollinated
using infraSTAT’s analytics engines to give rich
insights and visibility across passive operations.
For example, today we can tell operations
which alarms are working or are faulty. Or we
can correlate a supposed PM visit with a door
alarm, thus adding validation. When alarms are
unavailable we use geo-location of the field-force’s
mobile for governance. Operations in Africa need
this multi-pronged approach.
TowerXchange: Forgive the simple question, but
do you produce hardware such as RMS sensors,
or do you focus on data analysis? If so, do you
locate an analyst in the customer’s NOC?
85
Arun Sarma, VP (Marketing), infraSTAT: We’re a
software and hardware integration player - we don’t
produce the physical sensors.
We provide analytics systems in the cloud, though
we can also work in-premise - but we don’t put
analysts in the tower operator’s NOC.
TowerXchange: Please introduce infraSTAT’s fuel
monitoring capabilities.
Arun Sarma, VP (Marketing), infraSTAT: infraSTAT
provides a real time information flow for tower
operators and subcontractors. Without a system like
ours, variations in monthly opex, fuel and service
bills can be very hard to reconcile, and tough to fit
into a monthly close cycle.
We found that, as tower operators sought to create
efficient fuelling systems and processes, even the
best operations managers would struggle with
visibility into activity of individual technicians and
individual activity level sights. We identified a need
for a process and mechanism to improve control,
as previously many operations and maintenance
schedules were run in a very reactive mode.
TowerXchange: How does your solution
empower field teams to gather data on fuel and
maintenance of towers?
Arun Sarma, VP (Marketing), infraSTAT: We equip
the field force and subcontractors with real time
data, be that automatic scheduling of fueling or a
PM technician getting details of the equipment and
infraSTAT Map-view: a visual representation of all activity in your Network - critical activities are prioritised
spare parts they need to resolve any given alert.
infraSTAT analyses, okays or flags individual
transactions - so operations managers need only
look at flagged transactions, and the system
escalates as needed. Every flagged transaction
requires operations or subcontractor explanations
and approval, so you can tell who is approving and
when they’re closing a task, which helps prevent
deferring maintenance task completion until the
end of an audit period.
Many companies remain reliant on legacy paperbased systems that fail if a critical member of
staff leaves. Data hygiene is critical in passive
infrastructure management. Without a system like
infraSTAT, your asset registry will quickly slip out of
date.
TowerXchange: How has infraSTAT enabled your
clients to progress from reactive to preventative
management?
XX
Arun Sarma, VP (Marketing), infraSTAT: We
progressed from fuel monitoring to analysing
a broader set of data, enabling preventative
management. We’ve used mobile and web
dashboards to create an information flow for field
activities for sub-contractors and the operations
management team at the Towerco or MNO.
So we integrate more than just information about
fuelling - we found there is a great deal of value
in cross-pollinating data from other activities.
We’ve combined fuel monitoring with PM and
breakdown data - and we have added the capacity
to process OSS data. In a lot of cases where there
was a breakdown, we found that the site had a
history of over or under maintenance.
We find that the more data sources we can
integrate, the more bang for the buck we can
provide to our clients. We’re currently writing
interfaces to equipment monitoring systems such
as Inala’s and IPMS. We’re not just gathering
remote monitoring data on hardware, but also
integrating financial and contract management
data, which helps tower operators review and
negotiate service level agreements.
We use and update the fixed asset registry
for our clients. Asset registries in Africa can
be inaccurate and out of date - for example a
battery swap or even a generator replacement is
often not updated to the asset registry, but now
any omissions can be audited and traced to the
subcontractor or individual responsible. So asset
registers get cleaner and more comprehensive the
87
TowerXchange: Our readers always want to
know how proven your solution is in Africa?
Arun Sarma, VP (Marketing), infraSTAT: We’ve
been working with NSN in Africa for almost three
years. After our successful pilot, we signed a
pan-Africa contract with NSN in April 2011, and
commenced deployment in Uganda, Tanzania
and Kenya in June 2011, later adding two more
geographies.
In 2012 we added preventative maintenance and
breakdown modules, again signing a pan-African
contract with NSN. We’ve deployed these modules
with NSN in Tanzania for its Vodacom and Airtel
networks.
TowerXchange: I understand infraSTAT is also
being used by Africa Towers.
Arun Sarma, VP (Marketing), infraSTAT: We’ve
deployed infraSTAT with Africa Towers in five
geographies to date: Madagascar, Kenya, Rwanda,
Chad and DRC. We’re hoping to increase to cover
their entire installed base in the coming year.
We started working with Africa Towers in July
2013, with whom we’ve deployed the entire
infraSTAT suite. They needed visibility about daily
activity and interfaces with hardware at sites to
improve operational efficiency. Africa Towers is
using our information for fuelling, maintenance,
breakdowns and integrating OSS reports.
TowerXchange: How have you had to
adapt your solutions to meet the unique
requirements of African tower operators?
Arun Sarma, VP (Marketing), infraSTAT: When
we deployed our mobile app during our pilot in
Uganda, we found that many members of the field
force did not have phones that could run an app.
So we changed the backend to SMS to support
people without smartphones.
We’ve had to be adaptable as NSN and Africa
Towers have extended their rollout of infraSTAT,
for example by having a French language
interface ready.
We’re finding that users will use our system in
different ways than we necessarily expected. For
example, one of our clients deployed a power
management system to automatically switch from
DG to using battery power when fully charged,
but found that when they heard the DG fall silent,
site security would often manually switch the DG
back on! Thanks to visibility into the site made
possible by infraSTAT, we can now send clear
instructions to security not to intervene manually
unless infraSTAT sends them a message.
TowerXchange: When analysing cell site
performance efficiency, why is it important to
combine data from different sources?
Arun Sarma, VP (Marketing), infraSTAT: I’ll
use an analogy to explain. Monitoring passive
infrastructure in telecoms is like an army of ants
“
we gather all the data on passive
infrastructure, juxtapose that with
other data to create a common,
cross-organisation platform to
collect, correlate, cross-pollinate
and analyse data
“
longer you use infraSTAT.
looking for food - if you use only a few chosen
battalions, then you are going to be in trouble if
two battalions get trampled on under a camper’s
boot. We deploy all our battalions - we gather
all the data on passive infrastructure, juxtapose
that with other data to create a common, crossorganisation platform to collect, correlate, crosspollinate and analyse data on a real time, daily
and historical basis. This enables us to undertake
variance analysis, comparing actual performance
to expectation, which for example can enable
the site owner to evaluate RoI in hybrid energy
solutions.
infraSTAT has an experienced team of data
and analytics professionals in Bangalore who
use automation to bring these different data
sources together and deliver them to the client
through web dashboards with status reports and
governance processes, which can be drilled down
to site, equipment and activity level
XX
Special Feature:
Rooftops, masts and
towers, part 2
Essential reading for all stakeholders in emerging market towers;
Henrik Kamstrup of Intelli Towers explains how towercos evaluate
the capex required to upgrade towers, overcoming the challenges of
working with incomplete and untrustworthy documentation.
Speaking to a towerco that issued a recent RFP for all the equipment
at 200 new sites, TowerXchange learned that there was a wider
range of price quotations from tower manufacturers than from
any other category of supplier. To understand what differentiates
premium, custom engineered static assets made with high quality
steel from lower priced alternatives, TowerXchange spoke to
Kimberly Morrison of steel manufacturing giants Valmont.
This edition also features a message from Todd Schlekeway,
Executive Director of NATE, as well as profiles of tower designers
and manufacturers Metalogalva, and of ASE Structure Design, who
have completed drawings for more than 15,000 cell sites.
Don’t miss:
91 Intelli Towers explain what it costs and how long it takes to
evaluate and upgrade towers
97 Valmont explain what differentiates a custom engineered, high
quality tower from cheaper alternatives
101 NATE membership growth continues in emerging markets
106 Introducing tower designers and manufacturers Metalogalva
109 ASE Structure Design provide a closer look at tower drawings
XX | TowerXchange Issue 6
| www.towerxchange.com
89
What it costs and how
long it takes to evaluate and
upgrade towers
How to get the maximum capacity at the minimum cost
TowerXchange: Where does Intelli Towers fit in
the telecom tower ecosystem?
Henrik Kamstrup, Partner, Intelli Towers:
Launched in summer 2013, Intelli Towers is
a specialist analysis and design engineering
company, focusing on tower design and upgrade,
and providing tower manufacture through
partners.
What are your towers worth? Whether you’re buying or
selling assets, investing in transactions or supplying towers,
it’s useful to know how towers are surveyed and evaluated,
particularly in the context of emerging market tower
transactions for which the documentation on towers may be
incomplete or untrustworthy. We spoke to Henrik Kamstrup,
one of four founders of Intelli Towers, a new analysis and
design engineering firm with longtime experience and which
specialises in this field.
Intelli Towers brings together four prominent
tower design experts with many years of
experience of the design, manufacture, rollout, and
upgrade of passive infrastructure. Three of us have
worked together before as owners of KPR Consult;
a tower engineering company specialist established
10 years ago - KPR are leaders in analysis,
strengthening and co-location management of
telecom towers in Nordic regions.
Keywords: How to Guide, Steelwork, Construction, Valuation,
Due Diligence, Co-locations, Infrastructure Sharing, Capacity
Enhancements, Loading, Foundations, Data Room, Permits,
Greenfield, Site Surveys, Reverse Engineering, Asset Register,
Masts & Towers, Americas (South), Asia Pacific, Russia & CIS,
Europe, Africa, KPR Consult, Intelli Tower
We have an extensive database and experience
of just about every possible tower design in every
global tower market except the US. We’ve analysed
thousands of towers since 2006 - we know every
type of tower, rooftop, monopole, guyed mast,
angular or tubular lattice tower.
Henrik Kamstrup, Partner, Intelli Towers
< How towercos quantify the capex required to upgrade towers and to accommodate multiple tenants
< How to deal with incomplete or untrustworthy documentation
< How to evaluate and upgrade foundations
< Why fast deployment steel foundations are a good alternative for suburban and rural towers
< Using an independent tower designer to optimise your designs and enable comparison of tower
manufacturer quotations
No market is new to us when it comes to tower
design and strengthening; emerging market towers
are not especially different - everywhere uses the
same American standards. What does differ is how
to implement reinforcement and what to do with
foundations - much depends on local manpower,
and on availability of machinery or whether it’s
just shovels and wheel barrows!
91
We get a lot of requests from MNOs and towercos
asking us to train their subcontractors on how to
strengthen towers, and what to do with old, rusty
towers. So we’ll often run a ‘what to do and how
to do it’ session, then monitor them for a couple of
weeks afterwards.
TowerXchange: How do you audit a portfolio
of towers, particularly audits by towercos
seeking to evaluate the lease revenue generating
potential of acquisitions?
Henrik Kamstrup, Partner, Intelli Towers: Capacity
and lifetime are relevant for the business case.
Initially we have to group the sites into well
documented and not-well documented. These have
to be handled differently.
Our audit will group the sites into safe or not safe.
If not safe, can we bring it to safe conditions for a
fair cost, and if safe does the site has potential for
upgrading for more tenants for a fair cost?
If time is not available to fulfill all before closing,
some assumptions can be implanted in the contract
and verified in a window just afterward.
TowerXchange: How complete is the
documentation on the towers you survey?
Henrik Kamstrup, Partner, Intelli Towers: In
our experience, elder towers are seldom well
documented. We’ve worked from a lot of incomplete
and untrustworthy documentation. Sometimes we’ll
only have complete documentation on 10-20% of
Zinc problems after installation
sites - anything around 50% is a good number.
However, for a very quick overview we can trust
relevant pictures showing the existing configuration
of the tower - sometimes these can be even more
useful than existing drawings as antenna loading
seldom are updated on drawings. We have a
database of thousands of different types of towers,
and can find a similar structure very fast. Based
on a good photo we can make a first step in the
evaluation, even before knowing strength of the
members.
TowerXchange: What does it cost and how long
does it take to evaluate towers for acquisition?
Henrik Kamstrup, Partner, Intelli Towers: It
depends on how detailed you want it.
Assuming a portfolio of 1,000 towers we can make
an overall theoretical audit based on existing
documentation supplemented with photo within
one month. This can be done for less than US$500
per site.
For a full audit for 1,000 towers with a “normal”
share of non-well documented sites where surveys
are requested, it will cost less than US$2,000 for the
well documented sites and up to double for the nonwell documented sites, including proposals for how
XX
to extend the use of the towers. And this will take
approximately six months.
TowerXchange: Is there an opportunity for
sellers to evaluate and upgrade towers before
they are brought to market to maximise their
value?
Crooked tower; poor assembly or poor workmanship
Henrik Kamstrup, Partner, Intelli Towers:
Absolutely. A couple of the operators we met at
the TowerXchange Meetup also showed interest in
potential evaluation and upgrade of their towers
before they sell - they realised that for a limited
cost they can gain significant extra capacity and
add value to their towers. Further, the tower
documentation package will be 100% updated
which also adds value to the transaction.
If upgrading for more tenants it is important to
select the sites where it is an advantage without
doubt as you don’t know the buyers plans.
TowerXchange: What masts and towers are
suitable for upgrading capacity for multiple
tenants, and which aren’t?
Henrik Kamstrup, Partner, Intelli Towers: The
simpler a structure is, the simpler it is to upgrade.
Any kind of lattice tower is simple to upgrade. For
complex lattice towers (such as power lines types)
you can change members from slim to large, but
it is relatively difficult to gain significant extra
capacity by adding extra structural members.
What we found when we checked a site missing foundation
documentation and with a suspect foundation surface
Guy masts are difficult to reinforce. You can change
the placement of feeder cables, thus decreasing the
wind load from outside and gaining strength, but
you can only create a limited amount of capacity.
Similarly reinforcing monopoles can be done, but
it’s difficult and often expensive.
Upgrading foundations can be more complex,
especially if you need new flooring, and a new
surface. The major challenge in emerging countries
is the verification of the actual used rebar in the
concrete. There are several ways of detecting
this but also to upgrade the existing non-trusted
foundation to a new fully compliant foundation.
We show and explain these solutions to clients
from project to project depending on the current
challenge.
TowerXchange: Under what circumstances is
the replacement of a tower a better option than
upgrade?
Henrik Kamstrup, Partner, Intelli Towers: If the
general condition of the tower is poor. And if the
costs for strengthening will be close to a new tower,
or the strengthening will create a tower difficult to
maintain. Or if you have an unsafe tower where you
have to invest, then you might set up a new tower
with capacity for more tenants.
Let me give you some examples: We’ve seen some
poorly installed towers. It can be easy to tell; if you
look up a leg and see the alignment, it should be
a straight vertical line. If it’s buckled, the initial
assembly was potentially poor, and it will probably
fail a towerco’s acceptance criteria. I’ve seen towers
assembled with bolts missing, or dirt/small rocks in
93
the flanges, which can affect the pre-tensioning of
the bolts after 6-12 months.
The other main issue is corrosion. Some rusty
towers can have their lifetimes extended by
replacing all the bolts, but if all main members
are weak, the only option may be taking the tower
down or to make expensive upgrades.
We very occasionally see examples of poor
manufacturing quality, such as poor welding, but
we seldom encounter this - each member has to be
effectively tied together, otherwise they can’t move
on to the next!
TowerXchange: How do you evaluate and
upgrade tower foundations?
Henrik Kamstrup, Partner, Intelli Towers: It
varies as there are different types of foundations.
Some have huge slabs you can see above ground,
when they’re underground you have to dig to
evaluate depth. We often have to evaluate concrete
reinforcement by hammering off a piece and
verifying.
Again upgrade options vary according to the type of
foundation. We have to be quite creative to rebuild
around the existing foundation to ensure a site
with upgraded capacity is safe. For example, we
can add to an existing lump of concrete foundation,
using it as ballast, adding brackets on two sides
and drilled into foundations. Just adding 30-50cm
of concrete, 1m deep, on two connected sides can
add a lot of capacity. Or if necessary we can take the
Broken welding
XX
logistics easier. We’re particularly keen on steel
foundations that use the soil as ballast, with a three
arm steel frame extending 1.5m below terrain
level. Each of the three arms stands on thin steel
membrane elastic enough to move with the soil.
What’s great about these foundations is that if you
need to move a tower, for example if you have a
problem with the landlord, it’s movable at a cost of
only limited man-hours (no extra material costs).
The price of a steel foundation can for some systems
be 15-20% less than concrete. It’s easy to install
but it does require more space, why it’s best for
suburban and rural sites.
TowerXchange: How can innovative tower
designs help overcome difficulties securing
permits?
Henrik Kamstrup, Partner, Intelli Towers: In
markets such as Russia it can be difficult to get
permanent building permits, but you can install
temporary tower solutions as long as foundations
don’t exceed 50cm below terrain level.
we do a lot of work evaluating and upgrading
concrete foundations, one of our visions for the
tower industry is to evangelise the use of innovative
reusable steel foundations.
Using a steel foundation with a standard concrete
roadblock for ballast under each leg, you can erect
a 40m tower. Such a structure could have a long
lifetime - they’ll stand up to gust wind - but would
still be classified as a temporary structure by permit
issuers.
It takes just a few days to implement a steel
foundation. The steel foundation comes in the
same shipping container as the tower, which makes
TowerXchange: How can towercos and MNOs
ensure the design of new towers best meets their
requirements?
Cast in bolts breaking out of foundation
outside layer off across the whole length and add
reinforcement. A lot depends on the soil and on the
ground water level of course.
TowerXchange: What’s your view of the potential
of reusable steel foundations?
Henrik Kamstrup, Partner, Intelli Towers: While
95
“
If you want to achieve the
maximum loading at the
minimum cost, you need
professional assistance
when setting up the specs
“
Henrik Kamstrup, Partner, Intelli Towers: If you
want to achieve the maximum loading at the
minimum cost, you need professional assistance
when setting up the specs in order to ensure that
all important aspects (e.g. updated norms, relevant
wind speeds, effective equipment loading and
placement et cetera) are taken into account. Having
the right professional sparring partner setting
up these requirements (also discussing optimal
solutions for future loadings) secure the optimal
specs.
When offers are coming in it is also important to
have professional assistance evaluating how the
proposed towers fulfill the specs.
Missing bolts and structural members
TowerXchange: Finally, please sum up how you
would differentiate Intelli Towers from other
tower design and service companies.
We’re very focused on working with our clients and
meeting our clients’ needs - if we say we’ll do it,
we’ll do it on time.
Henrik Kamstrup, Partner, Intelli Towers: Intelli
Towers are 100% dedicated for towers and uses
innovative designs to deliver the maximum capacity
at minimum cost. We work within the rules, norms,
codes and standards to ensure quality and safety,
but we know the tricks to place equipment in
certain positions to gain capacity.
It’s important that we’re independent - we don’t
manufacture towers. Tower manufacturers have
their own engineering department, and they’re
focused on selling what they have and the structures
they know. We know all different manufacturers’
structures, we know the different producers, and
we have a wider range of experience
XX
What differentiates a custom
engineered, high quality tower from
cheaper alternatives
Lessons learned over 20 years of upgrading towers for multiple tenants at
US$3.9bn manufacturing giant Valmont Industries
In this article, TowerXchange explore how to select the right
tower and component manufacturer to meet your needs,
balancing a number of factors including the price and quality
of steel, the cost and quality of engineering, and the lead
times for delivery. We speak to Kimberly Morrison from
Valmont, who have a unique depth and breadth of experience
in supplying components to reinforce and upgrade the
capacity of towers for multiple tenants.
Kimberly Morrison, Valmont Site Pro 1
Keywords: Who’s Who, Steelwork, Tower Design, Tower
Manufacture, Co-locations, Capacity Enhancements,
Loading, Retrofitting, Procurement, Logistics, Site Surveys,
Masts & Towers, Spare Parts, Infrastructure Sharing, Africa,
Americas (South), Americas (North), Asia, Europe, Middle
East, Valmont Industries, Valmont Structures, Site Pro 1
TowerXchange: Where does Valmont Structures
and Site Pro 1 fit in the telecom tower
ecosystem?
Kimberly Morrison, Sales Manager International,
Valmont Site Pro 1: Valmont is a US$3.9bn
company with over 90 manufacturing facilities in
23 countries offering 27 brands.
Our parent company Valmont Industries was
incorporated in 1946. Valmont diversified
from manufacturing steel pipes for irrigation
to manufacturing lighting, utility and
communications structures.
Valmont Structures is a division that manufactures
finished telecom towers, while Valmont Site Pro 1
(SP1) is a division of Valmont Structures focusing
on the design, manufacture and distribution of a
comprehensive portfolio of over 1,400 components
for the modification of towers. SP1 produces just
about anything that hangs on the tower or the
grounding around the tower - everything but the
enclosures and fencing. SP1 also offers private
labeling of tower components.
TowerXchange: Are steel towers a commodity?
Customising tower and component design to meet the needs of each site
Understand where delivery times and costs are incurred
Why some towers are cheaper than others, and the implications for quality
How Valmont has come up with standardised components for the tower modifications required
by co-location
< ‘Drop and swap’ versus reinforcement of towers
<
<
<
<
Valmont Site Pro 1: Valmont works with the
customer so that each site is designed to meet
the exact loading requirements and wind speed
conditions in the area - we’re so far from the
mass production environment. The relationship
between manufacturer and customer is key.
97
TowerXchange: What is Valmont’s footprint in
international markets?
Valmont Site Pro 1: The telecom division of
Valmont has fully owned factories in the US,
Canada, UK, France, Germany, Finland, India,
Italy, Morocco, Australia, The Philippines, The
Netherlands, Poland, Estonia and multiple facilities
in China.
For readers in Africa, we’re most likely to ship
from China, India or Morocco. Manufacture
and transit time depends on which factory we
use and on scheduling. After receipt of order,
manufacturing time takes on average 4-6 weeks at
most Valmont facilities.
TowerXchange: Talk us through the
manufacture, import and inland logistics
processes that take a tower from your factory to
a client’s site - where does the delivery cost and
delivery time come from?
Valmont Site Pro 1: Once the tower has been
manufactured and galvanised, the next step
is packing. Major manufacturers like Valmont
have in-house capabilities for loading towers or
monopoles into containers, which can take as little
“
Some the customers take ownership from our
factory gate, some take it from the shipping port,
some pass on responsibility for clearing customs to
us - it’s up to them.
A lot of the value is in the
engineering behind the quote.
Customers need to examine
the engineering to ensure
they’re comparing apples with
apples
“
We don’t subscribe to a philosophy of installing 200
identical towers then modifying them to meet local
requirements after installation - our designs are
customised for each site.
as one day, while other manufacturers subcontract
containerisation with addition of cost and time.
The next step is to transit the container to the
shipping point for export or inland freight, with
the time taken dependent on the distance from
factory to shipping point.
Once shipped, customs processes are very specific
to each country and the shipping company must
understand the necessary paperwork and have it
completed in advance, otherwise you’re going to
incur significant delays. Clearing customs can take
two days to two weeks, depending on the country.
Then inland logistics from port to site again
depends mainly on distance and the efficacy of
your shipping company.
How much of this delivery cycle is Valmont’s
responsibility is defined in the terms of the order.
TowerXchange: What are the tradeoffs when
selecting a steelwork partner - why are some
towers cheaper than others?
Valmont Site Pro 1: A lot of the value is in the
engineering behind the quote. Customers need
to examine the engineering to ensure they’re
comparing apples with apples.
Quality processes vary widely from shop to shop.
Valmont uses only trained engineers and our
welders are all certified. The supply chain of the
material used including quality checks on the
grade of steel is another way Valmont works within
the quality process. Quality and work procedures
are used and followed so the process is the same
each time. These are all things a local steelwork
shop may or may not have.
There can also be a wide range of interpretation
of specifications in an RFQ. For example, if the
RFQ doesn’t confirm the frequency of microwave
dishes, they could be anything from 2-11GHz,
which significantly affects the size of the dish and
the structures required to prevent twisting and
swaying, requiring a more robust and more costly
design.
Most buyers will look at the basics, but it’s only
XX
The other main inputs into price are the cost
of steel, the cost of labour, the cost of power to
the plant, and the proximity of the plant to the
destination.
A good shorthand comparison of steel quality and
design quality is to ask the weight of the tower - if
one manufacturer is using 20,000lbs of steel but
another 30,000lbs, you can see there’s a difference
in quality.
Steel can be purchased in varying grades of
strength. There are international standards for
these steel grades, Valmont generally follows
ASTM. A quality manufacturer will only use steel
that has certifications that it meets the specified
grade and maintains traceability of this steel
throughout the manufacturing process.
TowerXchange: For readers not as familiar
with the engineering side of the business,
please introduce us to the international quality
standards applicable to telecom towers.
Valmont Site Pro 1: Most RFQs refer to specific
design coding and international standards.
Tie-rod bracing
TIA-222 revG is very similar to International
Building Code standards, which for example
“
“
when you drill to the level of specific equipment
to be mounted that you’ve taken into account
everything that must be encompassed into design and that affects price accordingly.
if one manufacturer is using
20,000lbs of steel but another
30,000lbs, you can see there’s a
difference in quality
define the requirements to make an elevated
platform safe for someone to stand on. TIA222 applies those standards to the telecom
industry and to tower design and manufacturing
specifically.
As well as tower designs, tower companies will
often mandate the use of specific tower design
software - usually RISA-3D, which we use at
Valmont.
TowerXchange: The capex required to upgrade
a single tenant tower to accommodate multiple
tenants is a critical part of towercos' business
models - what is involved in such upgrades?
What components are required?
Valmont Site Pro 1: The process of upgrading a
single tenant tower typically works something like
this; a carrier asks their towerco for space to hang
their equipment on a tower that currently has
99
emerging markets, from recently installed, robust
structures to weak towers barely able to support
existing equipment. With such structures, a ‘drop
and swap’ may be more feasible than undertaking
substantial reinforcement. But when dropping
a tower you have to turn off active components,
and that means an interruption in revenue for the
operator.
Swapping a tower can also be problematic if there
have been changes in zoning laws, which in many
cases are less liberal than when these towers were
first installed - many towers were grandfathered
in under old zoning laws and therefore cannot be
swapped.
Bolt-on bracing
capacity only for the anchor tenant, so the towerco
commissions an A&E firm to do a tower analysis
and to determine what needs to be done to enable
the tower to handle the requested additional
loading. The A&E firm passes that requirement to
SP1 and we quote on provision of the components
necessary to make that happen; typically a
combination of tie-rods (leg strengthening),
brackets and bracing. The A&E firm quotes that
to the towerco, which quotes the carrier a lease
rate, which may or may not include a contribution
toward the cost of the structural upgrade. If the
carrier consents, the upgrade is can be completed
pretty quickly.
would differentiate Valmont from other tower
design and manufacturing companies.
Valmont have been serving the tower industry
since the inception of the co-location model 20
years ago, and we’ve upgraded thousands of
towers for American Tower, Crown Castle, SBA et
cetera. We understand the parts needed for tower
strengthening, so we’ve come up with standardised
components for the tower modification work
required by co-location.
Valmont Site Pro 1: Valmont have a global
network of fully owned factories, with our own
galvanisation facilities.
TowerXchange: What are the alternatives if a
tower cannot be upgraded?
Valmont manufactures to the highest standards
of quality - because we own our own facilities
and galvanization, we’re able to use our own
employees as engineers and control the whole
process, using the highest quality engineering
design tools
Valmont Site Pro 1: I’m sure you can imagine the
varying quality and age of towers you have in
As a US$3.9bn corporation we have the leverage
and purchasing power to drive the cost of steel
down, and pass on those benefits to our customers.
XX
NATE membership
growth continues in
emerging markets
South Africa, Sweden, Trinidad and the United
Arab Emirates. NATE member companies consist
of tower construction firms, general contractors,
tower owners, wireless carriers, manufacturers and
distributors.
By Todd Schlekeway, Executive Director, NATE
The National Association of Tower Erectors (NATE),
a non-profit trade association in the wireless
infrastructure industry, is dedicated to providing
a unified voice for tower erection, service and
maintenance companies and is recognized as
the tower industry leader in promoting safety,
standards and education. Today the Association
boasts over 630 member companies from the
United States, Australia, Bahamas, Canada, Ghana,
Guan, India, Jamaica, Romania, Saudi Arabia,
NATE is excited to have recently entered into a
joint marketing agreement with TowerXchange.
The thought leaders and executives involved
with TowerXchange are playing a critical role in
providing emerging foreign markets with critical
wireless infrastructure services and development.
We believe this joint marketing agreement will
be beneficial to both parties and will help NATE
continue to expand our presence with international
stakeholders engaged in the wireless infrastructure
industry. There are many foreign and domestic
companies that need access to the professional
resources, education and best practices information
that comes with a NATE membership.
As the Executive Director of NATE, I have the
privilege of having conversations with our
members and industry stakeholders on a daily
basis. The movement to upgrade networks with 4G/
LTE capabilities continues to keep tower owners,
carriers, general contractors and tower firms busy.
Many of our NATE members have informed us that
their calendars are already full for 2014 due in large
part to LTE related installation and maintenance
work.
One of the hallmark tenets of NATE is safety. NATE
continues to pursue opportunities to work with
tower owners, carriers, general contractors and
subcontractors to ensure that communication on
job sites is given the proper focus and safety is
not compromised with the flurry of work that is
characteristic of multi-employer sites. With the
record level of activity upon us, it is imperative that
everyone involved in the wireless infrastructure
chain put forth extra effort in order to ensure that
safety remains the number one priority in this
industry moving forward.
I want to make sure that TowerXchange readers are
aware of some of the outstanding safety resources
and programs NATE is promoting to help industry
stakeholders perform quality work in a safe
manner.
NATE’s Qualified Contractors Evaluation Checklist
provides a road map of guidelines for everyone
involved in hiring tower construction firms to
follow in order to ensure that only qualified
contractors are hired for work. With new
companies springing up frequently in this industry,
it is imperative that NATE’s checklist is adhered to
by carriers, tower owners and general contractors.
The NATE Qualified Contractors Evaluation
Checklist can be downloaded and printed via
www.towerxchange.com | TowerXchange Issue 6 | 101
NATE’s website: http://natehome.com/wp-content/
uploads/2011/03/Qualified-Contractors-EvaluationChecklist1.pdf.
hazardous situations. The guide is free for everyone
in the industry and can be accessed by visiting
www.natehome.com.
The Association is also working hard to promote
the NATE Tower Site Hazard Recognition Guide.
Designed specifically for the on-site personnel of
carriers, broadcasters, owners, operators, general
contractors and any others responsible for activities
on a tower site, the guide was developed to improve
industry safety. NATE has long believed that
education is vital to improving safety on tower sites
and it is the responsibility of all tower construction
companies, owners and operators to contribute to
the safety of on-site personnel. The NATE Tower Site
Hazard Recognition Guide is available online and
serves as a step-by-step guide for project managers,
site superintendents and other employees to
recognize and effectively address potentially
Another program that continues to shape the
industry from a safety standpoint is the NATE
STAR Initiative program. The program emphasizes
safety, training, accountability and reliability
by asking participating companies to commit to
requisite levels of training, site safety audits and the
implementation of safety programs while adhering
to industry best practices. NATE is proud to see
continued growth in the STAR Initiative program
and we believe that the record number of program
participants will be leaders in 2014 and beyond by
ensuring that a culture of safety permeates industry
wide. Visit www.natehome.com to view a list of
companies who are participants in this program.
“
The NATE Exchange is a convenient,
consumer-driven, “one stop
shop” website platform for tower
construction and maintenance
companies and individual tower
technicians around the globe to gain
access to the most sophisticated and
up to date training courses in the
tower industry
“
NATE’s Tower Climber Orientation is another
valuable online educational and screening tool for
employers to use when providing prospective tower
climbers important information on what a career
is like in this field. The goal of this orientation
program is to promote the profession in and out
of industry circles and also to help employers
determine which applicants are truly interested in
this line of work before investing in training and
preparing them to work on tower sites in the field.
The Association has recently launched an exciting
new resource called the NATE Exchange. The NATE
Exchange is a convenient, consumer-driven, “one
stop shop” website platform for tower construction
and maintenance companies and individual tower
technicians around the globe to gain access to the
most sophisticated and up to date training courses
in the tower industry. Additionally, if you are a
NATE member company, you qualify for discounted
rates on designated training courses offered on
this exchange portal www.natehome.com/nateexchange/
Finally, I would like to invite everyone to attend the
19th Annual NATE UNITE Conference & Exposition
which will be held February 24-27, 2014 in San
Diego, California. NATE UNITE 2014 is shaping up
to be the best annual conference and exposition in
the industry to date! This is the place to be if you are
XX
eSite k10
Hybrid power for shared sites
t Industry leading OPEX reduction
t Optimised single cabinet solution
involved in our diverse industry as a tower owner,
carrier, general contractor, tower construction
firm, tower climber, manufacturer, media member
or an industry enthusiast! Visit NATE’s website
to download the NATE UNITE 2014 Sponsor &
Exhibitor Prospectus; view the event brochure; or to
register to attend.
In closing, I encourage all tower industry
stakeholders involved in foreign markets to take
the opportunity to explore the possibility of having
your company become a member of NATE. It is a
high priority for NATE moving forward to continue
our membership growth in foreign markets.
Collaborating with the leaders and decision makers
involved with entities like TowerXchange is a great
opportunity to meet those objectives. After all,
safety and education has no borders!
To contact a NATE representative, call the toll free
number (888) 882-5865 (U.S.), 605-882-5865 or visit
the NATE website at www.natehome.com
t Full remote network management
Providing new power to the telecom industry
www.flexenclosure.com/tower
Checklist for
Evaluating
Qualified
Contractors
Name of Contractor: __________________________________________________
Contact Person for Contractor: __________________________________________
Title: _______________________________________________________________
Address: ____________________________________________________________
Telephone: __________________________________________________________
The contractor has obtained insurance coverage appropriate for the
scope of work, prior to commencing the work (e.g. worker’s compensation;
general liability; etc.). (Attach Certificates of Insurance.)
The contractor has the necessary experience, references and capability to
properly perform the specific job at hand.
The contractor has a written safety program and agrees to conduct
regular safety audits of its job sites by a competent person.
The contractor agrees to provide a site-specific safety plan including
rigging, structural and RF safety procedures, and fall protection
requirements for this specific job.
The contractor agrees there will be a competent and qualified person at
the project site who will conduct daily safety audits.
The contractor agrees to maintain written records of the safety audits for
a period of at least one year.
The contractor requires pre-employment physical agility or physical
fitness tests to determine ability to perform job tasks.
CONTINUED ON NEXT PAGE
Checklist for Evaluating Qualified Contractors
PAGE 2
The contractor conducts drug screening of employees for unlawful use of
controlled substances.
The contractor provides an orientation and awareness program for new
hires prior to performance of any work.
The contractor ensures that their tower climbers have been properly
trained and understand OSHA regulations in the areas of fall protection
and rescue.
The contractor agrees to conduct a hazard assessment to determine
the requirements for personal protective equipment, including fall
protection.
The contractor maintains written documentation of all training as
required.
If the contractor is required to maintain OSHA 300 logs, they have submitted those documents for the past two years. For those companies not
required to keep OSHA 300 logs, they have provided the number of
employees on staff and a report on accidents they have sustained,
including the nature, type and number of accidents for the past two years.
The contractor agrees to notify the Company in writing if subcontractors
are to be used prior to the use of such subcontractors.
The contractor agrees that any subcontractors hired will be required to
meet the same contractor requirements outlined in this document.
The contractor agrees to adhere to the provisions of OSHA Directive CPL
2-1.36 if any personnel hoisting is to be conducted.
The contractor agrees to maintain good housekeeping on the job site.
Individual Completing Questionnaire: ____________________________________
(Print Name)
Title:
____________________________________________________________
Date:
____________________________________________________________
This document will be kept on file in the Safety Manager’s office.
REV 10/10
Introducing tower designers
and manufacturers Metalogalva
Metalogalva has manufactured over 200 towers for Unitel and Vodacom
Mozambique in the last year
TowerXchange asked Bruno Mota, Manager
of Metalogalva’s Telecoms Business Unit,
to explain the quality differentiators and
economics of telecom tower design and
manufacture, and to describe and how
they adapt to meet the changing needs of
customers as their structural requirements
change from capacity for single to multiple
tenants.
Bruno Mota, Metalogalva
Keywords: Who’s Who, Steelwork, Tower
Design, Tower Manufacture, Installation,
Capacity Enhancements, Loading,
Retrofitting, Procurement, Masts & Towers,
Asset Lifecycle, Infrastructure Sharing,
Europe, Africa, Vodacom Mozambique,
Unitel, Metalogalva
<
<
<
<
The importance of sourcing high quality steel from a reputable company
How the lifetime, and guarantee, of a tower is extended
Designing towers to be easily upgraded for multiple tenants
Metalogalva’s experience supplying towers for Unitel in Angola and Vodacom Mozambique
TowerXchange: Where does Metalogalva fit in
the telecom tower ecosystem?
Bruno Mota, Business Unit Manager - Telecom,
Railways & Special Projects, Metalogalva: We design,
manufacture and galvanise towers, for telecoms,
transmission line poles, substations, lighting poles,
road structures, catenaries and solar structures.
For the telecom industry, we manufacture
monopoles, lattice and tubular towers from existing
designs - Metalogalva’s standard - or we develop
a new design in order to meet customers’ specific
requirements.
We have our own factories, which we adjust
according to the requirements of the work, with
capacity to galvanise up to 140,000 tonnes per year.
We have specialist equipment including welding
robots, plasma and laser cutting machines and CNC
machines for cutting, drilling and punching profiles
and L shaped section. We also have in-house an
automatic powder coating line (with capacity of
1400m²/day) and we have as well a liquid painting
unit, so we are able to do the DUPLEX system
with good quality at fair prices. Right now we are
doing some interesting projects with camouflaged
towers (Pine|Palm towers) for a partner with lots of
experience in this niche market.
To get an idea of our capacity in telecoms, we
recently produced 114 towers in under one month
for Vodacom Mozambique.
TowerXchnage: What is Metalogalva’s experience
in Africa?
Railways & Special Projects, Metalogalva: In
the last year we have manufactured over 200
telecom towers which are now installed in Unitel’s
network in Angola and in the network of Vodacom
Mozambique. We’re looking to expand to send
our towers to countries like Nigeria, Uganda and
Tanzania.
In these cases we didn’t sell directly to the
operators, but were introduced by our partners
locally. We’ve also sold towers into Algeria,
Morocco, Cape Verde and São Tomé and Príncipe
markets indirectly. We’re interested in building
relationships with other tower installation
companies in Africa, in order to spread our product
to other emergent markets.
Metalogalva also have several important clients in
Europe, for example we supply towers to E-Plus and
“
We source our steel mainly from
ArcelorMittal, the world’s leading
steel producer - we don’t use second
rate steel. It’s important to confirm
that your tower manufacturer uses
raw material from a reputable
company
“
Vodafone in Germany, and two years ago we won a
big project for TGV in France called GSMR Synerail
to supply GSM towers.
TowerXchange: How should buyers distinguish
between the quality of products offered by
different tower manufacturers?
Railways & Special Projects, Metalogalva: We source
our steel mainly from ArcelorMittal, the world’s
leading steel producer - we don’t use second rate
steel. It’s important to confirm that your tower
manufacturer uses raw material from a reputable
company, and we use 3.1 certified raw material
whether we’re shipping to Germany or Angola. All
the procedures we use are certified like for example
welding (DIN 18800) or galvanisation (DASt22).
We are as well certified by ISO9001, ISO14001,
OHSAS18001, CE mark and EN1090 (EXC3). There are different standards and specifications in
different markets. Our solutions meet the customers
requirements and they are adapted to the location
The lifetime of a tower has a lot to do with the
thickness of the paint and the zinc galvanisation, so
we can offer towers with a 10, 15 or even 25+ year
guarantee depending on the client’s requirements
and its own respective budget. We use the 1461
Euronorm standard for galvanisation.
Our competitiveness comes from optimised and
custom solutions, introducing technology on the
production process such us robots, lasers, powder
coating, and also Kaizen concepts.
TowerXchange: What is the tradeoff between
tailor made solutions to meet the specific
requirements of each cell site versus installing
standard, and therefore lower cost, towers?
Railways & Special Projects, Metalogalva: If we have
an order for 200 different towers then that requires
lots of unique designs to be verified, lots of different
drawings to be prepared - a lot of work is needed
before manufacture. In addition the performance
of our production line will be reduced, making our
solution less competitive. So instead the optimum
solution might be to create four variants on a
standard tower, enabling us to produce four batches
of fifty towers for example, so we can offer a more
competitive manufacturing price, and facilitate
easier mounting/logistics of the structures on the
field.
“
multidisciplinary team of engineers who can
quickly verify if it is possible to apply more load. If
there is no additional capacity, the customer may
need to reinforce or replace the tower.
“
where they will be placed. We have a technical
department with eight Structural Engineers able to
design structures according to any norm required:
Eurocode or TIA for example.
We have a multidisciplinary
team of engineers who can
quickly verify if it is possible to
apply more load
There are fixed costs that are the same whether
we’re producing one tower, 50 or 200. We’re very
competitive at a larger quantity as we can use serial
production techniques.
TowerXchange: Tell us about the implications for
the design and reinforcement of towers as clients
add additional tenants.
Railways & Special Projects, Metalogalva: There are
now a number of companies offering solutions to
reinforce towers to achieve more capacity.
If one of our customers wants a tower with 6sqm
on top, we may evaluate their requirements and
find they can be met by a standard tower, or
we may need to design a new structure. Then if
the customer wants to add additional antennae,
requiring additional capacity, then we have a
We can also offer towers designed to be easily
upgraded after installation. For example, we
recently applied for a tender in France for two
variants of 30m tower designs, evolutive and nonevolutive. The evolutive designs have 4sqm of
capacity at the top, but it is possible to add an extra
section to add a further 3sqm of capacity to enable
sharing the tower with more operators, so we
design the structure for 7sqm capacity.
would differentiate Metalogalva from other
tower manufacturers.
Railways & Special Projects, Metalogalva: In 2013 we
invested €6.6m in new equipment, enabling us to
produce towers more efficiently.
Moreover, we have been serving the market for 42
years, which means we have a lot of ‘know how’ in
what we do.
We think it’s very important to achieve our lead
time commitments, whilst maintaining quality.
And we think it’s important to give constant support
to our customers, to act quickly to meet their
needs, which means Metalogalva has many happy
customers!
A closer look at tower drawings
< ‘As built’ drawings - these drawings are
prepared with redlines given by the clients
after completion of the tower site
Mechanical CAD Engineers in the team.
While mobile network operators and towercos
seldom have a direct relationship with companies
providing structural design drawings, companies
such as ASE provide an invaluable service to
architects and tower construction subcontractors.
ASE has considerable experience of creating
drawings for Multi Operator Pylons, and of designs
to upgrade single tenant towers to have capacity
for multiple tenants. ASE has experience in a wide
variety of sites.
ASE also has experience of designs for 3G and
LTE technology upgrades, as well as fibre rollout,
MEP drawings and GIS for fibre and underground
copper cables.
Umesh M Pujara, ASE Structure Design Pvt. Ltd.
TowerXchange: Where does ASE Structure
Design fit in the tower industry?
Umesh M Pujara, Managing Director, ASE Structure
Design Pvt. Ltd.: ASE Structure Design has over ten
years experience in telecom infrastructure design,
having completed drawings for more than 15,000
sites.
ASE is an Indo-Belgian joint venture between
Pujara Group, Arch & Teco Group and Intrabel
BVBA, with more than 50 skilled Civil and
TowerXchange: What specific services does ASE
provide to the tower industry?
Design Pvt. Ltd.:
< Preliminary design which describes the
proposed
tower structure with antennas and cabinets
< Building permit document
< Radiation hazard document
< Detailed design documents - detailed
construction and fabrication drawings given to
contractors for construction
The aforementioned design documents are either
prepared from scratch or with given inputs either
old or latest.
TowerXchange: What are the key international
standards for telecom tower design and what
are the critical health and safety considerations
when designing a tower?
Design Pvt. Ltd.: There are various International
Standards for telecom tower design such as ASCE,
BS, Eurocode & ETSI, ASTM & TIA/EIA. We use
standards as per client’s specifications.
For Health and Safety; radiation, thermal effect,
access protection and earthing are also taken care
of as per the client’s specification.
TowerXchange: What can you tell us about
the turnaround time and cost of the drawings
typically required by the tower industry?
Design Pvt. Ltd.: The turnaround time and cost of
the drawings differ project to project based on the
complexity. In general, turnaround time varies
from one working day for a preliminary design to
five working days for a complex detailed design.
Being in India our clients in other parts of the
globe get back their files overnight
A Multi Operator Pylon
sector
ref. constr.
ref. parcell
el. tilt
coax
L coax
L optische vezelkabel
U21
K 800 10486
zie FN4b
30° +35.50m
az.
HBA
-3°
1 1/4"
45.90m
10.00m
U22
K 800 10486
zie FN4b
140° +35.50m
-3°
1 1/4"
46.80m
10.00m
U23
K 800 10486
zie FN4b
270° +35.50m
-2°
1 1/4"
45.09m
10.00m
27
0°
Rack 19"
+ Krône blokken
+ AMM 20P
+ flatpack
+ batterijen
+ BBU
+ DCDU
Antenne type UMTS + plaatsing schotelantennes wijken af van stabiliteitstudie.
Arch & teco netwerken is niet verant-woordelijk voor huidige toestand.
1x externe MHA/sector voor UMTS2100.
aanzicht
zie pagina 03
40°
50°
60°
70°
80
°
18
0°
laagspanningsbord
1000
Nortel S8000i Mobistar GSM900
3x RRU UMTS2100
bevestigd op multiplex 145x62cm
tegen shelter
kabelgoot 500x60mm
+ verhoogd deksel
6x coax 1 1/4" GSM900
6x coax 1 1/4" UMTS2100
10x coax schotelantenne
aarding VOB 50mm2
grind pad
multi-operator kast
+ teller 25S60 Mobistar
+ differentieel zekering 25A-300mA
+ OVP
+ teller Base
U23
shelter Proximus
1x schotelantenne ø60cm Mobistar
AGL=+34.00m
azimuth 51.40°
site link 30005G1
testput Mobistar
+ aardingspen
trekput
S3-240°
AGL=+34.00m
azimuth 351.90°
site link 30582G1
S1-30°
M
H
A
U21
1000
MH A
in ondergrondse PVC buis
voedingskabel Mobistar
kabelladder
voor coaxen Proximus
trekput
ladder + rail Söll
+ antiklimplaat
MHA
kabelladder + verhoogd deksel
voor coaxen Base
trapje
grind
multi-operator pyloon Base
hoogte 42.00m
4x testput
binnenin de multi-operator pyloon
6x coax 1 1/4" GSM900
6x coax 1 1/4" UMTS2100
aarding VOB 50mm2
+ coaxen Base
+ coaxen Proximus
shelter Base
trekput
U22
AGL=+34.00m
azimuth 277.10°
site link 30495G1
90
°
trekput Mobistar
2x ondergrondse PVC buis
Belgacomkabel Mobistar
2 Mbit kast
energiekast (Automation)
shelter Mobistar 240x500cm
op betonblokken
0°
°
10
°
20
30°
S2-140°
AGL=+35.00m
azimuth 166.55°
site link 30494G1
plaats voor
andere operator
hoogspanningscabine
A Multi Operator Pylon
sector
ref. constr.
ref. parcell
el. tilt
coax
L coax
L optische vezelkabel
U21
K 800 10486
zie FN4b
30° +35.50m
az.
HBA
-3°
1 1/4"
45.90m
10.00m
U22
K 800 10486
zie FN4b
140° +35.50m
-3°
1 1/4"
46.80m
10.00m
U23
K 800 10486
zie FN4b
270° +35.50m
-2°
1 1/4"
45.09m
10.00m
+42.91m
+42.00m
Antenne type UMTS + plaatsing schotelantennes wijken af van stabiliteitstudie.
Arch & teco netwerken is niet verant-woordelijk voor huidige toestand.
40°
50°
60°
70°
80
°
90
°
18
0°
S3-240°
U21
U21/U22/U23
HBA=+35.50m
AGL=+34.00m
AGL=+34.00m
azimuth 51.40°/277.10°/351.90°
site link 30005G1/30495G1/30582G1
antennes Proximus
schotelantennes Proximus
MHA
AGL=+34.00m
azimuth 351.90°
site link 30582G1
platform Base
270
°
10
20°
30°
MHA
S1-30°/S2-140°/S3-240°
HBA=+35.50m
AGL=+35.00m
MHA
30
1x schotelantenne ø60cm
Mobistar
AGL=+34.00m
azimuth 51.40°
site link 30005G1
S1-30°
M
HA
U23
1x ankerpunt/sector
2x veiligheidsring Mobistar
4x peg steps/sector
252
0°
27
0°
MHA
schaal 1:50
snede
60
BEVESTIGING ANTENNES
2x veiligheidsring Base
antennes Base
schotelantennes Base
1x externe MHA/sector voor UMTS2100.
platform Mobistar
AGL=+35.00m
azimuth 166.55°
site link 30494G1
2x veiligheidsring Proximus
platform Proximus
ladder + rail Söll
MHA
AGL=+34.00m
azimuth 277.10°
site link 30495G1
hoogte 42.00m
AGL=+35.00m
azimuth 166.55°
site link 30494G1
SNEDE
U22
S2-140°
S1-30°/S2-140°/S3-240°
ladder + rail Söll
binnenin de multi-operator
pyloon
6x coax 1 1/4" GSM900
6x coax 1 1/4" UMTS2100
aarding VOB 50mm2
+ coaxen Base
+ coaxen Proximus
252
270
U21/U22/U23
hoogspanningscabine
HBA=+35.50m
AGL=+35.00m
azimuth 166.55°
site link 30494G1
MHA
MHA
shelter Proximus
AGL=+35.00m
2 Mbit kast
30
MHA
HBA=+35.50m
multi-operator kast
+ teller 25S60 Mobistar
+ differentieel zekering 25A-300mA
+ OVP
+ teller Base
60
AGL=+34.00m
3x trekput
AGL=+34.00m
azimuth 51.40°/277.10°/351.90°
site link 30005G1/30495G1/30582G1
1/50
0............0.50...........................1.50...........................2.50m
hoogte 42.00m
trekput Mobistar
2x ondergrondse PVC buis
Belgacomkabel Mobistar
shelter Base
shelter Mobistar 240x500cm
op betonblokken
0.00m
4x testput
testput Mobistar
+ aardingspen
print size A3
Special feature:
TowerPower - reducing
Africa’s reliance on diesel,
part five
TowerXchange’s tour of innovations to reduce energy opex
continues with a chat with Heliocentris CEO Ayad Abul-Ella,
who advocates a new approach - Managed Power Services - the
missing link between CAPEX and ESCO business models. Ayab
also describes Heliocentris’ vision for a fuel logistics free power
solution, based on fuel cell technology.
TowerXchange can get very excited about innovative new
renewable energy solutions or energy storage technologies, but it’s
important we don’t lose sight of the proven energy solutions that
are currently most widely used at emerging market cell sites. With
that in mind, we speak to leading genset manufacturers FG Wilson
and, in a continuation of our Energy Storage Tradeoffs special
feature, to leading lead-acid battery manufacturer EnerSys.
Don’t miss:
114 Heliocentris propose a Managed Power Services
business model
119 FG Wilson want to sooth the tower industry’s
pain points
123 EnerSys explain why lead-acid batteries are used
at >90% of African cell sites
Companies profiled in previous editions of TowerPower and Energy
Storage Tradeoffs: Apollo Solar, Ascot Industrial, Ballard, Clean Power
Systems, DAQS Europe, Eltek, Emerson, Enatel, Flexenclosure, GE Energy
Storage, GILDEMEISTER, Orun Energy, PowerOasis, SkyBuilt and Solar BK
You can download past editions of TowerXchange free at
www.towerxchange.com/publications
REAL SITUATIONS CALL
FOR REAL SOLUTIONS
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generator management with anti-stall and
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- Maximises site uptime
and limits human intervention
- Remote site management,
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- Dynamically optimises any
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WORLD-LEADING EFFICIENCY APPROACHING 98%
- Self healing and automatically
adapts to varying conditions
HIGH EFFICIENCY BUILDING BLOCKS
Robust, scalable power for flexibility and seamless integration
- Allows rapid deployment to
multiple sites
Solar/Wind Ready Systems
- Predictability in maximising solar harvest
MANUFACTURED
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Managed Power Services
The missing link between CAPEX and ESCO business models
Like TowerXchange, Heliocentris is keenly aware
of the paradigm shift as operators outsource
or sell passive assets to independent towercos,
and the implications for the way services are
bundled and delivered to emerging market
tower operators. Energy opex, carbon emissions
and O&M priorities are shifting, transforming
telecoms infrastructure supply chains and
service business models. In this interview,
Heliocentris’ CEO Ayad Abul-Ella proposes a new
‘Managed Power Services’ business model and
discusses the future potential of ‘fuel logistics
free solution’.
Ayad Abul-Ella, CEO, Heliocentris
Keywords: Who’s Who, Managed Services, Energy,
Monitoring & Management, O&M, Capex, Batteries,
Business Model, ESCOs, Hybrid Power, Solar, Fuel Cells,
Hydrogen, Dimensioning, RMS, Africa, Middle East, Asia
Pacific, Heliocentris
< ‘Standardised configurability’: how to limit the complexity of customising power solutions while
meeting the unique needs of each site
< “Managed Power Services”: servicing and supporting the tower operator to maximise the savings from
Hybrid Power and RemRMS
< The timeline for hydrogen-based, fuel logistics free power solutions to achieve commercial parity with
DG+battery solutions
TowerXchange: Please introduce Heliocentris
and explain what role you play in the telecoms
infrastructure ecosystem?
Ayad Abul-Ella, CEO, Heliocentris: Heliocentris
develops, delivers and, where meaningful, installs
and operates energy efficiency and complete
power solutions for telco base stations. Enabled
by our site and energy management system, we
provide a full set of services and solutions. Our
Services reach from energy optimisation and
solution engineering to implementation and smart
operations. Our power solutions are based on best
in class power components from third parties as
well as inhouse developed battery and fuel cell
systems. Depending on the customer preference
we offer our site and energy management system
on a license basis operated by us or turnkey to our
customers.
Our initial market focus is the Middle East, North
and Sub-Saharan Africa. We also have a foothold in
Southeast Asia, and our Asia-Pacific activities are
growing out of that base.
Our target customers are whoever has the pain and
gain from the power bill and the operations of a
cell site! Hence our direct customers are sometimes
managed service providers, often the Mobile
Network Operators themselves, and growing every
day, independent towercos.
TowerXchange: Looking at your website, I can
see a broad range of capabilities from Energy
Management Systems and RMS to solar, wind
and fuel cell energy solutions and supporting
services - do you develop and manufacture all
these different solutions yourselves, or select
and integrate best of breed COTS solutions?
Ayad Abul-Ella, CEO, Heliocentris: We have three
areas of competence that we focus on inhouse:
Power Management with corresponding smart
operations services, hydrogen technologies for fuel
logistics free solutions, and power solutions design
and systems integration. We feel that our rollout
and service operations teams in the field provide a
unique additional benefit to our customers.
Our EMS is proprietary, and one of our key
differentiators is that we develop both the server
software and all the sensors on the sites. To
optimise cost, performance and our ability to fit
solutions to client needs, our EMS is delivered on a
modular basis.
On top of our EMS we can add a layer of solution
engineering and system integration, enabling us
to take best-in-class, vendor-open components to
create the best power solution to tailored to each
site’s unique topology.
Our hydrogen technologies include our own fuel
cells and electrolyser systems as we feel that such
systems are not commoditised and can provide
us with an opportunity to develop sustainable
competitive advantage. Hence together with our
partners FutureE and Acta we develop our own
solutions in this field.
TowerXchange: Let’s talk about your Fuel Cell
technologies. Does switching from GenSet to Fuel
Cells really simplify the energy logistics supply
chain?
Ayad Abul-Ella, CEO, Heliocentris: Let me be frank;
I’d agree with the critical voices that are concerned
that replacing a diesel supply chain with a
hydrogen or methanol supply chain doesn’t reduce
complexity as needed. Methane logistics may be less
complicated and theft exposed compared to diesel
logistics, but looking at the cost of every site visit to
remote base stations, the target can and should be
power solutions that are fuel logistics free.
The current use cases of fuel cells are mainly for
Systems with on site hydrogen generation.
From a truly commercial perspective there are
a very limited number of sites where such an
approach is currently viable. At most sites, the
amount of PV and battery cells needed ultimately
lose in comparison to the cost of diesel gensets.
Our system stores energy in the form of hydrogen,
generated from water onsite using excess power
from PV and whatever unreliable grid power may
be available. You can then burn hydrogen when
solar, wind or grid power is not available.
Fuel logistics free system overview
We expect fuel cell powered, fuel logistics free
solutions to achieve commercial parity in the next
24 months. If the technology can be evolved to
a point when performance, lifetime and cost get
where they need to be, fuel logistics free solutions
will deliver a paradigm shift, enabling tower
operators to get rid of energy logistics altogether,
rather than replacing one fuel logistics supply chain
with another.
UPS at grid-connected sites.
Heliocentris together with their partners is working
on something quite different to many other fuel
cell companies, based on an exclusive electrolyser
technology that has the potential to enable fuel cells
to offer a fuel logistics free solution. We’ll reach a
critical mass of installed hydrogen-based systems
only when we have both, commercially viable
fuel cell systems AND commercially viable on site
hydrogen generation.
So no, we don’t believe in carrying hydrogen bottles
instead of diesel for prime power supply at off-grid
and bad-grid sites.
TowerXchange: How would this fuel logistics free
solution work in practice?
Ayad Abul-Ella, CEO, Heliocentris: A fuel logisticsfree solution needs to generate and store 100% of
the required power at the site. This can be mainly
achieved by PV-Battery Hybrid or by Fuel Cell
TowerXchange: Our readers always want to know
how proven innovative solutions such as this are
in the field, so is your fuel logistics free solution
actually being trialed yet?
Ayad Abul-Ella, CEO, Heliocentris: During the last
twelve months our technology partner Acta moved
such solutions from laboratory status to being
engaged in more than a handful of field trials.
We in parallel have deployed demonstration and
lab systems with several research institutes and
industrial partners. Our initial results indicate a
sweet spot for commercial viability to be where
However, I don’t want to over-emphasise our
fuel cell technologies, exciting though they are.
Heliocentris is rolling out energy efficiency and
complete power solutions for telcos and towercos,
of which today most don’t include fuel cells - our
objective is to position Heliocentris as a Managed
Power Service and Solution provider, incorporating
all kinds of technologies always striving to achieve
what truly counts: maximum uptime at lowest TCO
with the least possible carbon emissions. To us this
is not a magic triangle of trade-offs, but rather one
of more and more complementarity if approached
the right way.
TowerXchange: The majority of hybridisation
in emerging markets has used solar rather
than wind generation or fuel cell energy
storage sources - how do you foresee demand
for different renewable energy generation and
storage solutions changing as cell sites and
energy technologies evolve?
Ayad Abul-Ella, CEO, Heliocentris: In emerging
markets, most of the opex is consumed by diesel
genset based power solutions so far. The shift to
networked hybrid solutions is obviously taking
place as we speak and we are without doubt that
this trend will accelerate more and more. While
this shift takes pace, we believe that different
solutions will continue to co-exist for at least some
time to come. As the benefits of different battery
and renewable technologies in combination
“
increasing volumes. This is what we believe smart
toolboxes should live-up to.
There doesn’t have to be a
much of a trade off between
site optimised power solutions
and standardised designs.
We rather like to see our
approach as one that allows for
‘standardised configurability’
“
sites are grid-connected, yet the grid in average is
available less than 12-14 hours.
with or without GenSets vary a lot across the
different sites. So having a strong solution design
methodology that allows for modular and scalable
power solutions in combination with highly
customisable Energy Management Systems will
foster the rising demand for renewable energies
and allow the opex bills to be reduced to new levels.
The “one-size-fits-all” approach that we see often
promoted these days is likely to leave significant
efficiencies on the table. Depending on specific load
and geographical characteristics of a site, different
power solutions may be the best at each individual
site. So the task will be to have toolboxes that
allow the CTOs to choose from a variety of solution
designs while allowing for cost reductions from
Solar is already being widely deployed at sites, most
having 6-12kW peak of PV installed, and I forsee
a couple of thousand small wind turbines with
a 4-5kW peak to be deployed in certain regions
soon as well. Lead-acid batteries, OPZV or AGM
as well as more and more Li-Ion batteries all have
a role to play - as lowest TCO’s for different site
characteristics are yet not met predominantly by
one or the other.
TowerXchange: How do you balance the benefits
of customisation with the cost-savings of
standardisation?
Ayad Abul-Ella, CEO, Heliocentris: There doesn’t
have to be a much of a trade off between site
optimised power solutions and standardised
designs. We rather like to see our approach as one
that allows for ‘standardised configurability’.
First of all the towercos can pass on the complexity
that arises from site optimsed power solutions to
suppliers like Heliocentris that have specialised
in designing, implementing and operating power
solutions on a turnkey basis. Secondly, these
solutions should allow for bundling on a component
basis. For example a smart power solutions
company can base their supply on a few type of
battery cells from 2-3 suppliers, yet having modular
battery cabinets that allow for dozens of different
battery cabinets. And last but not least, thirdly with
the right remote management and smart operations
services the different technologies can be operated
by the towercos in a very unified and transparent
manner. We believe the combination of these three
elements can resolve much of the trade-off between
site optimised solutions and cost-savings from
standardisation.
TowerXchange: What will it take for ESCO
business models to be adopted in emerging
market telecoms? When we speak to towercos,
the most common reason they give for the
lack of progress of ESCOs in Africa is that
energy companies don’t have the field service
capabilities to support a substantial number of
sites.
Ayad Abul-Ella, CEO, Heliocentris: I fully
understand, and think the towercos have a valid
concern about the field service capabilities of
aspiring ESCOs. This is why we think that Managed
Power Services supporting the tower operator
in managing their power and overall passive
infrastructure is a sensible at least first step.
Vendors who offer an ESCO proposition
immediately might be overlooking challenges
that arise from managing and maintaining all the
different components ranging from rectifiers to
gensets and AC’s and batteries out of one hand
with all the SLA’s attached. The intelligence and
experience in the NOC’s have been gained over
decades meanwhile. Moving to Hybrid Power
Solutions that are off the balance sheet and
operated by the suppliers is already a big step from
where we are today. So taking it a step further and
simply paying for energy per kWh consumed might
be premature. Also the field support resources need
to be adequately available and trained.
Heliocentris has build up strong local teams
especially in the Middle East. Together with one
of our reference customers that meanwhile has
more than 400 sites equipped with our systems, we
see how important power management services
are to capture the full benefits that hybrid power
solutions and remote monitoring systems offer. This
is why we see more and more customers looking for
power management services that look at the passive
infrastructure end-to-end and ensure every day the
maximum savings and uptime independent from
who supplied the rectifier, the genset, the hybrid
system or the AC’s.
For example for a remote managed hybrid power
solution the uptime should on average stay above
the 99.5% level while genset runtimes stay below
10 hours. In order to continuously reach such KPIs
the SLAs with the different suppliers are one thing,
but to have the monitoring and analytics at hand to
create the tickets and coordinate the maintenance
teams in the needed manner is another.
competitors.
Ayad Abul-Ella, CEO, Heliocentris: In these dynamic
and fast changing markets we differentiate
ourselves based on our know-how, technology and
services we offer to our customers.
There are two main drivers. Firstly, the
combination of solution and system engineering;
the right supply chain to deliver, install and operate
customised turnkey solutions, and Managed Power
Services that enable Smart operations. All this is
realised with an excellent global partner network.
We maximise uptime over the whole lifecycle of a
site.
Secondly, our systems, know-how, focus and
technology create flexible and appropriate asset
preserving solutions. We enable the customer
to reuse their equipment. This saves capex
and improves TCO as the operator has smaller
investments to achieve savings.
Our business model could evolve into an ESCO, but
the Managed Power Service approach may be also
durable in itself. One way or the other, I do think
that simple capex plus standard after sale services
is a model we will see less and lesser.
In summary, Heliocentris has two approaches:
based on our EMS know-how we combine solution
and system engineering with the installation and
operation of turnkey hybrid power solutions and
add managed power services to enable smart
operations which is the key to a Power NOC.
Secondly we provide highly flexible solutions that
enable our customers to retrofit their installed base
without the need to change existing equipment.
would differentiate Heliocentris from your
Our holistic approach creates unique value for our
customers and that’s our differentiation
Soothing the energy opex
pain points
The feedback loop from FG Wilson’s 370 dealers helps this leading generator
supplier address pain points such as fuel theft and reducing site visits
One of the global market leaders in
primary and backup generator set design
and manufacture, FG Wilson supplies
over 50,000 units per year to a spectrum
of industries including telecoms. In this
interview, Ciaran McCarney discusses
quality control, customisation and after
sales service. We also examine how
generator set design has evolved to help
emerging market tower operators with the
pain points of pilferage and costly, time
consuming visits to remote sites.
Ciaran McCarney, FG Wilson
Keywords: Who’s Who, Energy, Capex, Opex
Reduction, Hybrid Power, Logistics, Site Visits,
Warehousing, Spare Parts, Caterpillar, FG Wilson
TowerXchange: TowerXchange have been
referred to FG Wilson as one of the ‘go to’
suppliers of primary power and backup
diesel generators for African cell sites - please
introduce your company and your role in the
telecoms power supply chain.
Ciaran McCarney, Manager, Global Accounts &
Dealer Support, FG Wilson: Having almost 50
years experience as one the leading generator
set suppliers globally, FG Wilson is renowned for
the durability, serviceability and reliability of its
product.
We have a truly global presence with a Dealer
network of 370 Dealers spread across 150 countries
and manufacturing facilities in the UK, India, Brazil,
US and China... we’re everywhere!
With regards to telecoms, we’ve had significant
success in matching our products to meet tower
operator needs in Africa, for example, our local
dealer recently secured a US$10m deal with MTN to
help power the modernisation of Nigeria’s mobile
communications network. Helios Towers Nigeria
is also a key customer. We, in conjunction with
our Dealers, are continually in discussion with the
significant players in African telecoms business
to ensure we understand and meet their specific
needs.
< FG Wilson’s quality assurance processes
< The balance of customised versus OTS products shipped to telecom clients
< How continuous product development yields designs to combat fuel theft and increase autonomy
< The criticality of after sales service, ensuring spare parts are available on short lead times
TowerXchange: Is there a ‘sweet spot’ in terms
of the kW load your generator sets support?
What are the most common FG Wilson products
installed at emerging market cell sites?
Dealer Support, FG Wilson: The sweet spot depends
very much on the segment and on the country we
are serving. We sell a significant proportion of our
volume at 10-250 kVA, but we have the luxury of
being able to offer a complete product line from 5.52,500 kVA - all of which contributes to our success.
TowerXchange: How does FG Wilson assure the
quality of your products?
Dealer Support, FG Wilson: We have an engineering
Centre of Excellence in the UK with an established
validation and testing process to ensure our
products meet customers’ exacting requirements.
We have a feedback loop through our dealer
network to ensure continuous product
“
“
FG Wilson ships 50,000 units
per year. Our volume of sales
is testament to our reputation
for quality
FG Wilson ships 50,000 units per year. Our volume
of sales is testament to our reputation for quality.
Ciaran McCarney, Manager, Global Accounts
& Dealer Support, FG Wilson: We don’t believe
in a single OTS product to meet all customer
requirements. We monitor what’s happening in
each of our target markets: telecom, industry, retail,
transport, health et cetera, and we have an extensive
product range catering for each segment.
TowerXchange: How is your telecoms order book
balanced between customised versus off the shelf
(OTS) products?
While our broad range of standard product options
from factory meet most market sector needs, we also
provide a customised DTO (Design to Order) service.
improvement. By adhering to a One Global Standard
quality principle across our global manufacturing
operations, we make sure every product delivers the
FG Wilson promise of engineering excellence.
“Non-price list, specialised products” - products that
have been customised - represent around 20-25% of
our annual volume. Many of our Dealers are also
experts at customising our product to meet specific
customer needs in territory.
TowerXchange: How does FG Wilson address
some of the specific pain points for tower
operators identified at the TowerXchange
Meetup, such as combating fuel theft and
minimising maintenance visits to remote cell
sites?
Dealer Support, FG Wilson: We have developed
special products to reduce the risk of fuel theft.
Typically fuel is stored in an adjacent tank, to which
access can be exposed - thieves can cut the hose and
siphon off fuel or put a hole in the fence and crack
open the padlock. To counter this, we’ve developed
a double skinned fuel tank, with capacity for 1,000
or 2,000 hours worth of fuel, all housed within the
confines of the generator itself, with a protective
cover on the filling area. No solution can be 100%
theft-proof, but this is a pretty strong deterrent!
Towercos are obviously very interested in our
solution. We have sold a volume of these units
to be used at cell sites in remote locations in the
Australasian region.
When it comes to minimising maintenance visits
to remote cell site locations, FG Wilson has again
responded to customers’ needs by developing
products that extend service intervals from 500
to 1,000 hours. Our high autonomy 1,000 hour
models have additional fuel storage capacity, with
refinements to every serviceable element; fuel
filtration, lube oil consumption et cetera. We’ve
worked with our engine supplier to ensure internal
adjustments needn’t be made to the engine for 1,000
hours, so that we are able to offer warranty on 1,000
hours of autonomy too.
TowerXchange: How important is the increasing
role of hybrid energy to the FG Wilson business?
Dealer Support, FG Wilson: Developers of innovative
hybrid packages are constantly approaching us, and
we make sure we’re working with every touch point,
talking to the likes of PowerOasis and Heliocentris.
We’re always evolving our backup power product
range to improve compatibility with hybrid power
systems, in order to maintain our competitive
position.
TowerXchange: After sales service and logistics
seems to be critical to the selection of an FG
Wilson solution - tell us about the lifetime,
maintenance, spare parts and replacement
system logistics support provided by FG Wilson’s
channel partners in local markets.
Dealer Support, FG Wilson: Serviceability is a
priority in FG Wilson generator set design and
development.
FG Wilson’s warranty to sales ratio is very low for
the industrial product industry. We don’t just “sell it
and forget it” - if you buy from FG Wilson, you can
be assured of excellent after sales service, wherever
you are. Our Dealers are generator experts, so our
role is really to support Dealers in the provision of
after sales service.
Telcos and Towercos plan ahead for new sites and
associated generator set procurement, so what
differentiates suppliers is their ability to support
with spare parts.
We work with our clients to identify their spare
parts requirements and ensure inventory is
available locally on a very short lead time. We
dispatch over three million FG Wilson Genuine
parts from our distribution centre in the UK. The
quality of our after market service gives people
confidence in the quality of our products. We offer a
VOR service; 24 hour delivery of a part if, on the rare
occasion, our local Dealer happens not to have it in
stock.
would differentiate FG Wilson’s products from
competitive DG solutions for cell sites?
Dealer Support, FG Wilson: Reliability. FG Wilson
doesn’t compromise on quality, adhering to the
highest manufacturing standards globally. Our
product will do what we promise it will do - giving
Telcos and Towercos peace of mind when FG Wilson
power is backing them up.
While FG Wilson quality standards mean we don’t
have to compete on price alone, the volume of units
we ship keeps us competitive from a capex point of
view.
We’ve been trading for almost 50 years, continually
developing our products to meet the needs of each
industry sector. We use the feedback loop with our
Dealers to look at product development from our
customers’ point of view. Strong relationships with
our customers have been the basis of FG Wilson’s
journey to date and will continue to be integral to
our future as we build on our success as a world
leading power provider
Why lead-acid batteries meet
the energy storage requirements of
>90% of African cell sites
EnerSys also exploring alternate energy storage chemistries, while moving
up the value chain to offer cabinets and complete solar solutions
TowerXchange look to market leaders EnerSys
to make the case for lead-acid batteries, having
interviewed innovators behind Li-Ion, Vanadium
Redox and Sodium Sulphur energy storage
solutions in the last edition the TowerXchange
Journal. EnerSys does a lot more that lead-acid
batteries of course; they’re investing in Li-Ion, NiCad and Nickel-Zinc energy storage solutions, and
moving up the value chain to provide cabinets and
even complete solar solutions, but the core of their
business in SSA remains provision of lead-acid
energy storage components.
Anssi Laitinen, EnerSys
Keywords: Who’s Who, Energy Storage, Capex,
Opex Reduction, Batteries, Pass-Through, Off-Grid,
Unreliable Grid, Line Conditioning, Hybrid Power,
Solar, Rectifiers, RMS, Spare Parts, Africa, EnerSys
< Moving up the value chain from component supplier to cabinets, controllers and complete solar solutions
< Comparing the market share of lead-acid with ‘exotic’ alternate energy storage chemistries
< The benefits of lead-acid batteries over a 3-5 year TCO analysis
< The impact of the independent towerco business model on the energy storage market
TowerXchange: What role does EnerSys play in
the telecoms infrastructure ecosystem?
Anssi Laitinen, Director of Marketing, Reserve Power
EMEA, EnerSys: EnerSys is a leading energy storage
supplier, known for providing high quality and good
service throughout the value chain.
EnerSys operates in both OEM and end user channels
and moves up in the value chain. This strategy is the
most advanced in Africa, where we provide much
of the infrastructure around batteries including
cabinets, controllers, and services. We recently
acquired Purcell Systems, which enhances our
offerings in cabinet enclosures and supports our
growth strategy
Jean-Luc, Managing Director, Africa, EnerSys:
Telecoms is a very important market to EnerSys in
Africa. We still have a strong components business
across Africa - mostly batteries, which we sell by
participating in tenders, for telecom applications.
In October 2011 we formed a joint venture in South
Africa with Powertech. We trade as Battech (PTY) Ltd
trading as EnerSys PowerTech in South Africa, and
all of our SSA business is traded from this company.
It’s a total solutions business looking after clients in
telecom, mining and material handling.
Wouter Vink, Business Development Manager,
EnerSys Powertech: In the power solution sector,
we offer complete outdoor and indoor cabinet
solutions as well as batteries for standby, cyclic
and hybrid applications, depending on the needs
of the customer. We also supply solar solutions.
EnerSys PowerTech is a complete integrator of DC
power, solar solutions, line conditioning and voltage
regulators, and we supply direct to MNOs, towercos
or to integrators.
TowerXchange: We’ve been referred to EnerSys as
one of the leading suppliers of lead-acid batteries.
What are the relative merits of lead-acid, lithium,
sodium and vanadium redox energy storage
solutions?
Jean-Luc, Managing Director, Africa, EnerSys: It’s
important to not minimise role of lead-acid batteries
in telecoms. With the energy storage applications
at unreliable and off-grid sites, there are a limited
“
Hybrid site TCO comparison lead acid technologies
1.2
1
0.8
TPPL
$
Flooded
0.4
0.2
0
It’s important to not minimise role
of lead-acid batteries in telecoms...
While there are a few trials of
new solutions with different
capabilities, we don’t see too many
of these evolving energy storage
technologies being rolled out in high
volumes - they are generally very
challenging for telecom applications
in terms of initial investment
“
Gel
0.6
Fuel savings/
year
Maintenance
reduction/
year
number of proven energy storage technologies.
While there are a few trials of new solutions with
different capabilities, we don’t see too many of
these evolving energy storage technologies being
rolled out in high volumes - they are generally very
challenging for telecom applications in terms of
initial investment.
EnerSys Powertech: There are various ways of
storing energy, and the choice of solution depends on
the application.
Genset
replacement
avoidance/year
Total savings/
year
Source: EnerSys
EMEA, EnerSys: I agree with Wouter, selecting the
right energy storage chemistry is related to the
application. In telecom space we see mostly Li-Ion
players being active but saying this it looks that still
Li-Ion is viable in applications where space and/
or weight restrictions exist. In other markets like
utilities and renewable we see other technologies too
but it’s too early to say which one will be the possible
break-through one. Important thing to remember is
that today more than 90% of demand in the battery
market is fulfilled with lead acid batteries. This is
due the combination of cost efficient, reliable and
Nonetheless we remain very open minded when
looking at alternative chemistries for energy
storage. EnerSys is in a unique position in that we
have a wide technology portfolio beyond lead-acid
batteries - we provide Li-Ion, Ni-Cad and Nickel-Zinc
solutions - and we have experience of energy storage
applications from different industries.
TowerXchange: What is the benefit of lead-acid
over alternate energy storage chemistries?
Jean-Luc, Managing Director, Africa, EnerSys: The
reason lead-acid batteries are so widely used is to
do with price. New energy storage technologies may
propose different cyclic efficiencies, but it’s more
difficult to prove the case in terms of CAPEX and
OPEX. We still see the majority of cell site energy
storage solutions being lead-acid based because it’s a
good product and it’s working.
It’s important to remember that lead-acid is not a
static technology, it is being improved all the time.
EnerSys’ advanced lead technology (TPPL = Thin
Plate Pure Lead) is a good example of this; more
power/cycles/life/power density to offer even better
TCO. TPPL can offer a 50-60% reduction in operating
expenditure compared to sites running diesel gensets
24/7.
EnerSys Powertech: Most MNOs and towercos are
looking at Total Cost of Ownership (TCO) over three
to five year scenarios, depending on the application
“
responsibility for power is passed through or if it’s
shifted to the towerco.
The reason lead-acid batteries are
so widely used is to do with price.
New energy storage technologies
may propose different cyclic
efficiencies, but it’s more difficult
to prove the case in terms of CAPEX
and OPEX. We still see the majority
of cell site energy storage solutions
being lead-acid based because it’s a
good product and it’s working
“
field proved technology.
of the energy storage product, and we see lead-acid
as having superior TCO over those periods.
TowerXchange: What impact has the entry of
towercos into Africa had on your business?
EnerSys Powertech: The towercos are playing a big
role in the deployment of CAPEX into batteries and
power systems.
Towercos’ first step isn’t always to exchange batteries
at newly acquired sites; they tend to optimise AC
power first - DC often comes later. The impact on
our business depends significantly on the towerco’s
arrangement with their tenants, and whether
The towerco has a big focus on opex savings. Under
towercos’ SLAs, energy opex savings are often money
in their pocket, which means they have a much
bigger focus on the payback and what they can save
at the end of the day.
TowerXchange: What’s the balance of EnerSys
order book between standby power solutions,
backup generators and cyclic batteries for very
unreliable grid, off-grid and hybrid solutions, and
how is that changing as awareness of renewables
increases?
EnerSys Powertech: Again, the selection of energy
storage solution depends on the application, in
particular on grid availability.
At a cell site on a stable grid you would use standby
power or battery instead of a cyclic battery. If the
site has more than ten grid power interruptions per
month you might use TPPL technology to enable
more cycles.
Where you have sites burning a lot of diesel through
backup generators, you might want to implement
delayed start scenarios, where you use a percentage
of battery storage capacity to do some cycles and
save OPEX.
Demand for cyclic batteries varies from country to
country. There’s definitely a shift from standby to
TowerXchange: How does EnerSys integrate your
offerings with your customers’ supply chains and
maintenance processes? Is any M2M monitoring
capability built in?
EnerSys Powertech: We have various monitoring
capabilities to look after health of battery and
storage. Everyone is monitoring their energy
storage solution to measure the savings they are
making. Some clients use our built-in monitoring
systems, others integrate with independent remote
monitoring solutions - the approach varies from
MNO to MNO or towerco to towerco.
EMEA, EnerSys: M2M inftastructure is developing
fast which means more offerings available with
increased functionalities. EnerSys is following this
market’s development and maturation since good
monitoring and communication of Energy Storage
usage could be additional benefit to our customers to
develop their processes to cut cost, plan maintenance
et cetera.
TowerXchange: One of the problems with he
pervasiveness of 12v lead-acid batteries is that
they can be used in domestic and small business
environments, creating a black market for stolen
batteries. What can battery manufacturers do to
help combat theft?
EMEA, EnerSys: There are several initiatives we’re
taking which unfortunately we can’t talk about in
a publication as we could tip off thieves! But you’re
right to note that there is a black market for standard
12v batteries.
Cell sites built with12v batteries, each of which a
thief can sell to use in a neighbor’s truck or solar
system, are at risk of theft. One simple step operators
and towercos can take is to use for example 2V
cells instead. SBS EON Technology is now extended
into 2V design so customers can benefit from
the unique benefits but also reduce interested of
thieves: stealing one or two is pointless - you’d need
six to start something.
Different anti-theft concepts are needed. There’s
no clear design solution yet, but would have to be
a low tech, low cost solution to keep our unit prices
competitive.
would differentiate EnerSys from other energy
storage and backup power solution providers?
EnerSys Powertech: A critical differentiator is the
quality designed into the product and processes and
consistency of EnerSys’s manufacturing process
“
Availability of product is a
key differentiator when working
with a market leader like EnerSys
- we have various different
factories, depending on the battery
technology required, and our
clients are not dependent on single
source of supply
“
cyclic batteries, driven by growing awareness of
solar and the falling price of PV panels over the last
five years, decreasing payback periods. Whereas
perhaps 20% of our energy storage solutions are
deployed to solar sites in South Africa, that figure
might be 30-40% in certain African countries - it
depends where we’re selling.
and availability of various battery technologies,
OPzS,AGM,GEL,TPPL (Pure Lead) and others.
Also, we’re very committed to the African market
- to ensuring we have the right product to meet
MNOs and towercos’ needs, and to ensuring we
have the necessary stock available for the required
application. Availability of product is a key
differentiator when working with a market leader
like EnerSys - we have various different factories,
depending on the battery technology required, and
our clients are not dependent on single source of
supply.
Anssi Laitinen, Director of Marketing, Reserve
Power EMEA, EnerSys: Additionally I would mention
EnerSys organisation and financial capability to
support our customer even in largest projects and
roll-outs
Accelerate your sales cycle
and close your next major deal in Africa
Advertise in the TowerXchange Journal, circulated to a highly targeted community of the 3,629
most influential tower decision makers
3%
2%
4%
5%
Operators
13%
Turnkey & managed
9%
27%
10%
C-level
services
VP, Exec Director,
Partner
Towercos
Power equipment & ESCOs
Investors & advisers
Passive equipment
10%
16%
11%
44%
17%
Active equipment &
Regulators
Others
24%
MENA
45%
Director-level/
Dept Head
Senior Manager/
Managing Exec
providers
services
11%
Sub-Saharan
Africa
18%
Middle & Junior
Manager
Americas
Europe
22%
Asia
10%
To book your advertisement, contact: Annabelle Mayhew | [email protected] | M. +44 (0) 7423 512588
Tower
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The drivers of SBA Communications ` expansion

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