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Tower xchange issue 3 featuring Broadnet Telecom

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  • 1. Tower XchangeTower XchangeTop 200 decision makers in African towers invited to TowerXchange MeetupISSUE 3 | April 2013 | www.towerxchange.comMarc Rennard: Why Orange is sharing towersStructuring deals to meet the requirements of each affiliateWhy IHS invested in Cameroon and Cote d’IvoireEaton CTO Thomas Jonell’s procurement prioritiesEgypt’s 4 companies licensed to lease infrastructureGrowth stock ATC vs the PE-backed towercosAfrica’s New telecoms infrastructure journal
  • 2. With special thanks to the TowerXchange “Inner Circle”About TowerXchangeTowerXchange is your independent communityfor operators, towercos, investors andsuppliers interested in African towers. We’re acommunity of practitioners formed to promoteand accelerate infrastructure sharing inAfrica. TowerXchange don’t build, operate orinvest in towers; we’re a neutral communityhost and commentator on African telecomsinfrastructure.The TowerXchange Journal is free to qualifyingrecipients. We also provide webinars andregular meetups. TowerXchange monetizesthis community through the sale of advertisingand sponsored content, without compromisingeditorial integrity.TowerXchange was founded by KieronOsmotherly, a TMT community host and eventsorganizer with 16 years’ experience, and isgoverned with the support and advice of theTowerXchange “Inner Circle” – an informalnetwork of advisorsOur informal network of advisers:Alan HarperCEOEaton TowersMichel FaivreDirecteur Programme Partaged’Infrastructure AMEAFrance Telecom-OrangeNina TriantisManaging Director, GlobalHead of Telecoms & MediaStandard BankJeffrey EldredgePartnerVinson & ElkinsTorsten EsbjørnRegional Director, AfricaRambollZouhair KhaliqConsultant, Executive DirectorWarid Telecom, Former CEO,Orascom Int’l InvestmentLaurentius HumanCEOInalaChuck GreenCEOHelios Towers AfricaRiana DonaldsonManager: International NetworkOperations SupportVodacomChris Gabrielformer CEO, Zain AfricaSenior Adviser, Macquarie GroupChairman, Clean Power SystemsNatasha GoodPartnerFreshfieldsAyman Al AdlAssociate Director – TMTStandard Chartered BankAhjeeth JaiJaiConsultantInvestecGary StauntonCEOLikusasa GroupDaniel LeeFormerly Managing DirectorCitigroupFazal HussainCEOSWAP InternationalAndrew DoyleManaging DirectorTech & Comms PracticeMott MacDonaldJohan SmithHead – Africa Telecoms GroupKPMGRajat MalhotraCEO, Middle East & AfricaHayat CommunicationsAdeel BajwaSenior GM of Legal Affairs andContractsWarid TelecomTunde TitilayoVice ChairmanSWAP International© 2013 Site Seven Media Ltd. All rights reserved. Neither the wholenor any substantial part of this publication may be re-produced,stored in a retrieval system, or transmitted by any means withoutthe prior permission of Site Seven Media Ltd. Short extracts may bequoted if TowerXchange is cited as the source. TowerXchange is atrading name of Site Seven Media Ltd, registered in the UK. Companynumber 8293930.www.towerxchange.com | TowerXchange Issue 2 | XX| TowerXchange Issue 3 | www.towerxchange.com2Cover image © François Maréchal pour Orange
  • 3. ContentsDepartments5 Tower People6 News< Etisalat seeking buyers in Tanzania< Telma’s towers for sale< Airtel to acquire Warid Uganda< African MarketWatch14 Cover story: Why Orange is sharing towers19 BMI Analysis: Why Kenya could be next23 Editorial: Announcing the TowerXchange Meetup50 How to guide: Understanding FX risk in Africa92 Beyond passive infrastructure:93 The case for transmission sharing99 Wholesale network sharing29 54 63117102TowercoperspectivesEgyptcase studyWho’s who in tower design,manufacture, installation & MSTowerPower – reducing Africa’sreliance on diesel, part twoFrom RMS to monitoring andmanagement platforms30 How IHS creates shared value35 Eaton’s procurement priorities40 Helios on H&S, ethics and compliance45 Growth stock ATC vs PE-backed towercos55 The Mott MacDonald Share Square: Egypt57 Mobiserve believe a tower deal is imminent60 EEC Group are positioning themselves to partnertowercos71 Mer Telecom’s one-stop-shop76 End-to-end services from NETIS81 Static asset manufacturers TESA & GSM TP85 How to design towers for easy installation90 Fast deployment by Viettel’s rollout consultants118 Power beyond the tower122 The dawn of the green energy era126 Why you should re-think charging batteries with DG129 Achieving desired autonomy103 How to combat fuel theft109 How to create actionable intelligence from yourInfrastructure data114 How to measure what matterswww.towerxchange.com | TowerXchange Issue 3 | 3| TowerXchange Issue 2 | www.towerxchange.com3
  • 4. Leadcom Integrated Solutions Ltd. isan international leader, in the provision,management, and implementationof telecommunications networkdeployment services and solutions forpan-regional operators, vendors, andmajor enterprises.Our extensive and longstanding experienceand extensive footprint, building and upgradingnetworks worldwide qualify us to offer ourcustomers excellent, comprehensive operationand maintenance services for their networksaimed at reducing the Operator’s OPEX andincreasing network efficiency and availability.Contact us at info@leadcom-is.com
  • 5. Tower PeopleIHS appoints new Chief Commercial Officerto drive continued growth IHS has appointed Rhys Phillip as ChiefCommercial Officer. Mr Phillip joins IHS fromErnst & Young where he was Partner and GlobalHead of Transaction Advisory Services for theTelecommunications Sector.In addition to advising tower businesses onmany of the African transactions since 2007 –particularly focusing on deals in Cameroon, Coted’Ivoire, Ghana, Kenya, Nigeria, South Africa,Tanzania and Uganda – Phillip led cross bordertransactions for leading operators, infrastructurebusinesses, financial investors and Managed ServiceProviders.  Prior to Ernst & Young, Mr Phillip ledM&A transactions in house for Vodafone and BTGroup and spent a number of years in InvestmentBanking in the UK and Europe.  Issam Darwish, CEO, IHS commented on theappointment: “Rhys has been one of the mostimpressive experts on African infrastructure inthe market for years.  Having advised some of theworld’s largest mobile network operators, he is anexciting addition to the IHS leadership team as wecontinue to grow our business. He is an expert inconstructing value driven acquisitions, ensuringefficacy and accuracy throughout.  We are lookingforward to benefiting from Rhys’ knowledge andnetwork in the telecoms sector at this importantstage of our growth.” Rhys Philip said: “IHS’ recent deals with OrangeDaniel Lee developed the leading tower advisorypractice at Citi where he advised on the sale of over10,000 towers (with a corresponding deal value ofUS$1.75bn) from mobile operators primarily in theemerging markets. Daniel brings incredible insightand tremendous relationships across the sector. Daniel advised on the first sale-leaseback in Africaand many other ground breaking transactions,each representing the first tower transactionin a number of different markets (e.g. Ghana,Tanzania, DRC, South Africa, Uganda, Cameroon,Cote d’Ivoire). Daniel has broad experience inworking with a variety of different mobile operatorsincluding MTN, Millicom and Cell C amongothers. Additionally, Daniel successfully advised anumber of towercos in Africa in their critical earlyfunding rounds, raising more than US$500mn inequity.Daniel recently departed from Citigroup, butwe’re delighted to announce he has accepted ourinvitation to join the TowerXchange Inner Circleadvisory board, and you’ll hear more from him inan in-depth interview to appear in the June editionof TowerXchangeDaniel Lee leaves Citigroup, joins TowerXchange Inner Circle informal advisory boardwww.towerxchange.com | TowerXchange Issue 3 | 5| TowerXchange Issue 3 | www.towerxchange.comXX
  • 6. Newsin Cameroon and Cote d’Ivoire highlights thedynamism of the management team and themomentum they have created for IHS, Nigeria’smost exciting telecommunications infrastructureprovider. The focus on providing cutting edgetechnology solar energy innovations in addition toterrific growth over the last 18 months makes mevery proud to join Issam’s team and I am thrilled tobe part of IHS’ continued growth story and increasethe tower portfolio while attracting supportiveinvestors.”You can read an interview with Mr Phillip on pages30-34Etisalat seeking buyers for Zantel Tanzaniaor for Tanzanian towersTowerXchange understands that Etisalat isconcurrently seeking a buyer either to acquireTanzanian subsidiary Zantel, of which Etisalatowns 65%, or to acquire the 600-700 towers Zantelhas in the region. Standard Chartered have beenappointed as Etisalat’s advisors.Helios Towers Africa would be favourites to acquireZantel’s towers, if sold separately, as Chuck Green’spioneering towerco acquired a 60% stake in ajoint venture with Millicom-Tigo in 2010, to whichMillicom-Tigo’s 1,020 Tanzanian towers weretransferred.Market conditions in Tanzania appear veryfavourable to the towerco business model.Tanzania has four licensed tier one mobile networkoperators; Etisalat’s Zantel, Airtel, Vodacom andMillicom Tigo. There’s room for growth in themarket – according to the GSMA, Tanzania has 62%mobile subscriber penetration, growing at 4.4%CAGR 2011-2012, with 75.8% population coverage.Diesel and maintenance costs push opex inTanzania to a point where the efficiencies offered bythe towerco business model makes sense. Tanzaniahad 4,593 base stations in 2012, a 25% growth from2011, of which 1,442 were off grid and another halfon unreliable grids experiencing power outages ofmore than six hours per day – statistics again fromthe GSMA.Rumours persist that Etisalat is still seeking to sellit’s 3,000 towers in Nigeria, but securing the buy-inof local stakeholders is believed to continue to holdup any potential transaction.www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com6With the appointment of ThomasSonesson, former CEO at managedservices company Reime Group, as CEOof ATC Ghana, Gordon Porter has movedfrom Ghana to become CEO of AmericanTower’s other joint venture with MTN,ATC Uganda.Both Ghana and Uganda share a similarlychallenging operating environmentwith high capex and particularly highopex due to only around half of cell sitesbenefitting from grid connectionsAmerican Tower swaps CEOs inGhana and UgandaAccording to Bloomberg, Madagascan telecomsfirm Telecom Malagasy (Telma) has askedinvestment bank Lazard to explore optionsfor the complete disposal of its business or thedivestment of its portfolio of 500 towers, believedto be valued at between US$50-70million. Severaltowercos are believed to be interested. Telmarecently created one of Africa’s first operator-ledtowercos, TowerCo of Madagascar, to which 100sites were transferred.Telma competes with Bharti Airtel, who holda similar number of towers, and Madagascanmarket leaders Orange who have an estimated700 sites.According to BuddeComm, mobile penetrationin Madagascar remains at a modest 47%. 3G waslaunched in 2012Telma’s towers for sale
  • 7. AssetManagementSystem(AIMS)Passive InfrastructureMonitoring DataPassive InfrastructureFinancial and TechnicalData• Availability•••• SLA Support•• Asset Register•• Hierarchical Dashboards• GIS
  • 8. Bharti Airtel has acquired 100% of the equityin Warid Telecom Uganda for an estimatedUS$100million, in news broken by Reuters justbefore TowerXchange issue 3 went to print. Thedeal was expected to bring Airtel’s market share inUganda to around 39%, very similar to MTN whohave around 40%. Also competing in the market areUganda Telecom Ltd (UTL), Orange Uganda and iTel.The implications for the tower industry could besignificant. In 2012, Eaton Towers acquired anestimated 400 towers from Warid Telecom Uganda,combining them with a further 300 sites acquiredfrom Orange Uganda. With 260 of those cell sitesalready shared between the two operators at thetime of the transaction, as a result of a conscious,co-ordinated rollout, the deal to buy Orange andWarid’s networks gave Eaton Towers over 1,000tenants, meaning they had “scale, pre-existingrevenue, and an ability to run a bigger businessfrom day one,” according to CEO Alan Harper in hisinterview in issue 1 of TowerXchange.In 2011 American Tower paid US$89m to MTNUganda for 51% equity in joint venture towercoATC Uganda, to which 1,000 of MTN’s towers weretransferred. UTL’s towers had also been believedto be on the market recently, although towerco’sappetite for the portfolio may have been limiteddue the proximity of so many UTL sites to the ATCUganda and Eaton towers already being marketedfor co-location. Over half of of Uganda’s towers areoperated by independent towercos. According tothe GSMA, there were a total of 3,067 cell sites inUganda in 2012, 1,249 of which were off-grid.This month’s deal between Airtel and Warid wasdescribed by Airtel’s Managing Director and CEO(International) Manoj Kohli as the “first in-marketacquisition” in the telco’s history, and remainssubject to regulatory and statutory approval. WithAirtel’s Africa Towers towerco strategy still unclear,the Indian-owned operator has been an enthusiastictenant of shared towers in the recent past in severalof the seventeen African countries in which theyoperateAtlantique Telecom, which has operations inBenin, the Central African Republic, Cote d’Ivoire,Gabon, Niger and Togo, and part of The EtisalatGroup, announced that it has entered a five yearmulti-country managed services agreement withEricsson to manage its entire mobile networks. Thisagreement enables Etisalat to focus even more ontheir core business - delivering innovative offeringsto their customers.Nagi Abboud, CEO of Atlantique Telecom said: “Withthe evolution of the competitive landscape in ourmarkets, we need to adapt our operating model toprovide a better service to our end users. Adoptingthis business outsourcing model is therefore animportant step in our group strategy execution thatwill be for the benefit of our subscribers, who remainour top priority, and this will, as well, open newgrowth opportunities to our employees.”Lars Lindén, Head of Ericsson in region sub-SaharanAfrica says, “Managed services is a proven businessmodel to support operators in growth mode and it isone of the most dynamic areas in our industry. Ourwork together will support Atlantique Telecom indefining a new generation of operators in Africa.”The contract covers network operations, fieldmaintenance, network optimization and spare partsmanagement for Etisalat’ s multivendor mobilenetworks, including access, core and transmission, aswell as value added serviceswww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com8Bharti Airtel to acquire Warid Telecom UgandaAtlantique Telecom awards Ericsson fiveyear managed service contract
  • 9. Accelerate your sales cycleand close your next major deal in AfricaAdvertise in the TowerXchange Journal, circulated to a highly targeted community of the 1,868most influential tower decision makersTo book your advertisement, contact: Kieron Osmotherly | kosmotherly@towerxchange.com | M. +44 (0) 7771 14800127%4%16%11%11%10%10%9%3%OperatorsTurnkey & managedservicesTowercosPower equipment & ESCOsInvestors & advisersPassive equipmentprovidersActive equipment &servicesRegulatorsOthersSub-SaharanAfricaMENAAmericasEuropeAsia45%10%22%18%5%C-levelVP, Exec Director,PartnerDirector-level/Dept HeadSenior Manager/Managing ExecMiddle & JuniorManager24%17%13%2%44%
  • 10. MTN and Airtel CEOs on theprofitability of African mobilenetwork operatorsany one market?” Asked Dabengwa, referencingcountries with five of six operators servingpopulations of 30 million. “I’m not sure how manyoperators in Africa are actually profitable.”“Lots of African operators are making losses,”agreed Manoj Kohli, CEO of Airtel Africa. “The timehas come to turn around Africa into a profitablesustainable, healthy business. We’ve placed a bigbet on Africa, which has cost us US$13.5bn in cash.”“We think Africa is a great market with a greatfuture, and a great frontier. With population of twobillion, median age of eighteen, we can grow voice,data and m-commerce.” Kohli added that it wastough to maintain infrastructure in Africa, with siterunning costs up to US$5,000 per month at off-gridsites in some markets, compounded by high taxesand levies.“Operators are losing money at the point ofacquisition, which leads to taking multiple SIMcards,” continued Airtel’s Kohli, adding that he hadbeen surprised at the low elasticity in Africa, withusage of minutes per month being half India’s.“Competitive intensity can be harmful rather thanfruitful,” said Kohli, agreeing with Dabengwa’sconcern about saturation of markets by adding“While Africa’s 54 countries can digest moreoperators, countries with 10-25 million populationand three to five operators are a non-viablesituation. Governments and regulators shouldbuild agenda of consolidation, otherwise a lot ofoperators’ investments will be pulled back, whichwill not be good for Africa.”“The mobile market in Africa has had ten to fifteenyears of good growth. Penetration levels are at 50%,but with up to 30% of consumers using multipleSIMs, real penetration is below 50%. Nonethelessdata penetration, internet penetration, is still nomore than 10%, so overall the opportunity is stillvery significant,” declared MTN Group CEO SifisoDabengwa.Challenges to long term sustainability identified byDabengwa included aggressive price competition(“operators selling product below cost is a bit of aproblem”), and the need to avoid regulations stiflingthe industry, as seen in Europe where the marketcapitalisation of telecoms companies is in manycases in decline.“What is the sustainable number of operators inwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com10Sifiso Dabengwa, CEO of MTN Group, and Manoj Kohli, CEO of Airtel Africa appeared onthe Sub-Saharan Africa regional focus panel at Mobile World Congress 2013. Here are thehighlights of their contribution.Manoj Kohli, CEO, Airtel Africa and Sifiso Dagengwa, CEO, MTN Group
  • 11. While they agreed on competition, the CEOs ofMTN and Airtel Africa disagreed on the regulationof infrastructure sharing. “We expect regulators tolead on infrastructure sharing,” suggested Airtel’sKohli.“I don’t agree that regulators should be involvedin infrastructure sharing,” said MTN’s Dabengwa.“Operators should do that among themselves.”Continuing the discussion of infrastructure sharing,Kohli added: “I believe if Africa is to achieve fullcoverage of voice and data, all towers have to beshared. Towers are expensive and the revenues insmall towns are small. Similarly, for voice and datawe need fibre. No single operator can bear the costof fibre,” added Kohli, referencing a consortium ofthree operators and government in Tanzania as anexample model. “Tower and fibre sharing will pavethe way for fantastic penetration tomorrow.”“In Africa generally every site, even if connectedto grid, needs to have pair of backup generators.This can be hugely expensive, complex and franklywasteful,” said Kamar Abass, Country Manager forNigeria and Head of Regional Accounts, RSSA forEricsson. “However, the power consumed by ourequipment is on a downward trajectory.”“Nigerian regulators are insisting on infrastructureinvestment – coverage requirements are ‘baked in’to licenses – so the mindset of operators is focusedon physical investment; on RAN and on buildingsignificant transmission networks that didn’t existin the pre-mobile world,” added Abass.“Property rights aren’t enshrined in Nigeria asthey are in other countries – land may be ownedby families, with no paperwork,” continuedEricsson’s Country Manager for Nigeria. “Passiveinfrastructure has been a key focus for networksharing in Nigeria, but nothing is happening yetwith active infrastructure sharing, and we thinkthat’s a major oversight. Passive infrastructuresharing has the potential to halve the infrastructurerequirement, and gives you capacity to densifythe network and improve QoS, but the operationalcomplexity of running a secondary power networkmeans active infrastructure sharing is somethingNigeria simply has to explore.”Kamar felt that the intensity of competition inNigeria may be preventing operators from openingwww.towerxchange.com | TowerXchange Issue 3 | 11| TowerXchange Issue 3 | www.towerxchange.comXXSpeaking at the Reuters AfricaInvestment Summit, MTN GroupCEO Sifiso Dabengwa said: “Growththrough mergers and acquisitions isstill an important part of our strategy.Anything between ZAR35.56 billion andZAR71.12 billion is something that wecould look at.”MTN’s US$8 billion M&A war chestWhen challenged by Nic Rudnick,CEO and Founder of LiquidTelecommunications, that Africa’smobile network operators weresharing with each other but not withsmaller ISPs trying to enter newmarkets, Manoj Kohli responded: “Wehave towercos in seventeen countries.Give me a list of countries and towersyou need, you’ll get it in 24 hours!”Perhaps Africa Towers have a fewmore towers on the market than werealised!Q&A soundbyte: Airtel offersshared towers in all 17countries“ “I believe if Africa is toachieve full coverage ofvoice and data, all towershave to be shared– Manoj Kohli, CEO,Airtel AfricaLow energy active equipment andactive infrastructure sharing
  • 12. a conversation about active infrastructure sharing,while many operators felt there might be apotential regulatory objection. “The only possibleregulatory objection would be how to aggregatethe spectrum when you combine two networks.Beyond that issue, we suspect the regulator wouldno have objection to active infrastructure sharingas it helps improve QoS.”TowerXchange wanted to learn more aboutEricsson’s Managed Rural Coverage. “As long as thetop of a tower is at 10m then it can often give theright level of coverage in a rural context. Ericsson’ssolution supports 2G and 3G (and LTE if required),with a satellite uplink opportunity, solar power,and a pair of standard 12v batteries that will powerbase station for four and a half days if fully chargedif there’s a failure of the weather.”“There is no need for microwave re-planning – webuy satellite capacity and manage the whole piece,so we can charge the operator an installation fee tocover part of cost of the hardware and installation,then Ericsson recovers the rest of the cost anda small margin from a share of the revenuesgenerated.”“The model is one of national roaming, and itwill take calls from any operator. In reality localsubscribers will buy whichever prepaid cards thesupervisor sells. If you put it in a village where thecommunity leader takes responsibility for security,if you’ve chosen the right person that securitytends to be assured.”“We think Managed Rural Coverage works invillages of more than 1,000 people, but there’s anew satellite that offers a lower price point. Whilethe operator could claw back some installationcosts from Universal Access Funds in certainmarkets, it’s a modest capital outlay: aroundUS$5,000 per site depending on the situation andinstallation conditions.”“From our point of view, the rural market islacking investment,” said Gerry Collins, Headof Business Development at Altobridge. “I thinktowercos will put up more sites in rural areas ifthey can get into active infrastructure sharing,and if low energy equipment continues toreduce opex requirements.”“In remote communities, energy and backhaulcosts can make rural mobile communicationsuneconomic. Altobridge believe we have thebest balance of energy usage (90% of our sitesexclusively use solar power) and coverage witha 7-10km radius. We have an optimised satellitebackhaul band that can bring the price down toUS$300-400 per month.”It seems that in rural contexts, coverageremains king. “Rural telecoms is a land-grab.If an operator extends coverage on their own,they can acquire most of the potential minutes,data and subscribers within the first threemonths, destroying the business case for otheroperators,” said Altobridge’s Collins. “I’m notconvinced that building and sharing towersmakes sense in these finite rural markets.”“If you put our solution in a market town,traffic might increase four-fold on market day,and traders all need to have the local operator’sSIM card. So the key is for mobile networkoperators to be where people live, work,are educated, and where they trade,” addedCollins. “With on network call plans, you’regoing to persuade urban migrants to switch tothe same network as their home village.”www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com12Kamar Abass, Ericsson
  • 13. XX | TowerXchange Issue 3 | www.towerxchange.comNewsTMT Finance reports that MTN has appointedCiti to advise on the sale of towers in Rwanda,with talks under way with American TowerKorea Times reports that KT Corp has signed anMoU with the Rwanda Development Board toestablish a joint venture to develop, install and operatea nationwide LTE network, providing wholesale LTEservices to MNOs and MVNOsUnitel emerged as the sole applicant to meetthe technical and financial requirements of thetender, and so were awarded the islands’ second fixedand mobile license, according to PanapressPresident Macky Sall has asked his governmentto “take practical steps” toward the launch of afourth MNO license, according to Agence EcofinCell C CEO Alan Knott-Craig was quoted onmybroadband.co.za stating that the networknow has around 4,000 cell sites nationally, having added1,223 new 3G sites in 2012. Cell C has 100 active LTE sites,targeting to increase to 1,000 by the end of 2013The Lusaka Times reports Zamtel CEO DrMupanga Mwanakatwe as saying the operatorwill deploy 400 2G and 3G base stations in less connectedareas, with LTE expected in Livingstone by late May 2013Aquiva Wireless plans to invest US$80mn overthe next three years to deploy LTE nationwide,according to Chief Executive Brian Maphosa, quoted inThe Herald. Meanwhile Telecel Zimbabwe say they willexpand their network of 437 BTSs by 120 by July 2013Having been openly discussed since 2011,it seems that licensing of 3G may finally beimminent. Moussa Benhamadi, Minister of Posts,IT and Communications, told Agence Ecofin: “Theadministrative record, which allows us to embark onthe introduction of 3G and 3G+ is completed. In themeantime, ATM Mobilis, Nedjma and Djezzy havebeen encouraged to prepare their 2G networks for thetransition to 3G”It seems that the government of Burundiis again interested in selling a majoritystake in national public operator Office Nationaldes Telecommunications (Onatel), with a view tomodernising the networkBiztechAfrica quotes Patrick Benon, CEOsaying “Orange is now the first operator tooperate a 3G + network in Central African Republic,and it reinforces our position as an innovativeoperator”Vodafone Egypt and Etisalat Misr have bothappointed Ericsson to manage and operatetheir base stations in Egypt, according to Daily NewsEgyptGhana’s operators must first focus ondeveloping 3G before implementing LTE,according to Albert Enninful, Acting Deputy DirectorGeneral of the NCA. Meanwhile, MTN Ghana haveannounced their intention to deploy more basestations, bringing their total number of 3G sites to 994A press statement from Orange Guinea CEOAlassane Diene announced plans to investUS$56mn in network upgrades and extensions overthe next three yearsMauritania’s third telecoms operatorChinguitel may be up for sale. Chinguitel isa subsidiary of Sudanese telco Sudatel which is alsorumoured to be considering the sale of its licensedoperators in Ghana, Guinea, Senegal and South SudanWho will acquire Maroc Telecom? With thepreliminary bid deadline of 22 April loomingas we went to print, MTN were rumoured to be lateentrants into the auction, joining Qatar Telecom,Etisalat and possibly STCAccording to the Daily Trust, MTN will investUS$1.5bn rolling out 5,000 2G and a further4,000 3G base stations in Nigeria in 2013. At the recentReuters Africa Investment Summit, Etisalat NigeriaCommercial Officer Wael Ammar revealed that theoperator was raising US$500mn in debt finance, with aview to expanding their network and services. Etisalatis believed to have 3,000 cell sites in Nigeria.African MarketWatch: New licenses, acquisitions and upgrades in briefAlgeriaBurundiCentral African RepublicGhanaEgyptMauritaniaRwandaRwandaSao Tome & PrincipleMoroccoSenegalNigeriaSouth AfricaZambiaZimbabweGuineawww.towerxchange.com | TowerXchange Issue 3 | 13
  • 14. Why Orangeis sharing towersStructuring deals to meet the specific requirements of each Orange affiliateMarc Rennard, EVP, AMEA,France Telecom-Orange© François Maréchal pour OrangeTowerXchange: Why is Orange sharing theirtowers in Africa?Marc Rennard, EVP, AMEA, France Telecom-Orange:Where passive infrastructure once represented athird of the cost of a new site, it now representsat least two thirds of the cost of a new tower. AsAfrican markets mature and ARPU continues todecline, we feel there’s an increasing necessity forOrange affiliates to share passive infrastructurewith other operators. However, the wayinfrastructure sharing is structured in each countrywill be different according to the requirements ineach market.With coverage of the major cities in Africa nowcomplete, nobody will be able to invest $150-300kto build and manage a single tenant cell site in aremote area without a sufficient concentration ofpopulation to enable a return on investment. This iswhy Orange is in favour of sharing towers.TowerXchange: Please could you tell us a littleabout how Orange makes strategic decisionsabout when and how to work with towercoswhen sharing infrastructure –  what is theinvolvement of the Group strategy team atheadquarters, and the involvement of the localaffiliates?Marc Rennard, EVP, AMEA, France Telecom-Orange: For the reasons that I just mentioned,Orange has given guidance to our affiliates in Africaencouraging them not to build new sites alone(there are always exceptions of course), and toRead this article to learn:< Why France Telecom-Orange encourages infrastructure sharing, supporting and empowering theiraffiliates to structure deals to meet their needs< Does Orange prefer to retain control and ownership of their towers?< The role of infrastructure sharing in reducing CO2 emissions< Orange’s objectives in their recent managed services and build-to-suite deal in Cameroon and Côted’Ivoire, and why they partnered with IHS< The prospects for future infrastructure sharing deals in Orange’s other AMEA marketsMarc Rennard was appointed International Executive Vice-President in charge of AMEA (Africa, Middle East and Asia) in2006, and he joined Orange’s Group Executive Committee in 2010.Marc ran leading French towerco TDF for eleven years prior tojoining France Telecom-Orange in 2003.Michel Faivre reports to Marc and is responsible for definingpassive infrastructure sharing strategy in the AMEA region.Orange’s AMEA division is responsible for 81m customers atOrange affiliates in 20 countries, with 21,000 staff, and globalincome of €5bn.Keywords: Who’s Who, Interview, MNOs, Deal Structure,Managed Services, 3G, Capex, Transfer Assets, Opex Reduction,QoS, Build-to-Suite, Densification, Hybrid Power, Renewables,Solar, Sale and Leaseback, C-level Perspective, InfrastructureSharing, Africa, Cameroon, Côte d’Ivoire, Kenya, Uganda, EatonTowers, IHS Africa, France Telecom-Orangewww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com14
  • 15. consider infrastructure sharing.Each Orange affiliate has its own momentum, itsown ecosystem and environment, its own regulatorycontext and, crucially, each has a different positionin the local market – much depends on whetherthey are a new entrant or market leader, and on thenumber of operators on the market. So each affiliatemoves at its own speed. But the global trend is foreveryone to move toward infrastructure sharing.Michel Faivre runs a dedicated team, studyingthe different cases in each market and helpinglocal affiliates build their own business case toshare maintenance, existing towers and/or newtowers. Each affiliate then presents their proposedinfrastructure sharing strategy to Orange’sinvestment committee, and we give a red, amber orgreen light to their strategies. So local affiliates areempowered to implement infrastructure sharing,and the final decision will rest with that localaffiliate’s board of directors.In summary, the Group provides guidance andagreement on the investment case to share passiveinfrastructure. Implementation and the run periodis handled by our local affiliate.TowerXchange: Please explain what you mean by‘run period’.Marc Rennard, EVP, AMEA, France Telecom-Orange:For example, I just returned from Côte d’Ivoire andCameroon, where I joined senior executives of IHSfor the signature of our agreement with them. Oncethe infrastructure sharing agreement has beensigned, the Group team’s direct involvement comesto an end and the local team takes over operations.Implementation over the ‘run period’ requires thetransfer of sites and of staff, the organisation ofmaintenance and other contractors.  The local teamhandles all this.TowerXchange: What are your objectives whenoutsourcing passive infrastructure to towercos,especially in markets such as Cameroon and Côted’Ivoire where 3G is in its infancy?Marc Rennard, EVP, AMEA, France Telecom-Orange:Working with professional towercos enables usto improve Quality of Service (QoS) and reducethe costs of maintaining and managing passiveinfrastructure. We did not want to sell our towersin Cameroon and Côte d’Ivoire but we did want toopen them to new customers, while securing anopportunity to co-locate on IHS’s sites and to askthem to build new sites for us in remote areas.So our objectives are to save opex and capex,improve QoS and extend our network.TowerXchange: Do you feel that in marketswhere towercos are active, they will build most ifnot all the new sites, rather than the MNOs?Marc Rennard, EVP, AMEA, France Telecom-Orange:There is no exclusivity under our agreement withIHS, we are allowed to build our own towers, butthe spirit of the agreement is that the towerco buildsnew sites. There’s no obligation to have IHS build allnew sites, but it’s our intention to work with them ifthe price and quality of service is right.TowerXchange: Does Orange have a preferenceto maintain control and ownership of towers, asopposed to selling towers and leasing them back?Marc Rennard, EVP, AMEA, France Telecom-Orange:www.towerxchange.com | TowerXchange Issue 3 | 15| TowerXchange Issue 3 | www.towerxchange.comXXGuidance from Paris HQ, © Stéphane Foulon
  • 16. We will review infrastructure sharing opportunitiesin each country according to the specific needsof each market. It depends on our affiliate’scompetitive position, whether they are number oneor number five in the market, and it also dependson the maturity of the market. In Africa, we havevery different cases: for example, if you takeDRC, the penetration rate is about 18%, and yet inTunisia, it’s over 100%. Our markets are extremelydiverse.However, at this time, Orange is not engaging in aglobal strategy of selling our existing towers. Oneyear ago, we chose to sell our towers in Uganda toEaton Towers, and we are open to selling towersin other countries as well. When there is no directneed of cash, like in Côte d’Ivoire and Cameroon,we retain ownership of the assets. The deal in thesecountries could become a reference model formarkets with similar conditions. All options remainopen and we will review each country on a case bycase basis.If you are the owner of a site one day, and if yousell those towers the next day, all you do is changecapex into opex. The value comes from the numberof tenants on each tower.Africa accounts for 70% of the total dieselconsumption of France Telecom-Orange worldwide,so the real battle is to save opex in energy andmaintenance.TowerXchange: Please tell us about Orange’scommitment to reduce CO2 emissions andhow infrastructure sharing and working withtowercos on build-to-suite programmes helps toincrease usage of renewable energy sources.Marc Rennard, EVP, AMEA, France Telecom-Orange: Our Corporate Social Responsibility policyputs a lot of emphasis on our efforts to reduceCO2 consumption, so we are involved in severalinitiatives to develop and use solar energy.Our interests are aligned with those of the towercos.For example, IHS have established a dedicatedprogramme to reduce fuel consumption, which isa critical way to increase site level profitability forthem. Telcos benefit from working with passiveinfrastructure professionals to help to reduce dieselgenerator runtime and optimise the recharging ofbatteries, thereby reducing CO2 emissions. We havea specific requirement for partner towercos to be‘best in class’ when it comes to these environmentalquestions, as reducing emissions is key for us.www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com16Reducing CO2 emissions, © Orange
  • 17. TowerXchange: Thanks Marc! Moving on tospeak to Michel, who has agreed to speak to us inmore detail about Orange’s latest infrastructuresharing deal with IHS. Michel, please could youintroduce us to the Cameroon and Côte d’Ivoiremarkets to put this in context.Michel Faivre, Directeur Programme Partaged’Infrastructure AMEA, France-Telecom Orange:The two markets are significantly different, withdifferent situations when it comes to infrastructuresharing. Cameroon has only two competingoperators at present and only 2G services. A new 3Glicense has been attributed to Viettel, and they willhave 3G exclusivity for two years.The three main players in Côte d’Ivoire are Orange,MTN and Etisalat, with two further operatorscovering part of the country. With five operators,the potential for co-location is larger in Côted’Ivoire.TowerXchange: What were Orange’s objectives inagreeing this deal?Michel Faivre, Directeur Programme Partaged’Infrastructure AMEA, France-Telecom Orange:Our objective is same as for all mobile networkoperators; cost reduction, especially opex butalso capex. Sharing towers shares renewal capex,primarily to modernise energy units, and sharesthe cost of new towers. Even with Orange’s largenetwork, we are still adding sites to cover ruralregions.As Marc mentioned, we want to improve QoS, eventhough our QoS is not bad. In the past, competitivemobile network operators were fighting ongeographical coverage, now we are fighting on QoS– and that is especially true for 3G.In Côte d’Ivoire, Orange is more present in theSouth than in the North of the country, while MTN’snetwork (recently acquired by IHS) is strongerin the North than the South. Working with IHStherefore improves our coverage and gives uscapacity for nationwide services. The developmentof 3G also requires us to densify the network.Sharing infrastructure enables us to focus onother tasks such as modernising, increasing andimproving capacity, rather than focusing on energyefficiency.Eventually, we are also sensitive to governmentand community objectives to reduce the number oftowers by adding tenants to existing towers.TowerXchange: Should we refer to the dealstructure in Cameroon and Côte d’Ivoire as an“operational lease”?Michel Faivre, Directeur Programme Partaged’Infrastructure AMEA, France-Telecom Orange:We refer to our agreement with IHS as managedservices with a build-to-suite programme. Orangehas not sold its towers in Cameroon and Côted’Ivoire.TowerXchange: Are the 2000+ sites includedin the deal all Orange’s towers in those twocountries?Michel Faivre, Directeur Programme Partaged’Infrastructure AMEA, France-Telecom Orange: InCameroon, the deal includes all the towers, while inCôte d’Ivoire it includes all the towers on which wehave mobile RAN equipment. It doesn’t include ourIvorian fixed telecom towers, although the optionto negotiate their inclusion in the future remainsin the contract, as we did not have time to includethem in the first place.www.towerxchange.com | TowerXchange Issue 3 | 17| TowerXchange Issue 3 | www.towerxchange.comXXMichel Faivre, Orange
  • 18. TowerXchange: Why was IHS a good partner forOrange in Cameroon and Côte d’Ivoire?Michel Faivre, Directeur Programme Partaged’Infrastructure AMEA, France-Telecom Orange:IHS was very professional in the way theynegotiated with us, and they understood thetechnical aspects of what we were trying to achieve.However, we have no exclusive relationship withIHS elsewhere in Africa, and we will work with theright towerco for each market.TowerXchange: What are the benefits for thedevelopment of telecoms infrastructure inCameroon and Côte d’Ivoire, and benefits forOrange, of the same towerco managing thetowers of both market leaders, Orange and MTN?As opposed to for example Ghana, where eachoperator partnered with a different towerco…Michel Faivre, Directeur Programme Partaged’Infrastructure AMEA, France-Telecom Orange:We felt that having two towercos in Cameroon wasnot possible for the market. There were only twooperators when we started the negotiation, so howcould we share and get the benefits of co-location ifwe partnered with different towercos? Even with athird operator, we are still not sure if it is possible tohave two towercos.On the other hand, in countries like Côte d’Ivoirewith three tier one operators and five in total, wecould imagine having two towercos.Working with the same tower provider helps toshorten the process. If we had partnered withanother towerco, we would need to negotiate aservice management contract and build-to-suiteprogramme with them, but we would need tonegotiate another contract to co-locate on thetowers IHS acquired from MTN. Working with onetowerco was simpler, and resulted into a betterprice.TowerXchange: What is the power gridavailability like in Cameroon and Côte d’Ivoire,and how important is hybrid energy in cell siteefficiency?Michel Faivre, Directeur Programme Partaged’Infrastructure AMEA, France-Telecom Orange:There is grid power in most places, but there isan issue with some power cuts for which we needalternative solutions.Orange already has some solar powered basestations in Cameroon and Côte d’Ivoire, but ourbuild-to-suite contract with IHS will increase thepercentage of solar sites in these countries.TowerXchange: Did Orange work with anyadvisers on the Cameroon and Côte d’Ivoire dealwith IHS?Michel Faivre, Directeur Programme Partaged’Infrastructure AMEA, France-Telecom Orange: No,we did not appoint a bank or a legal adviser for thisdeal. We handled it 100% in-house – we have a veryefficient team!TowerXchange: Finally, in the press releaseabout the deal, Marc was quoted as saying “thisagreement leaves open the possibility for Orangesubsidiaries elsewhere in Africa and the MiddleEast to look into similar partnerships.” Are thereany other markets in which Orange is activelyexploring infrastructure sharing? Any update onKenya?Michel Faivre, Directeur Programme Partaged’Infrastructure AMEA, France-Telecom Orange: Wewill implement this kind of passive infrastructuresharing contract in other countries. The competitionis still open – we will work with any of the towercosaccording to what is best in each country.We have started a similar project in Kenya. We arein the final stages. During the negotiation phase, wetry to sort out the maximum of issues in order todecrease the risks during the migration phasewww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com18“ “We have started a similar projectin Kenya. We are in the finalstages. During the negotiationphase, we try to sort out themaximum of issues in order todecrease the risks during themigration phase
  • 19. Why Kenya could benext for tower sharingBMI Analysis: a new guest column by Ken Okeleke, SeniorAnalyst at Business Monitor InternationalKen Okeleke, Senior Analyst, BMIKenya’s mobile market – Safaricom dominant,price wars ragingKenya’s mobile market reached the 30m mark forthe first time during the three months to September2012. According market data published by theCommunications Commission of Kenya (CKK),there were 30.433m mobile lines in the country atthe end of September 2012. This was a 2.5% q-o-qgrowth and 14.9% y-o-y growth, making it one ofthe fastest growing markets in the region. However,a considerable number of lines were not registeredat the end of the latest mandatory SIM registrationexercise in December 2012 and a grace period wasgranted by the regulator until the end of March2013. The disconnection of these lines could pushthe country’s mobile penetration rate below the70% mark it attained in September 2012, accordingto BMI data.Safaricom remains the dominant player with amarket share of over 63%. Airtel Kenya is in adistant second position with a market share of lessthan 20%, while Orange Kenya and Essar-backedYU Mobile are separated by less than 1ppt in theirmarket shares, which jointly account for around afifth of the mobile market.Safaricom’s smaller rivals tried to erode itsmarket share through intense price competition,which set off a brutal price war that ravagedthe market for most of the last three years. Theimpact of this development on operators’ financialindicators, along with rising opex, has broughtthe need to improve operational efficiencies in theRead this article to learn:< Why market growth, price wars, declining ARPU and the struggle to achieve profitability attractKenya’s MNOs to consider tower-sharing< Country risk perspectives on Kenya’s economy and election results< The Kenyan regulator’s stance on tower-sharing< BMI’s view on which MNOs and towercos are likely to be most active in Kenyan tower-sharingKenya is arguably the largest of the remaining mobilemarkets in Sub-Saharan Africa yet to see the uptake ofindependent tower-sharing services. However, some keymarket dynamics make the service almost inevitableto ensure that some operators in the market remaincompetitive and for a general improvement in networkquality of service and coverage. The leading independenttower sharing firms operating in the region have all settheir sights on the Kenyan market, which may finally yieldto independent tower-sharing services in 2013.Keywords: BMI Analysis, MNOs, Towercos, Research, MarketOverview, Country Risk, Market Forecasts, ARPU, Operator-led JV, Regulation, Infrastructure Sharing, Africa, Kenya,Safaricom, Airtel, FT-Orange, Essar, Helios Towers Africa,IHS, Eaton, Business Monitor Internationalwww.towerxchange.com | TowerXchange Issue 3 | 19| TowerXchange Issue 3 | www.towerxchange.comXX
  • 20. Kenyan mobile market to the fore. Although notindependently confirmed, local media reports,citing key stakeholders in Kenya’s telecoms markets,suggest that only market leader Safaricom is in theblack among the country’s four mobile operators,largely due to its scale and success of key non-voiceservices such as M-PESA.Lagging behind peers...Mobile network operators across Africa currentlyface the task of developing new revenue streamsand reducing input costs in order to improvetheir bottom-line figures and remain competitivein the market. In Kenya, the focus over the pastthree years seems to be on driving revenuegrowth through voice tariff increases, as in thecase of Safaricom, or through the rollout of non-voice high-value services such as mobile data andm-commerce services, as in the case of the threesmaller operators. However, declining revenuesfrom traditional voice services due to increasingcompetition and the sluggish take-up of high-value services due to low income levels make itinevitable for operators to look in the direction ofreducing input costs as a means of improving theirprofitability.One of the key strategies for efficiency improvementfor most leading operators in Africa are tower-sharing deals with independent tower firms. Towerdeals took off in Africa in 2011 and 2012 after awave of price wars swept across most markets inthe region. Surprisingly, Kenya, which is widelyregarded as the source of the price war, is laggingbehind other major markets in the region in thetower-sharing business.The closest the country has come to tower sharingwas an announcement by Safaricom and OrangeKenya in mid-2011 to form a jointly owned,independently managed infrastructure companyto acquire and manage their portfolio of towers.There is no update on this development, althoughwe would not be surprised if the operators areseparately exploring alternative tower sharingoptions.Tower sharing deal may be imminent in KenyaIt is increasingly unlikely the Kenyan mobile marketwill buck the trend towards tower-sharing servicesfor much longer. There are a number of factorsexpected to push the case for the market to open upto independent tower firms, possibly before 2013runs out. Some of these factors, which will likelystrengthen over time, are highlighted below.Downward pressure on ARPUsMarket average mobile ARPU in Kenya is belowUS$5 and is forecast to trend downwards overthe five years to 2017, according to BMI data.Meanwhile, Kenyan operators have witnessed asteep rise in opex over the past three years, mostlydue to external factors such high inflation, currencyinstability and high diesel prices. Although adversemacroeconomic factors that plagued the countryin 2011 and early 2012 appear to have abated,according to BMI’s Country Risk team, networkwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com2063.2%9.9%10.2%9.9%16.8%SafaricomAirtelYUOrangeSource: BMI, CCK, operatorsoperators are unlikely to see a significant easing inopex. This, along with declining ARPUs, will furthersqueeze operators’ margins and strengthen the casefor more aggressive cost-cutting measures, of whichwe expect tower sharing to be at the top of the list.Regulatory environmentKenya’s code of practice for the deployment ofcommunications infrastructure is silent on the roleof independent tower firms. Instead, it outlines aframework for operators to engage in site sharingor co- location. However, we do not expect theregulator to hinder the operations of independenttower firms in view of the potential for tower-sharing services to contribute to the faster rollout of network services to underserved areas andother operational targets set for the mobile market.The fact that there is no express prohibition of theMultiple operators drive competitionKenya Mobile Operators By Market Share,September 2012
  • 21. www.towerxchange.com | TowerXchange Issue 3 | 21| TowerXchange Issue 3 | www.towerxchange.comXXe/f = BMI estimate/forecast. Source: BMI, operatorsoperation of tower firms suggests that a frameworkfor their services could be prepared once thecountry’s operators make significant moves towardsengaging the services of independent tower firms.Willingness of tower firms to enter the marketKenya is perhaps the most attractive ‘new’ marketfor the tower firms operating in the region andthose looking for a foothold owing to the marketsize, the number of operators in the market andthe country’s positive economic outlook, whichwill inevitably drive growth in the telecoms sector.Helios Towers was previously reported to beinterested in the joint tower company proposedby Safaricom and Orange Kenya. The company,along with other leading firms including IHS andEaton Towers, have been open about their desire toenter the Kenyan market. We believe competitionby the tower firms for the Kenyan market will be akey factor in the conclusion of a tower deal in themobile market.Election results will not affect investorconfidenceThere were concerns over the possible reactionof Western investors if the PNU won the March 42013 presidential elections due to the indictmentof Uhuru Kenyatta and his running mate, WilliamRuto, for war crimes by the International CriminalCourt (ICC).BMI Country Risk team’s assessment of the situationis that the impact of Western action against Kenyawould be far more pronounced if that actioninvolved the imposition of sanctions that precludedWestern companies and individuals from investingin and trading with Kenya. Europe remainsan important market for Kenya’s horticultureindustry and the source of a large proportion of thecountry’s tourists. Western portfolio and FDI flowsalso play a meaningful role in plugging Kenya’slarge current account deficit. A reduction in theseinflows would have a significant impact on thecurrency, inflation and macro stability generally.However, as things stand, the chances of sanctionsbeing imposed are close to nil. That could changeif Kenyatta reneges on his commitment to complywith the ICC process but there is little reason tobelieve that he is about to backtrack. On the whole,we believe that the election of an ICC indictee tothe presidency is unlikely to have as meaningful animpact on the economy and investor confidence assome might fear.Which Kenyan operators are candidates fortower-sharingKenya’s four mobile operators have a combinedtowers portfolio of around 6,000 towers. This isgrossly insufficient for the country’s population ofalmost 45mn and land area of around 570,000 sqkm. Meanwhile, operators’ poor financial resultsover the last three years raise significant concernsabout their ability and willingness to invest in newtower deployments to underserved areas, especiallywhere ARPUs are likely to be lower than in majorKenya’s mobile ARPU (KES) heading south1002010 2011 2012e 2013f 2014f 2015f 2016f 2017f200300400500
  • 22. www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com22towns and cities.All four network operators are potential candidatesfor tower deals in view of the market dynamics andfactors mentioned in the previous section. However,Orange Kenya and Safaricom are the most likely tomove first in the market, mainly because of theirproposal to form an infrastructure company thatmay seek to partner with an established tower firmin the region. Furthermore, both companies areclosely associated with operators that have adoptedthe tower-sharing strategy in other markets.Orange and Safaricom’s parent companies, OrangeGroup and Vodafone Group respectively, haveimplemented the tower-sharing strategy in someother markets in which they operate, includingSouth Africa, Ghana and Uganda.YU Mobile is close behind Safaricom and Orange asa likely candidate for a tower deal. The operator’slack of 3G network services limits its ability toexpand its high-value data offerings, making italmost entirely dependent on voice revenues. Theoperator is keen to invest in 4G LTE services whenspectrum becomes available. However, this may nothappen soon and it will need to aggressively reducecosts in order to remain competitive in the mobilemarket. For its part, Airtel Kenya is likely to followa group strategy, which is yet undefined for towersale and leaseback deals. The operator subscribesto the services of tower firms in other markets itoperates and will likely do so when independenttower firms launch operations in Kenyawww.businessmonitor.com/bmoTower XchangeParticipate in the TowerXchange communityJoin the TowerXchange LinkedIn™ group atwww.linkedin.com/groups/TowerXchange-4536974Investors &advisersDecision makersat operatorsIndependenttowercosTowermanufacture &installationEquipment& managedservicesRegulators &policy makers
  • 23. The TowerXchange Meetup will accelerate thetransactions, innovations and partnerships thatunlock new efficiencies for the African towerindustry.TowerXchange has created a unique communityof 1,868 decision makers in African passiveinfrastructure, and set out to share best practicesthrough this journal. Insights can be found on apage, but new relationships are formed and dealsagreed face to face, so it’s time to invite you all tothe inaugural TowerXchange Meetup Africa.The leaders of the African tower industryhave warned us that they don’t want or needa conference; there is too much competitivesensitivity for the pioneers to say anythinginteresting “on the record”. That’s whyTowerXchange have created a Meetup, not aconference.The TowerXchange Meetup is designed aroundstructured networking round tables held under theChatham House Rule, plus “Shootouts” in whichbuyers shortlist the energy equipment, RMS andmanaged services partners they need to stabiliseand reduce opex.Business leaders in passive infrastructure feeldisenfranchised by today’s telecoms exhibitions,overrun as they are by devices and VAS.TowerXchange maintains a laser-beam focus ontowers, on passive infrastructure, and on the lowEditorialTop 200 decision makers in African towers to gather atTowerXchange MeetupKieron Osmotherly, TowerXchange Founderwww.towerxchange.com | TowerXchange Issue 3 || TowerXchange Issue 3 | www.towerxchange.comXX 23TowerXchangePassiveInfrastructurefootprintAfricaCom:5% passiveinfrastructureMobile WorldCongress:1% passiveinfrastructureDevices & VAS footprintMobile World Congress footprintAfricacom footprintTowerXchange: 100%passive infrastructureenergy, compact active equipment that stretchthe capacity of Africa’s towers. So while 1% ofMobile World Congress exhibitors are from passiveinfrastructure, and 5% of AfricaCom, everyoneyou meet at TowerXchange will be a passiveinfrastructure decision maker.Let me tell you how the TowerXchange Meetup willwork. The TowerXchange Meetup is by invitation-only, and those invitations will be extended in earlyJune. However, you can e-mail me to apply for yourplace now. The open, strategic debates hosted atthe TowerXchange Meetup require that the event isfor decision maker level people only. Usually thatmeans Director, VP or C-level only, but if you’re thetop tower decision maker for your business andyou’re a manager or executive, drop me an emailand we’ll confirm whether we can extend you aninvitation.
  • 24. | TowerXchange Issue 3 | www.towerxchange.com24TowerXchange carefully manages the ratio ofbuyers to sellers, and plans seating so that eachround table includes a senior representative ofa towerco, an investor, advisor, RMS or staticequipment manufacturer, a tier one OEM, amanaged service provider, and two senior decisionmakers from an operator. Attendees will participatein four different round tables, each with a regionalor topic matter focus chosen to meet their specificobjectives. So attending the TowerXchange Meetupguarantees you an agenda tailored to answer yourquestions, and guarantees “face time” with 28decision makers at prospective clients, suppliers orpartners interested in the same segment of towersand sharing the same round table as you. Of course,attendees also have lavish networking receptionsto network with the rest of the top 200 Africantelecoms infrastructure decision makers.Finally, if you are one of African towers’ thoughtleaders and you want to share your expertise byhosting a round table at the TowerXchange Meetup,please contact me.I look forward to meeting you in Cape Town at theend of September!All the best,Kieron OsmotherlyFounder, TowerXchangeM. +44 (0) 7771 148001kosmotherly@towerxchange.comwww.towerxchange.comwww.towerxchange.com | TowerXchange Issue 3 | XXBackhaul, FTTT, Core Network Active equipmentTier 1 OEMsMobile Network OperatorsInvestors: private equity, debt finance, infrastructure fundsLaw firmsGroup level strategistsC-suite & network planners at local OpCosOutsourcetoStrategic consultancyDue diligenceDemand forecastsValuationsIndependent TowercosSell co-locationsUpgrade capacityBuild-to-suitMaximise uptimeReduce opexInvest in networkTransfer assets toConstruction servicesTurnkey infrastructure rolloutManufacture of steelworkImport, customs & deliveryLeasing & permittingInstallation of towersUpgrades for capacityO&M servicesDynamic assetsEnergy equipmentDiesel gensetSolarWindFuel cellBatteriesRectifiersInvertersLine conditioningPIUsAir conditioningLightning protectionControllerVoltage regulatorManaged service providersESCOsStatic assetsTowers & mastsSheltersBracketsEnclosuresLightingFencing0&M servicesMaintenanceStaffingSpare partsVMI?RefuelingEnergy as a serviceMonitoring &managementRMSIntelligence/analysisSite managementJob ticketingAsset lifecycle platformAccess controlSubcontractMicrogenerationCommunity powerSubcontractor in-houseOutsourcetoSomebecometowercoTower Industry Value ChainInvestment management advisorsSource: TowerXchange
  • 25. TowerXchanges’ unique structured networking round tablesEnergy Provider shootout in ProgressSmall groups of buyers recieve5 minute demonstrations200 Director, VP and C-level Decision makers broken down as follows:Mobile Network Operators (50)Towercos (25)Investors and Investment Management Advisors (25)Lawyers and Strategic Consultants (25)Energy Equipment Providers (25)OEMs & Managed Service Providers (25)Static Assets (10), Access Control (5) & Monitoring and Management (10)TowerXchange roundtables bring together 1 representative from each of 8 segments of thetower industry, brought together by a common geographical focus or hot topic. There are4 roundtable sessions at the Meetup, each new roundtable "reshuffles" the decision maker-level participants at your table so you will meet 28 different prospective partners.25| TowerXchange Issue 3 | www.towerxchange.comXX www.towerxchange.com | TowerXchange Issue 3 |
  • 26. TowerXchange Meetup Africa 2013 AgendaRound table topicsEach “Round table” is a 90-minute structured networking session assembling participants in groups of8, brought together by a common regional or topic matter interest, and arranged so each group ideallyincludes 2 MNOs, a towerco, investor, advisor, OEM or managed service provider, energy equipment and astatic asset or RMS manufacturer.Buying and selling towers How to determine your organisational goals from towersharing; balancing opex reduction with cash released andequity stake retained How to structure a tower sharing deal to meet yourrequirements: operational lease vs sale and leaseback vsjoint venture Would an Indus Towers-like operator-led JV work in certaincountries in Africa? Creating shareholder value by retaining an equity stake in aJV-towerco How to prepare the data room; from asset registers, permitsand leases to tower designs, load valuations, maintenancelogs and DG runtime data How to structure MLAs, SLAs and anchor tenancyagreements Transferring assets from MNOs to towercos: confirmation ofpermits, novation of leases, transfer of staff and evaluationof contractorsFinancing African towers Are towercos paying a premium for first mover advantage?When will the gold rush end? Are African towers a bankable investment? What level ofgearing will investors permit before waiting for provenresults? How to measure, manage and mitigate country risk andoperational risk What are my / those towers worth? How to use demand-sidemodels, lease pricing benchmarks and GIS information toassess the commercial potential of a tower portfolio How to conduct a tower load valuation to unlock hiddencapacity and prioritise upgrades How tower auctions work, what terms are variable andwhich are non-negotiable, and what separates the winnersfrom the losers?A dedicated round tablefor each of the followingcountries: Cameroon, Côted’Ivoire, DRC, Egypt, Ghana,Kenya, Mali, Nigeria, SouthAfrica, Tanzania and Uganda.One roundtable for the rest ofNorth Africa(Morocco, Tunisia,Algeria, Libya andWestern Sahara)One roundtable for the rest ofEast Africa(Burundi, Djibouti,Eritrea, Ethiopia,Rwanda, Somalia,South Sudan and Sudan)One roundtable for the rest ofSADC (Angola,Botswana, Lesotho,Malawi, Mozambique,Namibia, Swaziland,Zambia and Zimbabwe)One roundtable for the rest ofCentral Africa(Central AfricanRepublic, Chad, CongoEquatorial Guinea,Gabon)One roundtable for the rest of West Africa (Benin, Burkina Faso, Gambia, Guinea, Guinea-Bissau, Liberia, Mauritania,Niger, Senegal, Sierra Leone and Togo)One roundtable for the rest of Africa’s Islands (Cape Verde, Comoros, Madagascar, Mauritius, Mayotte, São Tomé andPrincipe, Seychelles)| TowerXchange Issue 3 | www.towerxchange.com26 www.towerxchange.com | TowerXchange Issue 3 | XX
  • 27. Towerco business models Are tenancy ratios above two achievable in Africa?And how towercos can improve their margins byoptimising site level profitability What are the criteria that govern how manytowercos can operate in a given market? How doescompetition between towercos affect markets suchas Ghana? Are there still opportunities in Africa for newentrant towercos? What infrastructure sharing needs (and does notneed) from regulatorsBuild-to-suite and refurbishment programmes How to determine your OM requirements,select the right partner and structure BTS andrefurbishment programmes How to accelerate time to market in roll outs andnetwork extensions Key performance indicators for the managementof African towers; how to meet SLA clausesconcerning uptime, site visits and MTTR How to optimise logistics from manufacture toport to site Cell site densification and equipment amendmentimplications of 3G and LTE How to reverse-engineer tower designs How to upgrade the structural capacity and powersystems at a cell site to support multiple tenants How to evaluate whether to upgrade or replacea tower to add capacity for multiple tenants, andhow to maintain service when consolidatingtowers From corrective to preventative to just-in-timemaintenance Vendor Managed Inventory for the tower industry Health and safety, ethics and compliance - frompolicy to practicalitiesHow to reduce energy opex How to combat fuel theft How access control systems reduce vandalism and fueltheft while helping to integrate maintenance logs withjob ticketing and asset life cycle platforms How to measure the performance of Integrated PowerManagement Solutions Which hybrid and solar hybrid energy solutions areproven in Africa? How to evaluate a cell site’s suitability for hybrid energysolutions How to proactively manage power to optimise MTTR How to get the most out of unreliable grid sites How to future proof power at a cell site to accommodatemultiple tenants What will it take for the ‘energy as a service’ propositionto work in Africa? Selecting the right battery supplier to minimise dieselconsumption and extend replacement cycles Defining a business model to pay for energy by the kWh Community power initiativesSite intelligence How to leverage RMS to identify the smallest capex thatyields the biggest return How to translate RMS data into actionable intelligence How to demonstrate and optimise performance againstSLAs How to measure, monitor and extend the life cycle ofpassive (and active) infrastructure assetsBeyond passive infrastructure sharing Active infrastructure sharing in Africa How transmission sharing creates new revenues/efficiencies whilst freeing load capacity for additionalco-locations FTTT Wholesale infrastructure sharingDay one9:00 Welcoming Remarks fromTowerXchange9:30 Towerco CEO panel10:30 Morning coffee and networking10:50 First structured networking round table12:20 Networking lunch1:40 Second structured networking roundtable3:10 Afternoon coffee and networking3:30 Mobile network operator tower decisionmakers panel4:30 Partner selection shootout: innovations toreduce energy opex5:30 Close of Day oneEvening drinks receptions, awards and dinnerDay two9:00 Third structured networking roundtable10:30 Morning coffee and networking10:50 Investor panel11:50 Partner selection shootout: managedservices12:50 Networking lunch2:10 Fourth structured networking roundtable3:40 Afternoon coffee and networking3:30 2020 vision of African tower industryand action points for 20134:30  Close of day twoTowerXchange Meetup Schedule27| TowerXchange Issue 3 | www.towerxchange.comXX www.towerxchange.com | TowerXchange Issue 3 |
  • 28. TowerXchange Meetup Benefits PackagesMNOsTowercosInvestors advisorsManaged servicesTier 1 OEMsLawyers consultantsEnergy equipmentOther passive infraAttendeesSponsors/exhibitorsPassdiscount5025252525252525244936710*100%50%0%0%0%0%0%0%e.g. RMS, site management, job ticketing asset lifecycle platformsStatic asset manufacture and distributionAccess control systems*100% discounts for qualifying Director to C-level execs from MNOsBy invitation only: restricted to Director, VP and C-level attendeesMaximum of 2 delegate passes per company except for MNOs, towercos and sponsors*Expo only pass only available to exhibitors and sponsorsBronze, Silver, Gold and Platinum Sponsorship Benefit Options - choose one Capacity Limits*Expo onlypassDelegate pass ExhibitorBronzeSponsorSilverSponsorGoldSponsorPlatinumSponsorDiamondSponsor1 pass 1 pass90 secs100180 secs100180 secs200up to 5 mins200up to 5 mins200up to 10 mins2001 passwith booth with bootheitheror or or oreither either eitherwith booth with booth with booth2 passes 2 passes 3 passes 3 passesBenefitsExhibition accessDaytime cateringComplimentary volume one TowerXchangeAccess to MeetupRound table interactions with 28 selected prospectsAfter hours networking receptions cateringAcess to VIP loungeDedicated post event e-mailshot to all attendeesPresentation in Shootout to shortlist RFPsVideo on TowerXchange TVProfile in show guide and directory word limitLogo on backdrop, podium, signage, fliers invites3x3 turnkey boothPrivate meeting roomYour choice of bronze sponsorship benefitYour choice of silver sponsorship quality benefitYour choice of gold sponsorship premium benefitYour choice of platinum business-class benefitYour choice of diamond first-class benefitContact Annabelle Mayhew, amayhew@towerxchange.com, for price informationYour choice of bronze sponsorship benefitGift drop (gift provided by client)USB sponsor (USBs provided by TowerXchange)Pad and pen sponsor (stationary provided by client)Your choice of silver sponsorship quality benefitHost of phone charging point (provided by client)Sponsorship of massage areaSponsorship of coffee break day 2 pm Sponsorship of coffee break day 2 am Sponsorship of coffee break day 1 pm Sponsorship of coffee break day 1 amBrand sponsorship of lanyardsBrand sponsorship of tote bags(Bags provided by client)Your choice of gold sponsorship premium benefitSponsorship of lunch day 1Sponsorship of lunch day 2Sponsorship of icebreaker drinksSponsorship of breakfast (Open) day 1Sponsorship of breakfast (Open) day 2Your choice of platinum business-class benefitSponsorship of post dinner partySponsorship of VIP networking loungeHost of private lunch day 1 Host of private lunch day 2Host of private breakfast day 2Your choice of diamond first-class benefitSponsorship of Drinks ReceptionSponsorship of Award Dinner Sponsorship of Operator and Towerco only reception
  • 29. www.towerxchange.com | TowerXchange Issue 3 | 29| TowerXchange Issue 3 | www.towerxchange.comXXSpecial Feature:TowerXchange will take you on a virtual tour ofAfrica’s leading towercos, building an holistic viewof the key roles within the towerco business, and anappreciation of the differences between Africa’s ‘BigFour’ towercos and the local tower operators hoping todevelop a pan-African towerco footprint.This first installment concentrates on the ‘Big Four’towercos. We introduce you to IHS Africa’s new CCORhys Phillip as he discusses their recent transactionsin Cameroon and Cote d’Ivoire. Eaton Towers’ CTOThomas Jonell provides a revealing insight into theirprocurement processes and priorities. Helios TowersAfrica’s Nick Summers explains their Health andSafety and anti-corruption policies. And we hearfrom American Tower’s CEO Jim Taiclet and CFO TomBartlett as TowerXchange examines ATC’s 2012 annualresults for insights into their international strategy.TowercoperspectivesFour perspectives from towerco leaders:30 How IHS creates shared value35 Eaton’s procurement priorities40 Helios on health and safety, ethics and compliance45 Growth stock American Tower playing a differentgame to PE-backed towercos
  • 30. How IHS createsshared valueThe rationale for IHS’s acquisitions in Cameroon and Cote d’Ivoire and theirplan to scale to 25,000 co-location towers in the next five yearsRhys Phillip, CCO, IHSIHS’s twelve-year track record of successand leadership position in AfricaCEO Issam Darwish and CTO William Saadcreated IHS in Nigeria in 2001, establishing IHS as“commercially the leading independent towerco inNigeria.”“We started out as a builder,” said IHS’s Directorof Business Development Romain de Villeneuve.“This enabled us to develop operational excellenceand build mobile network operators’ confidencein the quality of service we provided, which led tous offering managed services. Becoming a towercowas a natural next step after our huge operationalexperience in Nigeria.”IHS targeted a move up the value chain frommanaged services into tower acquisition andleaseback, described as “great for investors, fornetwork operators and for consumers.” 2012 wasa transformational year for IHS, trebling theirnumber of towers owned and managed throughthe agreement to acquire 1,758 towers from MTNin Cameroon and Cote d’Ivoire. This deal madeIHS Africa’s number one towerco by number oftowers owned and managed, and gave them asubstantial footprint in these two high growthcountries through ownership of the market leader’stowers. According to IHS’ Chief CommercialOfficer (CCO), Rhys Phillip, “IHS was chosen overcompeting bidders because of our engineeringexpertise – over 80 percent of our 1,000 staff aretechnical engineers.” IHS has built over 3,000sites and maintains 99.95 percent power uptime.Read this article to learn: Why IHS invested in Cameroon and Cote d’Ivoire The 14 new African markets IHS have targeted Why towercos will build most new towers in Africa How IHS buys and their views of renewable energy and ESCO propositions How IHS extend operator relationships from one country to the nextIHS has risen from a proven engineering and managed servicesbusiness partner in Nigeria to become the largest towerco inAfrica, by number of towers owned and managed. IHS were in theheadlines again in early April 2013, taking over the managementand marketing rights of over 2,000 towers from Orange to addto the 1,758 towers they acquired from MTN in Cameroon andCote d’Ivoire in 2012. Selected members of the press and analystcommunity joined three senior members of the IHS  managementteam for a breakfast briefing in Barcelona during Mobile WorldCongress, where they explained their breakthrough year in 2012 andambitions to scale to over 25,000 towers owned or managed in MEAwithin the next five years.Keywords: Who’s Who, Interview, Towercos, Managed Services,Acquisition, Investment, 3G, EBITDA, Tenancy Ratios, InfrastructureSharing, QoS, Build-to-Suit, Exit Strategy, Regulation, Anchor Tenant,ESCOs, Hybrid power, Procurement, Sale Leaseback, OperationalLease, Private Equity, C-level Perspective, Africa, Cameroon, Coted’Ivoire, Nigeria, Sudan, South Sudan, Viettel, Orange, MTN, IHSwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com30
  • 31. “This transaction has accelerated revenue growth,extended our reach and extended the amount ofhelp we can deliver to MNOs,” added Rhys Phillip.The transaction also saw the introduction of newinvestors, with new 25 percent equity holders,Wendel, providing guidance and support at ashareholder level.The October 2012 deals with MTN were followed inearly April 2013 by the announcement that IHS hastaken over the management and license to market afurther 2,000 sites from Orange in Côte d’Ivoire andCameroon. In this latest deal the towers will remainthe property of the Orange subsidiaries: IHS willmanage the towers for Orange for an initial termof 15 years, whilst Orange subsidiaries will benefitfrom access to available slots on towers that IHScurrently owns in both countries.IHS’s rationale for the acquisition andlong-term lease of towers in CameroonIn acquiring 827 towers from MTN in Cameroon, IHSsecured the largest and most exciting tower portfolioin a country with plenty of capacity for growth inmobile penetration. Mobile subscriber numbersgrew from 3.1m in 2006 to 10.5m in 2011 at a CAGRof 38 percent, and are projected to increase to 17mby 2016, at a CAGR of 10 percent. Cameroon’s twoactive operators, MTN and Orange, are looking toexpand coverage to rural areas and second tiercities. 3G services are yet to be launched; howeverregulatory guidelines encourage co-location inCameroon.IHS’ anchor tenancy agreement with MTN, themost profitable and creditworthy MNO in Africa,also locks-in fulfillment of future build-to-suitrequirements from the number one operator.IHS has positioned itself as the natural partner fornew MNO entrants in Cameroon. IHS noted thatViettel had acquired a 3G license in Cameroon latein 2012, and that the company was well financedwith annual sales over US$6bn and profits overUS$1bn. IHS also noted the presence of elevenWiMAX/ISP players in Cameroon as potentialtenants.IHS’s rationale for the acquisition andlong-term lease of towers in Cote d’IvoireIn acquiring 931 towers from MTN in Cote d’Ivoire,IHS secured the largest tower portfolio with thehighest potential for co-location in another countrywith plenty of capacity for growth in mobilepenetration. Mobile subscriber numbers in Coted’Ivoire have grown at a CAGR of 26 percent since2007, and are projected to increase from 18.7m in2011 to 24.2m by 2016, at a CAGR of 5.3 percent.Cote d’Ivoire’s three major operators are seekingto expand capacity, while a further two tier twooperators are expanding to rural areas and secondtier cities. 3G services are in their infancy. The Coted’Ivoire government has hinted at the potentialcreation of a legal framework making tower sharingmandatory for MNOs. IHS also noted the presenceof eight WiMAX/ISP players in Cote d’Ivoire aspotential tenants.IHS’ anchor tenancy agreement is again withcreditworthy MTN and, like in Cameroon, locks-infuture build-to-suit requirements. Strong build-to-suit demand is expected from all existing MNOs inCote d’Ivoire.The lease conditions released for IHS in Coted’Ivoire were the same as in Cameroon: the leasewww.towerxchange.com | TowerXchange Issue 3 | 31| TowerXchange Issue 3 | www.towerxchange.comXX
  • 32. term was ten years with annual renewals for thefollowing five years.3G and cell site densification inCameroon and Cote d’Ivoire“With the development and rollout of 3G inCameroon and Cote d’Ivoire comes a need fordensification. Where a network planner mighthave needed three towers to cover in 2G, 3Gmight require five towers. We are still at the startof investment in 3G in these countries; moreinvestment is needed in build-to-suit and weanticipate 3G requirements driving more tenancieson the towers we’ve acquired. On top of that thereis still a need for the improved voice call qualityand growth in the number of voice customers – the50-60 percent penetration in these countries is quitelow,” said IHS’s Director of Business Development,Romain de Villeneuve.IHS targets 25,000+ co-location towersover the next five years“We retain an ambition to keep the growth curvesteep and maintain IHS’s leadership position inAfrica,” said CCO Rhys Phillip, showing a slidethat highlighted that Senegal, DRC, Kenya, Mali,Zimbabwe, Mozambique, Morocco, Tunisia, Guinea,Egypt, Madagascar, Rwanda, Ethiopia, and Zambiaare countries particularly targeted by IHS.As for the Middle East, “we have a relationship withEtisalat and a presence in the Middle East, but formoment IHS is an African towerco. The Middle Eastwill always be part of our plans at the right time,”said Phillip.IHS is targeting over 25,000 co-location towers inthe next five years. “We will work on group levelrelationships with mobile network operators andpartner with those operators as they explore newopportunities, evaluating the attractiveness ofindividual markets from a macro economic pointof view as well as the telecommunications andnetwork opportunity,” said Phillip.“We have built up a reputation for performancewww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com32“ “Senegal, DRC, Kenya, Mali,Zimbabwe, Mozambique,Morocco, Tunisia, Guinea,Egypt, Madagascar, Rwanda,Ethiopia, and Zambia arecountries particularly targetedby IHSIHS CEO Issam Darwish signing the Orange deal
  • 33. and quality of service in our markets and it isone we are very proud of.  It’s important that weconsolidate what we have in Nigeria, Cote d’Ivoireand Cameroon, North and South Sudan, investingin energy innovations, while leveraging ourcommercial teams to build IHS’s revenue profileand margins, enabling further investment in RD,”added Phillip.What defines IHS’ interest in a region- does IHS have an appetite to acquireany of the big portfolios rumoured to becoming to market?“We’re often interested if penetration of mobilegives us room to improve,” said the Director ofBusiness Development, Romain de Villeneuve. “It’simportant to be the first towerco in a country, tosecure first mover advantage. There is greater orlesser demand from all 54 countries in Africa, ofwhich we’ve prioritised 17 or 18. And then there’sthe operational challenge: it’s not easy to operatetowers in Africa, so risk monitoring is vital.”“If any big tower opportunities arise from MTN,Airtel, Orange, Etisalat, Vodafone/Vodacom orMillicom take place, IHS will want to play a role,”added the CCO Rhys Phillip.“IHS are not risk averse. Our founders set upa company in Nigeria when few would havewanted to startup in such a complex market. As anorganisation, we like challenges: it has to be large,growing market with potential tenancy growth. Ifthere is a large portfolio, we’d go for it,” added RajivJaitly, IHS’ CEO, Nigeria.Towercos will build the majority ofnew sites in the markets in which theyoperate“We believe few new towers will be built by mobilenetwork operators in the future; they will look tooutsource. In markets where there are towercos,I don’t think operators are going be building anymore towers,” continued Rhys Phillip. “Whenoperators outsource their towers, much of theirnetwork rollout and management expertise istransferred to the towerco. Subcontractors willcontinue to do much of the actual building, buttowercos will take over those relationships and beresponsible for the tower, for power, security andmaintenance.”Is there enough incentive to build towersin rural areas with low ARPU?“This is an age old dilemma, how do we makerural connectivity commercially viable?” saidRhys Phillip. “Governments remain keen to pushthe rural agenda, and the World Bank and otherssupport that ambition. IHS is keen to play ourpart in driving that, and we structure our pricingin rural areas so that it makes sense for both theoperator and us. The investments we’re making intopower solutions, such as uninterrupted solar, makesit easier for us to develop in rural areas.”Romain de Villeneuve took on the debate: “Wherethere is a lack of RoI in rural area networks,subsidies may be needed. But if we can build onesite for three operators and share the revenue, thenthe mobile network operator doesn’t have to takethe risk. Rural networks will benefit from hugegrowth thanks to tower sharing. We can be neutraland independent in network rollout, enabling theindustry to invest together without acting anti-competitively.”“It’s not our policy to ‘build it and they will come’.We talk to RF departments, and we know wherethey want to go,” added CCO Rhys Phillip.Given that the entry of towercos willtransform the passive infrastructuresupply chain, how do you buy?“The towerco will be a filter in front of all suppliersand subcontractors,” said IHS’s Director of Businesswww.towerxchange.com | TowerXchange Issue 3 | 33| TowerXchange Issue 3 | www.towerxchange.comXX“ “IHS are not risk averse...As an organisation, we likechallenges: it has to be large,growing market with potentialtenancy growth. If there is alarge portfolio, we’d go for it
  • 34. unreliable grid power, and rising fuel prices, weare interested in opportunities to share the riskwith energy innovators who are key to effectivenessand profitability. Something like 80 percent of IHSstaff are African engineers, and we like to findnew solutions, not only through solar panels butdeep cycle batteries, the latest gensets, and remotemonitoring – we’re interested in innovations acrossthe whole passive infrastructure supply chain. Withevery new tenant, our cost of energy decreases byapproximately 40 percent, so the infrastructuresharing business model is aligned with energy opexreduction models.”“Power uptime is so critical, and the implicationsof failures so huge, that giving that responsibility toan unproven ESCO partner would be a step too far,”added CCO Rhys Phillip. “But that’s probably whatCTOs were saying about towercos a few years ago!Towercos had to prove themselves in Africa, andthey’ve done that over the last three years. I feelthe ESCO proposition will take a similar number ofyears to mature.”“African telecoms remains around 95 percentprepaid, which means if there’s no power, there’sno revenue. So our head is on the block. We haveto provide excellent Quality of Service (QoS) toensure our operator tenants do not lose revenue.QoS in energy is a priority for IHS, and our mobilenetwork operator partners’ first expectation isthat we improve energy QoS and increase networkavailability,” concluded IHS’ Director of BusinessDevelopment Romain de Villeneuve.Extending operator relationships fromone country to the nextKen Okeleke, Senior Analyst at Business MonitorInternational asked an excellent question: “MTNalso work with IHS’s competitors – how easy is it toestablish relationships in one country and extendthose relationships to other countries?”“Trust is a major requirement,” said CCO Rhys Phillip.“Once you’ve attained the trust of a mobile networkoperator it’s easier to get into another country. Ourexperience is that the relationship has to be right atcountry level, but relationships with the head officeare also important of course.”“We’re very proud of what we’ve achieved to date –we won those deals in Cameroon and Cote d’Ivoire onmerit. MTN will doubtless continue to make decisionsbased on what’s best for them in each market, butwe’re confident we can maintain and deepen ourrelationship with MTN,” concluded Rhys Phillipwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com34“ “With every new tenant, ourcost of energy decreases byapproximately 40 percent, so theinfrastructure sharing businessmodel is aligned with energyopex reduction models.Development Romain de Villeneuve. “We buy likeall towercos: we research partnerships, we seekloyalty, quality, and a competitive price.”“Operators have their suppliers on a country bycountry basis,” added CCO Rhys Phillip. “Our duediligence process includes stepping into theirshoes, conducting our own due diligence on thosesuppliers, looking at alternatives and leveragingrelationships with trusted existing partners.”“IHS replaces the mobile network operator inmanaging subcontractors,” added de Villeneuve.“We have the time to focus on acquiring thebest engineering systems, the best innovationscombining grid, batteries, genset and renewables.It’s a major change from mobile network operatorsmanaging passive infrastructure, which is not theircore business. We know the passive infrastructureindustry, where fuel, steel and concrete are 75percent of costs.”“There has been an acceleration in solar energyinnovation. We won’t develop solar ourselves,but will select the right partners with time andfocus on energy. Builders of towers will staybuilders of towers, and we’ll maintain our 10-yearrelationships with companies on the ground,”concluded IHS’ Villeneuve.IHS’s view of the ‘energy as a service’proposition“Energy is our number one cost,” said Romainde Villeneuve. “With many sites off-grid or on
  • 35. Eaton’s procurementprioritiesCTO Thomas Jonell reveals what opex saving equipment and servicesEaton are buying, and how they buy itThomas Jonell, CTO, Eaton TowersTowerXchange: Thanks for speaking to ustoday Thomas. Please tell us about Eaton’sprocurement processes.Thomas Jonell, CTO, Eaton Towers: Eaton Towersputs a lot of emphasis on procurement – deployingcapital effectively is critical to our ability tocreate value for our customers, our investors andourselves.We’re always very specific in defining and writingup the scope of our requirements before we go tomarket. We think it’s critical to establish what wewant and how we want it, including specificationsof work and material use, expectations of rolloutand internal rate of return (IRR).We typically use two official rounds. First, wesend our RFP to at least ten vendors. Responsesto that RFP are scored on quality of submission,compliance with the specification, and adherence toguidance pricing. By the second round it’s usuallydown to two or three suppliers, with whom we’llexchange a framework agreement for the productand related rollout requirement.TowerXchange: Tell us about Eaton’sprocurement decision making unit.Thomas Jonell, CTO, Eaton Towers: Eaton Towershas a Planning Board Committee that approvesall OM subcontracting and capex deployment.Decisions are made based on our requirementsand on our annual budgeting and reforecastingprocesses. I chair the Planning Board Committee,Read this article to learn: Eaton’s 25% IRR and opex criteria when selecting equipment and services, and their use of VMI 5-year contracts with pan-African OM partners to implement refurbishment plans Using site management systems to display alarms from RMS in the NOC Eaton’s installation of a “Rolls Royce” access management system Analysing data and designing energy solutions tailored for each individual siteThomas Jonell has been a CTO in African telecomsfor more than ten years. He served as Celtel’s CTO inNigeria and DRC before spending the last five yearsat the helm of the technology side of Eaton Towers’business. TowerXchange wanted to know whichcategories of partner selection merited the mostattention from the CTO, and to understand how one ofAfrica’s ‘Big Four’ towercos define their requirements,select partners and evaluate performance of keyequipment and service partners.Keywords: Capex, Procurement, OM, SLA, RMS, Sitemanagement system, Job ticketing, NOC, Energy, PIUs,Line conditioning, Batteries, ESCOs, Access control, Airconditioning, Active infrastructure sharing, Infrastructuresharing, Africa, Ghana, Uganda, Eaton Towerswww.towerxchange.com | TowerXchange Issue 3 | 35| TowerXchange Issue 3 | www.towerxchange.comXX
  • 36. which also includes our CFO Peter Lewis, our GroupTechnical Manager and our Financial BusinessPlanner. We review the capex that each of our localOpCos want to spend based on the budget and theexpected IRR on that specific build out.In order for the Planning Board to grant permissionfor a new purchase, we require at least three,sometimes as many as five quotes from approvedsuppliers contracted under our frameworkagreement. So we secure firm quotations based onvolumes and lead times, and we select not just onprice but on ability to deliver and over the lifetimeof the equipment.Assuming the selected supplier’s presentationmatched up to their quotes and our expected IRR,then the Planning Board’s approval is granted.TowerXchange: What are the most strategicinvestments on which you spend the most time– which categories of equipment and serviceprovider are most critical?Thomas Jonell, CTO, Eaton Towers: The answerdiffers according to the needs of each market anddepending on the timing within a tower transaction.If we close a new deal where a number of existingassets are taken over then the number one priorityis identifying the right OM service partner tomaintain these assets. Can they execute? Do theyhave a clear scope? Our second priority is oftenthe immediate rollout of a management system sowe can understand how the OM subcontractor isdelivering against our expectations and SLAs.TowerXchange: Do you often inherit legacy OMcontractor relationships?Thomas Jonell, CTO, Eaton Towers: We may beasked to maintain existing OM relationships withsome tower transactions, and we usually don’thave any problem with that. Our thinking is that ifthings are working well, we are unlikely to have anyissue with maintaining that relationship. However,the mobile network operator’s relationships andrequirements may be very different compared tothose of a towerco. For example, when we cameinto Uganda the operator’s OM contractor had 30people. As towercos have fundamentally differentprocesses this has increased to nearly 70 sincewe’ve taken over.We like to encourage healthy competition byhaving at least two, maybe three or four, OMpartners in each country to make sure they arebenchmarked, that they can flex their muscles, fightfor the business, and receive more sites or lose sitesaccording to their ability to meet KPIs and SLAs.TowerXchange: Do you have a preference towork with pan-African OM contractors who canreplicate service levels in multiple countries?Thomas Jonell, CTO, Eaton Towers: Yes. In thenext country in which Eaton will operate, we willmaintain our existing contractor relationshipformed in Uganda and Ghana. We know theirmanagement team, they know what we expect, andwe have pre-agreed price lists.TowerXchange: How long are your typical OMcontracts?Thomas Jonell, CTO, Eaton Towers: We’ll oftenaward a three to five year agreement to give ourOM partners a longer term view and sense ofsecurity. This enables them to make investmentsin fuelling trucks, tracking systems and training,and ultimately to see Eaton as a bit more seriousthan the other clients who might offer only a six totwelve month contract.TowerXchange: What are your key performancemetrics for OM contractors?Thomas Jonell, CTO, Eaton Towers: We preferto use the same KPIs and the same expectationswww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com36“ “We like to encourage healthycompetition by having atleast two, maybe three orfour, OM partners in eachcountry to make sure theyare benchmarked… andreceive more sites or lose sitesaccording to their ability tomeet KPIs and SLAs
  • 37. of optimised opex in multiple markets, which iswhy establishing relationships with pan-Africanpartners with local expertise is so important.When we first acquire assets, the scope ofmaintenance requirements and frequency ofvisits will be high. In order to achieve the costreductions critical to our business plan, weinvest in a refurbishment program that upgradesaccess control, RMS, power equipment andcontrol systems. Our refurbishment programdrives efficiencies in partnership with our OMsubcontractor who will also deploy most of thisworks.Africa’s maintenance subcontractors need toprogress into this long term service environment,with its focus on partnering to reduce opex, ratherthan living on a month to month basis. Ultimatelythere are a limited number of strategic partnerswho understand how the African tower industryworks, who qualify when you overlay all thedifferent capabilities we require, and who we cantalk to about this kind of deal. There are perhaps adozen such companies with a pan-African footprint.TowerXchange: Going back to your prioritiesafter acquiring new assets, you mentionedthat the second priority is often the immediaterollout of a management system. Do the assetsyou acquire usually have a good quality sitemanagement system in place to collate alarmsfrom Remote Monitoring Systems (RMS)?Thomas Jonell, CTO, Eaton Towers: Unfortunatelyoperators seldom have a system in place specificallyfor site management. Some operators have basicsite management systems monitoring passive assets,but typically that might include only five or six basictemperature and generator failure alarms, andthose alarms are not always functioning. Our duediligence will identify which alarms are workingand where we have to rectify the ones which arenot. The use of our own robust trouble ticketingsystem will have a tremendous and immediateeffect on controlling opex.TowerXchange: What site management solutiondoes Eaton Towers use?Thomas Jonell, CTO, Eaton Towers: We have a fullblown NOC which utilizes a robust trouble ticketingsystem able to handle significant complexity. Thesystem the NOC utilizes is used for more thanjust reporting of problems; we use it for incidentmanagement, asset management and accessmanagement.Our OM contractors have presence in the NOC, sothey’re very much part of the process of seeing andmanaging any problems.TowerXchange: Getting back to site level, what’syour view on the key requirements from RMSsystems?Thomas Jonell, CTO, Eaton Towers: When itcomes to RMS, you’re not just buying black boxes;it’s critical that alarm systems are displayedcorrectly in the NOC. We’re particularly focusedon power management. We have a good historicalrelationship, an agreed price and deployment planwith our selected supplier for rollout in Uganda, butultimately we’ll use whatever RMS system best suitsthe requirements of a specific portfolio.TowerXchange: How does Eaton source energyequipment and services?Thomas Jonell, CTO, Eaton Towers: We sourceenergy equipment a little bit differently from howthe other towercos do it. We use Vendor ManagedInventory (VMI) partners to do the dirty work forus. One VMI partner company in each country hasto keep stock of equipment and spare parts froma selection of suppliers in their warehouse, whichthey supply to us at an agreed margin.Our VMI partners are not a generator resale agents,but rather they’re site construction companieswhose management has taken a long termstrategic view at getting beyond the business ofbuilding sites into buying, managing and servicingpassive infrastructure equipment. They’ve builtthe facilities to store couple of hundred gensetsand spare parts for us, which eases a lot of ourchallenges around planning and forecasting. VMIis especially important in battery replacement, as itcan take up to three months to ship in replacementbatteries.Through our RFP process we have selected two VMIpartners who currently support our business inGhana and Uganda. Going forward and dependingon their presence and understanding of the otherwww.towerxchange.com | TowerXchange Issue 3 | 37| TowerXchange Issue 3 | www.towerxchange.comXX
  • 38. markets Eaton move into we could possibly expandtheir business, however as we all know each markethas its own unique requirement and the selectionof our VMI partner is key in understanding theseunique conditions.TowerXchange: What are your key performancemetrics in energy opex?Thomas Jonell, CTO, Eaton Towers: For hybridsystems, Power Interface Units (PIUs) and passivecooling, Eaton has two basic criteria: first wewant an IRR of over 25%, taking all costs intoconsideration; and secondly when we evaluatespecific products the opex over a five year periodmust not be more than double the initial purchasecost.Selecting the right investment in hybrid systems canbe particularly challenging. There are more thantwo hundred companies! Many look cheap whenyou buy them, but much depends on the batteryreplacement cycle. We often find it’s better to incura higher initial capex if the battery lifecycle islonger, particularly for systems that have little or noneed for cooling. This is also why it’s important forhybrid energy systems to have a demonstrable trackrecord of success in Africa – so we can see proof ofthe IRR in a comparable market.Eaton’s VMI partners are responsible from a servicepoint of view, so we might give them a couple ofpotential replacement batteries, get them trained upso they report monthly on whether they meet ourrequirements. If a battery fails, our OM partnercontacts our VMI partner to replace the batteryat the initial supplier’s cost, so we’re passing onresponsibilities paying for a fixed service level asmuch as we can.TowerXchange: Do you buy in to the ESCO(Energy Service Company) business model – thatenergy providers need to progress from sellingequipment to selling a service?Thomas Jonell, CTO, Eaton Towers: Personally I’vealways found the business of buying generatorssomewhat absurd. Given that so much of thecomplexity is in maintenance and refueling, I wouldlike to buy energy as a service. I feel that serviceshould be a fixed SLA for a fixed price per kWh. TheESCO model has been talked about for years, but Istill don’t see a credible ESCO proposition that looksafter refueling and service as well as equipmentsupply.Will it happen? I don’t know if anyone has thecapability and the cash to do it right. In my opinion,too many vendors still take a short-term view, withthe initial capital outlay high, and a reluctance tobuy in to shared energy risk on anything beyond asmall scale.TowerXchange: What can towercos like Eatondo to maximise use of Africa’s unreliable gridpower?Thomas Jonell, CTO, Eaton Towers: Tower operators’hunger to stablise the grid is massive. We use gridpower as far as possible, and recently invested inwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com38Aiming for an IRR of over 25%400 PIUs to ensure the right level of grid quality. ThePIUs provide three critical functionalities: AVR, lineconditioning and a phase selector. This enables us torun on mains as long as possible.TowerXchange: How big a priority are accesscontrol systems?Thomas Jonell, CTO, Eaton Towers: It varies fromcountry to country.In Uganda the number two problem with fuel istheft, so we’ve invested in a “Rolls Royce” of accessmanagement systems. When we took over thesites, we felt there were too many keys with ex-contractors, and when things were moved or stolenfrom a site, there was a lack of accountability. Sowe opted to install electro-mechanical locks, for
  • 39. which keys are only given to designated people,and the ability to activate selective regions’ siteson each key. When our subcontractors go to a sitethey receive a unique code over the telephone. Theyinput that code into a key, only then can it open thelocks which it has been preprogrammed to, and fora limited time only. The system allows us visibilityif someone tries opening a lock without the rightcode or with appropriate access and we can actappropriately.We would look at installing the same solution inour next country if the condition of that countryrequires it; Ghana for example does not have thesame problem and priority for access managementas Uganda.TowerXchange: What can towercos do to reducethe burden on cell site energy consumptioncaused by cooling?Thomas Jonell, CTO, Eaton Towers: We’re workingon managing cooling requirements now. Manyoperators have containers on sites with activecooling systems, window shakers or split units.When you use active cooling, every genset startand stop requires you to re-dimension the powerrequirement.Installing passive cooling can free up the energycapacity to add one GSM tenant without doinganything else with the power on a site, so the costper tenant goes down quite dramatically. Butone solution doesn’t fit all; you’ve got to assessrequirements site by site.Intelligence requires good analysis, so we’re in theprocess of analysing data from our managementsystems to derive tailored solutions to optimisethe cost of running each individual site; frompower availability and genset start and stop, to theinstallation of PIUs. We’re currently exploring theoption of installing NiCd batteries with a view toadding renewable (solar) energy in the next phase.Our objective is to achieve a 40% saving in energycosts.Our choice of hybrid system was a good exampleof Eaton’s focus on IRR. Candidly, this system isinitially expensive, but the total cost of ownershipover the lifetime of the system and the projectmanagement skills of the supplier make it a goodmedium to long-term investment.TowerXchange: Finally, what’s your view of therole active infrastructure sharing could play inthe future of African telecom networks?Thomas Jonell, CTO, Eaton Towers: Eaton arestarting to explore areas where an infraco cancontinue to add value to market beyond passiveinfrastructure sharing.TowerXchange: Is active infrastructure sharingalmost the enemy of the tower business?Thomas Jonell, CTO, Eaton Towers: Only to peoplewho don’t understand it. From the tenants’ pointof view, active infrastructure sharing in Africanow would be like walking before you can crawl.Before that there is a major need for much betterwww.towerxchange.com | TowerXchange Issue 3 | 39| TowerXchange Issue 3 | www.towerxchange.comXXbackhaul to support the growth in data traffic. ButI think in due course towercos would be able toprovide ducting for fibre, maintenance of activeequipment, even work with the OEMs to provideactive antennas that look like single tenant solutionson the outside, but support up to three tenants.Towercos are used to such changes: rooftops cannotbe shared without changing the lease agreement.We’ve been talking to numerous telco equipmentvendors about potential models of activeinfrastructure sharing involving the towerco, andwe’re interested in exploring whether we canget operators to buy-in to active infrastructuresharing. We saw an initiative along these lines inKenya six months ago, where the regulators issuedone wholesale LTE license. It would be usefulfor TowerXchange to stimulate open discussionsaround the evolution of infrastructure sharing andthe effect of sharing active equipment – it’s certainlya hot topic!“ “Eaton are starting toexplore areas where aninfraco can continue to addvalue to market beyondpassive infrastructuresharing
  • 40. Health and safety, ethicsand compliance – from policyto practicalitiesHow Helios Towers Africa keep staff, subcontractors andcustomers safeNick Summers, Helios Towers Africawww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com40TowerXchange: Thanks for speaking to us todayNick. Please tell us a bit about your backgroundand your role at Helios Towers Africa.Nick Summers, Director of Compliance andSafety, Helios Towers Africa: I started off on theproperty and site acquisition side of the industryat Andrew Wilkes and Associates and then atVodafone, where over nine years I progressed intothe end to end management of site deployment,culminating in a 16 month stint at Vodafone Ghanaas head of rollout. In Ghana a moratorium on newtower construction came into force, so I took theopportunity to move over and develop the policyand governance elements of site deployment.I joined Helios Towers Africa two and a half yearsago and after a stint in Ghana, I volunteered toassist with writing the group’s Health Safety(HS) manual, before adding responsibility forour Ethics Compliance (EC) and CorporateSocial Responsibility (CSR) programmes. HeliosTowers Africa has group-level EHS governance,with a dotted line reporting to me from the Safety,Health, Environmental and Quality Managerin each local operation. We’ve also appointedEthics and Compliance champions at each localoperation to assist with driving forward group levelrequirements. CSR is coordinated locally with grouplevel approval.TowerXchange: What Health, Safety and Qualitystandards are used in Africa? Do requirementsvary substantially from country to country?Read this article to learn: How achieving OSHAS18001 instigates a systemic approach to the identification and management of risk The need to properly train, equip and supervise tower climbers How to ensure the HS policy compliance of subcontractors How to develop a zero tolerance policy toward Facilitation Payments, and where there is the highest riskthat they might be requested The criticality of HS, EC policies in investors’ due diligenceKeywords: How to Guide, Interview, Towercos, Access Control,Monitoring Management, OM, Construction, Installation,Fuel Security, Risk, Health Safety, SLA, Hybrid power, SkilledWorkforces, RMS, Infrastructure Sharing, Africa, Ghana,Tanzania, DRC, IFC, Helios Towers AfricaDoes operating a tower business in Africa require the turning ofa blind eye toward a “Facilitation Payment” to expedite a leasenegotiation or customs clearance? Or does it require a relaxedattitude toward health and safety? “This is Africa,” is often rolledout as an excuse. That excuse is not accepted at Helios TowersAfrica. Compliance and Safety boss Nick Summers explains thepolicies and procedures that protect tower climbers, electriciansand drivers, and that create a culture of zero-tolerance of briberyand corruption at Africa’s pioneering towerco.
  • 41. Nick Summers, Director of Compliance and Safety,Helios Towers Africa: It doesn’t vary much fromcountry to country, particularly when usinginternational standards. Helios Towers Africa isworking towards achieving OSHAS18001, which isthe Health and Safety equivalent of the ISO14001Environmental quality standard. OSHAS18001 isinternationally recognised, many of our customersrecommend it, and our investors are fully aware ofwhat it is, which is obviously beneficial.Achieving OSHAS18001 means you have a riskbased management system. It means that you candemonstrate that you know about the specificHealth and Safety risks facing your business, andhave a system in place to mitigate that risk. Itrequires creating a culture striving for continualimprovement, while encouraging those working onyour behalf to  work to the same standards and alsoobtain certification.We have a Helios Towers Africa groupEnvironmental, Safety, Health and SocialManagement System (HSESMS) with associatedpolicies which our local operations must abideby. Each operation in turn develops its ownmanagement system to take into account specificlegal requirements and local nuances in eachcountry.TowerXchange: So where are the key areas ofHS risk in the African tower industry?Nick Summers, Director of Compliance and Safety,Helios Towers Africa: In our business in Africa I seethe main areas of risk relating to climbing towerswithout the necessary training, supervision andprotection; people working with electricity; and therisk of driving on Africa’s notoriously poor roads.People must be trained in climbing towers, but ifthey are not properly supervised, or indeed notsupervised at all, then they might take shortcuts andnot protect themselves fully, they might not use theright equipment, and then there’s a much greaterrisk of falling, and that means a risk of fatalities.In Africa I have seen too many instances of peopleclimbing towers without the right equipment, notattaching themselves on properly, and puttingthemselves in danger.We take the safety of tower climbers very seriouslywww.towerxchange.com | TowerXchange Issue 3 | 41| TowerXchange Issue 3 | www.towerxchange.comXX– we’re talking about our staff, our contractorsand our customers. On a multi-tenant site manypeople have legitimate access, so we put checks inplace to ensure that everyone is certified, trained,supervised and medically fit to go up the tower.There are also safety issues around the EMF (ElectroMagnetic Fields) that come from antennas. In myexperience, African operations appear to be laggingbehind many other areas of the world where thereappears to be far greater awareness of this issue.We work hard to increase the awareness of thoseneeding to climb towers and ensuring that they donot put themselves at risk by manoeuvring in frontof live antennas.As well as working with towers and the risk totower climbers, we’re also working with electricityand the risk to electricians. We only permitqualified, certified electricians that meet certainstandards to work on our sites.Finally, Africa has a terrible record for road safetyin comparison to many other areas of the world.Helios Towers Africa encourages driver training – inour operations we make drivers pass a driving test.All our vehicles have tracking systems that monitorspeed and where they are and enable us to ensuresafe driving and to expedite rescue in the event ofan incident. We encourage contractors to abide byour driving policies, and select vehicles suitable forthe road conditions and load concerned.My personal view is that Health and Safetystandards in the African telecom industry are“ “In Africa I have seentoo many instancesof people climbingtowers without the rightequipment, not attachingthemselves on properly,and putting themselvesin danger
  • 42. lagging behind the mining and internationalmanufacturing industries in Africa. HS is ofparamount importance at Africa’s top mines and,for example, I’ve seen excellent practices in theGuinness breweries all over Africa. The controlsin Mining and Manufacturing are not always asrigorously enforced in the telecoms sector. HeliosTowers Africa is joining some of the big globaloperators in trying to change the Health Safetymind-set in African telecoms, which can only bebeneficial.TowerXchange: Where does responsibilityfor defining and maintaining HS standardsfall between Helios Towers Africa and yoursubcontractors? How does HS figure intoprocurement and partner selection processes?Nick Summers, Director of Compliance and Safety,Helios Towers Africa: Our view is that all of HeliosTowers Africa’s suppliers should be OSHAS18001compliant within a given period. The effort toachieve certification will raise the standard of ourcontractor base, and provides a level of reassurancethat they’re conversant with what is required ofthem,All our suppliers have Environmental, Healthwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com42and Safety clauses in their contracts that align toHelios Towers Africa’s policy. Each local operationmanages its own suppliers and audits theirperformance, while I in turn audit our operations toensure that they are in compliance.Helios Towers Africa conducts comprehensivedue diligence  on every prospective new suppliercovering the likes of Health and Safety, Ethics Compliance, financial history, Human Resourceset cetera. HS features very highly, if a suppliercannot demonstrate that they can abide by ourpolicies, they will not be selected.TowerXchange: Does having multiple tenants,and multiple teams, on a cell site multiply theEHS issues? Whose EHS policies apply?Nick Summers, Director of Compliance and Safety,Helios Towers Africa: It’s our site and we set thepolicies in conjunction with our customers. On oursites, Helios Towers Africa’s EHS policies set theminimum standards expected and customers andcontractors are required to abide by them.  Ourpolicies were defined taking into account the moststringent of our customer requirements, so in manyinstances we are very much aligned.It’s written into tenants’ Master Lease Agreementsthat they must abide by our HS policies, and ourHS managers at local operations work to make ourcustomers aware of our HS policies, and that ourcustomers in turn make their subcontractors awareof the policies by which they must abide.
  • 43. On the rare occasion that it happens, we have hadno qualms about preventing access if customer isn’tappropriately prepared with the right equipment orthe right certifications.TowerXchange: I saw that Helios Towers Africarecently received an award for investing US$40min energy storage and RMS to reduce your carbonfootprint. Tell us about Helios Towers Africa’scarbon management strategy.Nick Summers, Director of Compliance and Safety,Helios Towers Africa: We won that award forinstalling Remote Monitoring Systems on all oursites and deep cycle batteries on about 40% of them.Helios Towers Africa conducted a carbonfootprinting exercise in 2011, and will use that asBusiness Conduct is not just about anti-corruptionand anti-bribery as it also covers a number of otherareas such as due diligence, work place conduct,conflicts of interest and so on.Transparency International’s “Global CorruptionPerception Index” (http://cpi.transparency.org/cpi2012/results) shows that Africa is a particularlychallenging environment when it comes tocorruption and bribery. Of the three countries inwhich we’re currently operating, Ghana is ranked64th out of 176 countries, Tanzania 102nd and DRC160th. We’re working in a difficult environment,in markets where the regulators know thatopportunities for corruption and bribery are likelyto occur and we have to be prepared for that.TowerXchange: Where are the highest risk areasof the business where you might encounterissues of corruption or bribery?Nick Summers, Director of Compliance and Safety,Helios Towers Africa: Both in site acquisition andin the logistics of clearing customs there can bea risk of exposure to what are called FacilitationPayments, which are strictly prohibited under ourcode of conduct.This is not specific to our business orindustry.  Wherever there is the need for officialpaperwork or signatures there is the possibility thatFacilitation Payments may be requested.We have to do everything we can to mitigatecorruption and bribery. We have a substantialwww.towerxchange.com | TowerXchange Issue 3 | 43| TowerXchange Issue 3 | www.towerxchange.comXXan initial benchmark to compare our 2012 dataonce it’s collated. So we’re actively monitoring ourcarbon footprint – developing KPIs with the aim ofcontinually reducing our relative footprint will beour next step.Incidentally, when we conducted that carbonfootprinting study in 2011, we tried to benchmarkagainst other towercos worldwide, but we couldnot find any evidence that any other towercos hadconducted a similar exercise and certainly not inAfrica.TowerXchange: I’ve just read Helios TowersAfrica’s Code of Business Conduct, which isdownloadable from your website. Please couldyou summarise your ethics and anti-briberypolicies, and talk about the practicalities ofcompliance?Nick Summers, Director of Compliance and Safety,Helios Towers Africa: We have to abide by twoprincipal sets of legislation; the UK Bribery Act2010, and the US Foreign Corrupt Practices Act1977. There are six fundamental areas that needto be addressed and managed to ensure that wehave adequate procedures in place to satisfy thelegislative requirements. Having policies andprocedures that are proportionate to the risksfaced by the business is one of the fundamentalareas.  Therefore our policies and procedures havebeen written taking into account the challenges andrisks that we face in our business and they provideour employees with guidance and advice withhow to overcome certain situations. Our Code of“ “On the rare occasion that ithappens, we have had noqualms about preventingaccess if customer isn’tappropriately preparedwith the right equipment orthe right certifications
  • 44. education programme in which all staff are trained,but you can’t just train staff the once, you’ve got tokeep a constant flow of information to keep theseissues front of mind.  We aim to ensure that all staffwithin the business come into contact with someform of EC education or literature once a quarter.TowerXchange: What can towercos do to reducefuel theft?Nick Summers, Director of Compliance and Safety,Helios Towers Africa: One of the primary stepswe’re taking to reduce the amount of diesel weneed to use is through the introduction of hybridbatteries. In Tanzania we have some LPG generatorswhich have been trialled in Ghana too.Diesel theft is an area of great concern for everyAfrican tower operator. Whether it’s by securityguards, local people outside the site, maintenancepeople on site the site, or administrative theft, we allsuffer diesel theft to greater or lesser extent. HeliosTowers Africa are tracking fuel usage through theRMS that give alarms when an unusual amount offuel is being drained from the tank, and we cancross check fuel usage against DG runtime andinvoices to ensure there is no administrative theft.We’re also increasing access controls, giving NOCsgreater control over who has access, when and forwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com44how long so that individuals can be pinpointed.Ultimately all our maintenance contractorsare responsible for site security too. The OMcontractor is the “single point of failure” and hasthe financial incentive to minimise pilferage aswe only pay for diesel burned.  The Operations Maintenance contractor is held financiallyaccountable for any theft which gives them addedincentives to ensure that security is properlymaintained.TowerXchange: Thanks Nick, please could yousum up the importance of HS, EC issues forthe African tower industry.Nick Summers, Director of Compliance and Safety,Helios Towers Africa: Our policies are driven notjust by our own ethics but also by our investors. Forexample, the IFC have invested in us, and with theirinvestment comes many obligations which we haveto meet.When towercos seek new funding, a lot of thefocus of the due diligence is related to HS andEC. It’s important that we have the policies andmanagement systems in place because we shouldbe continually seeking to increase standards inAfrica. We must be striving to leave a positivelegacy and raise the bar in the African telecoms/towerco industry. “This is Africa” is not an excusefor accepting poor HS standards or tolerance ofcorruption and bribery. We’re not saying we’reperfect, and it’s not easy, but we can all improve,and that’s what we’re continually trying to do““When towercos seek newfunding, a lot of the focusof the due diligence isrelated to HS and EC.It’s important that wehave the policies andmanagement systems inplace because we shouldbe continually seekingto increase standards inAfrica
  • 45. Growth stock American Towerplaying a different game to PE-backed towercosAnnual results reveal American Tower sees international marketsas the “turbo charger” of their “domestic market Ferrari engine”TowerXchange has sifted through the AmericanTower 2012 annual report, associated webcast anddialed into a couple of the conferences on the recentinvestor junket to share highlights with our readers.Our selective coverage of the international aspectsof American Tower’s annual report is a result ofTowerXchange’s pre-occupation with emergingmarket towers, and our current focus on Africa. Forthe full picture we recommend you download thefull 2012 annual report from:www.americantower.com.American Tower aims to again double thesize of their business in the next five yearsThe announcement of American Tower’s 2012annual results re-emphasised their status as the“corporate” towerco participating in emergingmarkets. American Tower is a growth stock,delivering an impressively consistent 14-15%CAGR in rental and management segment revenue,adjusted EBITDA and AFFO per share over thelast five years, targeting a “lengthening andstrengthening” of that growth trajectory over thenext five to ten years.While nearly 60% of American Tower’s towers arenow situated outside the US, and internationalmarkets are growing faster than the mature UStower market, the US continues to represent around70% of American Tower’s revenue. American TowerChairman, President and CEO Jim Taiclet describesinternational markets as the “turbo charger” oftheir “domestic market Ferrari,” painting a pictureof a phased influx of amendment revenue as theUS and German markets mature; followed by SouthAfrica, Brazil, Mexico and Columbia; before finallymarkets like India and Ghana mature on theirRead this article to learn: The role of international markets in “lengthening and strengthening” American Tower’s growthtrajectory, targeting a doubling of assets and profitability in next 5 years The impact of 4G on amendment revenue and cell site densification American Tower’s strategy to secure first mover advantage in “cornerstone” international markets American Tower’s MA war chest of approximately $1bn A comparison of per site capex costs and tenancy ratios in the US, LatAm, Germany, India and AfricaKeywords: Annual Report, Cost of Capital, Towercos, Country Risk, 3G, 4G, VoLTE, Amendment Revenue,Cell Site Densification, Acquisitions, Build-to-Suit, Tenancy Ratios, Capex, Infrastructure Sharing, Africa,South Africa, Ghana, Uganda, Germany, LatAm, Brazil, Mexico, Columbia, American Towerwww.towerxchange.com | TowerXchange Issue 3 | 45| TowerXchange Issue 3 | www.towerxchange.comXX
  • 46. respective migration paths to 3G and 4G.Low cost of debt compared to the high cost of capitalfor PE-backed competitors will continue to giveAmerican Tower a financial edge when bidding forassets in “cornerstone” international markets suchas Brazil and South Africa. But American Tower hashad, and seems likely to continue to have, a limitedappetite for country risk. American Tower’s uniqueglobal footprint gives them the ability to pick andchoose markets, and the discipline to walk awayfrom auctions where bidding has outstripped theirvaluation. Nonetheless, American Tower remains inpole position for any assets that come to market inpremium emerging markets like South Africa.Growth stock“American Tower’s growth strategy is based ona simple observable premise: that consumers’appetite for mobile communications andentertainment is growing dramatically in theUS and around the world,” said Taiclet, openingAmerican Tower’s full year 2012 earnings releasewebcast. “Mobile data traffic grew five times in thefirst two years of this decade. Moreover, the mostrecent Cisco forecast predicts that mobile networktraffic will grow another ten times over the nextfive years. The Cisco study also estimates thatapproximately 75% of this growth will be deliveredover traditional macro sites, primarily towers.”Taiclet continued: “Macro site networkinfrastructure, which is predominantly towerbased, will shoulder the bulk of network expansion,and is expected to grow at a 50% CAGR over thenext five year period.” Taiclet emphasised that theinstallation of additional antennae for 4G or LTEwas a key driver of “amendment” revenue, whereexisting tenants buy additional capacity to hangnext generation technology active equipment,increasing the value of existing client relationships.3G and 4G driven cell site densification tospread from US to international markets“As the level of penetration of LTE devices(increases) and VoLTE is added to carriers’offerings, it is our view that additional cell sites willbe needed as a result of the higher signal strengthrequired to effectively deliver acceptable video,www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com46Amercian Tower GrowthUS Dollars(Billions) Total revenueAdjusted EBITDA3.000.52008 2009 2010 2011 20121.01.52.02.51.61.11.21.31.61.91.72.02.42.9“ “So as site proximity, andconsequently network density,increases, American Towerexpects to secure additionalleases on our existing towers,as well as more opportunitiesfor new tower construction
  • 47. www.towerxchange.com | TowerXchange Issue 3 | 47| TowerXchange Issue 3 | www.towerxchange.comXXand VoLTE applications, to large numbers of users,”said Taiclet. “So as site proximity, and consequentlynetwork density, increases, American Towerexpects to secure additional leases on our existingtowers, as well as more opportunities for new towerconstruction.”“Today the US is among the leaders in moving to 4Gtechnology, with the four largest domestic carriersin the process of national deployments right now.However, we believe that access to the broadbanddata and entertainment services enabled by 4Gwill be in high demand not only in the US butworldwide.” Taiclet classified South Africa, Mexico,Brazil and Colombia as markets where “3G is stillin the process of deployment, while 4G is eitherin the planning or very early initiation phase...In these countries, the lag time behind the USschedule is we believe about two to five years.”Taiclet described American Tower’s Ghana andIndia markets as characterised by the continuingexpansion of voice coverage, with 3G service stillin the introductory stage and 4G to come down theroad. Taiclet described such markets as being six toten years behind the US schedule. “We believe ourinternational presence will lengthen and strengthenAT’s domestic growth trajectory,” concluded Taiclet.American Tower targets “cornerstone”international markets“Beginning in 2007 we established regional teamsaround the world to explore and cultivate growthopportunities, leveraging our US knowledge base,and our early experiences operating in Mexico andBrazil,” continued American Tower’s ChairmanJim Taiclet. “These teams use their first moveradvantage to build leading franchise positions inthe most critical and attractive markets in eachregion. For example, expanding dramatically inMexico and Brazil, while adding new cornerstonemarkets such as India, Columbia, South Africa andmost recently Germany. Moreover, our teams havesecured deeply rooted strategic relationships withsome of the world’s leading multi-national MNOssuch as Telefonica, MTN and Millicom, furtherstrengthening our international position. So givenour geographic strength, and MNO partnerships,I‘d argue that our strategic positioning on theinternational front is truly exceptional.”“As a result of our growth prospects in the US andaround the world, we’ve set a new aspirationalgoal to once again double our asset base, and ourfinancial performance, over the next 5-6 yearplanning horizon,” added Taiclet.  When askedin QA how this doubling of the business wouldbreakdown, Taiclet suggested half was supportableThe engineering community refers to the rollout of 4G or LTE in three phases. “Phase one build isdominated by overlays on existing sites, which is driving most of the tower industry’s 4G business rightnow,” said Jim Taiclet, Chairman, President and CEO of American Tower during his recent 2012 annualreport webcast. “Verizon and ATT are the two leaders in the deployment schedule. Our expectation isfor Verizon to have phase one essentially complete, which in our view is 300m pops or more, by the endof 2013. With ATT our expectation is that they’ll be in the same situation, with 300m pops covered, bythe end of 2014. Sprint and T-Mobile will get there in our estimation by the end of 2015. As you sequencethose phase one schedules out, phase two tends to follow very quickly after, you’ll see through the endof 2015 overlaps between phase one and phase two among the carriers. And in phase two you see thedensification (including commissioning new build to suit towers) happening,” added Taiclet.So we’re still at the beginning of the impact of LTE, even in the US where less than 10% of handsets are4G LTE. Given that the monthly network burden goes up five fold when you swap a 3G for a 4G handset,when penetration reaches 30-50% on these phones that need 5x capacity, you can understand whyAmerican Tower is bullish that operators will have to keep investing capex and adding more sites totheir networks.Phases of LTE deployment and implications for towers, using US market as an example“ “we’ve set a new aspirationalgoal to once again doubleour asset base, and ourfinancial performance, overthe next 5-6 year planninghorizon
  • 48. www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com48from internal growth – leasing on existing sites,with 10-15% from construction of new build to suitsites and the balance from new acquisitions.“We anticipate that much of this growth will begenerated organically through our worldwideportfolio of more than 54,000 sites. We alsoanticipate that our strategic relationships with ourkey customers around the globe should supporta construction program of 2-3,000 sites per year,”continued Taiclet. “Our significant cash flowgeneration capabilities should in turn enable us tochoose to invest in additional acquisitions that meetour investment criteria. Our management objectiveis to deliver mid-teens growth and AFFO per sharefor our investors as we strive to double the businessagain over these next five years.”American Tower’s international revenueup 34% in 2012“As a result of the nearly 18,000 sites we’ve addedto our international portfolio since the beginningof 2011, and the associated impacts of increasedpass through revenue, as well as record levels oforganic new business, our international rental andmanagement segment reported revenue increasedover 34% to US$863m, with over 50% core revenuegrowth for the full year,” said Tom Bartlett, EVPand CFO of American Tower. “Core organic growthwithin our international segment was 13.6%. In2012 our international pass through revenue was$229m, reflecting an increase of about $53m,”added Bartlett.In 2012 American Tower constructed 2,111 sitesinternationally and acquired 5,738 sites, includingacquisitions in the Ugandan and German marketswith an average tenancy ratio of over 1.3 across theacquisitions. “Given the low average tenancy, expectthese sites to generate growth over future years,”added Bartlett.EBITDA growth and capex forecasts for 2013“We currently expect our reported 2013 adjustedEBITDA to increase to between $2.08 and $2.13bn,representing reported growth of over 11% and coregrowth of 14.8% at the midpoint,” said AmericanTower’s CFO Tom Bartlett. “In 2013, we expect tocarefully deploy our capital through our capitalexpenditure programme and selected acquisitions.We currently plan to spend between $550-650min capex during the year, which includes theconstruction of 2,250-2,750 new sites.”MA strategyIn QA American Tower Chairman Jim Taicletindicated that American Tower expected to fundmost acquisition opportunities from internal cashflow and access to debt markets. He went on todescribe how American Tower had about $2bn ofavailable capital as of the end of 2012 that, after theaforementioned $550-650m capex deployment, anddistribution of dividends, left an MA war chestof approximately $1bn. Taiclet described this assufficient to fund “mid-sized acquisitions,” adding“if there’s a compelling large scale acquisitionthat might mean an exception in terms of issuingequity money”. This clearly indicates that AmericanTower continues to have a lower cost of capital thanthe PE-backed rival towercos bidding for tower
  • 49. www.towerxchange.com | TowerXchange Issue 3 | 49| TowerXchange Issue 3 | www.towerxchange.comXXportfolios in emerging markets.American Tower also believes an increasingnumber of mobile network operators are openingup to the idea of selling and leasing back towerportfolios. “The willingness of wireless carriersaround the world to sell tower assets is increasing.It’s not increasing across the board with everymulti-national coming to the same conclusion atthe same time, but we do believe that there will beopportunities and activity in pretty much everyregion that we’re operating in, and we will use ourstandard evaluation process to determine if anyof those assets should trade to us. If we meet ourcriteria you’ll see us act, and if we don’t you maynot see a trade or someone else may get it. ButI do think it’s something that many carriers areconsidering, but they also view it as important andstrategic, and that attitude moves over time and notnecessarily instantly to sell,” concluded Taiclet.Comparing tenancy ratios and capex costsacross regionsCore organic growth or “same tower growth” isexpected to be around 10% in American Tower’sinternational markets. When asked whichinternational markets were expected to haveoutperformed that number in 2012, Taiclet said “I’dput South Africa right at the top of the list. It’s anincredibly busy leasing environment with Telkom,Vodacom and MTN all deploying 3G data at a prettyrapid rate. We were the first mover commercialleasing company in South Africa with our Cell Cacquisition and the timing happened to be veryfortuitous for us on that one.”“In Latin America, both Brazil and Mexico droveexcellent new business. Both of them had Nexteldeploying 3G aggressively, but in Brazil you alsohad America Movil, Telecom Italia and Oi filling outtheir 3G networks as well at a pretty rapid pace. Allfive of those carriers in Brazil are trying to get readyfor the World Cup and the Olympics, and there aresome requirements for them to have coverage forthose events that are pretty extensive. In Mexico,Telefonica was also very active along with Nextelas they tried to stay competitive with Telcel in 3G,”Taiclet added.In QA American Tower were asked to comparethe typical capex per site in the different regions inwhich they were active. Jim Taiclet suggested thatwhile capex varies significantly between and evenwithin markets, a rough average cost per site mightbe around $250k in the US, $175k in Latin America,$50-60k in India, and $190-200k in Africa.American Tower were also asked about the averagenumber of tenants on each of their sites, to whichthey responded “in international markets right nowit’s about 1.5 times, 2.6 in US, so overall it’s about 2times. In our Asian markets it’s up in the 1.7 range,in our African markets it’s probably in the 1.4 rangewhere we’re getting into some of those marketswith single tenant towers out of the gate. And inLatin America we’ve picked up some single tenanttowers there and it’s probably in the 1.5 times. Andin Germany in the deal that we’ve just done, it’s 1.6-1.7 times.”American Tower’s total revenue increased 17.7%,adjusted EBITDA increased 18.6% in 2012.Let’s conclude with a few headlines numbers fromAmerican Tower’s FY2012 annual report. Totalrevenue increased 17.7% to US$2,876m. AdjustedEBITDA increased 18.6% to US$1,892.4m, with anadjusted EBITDA margin of 66%.Focusing on American Tower’s internationalbusiness, international rental and managementsegment revenue increased 34.4% to US$862.8m, or30% of total revenues, with a gross margin increaseof 30.5% to US$548.7m. International rental andmanagement segment operating profit increased33.9% to $453.1m at an operating profit margin of53% (72% excluding the impact of pass-throughrevenues). That compares to a 77% operating profitmargin in American Tower’s domestic rental andmanagement segment.American Tower’s tower count in Africa increasedvery slightly in Q4 2012 with the construction ofeighteen towers in Ghana, bringing the total to1,926, two in South Africa (1,604 total) and twelvein Uganda (1,043 total). American Tower ownsmore towers in Africa than any other independenttowerco“ “in our African markets(the number of tenants oneach tower is) probably inthe 1.4 range where we’regetting into some of thosemarkets with single tenanttowers
  • 50. Understanding FX riskin AfricaWhat are your hedging options?TowerXchange: Please tell us about the FX risksrelated to investing in African countries.Scott Gooch, Director, Corporate Foreign Exchange,Wells Fargo: When making a decision to investor grow business in an African country thereare several key risks that companies must weighincluding their overall business model risks,economic risk, and geopolitical risk.  Once acompany has made a decision to investment in abusiness, then FX risk becomes another key riskfactor that must be addressed.FX risk encompasses everything from the basicability to successfully manage cross-border cashtransactions to hedging future cash expenditures.Converting from one currency to another anddelivering cross border can create operational andmarket risk.TowerXchange: Please explain the cross bordertransaction risks and the steps that can be takento mitigate that risk.Scott Gooch, Director, Corporate Foreign Exchange,Wells Fargo: The initial FX risk factor is todetermine how to successfully wire funds from thecountry of origin to the bank within the Africancountry, and which currency to transact business inorder to facilitate the transaction.On the surface this sounds simple, but withinthe African continent there are over fiftydifferent countries and most have their own localcurrency.  While many of the local currencies areRead this article to learn: The challenges of delivering currencies into certain African countries What you need to know to determine which currency to transact business in How to use hedging tools to “lock in” budgeted FX rates Comparing “Forward rates” and “currency options” What happens when a currency crashes?One of the most importantcomponents of country risk is foreignexchange (FX) risk. TowerXchangespoke to Wells Fargo’s FX expertScott Gooch to learn how companiesinvesting and operating in Africacould hedge to “lock in” an FX rate,or range of rates, thereby controllingexposure to FX risk in their budgetsand transactions.Keywords: Country Risk, Towercos,Investment, Valuation, Capex, Bankability,Africa, Zimbabwe, Wells Fargowww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com50Scott Gooch, Wells Fargo
  • 51. liquid and fairly easy to deliver, others may be veryilliquid or even restricted.  An analysis is initiallyneeded to determine the best currency to transactbusiness (i.e. local currency or an acceptablebase currency such as Euros (EUR), US Dollars(USD), or South African Rand (ZAR)).  Successfuldelivery of funds to an in-country bank must betimely, as these funds are often time sensitive asthey relate to closing a business transaction (ie.fund an acquisition, invest in capital expenditure),maintaining ongoing operations, funding payroll, etcetera. So it is important to select a financial partnerthat has experience delivering currencies into theAfrican country of focus.  Electronic wires are themost widely used method of transacting business.Paying for most transactions generally involves abasic Spot FX trade, which is a market exchange ofone currency for another currency which is agreedupon at a rate at a fixed point in time. The spot rateis the agreed upon rate to exchange one currencyfor another currency with the actual exchangegenerally occurring between two banks twobusiness days later.Once the best currency to transact in has beendetermined, then a company must understandits ongoing FX risk which can create changes invalue.  This risk to value is due to potential changesin the underlying FX rates between the time afuture transaction is identified and the time thattransaction actually closes.  The economic valueof the transaction will change with the change inthe underlying FX rate between the time a decisionis made to invest and the future date that theinvestment is actually made.To give an example of the FX risk due to changes inthe underlying spot rate: at time of writing the ZARis trading in the FX market at 9.2 ZAR/USD, whichmeans a company can buy 9.2 ZAR for each $1.0USD.Thus, a US company contracts to buy towers pricedin ZAR for 920 million ZAR in a transaction whichwill close in three months.The company uses the current spot rate of 9.2 as itsbudget rate, which at the time the contract is signedequates to $100million USD.Assume that three months later when thetransaction is closing the ZAR is then trading at8.0 ZAR/USD.  The USD cost required to close the902 million ZAR transaction would then be $115million.  Thus, it would cost the company 15% morein USD terms to buy the equipment which it hadbudgeted at only $100 million.Such a move could create funding issues if thecompany only budgeted to fund $100 million.TowerXchange: How can companies mitigate FXrisk by hedging?Scott Gooch, Director, Corporate Foreign Exchange,Wells Fargo: This FX currency risk or marketexposure can often be mitigated by utilizing ahedging tool.  In the financial world, Hedging isa term describing the act of utilizing a financialcontract or instrument to mitigate future financialmarket risk, by fixing the underlying marketvariables.  In this case the underlying marketvariable is the unknown future spot rate comparedto the initial spot rate.  In the example above, thespot rate changed unfavorably for the client from9.2 ZAR/USD to 8.0 ZAR/USD.  When the companyoriginally ordered the equipment it budgeted forthe cost of the ZAR at the then-current spot rate of9.2 ZAR/USD.  When the equipment was deliveredthe then current spot rate was 8.0 ZAR/USD.  Thecompany could have considered Hedging by lockingin a future ZAR rate for purchasing its ZAR threemonths into the future.  This type of hedge is knownas a “forward rate.”  These hedging products aregenerally offered by FX banks to clients if thebanks are comfortable with the underlying creditexposure of the company.If the company had been able to work with abank that was comfortable with the company’swww.towerxchange.com | TowerXchange Issue 3 | 51| TowerXchange Issue 3 | www.towerxchange.comXX“ “FX currency risk or marketexposure can often bemitigated by utilizing ahedging tool
  • 52. credit risk and able to provide the company with aforward rate, then the company could have lockedin a forward rate contract to buy its ZAR in threemonths.  When the then-current spot rate was 9.20,the then-current forward rate the company couldhave locked in to buy 920 million ZAR in threemonths was 9.25 ZAR/USD*.  Thus, if the companyentered into a forward hedge with the bank, itwould be agreeing to buy 920 million ZAR at a rateof 9.25 ZAR/USDS in three months for $99,460,000,regardless of the future spot rate.  In this examplethe company has hedged its risk to changes in theunderlying spot rate over the next three months,and the forward rate it locked in is actually morefavorable than the then-current spot rate.For many emerging market currencies the forwardrate is often more attractive than the initial spotrate.  This is because forward rates are based on thespot rate adjusted for the interest rate differentialbetween the two underlying courtiers and adjustedfor the company’s credit risk.  Because interest ratesin most emerging markets are higher than in the USthis means that the forwards will generally be equalto or more favorable than the underlying spot rate.TowerXchange: Are there alternative methodsfor mitigating against FX risk?Scott Gooch, Director, Corporate Foreign Exchange,Wells Fargo: The other common way of hedging FXrisk is to protect yourself with a “currency option”.This is more like a company buying insurance. Thecompany pays an up-front premium to the bank,and the bank agrees to provide currency at noworse than a specific future exchange rate. So ifyou win a major project generating revenue a yearfrom now, you could pay to take a currency optionto protect your budgeted FX rate. If the currencyyou’re exposed to weakens, then you simply let thecontract expire. The more FX risk you can take, thecheaper that up front premium.TowerXchange: What are the risks involved inhedging?Scott Gooch, Director, Corporate Foreign Exchange,Wells Fargo: There are risks involved in hedgingwhich should be closely considered prior toentering into any hedge.  The primary risk ofhedging with a forward hedge is that even if thecurrency weakens and it would be more favorablefor the company to purchase the ZAR in the then-current spot market at an all-in lower price, it muststill honor its forward hedge with the bank.  Inthe example above we outlined the risks to thecompany if the ZAR strengthened against theUSD and the company was not hedged.  In similarfashion, if the company does hedge and for examplethe future spot rate is 10.0 ZAR/USD it wouldhave proven more beneficial with the benefit ofhindsight not to have hedged.  Additionally, if theunderlying transaction to purchase the towersfor 920 million ZAR is terminated for unforeseenreasons, the forward hedge is still in place and mustbe terminated with the bank which could result ina loss.  Because of these potential risks the companyshould work with its FX bank closely to considerwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com52“ “manage the risks thatare easy to manage, andmitigate at least the risksthat you can mitigate
  • 53. these and other risks that could be created byhedging.TowerXchange: What happens in extremeexamples, such as the crash of the Zimbabwedollar in 2008-9?Scott Gooch, Director, Corporate Foreign Exchange,Wells Fargo: Sometimes the degree of politicalrisk restricts your options to mitigate FX risk. It’svery hard to hedge currency exposure in volatilecircumstances such as we saw in Zimbabwe, so itbecomes critical to limit your exposure as muchas possible by not holding cash in country, and byknowing the risk-return profile.The general rule of thumb is to manage the risksthat are easy to manage, and mitigate at least therisks that you can mitigatewww.towerxchange.com | TowerXchange Issue 3 | 53| TowerXchange Issue 3 | www.towerxchange.comXX“ “For many emerging marketcurrencies the forward rateis often more attractive thanthe initial spot rate.  This isbecause forward rates arebased on the spot rate adjustedfor the interest rate differential* Currency Restrictions may apply - OFAC Sanctions Programs and Country Information provided by the U.S. Department ofTreasury at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx(Information correct as at 20 March 2013)African currencies and any restrictions*Algeria -- Algerian dinar (DZD)Angola -- Kwanza (AOA)Benin -- West African CFA (XOF)Botswana -- Pula (BWP)Burkina Faso -- West African Franc (XOF)Burma -- Burmese kyat (MMK) Restrictions *Burundi -- Burundi franc (BIF)Cameroon -- Central African franc (XAF)Cape Verde -- Cape Verdean escudo (CVE)Central African Republic -- Central African Franc (XAF)Chad -- Central African Franc (XAF)Comoros -- Comorian franc (KMF)Cote d’Ivoire (Ivory Coast) West African Franc (XOF)Restrictions*Republic of the Congo -- Central African CFA (XAF)Democratic Republic of the Congo -- Congolese franc (CDF)Restrictions*Djibouti -- Djiboutian franc (DJF)Egypt -- Egyptian pound (EGP)Equatorial Guinea -- Central African Franc (XAF)Eritrea -- Nakfa (ERN)Ethiopia -- Ethiopian birr (ETB)Gabon -- Central African Franc (XAF)Gambia -- Dalasi (GMD)Ghana -- Cedi (GHS)Guinea -- Guinean franc (Franc Guineen) (GNF)Guinea-Bissau -- West African Franc (XOF)Kenya -- Kenyan shilling (KES)Lesotho -- Loti (LSL)Liberia -- Liberian dollar (LRD)Libya -- Libyan dinar (LYD) Restrictions*Madagascar -- Malagasy ariary (MGA)Malawi -- Malawian kwacha (MWK)Mali -- West Africa Franc (XOF)Mauritania -- Ouguiya (MRO)Mauritius -- Mauritian rupee (MUR)Morocco -- Morrocan dirham (MAD)Mozambique -- New Mozambican metical (MZN)Namibia - Namibian dollar (NAD)Niger -- West African Franc (XOF)Nigeria -- Naira (NGN)Rwanda -- Rwandan franc (RWF)Sao Tome and Principe -- Sao Tome Dobra (STD)Senegal - West African Franc (XOF)Seychelles -- Seychellois rupee (SCR)Sierra Leone -- Sierra Leonean leone (SLL)Somalia -- Somali shilling (SOS) Restrictions*South Africa -- South African rand (ZAR)Sudan -- Sudanese Pound (SDG) Restrictions*South Sudan -- South Sudanese Pound (SSP)Restrictions*Swaziland -- Lilangeni (SZL)      Tanzania -- Tanzanian shilling (TZS)Togo -- West African Franc (XOF)Tunisia -- Tunisian dinar (TND)Uganda -- Ugandan shilling (UGX)Zambia -- Zambian kwacha (ZMK)Zimbabwe – U.S. Dollar (USD) Restrictions*
  • 54. www.towerxchange.com | TowerXchange Issue 2 | 12| TowerXchange Issue 3 | www.towerxchange.com54Special Feature:With three tier one operators vying for market share, afourth license imminent, 110% subscriber penetrationand a maturing 3G rollout, the Egyptian market is ripefor infrastructure sharing. But what form will it take?Will Vodafone Egypt, MobiNil and Etisalat Misr agreean operator-led joint venture towerco? Could oneof the operators secure first mover advantage byselling and leasing back their towers? What role willbe played by the four managed service providerslicensed to lease infrastructure? Is there a role inEgypt for Africa’s ‘Big four’ towercos? And how has therevolution impacted the Egyptian telecom industry?In this case study, TowerXchange draws onindependent analysis from strategic consultantsMott MacDonald, and speaks to business leaders atMobiserve and EEC Group to answer these questionsand evaluate the prospects for a major infrastructuresharing deal in Egypt.Egyptcase studyThree viewpoints on Egypt:55 The Mott MacDonald Share Square: Egypt57 Mobiserve believe a tower deal is imminent60 EEC Group are positioning themselves topartner towercos
  • 55. Share Square: EgyptShare Square - EgyptA new regular feature with Mott MacDonaldEgyptian Mobile OperatorsThe Egyptian National TelecommunicationRegulatory Authority (NTRA) awarded a licensesto Alkan, EEC Group, HOI-MEA and MobiserveHolding, under the name MobiTower, to implementand deploy tower sharing infrastructure. There arenow four tower infrastructure license operatorsin Egypt and it will be interesting to see whetherMobiTower, or possibly one or more of the threeother licensees, will focus on a build-to-suitebusiness model (building towers to order) or seekto purchase the assets of one of the three mobilenetwork operators.At least part of the growth in new towers will comefrom a fourth mobile license, set to be announcedby the NTRA in mid-2013. It is expected that thisconcession will be issued to Telecom Egypt - thefixed-lined provider in the region who also has astake in Vodafone Egypt - who plans to launch anLTE network. The three incumbents are runningtrials of LTE networks in anticipation of 4G services.Egypt is an attractive market for a tower operatingcompany. Despite mobile penetration of over100%, 3G penetration in Egypt is low, while thesubscribers per BTS ratio is high (well over 6,0004),indicating relatively low Minutes of Use. With themobile network operators keen to move subscribersto what are hopefully higher ARPU5services, itis expected that 3G (and to a lesser degree 4G)will grow strongly over the next few years6: datafrom the International Telecommunication Unionindicates that 3G handset penetration should exceedwww.towerxchange.com | TowerXchange Issue 3 | 55| TowerXchange Issue 3 | www.towerxchange.com55MobiNilVodafoneEtisalat MisrEgypt has a population of 85.3 million1andis served by 3 mobile network operators:Vodafone, Etisalat Misr and Mobinil2. With93.7 million subscribers, penetration stands at110%, and has grown almost 7% over the past12 months3. All three operators offer advanced3G services.Opportunity for TowerCo entry withfocus on high Lease Up Rate (LUR)Opportunity for Outsourcingby MNO to TowerCoLimited opportunity for newentrant TowerCoEgypt3G 4GCurrentSharingNonePassiveActiveTechnology Development24.3%40.8%34.9%3 MNOs: Vodafone, Etisalat Misr, Mobinil (FT/Orascom)4th operator - Telecom Egypt - expected to enter market 2014Subscriber Penetration at 110% and growing at 5% a year - but 3G penetration low at 12.5%Alkan, EEC Group, HOI-MEA and MobiTower (Mobiserve) awarded licenses to provide passiveinfrastructure sharingMarket suited to outsourcing agreement between MNO and TowerCo as well as opportunity to driveup LUR as 3G penetration increases
  • 56. 50% by 20167. This growth in 3G penetration andcapacity will drive the demand for additionaltowers. Given the capex investment required by3G and 4G deployment, the capex/ opex savings oftower deployment that a tower company can offerare compelling.It is the anticipated 3G growth that will providethe opportunity for a tower operating companywith a portfolio of towers to focus on drivingup their Lease Up Rate. The subsequent moveto 4G is unlikely to contribute significantly totower growth: the 4G macro layer will be rolledout mainly on existing 3G sites and much of thecapacity expansion will be handled using smallcells and micro sites located on buildings and streetfurniture.Given such an attractive market for tower sharing itis almost certain that the other tower infrastructurelicence holders will also look to offer or expandtower sharing services.1 CIA World Factbook – data is estimate for July 20132 Mobinil is majority owned by France Telecom, with just under94% of the shares, and Orascom, with 5%3 Africa Middle East Telecom Week (North Africa States MobileNetwork Subscriber Statistics: 3Q 2012)4 Data taken from number of base stations and subscribers forone of the three incumbents5 ARPU: Average Revenue Per User6 3G Subscribers in Egypt to Grow Five Fold till 2012 byShushmul Maheshwari7 http://www.itu.int/ITU-D/arb/ARO/2012/ICTIndicators/Presentations/s3/S3-04.pdf Access to the “Internet of People” in emerging markettowers – a trust web of over 1,800 decision makers inpassive infrastructure Independent analysis and commentaries on theprospects for tower transactions in selected countries The latest industry emerging market tower industrynews – BEFORE it’s published in the TowerXchangeJournal, accessible 24/7 from desktop, tablet or mobile A comprehensive archive of TowerXchange’sinterviews and analyses, searchable by topic, country,company or grouped by category (e.g. interviews orhow to guides) The latest news and registration information aboutTowerXchange’s Meetups.www.towerxchange.com | TowerXchange Issue 3 | 56| TowerXchange Issue 3 | www.towerxchange.com56Visit the new TowerXchange.com websiteTower Xchange
  • 57. Tower deal imminentin EgyptNorth Africa’s leading managed service provider Mobiserve is wellpositioned to be a credible partner for potential multiple operator JV towercoTarek Aboualam, CEO, MobiserveTowerXchange: Are Mobiserve interested inmoving up the value chain and becoming atowerco?Tarek Aboualam, CEO, Mobiserve: We are certainlyinterested in the tower acquisition and leasebackbusiness. We are one of three companies that haveacquired a license in Egypt as a tower operator,which enables us to build and share towers.MobiTower is our towerco subsidiary based inEgypt.The towerco business is just starting in Egypt. Weare in deep talks with all the operators, in somecases in advanced negotiations.When Mobiserve decided to move into the towercobusiness, we knew we lacked some experience andknow-how. So we are in serious talks with a majorinternational player working in the tower businessin other countries. While Mobiserve bring the localknowledge of operations and rollout in North Africa,this other company are more experienced in howto negotiate a deal, structure a contract and buildrevenues. One of Mobiserve’s shareholders is DeltaPartners, another expert in the tower industry, andthey are helping too.TowerXchange: Tony Dolton, CTO of VodafoneEgypt said “I believe it would be difficult to makea traditional towerco business case withoutsome sort of network consolidation so for atowerco model to work in a country like Egypt weprobably have to have a slightly different modelthan the traditional one” (see TowerXchangeissue 1, pages 24-26 ). Tarek,  do you think aRead this article to learn: The status of discussions concerning a potential tower transaction or operator-led JV in Egypt The credibility of Mobiserve, who manage 18,000 cell sites, as a licensed towerco in Egypt The criticality of ‘street-level’ knowledge in overcoming local electricity and fuelling challenges Standardising KPIs across a multi-vendor environment A comparison of infrastructure sharing drivers in North Africa, SSA and EuropeMobiserve has an outstanding pedigree in managedservices, rollout and equipment installation. They manage18,000 cell sites, primarily in MENA. With the towercobusiness model spreading to North Africa, particularlyEgypt, Mobiserve has licensed and launched MobiTower,backed by Delta Partners and INVEST AD. TowerXchangecaught up with Mobiserve CEO Tarek Aboualam, and ChiefCommercial Officer Karim El Azzawy, who also serves asManaging Director of MobiTower, in a busy café at MobileWorld Congress…Keywords: Managed Services, Rollout, tenders,Maintenance, Operator-led JV, Local Knowledge, Alarms,Preventative Maintenance, Inventory Management, KPIs,Multiple Vendors, Infrastructure Sharing, MENA, Egypt,Morocco, Vodafone Egypt, Delta Partners, Mobiservewww.towerxchange.com | TowerXchange Issue 3 | 57| TowerXchange Issue 3 | www.towerxchange.com57
  • 58. multi-operator joint venture towerco, like IndusTowers, could work in Egypt?Tarek Aboualam, CEO, Mobiserve: That is a validoption. The operators are certainly seriouslyconsidering retaining a portion of the equity andretaining more control over their networks. Oncethe tenders published their requirements, whichcould be as soon as Q2 2013, everything will beclearer.The three major operators in Egypt Mobinil (France-Telecom), Vodafone Egypt and Etisalat are talking toeach other, and talking separately to tower licensees.Infrastructure sharing is going to happen in Egypt,and it will be good for everyone. Each operatorseems to be taking a slightly different position, butvariety enriches the discussion!TowerXchange: Is the regulatory environment inEgypt conducive to infrastructure sharing?Tarek Aboualam, CEO, Mobiserve: The regulatorhas done their part regarding issuing permits andlicenses to be able to build towers and sell tenanciesto all mobile network operators, and Mobiserve hassecured one such license.TowerXchange: Thanks for your views on thepotential tower deal in Egypt. Please introduce usto Mobiserve so we can understand your role inthe market.Tarek Aboualam, CEO, Mobiserve: Mobiserve is aregional company managing 18,000 sites across eightmarkets covering North Africa, the Middle East andSouthern Asia. We have also worked in East Africawhen projects require. Our customers include all thebig operators plus equipment manufacturers likeHuawei and Ericsson.Mobiserve was formed in 1999 by Orascom to helpwith their subsidiaries’ rollout. Five years ago, inDecember 2008, Mobiserve was sold to InvestAD, ourmajor shareholder, and Delta Partners.We are mainly in managed services, networkrollout, and equipment installation. We also buildtowers and shelters in our own factory, Mobifactory,although we also install third party steelwork.TowerXchange: Tell us about the biggest newcontract Mobiserve won last year.Tarek Aboualam, CEO, Mobiserve: One of thegreatest challenges we faced last year was increasingthe scale the business by 50%. Rather than the usualone-year, annually renewed outsourcing agreement,we signed a major telecom operator to a three-year,full turnkey and maintenance contract coveringpreventive maintenance, corrective maintenance foractive and passive equipment, generators, refueling,security, OM and backhaul; a full outsourcingagreement for 6,000 cell sites.TowerXchange: What are the critical successfactors behind managing such a substantial anddistributed managed service contract?Karim El Azzawy, Chief Commercial Officer,Mobiserve: The key to success is the use of localresources. Local knowledge at a regional, evenstreet-level. These important team members knowthe local electricity and fuelling challenges, so it iswww.towerxchange.com | TowerXchange Issue 3 | 58| TowerXchange Issue 3 | www.towerxchange.com58Infrastructure sharing comes to Cairo
  • 59. essential for us to maintain close contact with street-level.The co-ordination of managed services dependsmainly on human capital, which in turn depends onthe capability of senior project managers in regionaloffices that control 29 local offices spread all overEgypt.On top of those human resources, Mobiserve havedeveloped our own software to monitor alarms thatcome from sites, and to manage maintenance jobticketing, so we know where we need to interveneto fulfill SLAs. We develop weekly reports to showthe status of every region and to ensure we’re in linewith SLAs and KPIs, and those reports are sharedwith the client.TowerXchange: How do you maximisemaintenance performance?Karim El Azzawy, Chief Commercial Officer,Mobiserve: Preventative maintenance is of coursea key part of the OM activity within our turnkeysolution. We have a program to check every siteaccording to the client’s need. It might be once everyweek or fortnight – a scheduled check that the siteis functioning within norms. Any deviation fromstandards is reported to the client, and our supplychain management team handles the logistics ofspare part inventory management.We are able to install, manage and maintainequipment manufactured by all the vendors. Eachvendor has its own system for control, monitoringand quality, and each has it’s own KPIs. We try tonormalise our way of doing business to developstandard, comparable KPIs. This enables us tocompare different regions to see areas where we canenhance, and areas where have we mastered the jobso the people concerned can spread their know-howfrom one region or country to the next.For the third year in a row, Mobiserve have beenawarded best partner of the year by one of ourkey clients, including being top ranked for bothmanaged service KPIs as well as for new sites rolledout. Also, for the 5th year in a row, Mobiserve wereinvited by a major Chinese equipment vendor toattend their prestigious engineering conference.TowerXchange: How would you compare thetower industry in North Africa to that in Sub-Saharan Africa?Tarek Aboualam, CEO, Mobiserve: I feel that NorthAfrican operators’ tower strategy is more similar toEuropean rather than Sub-Saharan Africa thinking.It’s a balance sheet rather than operationallymotivated transaction, with objectives to free cash,lower capex, and focus on the core business, ratherthan the more technically motivated decisionsin Sub-Saharan Africa, which aim to pass onoperational challenges to specialist towercos.TowerXchange: Are there opportunities fortowercos in North Africa beyond Egypt?Tarek Aboualam, CEO, Mobiserve: There is interestfrom at least two other North African countries,albeit in much earlier stages than in Egypt. In onecountry interest is led by the regulator, which is intalks to shape infrastructure regulation before themarket pushes them to a new reality. In anothercountry the push is coming from the Group level of alocal one of the local OpCos.TowerXchange: Thank you gentlemen, would youlike to wrap up the interview by summing upMobiserve’s capabilities in the tower industry?Tarek Aboualam, CEO, Mobserve: It all boils down toour ability to manage our teams in the field, and todeliver against SLAs. That’s what makes Mobiserveinteresting; our hands-on experience of managing18,000 towers, and trust we have earned fromoperators.Our model has evolved to meet the demands of thetelecom industry today. Every operator is seekingto reduce their cost level while enhancing theirservice level, and that means they need to masterand control the network. Infrastructure sharing iswhere the industry is going. A serious partner likeMobiserve, with local experience and know-how,can really add value to the tower industrywww.towerxchange.com | TowerXchange Issue 3 | 59| TowerXchange Issue 3 | www.towerxchange.com59“ “I feel that North African operators’tower strategy is more similar toEuropean rather than Sub-SaharanAfrica thinking. It’s a balance sheetrather than operationally motivatedtransaction
  • 60. EEC Group positioningitself to partner towercos in EgyptIntegrated manufacturer, turnkey construction and OM serviceprovider brings local knowledge and has Egyptian infrastructureleasing licenseSamih Wahid Adly, VP COO, EEC Groupwww.towerxchange.com | TowerXchange Issue 3 | 60| TowerXchange Issue 3 | www.towerxchange.com60TowerXchange: Thanks for speaking to use todaySamih. What are the drivers for infrastructuresharing in Egypt?Samih Wahid Adly, VP COO, EEC Group: Thereare two main drivers for infrastructure sharing inEgypt. The first is the usual balance sheet reason –mobile network operators want to get their assetsoff their hands to stabilise opex and capex, and tooutsource the challenge of operating and fuellingsites.The second reason is due to the changes in Egyptiansociety, which means we need to deal with morestakeholders and local pressure groups. So whatstarted as a purely financially motivated issue nowhas technical and operational drivers too.TowerXchange: How do you see the current stateof infrastructure sharing in Egypt?Samih Wahid Adly, VP COO, EEC Group: Egypt’sthree main operators have been working togetherfor three to four years, having regular meetings toshare their sites. But the percentage towers sharedstill hasn’t reached what it could be. The potentialfor co-location and tower sharing in Egypt is huge,especially for greenfield sites – there’s a lot of workto be done in rural areas.Egypt’s three operators have held discussions aboutforming a joint venture towerco between them, runby a towerco. There has been some interest in thatmodel, but I can’t see it happening at the moment.Read this article to learn: How the need to stablise opex and capex, and the changes in Egyptian society, are driving infrastructuresharing The progress of operator-led joint venture and tower acquisition and leaseback discussions EEC Group’s pilot project to build independent towers The prospects for build-to-suite contracts to replace operators’ own rollouts The criticality of building local knowledge and relationships with local stakeholdersKeywords: Who’s Who, Interview, Managed Services,Steelwork, OM, Construction, Installation, 3G, Co-locations,Network Rollout, Build-to-Suite, Densification, SkilledWorkforces, Operator-led JV, Sale Leaseback, Stakeholderbuy-in, Infrastructure Sharing, Africa, Algeria, Egypt, Libya,Mali, Senegal, South Sudan, Sudan, EEC GroupEEC Group (Engineering Enterprises for Civil SteelConstructions SAE) is a family business established in 1977as a construction company. EEC moved into the manufactureof steel structures and towers in 1983, and they have beena passive infrastructure turnkey subcontractor since 1996with Vodafone Egypt and Algeria’s Djezzy among their firstclients. EEC Group is now an integrated manufacturer,turnkey construction and OM service provider with 1,500employees and projects in eight countries.
  • 61. TowerXchange: Are any of the four companieslicensed for infrastructure leasing in Egypt (EECGroup, Alkan, Mobiserve and HOI-MEA) activelybuilding independently owned towers and sellingtenancies?Samih Wahid Adly, VP COO, EEC Group: Two ofthe four licensees are actively building towers, oneof which is EEC Group.We have started a pilot project, having beenassigned one of Egypt’s 25 regions. We’vejust finished our surveys and are now in theconstruction phase, building 10-12 initial cell sites,and should have them “on air” next month.We have also signed build-to-suite contracts withtwo of Egypt’s operators, and hope to sign the thirdthis week.TowerXchange: What’s your 18-24 month visionfor EEC Group’s role as infrastructure sharingaccelerates in Egypt?Samih Wahid Adly, VP COO, EEC Group: If weare successful in this pilot project, I believe theoperators will commission and co-locate in moreand more sites through independent infrastructureleasing companies– they’ll stop doing their ownrollouts.We think there could be 1,200-1,500 new sites peryear in Egypt, and we believe that as first movers,EEC Group has the potential to build 30-50% ofthose new towers.The second part of our vision concerns strategicallyimportant opportunities that could arise if one ofEgypt’s operators were to sell 1,500 towers. EECGroup would like to bring our local and politicalknowledge to a joint venture with one of Africa’sestablished major towercos bidding for those assets.We’re aggressively pursuing conversations with twomajor towercos, who would bring their experiencewith deal structuring and setting up the NOC. Wefeel the towercos need a local partner with regionalexposure, so there’s considerable synergy in usworking together.TowerXchange: Egypt is a mature market interms of penetration, but I understand 3G is onlyused by a small proportion of subscribers – as 3Gbecomes more widespread, will there be a needfor significant cell site densification?Samih Wahid Adly, VP COO, EEC Group: AsI understand from Egypt’s operators, 3G onlygenerates 5-7% of total revenue. While 3G is stillvery new, wireless broadband has significantpotential in remote areas, where the landlineinfrastructure isn’t extensive.www.towerxchange.com | TowerXchange Issue 3 | 61| TowerXchange Issue 3 | www.towerxchange.com61In my opinion 3G will require a lot more sites. Themost efficient option is to co-locate, but as demandfor data grows, we are going to run out of sites andcapacity, so we will have to build more towers anddensify networks to support 3G.TowerXchange: What was the impact of therecent unrest on the management of towernetworks in Egypt, and what has changed?Samih Wahid Adly, VP COO, EEC Group: Theunrest post revolution is certainly impacting thetelecom business. Operationally, the situation ismuch more complex and challenging - from the lackof security affecting transportation and materials,economic instability causing an increase in virtuallyall operational costs, and fiscal policies potentiallybringing in higher taxes and removal of subsidies.This hasn’t stopped the operators or the companieslike ours. The telecom business will definitelybounce back when the situation stabilises.TowerXchange: Thanks Samih. With all this talkabout Egypt, I wouldn’t want readers to thinkEEC Group is focused solely on Egypt. Tell usabout your experience, footprint and businessdevelopment objectives outside Egypt.Samih Wahid Adly, VP COO, EEC Group: We’reexporting to more than 25 countries.EEC Group has been in Algeria since 2002 providingfull turnkey infrastructure services, now also OMfor one of Algeria’s mobile network operators – weCell on Wheels by TowerWorx
  • 62. have more than 30% of OM market share.We’ve been in Senegal and Mali for the last fiveyears, offering full turnkey services from towersand equipment supply, construction, telecominstallation to commissioning.EEC has been in Sudan since 2003, working withthree operators in Sudan and one in South Sudan –again offering full turnkey services and some OM.We also have 10 years experience in Libya, but hadto withdraw from the market during the recentconflict. We’re just about to return to Libya bywinning a portion of 3,000 full turnkey sites up forcontract. We expect to win at least 1,000 sites.So EEC Group is focused on Egypt, Algeria andLibya in North Africa, and we also specialise inSub-Saharan African countries where it’s difficult torollout.TowerXchange: Tell us about the people and theproject cycle when setting up a new operation ina country “where it’s difficult to rollout”.Samih Wahid Adly, VP COO, EEC Group: EECGroup has a specialised team with lots of experiencesetting up operations in countries where it’s difficultto rollout towers.We feel it is critical to build relationships with localstakeholders and to build local knowledge as fast aspossible. We tend to start with a core Egyptian teamwho are used to moving into new countries, butas we acquire local expertise the project becomesmore streamlined, and the team consists of anincreasing proportion of local people.For example, EEC Group has been in Algeria since2002, where the local team consists of five Egyptiansand 250 Algerians – you can see how the operationmatures. In contrast, in Mali where we’ve only beenfor five years, I think EEC Group’s team is about45% Egyptian and 55% local.EEC Group is becoming used to the protocols andprocesses of working in areas of political unrest –it’s becoming part of the job!Our project cycle for opening up a new operationis fairly straightforward. First, our client providesengineering approval on our designs for towers,shelters, and rapid deployment sites, and westart manufacturing. At same time we dispatchour team on the ground to mobilise, prepare forimplementation and support logistics. We have astrong logistics partner, which can be particularlycritical in landlocked countries like Ethiopia.TowerXchange: How do EEC Group differentiateyourself from other turnkey infrastructurepartners in MENA and SSA?Samih Wahid Adly, VP COO, EEC Group: As anintegrated manufacturer, EEC Group controlsthe supply chain, giving us a cost advantage inturnkey jobs that is a win-win for us and for theclient. More importantly for client, EEC Group’sintegrated design, manufacturing, commissioning,www.towerxchange.com | TowerXchange Issue 3 | 62| TowerXchange Issue 3 | www.towerxchange.com62construction and OM services means we have theflexibility to deploy rollouts a lot faster than ourcompetition – for us, everything is in-house. Thisis especially important in countries “where it’sdifficult to rollout” as we were discussing earlier.And EEC Group’s integrated package drives ourcompetitiveness when it comes to offering towercossolutions for co-location.But that’s only half of the story. EEC Group thinks ofitself as an engineering / innovation company. Wetry to present as many innovations as we can, suchas new designs for integration, rapid deploymentsites, or partnerships with specialist hybrid energyequipment manufacturers that can achieve 50-60%savings in diesel fuel consumptionHybrid power solutions
  • 63. Special Feature:TowerXchange continues our profiles of leading infrastructurepartners with proven experience in Africa.In this edition, we introduce you to the “Hands-Dirty Dozen;”the leading pan-African managed services partners evolving tomeet the changing requirements of tower operators. We featureinterviews of senior executives at four of the hands-dirty dozenin this edition; NETIS and Mer Telecom in this special feature,plus Mobiserve and EEC Group in our Egypt case study on pages57-62.TowerXchange also introduces you to two innovative staticasset manufacturers; TESA, whose recent partnership withRamboll will vault the renowned fencing supplier into the shortnotice tower manufacturing market in SADC; and GSM TelecomProducts, who have led some interesting projects in BurkinaFaso, Benin and Niger. Finally, we also introduce readers toViettel’s consultants VNTower, who share some insights into thefast deployment of towers in Mozambique.Who’s who in towerdesign, manufacture,installation and managedservices, part twoIn this feature:64 The hands-dirty dozen71 Mer Telecom’s one-stop-shop76 End-to-end services from NETIS81 Time to market a critical differentiator for TESA85 GSM TP on how to design towers for easy installation90 Fast deployment by Viettel’s rollout consultantsVNTowerwww.towerxchange.com | TowerXchange Issue 3 | 63| TowerXchange Issue 3 | www.towerxchange.comXXImage courtesy of Camusat
  • 64. www.towerxchange.com | TowerXchange Issue 3 | 64| TowerXchange Issue 3 | www.towerxchange.com64(In alphabetical order. This is not yet a complete matrix - further companies will follow in parts 3 and 4 of this special feature)Matrix of African tower design, manufacture, installation and managed service providersCompanyCompanyCompanyCompanyTower DesignTower DesignTower DesignTower DesignCamusatGangesInternationaleGSM TPEEC GroupTower ManuTower ManuTower ManuTower ManuInstallInstallInstallInstallManagedServicesManagedServicesManagedServicesManagedServicesTOCTOCTOCTOCAcquire leaseAcquire leaseAcquire leaseAcquire leasePermits licensesPermits licensesPermits licensesPermits licensesAfrican Footprint: Botswana, Cameroon, Central African Republic, Congo Brazzaville, DRC, Egypt, Guinea Bissau, Guinea Conakry, Ivory Coast, Kenya, Madagascar, Mali,Mauritius, Morocco, Niger, Senegal, UgandaFootprint: “Many countries in Africa”Footprint: Burkina Faso, UgandaFootprint: Algeria, Egypt, Mali, Senegal, South Sudan and SudanSample clients: France Telecom/Orange, Digicell, Eaton Towers, Bulgaria Telecom, ZTE, Telma, TowerCo of MadagascarSample clients: Airtel, Vodafone, Huawei (MTN), Orange, Helios, Eaton, Ramboll and Safaricom directly and through partnersSample clients: Telecel, Benin Telecom, STESample clients: Vodafone Egypt, MobiNil, Etisalat, Comium, Djezzy, Sudatel, Sotelma MaliTel, Alcatel, Ericsson, Huawei, ZTECompany profile: TowerXchange issue two, pages 96-99 or visit www.towerxchange.com/whatever-it-takes-to-get-it-doneCompany profile: TowerXchange issue one, pages 32-33 or visit www.towerxchange.com/driving-down-the-cost-of-multi-tenant-towersCompany profile: TowerXchange issue three, pages 85-89 or visit www.towerxchange.com/how-to-design-towers-for-easy-installationCompany profile: TowerXchange issue three, pages 60-62 or visit www.towerxchange.com/eec-group-positioning-itself-to-partner-towercos-in-egypt1,500 worldwide,843 in Africa500 perminant,1,000 contractors81,5001940s1991, in towerssince 2004201219775,0004,00010020,000TPTPTP TPIndiaTP AfricaIndiaTP AfricaCapabilitiesCapabilitiesCapabilitiesCapabilitiesApprox # oftowers in AfricaApprox # oftowers in AfricaApprox # oftowers in AfricaApprox # oftowers in AfricaFoundedFoundedFoundedFoundedStaffStaffStaffStaffTP = Through Partners
  • 65. www.towerxchange.com | TowerXchange Issue 3 | 65| TowerXchange Issue 3 | www.towerxchange.com65CompanyCompanyCompanyCompanyTower DesignTower DesignTower DesignTower DesignHayatCommunicationsLeadcomLikusasaMer TelecomTower ManuTower ManuTower ManuTower ManuInstallInstallInstallInstallManagedServicesManagedServicesManagedServicesManagedServicesTOCTOCTOCTOCAcquire leaseAcquire leaseAcquire leaseAcquire leasePermits licensesPermits licensesPermits licensesPermits licensesFootprint:Footprint (Africa): Benin, Burkina Faso, Chad, DRC, Gabon, Ghana, Ivory Coast, Niger, Rwanda, Tanzania, Uganda, TogoFootprint: Mauritius HQ, Mozambique, Zimbabwe, Zambia, Malawi, South Africa, Lesotho, Angola, Cameroon, Nigeria, Ghana, Liberia, SDR Guinea, Sierra Leone, Kenya, TanzaniaFootprint: Angola, DRC, Ghana, Guinea-Conakry, Mozambique, Niger, Rwanda, Senegal, Tanzania – able to perform and supply anywhere in SSA (also active in LatAm, Russiaand CIS countries)Sample clients: Etisalat, Qtel, Vodafone, Bharti, Wataniya, Ericsson, NSN, Alcatel-Lucent and HuaweiSample clients (Africa): Alcatel-Lucent, Ericsson, NSN, Huawei, Airtel, Atlantique Telecom, MTN, Orange, Tigo, Vodafone, Helios TA, Eaton, ATCSample clients: MTN, Econet, Cell C, Vodacom, Huawei, Ericsson, NSN, American Tower, HeliosSample clients: Vodacom, Vodafone, Airtel, Tigo,  FT-Orange, Celcom, American Tower, Huawei, ZTECompany profile: TowerXchange issue two, pages 22-23 or visit www.towerxchange.com/are-there-opportunities-for-new-market-entrant-towercos-in-africaCompany profile: TowerXchange issue two, pages 100-102 or visit www.towerxchange.com/the-marriage-of-passive-and-active-infrastructure-managementCompany profile: TowerXchange issue two, pages 86-89 or visit www.towerxchange.com/the-future-is-nowCompany profile: TowerXchange issue three, pages 71-75 or visit www.towerxchange.com/one-stop-shop-turnkey-wireless-infrastructure-provider1,200-1,500700250 permanent, 500-750 contractors1,400 total, 800 intelecoms19971982199519483-5,0003,0003-4,000CapabilitiesCapabilitiesCapabilitiesCapabilitiesApprox # oftowers in AfricaApprox # oftowers in AfricaApprox # oftowers in AfricaApprox # oftowers in AfricaFoundedFoundedFoundedFoundedStaffStaffStaffStaffTP = Through PartnersTPTPTPTPTPTPTP
  • 66. www.towerxchange.com | TowerXchange Issue 3 | 66| TowerXchange Issue 3 | www.towerxchange.com66TP = Through PartnersCompanyCompanyCompanyCompanyTower DesignTower DesignTower DesignTower DesignMobiserveReime GroupNETISRambollTower ManuTower ManuTower ManuTower ManuInstallInstallInstallInstallManagedServicesManagedServicesManagedServicesManagedServicesTOCTOCTOCTOCAcquire leaseAcquire leaseAcquire leaseAcquire leasePermits licensesPermits licensesPermits licensesPermits licensesFootprint: Algeria, Egypt, Morocco, Tunisia, plus East Africa on a project basis. Also Saudi Arabia, UAE, Pakistan and BangladeshFootprint: DRC, Ghana, Cote d’Ivoire, Kenya, Madagascar, Malawi, Nigeria, Republic of the Congo, Tanzania, Uganda, Zambia plus satellite operations in Burkina Faso, Rwanda and Sierra LeoneFootprint (Africa): Burkina Faso, Cote D’Ivoire, Ghana, Uganda (with offices opening soon in Kenya and Cameroon)Footprint: Pan African, continental HQ in South AfricaSample clients: Mobinil, Vodafone, Etisalat, Djezzy, Mobilink, Banglalink, Inwi, Meditel, Orange , Zain, Mobily, Huawei, EricssonSample clients: Airtel, Alcatel-Lucent, Eaton, Helios TA, Helios TN, Huawei, IHS, MTN, NSN, Safaricom, SWAP, Tigo, Vodacom, ZTESample clients: Eaton, Helios, ATC, IHS, Ericsson, Alcatel-Lucent, MTN, Orange, Comium, Vodafone, Mobitel, AirtelSample clients: (In Africa) Huawei, NSN, ZTE, Ericsson, American Tower, IHS Africa, Helios, Airtel, Vodafone, MTNCompany profile: TowerXchange issue three, pages 57-59 or visit www.towerxchange.com/tower-deal-imminent-in-egyptCompany profile: TowerXchange issue two, pages 91-94 or visit www.towerxchange.com/what-gets-measured-gets-done-at-reime-groupCompany profile: TowerXchange issue three, pages 76-80 or visit www.towerxchange.com/end-to-end-servicesCompany profile: TowerXchange issue one, pages 34-36 or visit www.towerxchange.com/design-for-shareability5,00036037510,0001999191218,000 in MENA Asia3-4,000Interested200919451,6007,000CapabilitiesCapabilitiesCapabilitiesCapabilitiesApprox # oftowers in AfricaApprox # oftowers in AfricaApprox # oftowers in AfricaApprox # oftowers in AfricaFoundedFoundedFoundedFoundedStaffStaffStaffStaffTP Software
  • 67. www.towerxchange.com | TowerXchange Issue 3 | 67| TowerXchange Issue 3 | www.towerxchange.com67If you would like to refer us to other turnkey infrastructure companies thatshould be featured in this Who’s who, then please contact TowerXchange atkosmotherly@towerxchange.com.We are generally interested in companies that have manufactured, installedor maintained at least 1,000 cell sites in Africa, or smaller companies with aunique capability within this segment of the tower industry supply chain.Please note that inclusion in the TowerXchange Who’s who is based solely onthe proven capabilities of the companies profiled, usually on the basis of clientrecommendation. It is not possible to “buy” coverage in our Who’s who, but weare very grateful to the advertisers in this special feature, GSM, Mer Telecom,NETIS and TESA, as their support helps TowerXchange keep ourpublication free to 1,868 African tower industry decision maker readers.In future editions TowerXchange hope to profile Alkan, Egypro, LemconNetworks, Linksoft, Plessey, QTE, Radio Network Solutions, Tricom andZamil Infrastructure.The TowerXchange Meetup will feature a unique “Shootout” of managedservice providers; five minute demonstrations and differentiationsof the leading players in this category, giving buyers an opportunityto compare their capabilities, match them to their organisationalrequirements, and identify potential pan-African manufacturing andservice partners to receive RFPs.Inviting other static asset manufacturers and managed service providers to be profiled in TowerXchangeTP = Through PartnersCompanyCompanyTower DesignTower DesignTESAVNTowerTower ManuTower ManuInstallInstallManagedServicesManagedServicesTOCTOCAcquire leaseAcquire leasePermits licensesPermits licensesFootprint: South Africa. Supplied to 16 countriesFootprint: Currently seeking African partnerSample clients: Ericsson, ZTE, NSN, MTN, Cell C, Likusasa, Plessey, QTE, Radio Network SolutionsSample clients: Viettel, Ericsson, Vietnamese Navy, Huawei, Vimpelcom, TelenorCompany profile: TowerXchange issue three, pages 81-84 or visit www.towerxchange.com/time-to-market-a-critical-differentiator-within-the-tower-industry-supply-chainCompany profile: TowerXchange issue three, pages 90-91 or visit www.towerxchange.com/fast-deployment-at-a-reasonable-price1006020012007Tens of thousandsof fences1500 projectmanagedCapabilitiesCapabilitiesApprox # oftowers in AfricaApprox # oftowers in AfricaFoundedFoundedStaffStaffTPTP TP
  • 68. The hands-dirty dozenTowerXchange introduces the top pan-African managed service providersTowerXchange calls them the hands-dirty dozen.They are the pan-African managed serviceproviders manning the front lines of the Africantower industry.In a region where engineering skills are a scarceresource, and in an era when MNOs and towercosalike are strongly inclined to outsource towerinstallation, upgrade and maintenance, there area dozen or so managed services partners withbroad, proven capabilities to support telecomsinfrastructure rollouts and retrofits in multipleAfrican markets.Where once these companies specialised inexpedited network rollouts for MNOs who werecompeting on coverage, as African markets matureand competition is increasingly on QoS andcustomer experience, the sale and leaseback oftowers and the importance of towercos increases.Always adaptable, the hands-dirty dozen are nowadapting to also service towercos’ needs to survey,strengthen and service acquired tower portfolios.While MNO’s rollouts demand staffing-up forequipment import, warehousing, inland logistics,and civil works projects at hundreds of newcell sites, tower transactions unlock pent upmaintenance and investments in structuralcapacity and energy efficiency, which createa similar upsurge in demand for managedservice capabilities. Tower transactions can be aparticularly exciting opportunity for the hands-dirty dozen in instances where transferred towersdon’t all come with the original design drawings,Keywords: Who’s Who, Managed Services, OM, Construction, Installation, Transfer Assets, OpexReduction, Capacity Enhancements, Network Rollout, Logistics, Site Visits, Site Surveys, Skilled Workforces,Warehousing, Reverse Engineering, Multi-country Partner, VMI, Spare Parts, Africa, Alkan, Camusat, EECGroup, Leadcom, Likusasa, Mer Telecom, Mobiserve, NETIS, Plessey, QTE, Reime Groupwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com68
  • 69. requiring the towercos to undertake a substantialprogramme of reverse engineering.Both MNO’s rollout and towercos’ retrofitassignments yield contracts of similarly finiteduration and declining value, at least for managedservice providers flexible enough to become genuinestrategic partners. Towercos want to work togetherwith managed service partners on a refurbishmentprogramme, which may typically be 18-24 months induration, aimed at increasing autonomy of cell sitesthrough energy equipment upgrades and RMS, thusreducing site visits and ultimately reducing opex.As a result, contracts with towercos can feature aplanned, phased reduction of contract value as afunction of reduced maintenance headcount andreduced site visits as sites become more efficient.You might think these declining-value contractsdestroy value in the managed services business,but TowerXchange doesn’t think so. As new buildsand refurbishments are completed and site visitsreduce, managed service providers can unlockeconomies of scale by partnering with additionaltowerco and MNO clients in the same country.By corralling together denser concentrations oftowers from multiple clients, local maintenanceteams are able to concentrate their services onsmaller areas, spending less time on the road andmore time getting on the front foot of preventativemaintenance.The value added service proposition offered by thehands-dirty dozen can be deepened by the provisionof supply chain management services – importing,www.towerxchange.com | TowerXchange Issue 3 | 69| TowerXchange Issue 3 | www.towerxchange.comXX Alkan Camusat EEC Group Leadcom Likusasa Mer Telecom Mobiserve NETIS Plessey QTE Reime GroupYes, we know there are onlyeleven!Here’s some potential additions,pending our research: Egypro HOI-MEA Lemcon Networks Linksoft Radio Network SolutionsTowerXchange’s hands-dirty dozen
  • 70. warehousing, delivering and installing passive(and potentially active) equipment and spare parts,provided on-demand at a modest mark up. We’veeven seen fully-fledged Vendor Managed Inventoryservices starting to be requested by at least onetowerco, and delivered by a couple of members ofthe hands-dirty dozen.Provision of VMI services has the potential todeepen the commitment of the tower operator–managed service provider relationship, and mayresult in the managed service partner beingentrusted with an ever-growing number of siteswithin the original, then neighbouring countries.Provision of energy as a service may be the nextopportunity for the hands-dirty dozen to deepentheir relationships and add a new revenue streamto their business models.Meanwhile, TowerXchange has noted theemergence of crack teams of nomadic turnkeyinfrastructure deployment and network upgradespecialists. These elite teams are dispatched fromthe hands-dirty dozen’s headquarters to use theirpremium engineering and project managementskills to oversee the critical formative months ofnew managed services engagements, marshalinglocal resources who are upskilled and who areultimately destined to take on the “long tail” of post-installation maintenance. As each project matures,these nomadic project leaders move from countryto country, contract to contract, and it’s theirreputation as proven strategic partners that meansthe hands-dirty dozen are trusted by MNOs and bytowercos to move one challenging rollout or retrofitassignment to the next.Should your company be mentioned inTowrXchange?If you work for an innovative managed serviceprovider with a pan-African footprint that hasdeployed at least 1,000 sites, TowerXchange wouldbe delighted to profile your company – email us atkosmotherly@towerxchange.comwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com70“ “elite teams are dispatched from thehands-dirty dozen’s headquartersto use their premium engineeringand project management skillsto oversee the critical formativemonths of new managed servicesengagementsImages in this article courtesy of Camusat
  • 71. One-stop-shop turnkeywireless infrastructure providerUpgrading towers, accelerating rollouts and overcoming logisticalchallenges in some of the world’s most challenging emerging marketsArie Ben-Dayan, Marketing Sales Director,Mer TelecomTowerXchange: Thanks for speaking to us todayArie. Please tell us where Mer Telecom fits in theemerging market tower industry.Arie Ben-Dayan, Marketing Sales Director,Mer Telecom: Mer Telecom has manufacturedor installed almost 30,000 towers in emergingmarkets, mainly in Latin America and Africa. Weoffer our customers a one-stop-shop and singlepoint of accountability for network deployment;from network design, to transmission planning,site pre-qualification evaluation, site design andengineering, customs clearance and inland logistics,civil works and the supply and installation ofpassive and active equipment.Mer Telecom is certified by NSN, Ericsson, Huaweiand the other major equipment vendors forthe installation and commissioning of all activeequipment such as BTS and Core network elements.After implementation, we also offer maintenanceand optimisation services, including drive testingand optimisation of the active network, as wellas preventive and corrective maintenance of thepassive network.Mer Telecom covers wireless infrastructure frompre- to post-deployment. We also provide hybridenergy systems, sites remote monitoring andcontrol and a platform for VAS such as mobilefinancial services, however, those are topics for afuture discussion – let’s focus today on our turnkeywireless infrastructure capabilities.Read this article to learn: The importance of a single point of accountability from tower design and manufacture toinstallation and maintenance How to audit and analyse tower capacity in the absence of original design data How to determine whether it’s more cost effective to upgrade or replace a tower How to accelerate time to market in network rollouts How to overcome the challenges of inland logistics when installing towers in Sub-Sahara regionArie Ben-Dayan is a thirteen-year veteran at MerTelecom, one of the world’s longest established towermanufacturers and turnkey wireless infrastructureservice providers. Mer Telecom are one of thoserare breeds of company that are comfortableleading rollouts and retrofits in emerging markets,overcoming all the challenges around infrastructuretransport, permit clearances, climate and politicalrisks that entails.Keywords: Network Rollout, Construction, Masts Towers,Installation, Reverse Engineering, Capacity Enhancements,Loading, Foundations, Permits, Logistics, Warehousing,Customs, OM, Health Safety, Infrastructure Sharing,Africa, Americas (South), Mer Telecomwww.towerxchange.com | TowerXchange Issue 3 | 71| TowerXchange Issue 3 | www.towerxchange.comXX
  • 72. TowerXchange: Is the transfer of assets frommobile network operators to independenttowercos a good thing from your perspective?Arie Ben-Dayan, Marketing Sales Director, MerTelecom: The transition of passive infrastructurefrom operator-captive to independent towerco is asubstantial market change for tower manufacturersand site builders.Mer Telecom has worked with leading towercossuch as American Tower and others. The maintowercos’ challenges are to audit, analyse andreinforce existing infrastructure to enable multi-tenant co-locations. The fact that Mer Telecomoffers in-house structural and CW engineering,design and manufacturing abilities is a majorbenefit for towercos; as tower experts, we are ableto offer the ultimate efficient and cost effectivesolution.Towercos have complex requirements with whichsmaller construction subcontractors, who might nothave tower design and manufacture capabilities asa core competency, may struggle.TowerXchange: How do you upgrade a tower’scapacity for multiple tenants?Arie Ben-Dayan, Marketing Sales Director, MerTelecom: The process of upgrading legacy towersdesigned for single tenants to accommodateadditional operators starts from an analysis ofthe full tower design data. Unfortunately for themajority of sites in Africa this data is not available,so we perform a detailed tower audit and insome cases reverse engineering. Based on manyengineering and logistical parameters, we’re ableto compute the total cost of required upgrades,compare that to the cost of a new tower, andrecommend the most cost effective solution. Whenwe undertake upgrades we typically strengthen thestructure, extend height and load capacity, and mayneed to reinforce the existing foundation.When we’re designing and installing new towersfor multiple tenants, it’s obviously much simpler.The EPA (Effective Projected Area) of a single tenanttower is usually much lower – typically 7-10m2. Formulti-tenant towers the EPA is typically 20-30m2. Asa result, multi-tenant towers are generally higher,require a larger foundation and a larger site toinstall multiple base stations and often a secondgenerator.TowerXchange: Roughly how frequently doyou find that a tower has to be refurbished orreplaced when additional load capacity is neededfor multiple tenants?www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com72In-house design and manufacturing
  • 73. Arie Ben-Dayan, Marketing Sales Director,Mer Telecom: The percentage of towers needingreplacement depends largely on the age of thenetwork. Towers designed before people thoughtabout co-location might only have capacity for afew 2G antennas and a microwave backhaul dish.Towers less than five years old tend to have morecapacity for equipment and therefore co-locations.In approximately 90% of cases the tower has to besubstantially refurbished, reinforced or replaced– it’s rare to find a site in Africa or Latin Americaready to immediately add multiple tenants.TowerXchange: It’s impressive how quickly MerTelecom are able to engage in a new country,build your local team and establish the logisticalcapabilities to rollout twenty or more towersper month. Tower owners have tight timescalesfor the installation of new sites – please tellus how Mer Telecom optimises shipment,customs clearance, warehousing and delivery ofmaterials to new sites.Arie Ben-Dayan, Marketing Sales Director, MerTelecom: Being the designer and manufacturer oftowers is a key element and a critical differentiatorin our ability to deploy networks quickly. It meanswe fully control the whole supply chain from towerdesign to customs clearance, inland logistics andinstallation.As a manufacturer it’s obvious that Mer Telecomhas the ability to anticipate customer needs andexpectations. We retain permanent available stockat plants and in local operations to enable us torespond as fast as possible to our customer’s needs.The tower is the critical element of a site, if theturnkey installation partner is not controlling thiselement, deployment can be delayed.When it comes to staffing new projects, MerTelecom has hundreds of people on the ground inAfrica and Latin America able to move from onecountry to the next. This makes it easy for us toallocate right resources according to local needs.When starting a new deployment, the first phaseis the manufacture and shipment of long leaditems. Whilst that’s going on, we have time to setup ourselves in the new country, so that when thematerials arrive, our local operation is ready to dealwith logistics and implementation phases.Mer Telecom combines manufacturing and logisticscapabilities with ground staff available anywherefrom East to West Africa. Lead time is never aproblem for us, in fact in most cases we move fasterthan the operator’s own permitting processes!TowerXchange: What are the most commoncauses of delays in rollout projects?Arie Ben-Dayan, Marketing Sales Director, MerTelecom: Those legal issues around site acquisitionand building, environment and civil aviationpermits remain the biggest challenge for rollouts. Assoon as they have spectrum and budget, operatorswant immediate deployment. I liken deployment torolling out slot machines – the sooner you install itand plug it in, the sooner you can generate revenuewhether it be coins in the slot or ARPU.Permitting is becoming more and more difficult inAfrica. I’d distinguish between francophone Africa,where it’s not so complicated, and anglophonecountries like Kenya, Tanzania and Ghana, where itcan more often be an issue.TowerXchange: How do you overcome thechallenges of inland logistics, especially inCentral Africa?Arie Ben-Dayan, Marketing Sales Director, MerTelecom: A smooth logistics process requires firstto know the logistic challenges in the specificcountry. There are always many such challengesincluding choosing the right port of entry, takinginto consideration the lack of road infrastructures,import regulations, the impact of climaticconditions and so on.It is critical to partner with the best in classshipping, clearing and in country transport agentsand companies.www.towerxchange.com | TowerXchange Issue 3 | 73| TowerXchange Issue 3 | www.towerxchange.comXX“ “we fully control the wholesupply chain from towerdesign to customs clearance,inland logistics andinstallation
  • 74. Mer telecom has an experienced and informedLogistics Officer in each of its branches to ensure anefficient and smooth port to site logistic chain.  For example, the Democratic Republic of Congopresents one of the most complex in-land logisticchallenges in Africa and possibly in the world. Wehave developed logistic capabilities in all ports ofentry including clearing agents, warehousing etcetera.As a true to life story, we had a case in which a truckwhich carried site equipment was forced to unloadtons of equipments in order to cross an unstablebridge; that required securing the help of localvillagers to assist in hand carrying the equipmentacross the bridge. In some cases, we had totransport the equipment and Civil Work materialsalong the river in small canoes!Mer Telecom’s ability to controlling the wholesupply chain is definitely an advantage inthose challenging countries where the lack ofinfrastructure, unstable political situation andclimatic hazards are a daily reality. We feel“comfortable” and at home in challenging countries.www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com74TowerXchange: Does Mer Telecom operateit’s own fleet and drivers, or do you use localsubcontractors?Arie Ben-Dayan, Marketing Sales Director, MerTelecom: We normally use local subcontractorsfor inland logistics, selected according to ourstandards.  We strongly believe that some taskshave to be outsourced like site acquisition,transportation and customs clearance to localcompanies that are more familiar with localbusiness culture and conditions.TowerXchange: How do you ensure the healthand safety of your staff and contractors?Arie Ben-Dayan, Marketing Sales Director, MerTelecom: Mer telecom is an ISO9000, 14000 and18000 certified company.As a global provider, Mer Telecom attributes specialimportance to Health Safety issues and employsdedicated HS officers to ensure full compliancewith Health and Safety rules and regulations.Therefore, our own staff and subcontractors havestrict rules, standards and policies that each has tofollow, and are under constant supervision.Mer Telecoms maintains an ongoing trainingprogramme to refresh and implement new healthand safety rules and regulations, this helps maintainawareness among our staff and subcontractors,and brings the risk of accidents as near to zero aspossibleRural hybrid site in Congo
  • 75. End-to-end servicesHow Netis became a trusted infrastructure partner of all four towercosJean Farhat, Managing Director, NETISTowerXchange: Thanks for speaking to us todayJean. First please tell us where NETIS fits into thepassive infrastructure ecosystem?Jean Farhat, Managing Director, NETIS: NETIS is atrusted partner for any requirement related to cellsites. Whether through our internal expertise orthrough our network of experts, we can respondto any request, whether for manufacture of anaccessory, site construction, surveys and upgradesfor multiple tenants, maintenance, power, RMS –we’ve even trained our competitors! For example,when Vodafone came into Ghana there was a lackof work at height certified riggers, so we arrangedtraining both for our staff and for our competitors.When Vodafone Ghana signed an operational leaseagreement with Eaton Towers, we were drawn intothe towerco business. We later also started workingwith Helios Towers Africa and American Towerin Ghana as well as with IHS in Cote d’Ivoire, andagain with Eaton in Uganda. Netis also providesOM services to mobile network operators suchas Airtel, and Comium, as well as working withEricsson and Alcatel-Lucent.TowerXchange: When towercos are consideringentering a new market, when do they startdialogue with key strategic partners like NETIS?Jean Farhat, Managing Director, NETIS: Whentowercos first came into Africa, it took them longerto become established in a new country and to startcreating efficiencies. But now towercos have theirown established processes and procedures, and areRead this article to learn: Why towercos negotiate with key strategic partners even before winning bids in new markets The implications of tower transactions for staff transfers and for unlocking pent up investments Towerco key performance indicators: power uptime, time to access sites and MTTR How NETIS support Eaton Towers with VMI How rapid deployment towers are used for major events, for industry and for tower replacementsJean Farhat and his business partnerJean-Claude Figali started NETIS(Network Industry and Services) as anend-to-end service and infrastructurepartner in 2009. NETIS provides servicesin three main fields: building andupgrading telecom towers and powersolutions, provision of comprehensiveOM services, and manufacture oftowers and accessories in their factory inAbidjan, Cote d’Ivoire.Keywords: Who’s Who, Interview, Managed Services, Steelwork, Masts Towers, OM,Construction, Installation, Transfer Assets, Capacity Enhancements, Network Rollout, Uptime,MTTF, KPIs, Site Visits, Skilled Workforces, Warehousing, Multi-country Partner, VMI, Spare Parts,Infrastructure sharing, Africa, Burkina Faso, Cote d’Ivoire, Ghana, Uganda, Eaton, Netiswww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com76
  • 76. ready to move in new countries even before theywin the bid. Towercos prepare their supply chains,engage strategic partners like NETIS, and agreeprices in each new country while they’re bidding.Yes, this means a loss of time if they’re not awardedthe contract, but a huge gain of time if they win thedeal.Within three to five months of signing a saleand leaseback or managed services agreement,the towercos can stabilise the network and startrecording improvements to SLAs. Of course, muchdepends on the state of the network before thetowerco takes over, but they conduct a detailed duediligence so they can identify priority investments.TowerXchange: Tell us about the transfer ofassets and staff when a tower transaction takesplace.Jean Farhat, Managing Director, NETIS: Whenassets are transferred to towercos, an efficient teamof the best staff will be transferred from mobilenetwork operators to contractors like NETIS. Thesestaff know the history of the sites and understandthe weaknesses in the network, and they canperform more efficiently now they’re managed bya company whose core business is the installationand maintenance of passive infrastructure.Initially the towerco keeps a close eye oncontractors through a network of regional managersand OM managers who stay in touch throughweekly meetings. Once they have confidence in thecontractor, the towercos are able to reassign someof those supervisory staff. And as that confidencein the partnership with companies like NETIScontinues to improve, they become comfortablewith us mutualising OM and other services, andworking with other towercos. This unlocks sharedbenefits such as local teams being able to cover asmaller area with a greater concentration of sites.With smaller distances to cover, there is less fatigue,and more time for preventative maintenance.TowerXchange: Does the transfer of assets frommobile network operators to towercos unlock“pent up” passive infrastructure maintenanceand renewal programmes?Jean Farhat, Managing Director, NETIS: Every dealis different, but it’s true that tower transactionsunlock a lot of activity. Mobile network operatorsmay put projects on standby while seeking buyersor partners to manage their towers.www.towerxchange.com | TowerXchange Issue 3 | 77| TowerXchange Issue 3 | www.towerxchange.comXX
  • 77. After the towerco takes over, they know the budgetthey have in place, they have their contractors “onthe starting blocks” with vehicles ready, so thereis almost immediate action. Tower transactionsunlock investments in batteries, generators,RMS and tower reinforcement. Storage batteryreplacements are key to achieving SLAs, as aregenerator refurbishments, replacements andupgrades. Towercos will often deploy RMS andundertake structural analysis projects and towerstrengthening to co-locate new tenants as quicklyas possible to create additional revenues. Withintwo years towercos will have undertaken mostplanned investments. These new activities oftowercos require new expertise from suppliers,such as the aforementioned structural analysis andstrengthening.TowerXchange: What are towercos’ keyperformance indicators?Jean Farhat, Managing Director, NETIS: Thereare few KPIs and they are very similar for all thetowercos and in all the countries we’ve worked in.Towercos will monitor AC and DC power uptime,time to access sites, and MTTR (Mean Time ToRepair) – which includes the time taken between analarm going on and the when the failed componentis repaired. And of course they all have zerotolerance of tower falls.TowerXchange: How is the concept of VendorManaged Inventory (VMI) applied to towers?Jean Farhat, Managing Director, NETIS: VMI is anew concept introduced by Eaton Towers. Eatonhas outsourced part of it’s supply chain and stockmanagement to NETIS in Ghana, requiring thestock be available any time, in the right place, atthe right price, enabling them to react as quicklyas possible without incurring additional financial,administrative and stock costs.VMI requires proper planning – we need to knowthe sales objectives and needs of the towerco.It helps that as OM partner we have directexperience of what is needed in terms of spareparts.VMI can’t work on “just-in-time” basis as manyspare parts and equipment are manufactured inAsia or in Europe, so transit and delivery timeneeds to be managed properly, and stock need tobe managed sharply and smartly. Too much stockexhausts capex, but holding too little means a riskof being out of stock of a critical component.www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com78“ “Tower transactions unlockinvestments in batteries,generators, RMS and towerreinforcementTowerXchange: Please tell us about NETIS’sexperience with rapid deployment sites.Jean Farhat, Managing Director, NETIS: One of ourspecialities is the roll out of rapid deployment andmobile sites. NETIS has a strong partnership withcompanies that manufacture telescopic masts, sowe’ve imported, deployed and maintained theseMobile telescopic tower
  • 78. sites in Cote d’Ivoire, Ghana, Equatorial Guinea andNiger.There are two versions of the mobile telescopicmast: self-support and guy-masts, which tendto be deployed for longer terms or in windyenvironments. Mobile towers are mainly usedfor events such as football matches or elections;anywhere with crowd that would overload the localbase stations without the additional capacity. Itcan be deployed and ready for telecom equipmentinstallation in just 2-3 hours.For example, in December 2011, we air-freight fiveunits to Malabo. The five units were assembled anddeployed at the stadiums in Malabo and Bata in justa week.Rapid deployment sites can be installed in just twoto three days as they don’t need foundations. Forexample, an operator in Ghana uses them to providecoverage for mines as rapid deployment towers canbe relocated without the need for substantial civilworks.Rapid deployment units can be up to 40m, offeringa greater load capacity than mobile sites. This canbe useful when you have to replace a tower andtransfer the antennas without interrupting thetraffic.TowerXchange: How important is it to controlthe whole supply chain by owning your ownfactory in Cote d’Ivoire?Jean Farhat, Managing Director, NETIS: Weacquired a factory in Abidjan in 2009. This gives usan advantage over competitors in West Africa asNETIS is able to respond with faster delivery timefor galvanised materials such as tower accessoriesand tower strengthening members. Once you canprovide the steelwork you can go further, oftenwinning the contract for the full refurbishment ofsites.TowerXchange: Thanks Jean, please could youwrap up the interview by summing up howNETIS are differentiated from other managedservice providers?Jean Farhat, Managing Director, NETIS: There arefew companies that cover both OM and projectsas deeply as NETIS. We are also distinguished byhaving our own manufacturing facility in Coted’Ivoire.NETIS is small enough to be reactive and responsiveto our clients’ needs. Our top management remainsinvolved on a daily basis – we are often out at sites.This enables us to understand and anticipate theneeds of our clients, and win their trust.We have some big, strong competition in managedservices and site-build, and we respect ourcompetitors. Despite NETIS being relatively youngin the market, we’re proud of what we haveachievedwww.towerxchange.com | TowerXchange Issue 3 | 79| TowerXchange Issue 3 | www.towerxchange.comXX“ “Our top managementremains involved on a dailybasis – we are often outat sites. This enables us tounderstand and anticipatethe needs of our clients, andwin their trust
  • 79. Bruno Voron: Managing Directorbvoron@netisgroup.net+ 226 763 084 84 (m)Jean Farhat: Managing Directorjfarhat@netisgroup.net+233 24 995 5555 (m)NETIS UgandaSherif Maher: Managing Directors.maher@netisgroup.net+256 (0) 776 352 231NETIS Cote DIvoireJean- Claude Figali: Managing Directorjfigali@netisgroup.net+225 507 478 992 (m)Jean Eric Ribourt: Operations Projects Directorjeribourt@netisgroup.net+225 087 915 15 (m)Serge Couliraly: Services Energy directorscoulibaly@netisgroup.net+225 078 108 25 (m)NETIS GhanaNETIS Burkina Faso
  • 80. Time to market a criticaldifferentiator within the towerindustry supply chainLeading steel fabrication specialist TESA explains their move intotower manufactureAnni Bodington, MD, TESAwww.towerxchange.com | TowerXchange Issue 3 | 81| TowerXchange Issue 3 | www.towerxchange.comXXTowerXchange: In the telecommunicationinfrastructure ecosystem, where does TESA fitin?Anni Bodington, Managing Director, TESA:  Whileit is not our intention to compete with the masstower manufacturers established in the market,TESA possesses much knowledge and expertisein the field of mass light steel fabrication anddesign, earning a reputation within the telecomscommunity for quality products, exceptionalservice offerings and adaptability to ever changingspecifications within the market.Continuous improvement to meet blue chip andinternational quality and audit requirementsthrough innovation with integrity in businesshas been our focus. Key competencies are manyand diverse with high volume manufacturingprocesses winning significant market share in ourcore products.  The company is a specialised steelmanufacturer, with a broad product range alignedfor BTS sites.  Our commitment to superior servicelevels and viewing our customers as long termpartners has resulted in a series of lasting valuepartnerships.TESA was founded in 2001 only entering thetelecommunications sphere with steel perimeterproducts in 2008. Initial product offeringshave shifted and the company has evolved anddiversified to include many of the steel productsrequired on a BTS site providing a single pointof contact, enabling the sourcing of most steelproducts required for passive infrastructure, nowincluding towers and audit, strengthening andRead this article to learn: The evolution of the total passive infrastructure solution model The importance of a single point of contact for all steel products How to manage customer relationships, stock levels and logistics to deliver on short noticeKeywords: Who’s who, Steelwork, Passive Equipment, Build-to-Suite, Logistics, Warehousing, Masts Towers, Solar, Fencing,Africa, Infrastructure Sharing, Ramboll, TESATESA is a specialist steel manufacturer with a broad rangeof products aligned for BTS sites. In 2012 TESA ventured intomanufacturing of towers. TESA has historically manufacturedsteel perimeter fencing for various network operators in Africa,while also manufacturing other steel passive infrastructure sub-components required on BTS sites. After recently partneringwith Danish tower design engineers Ramboll Telecom as theofficial licenced partner for the SADC region, with exclusivemanufacturing and distribution rights, the outcome of thisexciting partnership sees both companies combine their respectiveexpertise in steel fabrication and tower design which adds toTESA’s bundling of passive infrastructure products. The allianceprovides the industry with an alternative for optimised designs,manufactured in Cape Town and bundled with current productofferings.
  • 81. validation services. It was a natural progression totower manufacture.TowerXchange: Where do you see yourselvesfitting into the market now that you haverecently manufactured your first towers?Anni Bodington, Managing Director, TESA: Webelieve the market has dictated our diversification.The total passive infrastructure solution model isincreasingly in demand as a result of the change inthe towerco landscape with operators aggressivelypursuing tower sharing to reduce costs. It is ourbelief that TESA needed to diversify and to do this,set ourselves apart by bundling our current steelproducts with towers. Traditional products includedperimeter fences, solar panel structures andsupports, generator enclosures, antennae brackets,gantry poles and tower templates.  The ability tooffer these components to the client from a singlepoint of contact, in a timely manner is advantageouswww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com82to our market base.Partnering with Ramboll for tower design wasthe next step in our efforts to provide a fullsteel product offering.  The first towers weremanufactured in the last quarter of 2012, whichattracted positive comments and feedback fromour clients regarding the ease of erection with theRamboll tower design and short lead times withSADC content towers.The plan is to focus on a niche within the towermanufacturing market, namely short noticerequirements within the SADC, Central and EastAfrica region, offering certain tower families withinthe Ramboll design, and quick build solutions.TESA recently undertook a project in Lesothoworking with the client to design a solar structurefor off grid sites. The client needed short noticetowers, fencing, solar panel structures and TESAmet their challenging requirement within a coupleof weeks. All the steel work required for the project,namely towers, solar structures, gantry poles,generator cages, antenna brackets and perimeterfencing arrived simultaneously in the samecontainers. We are also currently working with anOEM for a hybrid solution, to increase our bundlingoptions.TowerXchange: Time to market is critical whenrolling out new sites and upgrading sites forcapacity or hybrid energy. How is TESA able toensure the fulfilment of purchase orders in atimely manner?Ramboll Telecom Africa’s Regional Director,Torsten Esbjørn: “Ramboll has long standingpartnerships with manufacturing partnershipsin India, and based on experiences built overmany years, set out to find a partner in theSADC region with a similar business outlook andunderstanding of quality and service. TESA issuch a partner and the best match for Rambollin the SADC region. Through TESA, Rambollexpect to be able to reach mutual customersmore comprehensively enabling them tounderstand and service their customers in eachsituation. Ramboll’s footprint in the SADC regionis limited with relations newly built. By bringingTESA to the marketing front, we expect to builda significantly larger footprint while buildingmore mature and developed partnerships withcustomers.”“ “The total passive infrastructuresolution model is increasinglyin demand as a result ofthe change in the towercolandscape with operatorsaggressively pursuing towersharing to reduce costsRamboll’s enthusiastic referral to TESA
  • 82. Anni Bodington, Managing Director, TESA: We reallydo concentrate on the logistics side of the business,planning for short notice orders and are also knownfor quick response and supply. This requires a lotof careful planning of stock levels, as well as carefulprocurement given fluctuations in currency.TESA specialises in projects that do not have timeto wait 12-16 weeks to import steel or completedsteel products.  Our niche is supporting rollouts andretrofits where time to market recan be a significantdifferentiator. Our setup may be small, but it allowsfor us to manage every detail. We forecast and holdcertain elements in stock, with absolute attention todetail which enables us to meet essence timelines.Of course, it also helps that we communicate withour clients as the pipeline knowledge is criticalfor effective and efficient manufacturing andlogistics planning. Innovative solutions to maintainmargins and reduce price are constantly explored.Creative ways to increase capacity, infrastructureand engineering resource offer solutions to meetdemands. The re-design and ramp up in ourfactory for tower manufacture is on track. Recentdevelopments at SA steel mills however haveadded a further supply challenge which makescommunication more critical than ever before.TowerXchange: Who are TESA’s clients? Whoare your operators? Do you use manufacturerssuch as Ericsson or ZTE? Or do you sell throughturnkey infrastructure subcontractors?Anni Bodington, Managing Director, TESA:TESA partner with turnkey infrastructureimplementation companies assisting and advisingon steel work components and designs to meetspecific client requirements.  We are fortunateto have preferred vendor status and approvedspecification with a number of African networksbut most mobile network operators do not orderdirectly. MNO’s would specify and approve theorder, but the PO is issued to the OEM, who inturn orders through their turnkey infrastructuresubcontractors. It is our hope that with the supportof Ramboll, we will be specified as tower suppliersshortly and are already working at network level toensure this.A large majority of our business comes fromturnkey contractors with whom we have formedwww.towerxchange.com | TowerXchange Issue 3 | 83| TowerXchange Issue 3 | www.towerxchange.comXXlasting relationships and who year after yearconsistently rate TESA above average in the annualISO 9001:2008 customer satisfaction survey. Wehave received four international awards and yes,TESA are preferred vendors to Ericsson and ZTE,amongst others.TowerXchange: Finally Anni, what is it like fora woman running a business in the “old boysnetwork” that is the African tower network?Anni Bodington, Managing Director, TESA: To befrank, it took a number of years for the companyto be considered serious contenders as suppliersin the industry. Having a woman at the helm wasnot to our credit. Over time though, jokes haveemerged that TESA is a woman-run company with‘balls of steel’. Balls we have plenty of and steelmanufacturing is our game.I simply am not one of the boys and have focusedon areas which are beneficial to growing thebusiness through membership, boards andAdvisory Councils such as Enterprise for Woman,Councillor of the Cape Chamber of Commerce, Headof the Woman’s President Organisation (WPO) ofSouth Africa, member of International WomanEntrepreneurial Challenge (IWEC). These have allbeen great initiatives in opening doors as well asaiding the growth of TESA. The company valuespartnerships. Partnerships are built over time withexceptional service and we endeavour at all times topartner with exceptional companies. The companyvision is to be a leading supplier of steel passiveinfrastructure products and this is not genderspecific
  • 83. Leading preferred steel fabrication- Towers, perimeterfencing and passive infrastructure products for thetelecommunications industry.AWARDWINNINGCOMPANY5 Marconi Crescent Montague Gardens, Milnerton, Cape Town, South Africa, 7439Tel: +27 21 551 2955 Fax: +27 21 551 2985 Email: info@tesafencing.com Website: www.tesafencing.com
  • 84. How to design towersfor easy installationHow GSM TP’s flexible, light weight, low cost towers have been installedinto Burkina Faso, Benin and NigerTorstein Grytting, COO, GSM TPTowerXchange: Please introduce us to GSMTelecom Products (GSM TP) and tell us whereyou fit in the infrastructure telecoms ecosystem.Torstein Grytting, COO, GSM TP: Launched in 2012,GSM TP designs and manufactures all the NROmaterials a tower operator or installation serviceprovider needs. Our team has a background intower installation, so we believe there’s a marketfor tower designers focused on easing installationwhile manufacturing light weight, low cost towersand accessories to our own designs to meet clientspecifications.TowerXchange: Please tell us about GSM TP’sexperiences in Africa – I understand yourtowers have been deployed in Burkina Faso,Benin and Niger – how did you meet the client’srequirements in each country?Torstein Grytting, COO, GSM TP: We started outfocusing on Burkina Faso as our analysis suggestedthat was where we had the highest probability forsuccess, given the relatively low mobile penetrationand growth potential.As a new player in the market, we used traditionaland non-traditional ways of contacting theright people; for example our first contact wasestablished through LinkedIn. Then it was a casegoing over and meeting people locally, securingreferences and growing our network into Niger andBenin.GSM TP’s first project was for 21 towers for TelecelRead this article to learn: How GSM TP designed a heavy data centre tower to load with 69.5 sqm of equipment The importance of good NRO planning skills in avoiding installation delays How towers can be packed to prevent damage in transit and colour coded to ease installation How to deliver low cost towers through volume orders and by switching between factories to getthe best steel price How to design and upgrade towers for multiple tenantsSelecting the right static asset manufacturer isn’t just about price– although the ability to produce light weight, low cost towersis critical to being competitive in this category of the passiveinfrastructure ecosystem. With so many providers offeringessentially similar designs, manufacturing services and deliveryschedules, differentiation is often on the ease of installation andthe quality of project management received. TowerXchangespoke to NRO material manufacturers GSM Telecom Products tolearn more.Keywords: Who’s Who, Interview, Steelwork, Energy, PassiveEquipment, Construction, Installation, Capacity Enhancements,Loading, Foundations, Build-to-Suit, Unreliable Grid,  HybridPower, Solar, Retrofitting, Warehousing, Masts Towers,Infrastructure Sharing, Africa, Benin, Burkina Faso, Niger,Telecel, GSM Telecom Productswww.towerxchange.com | TowerXchange Issue 3 | 85| TowerXchange Issue 3 | www.towerxchange.comXX
  • 85. in Burkina Faso. They had followed their owntower design criteria, and their requirements weredifferent from other operators. The order was for20 backbone towers, plus a heavy 50m tower closeto their data centre, which hosted 69.5 sqm ofantennae! Fortunately the client had really thought-through that big data centre tower, which was achallenging design as is had antennas on more orless every sqm!Tower designers work to three general categories:seaside towers that have to cope with gusty wind,inland rural towers exposed to direct wind, andurban towers where wind is deflected by buildings.Ouagadougou is such a low-rise city that it has tobe considered like a rural area, so designing a 50mtower to support 69.5sqm of antenna isn’t easy insuch wind conditions!The structure also could not flex as much as theusual 1° - we had to work within a maximum of ½°of deflection, which made the design challengingwith such a substantial antenna loading. Weovercame these challenges by making the towerbroader, moving the stress outward, and angling theexposed projected area. We also had to create biggerfoundations with stronger reinforcing steel and usehigher quality steel to ensure the main structurehad appropriate tensile strength. This meant it wasquite a heavy tower.We received the contract for 21 towers from Telecelin Burkina Faso last May, completed the shipment inJuly, and had photos of the towers being installed bythe subcontractor by October. We’ve subsequentlyreceived orders for another 49 towers from thesame client.We’ve also put 15 towers into Niger with a localpartner. The biggest challenge there was logisticalas the shipping company didn’t want to release thecontainers in Niger, so they eventually had to be re-packed and trucked in from Ghana. It’s much moreeconomical when we can ship to a local port wherethe contractor picks up the shipment directly andensures it clears customs.TowerXchange: What are the critical successfactors tower operators should consider whenselecting a design and manufacturing partner?Torstein Grytting, COO, GSM TP: It’s important todo a proper analysis in advance, and to objectifythings buyers tend to look at subjectively. We thinkbuyers should include “soft factors” in their RFPscoresheet, such as how well logistics work, orwhether the supplier offers a single point of contact.We believe in having one person in charge of theproject to answer all questions, and in installingthat project manager before the deal closes toensure they have good chemistry with the client.GSM TP offer complete manufacture and deliveryof all NRO materials; not just the tower but aviationlights, fences, generators, power supply systems – allthrough a single point of accountability.We also think it’s important to look at more thanjust price! For example, we once tendered to acontractor who just wanted a price per kilo of steel,which disincentivised efficient light-weight designs!It’s important to consider a contractor’s NROplanning skills. Do they have an after-sales projectmanagement system to use after the PO is issued?When will they start talking about foundations?How will they run the project through?Project materials often need to be onsite two weeksbefore the tower as the concrete needed to dry, yetI’ve encountered too many cases where the projectmanager only realises this one week before thetowers are shipped, which means incurring extracost flying in raw materials, or warehousing thetower components for days if not weeks whilst theproject “catches up”! That doesn’t happen with GSMTP – we’ll be running the project from the momentthe tower manufacture starts.TowerXchange: How does GSM TP package yourdeliveries to ease the installation of your towers?www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com86“ “Ouagadougou is such a low-rise city that it has to beconsidered like a rural area,so designing a 50m tower tosupport 69.5sqm of antennaisn’t easy in such windconditions!
  • 86. Torstein Grytting, COO, GSM TP: We look at thingsfrom the installer’s point of view, and continuouslyseek to improve how we package our towers tomake them easier to install.Currently, the only way many tower parts areidentified is with a small stamp of the part number.We use strong, bright colours to indicate whichsection is which – almost like a Lego™ set!But GSM TP’s “smartPack” is offers more thancolour coding. It starts from how we pack thetowers into shipping containers at the factory;we use round wood between each layer to avoiddamage in transit and to make it easier to manuallypull out of the container onsite.We’re currently conducting a QR code test project,where our customers could download our app, scanthe QR code on any section of the tower, and getlinks to the digital drawings, packing list and colourcodes enabling them to identify each componenteasily.TowerXchange: How do you ensure GSM TP isable to compete on price?Torstein Grytting, COO, GSM TP: Being a leanorganization with a very low cost of sales, being alow cost provider is part of our business model. Asour designs are produced in-house, it gives us theflexibility to move between factories depending onfluctuations in steel price, so we can use factories inThailand, India, Korea or China for example.TowerXchange: At what sort of volume of orderscan clients unlock the best economies of scale?Torstein Grytting, COO, GSM TP: Like any business,tower manufacturing needs high volumes andfairly standardised orders to realise the best prices.We feel the best prices are found around the 2,000tonne mark (150-200 towers), although we can stillleverage a volume discount on 100-150 towers. Themore variation within the project specification,the higher the price; 35 different towers aresignificantly more expensive to manufacture than35 the same!TowerXchange: How does the design of a singletenant tower differ from a multi-tenant tower?Torstein Grytting, COO, GSM TP: A single tenanttower is lighter, with a smaller wind and antennaload. Multi-tenant towers require capacity for moreantennas, so need a higher wind load, and areheavier.Structurally, with multi-tenant towers you wantmore straight sections in the premium locations inthe top ten metres of the tower, whereas a normaltower has an angle tapering from a broad at baseall the way to the top to move stresses away fromthe tower. Multi-tenant towers with more straightsections require stronger steel, which again addsweight.Despite the additional weight and therefore cost ofwww.towerxchange.com | TowerXchange Issue 3 | 87| TowerXchange Issue 3 | www.towerxchange.comXX“ “We use strong, brightcolours to indicate whichsection is which – almostlike a Lego™ set!GSM TP Smart packs
  • 87. multi-tenant towers, building a multi-tenant toweris still a lot cheaper than building three towers.TowerXchange: After a site has been installed,how can it be upgraded to add capacity formultiple tenants?Torstein Grytting, COO, GSM TP: To add capacityfor multiple tenants, we need to evaluate whichsections of the tower aren’t utilised to theirmaximum capacity, and we need to evaluate whichsections of the tower are most vulnerable for winddistress, and any remove instabilities in the towerthat may result when the towerco increases antennaloading.There are two potential design solutions toincrease a tower’s maximum capacity. The firstis to add strength by installing more steel, forexample by adding flat steel inside the angle, orby strengthening tower legs. In such instancesengineers would have to calculate the requiredthickness and any need to increase the size offoundation.The second alternative is to move antennas loweron the structure, but you have to calculate the affecton range, and you have more options on an 80mtower than a 50m tower. It’s important towers aredesigned to have microwave antennas low on thestructure.Upgrades are much easier when the tower operatorhas the original manufacturer’s drawings.  Whenyou have to design upgrades based on onsite checks,www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com88tests and measures there’s a danger you can misssomething, such as accurately assessing the qualityof steel used. Exhaustive checks of towers, especiallyafter acquisition by towercos, make this processeasier, but they can be costly.TowerXchange: What quality standards doesGSM TP you manufacture to?Torstein Grytting, COO, GSM TP: We design to anAmerican TIA standard, but we can design to anEurocode or local standard where necessary. Werespond to any requirements in the customer’sspecification, for example their minimum thicknessof galvanization.We generally work to our own internal qualitymanual, which factories have to follow, and whichalso defines the quality of steel and care of steel;to date we’ve found no operator with qualitystandards stricter than our own. Our internalstandard complies with any ISO standard – for
  • 88. example we consider ISO 14000 or 14001 gives aminimum level of quality, but we want more aboveand beyond that. We always buy from ISO certifiedsuppliers of course.TowerXchange: GSM TP is developing a powersolution too I believe – tell us about that.Torstein Grytting, COO, GSM TP: Our smart sitehybrid power solution for unreliable grid sites,which combines line conditioning, phase selection,renewables and a controller to optimise everything,is reaching final stages of testing. We’re fundedby Innovation Norway, so we have governmentalsupport. We have a tral site live in Afghanistan, andare in negotiation to install into 56 sites in Guinea.TowerXchange: Summing up, how do youdifferentiate GSM TP’s tower design andmanufacture services from competitors’?Torstein Grytting, COO, GSM TP: I believe ourdesign is incredibly flexible. GSM TP designs andmanufactures highly optimised, very low weighttowers, and is therefore able to offer them at a verycompetitive price.We tailor to the project specifications, using ourexperience in installations, skills in the supply chainand our smartPack strategies to ensure our towersare quickly and easily installed.We offer a single project manager point of contactand use our own materials, creating a single pointof accountabilitywww.towerxchange.com | TowerXchange Issue 3 | 89| TowerXchange Issue 3 | www.towerxchange.comXX
  • 89. Fast deploymentat a reasonable priceHow the consultants to Viettel’s rollout in Mozambique helpedaccelerate time to marketDzung Nguyen, Director, VNTowerwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com90TowerXchange: Thanks for speaking to ustoday. Where do VNTower fit into the passiveinfrastructure ecosystem?Dzung Nguyen, Director, International Business,VNTower: I’m one of the founders of VNTower, atelecommunication infrastructure and constructionservice provider established as a private companyin 2007. VNTower provides services such as theanalysis, design and supply of masts, towers andpoles; consultant resource services; constructionand project management; specifications; inspectionand maintenance and specially FTK (full turn key)service for the rollout of mobile networks.VNTower has performed services on nearly 2,000sites, including new builds, upgrades, modifications,and strengthening. We moved into towerfabrication with some good steel factory partners inVietnam and China enabling us to deliver volumeorders rapidly and at a competitive price.We’ve recently been focusing on fast deploymenttower solutions, both self supporting up to 45mand 60m guy-masts that can be installed within oneweek, including foundations, tower erection, fence,equipment and accessories.VNTower is a certified supplier to EricssonCorporation, and we’ve been focused on the Asianmarket; Vietnam, Laos, Philippines, Thailand, andlooking at Myanmar. And we’ve project managedViettel’s rollout in Mozambique.TowerXchange: Please tell us some of yourRead this article to learn: How cell sites with guy-mast towers can be fully installed in just one week Designing light weight towers for helicopter delivery Insights into the project management of Viettel’s rapid rollout in Mozambique The international quality and safety standards followed by VNTowerKeywords: Who’s who, Interview, ManagedServices, Steelwork, OM, Construction,Installation, Health Safety, Foundations,Network Rollout, New Market Entrant, Masts Towers, Asia, Africa, Mozambique, Viettel,VNTowerViettel rolled out 1,000 towers and a fibretransmission network in Mozambiquein just 10 months. The keys to rapiddeployment were cash flow, support andplanning, and the use of fast deploymentguy-mast towers with prefabricatedconcrete anchor blocks; much faster toinstall than traditional towers relyingon substantial reinforced concretefoundations. To learn more, TowerXchangespoke to Viettel’s project managersVNTower, who have also deployed orupgraded nearly 2,000 sites in Asia.
  • 90. clients and project experience?Dzung Nguyen, Director, International Business,VNTower: Ericsson Vietnam needed 200 towersin three to four months for sites with limited landleasing area – many of the towers were in cities.We provided 45m fast deployment towers, a selfsupporting tower that can carry 2 microwave1.2m and 9 radio antennae. These towers arepre-fabricated in our factory. On the first day, thetower and all accessories can be delivered in onetruck. On the second day the team installs the steelbeams of foundation. On the third and fourth daysthe tower and accessories will be done. On the fifthday we pour the concrete inside the beams of thefoundation. Grounding, fencing, BTS and powerconnection will be finished on the sixth and seventhdays. It’s that quick to install.In the unlikely event that the site has problems withthe landlord, land permissions or village protests,it’s easy to move – designed for a “quick runaway”.In another example, Papua New Guinea requested30m towers light enough for helicopter delivery.We designed a solution that didn’t use concrete tominimise weight. In that instance we were able tofinish towers in three days.TowerXchange: Tell us about your work withViettel in Mozambique.Dzung Nguyen, Director, International Business,VNTower: We have provided Viettel withmanagement services, including setting up theirrollout schedule and rollout plan in Mozambique.We sent highly skilled engineers and projectmanagers there for one year.As the third licensed operator in Mozambique,Viettel’s challenge was to build coverage by rollingout as quickly as possible. With our help Viettel wasable to install 1,000 sites in just ten months. Deliverywas very fast. We worked with them to preparethe plan; targeting the number of towers rolled outper month, building the tower team.  We dividedthe country into several regions, allocated skilledpeople to each region, and trained the team on thewww.towerxchange.com | TowerXchange Issue 3 | 91| TowerXchange Issue 3 | www.towerxchange.comXXground. We prepared various procurement andquality templates and checklists. The key to successwas buying at a very competitive price, using a goodsupplier system. Cash was not a problem as Viettelis government owned.Transportation was not a problem because all thetowers were close to highways, so delivery was easy.The tower designs mixed traditional mast towerswith guy-masts, the pre-fabricated anchor blocks ofwhich were made in our factory. Guy-mast towersare fast to deploy because most of the installationtime is usually taken up with foundations.Guy-mast towers are much cheaper than self-support towers. They’re also much faster to installbecause self-support towers take a long time tocomplete the foundation block. Viettel try to offsetcosts by using guy-masts as much as possible, butthey need more space. However, they can be up to60m high, which is good for coverage.TowerXchange: What are the safety and qualitystandards you use?Dzung Nguyen, Director, International Business,VNTower: Our towers are manufactured tointernational quality standards: ISO standards andenvironment standards, while our materials followinternational standards set by Ericsson and ouroperator partners. On the tower erection side of thebusiness, we use climbing and health certification,relevant safety equipment such as harnesses, safetybelt, and ensure working conditions and times ofworking follow international standardsVNtower guy mast base
  • 91. Special feature:In this new special feature, TowerXchangeconsiders business models to extend networksharing beyond towers and other static assets toinclude active infrastructure and transmission,enabling operators to unlock substantial assetsavings and cash flow improvements, whileenabling infracos to create new recurring revenuesteams and new capital value.In this first installment of “Beyond PassiveInfrastructure,” John Earley, President of theAfrican region for Ceragon, advocates that towercosconsider transmission sharing as a means offreeing up tower load capacity while generatingnew revenue up to US$5-6k per site per month;while Ericsson’s Patrik Jakobson makes the casefor bundling passive and active infrastructuresharing under wholesale agreements that could bea potential model for open access LTE.Beyond passiveinfrastructureFeaturing two insightful articles:93 The case for transmission sharing99 Wholesale network sharingwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com92
  • 92. The case fortransmission sharingSharing microwave backhaul would create new revenues fortowercos and free up significant load capacity on towersJohn Earley, President Africa Region,Ceragon Networkswww.towerxchange.com | TowerXchange Issue 3 | 93| TowerXchange Issue 3 | www.towerxchange.comXXTowerXchange: Is the transfer of assets fromoperators to towercos good news for backhaulspecialists like Ceragon?John Earley, President Africa Region, CeragonNetworks: The transfer of assets from operator-captive to towercos can be both a threat and anopportunity for network equipment providers.It’s a threat if we had an agreement with theoperator who built the towers, but we have to startagain with the new third party owners. But it’s alsoan opportunity; as sites become co-location sites,the new tower operators are required to makeinvestments to upgrade sites for multiple tenants,and in the majority of cases the transmissionnetwork was not planned with co-location inmind. Backhaul could require substantial capitalinvestment, otherwise a lot of sites may be renderedunusable for co-location due to the needs ofoperators for more and larger antennas to supporthigher bandwidths and more cluster sites.But in these early stages of passive infrastructuresharing, the transfer of assets has little effect onbackhaul. Most the transactions to date remainfocused on passive infrastructure; African operatorsare firmly holding on to their active infrastructure,and base stations and transmission have remainedpart of the mobile network operators’ strategicinventory.However, with the increasing desire for mobilenetwork operators to push responsibility for morecommodity assets to third parties, managed servicesRead this article to learn: How transmission sharing could generate new revenues of US$5-6,000 per month per site additional How sharing microwave antennae that represent up to 80% of wind loading would free up capacity toincrease tenancy ratios Should towercos acquire transmission assets or build a parallel transmission network? The imperative to share transmission when consolidating and decommissioning towersKeywords: Interview, Towercos, Beyond PassiveInfrastructure, Core Networks Backhaul FTTT,Capacity Enhancements, Loading, Site Level Profitability,Decommissioning, C-level Perspective, Stakeholder Buy-in,Infrastructure sharing, Africa, Ceragon NetworksJohn Earley served as CTO for Millicom Tigo in DRC and forCeltel / Zain in Nigeria, in the latter where an initiative todivest passive infrastructure was being explored prior to thesale of the business to Airtel. John then joined microwavetransmission market leaders Ceragon Networks as Presidentof the Africa region, growing the business from $15m to$85m revenue between 2010 and 2012. John continueshis interest in infrastructure sharing, and maintains closerelationships with several of Africa’s towercos. In thisinterview, John puts forward a case for the towercos tooffer transmission sharing alongside passive infrastructuresharing services.
  • 93. agreements and tower transactions could extendto active infrastructure management includingtransmission in the future.TowerXchange: Tell us about the sharedtransmission opportunity as you see it.John Earley, President Africa Region, CeragonNetworks: Towercos should extend their businessmodel to include shared transmission services.They have two alternate business models. Theycould offer shared transmission as an additionalrevenue stream and service to existing tenantsas part of the initial deal – acquiring both towersand transmission assets for leaseback, with a viewto upgrading or replacing those assets to supportmultiple tenants. Or they could build a paralleltransmission network and use an attractive pricingmodel to incentivise co-locating tenants to use theirshared transmission. This would provide additionalrevenue for the towerco while reducing capex andpotential opex for the operator.One of the towercos’ major challenges whenacquiring new physical assets is that the datadoesn’t always reflect the reality on the ground.Towercos try to mitigate this risk throughcomprehensive due diligence, but their businesscase has to be conservative to allow replacementand the structural re-engineering of towers wherenecessary to support additional tenants. Sharedtransmission has the added advantage of freeingup capacity to add more equipment to towers,driving up towerco revenues, tenancy ratios andprofitability.Imagine if a towerco had four tenants on a specifictower, all  sharing a single transmission network.With heavy microwave antennas representing asmuch as 80% of wind loading capacity, having oneset of microwave dishes rather than four couldfree significant Exposed Projected Area to sell toadditional tenants or for next generation equipmentupgrades. The radio base station antennas arerelatively small, with minimal additional load andwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com94more freedom on where to place them. On theother hand microwave transmission involves largeantennas, often requiring a specific location interms of height and direction.So you can see how shared microwave transmissioncreates both new revenues and frees up capacityenabling towercos to drive their core co-locationrevenues.
  • 94. TowerXchange: Do you see any of the Africantowercos moving towards transmission sharing?John Earley, President Africa Region, CeragonNetworks: The African towercos are listening, butwe don’t see a serious drive to turn transmissionsharing into a reality yet. I don’t think the towercosrealise the potential of backhaul – I’m not surethey’ve analysed the upside to the extent that theyhave a business case to present to operators.It’s not a question of skills. The engineering stafftransferred to towercos and their contractors carrybroad based skills, including first line maintenanceon transmission equipment. Some furtherupskilling would be required, but it’s really about achange of mentality: towercos have to have a desireto move in this direction.One of the African towercos hired a consultantto examine transmission sharing, but the projectdied off as they focused on different things. Tomy knowledge, none of the African towercos hascompleted a viability study into transmissionsharing. The more towers the towercos acquire, themore neglecting transmission sharing is going tolook a bit short-sighted.TowerXchange: With IHS announcing recentlythat they have secured a fifteen year leaseof Orange’s towers in Cameroon which, incombination with their previous acquisitionfrom MTN, gives IHS all the towers in Cameroon(Viettel notwithstanding), would a marketsuch as that be a good platform for a sharedtransmission play?John Earley, President Africa Region, CeragonNetworks: Shared transmission is going to workparticularly well in markets such as Cameroon,where consolidation and decommissioning oftowers will maximise long term efficiencies.In many cases, mobile networks in Africa wererolled out on a copycat basis. The first mover puttheir tower on one hilltop, their competition put atower almost adjacent to that; when the first movertook a rooftop, the competition took an adjacentrooftop. When launching, sometimes copying yourcompetition is the fastest way to rollout a network.But we’re reaching a point where some criticalhilltops and metropolitan locations don’t haveenough real estate available.www.towerxchange.com | TowerXchange Issue 3 | 95| TowerXchange Issue 3 | www.towerxchange.comXXFor companies in IHS’s position in Cameroon,the best way to reduce opex in the long-term inscenarios with two towers on essentially the samegrid reference is to decommission one tower and co-locate on the stronger tower. With ten to fifteen yearcommitments to two key anchor tenants, you can’tjust tear down the tower. If you want to combinethe sites, you’ll have to move equipment from onesite to other. Unless you share transmission assets,the wind loading requirements may necessitatebuilding a third tower whilst tearing down bothoriginal sites, all at significant cost. On the otherhand, if you shared transmission, you could fitradio antennas from both operators onto one of theoriginal towers, and you’d have ability to maximiseservice continuity, with a seamless transfer fromone site to  the other.TowerXchange: What is the revenue potentialfrom shared transmission?John Earley, President Africa Region, CeragonNetworks: A good benchmark would be the cost forleasing capacity from fibre or fixed line operators.That varies from country to country, and the moreyou buy, the less you pay of course, but if I had topick a figure for a 100MB connection, the marketprice for shared transmission would be aroundUS$5-6,000 per month per site, depending on thedistance involved and the cost of spectrum.TowerXchange: Is the target “client” within theoperator the same for shared transmission as forshared towers, thus making shared transmissiona simple upsell?“ “Shared transmission is goingto work particularly well inmarkets such as Cameroon,where consolidation anddecommissioning of towers willmaximise long term efficiencies
  • 95. John Earley, President Africa Region, CeragonNetworks: I think the decision makers for sharingtowers and sharing transmission are differentpeople.Most tower transactions are motivated by thereduction of opex and by stretching capex, and aredriven by corporate financial and strategy people inhead office.In order to sell shared transmission, towercoswould have to engage the local opco’s technicalnetwork people to convince them tht this wouldn’tadversely affect their ability to control and operatetheir networks.TowerXchange: Are mobile network operatorsprepared to share transmission?John Earley, President Africa Region, CeragonNetworks: There’s no difference between leasingmicrowave capacity and leasing fibre capacity,which the mobile network operators are alreadydoing.www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com96The major objections to transmission sharing arecoming from operators who are keeping controlof assets they consider to be a strategic. Yet onlycertain elements are strategic, such as the corenetwork for example. Transmission isn’t strategic.TowerXchange: How would shared transmissionservice providers ensure availability?John Earley, President Africa Region, CeragonNetworks: If you’re going to have multiple operatorssharing transmission, then you’re going to requireincreased resilience. If all five licensed operatorsin a country were using shared transmission, youmight not just need dual route redundancy buttertiary resilience to provide comfort that they’ll allget the same or better availability than their currentnetwork provides.TowerXchange: Tell us about the capacityconstraints affecting Africa.John Earley, President Africa Region, CeragonNetworks: The major capacity constraint in Africais the availability of spectrum. Spectrum is afinite resource with limited re-usability in a givengeography.Africa and Latin America have relatively poorregulatory control of spectrum, which leadsto problems with interference, for examplethrough the use of low frequency spectrum inmetropolitan areas. There is also a problem withthe unknowing illegal use of frequencies due toerrors in configuration where transmission links
  • 96. are accidentally put in on the wrong frequency.The lack of pervasive fibre rollout means Africahas a reliance on microwave backhaul, which inturn leads to constraints on the use of microwave.However, Ceragon and our peers have made alot of progress to make sure the maximum canbe squeezed out of available bandwidth, helpingimprove resilience to interference to overcome thepoor operating environment in Africa.There is no hard limit on microwave – the only limitis how much spectrum you can use and the cost ofthat spectrum. For example, in South Africa and inKenya there is a charge per MHz of spectrum used,so when you have four mobile network operatorsusing the same network topology, they incur fourtimes the fees even if in practice they are actuallyutilizing one and a half times the spectrum dueto trunking and combining – not sending data ata constant stream or bit-rate, rather than the fullfour times. So one can gain advantages in termsof overall bandwidth utilised, but the cost is stillsubstantial.TowerXchange: Is transmission sharinghappening anywhere else in the world?John Earley, President Africa Region, CeragonNetworks: Transmission sharing has been going onsince the beginning of transmission. For example,in the UK BT had a monopoly on transmission – youhad to rent it from them. Only with the advent ofmobile networks was there a push to build multipleparallel independent transmission networks as BT’stransmission infrastructure couldn’t support thegrowth in requirements from GSM transmissions,and a lot of expansion involved building masts inwww.towerxchange.com | TowerXchange Issue 3 | 97| TowerXchange Issue 3 | www.towerxchange.comXXfields and along roads where fixed lines never went.The regulators were forced to allow microwavetransmission. It stuck, and they’ve never lookedback.Meanwhile in Africa there was no such alternativebecause the incumbent fixed line network wasnot extensive (except in South Africa), so therewas no fixed line operator from whom to leasetransmission services.TowerXchange: Thanks John, would youlike to sum up the business case for sharedtransmission as you see it.John Earley, President Africa Region, CeragonNetworks: I foresee an increasingly compellingbusiness case for shared transmission. Once itstarts, the market will be quick to move in thisdirection. We’re seeing an exponential increasein the use of backhaul capacity, driven by hugeappetite for data which is driving bandwidthutilisation like never before. Operators will simplyrun out of capacity, and there won’t be enoughspectrum for each operator to have their own pipe.We see this happening already with shared fibreinfrastructure. My analogy, which applies equallyto towers, fibre or transmission, is that the currentsituation is like five bus companies each buildingtheir own highway between two major cities. Whytear up the landscape to build five highways fordifferent bus companies when it’s more economicalto build one shared five lane highway, and managetimetables and traffic?
  • 97. TowerXchange: Please contrast the business modelsof today’s passive infrastructure sharing with theconcept of wholesale network sharing - how doeseach model create value for operators and for thirdparty network partners (“NetCos”)?Patrik Jakobson, Head of Network Sharing, EricssonGlobal Services: I see differences along two differentdimensions. Firstly, passive network sharing includesonly towers, shelters, fencing et cetera, while thewholesale model includes active components – RAN,radio base stations, backhaul, controllers, even insome cases the core network (there’s a trade offbetween complexity and savings when it comes to thecore network).The second difference is the involvement of a thirdparty. Passive network sharing can be bi-lateralbetween two operators or through a third partytowercos, whereas wholesale network sharing bundlesinterdependent passive and active components to bemanaged by a third party NetCo. The wholesale modelcan be a good option when consolidating operators,when sharing a build out, or as an alternative to RANsharing.Ericsson see wholesale network sharing as anextended managed services proposition. It’s differentfrom the towerco model in that we don’t make moneyfrom the real estate business, we take out more costsyear on year, creating efficiencies and scale.TowerXchange: What kind of entity could providethese NetCo wholesale network sharing services– is it an opportunity for towercos to move up theWholesaleNetwork Sharingwww.towerxchange.com | TowerXchange Issue 3 | 99| TowerXchange Issue 3 | www.towerxchange.comXXCreating a new breed of NetCo to manage and share Africa’spassive and active network assetsRead this article to learn: Why wholesale network sharing might offer opportunities for your business The value proposition of passive versus wholesale network sharing Why infrastructure funds are interested in a new breed of NetCo bundling passive and activenetwork services How wholesale network sharing offers a potential model for open access LTE Wholesale models as a means of third, fourth and fifth ranked operators acquiring scalePatrik Jakobson, Ericsson Global ServicesKeywords: Wholesale network sharing, passiveinfrastructure sharing, active infrastructuresharing, NetCo, infrastructure funds,RAN sharing, open access LTE, valuations,technology risk, Africa, EricssonPatrik Jakobson is Head of Network Sharing at EricssonGlobal Services. His area is focused on developing thewholesale network sharing business as an evolvedManaged Services model to support operators to achievefurther opex and capex savings. TowerXchange spoketo Patrik to find out how he thought Wholesale NetworkSharing could work in Africa.
  • 98. www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com100value chain, an opportunity for active equipmentspecialists like Ericsson, or an opportunity for anew breed of NetCo?Patrik Jakobson, Head of Network Sharing, EricssonGlobal Services: Wholesale network sharing couldbe an opportunity for newcos, or it could be anopportunity for companies like Ericsson to offer theservice with the support of an infrastructure fund.Infrastructure funds are attracted by the lure of long-term cash-generating contracts, with the possibilityto create extra value by bundling passive and activenetwork segments.Towercos might be interested to move up the valuechain, but wholesale network sharing is closer toEricsson’s core business, and we’re interested in takingon operational and technology risks over long-termcontracts.TowerXchange: Some African operators remainreluctant to share even passive infrastructurein markets where coverage remains a criticaldifferentiator, what are the drivers that wouldcompel operators to participate in WholesaleNetwork Sharing?Patrik Jakobson, Head of Network Sharing, EricssonGlobal Services: Lack of spectrum and licensesprovides an incentive to share. For example at the800MHz band there’s often only enough frequencyfor three different LTE licenses, so if you have four ormore 2G and 3G operators then someone is going tohave to share, or lose out.The wholesale model also offers sustainable economicsfor operators that are subscale, for example operatorsranked third, fourth or fifth in some African markets.Such players often have scale disadvantage comparedto the market leaders, which might mean they can’trollout scalable LTE. Wholesale network sharing canbe a means to acquire scale.Wholesale network sharing can also be compelling inrural areas in which there’s less traffic, the relativecost per minute or cost per gigabyte of data is higherthan in areas with greater population density.Finally, the wholesale model offers an opportunityfor operators to divest active and passive networks,leasing them back from a NetCo, releasing cash,reducing debt and easing their balance sheet. Thismight be especially relevant in circumstances ofconsolidation, where there is typically a 3-4 year cycleto payback – an asset divestiture can release cash tooffset that loan payback period.TowerXchange: In our experience, many Africanregulators have yet to draft or are still draftingexplicit passive infrastructure sharing regulations.There may be no explicit policy concerning activenetwork sharing. What should be the role of theregulator in Wholesale Network Sharing?Patrik Jakobson, Head of Network Sharing, EricssonGlobal Services: I agree that regulators in somemarkets haven’t drafted explicit regulations aboutactive or wholesale network sharing. We advocatethat regulators continue to take a liberal approachComparing different sharing modelsModelRoaming N/A-10%-20%-20%-40%N/AUp to 13%Up to 17%Up to 23%Up to 31%Models including active sharingSource: EricssonPassive JVTowerCoWholesaleActive passive JVAsset savingCash-flowimprovement
  • 99. www.towerxchange.com | TowerXchange Issue 3 | 101| TowerXchange Issue 3 | www.towerxchange.comXXto new technologies, active network and spectrumsharing. Opening up markets for active infrastructuresharing supports sustainable mobile broadband, andwe all know that there’s a correlation between mobilebroadband and GDP growth. So regulators recognisethat if they can facilitate infrastructure sharing it canreduce price points for the rollout of LTE as mobilebroadband infrastructure, which might achieve wideradoption than expensive fixed broadband.It’s important for regulators to allow wholesalesharing among different operators, and allow a neutralthird party to own, manage and provide that capacitywithout their own operator license. The NetCo couldbe seen as a type of subcontractor of shared capacity.TowerXchange: Is there a role in wholesale networksharing for specialist passive infrastructuremanagement companies, such as towercos andfibrecos, as well as for and “InfraCos” or “NetCos” –companies focused on active infrastructure?Patrik Jakobson, Head of Network Sharing, EricssonGlobal Services: Towercos are becoming establishedin Africa, but there remains an interdependencebetween passive and active network components.Many operators are consolidating 2G and 3G at sametime as building LTE, and there are interdependencesin the design of the network. It’s important to keeppassive and active components together to create anend-to-end service offering encompassing capacityand coverage, governed by NetCo’s Service LevelAgreements. There’s a clear advantage to holdingpassive and active together to reduce complexity.TowerXchange: How could wholesale networksharing work in Africa? For example, are initiativessuch as Open LTE in Kenya illustrative of how thewholesale business model could work in Africa?Patrik Jakobson, Head of Network Sharing, EricssonGlobal Services: The open access network model,where a single license is offered to a wholesale player(as has been discussed in Rwanda and Kenya) is one asub-segment of the potential Wholesale NetCo model.But wholesale network sharing doesn’t have to meanonly one open network in each market. In establishedmarkets you might see two or three operators comingtogether to share under a wholesale model, while themarket leader takes a traditional model.TowerXchange: Can you give some examples of howthe wholesale network sharing model has beenimplemented outside Africa?Patrik Jakobson, Head of Network Sharing, EricssonGlobal Services: Ericsson is working with DeutscheTelekom Germany where Ericsson acquired 5000micro-wave hops from DT and are providing sharedcapacity based on Key Performance Indicators/ServiceLevel Agreement to DT and other operators, in a thirdparty set-up spanning a long-term contract period.We’re engaging with other operators andinfrastructure funds in Europe about other potentialwholesale network sharing opportunities. There isalso lots of activity around LTE auctions, with someoperators left without licenses and needing to look atnew wholesale business models.TowerXchange: Please sum up the benefits ofwholesale network sharing.Patrik Jakobson, Head of Network Sharing, EricssonGlobal Services: Wholesale network sharing unlockscapex and opex savings from passive and activeinfrastructure. Operators can use wholesale businessmodels to release cash by divesting passive and activeassets and leasing them back, relieving themselves ofoperational and technical risk, securing operationalcapacity at a known price, and securing performancecommitments over a long term contract.Even we don’t know what products there will be in theportfolio in five +/- years, but we have the technologyinsights through our RD arms, so we advocatetransferring technology risk to a technology leaderwho can commit to price/performance improvements.Working with a NetCo also offers flexibility: neutralgovernance overcomes the challenges faced byoperators who are bi-laterally sharing assets, whooften have confidentiality and prioritization concerns,and who may wish to expand networks at a differentpace.Finally, splitting the value chain into NetCos withhigh capital requirements yet predictable revenue,separated from operators subject to ‘retail risk’can yield an increased valuation. Service-centricoperators benefit from volume discounts from NetCosand can realize higher yield from divestitures and/or lower leaseback costs over long term contracts,when spinning-off networks that can achieve a highervaluations if classified as infrastructure  rather thanbundled with retail risk
  • 100. Special feature:This special feature is an expansion of the “How toleverage RMS to optimise preventative maintenance”article which included profiles of Inala SAM andKentrox ISM in issue two of TowerXchange. We’vebroadened the scope of this feature to connect RMSwith analysis, job ticketing, workforce managementand asset lifecycle platforms.In this edition, we start at the sharp end of RMS, withTelemisis’ solution to the acute problem of fuel theft –not just theft of diesel, but theft of generator equipmentand the practice of cutting fuel tanks with water or, inparticularly damaging cases, kerosene. Broadnet thentake you on a journey back to the NOC and into theintegration of RMS data with “manager of manager”platforms. Finally, we revisit Inala for a look at theirnew Infrastructure Intelligence service, blending feedsfrom any RMS with asset management data to unlockactionable insights.From RMS to monitoring andmanagement platforms –analysing and optimising assetutilisationThree unmissable interviews:103 How to combat fuel theft109 How to measure what matters114 How to create actionable intelligence from yourinfrastructure datawww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com102
  • 101. How to combatfuel theftTamper protected sensors reveal fuel theft at sites while comparing fuelalerts with invoices deters fraudChris Begent, Commercial Director, TelemisisTowerXchange: Thanks for speaking to us Chris.Let’s be honest, a lot of fuel pilferage originateswithin the supply chain, so is there a risk ofremote monitoring sensors being damaged bystaff or subcontractors?Chris Begent, Commercial Director, Telemisis:Unfortunately much of the fuel fraud or theft isinternal, so interference with sensors is a commonproblem we pick up.For example, one of our clients was aware ofregular small amounts of diesel theft, enough tosupply one or two vehicles, at one of their sites. Theparties responsible tried to sabotage the sensorsby disconnecting the power. They thought they’ddisabled the system and started draining the fuel.Fortunately our devices are extremely resilient totampering (our systems have independent powersystems, internal disconnection sensors, tamperprotection on fuel probes and fuel hatches), so thethief triggered an alarm and the client was able todispatch someone to the site, where they discoveredthe security guard was pilfering fuel.We can also combat fraud by cross-referencingfuel alerts against invoices. On one fairly largesystem we picked up invoices routinely 10% abovewhat the subcontractor said had been delivered.We conducted an accuracy test on our systemand found it was accurate within 1 litre. In thatparticular instance, we found that the metering ondelivery vehicles was 10% high across the board, sothe error was corrected.Read this article to learn: The importance of tamper-protected RMS in minimizing fuel theft within the supply chain How to prevent the damage caused by kerosene contamination The importance of remote upgrade and reprogramming of RMS to minimize site visits How self-configuring RMS reduces reliance on high skilled deployment technicians How data from RMS is filtered to support different users, from technicians monitoring local alarmsto management comparing and selecting equipment and service providersFuel theft is believed to add up to 30% to energy opex inAfrica. In the battle with the diesel mafia, how can RMS tipthe conflict in favour of the tower owner? TowerXchangewanted to learn more about fuel theft, and learn moreabout how to configure and filter RMS data to meet theneeds of different users. So we spoke to Telemisis, whohave an installed base of tens of thousands of RMS systemsfrom small deployments at fifty sites to many thousands. InAfrica, Telemisis’ SitePro RMS systems have been deployedin Egypt, Tanzania, Kenya, Ghana and Nigeria.Keywords: RMS, Fuel Security, Installation, OM, Capex,Batteries, Site Level Profitability, DG Runtime, Site Visits,Skilled Workforces, KPIs, Job Ticketing, Opex Reduction,Infrastructure Sharing, Africa, Telemisiswww.towerxchange.com | TowerXchange Issue 3 | 103| TowerXchange Issue 3 | www.towerxchange.comXX
  • 102. In Tanzania we had a site where the client wasburning 1,000 litres of diesel per month in twodeliveries of 500 litres… yet the tank capacity wasonly 430 litres! After we deployed our RMS thesystem didn’t need refueling again all year, as thegrid supply was reliable. So on a single site theoperator was paying for 12,000 litres of diesel peryear that they were not actually using! Multiply thatkind of saving across many sites, and add in thesavings from reduced truck rolls, and it pays for anRMS system in no time at all!In another example, I remember one of ourCaribbean customers had installed one of our mainunits into their gensets when they experienced thetheft of one of their generators from a site. Thesystem has GPS ring-fencing, so they dispatchedsomeone to the site with local law enforcement,noticed on the way that the GPS said they’d justpassed the generator, stopped, turned around andfound the dumper truck the thieves had used to ripthe generator off the site! Unfortunately theft of theactual generator itself is a common occurrence inAfrica so GPS tracking provides the potential for theequipment to be tracked and recovered.TowerXchange: Is watering down of dieselanother common problem?Chris Begent, Commercial Director, Telemisis: Yes,so fuel quality monitoring is also essential. Water inthe fuel is actually relatively easy to detect. On theother hand, kerosene or biodiesel contaminationis extremely difficult to detect. If you put keroseneinto a diesel generator, it will keep on running, butthe generator will run until it destroys itself, so itcan be extremely harmful. We have a solution formonitoring kerosene and unexpected hyrdocarbonscontamination that costs a tenth of the price of theother solutions available on the market.TowerXchange: How do you differentiateTelemisis from competitive RMS solutions?Chris Begent, Commercial Director, Telemisis:Telemisis has a background in electricitymonitoring, security and automation, using smallformat solid-state site equipment designed to workin harsh environmental conditions meaning thatreliability and ease of deployment are designed in.Our rugged SiteNode telemetry device is capable ofwithstanding operating temperatures from -30oC to+80oC.A lot of competitors’ RMS systems come from abackground of IT monitoring where environmentalconditions are benign and communicationsare reliable which means that some struggle inthe environments experienced in Africa. Ourexperience in power source management on cellsites, whether utilising green energy sources ormaximising battery usage within operationallimits before remotely starting the genset, meansthat we can provide a solution for the mostimportant aspect of cell sites; the power source.Because Telemisis SitePro is designed as a remotetelemetry system from the ground up, it largelyself-configures, which reduces the need for highlyskilled technicians to deploy the system.Site owners can install all elements of the systemsupplied by Telemisis, or it can be designed to workwith equipment and sensors already on site.Our system ranges from small format, solid-statedevices deployable for machine monitoring and GPStracking on generators or off grid solar-poweredsites, to larger switch sites.TowerXchange: How have your clients’requirements changed and how has yoursolution evolved over the last ten years?Chris Begent, Commercial Director, Telemisis:Our system has evolved in many ways over thepast ten years from feedback from our customers’requirements and to take advantage of newtechnologies as they become available. Some ofour systems have been installed for many years,and over that time our clients’ requirements haveevolved and their site monitoring solution fromTelemisis has expanded to meet these needs. If youcan address changes without sending people towww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com104“ “On a single site the operatorwas paying for 12,000 litresof diesel per year that theywere not actually using!
  • 103. TowerXchange: How do your sensor devices inthe field communicate with the NOC?Chris Begent, Commercial Director, Telemisis:The information collected on site is intelligentlyprocessed and transmitted to the NOC through themost applicable route such as Ethernet, GPRS orSMS. Multiple back-up communications optionsare available to ensure the information gets back,particularly when there are problems on site thatmay affect the primary transmission path.Integration with the NOC systems is oftenimplemented by Telemisis at an SNMP level buthigher levels of integration provided by SiteProprovide valuable insight into site conditionallowing proactive site visits or reduced site visitsby diagnosing the faults remotely and respondingaccordingly. The more detailed informationis useful particularly where customers wantintegration with back-office systems. This makesbusiness intelligence more powerful through theintegration of live, real-time data.Our ability to buffer data in the event of acommunication problem is critical to the integrity ofthe system but fallback transmission means the datais available to the engineers when it is most needed,when normal site communications are down.TowerXchange: Tell us where the TelemisisSitePro system fits within the systems andprocesses within the NOC.Chris Begent, Commercial Director, Telemisis: ItChris Begent, Commercial Director, Telemisis:Our devices automatically configure themselvesto connect to the server. For example the systemrecognises the SIM card and the settings it needs.Our temperature and humidity sensors are allpre-calibrated and fuel sensors are automaticallycalibrated as part of the startup procedure.Once we’ve established communications withthe central server, the intelligence in that serverenables a project manager in the NOC to rapidlyapply the correct configuration. The system onlypresents options that are viable in terms of theequipment that is connected on site.So we only need a skilled technician at the NOC,who configures and commissions the site with theperson on site processing through physical tests bywalking in front of sensors, closing breakers etc.the site, that fulfills one of the key aims of RMS; toreduce site visits. We don’t want to create site visitrequirements for the telemetry, so remote upgradeand reprogramming is made possible though oursecure interface.We understand that once you’ve gone down aroute partnering with a telemetry supplier in yournetwork, it is expensive and difficult to changeso to a certain extent you’re committed to thatsupplier. For this reason we think it’s critical thatnew hardware retains backwards compatibility sothat expansion and upgrade is easy. Our SiteProsystem is backwards compatible to the equipmentwe installed in 2002-3.TowerXchange: Tell us more about deploymentof your systems, from self-configuration tocommunication with the NOC.www.towerxchange.com | TowerXchange Issue 3 | 105| TowerXchange Issue 3 | www.towerxchange.comXXSiteNode
  • 104. depends what systems the client already has andwhat information they want. Typically the NOC hasbasic alarms transmitted to it through BTS inputswhich typically offer very little useful informationon the site systems, or in some cases by SNMP whichcan generate a large amount of alarms which aretoo numerous to handle at the NOC.The SitePro system collects a lot more than alarms,by providing readings that enable the user tohave valuable additional information enablingthem to act more efficiently. SitePro passes theclear cut alerts that the NOC operators want to theNOC screens but makes the extended informationavailable to the engineers or managers providingthem with the information they need so that theyhave a good idea what to expect before they goonsite and can respond efficiently, maximizingproductivity and site availability.For example, an operator might see a generatoralarm from a remote site two and a half hoursdrive away. From the NOC he can see that thecharger alternator has failed. He can then dispatcha maintenance person equipped with a replacementcharger alternator to replace then and there,rather than having to make a five hour round tripfor diagnostics and another to perform the actualrepair.TowerXchange: How do RMS support decisionmaking processes?Chris Begent, Commercial Director, Telemisis: Wethink it’s important that we provide genuine RemoteManagement not just Remote Monitoring. Our jobdoesn’t end with the installation of sensors; it’scritical to feed back management information intothe decision making processes of site owners andoperators to support their tendering with provableinformation on service patterns, fuel use, and fueltheft.Our information helps identify patterns in faultsand equipment degradation, informing batteryreplacement decision-making processes byassessing battery performance over time againstspecifications laid out by the client.We provide accurate data on fuel delivered and fuelburned, which is critical when re-tendering for fuelsupply and delivery.TowerXchange: Why is RMS so critical fortowercos?Chris Begent, Commercial Director, Telemisis: Theintelligence from RMS enables towercos to optimisetheir site operations, which is critical for improvingsite level profitability. The visibility of site conditionis of prime importance because if you don’t knowwhat is happening on site you can’t respond, andfailure to meet SLAs can be costly to towercos.SitePro also provides remote control capabilitiesmeaning that action can be taken either withoutsending an engineer or while the engineer is en-route. For instance you receive a generator “fail tostart” alarm from site, meaning the site is runningon the batteries and so time is ticking away towardsa site outage. Remote control of the generatormeans that the engineer can take remote control ofthe generator and manually start the set and checkits condition so keeping the site operational.In the unlikely event of disputes, towerco’s can useSitePro to prove the achievement of SLAs.Towercos also often install tracking devices on theirfleet of vehicles. With SitePro this can be integratedwithin the same monitoring system, providing amore comprehensive enterprise solution. If fueldelivery vehicles are included on the system, thefuel supply chain information is condensed into asingle point of interface.TowerXchange: Tell us about the scale of humanintervention required to respond to remotemonitoring alarms – at what point is the networkwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com106“ “Our job doesn’t end withthe installation of sensors;it’s critical to feed backmanagement informationinto the decision makingprocesses of site ownersand operators to supporttheir tendering
  • 105. systems?Chris Begent, Commercial Director, Telemisis: Thatreally is a “how long is a piece of string” question asso much depends on the client’s objectives, and thatmay differ from site to site.In general, you’re probably looking at an averagecapex of around £2-3,500, depending on whichcountry you’re in. That’s the installed priceincluding a reasonable base of sensors. Installationcosts vary significantly and some countries youneed to add £1,000 per site just for labour costs. SoI’d estimate maybe £2,500 for the equipment in awell equipped system, plus £1,000 for installationsince you don’t need technical guys on site.TowerXchange: Please tell us an example of theTelemisis solution in action.Chris Begent, Commercial Director, Telemisis:When Hurricane Dean struck Jamaica in 2007, theincident really illustrated the benefit of RMS. Thenetwork equipped with our telemetry was ableto get up and running within 24 hours, while acompetitor’s network took many days to get backinto full operation. Telemisis monitored the shutdown of grid power at the peak of the hurricane(so 240V weren’t running through the systemsduring extreme weather!), and the immediate startof generators afterwards. Vital information on sitealarms allowed the prioritisation of visits to affectedsites keeping active sites on air and enabling rapidrepairs to be undertaken efficiently with best use ofresourcemeans that the users don’t need to login to thesystem for day to day information, it is in theirinbox each day that they need it, for that region,for that person in the org-chart. Automation isimportant if you’re managing more than ten sites,and it’s critical if you’re managing thousands.For example, a towerco they may want to makesome fuel data available to a subcontractor, sothat data can be filtered by geography and bysubcontractor, and only the information importantto that subcontractor is shared. Similarly, towercoscan allow network managers and operator tenantsto login and examine certain data across multipleregions, but only seeing sites on which they aretenants.The central monitoring team in the NOC can usetheir normal screens, other users can use ourweb-based interface, while the field engineers useintegrated mobile apps for industrial tools andsmartphones. The management team typically usesbusiness intelligence tools fed with informationfrom our system. We can provide trouble-ticketingand service management alerts, or our data can befed into existing systems if preferred.Ours is a scalable system able to manage ten totwenty sites on a Telemisis hosted system, or up totens of thousands of sites where operators typicallyhost their own systems and often have data fed intotheir existing business intelligence systems.TowerXchange: What is the estimated capitaloutlay per site to acquire and install yourtoo big for one person to manage alarms andmanually integrate with job ticketing?Chris Begent, Commercial Director, Telemisis: Youneed to set up a tree structure and group sites byarea to keep supervision to perhaps a maximumof one hundred or so sites per region. It variesaccording to the requirements of the networkconcerned. Some operators might only be able tocope with ten or so sites, but automated processingand filtering of information is critical.With Telemisis SitePro, automatic reporting issupplemented by a unique user login that filters theinformation to just the information at the level ofconcentration that user needs to see. Auto reportingwww.towerxchange.com | TowerXchange Issue 3 | 107| TowerXchange Issue 3 | www.towerxchange.comXXUser interface examples
  • 106. SitePro—Remote MonitoringSitePro the intelligent solution for remote site and machine monitoring.Automatic alerting, reporting and data analysis means the informationyou need to minimise your costs and maximise performance is in yourhands simply and easily.SitePro—Quality by DesignSitePro - Monitoring and ControlSolutions for -On Site Power Generation including FuelRectifiers and Off Grid Power SystemsGrid PowerBatteries and DC PowerSecurity Safety including Tower LightsEnvironmental systemsSite Management OptimisatonVehicle and Mobile Plant TrackingSmall size for flexibility of location andsolid-state reliability, with a broad rangeof interfaces to provide a solution for allsite needs.Tel: +44 (0) 3333660088 Web: www.telemisis.comFax: +44 (0) 3333660089 Email: sales@telemisis.com
  • 107. How to create actionableintelligence from yourinfrastructure dataNew service unlocks insights from RMS and other asset datasources to ensure better asset utilisation, lower cost of ownershipand an increase in availabilityJannie van Rhyn, GM InfrastructureIntelligence, Inalawww.towerxchange.com | TowerXchange Issue 3 | 109| TowerXchange Issue 3 | www.towerxchange.comXXTowerXchange: What is the InfrastructureIntelligence proposition?Jannie van Rhyn, GM Infrastructure Intelligence,Inala: Inala Infrastructure Intelligence is a servicedesigned to effectively and efficiently optimise,maintain and manage passive assets. The servicecorrelates the technical and financial data of passiveassets with their performance and operational datathrough the collaboration of systems, processesand people. The resulting reports, dash boardsand recommendations allow for the efficientmanagement of the infrastructure throughsystems like job cards, contractor management,maintenance management and SLA management.This helps to improve asset availability andutilisation while providing more effective decisionmaking support.Although most of the RMSs do an excellent job ofreal time monitoring, controlling and alarming ofthe of sites and its assets, they are not optimised forhistorical data analysis, failure prediction and trendanalysis. RMS are also usually not integrated withticketing and job cards systems, and not integratedwith asset registers to allow for more efficient assetutilisation and decision making. By implementingour Infrastructure Intelligence service alongside theclient’s preferred RMS, the tower operator will havea much enhanced and complete asset managementsolution. This allows for improved life expectancyand ROI in passive infrastructure, as well as betterfinancial and resource planning for maintenanceand capital expenditure.Read this article to learn: How to translate RMS and asset management data into actionable intelligence How to connect that intelligence with job ticketing and contractor management to optimise preventativemaintenance How to tailor dash boards to meet the needs of different departments and individuals How to base End of Useful Life estimation on actual usage rather than on accounting principles or thesubjective opinion engineers How to attain a single view of the network, even if different RMSs are deployedKeywords: Who’s Who, Monitoring Management, RMS, Capex,OM, Valuation, Batteries, Uptime, Energy, Dimensioning, AssetRegister, Procurement, Site Management System, Asset LifecyclePlatform, Job Ticketing, Africa, Infrastructure Sharing, InalaRMS provides invaluable alarms, but the majority of the performancedata generated by RMS is seldom used. Inala InfrastructureIntelligence saw an opportunity to harvest and analyse operational,environmental, performance and utilisation data from any RMS(not only Inala RMS), marry it with the actual asset data, and use theresulting intelligence to power predictive maintenance, allow for siteand/or asset comparisons, assist with capex estimation and provideintelligent reporting and dashboards to assist in decision making,thus deploying opex and capex more effectively.
  • 108. TowerXchange: Who should be usingInfrastructure Intelligence?Jannie van Rhyn, GM Infrastructure Intelligence,Inala: Our ideal client is either responsible for orwill benefit from more efficient management of thepassive assets on mobile telecommunication sites.It could be a Mobile Network Operator, it could bean independent towerco, or could be a managedservice provider managing the network, includingthe passive assets, such as NSN or Ericsson. Even ifa network is too small to make the implementationof the service viable on its own, one can easilyimplement the service cost effectively over morethan one network to the benefit of all networkowners involved.TowerXchange: With which RMS’s can theInfrastructure Intelligence service be used?Jannie van Rhyn, GM Infrastructure Intelligence,Inala: Our service and its implementation isindependent of the RMS system and its hardware.All we need is access to and an understanding of thedata or the data strings from the client’s RMS. Thisallows for the service to be implemented over morethan one RMS within the same network. In such acase the user will have a combined single view ofthe network even though it has more than one RMSdeployed.We can also interface with existing ticketingsystems, job cards systems, and ERP systems if theclient already has these systems implemented.TowerXchange: How does InfrastructureIntelligence present insights?Jannie van Rhyn, GM Infrastructure Intelligence,Inala: The service presents insights through dashboards, regular and ad hoc reports. These dashboards are not only hierarchically differentiatedbut also department specific, and can be tailored toneeds of the specific post or department.For example, the Group CFO’s dash board andreports will look totally different from that of theGroup CTO’s, as the one will see current value ofassets, depreciation, End of Useful life et cetera, theother will see the high level status of sites, total fuelon hand, cost of sub-contractors et cetera. Similarlywill there be a difference between the dash boardswww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com110and reports of the Group CTO and the field engineerresponsible for a specific number of sites.TowerXchange: What kind of asset data does theservice need?Jannie van Rhyn, GM Infrastructure Intelligence,Inala: To improve the RMS data analysis andto make a meaningful recommendation on themanagement of the assets, it is important to haveas much information about the physical asset aspossible. Typical information needed about thepassive assets on telecommunication sites are themake, model and the capacity of the asset, whenit was procured, the price at procurement, themaintenance schedules et cetera. This asset datacan be generated within our system through toolsand processes or can be obtained from existingasset registers, financial systems and ERP systemsthrough relatively simple interfaces.TowerXchange: Why is it important to have theRMS data AND the asset data?Jannie van Rhyn, GM Infrastructure Intelligence,Inala: By combining the data of the asset withits performance data, the value of the actionableintelligence for decision making is just so muchmore than without one of the data sets. It istypically the principle of one plus one equals threeand not two.For example, from the discharge cycle data of abattery, from the RMS, the service will indicate ifthe battery autonomy is below a certain thresholdElements of Inala Infrastructure Intelligence
  • 109. but the best corrective action to be taken is not soobviously apparent. But with the information onthe age of the battery, the capacity of the batteryand the average energy consumption of the site amuch better corrective action recommendationcan be made. If you now superimpose the batteryperformance (or lack of it) onto the average batterytemperature of the specific site, you can preventfuture battery degradation.Similarly estimation of End of Useful Life,replacement timing and the depreciation of an assetcan be so much more accurate if based on actualusage, environmental conditions and performancerather than based on accounting principles overthe complete asset class or based on the subjectiveopinion of a field engineer. That is the reason whyit is important for us to have the performance dataand the asset data combined as the level of insight isso much more enhanced.TowerXchange: How do you deliver thisactionable intelligence to the client?www.towerxchange.com | TowerXchange Issue 3 | 111| TowerXchange Issue 3 | www.towerxchange.comXXJannie van Rhyn, GM Infrastructure Intelligence,Inala: This is done through a combination ofsystems and tools, people and processes. Althoughpart of the system is software based, much ofthe analysis and execution needs interpretationand supervision. For that reason, InfrastructureIntelligence is offered as a value-adding servicerather than a self-supporting product or system.The service can be implemented on two levels.Level 1 displays information in various dashboardsand reports, identifies preventative maintenancetasks and makes recommendations, but does nottake responsibility for the implementation andexecution of the tasks and recommendations. ThisLevel includes an Asset Management Centre (AMC)with one system operator located within the client’senvironment who will operate the system ensurethat the dash boards and reports are delivered,and who will handle all client queries and newrequirements. It also includes analysts at Inala thatcontinuously analyse that data, look for trends andexceptions, create ad hoc reports.Under Level 2 the AMC is expanded with morepeople (depending on the size of the network) asthey will now take responsibility for the executionof the tasks and recommendations by ensuringthe necessary job cards are issued to the correctcontractors and ensuring that the contractors areeffectively managed. This Level can include thetakeover of the client’s current field engineersand associated resources. Level 2 service isrecommended as it ensures that the managementof the site maintenance is done by dedicated andDiagram of AIMS
  • 110. trained asset management staff, that will ensurethat the completed job card information is fed backinto the system to ensure the data in the system iscomplete and up to date.Ideally we want to take on the completemanagement of the passive infrastructure,while providing the tower owner with sufficientinformation to make the correct investmentdecisions based on their goals and objectives.TowerXchange: What are the benefits of usingthe Infrastructure Intelligence service?Jannie van Rhyn, GM Infrastructure Intelligence,Inala: In the short term we will lower the cost ofmanaging the assets and increase the availabilityof the assets. This is ensured through intelligentand focused reports and dash boards, moreefficient maintenance management, more efficientcontractor management, improved NOC operations,comparisons of costs and performance betweenregions, sites or assets and the identification of overdesigned or underperforming assets.Further benefits include recommendations based oncontinuous analysis and trend analysis, predictivemaintenance, valuation of assets based on actualwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com112usage, capex projections and benchmarking of costs,performance and manufacturers.There are no extra costs for general systemupgrades and improvements.Infrastructure Intelligence can be particularlyuseful for towercos integrating and upgradinglegacy acquired towers that might have a range of“ “Ideally we want to take on thecomplete management of thepassive infrastructure, whileproviding the tower ownerwith sufficient information tomake the correct investmentdecisions based on their goalsand objectives
  • 111. different RMS solutions installed.Infrastructure Intelligence also providesindependent third party verification on sites withmore than one operator or where the operator isonly a tenant. This improves transparency when itcomes to SLAs and penalties.TowerXchange: What does InfrastructureIntelligence cost?Jannie van Rhyn, GM Infrastructure Intelligence,Inala: The business model for the InfrastructureIntelligence service is based on a per site permonth basis and the cost should be covered overtime by the lower maintenance costs and higheravailability. There is an implementation fee that isvery much dependent on the client, the maturityof its asset management environment includingsystems, people and processes. The more mature itis, the easier it is to implement our service. If veryfew processes exists, then we need to define andimplement that with the client which increases theimplementation fees.The cost of the service depends on the number ofsites, the location of the sites/network, the dataavailable from the client and the requirements ofthe client. For a typical network in say East Africaof 750 sites the implementation fee will be fromUS$50,000 to US$100,000.The monthly fee for such a network and the Level1 service will be from as little as US$30 per site permonth the Level 2 service from as little as US$100.For Level 2 service, where we take over the most ofthe maintenance management staff, the client willsave those costs immediately.TowerXchange: What are the practicalitiesaround implementing Intelligent Infrastructure?Jannie van Rhyn, GM Infrastructure Intelligence,Inala: The implementation of the service have verylittle impact on the clients current environment.Inala will, with the client, review the client’s currentrelevant systems and processes in order to definethe scope of the service. Together with the clientthe configurable parameters, rules, dashboards andreport layouts, access control, frequency of reportdelivery and the distribution lists are finalised anddocumented.The recommended location for the hosting of theAsset Information Management System (AIMS) isin the cloud to ensure quick and effective accessfor stakeholders, but it can also be hosted in anyenvironment specified by the client, if required.TowerXchange: Can Infrastructure Intelligencedeliver insights fast enough to be used as atool supporting the sale of tower assets, as I’dimagine the level of visibility and control overpassive assets could have a multiplying effect onthe valuation of tower portfolios?Jannie van Rhyn, GM Infrastructure Intelligence,Inala: If it is a new client, the speed at which wecan deliver insights to be used in due diligencefor a tower transaction depends what data theMNO has. Specifically, do they have an up to dateand complete asset register? If they don’t have acomplete asset register, Infrastructure Intelligencecan pull in data from RMS and from those variousorphaned databases that field engineers have ontheir laptops, and we can pull all of that into onedatabase. We can also physically survey sites usingmobile applications with barcode scanners anddigital check lists that can send the informationback to our central database, but of course thattakes more time.If the MNO is an existing Inala InfrastructureIntelligence client then the passive assetinformation and knowledge of the assets will beso much better and independent, giving you moreconfidence in the data presented to prospectivebuyers, leading to an improved valuationwww.towerxchange.com | TowerXchange Issue 3 | 113| TowerXchange Issue 3 | www.towerxchange.comXX“ “passive asset informationand knowledge of the assetswill be so much better andindependent, giving youmore confidence in the datapresented to prospectivebuyers, leading to an improvedvaluation
  • 112. How to measurewhat mattersBroadnet on the integration of RMS alarms into the NOC, and theimportance of IPMSAndy Richardson, VP Sales, Broadnet TelecomTowerXchange: What’s your footprint in Africa,and who are your target clients?Andy Richardson, VP Sales, Broadnet Telecom:We are active today in sub-Saharan Africa. Forthe last eighteen months we’ve been workingwith a number of Africa’s leading operators toprove our technology proposition. We are underNDA, therefore, the specifics are somewhatguarded, although we’re very close to securing twosignificant opportunities.Broadnet’s solution is designed by Africans for theAfrican market, at a price point that makes it veryappealing. Two thirds of our RD team are fromCameroon, Egypt, Algeria, Nigeria and South Africa.These individuals offer the best possible insight intothe needs of the African continent. The reality isthat we understand better than most the challengesof operating wireless solutions in the emergingmarkets. Therefore, we have taken a differentapproach: one we will teach the client how to makethe solution work in challenging environments, twowe will give some ideas of how they can mine the“big data” and present the analytics in a meaningfulmanner and three we enable the client to be moreefficient.Our solution has been designed for the co-location/ tower operator market. We have been verydeliberate in the way we have engineered ourSiteOSS solution.Many African MNOs and tower operators haveor will be acquiring intelligent solutions to moreRead this article to learn: How smart, SNMP enabled devices significantly reduce installation costs How RMS data is integrated with “manager of manager” platforms Mining “big data” to present meaningful analytics and support efficient resource utilisation The importance of keeping RMS simple and focusing on IPMSBroadnet Telecom fit at the centre of everything that a toweroperator would need from a site management vendor. Broadnetprovides passive infrastructure and remote management,monitoring and control, enabling: hybrid power management,smart metering (kWh utilisation) and billing validation,verification of fuel usage, workforce automation, and SLAmanagement linked to trouble ticketing module thereby allowingtower owners to manage their subcontractors and link theirperformance directly to SLAs. Andy Richardson a veteran of theAfrican Telecoms Industry. Well known as a WiMAX pioneerand more recently the architect of Kentrox’s success in the towermarket, he’s now spear-heading Broadnet Telecom’s foray intoAfrica.Keywords: Who’s Who, Monitoring and Management,Installation, NOC, RMS, Rectifiers, Site ManagementSystem, Asset Lifecycle Platform, Job Ticketing, Spare Parts,Infrastructure Sharing, Africa, Broadnet Telecomwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com114
  • 113. efficiently manage their remote infrastructureassets, motivated by the desire for increasedproductivity and containment of costs, which isimpacted by: covering large distances with under-developed road networks, seasonal weather,crime, low policing, escalating fuel costs, andintermittent RF propagation and coverage allthrowing up significant challenges which permitremote management, monitoring and control to addsignificant and tangible value.TowerXchange: How do you configure an RMSsystem to overcome those African challenges,and to meet the differing needs of each site?Andy Richardson, VP Sales, Broadnet Telecom:There are three critical components: SiteOSSsoftware, the remote unit and the people.In many of the locations where legacy devices areinstalled, it’s vital to have a controller that can hookup serial and analogue devices, send informationto the NOC, and present it in a meaningful thoughsimple graphical format allowing management tomake informed decisions that maximise networkuptime by pre-emptively determining where theremay be a potential issue.If the site devices are intelligent SNMP enabledunits then there’s minimum configuration required,thus, reducing the installation time. The biggest costis often getting to the site.For those sites needing to wire up lots of third partyequipment our product has a considerable amountof smart functionality built into the installationprocess, without compromising quality, whichmeans we don’t need to rely on highly qualifiedengineers.As many have discovered maintaining networkuptime is a huge challenge in Africa, regardlessof whether the site is on-grid, off-grid or on anunreliable grid that might only be available forlimited periods. Bandwidth limitations can maketroubleshooting extremely difficult and in somecases undermine the value proposition, so pushingopex off the scale, even though raw materialsand labour maybe cheaper. However, we havecompleted major advancements in our solution thathave made remote management, monitoring andcontrol more efficient and effective.TowerXchange: Tell us about the communicationbetween devices at sites and the NOC.Andy Richardson, VP Sales, Broadnet Telecom:In essence, the site controller gathers andstores information from each monitored asset,communicating back to the NOC at intervals pre-determined by the client – whilst being sensitive tothe critical market conditions. Communication canbe by Ethernet, GPRS, SMS or GSM.TowerXchange: Tell how RMS data is integratedinto the different software systems at the NOC.Andy Richardson, VP Sales, Broadnet Telecom: Atthe NOC we’ll feed data into SiteOSS software, whichcan communicate through an integration layer witha “manager of managers” system, such as NetBoss,NetCracker, Netcool or Openview. For example,we have our system which monitors a number ofdifferent devices, performs thresholding and finallygenerates alerts or alarms which are forwarded tothe next level of the management system, whichthen takes those alerts or alarms, aggregates themfurther to send a more concise status report up tothe next level. The integration layer or “northboundinterface” is simply an interface over which thesystem can generate or report its output “north” tothe next layer, typically a “manager of managers”platform.TowerXchange: How do you present the RMSdata to allow management to derive actionableanalytics?Andy Richardson, VP Sales, Broadnet Telecom: Thesystem interface presents data either as statisticalfigures, or graphical representation options suchwww.towerxchange.com | TowerXchange Issue 3 | 115| TowerXchange Issue 3 | www.towerxchange.comXX“ “maintaining network uptime is ahuge challenge in Africa, regardlessof whether the site is on-grid, off-grid or on an unreliable grid thatmight only be available for limitedperiods
  • 114. as line charts, bar charts and pie charts. For toweroperators with a large portfolio of sites withdiffering levels of sophistication and multipletenants, capturing site information in nearer realtime using a fully integrated asset registry willensure efficient resource utilisation.TowerXchange: What differentiates Broadnet’ssolutions from your competitors?Andy Richardson, VP Sales, Broadnet Telecom:Broadnet Telecom is an RF company. The companyheritage dates back to Harris Farion; RF engineeringand manufacturing. We fulfill a lot of work forleading Microwave OEM’s, and that gives us anadvantage in understanding RF communicationsand in maintaining wireless connectivity. We bringtogether hardware, software, connectivity andmachines.Furthermore, we consider our core competenciesas absolutely vital to the co-location providersachieving their immediate business objectives andmaintaining their long term competitiveness. So,whether that’s a services organisation to accomplishbackhaul dimensioning, network optimisation,network design, engineering services; or theyneed operation and maintenance activities suchas asset management, reverse logistics, remotesite management, hybrid power managementand utility verification or back-office troubleticketing and work force automation, we are oneof a few companies who can make all this happen.Combining hardware, software and wirelessservices in a unique business model that appeals tothe operators we’re speaking to in Africa.The convergence of the tower operators inAfrica, the advancements in remote managementtechnology and the change of customer businessmodels, provides us with an opportunity todemonstrate our differentiated service deliverycapabilities with integrated tools and processes thatenable operational productivity and transparency.In my opinion, RMS should focus on three criticalaspects; intelligent rectifiers, batteries andgenerators, categorised as an Integrated PowerManagement Solution (IPMS). If you can costeffectively crack IPMS you’ll have solved the secretto long-term success in passive infrastructuremanagement. Everything else is noisewww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com116“ “RMS should focus on three criticalaspects; intelligent rectifiers,batteries and generators, categorisedas an Integrated Power ManagementSolution (IPMS).... Everything else isnoiseMonitoring management system architectureUser GroupsUsers Interface - Dashboard - ReportsAsset LifestyleManagementWorforceManagementTroubleTicketingMgmtPreventiveMaintainanceFault PerformanceMonitoringEnergyManagementSecurity/SurveillancePolling EngineBandwidthManagementRouting EngineNOC PlatformControllerRemote Site SNMPDevicesSETApplicationsProcessesGETRules andThresholdsScripting Engine
  • 115. Special feature:With the commoditisation of solar technologiesand the falling cost of PV panels, solar power nowoffers the sub-24 month RoI that tower operatorscrave. With many network extensions beyond thereach of the grid, and many countries in Africasuffering from unreliable grid power, part twoof TowerXchange’s TowerPower special featureprofiles three innovative solar energy companies:Flexenclosure, Apollo Solar and SolarBK.We start this special feature with a report fromthe Energy + Mobile for Development seminarat Mobile World Congress, where Bharti Infratel,Fenix International, M-KOPA, OMC Power andVodafone all shared insights into their communitypower initiatives.TowerPower –reducing Africa’sreliance on diesel,part twoFeaturing five insightful articles:118 Power beyond the tower122 Flexenclosure declare the dawn of thegreen energy era126 Why you should re-think charging yourbatteries with a DG129 Achieving desired autonomywww.towerxchange.com | TowerXchange Issue 3 | 117| TowerXchange Issue 3 | www.towerxchange.comXX
  • 116. Power beyond the towerHow RESCO entrepreneurs are empowering Mobile EnabledCommunities© OMC Power“The mobile industry has built three million towersworldwide – including one of the largest off-gridenergy developments the world has even seen,”said Chris Locke, Managing Director of the GSMA’sMobile for Development Group, opening the Energy+ Mobile for Development session at Mobile WorldCongress, and inaugurating the GSMA’s new MobileEnabled Community Services programme.Locke continued: “The mobile industry enables over500m off grid mobile connections. Many of thoseconnections are in Africa, the biggest and fastestgrowing mobile market in the world. As we knowwhen we travel to emerging markets, mobiles arecharged chaotically and expensively. The MobileEnabled Community Services programme has beenstarted to look at how energy at base stations can beused to provide power to the communities aroundthem,” concluded the GSMA’s Locke.TowerXchange attended this packed seminar, whichwas moderated by José María Figueres, formerPresident of Costa Rica and President of the CarbonWar Room. Figueres challenged participants inthe seminar to look beyond the horizon to engagewith two fundemental challenges facing humanity– connecting and empowering the next two billionmobile subscribers, and winning the war on carbonemissions.“Mobile is strategically situated to help us win bothwars and move the envelope on both challenges– mobile is a tremendous enabler,” said Figueres.“We’ve got to take Mobile for Development out ofCorporate Social Responsibility and into strategyRead this article to learn: The extension of Bharti Infratel’s P7 Energy program from 1,200 sites to almost 5,000, and how theypilot and scale RESCO innovations The role of telecom towers as anchor tenants in Community Power initiatives, and of MNOs as keydistribution partners The opportunity to “spend shift” household expenditure on kerosene, which often exceeds expenditureon airtime, to distributed energy and battery boxes How Vodafone reduced opex by 61.4% at a cell site while providing power to a community in Kwazulu NatalIs provision of community power services a CSRexercise to generate brand warmth, or is there acommercially viable business model extensionhere for MNOs, tower operators and RESCOpartners? TowerXchange reports from the Energy+ Mobile for Development session at MobileWorld Congress, where Bharti Infratel, Vodafone,OMC Power and Fenix International sharedtheir experiences deploying community powersolutions in rural India and Africa.Keywords: Beyond Passive Infrastructure, OpexReduction, Batteries, Anchor Tenant, Off-grid,ESCOs, Hybrid Power, Renewables, Solar, NextBillion, Microgeneration, Community Power, Africa,Asia, India, Kenya, South Africa, GSMA, Carbon WarRoom, Bharti Infratel, OMC Power, Vodafone, FenixInternational, M-KOPAwww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com118?
  • 117. departments, developing proper business modelsthat make sense for the CFO because they enablemedium to long-term growth and sustainability.”Bharti Infratel re-engineer tower power toachieve renewable energy targetsDS Rawat, CEO of Bharti Infratel took up thedialogue, explaining that meeting exacting uptimetargets in the service level agreements withtenants on Bharti Infratel’s 80,000 towers meant adependence on backup diesel generators. Yet withdiesel costs rising 10-15% per year and the cost ofsolar panels falling, there was an enthusiasm toexplore renewable energy alternatives.Rawat explained that Bharti Infratel had progressedfrom the early days of the tower business, whenenergy costs were passed through to operatortenants. Under their P7 Energy Program, BhartiInfratel have installed 1,200 solar powered sites,and are looking at a further 3,500 4kW solar sites.They have also invested in a further 6,000 sites withIPMS, free cooling systems and variable speed DC/DG.  The P7 Energy Program has reduced BhartiInfratel’s carbon footprint by tens of thousands ofmetric tonnes per year, and helped India’s operatorswith their efforts to achieve the regulator’s target ofa 5% reduction in their carbon footprint.Infratel see Renewable Energy Service Companies(RESCOs) as critical business partners. “Infratel’score strength is bringing together more sharingoperators, making the package cheaper anddelivering economies of scale. RESCO’s corestrength is energy; bringing the benefit of scale,lower costs, and the ability to attract better talent.So we scan the horizon for RESCO innovations withsustainable business models that make economicsense.”Rawat talked of a process where Infratel trialRESCO innovations initially on five to ten sitesthen, if successful, scale up to fifty sites to test theecosystem, before rolling out energy innovations onall sites that meet their criteria.www.towerxchange.com | TowerXchange Issue 3 | 119| TowerXchange Issue 3 | www.towerxchange.comXX9.9%Rawat concluded by highlighting their workwith partners OMC in sharing power with localcommunities, handing over to OMC Power CEO AnilRaj.RESCO and community power pioneer OMCPower explain “spend shifting”CEO Anil Raj described OMC Power as “a pureplaypowerco with close links to telecom industry.”OMC’s business model is to build a power plant,© OMC Power
  • 118. www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com120with a preference for renewable energy sources,use two to four telecom towers as anchor tenants,and provide energy to the local community.Raj enthused that there was a misconception aboutso-called ‘bottom of the pyramid’ markets, andexplained that there is another pyramid at thebottom of the pyramid. “Rural societies are nothomogenous societies, there are sustenance farmersliving off US$2 per day but there are also successfulland owners with hundreds of acres. Providingpower in rural emerging markets is not scrapingbottom of a barrel, it’s serving a prosperoussegment of society deprived of energy and the hugeopportunities that energy offers.”Raj introduced the concept of “spend shifting;”shifting households from dependence on fossil fuelsuch as kerosene for lamps, to distributed energy.OMC started with charging cellphones, progressingto the provision of illumination and cooling, takingtheir customers on a journey of energy access thatmight culminate in provision of domestic televisionsor industrial water pumps.For Community Power initiatives like OMC’s towork, distribution is everything. OMC use a homedelivery system to deliver lanterns to customers’doorstep.OMC have targeted using renewablemicrogeneration to power 3,500 telecom towers andtwo million homes in 2,000 communities by 2015.How Vodafone provide power for a schooland a water pump in Kwazulu Natal whilereducing opex by 61.4%Joe Griffin, Group Environmental Manager atVodafone explained that the network generated80% of Vodafone emissions, and that 16% of theenergy that Vodafone buys came from green energy,hence the imperative to accelerate the deploymentof low carbon technologies.Griffin presented a case study of one of Vodafone’spilot sites in Emfihlweni, a small community inKwazulu Natal, South Africa, where an extensivecommunity consultation was carried out in order tounderstand real needs. Vodafone found that if theywanted to provide energy to the local school, ratherthan increasing footprint of base station, it wouldbe better if the school housed solar foil on theirroof. This 14kW (100m2) solar foil replaced thediesel power source for the local base station, whileexcess energy was used by the school for lightingand power, and by a water pump which improvedsanitation for the school and drove fresh drinkingwater to the community.Griffin emphasised that the model worked in thisinstance because it wasn’t a purely philanthropicexercise – the business case was sound. Dieselcosts and CO2 emissions were reduced by 90%, andmaintenance costs fell by 24%, cutting total opex atthe site by 61.4%.A snapshot of energy access across Vodafone OpCos in 2011Vodafone operating companyDRC 59 89%Tanzania 38 86%Kenya 33 84%Other SSA 310 68%Worldwide 1,317 19%India 289 25%Population without access to modernelectricity services (millions)Share of population“ “Diesel costs and CO2emissions were reduced by90%, and maintenance costsfell by 24%, cutting total opexat the site by 61.4%
  • 119. www.towerxchange.com | TowerXchange Issue 3 | 121| TowerXchange Issue 3 | www.towerxchange.comXXBattery boxesMike Lin, CEO at Fenix International, was workingon the US$100 laptop when he realised solving thedilemma off grid mobile phones being chargedfrom diesel generators and car batteries mightbe a more immediate opportunity. One in fiftyrural businesses in Africa are focused on mobilecharging! This inspired Lin to create the “ReadySet”solar powered phone charger which for aroundUS$150-200 can charge six to eight phones per dayat around 25 to 50 USD cents per charge, generatingincome for a mobile charging entrepreneur ofaround US$40 per month.Fenix leverages sales, marketing and distributionpartnerships with MTN in Uganda and Rwandaand with Vodafone in Tanzania. Using Uganda asan example, Lin explained that with 90% of the 35million population off grid, there were some 500,000entrepreneurs who could become “microutilities” –rolling up to a US$70 million addressable market inUganda alone. Fenix has sold 2,000 units to date.Another battery box, Jesse Moore’s M-KOPAleverages the M-PESA payment infrastructure inKenya to distribute and collect income from hisUS$200 solar system. Six million households inKenya are reliant on kerosene, spending US$ cent60-65 per day on kerosene lamps and mobile phonecharging – that’s an annual bill of US$200-250,significantly more than those households spendon airtime! M-KOPA replaces kerosene lamps withmodified “d.light” solar lanterns with embeddedSIM cards, to remotely meter and collect credits.Moore’s feeling is that the off-grid African consumerdoesn’t want cheap solutions as much as they wanthigh quality, risk-free, affordable systems withsuperior build quality. Those same qualities enableM-KOPA to partner with Safaricom, both for thesame distribution network that Fenix craved, andfor access to critical credit profiles, GIS and usagedata that extend the longevity of the product. Todate, M-KOPA has secured points of sale at 400 ofthe 50,000+ M-PESA agents.M-KOPA and Fenix both demonstrate the uniquealignment of mobile distribution networks andbrands with the community power opportunity.Community power opens up another revenuestream for airtime and mobile money dealers, andleverages the trust consumers intrinsically builtfrom that first digital good, airtime, and the trustthey have in services like M-PESABattery boxes versus microgrids“When energy needs are moderate and canbe met with a battery box then I think wecan work without microgrids,” suggestedOMC’s Raj. “Microgrids are expensive,regulated, and require complicatedrights of way. Using energy boxes, we canprovide energy today. In the long term,when energy needs of rural households gobeyond what battery power can provide,then we’ll provide microgrid solutions.”If you’d like to recommend a companyto be profiled in TowerXchange’sTowerPower special feature, pleasecontact kosmotherly@towerxchange.com. We are generally interested incompanies who have installed at least100 hybrid power sites and/or 1,000DGs in Africa.Index of TowerPower profiles in TowerXchangeApollo SolarClean PowerELTEKFlexenclosureOrun EnergyPowerOasisSolar BKIssue 3, pages 126-128Issue 2, pages 61-64Issue 2, pages 57-60Issue 3, pages 122-125Issue 2, pages 65-68Issue 2, pages 53-56Issue 3, pages 129-130Visit www.towerxchange.com to download any issue of the journal.Download options can be found on the main navigation under‘publications’.Alternatively, the TowerXchange website has an in-build search baron the homepage - simply key in the company you wish to view andall the related articles will be found. There is also an archive andcatagory section in the sidebar on any page.
  • 120. The dawn of the greenenergy eraRoI in less than two years means energy efficient power solutionswith or without renewable energy are now the most affordable way topower many off grid and unreliable grid cell sitesAnn Louise Johansson, VP Strategy, Flexenclosure David King, CEO, FlexenclosureTowerXchange: Where do Flexenclosure fit in thetelecoms infrastructure ecosystem?David King, CEO, Flexenclosure: Flexenclosureprovides eSite, a hybrid power system for off-gridand unreliable grid cell sites that enables mobilenetwork operators or tower companies to makeradical reductions in diesel costs. We use ourpatented control system Diriflex to manage a uniquecharging strategy designed to maximise batterylife and minimise genset runtime. We’ve reduceddiesel consumption by 80- 90%, while still keepingpayback to less than 2 years.TowerXchange: What has been Flexenclosure’sexperience in Africa?David King, CEO, Flexenclosure: We have installedaround 460 sites, of which 252 are in Nigeria, 52 inChad, 95 in Tanzania, and 14 in Ghana.Ann Louise Johansson, VP Strategy, Flexenclosure:Our eSite solution has achieved good results frominstallations in Sudan, South Sudan, Nigeria, Ghana,Kenya, Tanzania, Madagascar and Chad. We’veinstalled sites in some of the harshest environmentsin Africa. Most of these have been upgrades toexisting sites and they have included solar power.One of our biggest deployments is with AirtelNigeria.In addition we build and deploy eCentre, a pre-fabricated, pre-equipped, modular data centre. In2001 in Nigeria we installed our first eCentre, andsince then we have deployed more than 6,000 m2Read this article to learn: Why advances in energy technology can give tower companies radically improved opex for off-grid andunreliable grid cell sites How it is possible to take a modular approach to the installation of hybrid energy at shared sites enabling easyexpansion as the number of tenants increases How to install the intelligence needed to separately bill tenants for energy consumed How to reduce site visits by slashing DG runtime and reducing scheduled maintenance to a single annual visit Why the telecom industry should dimension remote cell sites with capacity for Community PowerThe economics of cell site energy are changing – for thebetter. Where the energy opex at a single cell site once hadto cost upwards of US$40,000 a year, now the increasedefficiency of power solutions and the falling costs ofrenewable energy sources offers an opportunity to reduceenergy opex by 80-90%, and to cut scheduled maintenanceto a single annual visit. To learn more, TowerXchangespoke to David King and Ann Louise Johansson atFlexenclosure, who specialise in green, fully integratedand optimised power systems for cell sites – not only forthe sake of the environment, but because their productsprove that switching to green energy is an incrediblyefficient way to cut opex.Keywords: Opex Reduction, Renewables, Hybrid, Off-Grid, Unreliable Grid, DG Runtime, ESCOs, Retrofit,Solar, Wind, Capex, RoI, Upgrading Power for Multiple Tenants, KPIs, RMS, Maintenance, ChangeManagement, Community Power, Infrastructure Sharing, Africa,  Airtel, Flexenclosurewww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com122
  • 121. of eCentre data centre facilities there and in othercountries such as Ghana and Sudan.TowerXchange: Do you see Flexenclosure as apure product provider or an ESCO?Ann Louise Johansson, VP Strategy, Flexenclosure:Flexenclosure is a product company. We offer acomplete system, including batteries, electronics,cabinet, control and management systems. Furtheroptions include solar panels, cooling systems, gridmanager and multi-tenant capability. We’re not anESCO. We focus on providing solutions that managepower in the most economical way with or withoutrenewables. We are happy to work together withESCOs to serve both Tower Companies and MNOs asappropriate.TowerXchange: What’s been the balance betweeninstalling just CDC batteries, solar and windpower at the cell sites you’ve retrofitting androlled out in Africa?Ann Louise Johansson, VP Strategy, Flexenclosure:So far almost all of our sites in Africa have includedrenewable power sources. MNOs in Africa havebeen keen to try renewable energy and most of ourwork has been on upgrades to solar hybrid ratherthan greenfield sites, where wind power mightbe a more viable option. The falling cost of solarpanels and commoditisation of solar equipment hassupported this trend. Wind power is a less maturemarket. We can get a lot of power out of wind, andhave a 6kW wind turbine but it is currently morechallenging to introduce.eSite provides a great economic solution eitherwith or without renewable energy. The addition ofrenewable power increases the cumulative savingsfrom an eSite but also stretches the pay-back time.So inclusion of renewables really depends on ourcustomers’ preferences and financial time horizons.What is important is flexibility. We take a modularapproach, starting with an energy efficient systembuilt around an intelligent controller, Diriflex, andbatteries. Renewable energy sources can always beadded at a later stage.TowerXchange: How do the requirements ofmulti-tenant towercos compare to those of singletenant MNOs?David King, CEO, Flexenclosure: One markeddifference between the towercos and the MNOsis the priority and focus on site profitability.Towercos are taking a more proactive approachto improving site economics. The other maindifference is that towercos require a flexible systemthat can grow with the addition of tenants and copewith the additional load. It is with this in mind thatwe have developed our eSite k6, which can hostup to four tenants. In a typical scenario, a towercostarts with a relatively low load, single to two tenantenvironment. The savings achieved mean thatinvestment in the eSite is paid off in 18-24 months.As the load increases and additional tenants areadded, the towercos just need to add additionalbatteries when required.The eSite k6 includes a bigger cabinet with capacityto add strings of batteries and multi-tenantfunctionality such as metering and independentdisconnection.We have a bold vision of the African tower industry.For towercos it’s currently a land-grab of sites, butthen it’s all about site profitability, and we’re prettycertain we’ve got the best product on the market tosupport them.www.towerxchange.com | TowerXchange Issue 3 | 123| TowerXchange Issue 3 | www.towerxchange.comXXeSite – a super hybrid system
  • 122. Ann Louise Johansson, VP Strategy, Flexenclosure:Scalability and multi-tenant handling are key totowercos. Towercos will likely start with a singletenant on a tower, which means they’re faced withhigh costs relative to lease income, so it’s crucial toimplement an efficient and modular power solutionto minimise energy opex from day one. Theinvestment for multi-tenant functionality, additionalbatteries and possibly solar components can beadded in a modular fashion as additional tenantsare added.Flexenclosure’s bundles eManager, a powermanagement and optimisation system togetherwith eSite. eManager is used by towercos to ensureoptimised performance over a whole network.eManager is not just a monitoring system, it is usedas an energy data warehouse, for alarm handling,to track energy cost KPIs, to conduct detailed poweranalysis, to manage diesel consumption logistics, forasset management, and also to remotely monitorand trouble shoot sites. Some problems can besolved remotely but if not at least they can identifythe problem and bring the right tools.Flexenclosure provides an intelligent tool enablingtowercos to control, measure and bill separatelyfor the energy consumption of each tenant. To date,the model of towercos selling power to tenants on akWh basis is not being widely used, but the tools arethere for towercos to change their model.For MNOs and towercos alike, Flexenclosureenables the optimisation of the network from anenergy perspective. This can make a huge differenceto our customers to be able to see what’s going onat their sites. If we can improve performance by anextra 10% that could be US$4,000 of opex per site.Across a portfolio of 1,000 sites that’s US$4millionper year!TowerXchange: What typical capex is required tofit Flexenclosure’s solutions and what’s the RoI?Ann Louise Johansson, VP Strategy, Flexenclosure:When we’re building business cases, we’re alwayslooking for payback in less than two years. That canbe achieved on opex savings of 80-90% based ontypical opex of around US$40,000 per site per year.Based on that, you can work out what kind of capexis involved!Renewables have reached a price point where theymake sense for MNOs and towercos because theRoI payback is short enough, and the subsequentsavings can add up to many US$millions over thelifetime of the equipment and over hundreds ofsites.TowerXchange: What kind of maintenance opexsavings can be realised with hybrid energy?Ann Louise Johansson, VP Strategy, Flexenclosure:We enable MNOs and towercos to have maintenancecosts at a fraction of current costs. FromFlexenclosure’s perspective, it’s about reducingsite visits and cost of maintenance. Our remotemanagement and energy optimisation systemeManager is a standard part of eSite, so as soon asyou’ve commissioned and finalised a site you canlog in and see what’s happening at a site from theNOC.www.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com124eSite with a solar installation“ “the model of towercos sellingpower to tenants on a kWh basisis not being widely used, but thetools are there for towercos tochange their model
  • 123. Refuelling visits obviously drop dramatically withDG runtime reduced by 80-90%, and due to carefuldesign and a fully integrated system our equipmentrequires only a single annual maintenance visit.The business case for renewable energy has towork, so we’ve designed solutions as maintenancefree as they can be.TowerXchange: Is there a big changemanagement challenge – do you need newskills in the maintenance team if you installrenewables?Ann Louise Johansson, VP Strategy, Flexenclosure:Part of the eSite concept of a carefully designedand fully integrated system is that the solution iseasy to maintain, so operators wouldn’t requirespecialist skilled personnel. While they don’t neednew people, their people need to be trained so theyunderstand different ways of working and runninga site with energy efficient power solutions andrenewables. For example, cooling is a major partof any cell site energy solution, and our system hasbeen designed to run at quite a high temperature,but if people think it’s too hot they’ll open the door!TowerXchange: Looking beyond the cell siteat community power initiatives – what are thebenefits for the telecoms industry to supportrural electrification?Ann Louise Johansson, VP Strategy, Flexenclosure:Providing power will be the next revolution afterthe current mobile telephony revolution. Providingpower to rural communities will have a similarimpact in developing and changing lives.From the telecoms industry’s point of view,Community Power projects charge mobile phonebatteries, which means more minutes and datacan be consumed. At one of our Community Powerprojects there’s a parallel project to help a village todevelop sustainable business plans using the powerthat is now available. More productive businessesultimately means more need for communication.We need to dimension cell sites for additionalcommunity power in remote villages. It’schallenging to find the right business model tomeet small, localised power requirements asthey’re almost always more costly than largerwww.towerxchange.com | TowerXchange Issue 3 | 125| TowerXchange Issue 3 | www.towerxchange.comXXsites. Nonetheless, African governments should seemicrogeneration with telecoms (or agricultural)anchor tenants as legitimate alternatives toextending power grids.TowerXchange: Finally, how would you sum uphow Flexenclosure differentiate yourselves fromcompetitors?David King, CEO, Flexenclosure: Simply eSitedelivers the best sustained performance of anyhybrid energy system. That is, we provide thelowest diesel and energy related costs and the bestsite economy over a network of sites and for alonger period of time.In addition Flexenclosure is a great businesspartner. We’re small enough to be technicallyand financially flexible – nothing is off limits. Forexample, we’ll consider putting the equipment inplace and sharing savings, helping towercos findcapital by working with third party export creditfinanciers.Ann Louise Johansson, VP Strategy, Flexenclosure:We achieve the greatest energy savings and the bestprice:performance ratio. The way we achieve thisis through an integrated and optimised solutiondesign that is modular to fit the towercos businessmodel. We have an intelligent controller, Diriflex,network based power management and energyoptimisation using eManger, and remote supportand software maintenance. We deliver the mostfor your money, not just in the first six months butgoing forwardeSite k2 with solar option
  • 124. Why you should re-thinkcharging your batteries with adiesel generatorThe rocket scientists of solar apply their technology to reducing DGruntime to close to zeroTowerXchange: I’ve just listened to the CEO ofMTN and MD of Airtel Africa explain that thebiggest threat to the profitability of the Africantelecom business is the logistics, cost andscarcity of power – has solar technology evolvedto the point where it could be the solution?John Pfeifer, President and CEO, Apollo Solar: Weall know that the cost of diesel is going up. In sub-Saharan, Central, a Southern African countries thecurrent cost of diesel ranges from 80 US cents to US$1.80 per liter.  When we include maintenance anddelivery costs plus a factor for theft, we agree thatthe diesel generator solution should be avoided.Meanwhile, since 2007 the cost of installed solar hasdropped dramatically.  Solar power is now abouthalf the cost of diesel power, depending of courseon the local cost of the diesel fuel and of the capexfunding amortized to install the PV system.Any operator reliant on diesel has a real problem.And in Africa, that means all the operators havea real problem, as do towercos acquiring passiveinfrastructure assets.Apollo has identified a significant paradigmshift.  Based on the new much lower cost of solar,we advise our customers to avoid charging batterieswith a diesel generator.  The batteries themselvesrepresent about a 20% power loss over the charge-discharge round trip, so every dollar spent ondiesel burned then stored in a battery becomes 20%more expensive.  Just use the expensive diesel fuelfor power to the BTS directly and only when theweather makes solar power un-available.  Once theRead this article to learn: Why charging batteries from your DG wastes 20% of fuel opex How to compare the reliability and maintenance costs of high-quality solar hybrid solutions versusthe low-cost, ‘cheaper’ options How to easily upgrade modular solar hybrid cell sites to add tenants How an efficient MPPT Charge Controller extends battery life and saves even more opex The capex costs of installing power electronics, solar panels, and batteriesKeywords: Reducing Energy Opex, Cost of Diesel, Solar, Hybrid,Renewables, DG Runtime, Autonomy, Batteries, Uptime, SLA,Installation, RMS, Capex, Infrastructure Sharing, Africa, FranceTelecom-Orange, Camusat, Leadcom, Apollo Solarwww.towerxchange.com | TowerXchange Issue 2 | 69| TowerXchange Issue 3 | www.towerxchange.com126The Pfeifer family has been in the energy delivery business for threegenerations. John’s grandfather delivered coal, his father deliveredfuel oil, now John Pfeifer delivers sunshine! John is President andCEO of Apollo Solar, a designer and manufacturer of hybrid powerequipment, who in 2002 was asked by NASA to get more powerout of the solar panels and batteries on a high altitude balloonmission.  They were able to harvest 30% more power from the samesystem.  Apollo commercialized that solution and began deploymentof the technology to the global market in 2005.  The Apollo telecompower systems are now in their 3rd generation and installed on everycontinent with over 100 cell sites in Africa by way of an installationpartnership with Camusat. TowerXchange met John Pfeifer at theMobile World Congress in Barcelona to learn more…John Pfeifer, CEO, Apollo Solar
  • 125. PV system is installed, the sunshine is free.  Use it tocharge the batteries.The smarter and higher-ROI solution for off-gridbase stations is to operate on 100% solar, withenough PV and battery capacity for just over oneday of autonomy.  When you need additional daysof autonomy, add a small generator just to powerthe telecom equipment, rather than doubling ortrebling solar panels or batteries.  There’s a sweetspot in the calculation of capex and opex whereyou’ve minimized cost of diesel – DG runtime mightbe reduced to just a few hours per month dependingon the weather – essentially just what is required tomaintain service on extremely dark days.  Of courseevery site is different and local parameters must becarefully analyzed to optimize the design for eachspecific site.TowerXchange: Service level agreementsoften demand 99.5% uptime – tell us about thereliability of solar.John Pfeifer, President and CEO, Apollo Solar: Solaris certainly much more reliable and maintenance-free than a generator of any description, butthe electronics used to be the weakest part ofsolar power system.  If you want to damageelectronics, heat it up, or if that doesn’t destroy it,subject it to repeated temperature cycles.  Solaris the application from hell for electronics!  Theelectronics are subjected to the heat of the Africansun during the day, and turned off at night whenthe ambient temperature is lowest. That type of heatand temperature cycling still won’t break Apollosystems, but it will break a lot of the low-cost solarsolutions that are now available the market, and thelogistical costs of replacing a US$2 electronics partwhen it might take days to reach the site will wipeout any capex savings pretty fast!Apollo Solar’s charge controller was the only systemto pass the US Army field test – they dragged itaround behind a humvee over a bumpy track for2000 km and then baked it in an oven but theycouldn’t break it. The military rated DG wouldn’tstart because it thought it was already over-heated,but the Apollo system continued to charge thebattery.  Our equipment has been field tested bythe US Army and Navy in temperature extremes,and it keeps working.  Because we design all thehardware, develop our own software and assemblethe telecom cabinets, we can provide standardfive year warranties, extensions to ten years, andan SLA for the complete system, giving clients thereliability and operations security of a single pointof responsibility.TowerXchange: Procurement executives, CTOsand COOs at operators and towercos want toknow that the equipment they’re consideringinstalling is battle-hardened in Africa. What’sApollo’s installed base in Africa?John Pfeifer, President and CEO, Apollo Solar: Wehave a partnership with Camusat to deploy Apollowww.towerxchange.com | TowerXchange Issue 3 | 127| TowerXchange Issue 2 | www.towerxchange.com70Apollo-Camusat Installation in Madagascar
  • 126. www.towerxchange.com | TowerXchange Issue 2 | 69| TowerXchange Issue 3 | www.towerxchange.com128Solar sites for France Telecom-Orange.Camusat has installed over 100 Apollo Solar units inAfrica including in Madagascar, Egypt, Mali, CentralAfrican Republic and Kenya. Our equipment hasalso been installed in the US, Canada, Mexico, Peruand Chile – the latter installed by Leadcom.Our first units were deployed in 2005, so they’rebattle-hardened. We’ve taken the lumps, learnedsome lessons – this is our third generation system.TowerXchange: Do you need a rocket scientistfield engineer to install your kit?John Pfeifer, President and CEO, Apollo Solar: Weoffer an Apollo person onsite for commissioning.But we supply an IP66 sealed electronics enclosure– the only requirement at installation is to bring inwires from PV array, battery and load, and maybeinclude optional alarms (for site security). Theelectronic cabinets are all factory programmed, pre-wired and tested, so limited engineering expertise isrequired. Getting the modem to work with the localtelco tends to be the most complicated part of theprocess, as it has to be configured with a SIM card totalk on the network.As for overcoming the logistics of getting equipmentto remote cell sites, that’s why we partner withCamusat as they have earned a reputation for doing“whatever it takes to get it done” (see the Camusatprofile on pages 96-99 of issue 2 of TowerXchange).TowerXchange: How can you upgrade the systemto provide power for multiple tenants?John Pfeifer, President and CEO, Apollo Solar: Weoffer the cabinet in sizes from 4.2 to 33.6kW PVpower. That means we can cover any telco DC loadrequirement from 500-4000W and have some powerleft over to charge mobile phones or provide somelocal lighting or refrigeration.The largest tower owners in the world commonlyuse 4kW to 8kW of PV per base station. The Apollooutdoor cabinet has slots for four times 4kW of PV,supporting up to 16kw of PV. The cabinet can beinstalled with one 4kW Charge Controller and morecan be added as more tenants sign up.Upgrading for additional tenants is modular andsimple - putting in an extra charge controllerrequires pushing a couple of buttons, supported byour guys who can be on the phone 24/7.TowerXchange: What is unique about ApolloSolar’s charge controller?John Pfeifer, President and CEO, Apollo Solar: Anyrechargeable battery is only as good as the chargingelectronics. Our charge controller runs at 98% orbetter efficiency. Some of our best competitors runat 96.5%. Each of our T80HVs is able to deliver 80amps at ambient temperatures up to 45°C, which isthe highest temperature and highest battery currentoutput of any charge controller in our market.To extend the life of the battery, it is important tocharge the system quickly and accurately and avoidovercharge. We know how to protect the batterylife and prioritize that objective because batteriesare an extremely large cost of remote cell sites.The Apollo System also has integral, near real-timeremote monitoring – it’s updated every six secondswhere some of our competitors update every hour.Our robust RMS monitors system access and PVtheft, with alarm alerts to the NOC. The solar-hybridsystems also monitor all the essential details of thecoupled generator.TowerXchange: Tell us about the capital outlayrequired.John Pfeifer, President and CEO, Apollo Solar: Thecost of solar panels has plummeted to 60-70 UScents per watt. Our electronics cabinets start at $1per watt, and we can do better than that in volume.The rest of the capex costs are related to installationlogistics and the choice of batteries so the estimatesare based on the site locale and battery marketpricesApollo Solar cabinet
  • 127. Achieving desiredautonomyInnovative Vietnamese manufacturer and system integrator leveragesmicrogrids, renewable energy and deep lifecycle batteries to delivermore days of autonomous power and extend asset lifecyclesNguyen Tuy Anh, Solar BKTowerXchange: Thanks for speaking to ustoday. Where do Solar BK fit into the passiveinfrastructure ecosystem?Nguyen Tuy Anh, Partner, Business Development,Solar BK: Solar BK is based in Ho Chi Minh City,Vietnam. We design alternative power supplysolutions, including solar, wind and DG completeenergy systems. Our solutions are derived fromthe Research Center for Thermal Equipment andRenewable Energy (RECTERE) in the Ho Chi MinhCity University Technology RD Centre, and webecame a registered company in Vietnam in 2007serving renewable energy Vietnam, Laos, Cambodiaand Burma to telecoms and other industries.Solar was expensive five years ago, but the industryhas changed, and we’ve been able to bring costsdown by localising a lot of material.We’re interested in the African market. There’s lotsof potential for alternative power suppliers andwe’re finalising a deal with a local agent.We’ve installed 20MW of alternative energysolutions in Vietnam; primarily wind and solarsystems on our islands. Inland Vietnam has highpenetration of electricity, but our islands are highlydependent on expensive diesel, and delivery isexpensive, so the environment is similar to someparts of Africa. We’ve also completed off-gridprojects in Myanmar and Cambodia, where there’slower electricity penetration.TowerXchange: Please tell us some of yourclients and project experience?Read this article to learn: Designing, supplying and installing alternative hybrid power supply to provide power to isolatedislands and off-grid and unstable grid remote areas How to choose the right combination of DC hybrid Generator set, solar and wind to achieve thedesired level of autonomy How to leverage outdoor solutions and active cooling to keep the energy footprint of cell sites downto 2kW and minimise TCO Choosing the right batteries to extend the lifecycle of your assets Comparing the performance life of solar versus diesel generatorsTowerXchange continues our tour of some of theworld’s most interesting TowerPower solutions byspeaking with Solar BK, who have installed award-winning microgrids on some of Vietnam’s isolatedislands, and who are now seeking to apply similartechnologies in Africa.Keywords: Who’s Who, Interview, Energy, Batteries,Outdoor Equipment, Air Conditioning, Off-grid, Hybridpower, Renewables, Solar, Wind, Microgeneration,Community power, Asia, Africa, VNTower, Solar BKwww.towerxchange.com | TowerXchange Issue 3 | 129| TowerXchange Issue 3 | www.towerxchange.comXX
  • 128. Nguyen Tuy Anh, Partner, Business Development,Solar BK: We won a Global Energy Award for ourwork designing, delivering and installing off gridalternative power supply on some of the isolatedislands in South East Asia. There was an urgentneed to supply power to the Navy and to theseislands, which can take weeks to reach, and whichhad no grid power previously. We installed 10MWof solar and wind energy systems in 6 months, andViettel – a leading mobile operator in Vietnam -connected to our installed hybrid wind and solarsystem.The choice of renewable energy solution dependson site load and climactic conditions. Noteverywhere works for wind energy, so we needa good survey to get information about a site. Forexample, Kenya, Uganda, Rwanda and Ethiopia allhave good solar conditions, but there may not beadequate wind available. A full hybrid could haveany combination of energy sources, such as 70%solar, 20% wind, 10% genset; much depends on howmany days autonomy are desired.TowerXchange: What is Solar BK’s interest inAfrica?Nguyen Tuy Anh, Partner, Business Development,Solar BK: We’ve been talking about all 54 countriesin Africa, but their requirements vary significantly.Some are very developed, such as South Africa,Egypt and Algeria. Others have a very unstable grid,with mobile penetration still low, lots of room forgrowth, and the potential for more licenses to beissued.We’ve noted the trend to transfer assets from MNOsto towercos. Towercos need focused solutions foroff-grid and unstable grids, and our DC solar hybridwith monitoring system is the right product withthe right design to reduce Total Cost of Ownership(TCO). We’re able to leverage outdoor solutions andactive cooling to keep the energy footprint down to2kW.It’s critical to choose the right product for themarket. A good battery backup, lead-acid for goodgrid sites or deep cycle batteries for unreliablegrids, extends the lifecycle of your assets. Choosingthe wrong battery can mean opex costs exceedcapex savings, and if you need to change batteriesevery six months, you risk downtime.In combination with VNTower (see pages xx-xx)we’re able to offer a total site solution includingthe tower, power supply, civil work and projectmanagement. The investment will be less thanbuying each component separately, while a readymade complete solution also saves time – and timeto market is money!TowerXchange: How do you design a site tofuture-proof for upgrade to battery hybrid oreventually renewable energy?Nguyen Tuy Anh, Partner, Business Development,Solar BK: The operator or towerco needs to makethe right business case for each site. I don’t believeevery site should be a hybrid. In cities, toweroperators will use the grid. Tower operators willchoose the right hybrid solutions for off-grid sitesbased on the TCO, taking into account opex suchas the local fuel delivery costs, and capex, such asthe fact that the performance life of solar can befifteen years, while you may have to change the DGevery three years. So renewables often won’t befeasible if you only look at a three to four year TCO.For example, in Cambodia Viettel calculated an RoIpayback on hybrid energy in three to four years.The capex per site is hard to estimate – muchdepends on site load. Old generation BTS’s consume3kW. New 1kW base station technology fromEricsson and Huawei makes the hybrid businesscase more feasible. Capex ranges between US$30-100k depending on load.TowerXchange: What are the safety and qualitystandards you use?Nguyen Tuy Anh, Partner, Business Development,Solar BK: Both Solar BK and VNTower are certifiedsuppliers to Ericsson and Huawei, and we followtheir standardswww.towerxchange.com | TowerXchange Issue 3 | XX| TowerXchange Issue 3 | www.towerxchange.com130“ “the performance life ofsolar can be fifteen years,while you may have tochange the DG every threeyears
  • 129. © 2013 Site Seven Media LtdTower XchangeDesign by BLACKLIGHT Design Agency