In the last decade, Africa saw at least a tenfold increase in mobile coverage accompanied with a substantial mobile subscriber growth. However, its mobile density, at around 43% in 2010, still stands low compared to other continents. Remarkable disparity between countries exists: South Africa almost reaching 100%, whereas countries like Zimbabwe and Malawi are below 20% of mobile density.
First and second half of information:
What are the reasons for low penetration? Access to voice and data services in terms of availability and affordability is severely constrained.
The average service tariffs are several times higher than in South Asia, which has similar incomes per capita. Challenging physical environment, low population density in rural areas, insufficient infrastructure and limited competition render network deployment costly. Weak demand due to low income level, low ICT literacy and lack of e-applications (eg, e-government) complete the vicious cycle to make infrastructure investment unattractive in many geographical areas.
How to achieve cost-efficient mobile service coverage? Deploying a mobile network can be a big financial burden for smaller operators and even for larger operators when it comes to rural areas.
Looking closely at the cost structure of the key component in every mobile network, the base station, a large portion of its Capex (up to 75%) and Opex (up to 25%) goes to passive infrastructure. Economy of scale can be achieved if infrastructure, such as towers, is shared among operators, either via direct commercial arrangement or with the introduction of third-party network providers offering open access (eg, tower companies).
From the regulatory point of view, such passive infrastructure sharing can bring about more deployment to fill up the big gap from universal voice and broadband access, more competition, lower tariffs, and therefore more customer benefits. The resulting pickup in demand can, in turn, generate more favourable conditions for further investment. From the social and economic point of view, it can reduce resource duplication, free funds and boost economic activities elsewhere.
Around the world, tower sharing practises prove to be successful. In India, a tower sharing model is in place with an enabling framework, which includes regulatory directives and government subsidies. The government initiative is embraced by operators and tower companies leading to increased competition, fast ramp up of coverage in rural areas and availability of free financial streams, which can be invested in innovation, customer satisfaction and growth. In Indonesia the tower sharing market is very dynamic, with abundance of independent tower sharing companies that build or buy towers and subsequently rent them back to operators. The government welcomes this initiative as it ensures transparency and boosts competition, while for operators it is a key measure to reduce costs and increase profits.
In Africa, tower sharing, although limited, is not unusual. The first tower company, Helios, started operations in Nigeria and has built over 1 000 sites in prime areas for sharing. New capital has expanded it to a pan-African tower company. In other countries like Morocco, Kenya and South Africa, tower sharing deals were also signed in the past two years. Such sharing trend is vital to accelerate network growth, service availability and affordability on the continent.
* Finding the right partners.
* Selection of business model such as joint venture, transfer and lease back, wholesale.
* Determining sharing extent in terms of geographic areas - in urban, rural or both.
Maintaining a stable strategic relationship with a sharing partner or with a tower company is often tricky, which has to be translated into commercial terms such as governance, SLA, and special conditions like agreement exit. To increase the chance of success, a good strategic approach, methodology, implementation expertise and strong project management are essential.
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