Transcript Sundquist - Mobile Infrastruture Sharing

CMI Conference November 2014:
A Market Model study
of mobile infrastructure Sharing in Africa
Mårten Sundquist
KTH University
Background – Network Infrastructure sharing
 A strong general trend
 From vertical to horizontal business model
- cooperation by competitors
- outsourcing of services
- divestment of key network components
 Different technical solutions
 Regulatory aspects
- Preservation of competitive environment
 Financial aspects
Background – Africa





Spectacular subscriber uptake development
Mobile broadband dominating internet access
Operators stronger position
Financial situations increasingly challenging for MNOs
Growing economies
Research Questions
•
•
What types of innovative network sharing cases can be identified in Africa
and how do they differ from the ones in Europe?
What are the business rationales of the new types of network operators?
Methodology
i.
ii.
iii.
Market review
Identification and data collection of innovative cases
Analysis
Case 1:
Tower companies in Nigeria
 Tower companies strong development in Africa 2013-15
 Business:
- buy and lease-back towers
- try to get additional operators per site
=> Network sharing
 Service scope wide in Africa
- power solutions
- security
- design of new operator site solutions
Nigeria Tower Co market





175 M population
Growing economy
145 M SIMs (but still majority without phone)
Networks growing
Tower co 2-3BUSD
divestment 2014
Nigeria Tower Co Business Rationale
1. Off-load balance sheet
2. Cost reduction
Cost per
Site
Original (MNO) Cost Level
Operational
efficiency
Cost of Capital
Multi tenancy
Operator saving
Contracted Price
New (Tower Co) Cost Level
Tower Company
margin
Case 2: Rural Network operator Tanzania





Tz 950 000 km2 38M inhabitants
~50% population coverage.
Three main MNOs in Tz (Vodacom, Millicom and Bharti)
Challenge: how to build cost efficient rural coverage
Business idea:
- Create independent rural “network operator”
- Sell capacity whole-sale to network operators
SNT - Rural Network Operator





Independent network operator created
900 MHz spectrum from regulator
Sell capacity whole-sale to existing operators
Three operators on-board
Some resistance from MNOs
- Core business
- SNT not always first
 Low margin business
 World unique setup.
Rural Operator Business Actors
2G/3G
Case 3: National combined LTE network
in Rwanda





Rwanda 26 000km2 - 12M population
Three large MNOs (MTN, Millicom and Bharti) running 2G/3G
One LTE license (170MHz on 800, 900 and 1800) given to KT/JV
LTE capacity wholesale to three operators
Compete via technology advantage
World unique setup!
Rwanda Integration
Rwanda: Views of different actors
 Rwanda government + JV
- Decreased overall investment
- Quick rollout
- Competition via technology
 MNOs
- Intrusion in Core business
- “Network ready for LTE”
- Complex integration
 Vendors
- Less sales
 End-users
- Remain to be seen…
Case 4: M-Pesa Kenya
 Mobile payment systems generally not successful
 But: In Africa hugely successful
- Large unbanked population
- Undisturbed by regulations
- Creative solutions
 M-Pesa Kenya
- Operated by Safaricom (Vodafone)
- 18% of Safaricom revenue
- 25% of Kenya’s GDP pass through M-Pesa
M-Pesa Application sharing
 Due to regulation and competitor pressure, M-Pesa is 2014 opened up
for competing MNOs
 Mobile System Application Sharing!!!
 M-Pesa ecosystem include:
- 85 000 agents
- Application and mobile system interconnect
- Central bank supervision
Summary
Horizontalization of business models
Summary network sharing in Africa
 There are many interesting, innovative and even world unique cases of
network sharing in Africa
 Cases 2 and 3 should be considered by national regulators in many
countries – not only in Africa
 Paper Contribution: Increase understanding of:
- Network sharing research topic
- African mobile market
- Regulators and vendors choices for network sharing
Thank you!