Tower sharing could save telcos $8bn

TOWER SHARING: Vodafone deal with Telefonica could be copied in Mideast. (Getty Images)

In a new white paper, Delta Partners, the telecom advisory and investment firm, claims telco operators in the MEA (Middle East & Africa) region could save $8 billion over the next five years, by sharing their towers.

The paper "Tower Sharing in the Middle East and Africa: Collaborating in competition" says there are currently over 200,000 mobile network towers in operation across the Middle East and Africa, in which operators invest annually between 10-20% of their revenues to rollout new sites or upgrade existing ones. 

An extra 100,000 towers are expected to be rolled out in the next five years.

"Network sharing is not a recent trend, but the current economic environment, increasing competition and pressure on margins across MEA markets, is making operators consider it in order to achieve significant savings in capex and opex.

''In some cases, infrastructure sharing is the only viable way to access rural areas and penetrate lower end segments," says Victor Font, Managing Partner.

"We believe that over $8 billion can be saved in the next 5 years if operators collaborate and start sharing their networks' assets."

Recent multi-billion dollar network sharing deals have already been concluded in India.

Meanwhile, last month's announcement that Vodafone and Telefonica would share parts of their European network infrastructure was hailed as a milestone of pan-European collaboration that would result in better quality and coverage, less unsightly masts and save hundreds of millions of Euros for shareholders.

"The same shareholder value can be created in the MEA region, but many operators are still a little cautious as they see their network assets as a key asset and differentiator," says Chris Datta, Principal.

"Our analysis has shown, however, that a potential downside in market share is far outweighed by the extra benefits of cost saving on both opex and capex. In other words, operators would have to drop their market share by over 10% to not create value," he says.

"We see operators, investors and regulators starting to actively support site sharing and we expect it to become a key trend for 2009 /2010 in the Middle East and Africa" adds Victor Font.
 
"The key success factors lie in the negotiation and structuring of the deal e.g. whether to include passive and/or active network elements, existing towers or just new towers and who would manage the assets. The main challenge will continue to be in the execution."

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM