South Asia and Middle East Telecom Infrastructure - Analyst Briefing
 

South Asia and Middle East Telecom Infrastructure - Analyst Briefing

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South Asia and Middle East Telecom Infrastructure - Analyst Briefing South Asia and Middle East Telecom Infrastructure - Analyst Briefing Presentation Transcript

  • South Asia & Middle East Telecom Infrastructure: Growing in Pursuit of a Connected World Aandal Margabanthu Rahul Agarwal Information & Communication Technologies 4th August 2011Frost & Sullivan’s Growth Consulting can assist with your growth strategies
  • Today’s PresentersAandal Margabanthu, Research Associate,Frost & SullivanRahul Agarwal, Consultant,Frost & Sullivan 2
  • Focus PointsAgenda Scope of the Study Wireless Infrastructure Market Market Definitions Key Ecosystem Participant for the Telecom Infrastructure & Broadband Market Drivers and Restraints for Telecom Infrastructure Business Models Explosive Growth in Mobile Subscribers Rising Towers in SAME BTS Growth fuelled by next generation technologies Top Trends in the Wireless Infrastructure Market Increase in Data Traffic Growing Infrastructure Sharing Practice-Pros and Cons Strategic Conclusions Broadband Market Market Definitions Drivers and Restraints for Broadband Market Explosive Growth in Broadband Subscribers Strategic Conclusions 3
  • Scope of the StudyThe study deals with the Telecom infrastructure in India, Bangladesh, Sri Lanka, UAE, Saudi Arabia andEgypt. The study provides an insight into the Wireless Network Infrastructure and the BroadbandInfrastructure of the region.The wireless segment discusses about the Mobile Infrastructure assets of the region and provides an ideaabout the total number of Telecom Towers and Base Transceiver Stations in each country. It discusses themajor drivers and restraints that affects the market and its impact on the industry in the forthcoming years.The study does not cover the backhaul network or other network components like microwave links orantennas. However the Capital Expenditure for microwave links and antennas in all the regions have beenincluded.The study on broadband market focuses upon the state of broadband internet in the region along withpenetration and other key statistical inputs. The study highlights key access technologies prevalent in theregions along with key service providers and maps the competitive landscape. Market drivers and restraintshelp formulate market potential going forward and forecast the fate of access technologies and theirsignificance in the growing broadband market of the region. The study briefly touches upon the cableinfrastructure and does not include insights on broadband equipment installations. 4
  • WIRELESS INFRASTRUCTURE MARKET 5
  • Market Definitions Wireless Infrastructure Passive Infrastructure Backhaul Infrastructure Active Infrastructure Backhaul is the connection Passive Infrastructure between each tower’s Base Active Infrastructure includes the non electric Transceiver Station (BTS) includes radio antenna, base components like the tower and base station controller transceiver station (BTS), and the pylons, diesel electric (which controls multiple microwave equipment, generator, battery, air BTS’s from different towers) transceiver and signal conditioners and equipment usually through microwave processing devices. shelter. radio or optical link Sharing the same antenna to receive and Antenna Sharing transmit radio frequencies of multiple Sharing of the common site to operators house the physical towers and Permitting the subscribers of other service Site Sharing Roaming equipment like antennas and provider to access its own network BTS of multiple vendors Sharing of Radio Access Network (RAN) The concept of using the same Radio Access implies sharing of resources that connect physical tower to install Network Sharing the user equipment with the Core network Mast Sharing antennas belonging to multiple of the service provider operators Leasing or renting a part of the bandwidth Spectrum held by a telecom service provider to Sharing another service provider 6
  • Key Ecosystem Participant for the Telecom Infrastructure & Broadband Market India Bangladesh United Arab Emirates Indus Tower Grameenphone Reliance Infrastructure Banglalink Etisalat BSNL Robi Axiata Du Bharti Infratel Airtel Bangladesh Viom Networks Banglalion GTL Qubee MTNL Bharti Airtel Egypt Sri Lanka Mobinil Dialog Axiata PLC Vodafone Egypt Saudi Arabia Mobitel Etisalat Misr Etisalat Lanka Telecom Egypt Saudi Telecom Company Airtel Lanka Mobily Sri Lanka Telecom Zain SaudiHuawei, ZTE, Alcatel Lucent, Ericcson, Nokia Siemens Networks, Cisco etc some of equipment vendors who provide end to end active infrastructure solutions in the SAME region Source : Frost & Sullivan 7
  • Drivers and Restraints for Telecom InfrastructureTelecom Infrastructure Market: Key Market Drivers and Restraints (SAME), 2010-2017 Explosive growth in the mobile subscribers fuelled by 1-2 years 3-4 years 5-6 years increasing affordability and decreasing service and High High Medium handset pricesMarket Drivers Introduction of next generation technologies like Medium High High 3G,3.5G,4G Increase in the usage of data and value Medium Medium High added services Focus on quality of service for Medium Medium High competitive differentiation Decreasing ARPU across the region has affected the operators margin Medium Medium MediumMarket Restraints Increasing CAPEX and OPEX requirements Medium Medium High owing to rising fuel and material costs High Infrastructure sharing practice on the increase Medium High Source: Frost & Sullivan analysis. 8
  • Business ModelsDifferent Business models that the Tower Business follow are Operator Owned Operator Owned Demerged Entities Demerged Entities • • The parent operator hives off its tower assets •• Supports the parent operator’s network The parent operator hives off its tower assets Supports the parent operator’s network into aa separate business unit •• Single tenant into separate business unit Single tenant • • Unlocks the potential of the tower assets •• The entire CAPEX and OPEX has to be borne Unlocks the potential of the tower assets The entire CAPEX and OPEX has to be borne • • For the incumbent,it is estimated to generate aa by the operators For the incumbent,it is estimated to generate by the operators revenue increase of upto 15% •• Fast being replaced by the sharing models revenue increase of upto 15% Fast being replaced by the sharing models • • Example Bharti Infratel,Reliance Telecom • Example Etisalat,Saudi Telecom Company etc Example Bharti Infratel,Reliance Telecom • Example Etisalat,Saudi Telecom Company etc Infrastructure Infrastructure Joint Alliances Joint Alliances Independent Tower Companies Independent Tower Companies • • Formed as aa Joint Venture between two or Formed as Joint Venture between two or • • Not backed by operator; remains as the best Not backed by operator; remains as the best more operators more operators option for new entrants as itit reduces the time to option for new entrants as reduces the time to • Reduction in CAPEX and OPEX is possible market • Reduction in CAPEX and OPEX is possible market • Encourages Infrastructure Sharing • Based on the multi tenant principle,which leads • Encourages Infrastructure Sharing • Based on the multi tenant principle,which leads • • Enables the operators to concentrate on their Enables the operators to concentrate on their and huge CAPEX and OPEX savings and huge CAPEX and OPEX savings core functions like customer relations and core functions like customer relations and • • Example GTL Infrastructure, American Tower Example GTL Infrastructure, American Tower subscriber retention etc Company in India subscriber retention etc Company in India • Example Indus Towers in India • Example Indus Towers in India Source: Frost & Sullivan 9
  • Explosive Growth in Mobile Subscribers 2000 1777.4 CAGR: 9% 1500 b i s ) S sr e ( n u cbr m 972.6 1000 500 0 2010 2017 India Banglades h SriLanka UAE Saudi Arabia Egypt Source : Frost & Sullivan• The South Asian and Middle Eastern markets have been witnessing an explosive growth in the subscriber base in the recent years due to increased affordability and innovative and price competitive services offered• Another reason is the availability of cheap handsets with enhanced features like 3G support etc• Voice services still corresponds to about 80% of the operators revenues but there is an increase in data usage• The ARPU will continue to decline in the region• There is a huge potential for growth in the region as the rural areas in countries like India, Bangladesh and Egypt do not have a mobile penetration which is on scale with the population• A major proportion of the subscribers is expected to come from India followed by Bangladesh 10
  • Rising Towers in SAME CAGR: 4.8% 0.58 0.6 45 ate(%) 38.8 40 0.5 0.42 0.38 35 Towers(mn) Tower Growth R 0.4 30 25 0.3 20 0.2 15 10 0.1 10.1 5 0.0 0 CY 09 CY 10 CY 17 Source: Frost & Sullivan Tow ers(million) Tow er Grow th Rate(%)• Towers are expected to grow at steady CAGR of 4.8%• Increased CAPEX and OPEX requirements coupled with decreasing ARPU has resulted in the adoption of the tenancy model wherein more number of BTS are colocated on the same tower• Infrastructure sharing practice is on the rise to curtail the network expenditures• New technological innovations in the tower industry include usage tubular towers design, intelligent network ,fuel cells ,free cooling, etc• Alternate sources of energy like solar and wind are being used to power the installations 11
  • BTS Growth fuelled by next generation technologies CAGR: 16.4% 1.91 2.0 200 B T S G ro w th 190.3 B T S (m n ) 1.5 150 R a te (% ) 1.0 0.66 100 0.44 0.5 50 49.3 0.0 0 CY 09 CY 10 CY 17 Number of BTS BTS Grow th Rate(%) Source : Frost & Sullivan• The BTS considered here is inclusive of 2G(GSM/CDMA),3G,3.5G and 4G BTS for the study period• Introduction of technologies like WCDMA,HSPA/HSPA+ ,WiMAX, LTE, UMTS etc has increased the demand for BTS• Increased per user data usage and the advent of mobile broadband will drive the growth in the number of BTS• Active infrastructure sharing may hinder the growth in BTS numbers. However there is currently not enough support from the technological and regulatory front for BTS sharing• Overall tenancy ratio for SAME in 2010 is 1.6x and by 2017 it is expected to reach 3.3x 12
  • Trend #1: Increase in Data Traffic 3G and 3.5G services have been launched in India, UAE, Saudi and these countries will have commercial 4G launch by 2011 or 2012. The entire region will have next gen technologies launched in the next 2 years• Poor fiber connectivity and high • Intense competition has resulted in cost of copper and optical fiber Increase in Data decreased tariff in the region which has• Mobile broadband through dongles Usage will need in turn resulted in a decreased ARPU. (EVDO) and handsets(3G) is now drive the growth The focus is now on VAS and data to the preferred medium to increase in wireless bolster the ARPU the low internet penetration in the infrastructure • In a high churn market, innovative data region services will help retain customers • Availability of affordable feature rich phones in the region • Increasing penetration of smartphones Source : Frost & Sullivan 13
  • Trend 2#: Growing Infrastructure Sharing Practice-Prosand Cons Advantages and Disadvantages of Infrastructure Sharing Unbundling of resources can result in a revenue increase of up to 15% for the operators Reduces the growth in the total number of towers Optimizes existing resources and and affects the tower reduces negative environmental impact company growth Helps improve service offerings by facilitating innovative and price Reduced competitive competitive services differentiation for existing operators Helps focus on core operations like customer relationships, subscriber retention etc Complexity involved with the day to day operations of the cell site Reduces CAPEX and OPEX thereby enabling network expansion in rural areas Lack of secure technological support especially in case ofReduces the entry barriers sharing Active Infrastructureand the time to market for components like BTS (Node B)new entrants etc Source : Frost & Sullivan 14
  • Strategic Conclusions Increasing adoption of Infrastructure Sharing1 in the region Shift from Voice to Data Services with VAS2 now acting as a revenue generation and differentiation tool There will be an increase in the numbers of3 tenancies in the region Next generation Technology Deployments4 across the region will positively affect the network infrastructure requirement In the future, the focus will shift to improving5 Quality of Service Source: Frost & Sullivan. 15
  • BROADBAND MARKET 16
  • Market DefinitionsBroadband Subscription in the region has the following access technologies considered India ADSL, 3G, WiMAX Bangladesh Fiber, 3G, WiMAX Sri Lanka ADSL, Fiber, 3G, 3.5G, WiMAX UAE ADSL, Fiber, 3G Saudi Arabia ADSL, Fiber, HSPA, WiMAX Egypt ADSL, 3G, HSDPAThe statistic is measured irrespective of the type of device used to access the Internet, or the method of payment.Subscriptions and forecasts are not inclusive of LTE technology 17
  • Drivers and Restraints for Broadband MarketBroadband Market: Key Market Drivers and Restraints (SAME), 2010-2017 1-2 years 3-4 years 5-6 years Growing Economy - Increasing access to PC and affordable smartphones. Social awareness and Literacy High High MediumMarket Drivers Pro active Government - Initiatives encouraging computer Medium High High and Internet use and IT and Internet-related businesses Introduction of next generation technologies like 3G.3.5G,4G. Laying down Medium Medium High infrastructure to support increased usage Increase in data usage and VAS Medium Medium High Lack of infrastructure in emerging economies – Expensive to lay down the infrastructure for High Medium LowMarket Restraints wired expansion Low level of PC penetration in emerging High Medium Low economies of South Asia Low Affordability, limited coverage and literacy rates High Medium in rural areas of the emerging economies Source: Frost & Sullivan analysis. 18
  • Explosive Growth in Broadband Subscribers 500 Broadband Subscriptions 340.6 Sb cib r ( N n) u s r es M) ) m CAGR: 41% 30.8 0 2010 2017 India Banglades h SriLanka UAE Saudi Arabia Egypt Source : Frost & Sullivan• Pro active government, growing economy and increasing social awareness and literacy in the region bodes well for broadband market. Explosive growth in the mobile subscriptions along with Introduction of next generation networks will further aid the growth• Increasing preference for mobile subscriptions over fixed line coupled with limited coverage and poor wireline infrastructure in the countries of India, Bangladesh will make wireless broadband a preferred medium 19
  • Explosive Growth in Broadband Subscribers 500 Wireline Broadband Subscriptions u cbr Mm)) ) S sr e ( N n CAGR: 31.2% b i s 97.9 14.7 0 2010 2017 India Banglades h SriLanka UAE Saudi Arabia Egypt 500 Wireless Broadband Subscriptions u cbr Mm)) ) S sr e ( N n 242.2 CAGR: 47.6% b i s 15.9 0 2010 2017 India Banglades h SriLanka UAE Saudi Arabia Egypt Source : Frost & Sullivan 20
  • Explosive Growth in Broadband Subscribers Broadband Subscriptions CAGR (2010 – 2017) Egypt 16.63% Saudi Arabia 30.26% UAE 23.92% Sri Lanka 50.21% Bangladesh 54.75% India 54.21% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%• There is a huge potential for growth in the region as countries like India, Bangladesh and Sri Lanka will grow at a CAGR close to 54% whereas the developed Middle Eastern countries of Egypt, UAE and Saudi Arabia are expected to grow at a modest CAGR close to 23 per cent Source : Frost & Sullivan 21
  • Strategic Conclusions Deployment of next generation networks would drive the growth in the region. India1 and Bangladesh await 3G while other countries are embarking on LTE Mobile Broadband is set for explosive growth2 and would be the preferred mode of broadband adoption In Middle East wireline access would3 continue to co exist with wireless access owing to superior infrastructure India, Sri Lanka and Bangladesh to have4 mobile broadband as the preferred mode of access Source: Frost & Sullivan. 22
  • Next Steps Request a proposal for or Growth Partnership Services or Growth Consulting Services to support you and your team to accelerate the growth of your company. (myfrost@frost.com) +91 (0) 22 6160 6666 Join us at our annual Growth, Innovation, and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth (www.gil-global.com) Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news) 23
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  • For Additional InformationCaroline Lewis Aandal MargabanthuCorporate Communications Research Associate91.022.6607 2000 Information & CommunicationCaroline.lewis@frost.com Technology Practice AandalM@frost.comAbhishek Chauhan Rahul AgarwalSenior Consultant ConsultantInformation & Communication Information & CommunicationTechnology Practice Technology Practiceabhishekc1@frost.com RahulA@frost.com 26