Network Sharing Options….     LTE World Summit - 24th May 2012 Barcelona.David Haszeldine, Technology EconomicsTechnology,...
Current Network situation…. Where are we today? • Mobile Network Operators (MNO) have built national radio infrastructures...
Network Sharing … cell traffic distribution                                 David Haszeldine LTE World Summit 24 May 12 Ba...
Network – cell revenue distribution                             0%                            10%        Cumulated Revenue...
Network Sharing …savings? an example ….  • Two operators share 50:50 - average 4,250 sites each  • Assumed - saving effici...
Network Sharing …. Integration/Consolidation costs?     Integration costs may not be trivial     Say 2500 sites are term...
Network Sharing Joint Venture Options  •   Geographic split of low traffic areas         Country split into regions      ...
Network Sharing – things to look out for …. •   Similar Marketing strategy in medium term?        voice and data service p...
Network Sharing … does it work?  It depends  •   Management willingness to change.....?  •   Equipment commonality – maybe...
Network Sharing – Regulator issues?   Regulator         Unlikely to approve market dominance         May not like any m...
Network Sharing …….                      David Haszeldine LTE World Summit 24 May 12 Barcelona                            ...
David.Haszeldine@telekom.comMobile: +44 795 7654 941
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LTE World Summit 2012 David hazeldine deutsche-telekom-thurs_masterclass_zone-1

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LTE World Summit Barcelona May 2012
MASTERCLASS

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LTE World Summit 2012 David hazeldine deutsche-telekom-thurs_masterclass_zone-1

  1. 1. Network Sharing Options…. LTE World Summit - 24th May 2012 Barcelona.David Haszeldine, Technology EconomicsTechnology, Deutsche Telekom.
  2. 2. Current Network situation…. Where are we today? • Mobile Network Operators (MNO) have built national radio infrastructures in parallel • Multiple costs … • A lot of the RAN network of each MNO is under utilised Why….. In the past • Competition – coverage was a key market differentiator • Regulatory – the licence required it Now • Coverage – less of a differentiator • Services – the real differentiator… • Cost is now a key driver ! • Regulator may be more flexible David Haszeldine LTE World Summit 24 May 12 Barcelona 2
  3. 3. Network Sharing … cell traffic distribution David Haszeldine LTE World Summit 24 May 12 Barcelona 3
  4. 4. Network – cell revenue distribution 0% 10% Cumulated Revenue 20% 30% 50% revenue from circa 10% sites 40% 50% 60% 80% revenue from 30% sites 70% 80% 10% revenue from 50% sites 90% 100% 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Sites David Haszeldine LTE World Summit 24 May 12 Barcelona 4
  5. 5. Network Sharing …savings? an example …. • Two operators share 50:50 - average 4,250 sites each • Assumed - saving efficiency of 80% and cost saving efficiency of 80% Operator A Annual RAN Opex (€m) € 52.0 Operator B saving Annual RAN Opex (€m) € 58.5 Personnel Costs € 7.0 € 2.2 saving Leased Lines € 10.4 € 3.3 Personnel Costs € 9.4 € 3.0 Site Rental & Leasing € 22.9 € 7.3 Leased Lines € 5.3 € 1.7 Maintenance & Repair € 0.8 € 0.2 Site Rental & Leasing € 29.8 € 9.5 Services € 4.2 € 1.3 Maintenance & Repair € 0.6 € 0.2 Advisory Fees € 0.5 € 0.2 Services € 5.9 € 1.9 Other Costs € 6.2 € 2.0 Advisory Fees € 0.6 € 0.2 Total € 52.0 € 16.6 Other Costs € 7.0 € 2.2 Total € 58.5 € 18.7 • This gives a target saving of £35.3m or 32% on a target 4,250 node network • But this is just a target …. • Lets say they want a 6,000 node network? • This can be achieved within the given Opex envelope and a reduced saving made David Haszeldine LTE World Summit 24 May 12 Barcelona 5
  6. 6. Network Sharing …. Integration/Consolidation costs?  Integration costs may not be trivial  Say 2500 sites are terminated  Lease termination allowance €20m  Site decommission costs €4m  Site reconfiguration/upgrade €40m to €240m  Core network re-configs €10m to €20m  Access network upgrades €15m to €25m  Project management €15m to €30m  Asset write off €15m to €25m  So a ….€120m to …….€360m potential integration cost!  Maybe not a 3 year pay back! David Haszeldine LTE World Summit 24 May 12 Barcelona 6
  7. 7. Network Sharing Joint Venture Options • Geographic split of low traffic areas  Country split into regions  MNOs take a region/s each …customers roam  Joint Owned Operating Company A  All RAN assets put into one network and the best network built  RAN Assets stay with parent – use MORAN…..MOCN  Full sharing agreement on all assets - irrespective of ownership  Tight exit clauses  Stringent Financial and Performance KPIs set and enforced  Jointly Owned Operating C  As above but sites used are 50% provided by each company or some other formal split agreed  Possible usage charge on respective assets  Jointly Owned Operating Company C  As above but assets transferred David Haszeldine LTE World Summit 24 May 12 Barcelona 7
  8. 8. Network Sharing – things to look out for …. • Similar Marketing strategy in medium term? voice and data service provision equipment upgrades policy introduction of new technology/services • Similar technology in RAN? 2G supplier 3G supplier Backhaul architecture • Synergies in support contracts • Site and Access Lease termination agreements … Early Termination penalty clauses? • Support contract Terms and Conditions …. Early Termination penalty clauses? David Haszeldine LTE World Summit 24 May 12 Barcelona 8
  9. 9. Network Sharing … does it work? It depends • Management willingness to change.....? • Equipment commonality – maybe an issue ? • Access network – remove spare capacity, good synergies? • Site lease/purchase strategy - ? • Support contracts – in house/managed services/outsourcing synergies? • RAN Network operations performance • Network Integration performance • Marketing – issues? • P&L issues • Asset valuation • Restructuring cost treatment David Haszeldine LTE World Summit 24 May 12 Barcelona 9
  10. 10. Network Sharing – Regulator issues? Regulator  Unlikely to approve market dominance  May not like any market consolidation – even at a network level  May like to see the Operators costs reduced …so they can squeeze tariffs?  However, in the UK and elsewhere in Europe, they have approved deals David Haszeldine LTE World Summit 24 May 12 Barcelona 10
  11. 11. Network Sharing ……. David Haszeldine LTE World Summit 24 May 12 Barcelona 11
  12. 12. David.Haszeldine@telekom.comMobile: +44 795 7654 941

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