towerxchange-issue_8

Tower Xchange

Tower Xchange

Plus TowerXchange’s analysis of American Tower’s International strategy

Issue 8 | May 2014 | www.towerxchange.com

LatAm - let’s meetup!Join 200 decision makers, representing 42 towercos and carriers, at the TowerXchange Meetup AmericasThe journal for the emerging market telecom tower industry

TowerXchange Asia:< The structure of the Myanmar tower rollout< Axiata spins out and launches edotco< CEO interviews: edotco, STP and IGT!

TowerXchange Africa:< Market size and forecasts for next two years< Airtel tower sale preview, including Nigeria< Opportunities in Chad, Niger and Burkina Faso

TowerXchange Americas:< 20k Brazilian towers for sale, BTS analysis< Impact of LTE and ‘Tower Law’ on Chile< The ground lease aggregation model

With special thanks to the TowerXchange “Inner Circle”About TowerXchange

TowerXchange is your independent community for operators, towercos, investors and suppliers interested in emerging market towers. We’re a community of practitioners formed to promote and accelerate infrastructure sharing in Africa, Asia and Latin America. TowerXchange don’t build, operate or invest in towers; we’re a neutral community host and commentator on emerging market telecoms infrastructure.

The TowerXchange Journal is free to qualifying recipients. We also provide webinars and regular meetups. TowerXchange monetises this community through hosting annual Meetups and the sale of advertising, without compromising editorial integrity.

TowerXchange was founded by Kieron Osmotherly, a TMT community host and events organizer with 16 years’ experience, and is governed with the support and advice of the TowerXchange “Inner Circle” – an informal network of advisors

Our informal network of advisers:

© 2014 Site Seven Media Ltd. All rights reserved. Neither the whole nor any substantial part of this publication may be re-produced, stored in a retrieval system, or transmitted by any means without the prior permission of Site Seven Media Ltd. Short extracts may be quoted if TowerXchange is cited as the source. TowerXchange is a trading name of Site Seven Media Ltd, registered in the UK. Company number 8293930.

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Chairman: Daniel LeeManaging DirectorIntrepid Advisory Partners

Michel FaivreDirecteur Programme Partaged’Infrastructure AMEAFrance Telecom-Orange

Fazal HussainCEODeka Global

Nina TriantisManaging Director, GlobalHead of Telecoms & MediaStandard Bank

Jeffrey EldredgePartnerVinson & Elkins

Ayman Al AdlDirector, TMT, Middle East & AfricaStandard Chartered Bank

Torsten EsbjørnRegional Director, AfricaRamboll

Gary StauntonCEOLikusasa Group

Alan HarperCEOEaton Towers

Zouhair KhaliqConsultant, Executive DirectorWarid Telecom, Former CEO, Orascom Int’l Investment

Jim EisensteinChairman & CEO, Grupo TorreSur

Kurt BagwellPresidentInternational, SBA Communications

James MaclaurinCEOedotco

Areef KassamDirector of InfrastructureGSMA Mobile for Development

Natasha GoodPartnerFreshfields

Ahjeeth JaiJaiConsultantInvestec

Rajat MalhotraCEO, Middle East & AfricaHayat Communications

Chris Gabrielformer CEO, Zain AfricaSenior Adviser, Macquarie Group Chairman, Clean Power Systems

David MeganckFounder & COOAcsys

Chuck GreenCEOHelios Towers Africa

Marc GanziPresident, Digital Bridge Holdings & Mexico Tower Partners

Adeel BajwaSenior GM of Legal Affairs and ContractsWarid Telecom

Inder BajajCEOHelios Towers Nigeria

Tunde TitilayoVice ChairmanSWAP International

Laurentius HumanCEOInala

Riana DonaldsonManager: International NetworkOperations SupportVodacom

Thorsten Schaefer CEO azeti Networks

Nobel TanihahaPresident DirectorPT Solusi Tunas Pratama (STP)

Andrew DoyleManaging DirectorTech & Comms PracticeMott MacDonald

John StevensCEOIrrawaddy Green Towers

Contents

Regular features

9 News: deals, launches and licenses20 TowerXchange Meetup Americas agenda50 LatAm tower count + middle market towercos82 Africa tower count and heatmap115 Myanmar tower count

47 81 103

144

LatAm: Brazil, Chile and Argentina

Africa: Burkina Faso, Chad, Niger and Nigeria

Asia: exclusive CEO interviews with STP, edotco and IGT

RMS and site management systems

50 Introduction to the LatAm tower industry55 Seeking value in the Brazilian towers market57 Planex on the Argentinian tower industry62 Chile case study: LTE and ‘Tower Law’

82 African towers: market size and growth forecasts89 A preview of Airtel’s African tower sale93 A closer look at Burkina Faso, Chad and Niger98 The changing shape of the Nigerian tower industry

104 Nobel Tanihaha, President Director of STP 107 edotco launches; we interview CEO and CTO 115 The structure of the tower industry in Myanmar119 John Stevens, CEO, Irrawaddy Green Towers

166 Rooftops, masts and towers

167 Evaluating and strengthening existing towers171 Can Brazilian towers accommodate multiple tenants?175 Rooftops, billbards and IBS in Mexico179 From boutique manufacturer to global tower provider

145 How to select and deploy RMS150 ConnectM + Gemalto: intelligent tower management154 Caryon Development advocate ‘Smart Towers’159 The latest from AIO Systems and azeti

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Special features

5 AMT’s international portfolio39 EY’s intro to towerco business models45 Hardiman on the Italian tower market135 Ground lease aggregators182 TowerPower: Bergey, Ballard, Power-One, TSi Power, Imergy and Trojan battery

Africa’s leading, independent, telecom tower company

HTA acquires, builds and manages wireless telecom infrastructure, leasing it to mobile network operators across Ghana, Tanzania and the Democratic Republic of Congo.

HTA’s model of shared telecoms infrastructure, and its scale, helps to deliver improved efficiency and network quality and reliability for operators, reduced costs for users and increased accessibility.

Find out more about our business www.heliostowersafrica.com

6162_HTA_Ad_355x255mm_AW.indd 1 31/10/2012 16:43

TowerXchange’s analysis of American Tower’s International portfolioAs the leading towerco reports their annual results, TowerXchange examines the figures to summarise AMT’s international strategy

“In 2013, we drove record levels of organic growth in both our US and international segments and added over 10,000 sites to our global asset base through the acquisitions of the GTP and NII portfolios and our ongoing site construction program,” said American Tower (AMT) Chairman, President and CEO Jim Taiclet during the conference call announcing AMT’s 2013 results. Taiclet later continued: “we have purposely and methodically expanded our asset base to over 67,000 towers that deliver strong organic growth as well as the highest margins in our industry.”

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Given our focus on the tower industry in Africa, LatAm and Asia, I thought TowerXchange readers might be interested if we isolated some of the key data points relating to AMT’s international strategy. AMT currently owns over 39,000 sites outside its domestic US market. AMT’s international segment accounted for around 25% of Operating Profit during Q4 2013, and contributed close to 40% of the total growth in EBITDA, as a function of organic growth and recent acquisitions, particularly in Brazil and Mexico. AMT continues to leverage its international portfolio to supplement its domestic growth and expects its international operations to generate organic core growth rates of at least 200-300 basis points above those of the U.S. International tenancy ratios AMT believes that the lower current average tenancy ratio and gross margin profile of its international portfolio combined with solid structural characteristics and attractive geographic distribution, provides an excellent opportunity for strong, sustainable long term international growth. Historically, AMT has achieved impressive growth in tenancy ratios and revenue per tower on legacy sites in markets such as Brazil and Mexico. “We have nearly doubled our revenue per tower on a constant currency basis for

United States 27,739

India 11,529

Mexico 8,369

Brazil 6,746

Colombia 3,461

Germany 2,031

Ghana 1,969 South Africa 1,900 Chile 1,150 Peru 498

Costa Rica 456

Panama 57Uganda 1,164

AMT International tower count as of December 31, 2013 (excludes DAS)

our international sites in place since the end of 2003, while simultaneously increasing the gross margin percentage,” stated Taiclet on the conference call. “Excluding pass-through revenues, such as ground rent and generator fuel in the relevant markets, these sites currently generate gross margins significantly in excess of 90% today.” While tenancy ratios have more than doubled in Brazil since towers were acquired (see infographic), similar growth has been achieved in South Africa, where AMT reports a current tenancy ratio of over 2 tenants per site on the original portfolio they purchased from Cell C in 2011, having added over 700 co-locations to

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the original 1,364 site portfolio – impressive considering the acquisition included 459 rooftops.

Tom Bartlett, EVP and CFO of American Tower concluded “we believe our international operations will continue to generate organic core growth rates significantly in excess of our domestic operations. In our view, the long-term growth story in international is very exciting.”

Further acquisitions AMT prioritises international investments utilising an extensive evaluation process, including political, economic and business

environment considerations. Like most towercos, they are attracted to competitive markets with three or more major carriers as prospective tenants, and where data network deployments are imminent or ongoing. AMT understandably offer few clues as to their appetite for specific international acquisition opportunities, except to emphasise their continuing strategy to deepen their presence in “legacy markets”. This would seem consistent with unconfirmed rumours suggesting AMT’s continued appetite for opportunities in Mexico and Brazil, and AMT’s widely rumored withdrawal from interest in any portions of the Airtel Africa portfolio of 15,000 towers currently

Tenancy ratios in selected AMT International markets

Source: American Tower 2013 International Analyst Day Presentation

Uganda

1.1Ghana

1.4

Brazil

1.4 Mexico

1.5SouthAfrica

1.8


being brought to market. AMT did emphasise that “we are first and foremost having the US as a priority”. There have recently been unsourced rumors connecting AMT with a bid to acquire Viom Networks, which operates around 42,000 towers in India.

Build to suit economics

AMT provided a rule of thumb comparison of macro site build costs of US$30k-$50k in India,

US$150k-$200k in LatAm and EMEA and US$225k-$275k in the US. They spoke of the very high rates of return on build-to-suit activity, and their enthusiasm to allocate as much capital as possible to the category. CFO Tom Bartlett suggesting “if you use TCF, tower cash flow, divided by cost as a surrogate for rate of return, if you go back and you take a look at our 2009 towers that we built, we are generating 20% rate of returns on our international portfolio and over 10% on the US portfolio.” BTS activity generally comes with an anchor tenant under MLA and AMT typically looks to add another tenant within 36 months.

Conclusion AMT is a growth stock and the company views its international portfolio as an excellent complement to its assets in the U.S. where it has created tremendous shareholder value by acquiring and upgrading key macro cell sites and leasing space to support carriers’ transition from an era of voice-centricity to the era of data-centricity. That voice to data transition is still taking place in international markets, and AMT is acquiring assets and building towers to ride this international wave of data demand growth. The need for cell site densification in International markets is illustrated by the fact that there are approximately 4,000 subscribers per cell site in Brazil, and 3,000 subscribers per cell site in South Africa, compared to 1,100 in the US. AMT has a significant tower footprint in North and South America, including its legacy core international markets of Brazil and Mexico where it has been operating for nearly 15 years. In addition, the company has materially enhanced its presence in other regions over the last several years to solidify its position as a global player in the industry. This includes tower portfolios in India, South Africa, Ghana, Uganda and Germany, markets in various stages of wireless development where AMT sees significant opportunities for profitable growth

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

3.5

3

2.5

2

1.5

Example tenancy ratio growth (American Tower Brazil 2002-13)

Source: American Tower Analyst Presentation 2013

to none.” – Ehize Ilozavbie, Chief Legal Officer at SWAP TECHNOLOGIES AND TELECOMMS “Myanmar is set to grow the nationwide tower base from 1,800 to circa 15,000 sites over the next five years, with mobile penetration going from 6% to 80% in the same period. Despite the frontier market risk and the greenfield nature of the roll-out, any well managed tower portfolio in Myanmar is bound to generate above-average returns in the medium to long term.” – Paul Hemming, Director, Redwing Asia “Most Investments are made to get high returns; you can not beat Nigeria in terms of ROI! All procedures may not always be proper, but then the tower industry is not killed (as yet) by greedy town councils and municipalities!” – Surendra Kulkarni, CTO, Glomobile Ghana “I am in Myanmar and we have all been transported back to 1996, the first time a towerco has the opportunity to build a new network to accommodate four operators from the very start. Great country many challenges such nice people.” – Brian Edwards, Operations Director, Apollo Towers Myanmar “Why would I invest in the DRC? DRC is a challenging but proven market. Helios Towers DRC has achieved impressive tenancy ratios on the towers acquired from Millicom Tigo in 2010. However, DRC’s most extensive tower network is Airtel’s, currently available as part of Airtel’s African tower sale.

Myanmar: the most investible tower market in the world


“Myanmar provides a very unique opportunity to the world for green field roll out and hence the learning from all other emerging markets can be put to use to optimise design, cost and opex with green energy solutions for the roll out of the network. Excellent opportunity for MNOs, towercos and OEMs to combine their energy and resources to put all best practices to use.” – Sandeep Kaul, then CTO, IHS Nigeria

If given US$200mn to invest in emerging market towers, 27% of TowerXchange LinkedIn Group members would acquire assets in Myanmar

“The constitutional reform in telecommunications in Mexico 2013 states the building of a wholesale network in the 700 MHz band, this makes (Mexico) a great option.” - Ramiro Robledo, Director, Regulatory Projects, Federal Telecommunications Institute, Mexico “The appetite for towers in Nigeria is insatiable yet, but for the setbacks of power, the market is second

TowerXchange conducted a light-hearted survey via our LinkedIn group to ask “If you had US$200mn to invest in emerging market towers, in which country would you prefer to acquire assets?”

Myanmar Brazil Nigeria DRC Mexico

What would be your vote?Selected comments on the survey from TowerXchange LinkedIn group members:

30%

25%

20%

15%

10%

5%

2722 20

15 15

The DRC has a long runway for growth: with a population of 75.5mn, DRC has mobile penetration of just 17.5%, but growing fast. The overlay of 3G commenced in 2012 and is stimulating demand for infill sites. Four of Africa’s top six operators are present in DRC (Airtel, Orange, Tigo and Vodacom) and Ziad Dalloul’s Africell leveraged tenancies on Helios towers to come to market quickly and competitively.

For me the downsides of investing in DRC towers translate to barriers to entry for competitors. There is some country risk in a country with ongoing conflict, particularly in East, but the perceived risk may be greater than the actual.

Running a towerco in a country with such under-developed power and transport infrastructure is a tremendous challenge. Most cell sites outside Kinshasa and Lubumbashi are off-grid, and the delivered cost of a dollar’s worth of diesel can be US$1.80. So the caveat I attach is that I would only back a management team with proven experience in frontier tower markets.” – Kieron Osmotherly, CEO, TowerXchange

Read TowerXchange’s latest analyses and interviews first, and share your opinions, by joining the TowerXchange LinkedIn group FREE at:http://www.linkedin.com/groups/TowerXchange-4536974

Africa NewsMTN Nigeria tower sale process well under way

MTN kicked off a process to sell the largest tower network in Nigeria, an estimated 9-10,000 towers, earlier in 2014. The portfolio unquestionably represents the most valuable single country package of African tower assets brought to market to date, and could command a valuation above US$1bn, depending on MTN’s preferred leaseback rate

IHS raises a further US$130mn from existing investors

Less than two months after announcing a US$490mn capital raise, IHS has secured a further US$130mn from existing investors, pushing total capital raised beyond US$1.6mn. IHS are likely to bid aggressively for several of the portfolios of towers currently for sale in Africa, giving particular priority to their native market Nigeria, where MTN, Airtel and Etisalat have a total of around 18,000 towers for sale – which coincidentally might attract an aggregate valuation near to the US$1.6mn total capital raised to date by IHS, depending on the usual variables (deal structure, lease back rate, contract duration etc)

Airtel now #2 in NigeriaData released by the NCC in February 2014

shows that Airtel Nigeria had a 26.2mn subscribers,

followed by Glo with 24.5mn and Etisalat with 18.1mn. MTN remain market leaders with 57.2mn subscribers. New Airtel Africa CEO Christan de Faria called the statistics “a clear indication of the trust that a growing sector of the population have started to have in us…Nigeria continues to be a very competitive telecoms market and our intention is to ensure that we continue to innovate and make life easier for our customers.”

Sonatel and MobiNil tower sales continue to progress

According to TMT Finance, a shortlist of three bidders has reportedly been drawn up for MobiNil’s 2,500-3,000 Egyptian towers, with the deal potentially closing before the publication of the Summer edition of the TowerXchange Journal – we’ll cover it in more detail at that time. Meanwhile, another MNO in which Orange owns a stake, Sonatel, is progressing the sale of 3,000 towers across Senegal, Mali, Guinea Bissau and Guinea Conakry

IHS closes deal to acquire MTN towers in Rwanda and Zambia

First reported in issue 7 of TowerXchange, IHS’s latest deal with MTN has now been completed with slightly modified tower counts, as is often the case. IHS has acquired and will manage a total of 1,269

Nigeria

Nigeria

Nigeria

Senegal Egypt

Rwanda Zambia


HIGH STANDARDSOLUTIONS - FOR YOUR TOP PERFORMANCE

www.leadcom-is.com

the coveted OSHAS 18001 certification mark to demonstrate their conformance to the standard. OHSAS 18001 was first introduced in 1999 and requires organisations to assess their risk and implement an effective occupational health and safety management system to promote a safe and healthy working environment. Certified organisations are committed to continuous improvement and are assessed annually to ensure progress is being maintained. “We are particularly pleased to have achieved the OSHAS 18001 certification in all of our existing markets as it underlines our commitment to our customers and our focus on quality of service. We are the first and only OSHAS 18001 certified company in each of our markets,” said Chuck Green, CEO of Helios Towers Africa

Helios Towers Tanzania launches IBS

HTA’s Tanzanian opco Helios Towers Tanzania (HTT) launched their In-Building Solutions strategy at an event at the Kilimanjara Regency Hotel in Dar es Salaam recently. “As the sector matures there is a clear mandate to improve the breadth and quality of these services; namely voice and data services. Tanzania has seen a wide proliferation of next generation technologies like 3G and 4G services,” said Norman Moyo, CEO of HTT. HTT’s IBS are expected to improve QoS in large and tall buildings as well as along roads

“This acquisition is in line with our stated strategy of strengthening our market position through in-country acquisitions, as and when suitable opportunities come along. We are at an advance stage of successfully integrating Warid’s Uganda operations with that of Airtel and look forward to a similarly swift transition in Congo Brazzaville as well. As already demonstrated in Uganda, the merger will bring more value for the customers in the form of affordable data and roaming tariffs, innovative products, Airtel Money, world-class networks and customer care,” said Manoj Kohli, CEO (International) of Bharti Airtel

Smart East Africa launches

Smart East Africa, a subsidiary of the Aga Khan Fund for Development, is launching operations in Uganda, Tanzania and Burundi. At the Kampala launch, Group CEO Abdellatif Bouziani called attention to his firms experience in Afghanistan and Tajikistan, and the AGA Khan Development Network’s 100 years experience of investment in East Africa, as evidence of their experience

HTA achieves OSHAS 18001 compliance

Congratulations to HTA on completing their clean sweep of OSHAS 18001 certification in each of their existing markets, Ghana, Tanzania and the DRC. All HTA operations have earned the right to display

towers, broken down as 550 in Rwanda and 719 in Zambia, representing 100% of MTNs towers in the two countries. The deal also includes a build-to-suit programme

Fourth MNO license for Zambia

ITWeb Africa quote Zambian Minister of Communications and Transport, Yamfwa Mukanga suggesting the previously postponed issue of a fourth mobile license would follow after the implementation of the digital migration project, saying ““The government is concerned with the high cost of communication. So the fourth mobile operator will come with many advantages including reduced cost of making phone calls and other services.” Vodacom continue to be rumoured to be interested in Zambia. Airtel are current market leaders, followed by Zamtel and MTN. According to BMI data reported in TowerXchange, Zambia’s mobile penetration was 71.1% at the end of 2012 and is forecast to reach 91.2% by 2017. ARPU is around the US$5 mark

MNO consolidation continues as Airtel again acquires Warid assets

Having acquired Warid’s business in Uganda and Bangladesh, Bharti has repeated the feat by acquiring Warid’s subsidiary in Congo Brazzaville. The transaction is thought to be valued at US$70-80mn. The deal adds Warid’s 1mn customers to Airtel’s market leading 1.6mn customers, vaulting the Indian telco above MTN as the market leader in Congo Brazzaville.

Zambia

Congo Brazzaville

Uganda

DRC

Burundi

Tanzania

Tanzania

Ghana

Tanzania



Quoting selectively from the GSMA’s press release; at a high-level meeting at Mobile World Congress in Barcelona, senior leaders from eight major mobile operator groups, covering 551 million mobile connections across Africa and the Middle East, announced a plan to cooperate on network infrastructure sharing initiatives that recognise the profound impact of mobile broadband and Internet services on the citizens of both regions. The participating operators have made this commitment in order to provide Internet and mobile broadband access to unserved rural communities and drive down the cost of mobile services for all sections of the population. “This cooperation demonstrates that the industry is committed to innovating in order to serve the billions living in the rural areas,” said Manoj Kohli, Managing Director, Bharti Enterprises and Chair of the Public Policy Committee of the GSMA board, who also supports the initiative. “We call on governments to support and encourage the commercial infrastructure sharing arrangements that we aim to propose.” An impressive roster of senior leaders have attached their names to this infrastructure sharing initiative:< Christian de Faria, CEO Africa, Bharti Airtel

< Ahmad Julfar, Group CEO, Etisalat Group< Sifiso Dabengwa, CEO and President, MTN Group< Dr. Nasser Marafih, Group CEO, Ooredoo Group< Marc Rennard, Senior Executive Vice President, Africa, Middle East and Asia, Orange< Abdulaziz A. Alsugair, Chairman and Managing Director, STC Group< Serpil Timuray, CEO, Africa, Middle East and Asia Pacific Region, Vodafone Group< Scott Gegenheimer, CEO, Zain Group

TowerXchange contacted the GSMA to learn more about this initiative… TowerXchange: It’s exciting to read that 8 of the leading operators in MEA plan to cooperate on network sharing initiatives that will accelerate provision of Internet and mobile broadband access to rural communities - can you give us some detail on how these initiatives will work in practice? Peter Lyons, Director of Public Policy, GSMA: With the strategic direction now set at the regional level, the next step is for operators to undertake an extensive review of the relevant regulatory, commercial, and technical conditions in each of their operating markets across these 48 countries.

For instance, operators will need to identify those markets where there is a lack of regulatory clarity around voluntary network infrastructure sharing arrangements. For its part, the GSMA will offer continuous support for the development of progressive policy environments and national regulatory frameworks that allow for voluntary commercial sharing arrangements. TowerXchange: What specific steps can governments take to support and encourage infrastructure sharing in MEA, both in terms of regulatory frameworks and in terms of facilitating access to government-owned assets? Peter Lyons, Director of Public Policy, GSMA: The regulatory framework of a country should facilitate all types of voluntary infrastructure sharing arrangements, which can involve the sharing of various components of mobile networks, including both so-called passive and active sharing. Governments can help by providing regulatory clarity so that market participants can consider such arrangements. TowerXchange: Are these initiatives currently focusing solely on passive infrastructure sharing, or is there provision or appetite for active infrastructure sharing or RANsharing in the future? Peter Lyons, Director of Public Policy, GSMA: This initiative covers passive infrastructure sharing, and where technically feasible, active infrastructure sharing

GSMA announces infrastructure sharing initiative across the Middle East and AfricaInitiative aims to enhance use of network infrastructure to connect underserved communities

Mexican secondary telecoms reform delayed

The critical secondary telecom legislation is still pending before the Mexican Congress. In a recent statement, Chamber of Deputies President Jose Gonzalez Morfin informed the press that lawmakers are likely to meet for special sessions to define the content of the legislation during the month of May.

Telefonica targets Iusacell

Bloomberg report that Telefonica is in talks to acquire Iusacell, Mexico’s third ranked operator. Mott MacDonald report that Iusacell has 8% market share, with Telefonica on 19%. A merger could create a stronger competitor for America Movil’s Telcel, which leads the market with 69%.

Claro Colombia announces 4G investment plans

The leading carrier is likely to invest US$1bn to develop its 4G network over the course of 2014, as stated by the company’s President Juan Carlos Archila. The project aims at expanding LTE


coverage to 50% of the Colombian population in the next three months.

Une-EPM and Tigo Colombia merger receives regulatory approval

The national antitrust authority of Colombia has approved the merger between state-owned Une-EPM and Millicom’s Tigo. The companies have eight months to come to an agreement with regards to which blocks of their spectrum will be given back to the Ministry of Information Technology and Communication.

The merger would result in the new entity holding the rights for 135MHz of frequencies in spite of 85MHz being the limit per operator. Une-EPM and Tigo Colombia would then have 28 months to hand back the spectrum.

In the event of the companies failing to reach an agreement, the authority could impose them fines up to US$31.8mn.

Substantial portfolios likely to change hands in Brazil

Sources suggest to TowerXchange that there are three substantial tower portoflios at various stages of coming to market in Brazil, including two privately owned tower firms and one sale and leaseback opportunity.

The sales are at various stages of progress but we forecast that a total tower count in five digits will change hands in the next two quarters.

TIM Brasil’s likely next moves

TIM Brasil is likely to bid in the upcoming 700 MHz spectrum auction following a recommendation by its Board of Directors. The auction is likely to take place in August, following a public consultation during the month of May.

While exploring their move, TIM Brasil is also assessing divesting its portfolio of approximately 7,000 towers in order to raise the capital needed to then deploy 4G LTE across the country. Currently, the company is looking for new financial advisers to work on the sale of its telecom towers in Brazil after a senior specialist of Morgan Stanley, their current adviser, left the bank.

Oi-PT merger receives Portuguese competition

watchdog approval The Autoridade da Concorrencia (AdC) of Portugal has recently approved the tie-up between Brazilian’s Oi and Portugal Telecom

Mexico

Mexico

4G LTE, mergers and capital raising make the headlines in LatAmConsolidation rumours persist while networks upgrades throughout the region keep progressing

Brazil

Brazil

Columbia

Columbia

BrazilPortugal

Investors pour capital into middle market towercos as BTS is outsourced in Brazil

Bloomberg report that five different middle market towercos in Brazil, Brazil Tower Company, Highline do Brasil, T4U, QMC and CSS, have attracted investment form seven private equity firms including Goldman Sachs and Patria Investimentos. One of the towercos suggested that Brazil’s carriers were soliciting “bids to build about 3,900 towers, more than half the 6,680 new towers needed in 2014 to improve networks.”

Bloomberg go on to quote statistics attributed to Brazil Tower Company, who say they build towers for 200,000 reais to 500,000 reais each, which “values the 3,900 to be built by third parties at 780 million to 2 billion reais, according to data compiled by Bloomberg. Brazil Tower then expects to sell the sites in bulk for as much as $300,000 each.”

Intriguingly, Bloomberg report that the five middle market towercos have capacity to construct only 1,600 of the 3,900 towers between them. Meanwhile SBA and GTS seem less keen on bidding for BTS opportunities under the contractual terms offered by their smaller competitors, hinting at a potential opportunity for further new entrant towercos.

NII for sale?

TMT Finance report that NII Group has appointed

following its Brazilian’s equivalent, Cade, green light on the deal.

Potential dropouts in Oi’s quest for capital funding

Brazil’s Itaú Unibanco Holding SA is rumoured to be considering leaving the consortium of fourteen banks currently involved in the injection of capital ahead of the Oi-PT merger. Other financial institutions such as Goldman Sachs, Banco Bradesco and Citigroup have also been rumoured to be keen to get out of the deal.

Oi aims at raising between US$2.6bn and US$3.5bn as part of its plan to merge with Portugal Telecom.

Oi-SBA 2,007 tower deal completed

Oi and SBA Communications have concluded their recent tower deal during the first week of April with SBA acquiring 2,007 towers for US$ 696 million. As part of the deal, Oi is entering a long-term leasing agreement with SBA.

The acquired portfolio has a tenancy ratio of 1.6 per tower and features existing leasing agreements with all major Brazilian carriers. For further details of the transaction, check out the interview with Kurt Bagwell, President – International for SBA Communications, in issue 6 of the TowerXchange Journal.


UBS as “an advisor to conduct a strategic review which could result in a sale of part, or all of the company.” NII trades as Nextel in Brazil, Mexico, Chile and Argentina.

Nextel Argentina assessing 4G opportunities

The Argentinian carrier is currently exploring the possibility of deploying 4G LTE technology following its unsuccessful attempt to win 3G spectrum back in 2012, when the 800MHz and 1900MHZ band auction was called off by the Argentinian government and frequencies assigned to state-owned telecom operator Arsat.

Movistar and Claro Ecuador one step closer to LTE

Ecuador’s government has successfully completed the first phase of negotiations with Movistar and Claro Ecuador to award them LTE spectrum before the end of 2014. A new round of negotiations is likely to begin after the Easter break.

Currently, CNT is the only carrier in Ecuador that has been granted a license to offer LTE services.

Viettel to launch in Peru

TeleSemana quote Gonzalo Ruiz Diaz, head of telecoms regulator Osiptel, as saying that Viettel will launch on 26 July having been held up with permitting for the installation of towers. Viettel was awarded spectrum in the 1,900MHz band in January 2011

Brazil

Brazil

Brazil

USA

Argentina

Argentina

Peru

has appointed advisors to support a possible IPO. Bloomberg report that Carlyle Group and Axiata have entered bids for Viom

TMT Finance raises possibility of sale of Ascend Telecom

Always a good source for deal rumours, TMT Finance report that another Indian towerco, Ascend Telecom which owns around 4,500 sites, has been put up for sale. Ascend is jointly owned by New Silk Route and TVS Interconnect Systems

Indosat, Axiata and Axis selling 7,500, 8,000 and 1,600 towers respectively in Indonesia

Having sold 2,500 towers to Tower Bersama in 2012, TMT Finance reports that Indosat is bringing a second tranche of 7,500 towers to market. TMT Finance continues to speculate that XL Axiata will “hive off around 8,000 towers which could be worth up to US$1.47bn. STP, Tower Bersama and Protelindo are all apparently in the running for the portfolio.” We’re not sure how to marry this rumor with the launch of Axiata’s towerco edotco, and their widely rumoured although unconfirmed launch in Indonesia. Meanwhile, the same publication suggests Tower Bersama is closing in on a deal to acquire 1,600 towers from Axis

American Tower considers a bid for VIOM Networks

Encouraged by the success of the recent spectrum auction in India, and overdue consolidation in the MNO category, American Tower “is targeting to bid for India’s Viom Networks, which will help it improve its services and lower its costs... AMT gained 10,000 towers in India with its previous two purchases, with Viom it could go for consolidating its assets from all three purchases, consequently lowering the operating cost,” according to Seeking Alpha. Cellular News reports, without citing its source, that American Tower “is thought to put a valuation on Viom at around Rs 11,000 crore (US$1.77 billion), excluding debt, which is estimated at around Rs 7,200 crore. That figure is significantly below what Viom’s shareholders are understood to value the company at though.”

Viom Networks, a Tata Teleservices and SREI Infrastructure joint venture, owns a portfolio of approximately 42,000 sites in India, boasting a healthy tenancy ratio of around 2.3 with over 95,000 tenancies from all the leading Indian operators. Tata Teleservices account for approximately 40% of Viom’s revenues, with tenancies from Bharti Airtel, Aircel, MTS, Vodafone, Idea, Uninor and BSNL among others. Meanwhile, Hindu Business Line reports that Viom

True Corporation launches Telecom Infrastructure Fund

Please forgive TowerXchange picking up on “old news” but we weren’t covering Asia in late 2013 when, together with SCB Asset Management, True Group announced the formation of the TRUE Telecommunications Growth Infrastructure Fund (TRUEGIF). True Group will transfer to TRUEGIF 6,000 telecom towers (of which 5,845 may be leased), a core fibre optic grid of 5,112 kilometers and related transmission equipment, and 1,200,000 ports in the broadband system located in provincial areas of Thailand

Balitower IPO surges on trading debutShares in Bali Towerindo Sentra (Balitower)

surged in it’s trading debut on the Indonesian stock exchange, raising approximately Rp35 billion (approximately US$3mn), helping fund the regional towerco’s expansion plans.

The IPO released 14.7% of Balitower’s paid capital, 88 million shares, priced at Rp400 (US$0.035), valuing the company at around US$20mn. Shares rose 50% to Rp600 on it’s March 14 debut, reaching a high of Rp1,455 rupiah a week later (US$0.13) before trading was suspended. According to Balitower filings, the company made a profit of Rp53 billion in the first nine months of 2013. In an interview on IDN Financials, Balitower President Director Jap Owen Ronadhi explained the company’s growth plan: “we plan to build more


Asia NewsIndia

India

Thailand

Indonesia

Indonesia

towers, expanding from currently 208 towers to 300-350 towers. We focus 70% of our development in the Badung Municipality, which is the tourism area with high traffic. We will also build in Buleleng and in Greater Bali.” “The IPO proceeds were about Rp35 billion, and our total capex is Rp150-200 billion, funded by internal cash, IPO proceeds and bank loans” Asked how he saw the future of the tower industry in Indonesia, Balitower’s President Director added “the merger of Axis and XL will automatically reduce the market, while the strength of the US dollar hampers operators expansion. However there is an increase in demand for capacity, for 3G sites, and by the end of the year operators will start developing 4G LTE, which will expand our market.”

Mitratel tower sale remains a political hot potato

Whether a stake in state-backed Telkom Indonesia’s towerco Mitratel is sold, or whether the company is listed, remains unlikely to be determined before Indonesia’s next elections. Mitratel owns an estimated 3,000 towers, and is in the process of taking over 14,000 towers owned by Telkomsel, a mobile phone operator in which Telkom has a 65% stake

Indonesian towerco IBS plans rights issueListed in 2012, PT Inti Bangun Sejahtera has

announced plans for a rights issue of 208mn shares at Rp500 per share


Indonesia

Indonesia

back to the HQ of Ceragon and resuming as COO. Trevor Gordon will take over as regional head for Africa, while Amit Ancikovsky heads up LatAm and Ram Prakash Tripathi is responsible for Asia. All change at Telefonica, where COO Jose Maria Alvarez-Pallete takes operations in Europe and LatAm; former head of LatAm Santiago Fernandez Valbuena will become strategy chief and retain a place on the board. The reshuffle sees Spain, Brazil and UK CEOs, Luis Miguel Gilperez, Antonio Carlos Valente and Ronan Dunne joining Telefonica’s excom.

Millicom will appoint Tim Pennington as their new CFO in June 2014. Tim moves across from holding the equivalent position at Cable & Wireless Communications.

Finally, the restructuring of Airtel Africa has led to the appointment of VG Somasekhar to lead a new business unit comprising of Zambia, Congo-Brazzaville, Malawi, Burkina Faso, Niger, Chad, Madagascar and Seychelles. Somasekhar had been MD of Airtel Uganda. Another business unit comprising Ghana, Kenya, Tanzania, Gabon, Uganda, Sierra Leone and Rwanda will be led by Christophe Soulet. The Nigeria and DRC business units will continue to be led by Segun Ogunsanya and Louis Lubala. All four business unit heads will report to Airtel Africa CEO Christian De Faria

Howard Earley has taken over as CEO of Inala. Howard is well known in the African tower industry as the former CFO and COO of blue-chip TI firm Plessey. Howard succeeds TowerXchange advisory board member Laurentius Human, outgoing CEO of Inala, who has crossed over to the investment side of the business with Jabil. Meanwhile John Earley (no relation!), is moving

Tower People

Howard Earley, CEO, Inala

TowerXchange facilitates an open dialogue and shares knowledge between key stakeholders involved in the transformation of the Latin American telecom tower industry. With carriers actively involved in upgrading their network to meet growing demand for capacity and tower companies’ ever-increasing appetite to acquire towers, the industry needs information, transparency and clarity.

The TowerXchange community unlocks priceless insights enabling you to evaluate opportunities across Latin America for your business, through exclusive interviews, original research and live events.

A unique, invitation-only gathering of the top 200 decision makers in the Latin American tower industry

Meetup Americas 2014May 20-22, Rosen Shingle Creek, Orlando, Florida

Co-located with the PCIA Wireless Infrastructure Show

Register online at http://www.towerxchange.com/apply-to-attend. Questions? Call Annabelle on +44 7423 512588

Bronze Sponsor:Silver Sponsor:Gold Sponsor: Co-located with:

Media Partners:Association Partner:

Featuring a roundtable and a panel on African towers

Created and hosted by:

Tower Xchange

Country Manager, Costa Rica, Continental Towers< Country focus: Nigeria – Inder Bajaj, CEO, Helios Towers Nigeria< Regional focus: Central America - Bill Bates, Vice President - Business Development, SBA Communications

12:20 Networking lunch

1:40 Second structured networking roundtable:< Key tower manufacturing and design requirements for state of the art project development - Bhaskar Babu, Marketing Head - Telecom and Structures, Ganges Internationale< Country focus: Myanmar - John Stevens, CEO, Irrawaddy Green Towers< Saving sharing as a service business model – Pros and Cons - Emmanuel Jakobson, Vice President Sales, AIO Systems< Regional focus: Africa - Chuck Green, CEO, Helios Towers Africa< Opportunities for towercos to expand beyond the macro networks into DAS and small cells - César Peña, Latin America Sales & Business Development Senior Director, Mer Group Telecom Division< Contractual terms that create and destroy value when negotiating sale and leaseback and BTS programmes - Andres de Orleans Borbon, CFO, Helios Towers Africa< How to scale modular hybrid energy solutions for

multiple tenants, unlocking significant opex savings - Dr Michele Greca, VP and CEO, Ascot International

3:00 Afternoon coffee and networking

3:20 Strategic partners panel part I: the importance of partner selection for ROI optimisation and opex reduction

Moderator: Carlos Tilac, COO, Torrecom

Senior representatives from Mer Group Telecom Division, Ganges Internationale Private, SiteOne and Acsys will offer their perspective on key factors carriers and towercos need to consider when selecting their contractors and suppliers

3:40 Investors keynote panelModerator: Marco Cordoni, Senior Partner, Analysys MasonMark Johnson, Managing Director, The Carlyle GroupRyan Lepene, Managing Director, Peppertree CapitalZaid Alsikafi, Managing Director, Madison Dearborn Partners

4:40 Closing remarks from day one

5:00 Close of day one

From 8:00 Registration and coffee

9:00 Welcome and opening remarks Kieron Osmotherly, Founder and CEO, TowerXchange

9:10 The status of the Central and South American tower industry and forecasts for the mid-termArianna Neri, Head of Americas, TowerXchangeKieron Osmotherly, Founder and CEO, TowerXchange

9:30 Mobile network operator decision makers panel Jorge Paniza, CTO, Telefonica Costa Rica, Edgar Geidans, Group CTO, Trilogy International, Eduardo Ramirez Palomeque, Infrastructure Director, Iusacell

10:40 Morning coffee and networking

11:00 First structured networking roundtables:< Country focus: Brazil - Dr Chahram Zolfaghari, CEO, Brazil Tower Company< Country focus: Mexico - William Ritchey, President, IIMT< Country focus: Chile - Ricardo Loor, COO, Torres Unidas< Country focus: Colombia - Eric Ensor, COO, Torres Andinas < Country focus: Ecuador - Yamil Franco, Americas Regional Manager, Leadcom Integrated Solutions< Country focus: Costa Rica - Federico Lorenzana,

TowerXchange Meetup AmericasOrlando, Florida | 20-22 May 2014


Day One | Tuesday 20 May Programme

11:10 Strategic partners panel part II: the importance of partner selection for ROI optimisation and opex reductionModerator: Carlos Tilac, COO, TorrecomSenior representatives from Leadcom, AIO Systems, HMS Industrial Networks, Telemisis and Metalogalva will offer their perspective on key factors carriers and towercos need to consider when selecting their contractors and suppliers

11:30 Towerco keynote panel Part IModerator: Jonathan Atkin, Managing Director, RBC Capital MarketsKurt Bagwell, President - International, SBA CommunicationsJim Eisenstein, Chairman & CEO, Grupo TorreSurMarc Ganzi, President, Digital Bridge Holdings & Mexico Tower PartnersPhil Kelley, SVP Corporate Development, Crown CastleOlivier Puech, CEO Latin America, American TowerDaniel Seiner, CEO, Torres Unidas

12:30 Networking lunch

1:30 International focus: Africa keynote panelInder Bajaj, CEO, Helios Towers NigeriaChuck Green, CEO, Helios Towers AfricaDaniel Lee, Managing Director, Intrepid Advisory Partners

Terry Rhodes, Co-founder & Director, Eaton TowersNina Triantis, Managing Director, Global, Head of Telecoms & Media, Standard Bank2:30 Strategic partners panel part III: the importance of partner selection for ROI optimisation and opex reduction

Moderator: Carlos Tilac, COO, Torrecom

Senior representatives from Ascot, ConnectM, Karam, Sagemcom and Invendis will offer their perspective on key factors carriers and towercos need to consider when selecting their contractors and suppliers

2:50 Afternoon coffee and networking

3:10 Towerco keynote panel Part IIModerator: Jonathan Atkin, Managing Director, RBC Capital Markets Eric Ensor, COO, Torres AndinasJose Paz, CEO, Continental TowersWilliam Ritchey, President, IIMTMaria A. Scotti, CEO, TorrecomDr Chahram Zolfaghari, CEO, Brazil Tower Company

4:10 Summary and closing remarks from day two

9:00 Opening remarks - Jonathan Adelstein, CEO, PCIA

9:05 Key challenges and lessons learnt from a Central American carrier and towerco in South East Asia - an executive talkPat Casey, Group HR Director, Digicel and Kieron Osmotherly, Founder and CEO, TowerXchange

9:30 Third structured networking roundtable:< How to survey, evaluate and upgrade towers for multiple tenants - Gal Barzilai, General Director, Infracomex (Mer Telecom Mexico Subsidiary)< Site energy efficiency on single and multi-tenant sites - Bartek Stelmasiak Candell, Global Key Account Manager - Telecom Infrastructure and Energy, HMS industrial Networks < How to raise capital for tower transactions - Dan Lee, Managing Director, Intrepid Advisory Partners< Control and security issues of co-located sites: challenges and solutions - David Meganck, COO, Acsys < Health and Safety principles in the tower industry - Todd Schlekeway, Executive Director, National Association of Tower Erectors (NATE)

10:50 Morning coffee and networking


Day Two | Wednesday 21 May Programme

TowerXchange Meetup AmericasOrlando, Florida | 20-22 May 2014

Leadcom Integrated Solutions

Marc Ganzi, President, Digital Bridge Holdings and Mexico

Tower Partners

Edgar Geidans, Group CTO, Trilogy International

Chuck Green, CEO, Helios Towers Africa

Mark Johnson, Managing Director, The Carlyle Group

Phil Kelley, SVP Corporate Development, Crown Castle

Dan Lee, Managing Director, Intrepid Advisory Partners

Ryan Lepene, Managing Director, Peppertree Capital

Ricardo Loor, COO, Torres Unidas

Federico Lorenzana, Country Manager, Costa Rica,

Continental Towers

Arianna Neri, Head of Americas, TowerXchange

Kieron Osmotherly, Founder & CEO, TowerXchange

Jorge Paniza, CTO, Telefonica Costa Rica

David Porte, Vice President – International, SBA

Communications

Jose Paz, CEO, Continental Towers

Olivier Puech, CEO Latin America, American

Tower

Eduardo Ramirez Palomeque, Infrastructure

Director, Iusacell

Terry Rhodes, Co-founder & Director, Eaton

Towers

William Ritchey, President, IIMT

Maria A. Scotti, CEO, Torrecom

Todd Schlekeway, Executive Director, National

Association of Tower Erectors (NATE)

Daniel Seiner, CEO, Torres Unidas

Carlos Tilac, COO, Torrecom

Nina Triantis, Managing Director, Global, Head of

Telecoms & Media, Standard Bank

Dr. Chahram Zolfaghari, CEO, Brazil Tower

Company

Jonathan Adelstein, CEO, PCIA

Jonathan Atkin, Managing Director, RBC Capital

Markets

Zaid Alsikafi, Managing Director, Madison

Dearborn Partners

Kurt Bagwell, President – International, SBA

Communications

Inder Bajaj, CEO, Helios Towers Nigeria

Bill Bates, Vice President – Business Development,

SBA Communications

Pat Casey, Group Human Resources Director, Digicel

Marco Cordoni, Senior Partner, Analysys Mason

Andres de Orleans Borbon, CFO, Helios Towers

Africa

Jim Eisenstein, Chairman & CEO, Grupo TorreSur

Eric Ensor, COO, Torres Andinas

Yamil Franco, Americas Regional Manager,

Confirmed speakers include:


14 Top Towercos under one roof at the TowerXchange Meetup Americas 2014

Delegate List as on 9 May 2014

www.towerxchange.com | TowerXchange Meetup | 11| TowerXchange Issue 8 | www.towerxchange.com24

Accruent: Regional Vice President, SalesAccruent: Director, Product ManagementACSYS: CEO and FounderACSYS: Business Development DirectorAIO Systems: VP SalesAIO Systems: VP MarketingAIO Systems: Director of Sales - Latin AmericaAKCP: Vice President, ManufacturingAmerican Tower: Senior Strategic Implementation LeadAmerican Tower: Director of New ProductsAmerican Tower Company: Chief Executive Officer - Latin AmericaAnaysys Mason: Senior PartnerApollo Solar: CEOAscot Industrial: Global Account Key ClientsAscot Industrial: CEOAT&T: Area Manager, National Small Cell Business DevelopmentAT&T: Advanced Technical SupportAT&T: Project ManagerAT&T: Notice to Proceed ManagerAT&T: Central Region Account ManagerAT&T: No job title givenAT&T: Area Manager Network Services RFMEAT&T: RFMEAT&T: No job title givenAT&T: Senior ManagerAT&T: Sr. Technical Program ManagerAT&T Cleartalk: Project ManagerAT&T Mobility: Manager OperationsAT&T Towers: SE Account Manager - DAS & TowersAT&T Towers: National DAS Tenant Add Area Manager

AT&T/Strategic Sourcing: DirectorAuBren DAQS Europe: Managing Directorazeti Networks AG Vice President, Sales Worldwideazeti Networks AG Head of PreSales/ConsultingBarclays Capital: Managing DirectorBerkshire Partners: Managing DirectorBerkshire Partners: Advisory DirectorBR Towers: Strategic/Financial/Comercial Planning Exceutive and M&ABrazil Tower: PresidentBright House Networks: No job title givenC-Spire Wireless: No job title givenCarmanah Technologies: Sales Manager - ObstructionCIG Wireless: CEOCIG Wireless: CFOClean Power Systems: CEOConnectM: CEOConnectM: COOContinental Towers Corp: Country Manager, Costa RicaContinental Towers Corp: Chief Executive OfficerCrown Castle: Director Tower AcquisitionsCrown Castle: President and CEOCrown Castle: Senior Vice Principal Corporate DevelopmentCummins Power Generation: Director - Telecom BusinessDeltanode Solutions AB: Business AdvisorDeltanode Solutions AB: CEODigicel: Group Human Resources DirectorEaton Towers: Co-Founder & DirectorEltek: President - Americas RegionFairPoint Communications: Director

FLEXENCLOSURE CEOFLEXENCLOSURE Sales Director Southern AfricaFluidic Energy: President Latin AmericaGanges Internationale: Head - Telecom & StructuresGemalto: Director of Business Development Sensor Logic M2M PlatformsGemalto: Product Marketing DirectorGeneral Communications, Inc.: DirectorGlobecomm: No job title givenGrupo TorresSur: Chief Development Officer and Corporate SecretaryGrupo TorresSur: Chairman & Chief Executive OfficerGS Yuasa: Senior Director - Telecom and UPSHelios Towers Africa: CFOHelios Towers Africa: Chief Executive OfficerHelios Towers Nigeria: Chief Technical OfficerHelios Towers Nigeria: CFOHelios Towers Nigeria: Chief Executive OfficerHighline do Brasil: CEOHighline do Brasil: DirectorHMS Industrial Networks Global Key Account ManagerHMS Industrial Networks Business Development ManagerIIMT: Executive Vice PresidentInside Towers: Managing editorInside Towers: No job title givenIntelli Site Solutions, SAPI de CV: Co-CEOIntelli Site Solutions, SAPI de CV: Co-CEOIntelli Towers: Chief Executive OfficerIntelli Towers: Chief Technical OfficerIntrepid Advisory Partners: Managing DirectorInvendis: CEO

Delegate List as on 9 May 2014

www.towerxchange.com | TowerXchange Issue 8 | 25| TowerXchange Meetup | www.towerxchange.com2

Irrawaddy Green Towers: CEOIusacell: Infrastructure DirectorJefferies LLC: AnalystKARAM - PN International: General Manager - International MarketingLeadcom Integrated Solutions: Americas Regional ManagerLeadcom Integrated Solutions: Regional Manager Central America & CaribbeanLeadcom Integrated Solutions: CEOM2M Spectrum Networks LLC: Senior Director Network DeploymentM2M Spectrum Networks LLC: SVP Network ImplementationM2M Spectrum Networks LLC: Deputy DirectorMacquarie Infrastructure and Real Assets Inc.: Vice PresidentMadison Dearborn Partners: Managing DirectorMedia Venture Partners, LLC: AnalystMer Group Telecom Division: Latin America Sales & Business Development Senior DirectorMer Group Telecom Division: General Director Infracomex (Mer Telecom Mexico Subsidiary) Mer Group Telecom Division: General Manager Infrastructure BUMetalogalva: Business Unit Manager - TelecomMexico Tower Partners: CEOMexico Tower Partners: PresidentMorgan Stanley: MD, TMTNAAP Global Solutions: VP Sales and Business DevelopmentNational Association of Tower Erectors (NATE): No job

title givenNational Association of Tower Erectors (NATE): Executive DirectorPCIA: Chief Executive OfficerPeppertree Capital: PresidentPeppertree Capital: Managing DirectorPhoenix Tower Industrial: Vice President, Mergers & AcquisitionsPhoenix Tower International: Chief Executive OfficerPioneer Cellular: No job title givenPower-One: Product ManagerPower-One: Distribution Sales ManagerQMC Telecom do Brasil: PresidentRamboll: Head of Department Masts & TowersRamboll: Project DirectorRBC Capital Markets: Managing DirectorSagemcom: Energy Solutions ManagerSagemcom: Area Sales ManagerSBA Communications: Director International OperationsSBA Communications: Vice President, Business DevelopmentSBA Communications: President, InternationalSeccional Brasil: Chief Executive OfficerSK Telecom, SK Planet: Board MemberSprint: Manager, Custom Network EngineeringSprint: Telecom Design EngineerSprint: Project/Program Manager IIIStandard Bank: Managing Director, Global Head of Telecoms & MediaSunco Energy SL: Telecommunications DirectorTarantula: Executive ChairmanT-Mobile: No job title given

T-Mobile: Sr Manager DAS / SmallCellT-Mobile: RF EngineerTelefonica Costa Rica: CTOTelefonica Ecuador: Gerente de Despliegue de RedTelemisis: Managing DirectorTelemisis: Commercial DirectorThe Carlyle Group: Managing Director Time Warner Cable Business Class: No job title givenTorrecom: Chief Executive OfficerTorrecom: COOTorres Andinas: Chief Operations OfficerTorres Unidas: Chief Executive OfficerTorres Unidas: Chief Operations OfficerTowerCo: CEOTrilogy International: Group Chief Technology OfficerTrojan Battery: DirectorTrojan Battery: Technical AdvisorUS Cellular: Mgr. Strategic SourcingVerizon Wireless: No job title givenVerizon Wireless: Switch TechVerizon Wireless: Site Acquisition ManagerVerizon Wireless: Construction Purchasing ManagerVerizon Wireless: Site Acquisition ManagerVerizon Wireless: Site Acquisition CoordinatorVerizon Wireless: Site Acquisition ManagerVerizon Wireless: Site Acquisition ManagerVinson & Elkins: PartnerVinson & Elkins: PartnerWells Fargo Securities: AnalystWells Fargo Securities: AssociateWestchester Services L.L.C.: Director of Real Estate

TowerXchange’s unique structured networking round tables

200 Director, VP and C-level Decision makers broken down as follows:

Mobile Network Operators

Towercos

Investors and Investment Management Advisors

Lawyers and Strategic Consultants

Energy Equipment Providers

OEMs & Managed Service Providers

Static Assets, Access Control & Monitoring and Management

TowerXchange roundtables bring together 8-10 representatives

of different segments of the tower industry ecosystem, brought

together by a common geographical focus or hot topic. There

are 3 roundtable sessions at the Meetup, each new roundtable

“reshuffles” the decision maker-level participants at your table so

you will meet several different prospective partners.

| TowerXchange Issue 8 | www.towerxchange.com26 www.towerxchange.com | TowerXchange Issue 8 | 5

Meetup Americas Exhibition

Companies involved in the regional telecom tower industry have a unique opportunity to be part of the most focused regional gathering of the year and exhibit in the TowerXchange Latin American pavilion, placed at the very heart of PCIA’s exhibition hall where 100+ international companies will showcase their solutions to the largest, most qualified and concentrated audience of tower industry decision makers in the world.

Discuss your requirements today and find out all the available options for your participation by contacting Annabelle Mayhew at [email protected] or via phone at +44 (0) 7423 512 588.

Contact us today to sponsor or exhibit at the TowerXchange Meetup Americas 2014.


TowerXchange Pavillion

331131

129

127

228

KeeganWireless230

Food & Drinks

Overhead DoorOverhead

Door

ConnectionsCafe

Small Cell PavillionElectro

-Wire623

CommScope520

Slatercom421

AmiritTechnologies

423

TEConnectivity

520/620

Huada621

Product Showcase

Ericsson 20x20

20x2020x20

C D

A B

CS

-S S

ervi

ce D

esk

Food & Drinks

Food & Drinks

226

C SquaredSystems322CLCLodging320

Galtronics221/223

130

128

126

124

122

120

118

116

114

112

110

108

106

104

102

100

430

329 428

327 426

431 530

429 528

427 526

531 630

529 628

527 626

731

729

727

725

723

721

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NATE713

711

709

707

705

703

701

129

127

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226

105

103

101

KGP202/204

Unimar200

11’ 11’ 11’ 11’ 11’ 11’ 11’

20’

GMESupply

205

MosaikSolutions

203

AFL201

MaxCell304

SBA

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Hughey &Phillips302

CDMI300 401

Fibrebond405

ValmontSite Pro 1

403

ValmontStructures

401

MaxCell304

Hughey &Phillips302

CDMI300

Terracon505

NelloCorp.

503

Deltanode501

SabreIndustries604

Graybar602

3ZTelecom600

ITL, LLC605

Skyhawk601

704

603Accruent700/702

117

115

113

214

Eastpointe216

212

TUFTUG217

Lattice213

Amphenol316/314

TestEquity211

EhresmannEngineering

209tarantula308

Trans-American308

111

109

210

CellphoneMate208

722622523323Wideband

Antennas422/420

Shive-Hattery

321

522

720

TWRLighting

615

716617

714BB&T

Atlantic Risk515

TP Electric616

DynamicEnviromental

517

EMSS614

Oldcastle609

710PCTEL611

OTL Solution708

Henkles & McCoy610

FidelityNational

511

TectonicTelecom509/508

631

529

527

228

228

226

ENTRANCE ENTRANCE


331131

129

127

228

KeeganWireless230

Food & Drinks


Door

ConnectionsCafe


-Wire623

CommScope520

Slatercom421

AmiritTechnologies

423

TEConnectivity

520/620

Huada621

Product Showcase

Ericsson 20x20

20x2020x20

C D

A B

CS

-S S

ervi

ce D

esk

Food & Drinks

Food & Drinks

226


Galtronics221/223

130

128

126

124

122

120

118

116

114

112

110

108

106

104

102

100

430Azeti

KARAM Naap

TowerXchange

Leadcom Ascot

Mer Group Telecom Division

Invendis

Metalogalva

Sagemcom

AIOSystems

HMSIndustrialNetworks

GangesInt.

ACSYS

Telemisis329 428

327 426

431 530

429 528

427 526

531 630

529628

527 626

731

729

727

725

723

721

717

715

NATE713

711

709

707

705

703

701

129

127

228

226

105

103

101

KGP202/204

Unimar200

11’ 11’ 11’ 11’ 11’ 11’ 11’

20’

GMESupply

205

MosaikSolutions

203

AFL201

MaxCell304

SBA

Com

mu

nic

taio

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Hughey &Phillips302

CDMI300 401

Fibrebond405

ValmontSite Pro 1

403

ValmontStructures

401

MaxCell304

Hughey &Phillips302

CDMI300

Terracon505

NelloCorp.

503

Deltanode501

SabreIndustries604

Graybar602

3ZTelecom600

ITL, LLC605

Skyhawk601

704

603Accruent700/702

117

115

113

214

Eastpointe216

212

TUFTUG217

Lattice213

Amphenol316/314

TestEquity211


209tarantula308

Trans-American308

111

109

210

CellphoneMate208


Antennas422/420

Shive-Hattery

321

522

720

TWRLighting

615

716617

714BB&T

Atlantic Risk515

TP Electric616

DynamicEnviromental

517

EMSS614

Oldcastle609

710PCTEL611

OTL Solution708

Henkles & McCoy610

FidelityNational

511


631

529

527

228

228

226

ENTRANCE ENTRANCE

70% SOLD

GS Yuasa

www.towerxchange.com | TowerXchange Issue 8 | 7

Tower Industry Value Chain

Backhaul, FTTT, Core Network Active equipment

Tier 1 OEMs

Mobile Network Operators

Investors: private equity, debt finance, infrastructure funds

Law firms

Group level strategistsC-suite & network planners at local OpCos

Outsourceto

Strategic consultancyDue diligenceDemand forecastsValuations

Independent TowercosSell co-locationsUpgrade capacityBuild-to-suitMaximise uptimeReduce opexInvest in network

Transfer assets to

Construction servicesTurnkey infrastructure rolloutManufacture of steelworkImport, customs & deliveryLeasing & permittingInstallation of towersUpgrades for capacityO&M services

Dynamic assets

Energy equipmentDiesel gensetSolarWindFuel cell

BatteriesRectifiersInvertersLine conditioningPIUs

Air conditioning Lightning protectionControllerVoltage regulator

Managed service providers

ESCOs

Static assetsTowers & mastsSheltersBracketsEnclosuresLightingFencing

O&M servicesMaintenanceStaffingSpare partsVMI?Refueling

Energy as a service

Monitoring & managementRMSIntelligence/analysisSite managementJob ticketingAsset lifecycle platform

Access control

Subcontract

MicrogenerationCommunity power

Subcontract or in-house

Outsourceto

Som

e be

com

e to

wer

co

Investment management advisors

TowerXchange serves the Latin American tower community along two intersecting axes. On a horizontal axis we facilitate relationships between MNOs, towercos, investors and their advisers, aiding the structuring of deals and the transfer of assets. On a vertical axis, we examine the impact on, and opportunities for, the passive infrastructure supply chain, whether they sell to MNOs, towercos or through OEMs.

How TowerXchange ensure an audience of decision makers

TowerXchange successfully launched its first live event for the emerging market telecom tower industry in 2013. Since then, we have gained a strong reputation for delivering a high quality, meaningful platform for our selected audience of tower professionals.

The TowerXchange Meetup is exclusively for Director, VP and C-level decision makers. If registrants are substituted, we will only accept replacement registrants of equal or greater seniority than those pre-approved.

Through our passive infrastructure focused journal publication and research, TowerXchange have cultivated relationships with 4200 (at time of press) decision makers active in the Latin American tower industry, 85% of whom are at Director, VP or C-level.

By co-locating our event with the highly successful North American PCIA’s 2014 Wireless Infrastructure Show, we will offer our audience a unique chance of exposure to the most mature tower industry in the world and its poll of top telecom professionals.

Who will you meet

| TowerXchange Issue 8 | www.towerxchange.com28

28 guaranteed, qualified introductions‘How to’ advice from proven practitioners

Your trusted community host and commentator

Dedicated to passive infrastructureDecision makers only An aid to shortlisting / receiving RFPs

4 structured networking sessions assemble participants in groups of 8, brought together by a common regional or topic matter interest, and arranged so each group includes 2 MNOs, a towerco, investor, advisor, OEM or managed service provider, energy equipment and a static asset or RMS manufacturer

The main TowerXchange Meetup is supplemented by ‘how to’ workshops, tackling topics from how to structure a tower transaction to the implications of 4G, while the business leaders from MNOs, towercos and investors will debate hot topics in unmissable panel discussions

The TowerXchange Meetup draws on the credibility, original research and comprehensive relationships with Latin American telecoms infrastructure decision makers who read our renowned journal

While other events increasingly focus on devices and VAS, TowerXchange maintains a laser-beam focus on passive infrastructure

Access to the TowerXchange Meetup is by invitation-only. Our 200 attendees are vetted for decision making authority (Director, VP and C-level only), and the ratio of buyers to sellers is carefully managed

Strategic Partners Panels: dynamic panel sessions offering an opportunity to key solution providers and king buyers to interact. A unique way to accelerate partner selection due diligence and shortlist RFP recipients

What makes TowerXchange Meetups uniqueJoin the TowerXchange community at our exclusive executive retreat in Orlando where our unique, networking-driven “unconference” will facilitate tower transaction deal-making, accelerate buyers’ partner selection due diligence, and provide passive infrastructure equipment and service providers with dozens of highly qualified new prospects.


Respecting confidentiality yet revealing what’s really going on

Enjoy networking with 200 VIPs

Tower transactions are highly confidential, so the TowerXchange Meetup is held under “Chatham House Rule” and our unique roundtables, private meeting space and informal receptions will enable you to discreetly discuss and advance strategic partnerships

Thanks to the co-location with US’ PCIA, our Meetup will be hosted at the Rosen Shingle Creek in Orlando, Florida. Our ideal location is just a short distance to a variety of Orlando’s best attractions, restaurants, shopping and entertainment venues and will be the perfect address for three days of intensive learning and networking.

The must-attend event for tower industry decision makersAttending, exhibiting or sponsoring our Meetup Americas represents a unique opportunity to be exposed and interact with the entire value chain of Latin American tower professionals in addition to key professionals from the leading North American tower market.

Our attendees will enjoy three days of knowledge sharing thanks to our closed-door, highly interactive Meetup format, which will focus purely on the Latin American tower industry. At the same time, our audience can experience the advantages of meeting and gathering with over 2000 attendees joining the Wireless Infrastructure Show from all over the world in the networking and exhibition areas.

For our exhibitors, “all booths are created equal” at TowerXchange – you won’t be swallowed up into the shadow of the huge exhibits of deep-pocketed big brands – at TowerXchange everyone gets the same size turnkey booth, which means vendors are shortlisted to receive RFPs purely on the basis of their ability to

TowerXchange Passive

Infrastructure footprint

Futurecom:5% passive infrastructure

Mobile World Congress: 1% passive infrastructure

Devices & VAS footprint

Mobile World Congress footprint

Futurecom footprint

TowerXchange: 100% passive infrastructure

www.towerxchange.com | TowerXchange Issue 8 | 9

meet buyer requirements. The TowerXchange Meetup has been designed to incur low logistics costs – there’s no need to ship anything to the event – all the materials you will need will fit in the hold of the plane you fly in on.

Futurecom and Mobile World Congress are great events for general networking, but they increasingly focus on devices and VAS, not towers and passive infrastructure. The TowerXchange Meetup is 100% devoted to passive infrastructure. It’s 100% decision maker level: only Director, VP and C-level are permitted to attend. And our ratio of buyers to sellers is carefully controlled.

| TowerXchange Issue 8 | www.towerxchange.com30


331131

129

127

228

KeeganWireless230

Food & Drinks


Door

ConnectionsCafe


-Wire623

CommScope520

Slatercom421

AmiritTechnologies

423

TEConnectivity

520/620

Huada621

Product Showcase

Ericsson 20x20

20x2020x20

C D

A B

CS

-S S

ervi

ce D

esk

Food & Drinks

Food & Drinks

226


Galtronics221/223

130

128

126

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122

120

118

116

114

112

110

108

106

104

102

100

430

329 428

327 426

431 530

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531 630

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731

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723

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717

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NATE713

711

709

707

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701

129

127

228

226

105

103

101

KGP202/204

Unimar200

11’ 11’ 11’ 11’ 11’ 11’ 11’

20’

GMESupply

205

MosaikSolutions

203

AFL201

MaxCell304

SBA

Com

mu

nic

taio

ns

Hughey &Phillips302

CDMI300 401

Fibrebond405

ValmontSite Pro 1

403

ValmontStructures

401

MaxCell304

Hughey &Phillips302

CDMI300

Terracon505

NelloCorp.

503

Deltanode501

SabreIndustries604

Graybar602

3ZTelecom600

ITL, LLC605

Skyhawk601

704

603Accruent700/702

117

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Eastpointe216

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TUFTUG217

Lattice213

Amphenol316/314

TestEquity211


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Trans-American308

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CellphoneMate208


Antennas422/420

Shive-Hattery

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TWRLighting

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714BB&T

Atlantic Risk515

TP Electric616

DynamicEnviromental

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EMSS614

Oldcastle609

710PCTEL611

OTL Solution708

Henkles & McCoy610

FidelityNational

511


631

529

527

228

228

226

ENTRANCE ENTRANCE

TowerXchange have co-located our Latin American Meetup with the premier national event for mobile network solutions-produced for the industry, by the industry; The Wireless Infrastructure Show, organised by the PCIA.

Your registration for the TowerXchange Meetup Americas includes a full access pass to The Wireless Infrastructure Show, which means

that throughout the event you can choose to attend sessions in the TowerXchange Meetup or you can visit The Wireless Infrastructure Show opening reception, general and tracked sessions and keynotes.

The Wireless Infrastructure Show attracts more than 2,000 thought leaders and industry innovators from across the wireless

infrastructure ecosystem. Network within the primary forum for infrastructure owners and operators, carriers, investment community representatives, government officials, equipment manufacturers and service providers, and other integrally involved in shaping the future of the industry. This market defining Show features over 35 lectures, panels, round-tables, and special events on a comprehensive selection of industry topics taught by leading industry experts.

The TowerXchange Pavilion is located on The Wireless Infrastructure Show exhibition floor, so you have access not just to our 18 Latin America-focused exhibitors, but over 100 exhibitors showcasing all of the most relevant infrastructure development tools, platforms and services helping to drive the industry forward across North, Central and South America!


PCIA Wireless Infrastructure Show

Your TowerXchange Meetup Americas registration includes a full access pass to the co-located PCIA Wireless Infrastructure Show!

Job functions at The Wireless Infrastructure Show: Industry composition at The Wireless Infrastructure Show:

C-Level

Engineering/Technical Operations

Investor/Financial Analyst

Business Development

Infrastructure Providers

Carriers

Professional Services

Consultant

Legal

IT

Financial

Other

28%

17%

8%

30%

10%

4%3%

40%

20%

20%

10%

10%

Our sponsors


Site One

SiteOne is an innovative Telecom site management solution based on a unique Intelligent Site Management System to monitor and manage remotely distributed sites. By installing the azeti NG at the site to be monitored/controlled, you can continually watch over IP based equipment and other operational technologies such as access control, energy consumption or environmental parameters. This combination provides a complete view of all the critical elements installed on the site, while allowing operators to not only monitor performance but also to execute and program intelligent actions based on multiple scenarios. SiteOne adresses some of the most common remote site issues including theft of equipment, inefficient energy usage, unauthorized entry, HVAC control, lack of real-time data or general performance monitoring.

www.azeti.net

Acsys

Acsys is a global leader in tower access control solutions. Our patented, military-grade solutions based on our unique, programmable locks and keys facilitate intelligent access control while avoiding the bottlenecks associated with wired systems, including lengthy and expensive installation, maintenance, external power dependency, etc.

European-rooted, with an innovative team from around the globe, and the benefits of China-based production, Acsys stays at the forefront in designing cutting-edge security and staff management solutions at a competitive price. World unique solutions like our Code Generating System are changing the face of tower access and are utilized by many of the industry’s biggest names.

www.acsys.com

Silver Sponsor:Gold Sponsor:

Our sponsors


Mer Group Telecom Division

Mer Group Telecom Division provides end-to-end Wireless Infrastructure Turnkey Solutions – from network planning, site design and provision of towers, to site construction, equipment installation, network optimization and maintenance. Combining cost effectiveness, short lead times and advanced engineering techniques, we are strongly committed to client satisfaction. With a highly developed logistics chain, advanced tower manufacturing facilities and an extensive network of warehouses, our solutions are flexible and scalable, providing measurable benefits for customers. Our strong presence in Latin America enables us to leverage the combined in-depth regional knowledge of local partners with our industry acknowledged engineering expertise for our customers’ benefit.

The division leverages its proven global track record, comprehensive knowledge and accumulated expertise to seamlessly deliver technologically innovative and best-of-breed solutions including M2M enablement and vertical market applications, mobile financial services, cloud billing, MVNO enablement, as well as on/off board and remote/contactless payment solutions for public transport operators.

www.mer-group.com/solutions/wireless-infrastructure

Gemalto

Gemalto (Euronext NL0000400653 GTO) is the world leader in digital security with 2013 annual revenues of €2.4 billion and more than 12,000 employees operating out of 85 offices and 25 research and software development centers, located in 44 countries.

In Machine-to-Machine (M2M), Gemalto’s Cinterion® modules provide connectivity to millions of devices worldwide. Our SensorLogic M2M platform is a device-agnostic platform, making the integration of diverse devices and software applications simple and straightforward. SensorLogic provides data management, device management, and application enablement for remote monitoring and control solutions. Our solutions are trusted by MNOs and governments around the world.

www.gemalto.com

ConnectM

ConnectM is a leading, global Machine-to-Machine (M2M) Technology Solutions, Business Intelligence (BI) and Services Company headquartered in Bangalore, India.

ConnectM Tower Remote Management Solution (TRMS) is used at around 5000 Towers in India, 4500 Towers across 9 countries in Africa and in South East Asia. TRMS is used for cell tower passive infrastructure management that enables real time monitoring of all the information from the remote sites and helps field operations team to manage the assets efficiently. The solution is designed to help global cellular tower operators to achieve higher uptime with lower cost of operations.

www.connectm.com

Bronze Sponsor:Silver Sponsor: Silver Sponsor:

Our sponsors


Invendis

Invendis Technologies India Pvt. Ltd. started in 2007 with more than 100 years of experience in Telematics. Today, we are global leaders in the business of Remote Monitoring of Telecom Towers.

Invendis designs and delivers technology-enabled business solutions helping Telcos & Towercos offer uninterrupted services to their clients. Invendis also provides a range of Remote Monitoring & Energy Optimization services by leveraging our domain and business expertise.

Our offerings span front end equipments, sensors, transducers, business applications, systems integration, product engineering, Installation, maintenance, 24X7 Global Monitoring & IT infrastructure services.

Invendis pioneered customizable Front End Monitoring & controlling equipments, which helped Towercos to roll out Monitoring & Energy optimization solutions in shortest possible time.

Invendis has a global footprint with over 25,000 installations spread across Asia, Africa & Europe.

Bronze Sponsor:

www.invendis.com

AIO Systems

AIO Systems is a solution provider of next generation of remote management, monitoring and control systems for critical unmanned sites. Offering customized infrastructure management solutions, AIO’s products are designed for telecom, power and water utilities, Oil & Gas industry, and others.

AIO’s total site efficiency solution offer ~34% OPEX reduction to telecom tower operators by reducing power and diesel consumption, preventing theft and loss of fuel and equipment, and allowing them to manage every asset and every tenant individually.

Our unique controllers and peripheral devices allow for a fully integrated remote site security, which includes site surveillance and access control, perimeter security, CCTV, active security elements and more.

AIO Systems manages a modular configuration fit for the clients’ needs, in full automation, and providing timely alerts via a variety of communication channels.

HMS Industrial Networks

HMS Industrial Networks is the leading independent supplier of products for industrial communication and remote management. Products are marketed under the brands Anybus®, IXXAT and Netbiter®. Headquartered in Halmstad, Sweden, HMS is represented by branch offices in 10 countries plus distributors in more than 50. HMS employs over 350 people and reported sales of 60+ million EUR 2013.

Telco site support equipment has become smart, which offers the opportunity to have full remote control of all support equipment on Radio and Core sites and benefit from reducing the OPEX without major investments. With the Netbiter® concept we have developed a vendor independent solution that fits into all kind of systems and takes care of all hassles with different communication protocols, different sizes of diesel tanks, tampering etc.

Bronze Sponsor:Bronze Sponsor:

www.aiosystems.com www.hms.se

Our exhibitors

www.towerxchange.com | TowerXchange Issue 8 | 35 | TowerXchange Issue 8 | www.towerxchange.com14

Telemisis

Telemisis manufactures the SitePro® system for remote monitoring and automation solution for all business sectors; our specialisation being mobile operators and tower owners. We have delivered full site management systems, including power optimisation, fuel management, electricity metering, environmental management and machine/equipment control in harsh and demanding locations since 2000.

Telemisis manufactures the industry’s smallest, most flexible and cost-effective remote telemetry node “SiteNode®”. SiteNode® units provide interfacing and data collection capabilities from a wide range of standard devices and sensors that may already be deployed or will be added. Coupled with Telemisis’ back-end server systems we offer standard or

bespoke solutions.

www.telemisis.com/products

Ganges International Private Ltd.

GIPL (Ganges Internationale Pvt Ltd), started in 1991 manufactures and supplies Tower for Telecommunications, Windmills, Power Transmission & Distribution and Railway Electrification. GIPL has a reputation for timely delivery, quality and total reliability of tower supplies. GIPL’s team of committed, skilled and experience professionals will oversee the A-Z of your tower supplies.

GIPL has a production capacity of 50,000 MTPA (Metric Tons Per Annum) and galvanising capacity of 54,000 MTPA.Expertise:<Tower design, Manufacturing & Supply <100% own manufacturing for all products <ISO 9001: 2000 certified <We provide all types of TowersProducts:<Poles–3m to 9m <Roof Top Towers–9m to 30m <Ground Based Tower/Green Field Tower 20m to 100m <Rapid Deployment Towers & Structures <Palisade Fences

www.gangesintl.com

Metalogalva

TELECOM TOWERS MANUFACTURERQuality products at fair prices. Company with 42 years experience. Young and flexible team. 400 employees; 30 engineers. 100 000 tons galvanizing capacity (year). 14 welding and plasma robots. 6.6M€ Investment on new equipments.Qualifications:<QUALITY MANAGEMENT SYSTEM ISO 9001<RDI MANAGEMENT SYSTEM CERTIFICATE NP 4457 <ENVIRONMENTAL MANAGEMENT SYSTEM ISO 14001 <MANAGEMENT SYSTEM CERTIFICATEOCCUPATIONAL HEALTH AND SAFETY OHSAS 18001 <SPECIAL CERTIFICATION FOR GALVANIZATION for German Norm DASt - GUIDELINE 022Verification:<QUALIFICATION OFMANUFACTURES TO WELD STEEL STRUCTURES according to DIN 18800-7 Level “E” <EC CERTIFICATE FACTORY PRODUCTION CONTROL (FPC) EN 1090 - 1/2 - EXC3

www.metalogalva.pt

Our sponsors

Vinson & Elkins RLLP

Vinson & Elkins is one of the oldest and largest international law firms, with approximately 700 lawyers located in 16 offices around the world.

Our global telecommunications team has extensive experience advising on international telecoms and telecoms infrastructure transactions. We have extensive industry experience, advising on telecoms transactions in numerous countries. Our telecommunications advice includes acquisitions and disposals, debt and equity financing, infrastructure development, operational arrangements, regulatory matters and dispute resolution.

We also have significant experience in the negotiation and drafting of sale and purchase, debt and equity financing, master lease, build-to-suit, site management and service level arrangements; and have played a prominent role in complex fibre transactions.

www.velaw.com

Bronze Sponsor:

Our exhibitors

www.towerxchange.com | TowerXchange Issue 8 | 15 | TowerXchange Issue 8 | www.towerxchange.com36

Ascot

MODULAR & FLEXIBLE ENERGY SOLUTION designed for INDEPENDENT TOWER OPERATORS, who enter in a multi-tenancy agreement with different Operators

ASCOT, leader in Hybrid Solution, has studied and developed a modular & Flexible Solution designed to provide a smart and flexible power solution with Minimum Initial Capex, in the same time, to be able to expanded gradually in conjunction with the acquisition of the tenancy agreement

The Modular DC-HPU is suitable to power from one to three BTS of up to 2KW, it has an engine capability of supplying power up to three banks of batteries, so the main change to accommodate multiple tenants is to add extra battery stacks. We also enable metering to bill each tenant for

their own energy consumption.

www.ascotinternational.com

Sagemcom

Sagemcom is a French high-technology group with an international dimension. Sagemcom concentrates expertise in telecom and energy solutions enabling the supply of customized connected systems to utilities, telecom operators and services operators worldwide.

The Networks & Systems department offers highly efficient and innovative solutions for Energy & Site Monitoring, Green Energy production & optimization, Radio Site construction, Optical fiber rollout, Telecom equipment and associated services.

Sagemcom employs 4,200 people on five continents, with a revenue

of around 1.3 billion euros

www.sagemcom.com

Leadcom

Leadcom Integrated Solutions Ltd. is an international leading provider of telecommunication network and infrastructure deployment services and solutions. We combine extensive global experience, high level of engineering, project management and the experience. Leadcom successfully performed projects in all the Americas countries, our current footprint is covering over 10 countries in Americas, Leadcom can easily mobilize experienced resources to provide services in any given country.

Acting as a System Integrator, Turnkey Provider and Value Added Reseller, we provide a comprehensive service offering aimed at major global and local telecom operators, towercos, vendors and large enterprises. Our service offering includes design, engineering, implementation of mobile telecommunication infrastructure as well as vendor-independent managed services provider – focusing on reliability, efficiency and OPEX reduction for our customers

www.leadcom-is.com

Karam

KARAM specializes in field of Fall Protection & manufactures the highest quality equipment, leading the way with innovative products & solutions for safe working at height.

Our complete vertically integrated manufacturing set-up is spread over a span of around 325,000 square feet area with work force of above 1500 highly skilled people.

KARAM provides a range of Solution to the user working at Height on variety of towers, masts, monopoles and lattice structures that are used in Telecom industry.

Our commitment to quality is reaffirmed by our ISO 9001-2008 certification. All our products are certified as per EN also meets American

& other International standards.

www.karam.in

Our exhibitors


With almost 40,000 African towers set for transfer from operator-captive to independent towercos, and over 25,000 African towers already owned or operated by towercos, there has never been greater interest in African towers.

The TowerXchange Meetup facilitates dialogues between operators, towercos, investors and suppliers by using small group, round table sessions dedicated to key specific countries, or to key financial and operational topics, enabling YOU to connect with the top 250 decision makers in African towers.

The return of TowerXchange’s unique, invitation-only gathering of the top 250 decision makers in the African tower industry

Meetup Africa 2014Monday October 20 - Tuesday October 21 Gallagher Convention Centre, Johannesburg

To discuss your participation, contact Annabelle on +44 7423 512588 or email [email protected]

GS Yuasa

GS Yuasa is a Japanese company formed in 2004 with the merger of two large 100 year old battery manufacturers, Japan Storage Battery and Yuasa. At US$3.2B in sales, GS Yuasa is one of the worlds largest battery manufacturers.

GS Yuasa manufactures a full line of technologies including lithium, lead acid, nickel metal hydride, and nickel cadmium for the automotive, industrial, and specialty battery markets. In North America GS BATTERY (U.S.A.) INC. is a major supplier to the telecom industry.

With 36 affiliates in 16 countries, GS Yuasa has a worldwide presence operating under the GS Yuasa, GS, and Yuasa brands.

www.gs-yuasa.com (GS YUASA)www.gsbattery.com (GS Battery USA)

Your TowerXchange Meetup Americas registration includes a full access pass to the co-located PCIA Wireless Infrastructure Show!

Delegate RegistrationTowerXchange Meetup Americas 2014, May 20-22, Rosen Shingle Creek, Orlando, Florida

For BACS payment, please remit to:Site Seven Media Ltd

Bank name: Lloyds TSBSort code: 30-90-89

Account number: 21593660

I agree to the terms of this registration Date

For IBAN payment, please remit to:Site Seven Media Ltd

Bank name: Lloyds TSBSwift /BIC: LOYDGB21256

IBAN: GB29 LOYD 3090 8921 5936 60

The following terms and conditions apply:< Site Seven Media reserves the right to refuse admission to the event if full payment of the Registration Fee has not been received.< In the event of the Site Seven Media cancelling the TowerXchange Meetup Americas 2014, the parties agree that Site Seven Media will offer to transfer the registrant’s attendance of the Event to an acceptable alternative event. If Site Seven Media cannot offer an acceptable event, we will refund the Registration Fee to the Client in full.< Substitution policy: you may substitute subscribers registered delegates for colleagues, as long as alternate attendees are also Department Heads, Director, VP or C-level Regrettably no cancellations can be accepted.

Payment terms: Within 14 days of receipt of invoice, or in advance of the event, whichever comes first.

Payment per person

Registration Details

Discount Codes

Carriers

Government

Investors

Towercos

PCIA Members PCIA Non-Members

Company Name:

Delegate 1 Name: Delegate 1 Email:

Delegate 2 Name:

Address:Tel:

Delegate 1 Email:

PO Number:

Package Description

Vendors

Special rates are available for full time employees of towercos, carriers, government and regulators ONLY. Contact [email protected] to request a discount code.

Package description: TowerXchange Subscription and Delegate Pass for Meetup Americas 2014. Package includes daytime catering, participation in 3 round table sessions, after hours networking receptions. Package does NOT include accommodation or evening meals.

Note that delegates must be Department Heads, Director, VP or C-level, unless special permission is granted. Companies are also restricted to a maximum of 2 delegates unless sponsoring or unless special permission is granted – contact [email protected] if you wish to apply for 3 or more passes or for an exception to our Director, VP or C-level rule.

Discount Code:

Free

$1500

$1500

$1500

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Free

$1575

$1575

$1575

$3150

Invoice address & payment contact (if different):

Register at www.towerxchange.com/apply-to-attend or complete, scan and email this form to [email protected]

An introduction to towerco business models and tower transactionsEY define the three types of towerco business model


We are delighted to be contributing to TowerXchange, and the emerging market tower industry in general, through a series of articles where we, EY, will share insights gained from our experience on transacting in towers and particularly in Africa. The first article in the series is intended to be a ‘Tower transactions 101’, focusing on the current towerco business models in the market, types of transactions, towerco economics as well as outlining a glossary of terms and KPIs commonly used in the industry. Subsequent articles will cover areas such as data preparation, diligence, commercial considerations, valuation approaches, structuring transactions, exit considerations and our views on the future of infrastructure sharing.

Towerco business modelsBroadly speaking there are three types of business models for a towerco, which differ in value proposition to the towerco, and thus impact the entire investment cycle we are currently seeing in the market. Our commentary excludes the building of sites on behalf of an MNO when there is no ongoing role post construction as a towerco model, as this essentially represents a pure construction activity – rather than a true towerco business model. The first model involves managing and maintaining tower sites for an MNO, referred to as ‘Managed Services’. Under this model the towerco has no ownership in the underlying site and generally provides services on a simple cost-

Justin Prichard, Director - Lead Advisory, Transaction Advisory Services, EY

Read this article to learn:< The three types of towerco business models and two types of sale and leaseback transaction structure

< The natural limits on per tower valuations and leaseback rates

< The economics of a single site

< How towercos create value through co-location sales and energy opex reduction

< A glossary of tower industry terms and KPIs

Keywords: How to Guide, Towercos, Managed Services, Strategic Consultancy, Deal Structure, EBITDA, Tower Cash Flow, Rental Rates, Valuation, Due Diligence, Opex Reduction, Tenancy Ratios, Co-locations, Build-to-Suit, Business Model, Site Level Profitability, KPIs, Sale & Leaseback, Operational Lease, Africa, Infrastructure Sharing, Ernst & Young

At EY, we continue to be at the forefront of transactions in the African tower market, successfully completing nine deals on the continent to date and advising on a host of others. We provide our clients the full range of advisory services to ensure a successful transaction from lead M&A advice to commercial, financial and tax due diligence and tax structuring. Our core telecom infrastructure team is based in the UK, drawing on an extensive and specialised network of offices in 33 African countries with 5,500 professionals to ensure that we provide our clients with the best advice possible.


plus arrangement. There are ways to structure these agreements to incentivise the towerco to reduce costs, for example the MNO sharing the savings benefit with the towerco, but the Managed Services model is primarily used in markets where operations can be difficult and MNOs would prefer to outsource operations even if costs are slightly higher. The second model is referred to as a ‘Management and Marketing’ model, which has its roots in the Managed Services model but, where the towerco has the right to market the sites to other MNOs and receive all or part of the co-location revenues generated from such additional tenants. The larger the number of co-locators, and the larger the share of the co-location revenues the towerco receives, the greater the value proposition to the towerco and, thus, the larger cash savings a towerco is able to offer to an MNO. Under this model, there is no transfer of ownership of the sites and hence a towerco does not pay for the site. However it is common for there to be a commitment to invest in the passive network, such as the site power solution. The third and most common model is the ‘Own and Operate’ model, whereby the towerco owns all (or part) of the infrastructure on a site and leases space on it to an MNO. The towerco either builds the infrastructure for, or acquires it from, an MNO in a sale and lease back transaction. Towercos will generally require a track record of operations before an MNO will be confident to enter into a sale and leaseback transaction with

Figure 1: Overview of EY presence in Africa

them on a significant number of sites, and as such it is common for towercos to start by building the infrastructure in a particular market before growing through acquisition. To provide a fuller understanding we focus on the ‘Own and Operate’ towerco business model because it is both the most common business model in the market and creates the most value from a towerco /

infrastructure investor point of view (and therefore generally delivers the most value to an MNO via a sale and leaseback transaction). In Africa, the most common infrastructure sold by MNOs in tower transactions is termed “passive infrastructure”, and represents the land (or land lease), the tower / mast, power solution and the bricks and mortar present on the site. An MNO


will retain ownership of its ”active infrastructure”, being the antenna, BTS / node B, BSC / RNC and the connection to the backhaul /core network. In a typical tower sale and leaseback transaction, the MNO will sell its passive infrastructure (transferring responsibility of the relevant expenses and maintenance capex to the towerco) and agree to a lease back rate, or use fee, for the space on the site that its active equipment occupies. The two most important (inter-related) parameters of any sale and leaseback transaction are therefore: (i) the value paid by the towerco to the MNO for the site; and (ii) the lease back rate paid by the MNO to the towerco - the higher the leaseback rate paid by the MNO, the higher the value of the site. Therefore, seeking to compare sale and leaseback transactions when only one of these parameters is known (usually site value) is not particularly meaningful, and is the reason why we see such a range of per tower valuations in sale and leaseback transactions.This relationship has led to two types of sale and leaseback transactions. The first being where the MNO sets a lease back rate and bidders offer as high a valuation as possible, with the second being where the MNO sets the value it wants to raise and bidders offer as low a lease back rate as possible. Some transactions in the past have not specified either but this leads to difficulty in comparing bids and is now less common. There are, however, natural limits to both the per tower value and lease back rate in tower transactions, with MNOs generally reluctant to sell below book value to avoid the need to record

a loss. Conversely, if the lease back is materially higher than the MNOs total cost of ownership (TCO) of running the site there is a danger that the transaction will be viewed as a financial instrument impacting the MNO’s existing debt and therefore its covenants and gearing. Working within these boundaries, it is understandable that MNOs do not want a tower transaction to be materially dilutive from a future EBITDA / cash flow perspective. As such, the desired lease back rate tends to be the same or less than the operating expenses / TCO per site. What does this mean for towercos?On day 1 of a sale and leaseback transaction, the net cashflow generated on a per site basis can be zero or negative unless there is a significant number (and value) of existing co-location tenants on the portfolio of sites. Consequently, to deliver the returns required by investors, and priced into the business plans underpinning the offers made in the sale and leaseback transactions, towercos will need to focus their time on: (1) increasing revenue through additional tenants; and (2) reducing expenses (primarily power). This is why you see so much emphasis placed on understanding future demand for sites (driven by increasing mobile penetration and technology changes particularly) and alternative solutions to the diesel generators that currently power so many African mobile sites. In our subsequent articles we will dive deeper into transacting in towers to provide more insight for MNOs, towercos, investors, advisors and other stakeholders in the industry

Figure 2: Single site economics - African ‘Own and Operate’ Towerco model

Key: Towerco ownedMNO owned/shared

Antenna

BTS/Node BBSC/RNC

Backhaul to core network

(via fibre or microwave)

Power solution

Land

Tower/Mast

Single site economics - example

Revenue

Expenses

EBITDA

Tower cash flow

Tenant(s) – MNO, WIMAX, Broadcast etc

Power – diesel

Power – electricity

Ground rent

Security

Operations & Maintenance

Insurance

Maintenance capex

Positive cash flow Negative cash flow Note: before any overhead costs

Single tenancy

Multiple tenants


Glossary of terms / KPIsTerm Description / Definition

Active infrastructure

Augmentation capex

BSC

BTS

Build to suit (BTS/B2S)

Co-location

EBITDA

GBT

Lease back rate

Lease up rate (LUR)

Maintenance capex

The antenna, BTS / node B, BSC / RNC, and the connection to the backhaul / core network

The capitalised costs associated with adding an additional tenant to a site, most commonly relates to site strengthening, one-off in nature, commonly quoted on a per site basis

Base Station Controller, GSM network, responsible for assigning frequencies to each call

Base Transceiver Station, GSM Network, facilitates communication between the antenna and the network, alternatively use to represent Build to suit (see below)

Sites built and owned by a towerco (as opposed to being purchased from an MNO), generally higher value sites because they are built for purpose by the towerco to accommodate multiple tenants (specification and location)

The addition of a tenant(s) to a site

Earnings before interest, tax, depreciation, and amortisation

Ground based tower, represents the most well-known type of site

The monthly fee paid by the anchor tenant for space on a tower sold to and leased back from a towerco, generally the same or less than the operating expenses / TCO per site

The ratio of tenants to number of sites, generally does not discriminate between the type of tenant (MNO, WIMAX etc.) or level of use fee, same as tenancy ratio

The capitalised costs associated with maintaining the passive infrastructure of a site, most commonly relates to generator refurbishment or replacement, ongoing and lumpy in nature, commonly quoted on a per month per site basis

Towerco business model where the towerco has no ownership in the underlying site and generally provides such a service on a simple cost-plus arrangement

Towerco business model where the towerco has no ownership in the underlying site but has the right to market space on the site to additional tenants and retain all or a proportion of the use fee paid by those tenants

Mobile Network Operator

Similar to BTS, 3G network, facilitates communication between the antenna and the network

Towerco business model where the towerco owns all (or part) of the infrastructure on a site and leases space on it to an MNO. The towerco either builds the infrastructure for, or acquires it from, an MNO in a sale and lease back transaction

Profit & Loss Statement

Own and Operate

Management andMarketing

Managed Services

MNO

Node B

P&L


Term Description / Definition

Passive infrastructure

Refurbishment capex

RNC

Rooftop site

Sale and leaseback

TCO

Tenancy ratio

Tenant

Tower

Tower Cash Flow (TCF)

Towerco

Use fee

The land (or land lease), tower / mast, power solution and the bricks and mortar present on the site

The capitalised costs associated with upgrading the quality of passive infrastructure, most commonly relates to upgrading the power solution, one-off in

nature, commonly quoted on a per site basis

Radio Network Controller, 3G network, responsible for assigning frequencies to each call

Site where the active equipment is attached to a building as opposed to a traditional GBT, common in urban areas

Transaction in which the towerco acquires all (or part) of the infrastructure from an MNO. The two most important (inter-related) parameters of any sale

and leaseback transaction are: (i) the value paid by the towerco to the MNO for the site; and (ii) the lease back rate paid by the MNO to the towerco

Total cost of ownership, refers to the operating expenses and maintenance capex of the passive network assets, commonly quoted on a per month per site

basis

The ratio of tenants to number of sites, generally does not discriminate between the type of tenant (MNO, WIMAX etc.) or level of use fee, same as lease up

rate (LUR)

Pays a use fee to occupy space on the passive infrastructure of a site, generally does not discriminate between the type of tenant (MNO, WIMAX etc.) or

level of use fee

The physical mast that supports antennae at a site, commonly refers to all the passive infrastructure on a site in the industry

EBITDA less maintenance capex

Company that owns and/or maintains all or part of the passive and/or active infrastructure of a MNO’s network

Payment made by a tenant to occupy space on the passive infrastructure of a site, commonly quoted on a per month per site basis. Same as lease rate

Glossary of terms / KPIs

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Italian tower market emerges from stasisSignificant transactions in prospect


There is no surprise in the announced Italian tower sales. Capital requirements of LTE rollout have stimulated tower sales Europe-wide. Notable recent transactions include those of Bouygues in France, E-Plus in Germany and Telefonica in Spain. T-Mobile is planning the sale of Austrian towers. The UK and France feature vibrant independent sectors. Simultaneous sale of two tower portfolios, as in prospect in Italy, is unusual. This is because simultaneous sales have a probable effect of depressing valuations. Set against this is the fact that Italian mobile usage is high as against European norms. Pressures on Italian operators to raise cash in order to fund deployment of LTE are correspondingly high. There is considerable overlap of coverage by the various Italian operators. Tower sharing has to date has been implemented on 20% of sites only. Considered from a towerco perspective, this presents opportunity for consolidation and optimisation, thereby achieving efficient operation, economic deployment of capex and correspondingly lowered opex. Tower portfolios are typically sold with contracted revenue for up to ten years post-sale. Base-line revenues are thus secured. At this time, opportunities for revenue increase present in that LTE cell sizes, for capacity reasons, are typically smaller than those of GSM and 3G. This results in increased demand for antenna and base station hosting. DTT deployments may also

A forthcoming sale of Telecom Italia towers will be the most significant such transaction in Europe in 2014. The acquirer will become the largest independent towerco in Italy. Italian operator WIND, a subsidiary of the Russian Vimpelcom, is also considering a tower sale. If both of these initiatives come to fruition, the coming 12 months will thus see either two competing independent towercos, each with a strong base of secure revenues, or, alternatively, a single towerco that will dominate the market and become a significant international force. Conor Plant of consultancy Hardiman Telecommunications Ltd. reviews the Italian vista and the prospects for success.

Read this article to learn:< The impact of the forthcoming sale of 10,000 Telecom Italia towers for a wave of tower transactions in

Italy and across Europe

< Progress of LTE deployment in Italy

< Coverage overlap and tower sharing to date in Italy

< The continued performance of the Italian mobile sector against the downturn

< Why this tower sale is likely to attract than a previous attempt to sell 18,000 Italian towers in 2007

Keywords: Lawyers & Advisors, Strategic Consultancy, Market Overview, 4G, Business Case, Densification, Country Risk, Rooftop, Sales & Leaseback, Infrastructure Sharing, Europe, Italy, France, Austria, Spain, Russia, Telecom Italia, WIND, Vimpelcom, Bouygues, E-Plus, Telefonica, T-Mobile, 3 Italia, Hardiman Telecommunications

Conor Plant, Managing Consultant, Hardiman Telecommunications

Conor Plant ([email protected]) is a Managing Consultant with Hardiman Telecommunications Ltd. (http://www.telecoms.net), a boutique consultancy with offices in London and Hong Kong. Hardiman Telecommunications Ltd. advises operators, towercos, investment banks and PE funds on strategy, operations and M&A.

provide additional revenue opportunities. All Italian MNOs have committed to rolling out LTE. TIM’s LTE currently covers 37% of the national population. This will be extended to 60% over the coming year. The requirement for LTE sites runs to 7,000. Vodafone and 3 Italia are also actively rolling out, and WIND will commence shortly. Replication of LTE rollout, in the sense of construction of similar sites by all operators, would be wasteful and inefficient. It is unlikely. It may be noted that the TIM portfolio, which runs to 10,000 towers, features a significant number of urban rooftop sites. These are in premium demand for LTE deployment. LTE, in urban implementations, requires small cell sizes and low-placed rooftop antennae.

The logic underpinning consolidation in the Italian tower sector is compelling. Nevertheless, it should be underlined that success is not assured. A proposed joint sale of towers by 3 Italia and WIND failed to find buyer in 2007. The promoters of the initiative - which encompassed 18,000 towers - held that market conditions were not conducive to achieving the desired price. This raises the matter of reasons why market conditions are indeed conducive to success at this time. It is to state the obvious that significant questions overhang the medium-term prospects of the Italian economy. Nevertheless, as a general matter of international TMT investing, return of

financial stability and corresponding investor confidence is certainly evident. We have noted that Italian mobile usage is high by international comparison. The mobile sector, while not entirely invariant against underlying economic conditions, continued to perform during the downturn. It is also the case that the seven years since the unsuccessful initiative by 3 Italia and WIND have seen emergence of confidence and robust planning against LTE. As of 2007, LTE, while in prospect, had not yet been subjected to rigorous business analysis. Operators were still wary of possible repetition of the experiences of 3G rollout, when investment was made


considerably in advance of demand. Demand for high speed data communications, as evidenced by the phenomenal growth of social websites and streaming applications, is now clearly in advance of investment. LTE will meet this demand. A further positive factor is investor comfort with tower transactions in general and with business models and plans of independent tower operators in particular. While not unknown as of 2007, independent tower initiatives have been significantly proven in the intervening years. Towercos, as business propositions, have transited from being perceived as novel, and possibly interesting, to become, as of now, well-recognised as mainstream telecommunications initiatives, and amenable to analysis according to established KPIs. The opportunities in the Italian tower sector are clear. The current replication of tower coverage is inefficient. Operators need to liberate capital. Consolidation will bring clear opex efficiencies. Infrastructure sharing will accelerate rollout of LTE. Significant investor interest may be expected

“

“

The opportunities in the Italian tower sector are clear. The current replication of tower coverage is inefficient. Operators need to liberate capital. Consolidation will bring clear opex efficiencies. Infrastructure sharing will accelerate rollout of LTE. Significant investor interest may be expected

Special feature:

In preparation of the TowerXchange Meetup Americas, we have assembled an initial analysis of the Latin American tower market based on our ongoing research and valuable inputs from the industry. The analysis shows the great potential of the regional tower industry and its growth pattern over the course of the past few years while highlighting some of the key challenges to overcome in order to maximise the return for towercos, investors and tenants alike.

The demand for a new regulatory framework for the tower industry is a top priority for countries like Brazil and Mexico in order to ensure independent towercos can add the maximum value to each local market. Simplified and clear telecom laws will contribute to the proliferation of greenfield projects - a priority in order to meet ambitious coverage and capacity demands.

We are reporting on rumours suggesting that as many as 20,000 towers could be on sale in Brazil alone, which could definitely turn Q3 and Q4 2014 into the most interesting season for the regional tower industry to date. In the next few pages, we are offering a Meetup preview, an in-depth analysis of the Brazilian tower sector co-authored with Analysys Mason as well as an overview of the Argentinian telecom sector by Planex Technologies.

TowerXchange’s analysis of the LatAm tower industry

Don’t miss:

48 TowerXchange Meetup Americas preview

50 Editorial: An introduction to the Latin American telecom tower industry

55 Analysys Mason and TowerXchange: Seeking value in the Brazilian

towers market

57 Planex on the Argentinian tower industry


LatAm towerco breakdown by country

AMT

Panama

Costa Rica

Peru

Chile

Brazil

Mexico

Columbia

Andinas

Ecuador

Peru

Chile

Columbia

Brazil

Continental

Guatemala

El Salvador

Jamaica

Honduras

Nicaragua

Panama

Costa Rica

Columbia

Innovatell

Ecuador

Peru

QMC

Brazil

Mexico

SBA

Guatemala Guatemala

El Salvador

Nicaragua Nicaragua

Panama

Costa Rica

Brazil

Torrecom

Mexico

Unidas

Peru

Chile

Towercos focusing on a single countryBrazil: GTS, BR Towers, Highline, CSS, T4U, Brazil Tower Company

Mexico: MTP, IIMT

Panama: Torres de Panama

Dom. Rep: Teletower Dominicana

TowerXchange Meetup Americas previewThe time has come for the gathering of the year of LatAm telecom tower executives

With just over a week to go before the doors of the first TowerXchange Meetup Americas open, here is a snapshot of what our attendees can expect from the only LatAm focused event of the year for telecom tower professionals.


Major tower companies, carriers, investors and solution providers have all confirmed attendance and we expect 200 C and D level participants at the Rosen Shingle Creek in Orlando, Florida.

Acsys, CEO | American Tower, CEO, Latin America | Berkshire Partners, Managing Director | Brazil Tower Company, Co-President | Clean Power Systems, Managing Director | ConnectM Technology Solutions, CEO | Continental Towers Corp, CEO | Continental Towers Corp, Country Manager - Costa Rica | Crown Castle, President and CEO | Deltanode, CEO |Digicel, Group HR Director | Digital Bridge Holdings, CEO | Eaton Towers, Co-founder and Director | Eltek, Americas Regional President | Entel, Head of Projects | Everest Engenharia, Vice President, Strategies | Grupo TorreSur, Chairman and CEO | Grupo TorreSur, Chief Development Officer and Corporate Secretary | Helios Towers Africa, CEO | Helios Towers Africa, CFO | Helios Towers Nigeria, CEO | Highline do Brasil, President and Managing Partner | IIMT, Executive Vice-President| Intelli Towers, CEO | Invendis, CEO Iusacell, Infrastructure Director | Leadcom Integrated Solutions, CEO | Macquarie Infrastructure and Real Assets, Vice President | Madison Dearborn Partners, Managing Director | MER Group, CEO | Mexico Tower Partners, CEO | Morgan Stanley, Managing Director| Peppertree Capital, President | Peppertree Capital, Managing Director | Phoenix Tower International, CEO | QMC Telecom, President | SBA Communications, President - International | SBA Communications, Vice-President, Business Development | Seccional Brasil, CEO | SK Telecom, Board Member | Standard Bank, Managing Director, Global Head of Telecoms & Media | T-Mobile, Senior Manager DAS and Small Cell | Telefonica Costa Rica, CTO | Telefonica Ecuador, Network Rollout Director | The Carlyle Group, Managing Director | Torrecom, CEO | Torrecom, COO | Torres Andinas, COO | Torres Unidas, CEO | TowerCo, CEO | Trilogy International Partners, Group CTO | Wells Fargo Securities, Managing Director

Meetup Americas 2014May 20-22, Rosen Shingle Creek, Orlando, Florida

Co-located with the PCIA Wireless Infrastructure Show

Featuring roundtables on Myanmar and Africa and an African tower panel session

Who you will meet | 200+ Reasons to attend

20+ hours of interactionThe Meetup is specifically designed to ensure interactivity and networkingthroughout. Our Panel Sessions and Roundtables are tailored to allow all attendees to exchange views, discuss key challenges faced by the industry and create meaningful business relationships beyond the Meetup.

A closed door, executive retreatWe have carefully managed the ratio of sellers and buyers as well as the seniority of our attendees. You will be exposed to a crowd of 200 C and D level experts with decision making and budgetary power.

International exposureThe TowerXchange Meetup Americas is co-located with the PCIA Wireless Infrastructure Show, allowing our attendees to meet 2,000+ experts from the North American telecomtower industry and beyond.

A business-friendly environmentTower transactions are highly confidential, so the TowerXchange Meetup is held under “Chatham House Rule” and our unique roundtables, private meeting space and informal receptions will enable you to discreetly discuss and advance strategic partnerships.


The TowerXchange Pavillion at the very heart of the PCIA Wireless Infrastructure Show

Towerxchange Meetup Americas | A business trip you CANNOT miss

To book your place, please contact:Annabelle MayhewChief Commercial OfficerE. [email protected] M. +44 (0) 7423 512 588

Join the TowerXchange Meetup Today

If you haven’t registered yet, there are still a few tickets available to join us in Orlando, 20-22 May 2014. Please contact us immediately to book your place at the most targeted event of the year for professionals involved in the transformation of the Latin American telecom tower industry.


331131

129

127

228

KeeganWireless230

Food & Drinks


Door

ConnectionsCafe


-Wire623

CommScope520

Slatercom421

AmiritTechnologies

423

TEConnectivity

520/620

Huada621

Product Showcase

Ericsson 20x20

20x2020x20

C D

A B

CS

-S S

ervi

ce D

esk

Food & Drinks

Food & Drinks

226


Galtronics221/223

130

128

126

124

122

120

118

116

114

112

110

108

106

104

102

100

430

329 428

327 426

431 530

429 528

427 526

531 630

529 628

527 626

731

729

727

725

723

721

717

715

NATE713

711

709

707

705

703

701

129

127

228

226

105

103

101

KGP202/204

Unimar200

11’ 11’ 11’ 11’ 11’ 11’ 11’

20’

GMESupply

205

MosaikSolutions

203

AFL201

MaxCell304

SBA

Com

mu

nic

taio

ns

Hughey &Phillips302

CDMI300 401

Fibrebond405

ValmontSite Pro 1

403

ValmontStructures

401

MaxCell304

Hughey &Phillips302

CDMI300

Terracon505

NelloCorp.

503

Deltanode501

SabreIndustries604

Graybar602

3ZTelecom600

ITL, LLC605

Skyhawk601

704

603Accruent700/702

117

115

113

214

Eastpointe216

212

TUFTUG217

Lattice213

Amphenol316/314

TestEquity211


209tarantula308

Trans-American308

111

109

210

CellphoneMate208


Antennas422/420

Shive-Hattery

321

522

720

TWRLighting

615

716617

714BB&T

Atlantic Risk515

TP Electric616

DynamicEnviromental

517

EMSS614

Oldcastle609

710PCTEL611

OTL Solution708

Henkles & McCoy610

FidelityNational

511


631

529

527

228

228

226

ENTRANCE ENTRANCE

For programme enquiries, please contact:Arianna NeriHead of AmericasE. [email protected]. +39 338 111 2103

An introduction to the Latin American telecom tower industryA summary of findings from the past few months of research as developed by TowerXchange



With 1,666 towers divested, Mexico experienced yet another interesting year in terms of transactions while international media continue to speculate about imminent changes to the national telecom regulatory framework.

Although absent from the sale and leaseback market, Chile, Peru, Colombia and Ecuador are other countries we are keeping an eye on thanks to their push towards 4G LTE which might prompt a new wave of tower transactions in the upcoming months. Build-to-suit and middle-market towercos are active in all four countries, as well as some of LatAm’s larger towercos.

Central America and the Caribbean could be the next targets for international towercos seeking to expand their regional footprint. Some markets, such as Panama and Puerto Rico, feature many independent towers and local towercos. Others remain greenfield markets with promising macros, but lacking scale.

In the next few pages, we offer a comprehensive analysis of major trends, transactions and news from the LatAm telecom tower industry, starting with an updated tower count and a comprehensive report on the landscape of independent towercos active in Central and South America.

In addition to the towercos listed in the tower count graphic, TowerXchange has identified a wide array of mid-sized tower companies active in the CALA region. Brazilian focused Brazil

2013 was an exciting year for the Latin American telecom tower industry, with 14,035 towers divested, more than double the previous year. With 12,369 towers sold in Brazil alone, the country placed itself at the very heart of the transformation of the tower industry, also thanks to the push provided by upcoming events such as the 2014 World Cup and 2015 Summer Olympics.

Read this article to learn:< An update on LatAm tower transactions in 2012 and 2013

< LatAm tower count and mid-market towercos scenario

< Perspectives on the Brazilian, Mexican and Chilean telecom tower market

< The growth of BTS in Brazil: drivers and challenges

< Mexico and its complex telecom tower industry

< The potential of the Chilean market

Keywords: Central America, South America, Caribbean, Chile, Peru, Mexico, Brazil, Colombia, Ecuador, Guatemala, Costa Rica, Transactions, Towercos, American Tower, SBA Communications, Grupo TorreSur, BR Towers, Build-to-Suit, Torrecom, Continental Towers, Torres Andinas, CSS, QMC Telecom, Tenancy Ratio, Premium, MNOs, Sale and Leaseback, Regulation, Nicaragua, Guatemala, Panama, Jamaica, El Salvador, Honduras


Tower Company, QMC Telecom, Highline do Brasil and Torres Andinas are all actively pursuing BTS opportunities alongside CSS and T4U. The Mexican landscape hosts Torrecom - also active in Guatemala and Nicaragua, and Continental Tower Corp, which also operates in Guatemala, Nicaragua, Colombia, the Dominican Republic, Jamaica, Honduras, Panama, Costa Rica and El Salvador. Additionally, we report activities of Torres Andinas in Chile, Peru and Colombia as well as Torresec’s involvement in Ecuador and Puerto Rico. Teletower Dominicana is involved in the development of the Dominican Republic’s tower sector while Torres de Panama operates in Panama.

Brazil: 7,000 new towers to be built in 2014, ten active towercos and 20,000 towers on sale

The Brazilian tower market has been experiencing an unprecedented growth pattern over the course of the past three years. To quote Grupo TorreSur CEO and Chairman, Jim Eisenstein “Brazil, in particular, has been like the U.S. tower industry in fast forward.”

As previously reported, SindiTelbrasil has assessed that 9,556 new towers should be installed over the course of 2014 in order to reach the ambitious 4G coverage goal. That would mean 30 new towers per day for the entire year.

In reality, we are likely to see no more than 7,000 new towers erected in Brazil during this year and this is due both to the actual construction capacity

Estimated number of towers owned or managed by towercos in Latin AmericaSource: TowerXchange research, quarterly filings, site lists

Columbia

Chile

Peru

Panama

Costa Rica

Nicaragua

Guatemala

Mexico

El Salvador

Brazil

American Tower

5,0000 10,000 15,000 20,000

SBA Communications

Grupo Torresur

BR Towers

Torres Unidas

IIMT

T4U

Mexico Tower Partners

CSS

6,771

5,151

6,094

4,000

3,496 8,412

1,163

180

180

600

500

400

480 417

457

498

58

250 471 139

350

Source: TowerXchange

of major service providers and towercos active in the national territory and due to the highly complicated bureaucracy behind licensing and permitting.

The proposed Law of Antennas, now in draft form, might simplify the requirements for towercos and carriers seeking permits for greenfield projects but to date, the procedure is in the hands of local governments and municipalities and hasn’t been unified.

With a wide array of mid-sized towercos such as Brazil Tower Company, QMC Telecom, T4U Tower Management, Torres Andinas and Highline do Brasil all competing to secure build-to-suit

projects, the country isn’t facing a shortage of players and yet, the tower construction game hasn’t achieved the desired pace.One additional challenge to the optimal development of the Brazilian BTS market comes from the sometimes contentious conditions - such as generous cancellation terms and heavily discounted lease rates - carriers have secured from some towercos. This has disincentivised the major international towercos from participating in the Brazilian BTS market, which could be problematic if Bloomberg are correct in their recent speculation that Brazil’s ‘middle market’ towercos had capacity to build only 1,600 towers per year. However, in light of the 60 GB of data traffic per second registered during the 2012


London Olympics and the 500 GB splashed during the US Super Bowl back in February 2012, key players in the Brazilian telecom tower sector will need to run the extra mile to meet these highly ambitious targets on time.

In the midst of this complex yet exciting scenario, American Tower, SBA Communications, BR Towers and Grupo TorreSur have dominated the Brazilian sale and leaseback market and have acquired over 20,000 towers since 2010, at an average price of US $175,000 per tower.

Brazilian tower portfolios valuations take into consideration the tower location, its existing and potential tenancy ratio, its structural capacity and the anchor tenant fee agreed with the carrier. As such, cost per tower is at best a crude measure of value.

During the recent American Tower International Analyst Day, AMT indicated that its Brazilian portfolios acquired in the early 2000s had achieved a tenancy ratio of 3.2 in 2013, indicative of sustained tenancy ratio growth of around 0.2 per year, considered very healthy for emerging market towerco economics.

To add spice to an already dynamic scenario, recent news have reported that Tim Brasil is currently considering divesting its 7,000+ tower portfolio in order to finance its 4G network plans. Rumours suggest that there might be as many as three more substantial Brazilian tower portfolios for sale in addition to TIM’s and this could bring

Major tower transactions in Latin America 2012/2013

Date

Q3 2013

Q4 2013

Q3 2013

Q3 2013

Q3 2013

Q2 2013

Q2 2013

Q3 2012

Q1 2013

Q1 2013

Q4 2012

Q4 2012

Q4 2012

Q2 2012

Q1 2012

Seller Buyer Country USD/Tower Value in USDTower Sites

Oi

Oi

Nextel

Nextel

SBA Communications

SBA Communications

America Tower

America Tower

Brazil

Brazil

Brazil

Mexico

343 million163

645 million321

413 million148

398 million239

2,113

2,007

2,790

1,666

Global Tower Partners*

Oi

Oi

American Tower

Grupo TorreSur

BR Towers

US/Costa Rica

Brazil

Brazil

4.8 billionN/A

293 million138

251 million119

15,700

2,113

2,113

Telefonica

Sitesharing

BR Towers

BR Towers

Brazil

Brazil

252 million132

N/AN/A

1,912

350

Axtel American Tower Mexico 250 million283 883

Telefonica Torres Unidas Chile N/AN/A 400

Telefonica SBA Communications Brazil 178 million223 800

OI Grupo TorreSur Brazil 258 million214 1,208

Telefonica American Tower Brazil 225 million150 1,500

Telefonica American Tower Chile 96 million172 558

* company acquisition

Special thanks to Jonathan Atkin, Managing Director at RBC Capital Markets for his contribution


the number of towers for sale over 20,000. We expect major towercos to gear up for an exciting rest of the year and will keep following the Brazilian tower market development as they unfold.

Mexico: low penetration rates, 111 million people and the potential to become a key telecom tower playerAs stated by BMI in a recent analysis of the

Mexican telecom tower sector published in the TowerXchange Journal, the next two years could prove crucial for the Mexican tower industry as various factors are contributing to create a perfect storm for investment in the country.

In 2013, Mexican President Enrique Peña Nieto issued a constitutional amend aimed at transforming the Mexican telecommunications industry. As part of the reform, a new regulatory

agency was created - IFETEL - with constitutional status and a mandate to ensure economic competition and universal coverage. The new body is independent from the executive and legislative powers, unlike COFETEL, the previous acting agency.

Looking at the current status of the market, the rationale behind the reform is evident. Out of the four carriers active in Mexico, América Móvil’s Telcel, is the most powerful actor with market share beyond 70%, with the remaining market being split among Movistar, Iusacell and Nextel.

Changing the status quo in a country heavily dominated by one company is not an easy task and we will have to wait until the secondary legislation comes into place, later this year, to fully evaluate the practical impact of the reform.

In the meantime, we could witness a tremendous growth of the Mexican tower industry. It has been estimated that, in addition to the existing 22,500-23,000 Mexican towers, an additional 70,000 towers are needed in order to reach 90% coverage.

However, this might prove to be an challenging task, considering that Mexico has one of the highest costs per tower in the region. In 2013, American Tower acquired 2,790 towers for US$413 million in Brazil and 1,483 towers for US$323 million in Mexico from NII Holdings (operating as Nextel). The average price per tower in Brazil was US$148,000 whereas each

Towerco economics: tenancy ratio growth

Example tenancy ratio growth (American Tower Brazil 2002-13)


2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

3.5

3

2.5

2

1.5


Mexican tower was valued at US$252,000. And this is a consistant trend we have witnessed in Mexican transactions since 2011, when American Tower acquired 2,500 towers from Telefonica at US$200,000 per tower and Global Tower Partners bought a portfolio of 199 towers from the same carrier for US$40 million (USD 200,000/tower).

In spite of current challenges faced by the national telecom tower industry, Mexico is a country with great potential and, quoting the CEO of Digital Bridge Holdings (which owns Mexico Tower Partners), Marc Ganzi “a poster child for wireline replacement, as well as explosive wireless internet and data consumption.”

In his recent interview with TowerXchange, Marc commented: “I am particularly keen on the Mexican market, and feel we can grow our business there significantly. It can take investors quite a long time to get comfortable with the operational norms, currency, political and sovereign risks inherent in Mexico, but I’ve been there for over 15 years, which gives our investors comfort in backing us, and means we’re given the autonomy to run the business as we see fit.

There’s tremendous demand for new sites in Mexico, with significant capital being deployed by Telcel and Telefónica in their desire to cover the entire population - it’s a big country with lots of rural communities and an extremely fast growing middle class. The need for coverage and capacity sites make Mexico an ideal tower market, as it clearly will need future new builds and collocation.”

Chile: 5% 4G coverage, a proactive government and the most stable business environment in Latin AmericaIn 2012, a new law came into effect in Chile (N. 20.599) setting clear construction guidelines in order to ensure all new towers built in the country have the structural characteristics to host multiple tenants. The same law outlined stringent conditions for the installation of towers in saturated and sensitive areas as well as compensation for communities affected by new towers’ erection.

These new rigid measurements have contributed to the apparent slowdown of the Chilean telecom tower market in spite of representing a clear push towards infrastructure sharing which has recently been mandated in rural areas.

With 4G covering just above 5% of the country, carriers are actively involved in rollout, following two successful auctions in February 2014 (700MHz 4G spectrum) and July 2012 (2.6Ghz spectrum).

The Chilean government is heavily involved in the promotion and regulation of the ICT sector and has set very clear coverage requirements that will push carriers to invest in infrastructure and expand their current portfolios by three to four times, as analysed by BMI in a recent article for the TowerXchange Journal. However, as per BMI’s report, 3G connections in Chile accounted for 26.8% of total subscriptions at the end of 2013, following growth of 29% year on year. This data shows that Chilean subscribers demand higher value services and therefore suggests that 4G is likely to capture

their attention relatively quickly.

Thanks to its openness to international investment and a proactive government, the Chilean telecom industry is expected to keep delivering growth, great news for incumbent operators Claro, Movistar and Entel, and for American Tower and Torres Unidas, who both operate substantial tower portfolios in Chile.

LatAm towercos and carriers: a business partnership in the makingLatAm is host to a highly complex and thriving tower industry, led by AMT and SBA and the two Brazilian leaders, but also consisting of a host of innovative ‘middle market’ towercos supporting the region’s enormous thirst for new towers. Although facing many challenges, especially related to the imminent need to reform telecom regulations from Mexico to Brazil to facilitate the access of new players and international investors, Central America, the Caribbean and South America are potential candidates for the further development of a profitable telecom tower industry.

With most countries over 100% subscriber penetration and with a growing middle class demanding value added services and driving demand for data, the time is right for carriers to invest in the deployment of 4G LTE and to welcome the new wave of independent towercos as a business partner enabling the sector to fully develop its potential

Seeking value in the Brazilian towers market

Brian Burns, Analysys MasonArianna Neri, TowerXchange


The Brazilian towers market has been capturing investors’ attention, with ten major tower transactions since 4Q 2011 and approximately 7000 new towers expected to be built during 2014. A peculiarity of the market is the distinction between the players focusing on the buy-and-leaseback market, and those focusing on the build-to-suit market. In this article, we examine the value drivers for both these segments of the tower space.

Buy and leaseback: the attractiveness of towers varies considerably between portfolios

In recent transactions in Brazil, tower portfolios have been sold at an average price of USD175 000 per tower (see Figure 1). This suggests that Brazilian towers are valued at a premium to those in other emerging markets, which have typically had lower valuations. Acquisitions have been limited to

four large tower companies: American Tower, BR Towers, Grupo TorreSur and SBA Communications.

When one considers the variation in value per tower across the transactions shown in Figure 1, it becomes clear that this is a crude and imperfect measure. The value of towers depends to a great extent on the attractiveness of the location, the structural capacity, potential tenancy ratio, and the anchor tenant lease rate agreed with MNOs. These factors are encompassed by the three major drivers of value for buy-and-leaseback portfolios (see Figure 2).

Build to suit: the market may represent an opportunity for mid-sized towercos, although it is not without challenges

Historically active in the construction industry, most MNOs are now streamlining operations and subcontracting to third-party partners to develop build-to-suit projects. Larger towercos are focusing on buy-and-leaseback transactions, which

350

300

250

200

150

100

50

195150 132 138 119

163 148

321

214 223

Dec

EV

/Tow

er (

USD

per

tow

er)

Grupo Torre Sur

BR Towers

American Towers

SBA Communications

Dec2012 20132011

1200 1500 1912 1208 800 2113 2113 2113 2790 2007Towers in

transaction

DecDec May May Jul AugApr Sep

Source: TowerXchange, 2014Figure 1: Major tower acquisitions in Brazil, 4Q 2011–4Q 2013


represents a potential opportunity for mid-sized towercos such as Brazil Tower Company, CellSite Solutions, Highline do Brasil, QMC Telecom and T4U Tower Management to get involved in the attractive Brazilian market.

However, in the Brazilian context, the dynamics of the highly competitive build-to-suit market do

Figure 2: Sources of value for buy-and-leaseback tower transactions in Brazil

not always maximise value creation for towercos. In fact, mobile operators contracting towercos to develop greenfield projects often achieve heavily discounted lease rates as part of the deal and negotiate generous cancellation terms in the contract. This can have an adverse effect on the long-term valuation of such assets. Moreover, greenfield projects require as many as seven

different licences from state and local governments. Brazil has not yet achieved a unified legal framework for new tower installation, although a new Lei das Antennas (Law of Antennas), which could simplify leasing and permitting, is in draft form.

Conclusion: understanding the portfolio specifics is key to assessing value

On the whole, the Brazilian telecoms tower industry is an appealing market with proven growth potential. However, it presents considerable challenges, particularly for the build-to-suit market, such as the absence of a unified regulatory framework, uncertainties in light of recent MNO consolidation rumours, as well as a highly competitive base station market.

Given the significant variations in tower valuations in the Brazilian market, it is absolutely vital to develop robust understanding of the attractiveness of the specific portfolio being considered – using cost per tower comparisons is clearly insufficient. Having undertaken more than 70 engagements in the tower sector in the last 3 years, Analysys Mason has deep expertise in assisting clients to understand the value of tower portfolios, and is considered the leading advisor in this space

Sources of value

Pricing level for anchor tenant

Number of existing third-party tenants

Potential for growth in tenancy ratio

Prices dictated by the divesting MNO (refined in negotiation with towerco)MNOs set anchor lease prices to balance portfolio sale value versus ongoing future lease payments

Secure revenue stream with a significant impact on valuation

< Attractive to investors with a lower appetite for risk< However, high tenancy ratios imply lower potential for future growth

Critical input to valuation of portfolios, but an area of uncertainty

Analysys Mason has developed a robust proprietary approach for forecasting tenancy ratios in order to minimise uncertainty and risk

Brazilian MNOs have typically accepted higher lease prices in exchange for a higher portfolio value

Valuations have reflected the starting point tenancy ratio:

< American Tower August 2013: 1.00 tenants, USD148 000/tower< SBA July 2013:1.15 tenants, USD163 000/ tower< SBA December 2012: 1.33 tenants, USD223 000/tower

Valuations have reflected the perception that the portfolios are likely to continue to experience rapid growth

< American Tower’s 2002 vintage achieved a tenancy ratio of 3.2 in 2013

Considerations Brazilian context

Source: Analysys Mason and TowerXchange, 2014, American Tower International Analyst Day, 2013

This article has been co-authored by Arianna Neri and Brian Burns, a Manager at Analysys Mason, the specialist adviser on telecoms, media and technology (TMT) worldwide.

Planex on the Argentinian tower industry…And beyond! Multi-disciplinary expertise key to Planex’s growth across LatAm

Marcelo Krimer, President, Planex Technologies

TowerXchange: Please tell us about Planex Technology, its activities and geographical footprint

Marcelo Krimer, President, Planex Technologies: Planex Technology was established in Argentina in 1992 with the mission to provide technology solutions for the telecom industry.

To date, we are active in various Latin American countries with offices in Argentina, Peru, Guatemala, Venezuela and Colombia as well as operations in Uruguay, Paraguay, Chile, Bolivia, El Salvador, Honduras, St. Martin, Belize, Nicaragua, Panama, Haiti and the Dominican Republic. Moreover, we have had an office in Miami since 2002.

We offer engineering and technology services to carriers, OEMs as well as telecom cooperatives, corporations and governmental entities. Our array of services include project engineering, site analysis, installation and integration of services, support and maintenance of systems et cetera.

Planex employs over one hundred employees and the majority of our staff are engineers with a very wide range of expertise on network access, satellite and wireless networks as well as fibre optic installation. We started with a focus on testing services for network quality control and since then we have been able to add more specialised services to our portfolio.

Since 1996, we have started offering value added services in Argentina which include voicemail platforms, SMS and pre-paid service platforms, and

Read this article to learn:< An overview of the Argentinian telecom sector< Is a multi-disciplinary and flexible approach to business the key to succeed in LatAm?< Is Argentina ready for tower companies?< O&M outsourcing - a growing trend in the region

Planex Technology started its operations in Argentina over twenty years ago and since then has become an established service provider in over fifteen countries. We had the pleasure to discuss the Argentinian telecom sector in general, the opportunities for the tower industry with LTE imminent, and the challenges of import limitations with Planex President, Marcelo Krimer.

Keywords: Planex Technology, Argentina, Peru, Guatemala, Venezuela, Colombia, Uruguay, Paraguay, Chile, Bolivia, El Salvador, Honduras, St. Martin, Belize, Nicaragua, Panama, Haiti, Dominican Republic, Miami, Latin America, Interview, Active Equipment, Central America, South America, O&M, 4G, SLA, KPIs


we are now actively supporting clients all over Latin America.

Five years ago, we got involved in the machine to machine business which we foresee as a growth area in the market. Therefore, we support our customers to manage remote services, monitor the status of their equipment as well as towers through specialised software.

Our key clients are carriers from across Central and South America but we are starting to work with tower companies on a variety of issues.

TowerXchange: Can you give us a brief overview of the telecom market in Argentina?

Marcelo Krimer, President, Planex Technologies: Argentina hosts four active carriers and one MVNO.

In 1990, the government decided to privatise the telecom sector. Breaking the previous monopoly of ENTel resulted in the market being split into two areas with the north managed by a consortium between Telecom Italia and France Telecom - Telecom Argentina - and the south controlled by Spanish Telefonica.

To date, América Móvil’s Claro is the leading carrier with approximately 21 million subscribers, followed by Telefonica’s Movistar (17 million subscribers), Telecom Argentina’s Personal (16 million subscribers) and Nii Holdings’ NEXTEL with around 2 million subscribers. Argentina has one of the highest penetration rate of the region at 147%.

A few years ago, the government established ARSAT as part of the Argentina Connected Program with the aim of installing over 50,000 Km of Federal fibre-optic network in the country. This project will allow access to areas yet to be covered and will enable municipalities to build their own local network to connect to the main fibre-optic backbone.

TowerXchange: Is there much activity in the independent tower industry in Argentina?

Marcelo Krimer, President, Planex Technologies: With regards to its tower industry, Argentina has not yet developed a strong market for tower companies


and I believe that the process will gain speed once 4G LTE becomes a true priority for carriers. At that point, the country will need thousands of new towers and the logical solutions will be to welcome tower companies with the right expertise and knowledge. The development of 4G LTE network in Argentina is a political decision which will be reached in the near future in light of the growing demand of broadband services.

TowerXchange: Which of your offered solutions are currently most in demand in Latin America and what are the drivers behind that growth in demand?

A view of Buenos Aires


Marcelo Krimer, President, Planex Technologies: I would say that our offering varies depending on the country we are focusing on. One of our key strengths is the ability to diversify our portfolio of technology and engineering solutions so to be fully aligned with the demands of all the regional carriers.

A key solution clients often demand is the network quality measurement which serves as a detector of congestion issues in the network that can result in dropped calls and bad service.

Governments in the region have been very strict with regards to the quality of calls and services offered by carriers and there are severe fines in place to ensure carriers perform quality checks on their networks. Planex offers several solutions to help carriers maintain network performance complying with QoS standards at all times.

Nevertheless, active and passive network measurement is just the feedback piece of a chain of tools that contributes to ensuring QoS/QoE. The market is evolving and adopting solutions that proactively improve customer satisfaction while reducing opex happens not just at the network layer, but also through automatic verification and repair tools on the user terminals themselves, along with customer support infrastructure that is able to proactively and automatically monitor terminal behaviours and trigger solutions from a distance.

Latin America operators are showing increasing interest and demand for remote site monitoring solutions for attended and unattended cell and

central sites, which strongly contributes to reduce network and operating costs while improving network performance. Aforementioned device repair solutions take care of issues inherent to the new protagonists of the mobile era – smartphones – by combining automatic health checks and resolutions with assisted remote take over and support, community collaboration, peer-to-peer remote resolution and control through friends and family assistance.

TowerXchange: Tell us about your R&D laboratories. Which technologies are you working on and how does the R&D business add value to your existing offering?

Marcelo Krimer, President, Planex Technologies: Our R&D laboratories started as an in-house solution to integrate our offerings with the existing products clients want to connect to: pieces of equipment, software, platforms et cetera.

Our R&D team executes tests and verifications on internal feature applicability on the IP/PBX centrals, DWDM equipment, control and access systems, homologation cross references, O&M front end systems, FTTX terminals, optical line units, monitor and measurements control units, L2/L3 switches, routers, remote terminal units among others.

The goal is to make them work together following normative standards and customer requirements. With constantly evolving technology and continuous challenge of new mature products, it is very important to ensure that our solutions communicate

properly and don’t interfere with other equipment the carrier wants to use, especially if they are from another supplier, and use different protocols etc. This is the key focus of our R&D unit - to ensure that our products are interoperable with any existing device, and to certify that any change on the provided solution will fulfil the expectations of our customers.

TowerXchange: What proportion of your business comes from carriers and what from tower companies or OEMs?

Marcelo Krimer, President, Planex Technologies: We work with most carriers active in the region so Planex is definitely a carrier-oriented company and 80% of our revenue comes from work developed for them.

However, we also work with governments, corporations and we hope to work more with tower companies in the near future. Our goal is to grow the “non carrier segment” of our business to the point it surpasses the carrier segment.

TowerXchange: Is O&M outsourcing a big trend in the region? If so, what are the key characteristics of an outsourcing contract you sign with a client? Which KPIs need to be achieved?

Marcelo Krimer, President, Planex Technologies: This is definitely a growing trend in Latin America. Carriers are reducing their focus on infrastructure, operational issues and maintenance and trying to optimise the ratio between revenue and headcount

by outsourcing anything not strictly related to their core business.

Therefore, this is an opportunity for us to serve as an outsourcing partner while carriers focus on marketing, customer experience and other core competencies.

In terms of KPIs, geographical coverage plays a big role. It is fundamental to ensure our clients’ ability to reach and serve remote areas with a good QoS supported by excellent O&M processes.

The level of expertise is another factor. O&M contractors often use in-house teams in conjunction with subcontracted personnel. Therefore, we need to ensure that the team is up to speed and capable of meeting expectations even if they are subcontracted from third-party companies and not part of our in-house team.

Coordination between the various parties involved is highly relevant. Our customer service personnel, operational team, the account executive in charge of a specific client all need to be able to communicate and work together while keeping the SLA’s and KPIs in mind.

TowerXchange: How do you differentiate your offering from the competition? And which factors ensure your products and services are delivered on time and respect high standards?

Marcelo Krimer, President, Planex Technologies: We are a flexible team of engineers, very technology

savvy with multi-specialty backgrounds.

You see, in any other part of the world, highly specialised teams are expert in their own niche sector. However, in Latin America, it is of paramount importance to reach high levels of expertise in multiple areas, otherwise companies will struggle to achieve economies of scale. It is a simple equation: the more services you are able to provide while ensuring high standards, the more business you will acquire.

Planex has experienced a very low staff turnover and has several Director-level employees that started in the company as technicians or trainees while still completing their studies. I believe our personnel development and succession planning gives us an added value when it comes to proving our credibility to a potential client.

We are constantly innovating and adding services to our portfolio. While the market evolves, we go with it.

TowerXchange: How do you see your business evolving in the next 3-5 years?

Marcelo Krimer, President, Planex Technologies: We would like Planex to become a more global company with a stronger and larger presence in the countries where we operate.Moreover, we would like to deepen our involvement in areas such as renewable energy and its potential for the telecom sector. We are already working with partners able to offer renewable energy solutions

and we hope to do even more in this area.

Hybrid energy can serve the tower industry by complementing traditional sources of energy in off-grid sites but this is yet to become a widespread solution in LatAm. As I foresee energy becoming a problem in the next five years, we want Planex to keep exploring solutions to be ready when clients will start requesting them.

Over the next few years, governments and carriers will put added emphasis on the Quality of Service of networks. Therefore, solutions and tools to address this crucial matter will have to follow evolution and Planex is playing an important role in consulting and providing cutting edge QoE solutions.

Moreover, tower companies and carriers will keep focusing on reducing operating costs while adding efficiency and cell site density to LTE networks over the next five years. Planex will keep supporting companies involved in the telecom sector by adopting enhanced remote monitoring and automated M2M solutions along with offering outsourcing services.

In-building wireless network design and deployment of in-building solutions is currently under investigation to cope with the QoS and bandwidth demands of the 4G networks.

In conclusion, the telecom industry is changing at a very fast pace and we need to be extremely open to changes


Accelerate your sales cycle and close your next major deal in emerging market towersAdvertise in the TowerXchange Journal, circulated to a highly targeted community of the 5,131 most influential tower decision makers

To book your advertisement, contact: Annabelle Mayhew | [email protected] | M. +44 (0) 7423 512588

OperatorTowercoEnergy equipment & ESCOManaged service/ turnkey infrastructureStatic asset manufacturerStrategic or legal advisorActive equipment or IBSInvestorRMS, ILM & access controlRegulator or governmentOther

C-levelVP, SVP or Dept HeadDirector-levelSenior managerMiddle management

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North America

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South & Central Americas & The Caribbean

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Special feature:

With mobile penetration at almost 140%, 4G LTE deployment underway and approximately 1,500 towers in the hands of towercos, Chile is considered one of the most interesting telecom markets in the CALA region.

The growth of the Chilean broadband market is surpassing the OECD standards by four times, thanks to the country’s forward-thinking approach to the development of a robust ICT sector. In fact, the Chilean government has highlighted the growth of the telecom and technology industries as one of its strategic objectives to further enhance the country’s GDP and overall stability.

In TowerXchange’s Chile special feature, BMI and Mott MacDonald offer our readers comprehensive insights into Chile’s telecom sector, its growth pattern and the impact of recent regulatory changes on its industrial landscape. And we talk to two of Chile’s leading turnkey infrastructure providers, Mer Group, Telecom Division and AJ Ingenieros.

Chile case study

Don’t miss:63 Editorial: LTE could stimulate tower industry growth in Chile66 The Mott MacDonald Share Square for Chile69 BMI: Strong fundamentals will see the Chilean tower market heat up72 Mer Group: the hotspots for turnkey infrastructure deployments in LatAm77 AJ Ingenieros: an integrated solution provider’s view of the Chilean tower industry


LTE could stimulate tower industry growth in ChileFrom 4G LTE rollouts to government activities to boost the telecom industry


4G LTE gains momentum

The three major Chilean carriers - Claro, Movistar and Entel - have all successfully launched 4G LTE networks.

Claro was the first to upgrade its network and launched 4G LTE back in June 2013, followed by Telefonica Movistar in November.

Entel Chile has announced the upgrade in March 2014 and is now offering LTE-2600 to its 10,000 subscribers through 803 sites across the country.

Last month, the Chilean telecom regulator (Subtel) allocated three additional tranches of spectrum in the 700MHz band to Entel, Movistar and Claro. The terms of the concession require carriers to deploy 4G networks nationwide within 24 months including 1,281 remote regions, 503 schools and 13 roads.

An interesting feature of the concession is the obligation for carriers to open their networks to MVNOs. A move in line with the governmental push for enhanced competition and higher quality of service.

A sleepy year for tower transactions

The Chilean telecom tower industry hosts several active towercos and may be subject to considerable change over the course of the next few months.

To date, American Tower is reported to own and

Defined as one of the most open and mature industries in Latin America, the Chilean telecom sector enjoys full competition and a modern infrastructure and regulatory system.

Thanks to its openness to international investment and a proactive government, the national telecom industry is expected to keep delivering growth, great news for incumbent operators Claro, Movistar and Entel, and for American Tower and Torres Unidas, who both operate substantial tower portfolios in Chile.

Read this article to learn:< The status of 4G LTE network deployment< What is happening in the Chilean telecom tower industry< Government initiatives to push the ICT sector forward< Where to meet key executives from the national telecom industry

Keywords: Chile, Claro, Movistar, Telefonica, Entel, 4G, LTE, Network, Subtel, Licenses, MVNO, American Tower, Torres Unidas, Towercos, Transactions, Nextel, VTR Wireless, AJ Ingenieros, Regulations, Minister of Transport and Telecommunication, Digital Agenda, Imagina Chile 2013-2020, ICT, Meetup Preview


operate 1,150 co-located sites while Berkshire Partners-backed Torres Unidas owns an additional 500 independent towers.

Major carriers such as Nextel - recently acquired by Chilean Entel from NII Holdings - VTR Wireless and Movistar could all decide to sell their tower portfolio in order to expand their 4G LTE networks and this would create enticing opportunities for AMT, Torres Unidas and any prospective new market entrants.

The last tower transaction recorded in Chile took place in Q4 2012, when Telefonica Movistar sold 558 towers to AMT for US$96 million. In the same period, Torres Unidas acquired 400 towers from Telefonica Movistar for an undisclosed amount.

Government increases its commitment to ICT sector

As featured in our interview with Francisco Briceño from AJ Ingenieros, in 2012, the Chilean Senate approved a new law establishing clear rules regarding telecom tower installation.

Specifically, the law sets parameters with regards to towers spacing in sensitive areas near schools, hospitals, gardens etc. The law favours tower sharing and the installation of camouflaged towers in order to preserve the landscape and reduce the visual impact of greenfield projects.

Earlier in 2013, the Chilean President Sebastián Piñera, along with the Minister of Transport and


Converge in ICT services prices with the OECD countries

Average value of the basket ICTSource: International Telecommunications Union ITU. Year of publication: 2012

Entire country with internet access

Internet penetration by number of peopleSource: Vice Ministry of Telecommunications. Year of publication: 2012

Free WiFi internet access in all Chilean towns and cities

Percentage of towns with free public WiFi internetSource: Vice Ministry of Telecommunications. Year of publication: 2012

Chilean households connnected with high speed internet

Percentage of high speed connection for homeSource: Vice Ministry of Telecommunications. Year of publication: 2012

Santiago de Chile

2.8%Goal

1.2%Current

80%Goal

40.7%Current

100%Goal

25%Current

50%Goal

<1%%Goal


Telecommunication, Pedro Pablo Errázurriz, presented the Digital Agenda “Imagina Chile 2013-2020”. The Agenda sets a clear roadmap for the long-term development of the national ICT sector and features thirty specific initiatives and goals that aim at facilitating telecom access for the entire Chilean population.

The first target is for the ICT sector to represent 10% of GDP by 2020 through the widespread use of technology and, in order to achieve this target, the Government has established five strategic priorities and specific initiatives for each of them. Interestingly, the Government has compiled very clear monitoring indicators for each main strategy, as shown in the table on the previous page. These indicators, specifically related to digital inclusion, connectivity and entrepreneurship, add up to a comprehensive list including educational and government related initiatives.

The Chilean telecom industry live in Orlando

Further information and insights on the Chilean telecom industry will be provided during the TowerXchange Meetup Americas, taking place in Orlando, 20-22 May, in co-location with PCIA Wireless Infrastructure Show.

At the Meetup, key executives active in the industry will share their views on the development of the Chilean telecom tower sector.

Olivier Puech, CEO LatAm for American Tower and Daniel Seiner, CEO of Torres Unidas, will participate in the Towerco keynote panel on Wednesday 21 May at 11:30am. Ricardo Loor, COO of Torres Unidas, will host a roundtable on Chile on Tuesday 20 May at 10:30am.

Contact me at [email protected] for more information and to sign up for the Meetup

10% of GDP will come from knowledge economy

Percentage of ICT sales over GDP totalSource: Ministry of Economy. Year of publication: 2012

Duplicate the amount of digital companies

Amount of companies in the ICT areaSource: Internal Revenue Service. Year of publication: 2011

Promoting innovation and entrepreneurship for the new knowledge

economy

Global competitiveness ranking - innovationSource: World Economic Forum. Year of publication: 2012

10%Goal

5.2%Current

18,000Goal

8,878Current

33Desired position

44Currentposition

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Share Square: ChileThe telecommunication sector in Chile has been one of the most dynamic sectors over the last few years and represented 5.72% of GDP in 2012. The market generated an estimated US$7.4bn in service revenue in 2012, up 9.4% from the previous year.

In order to develop the broadband and mobile telephony market and to increase the competitiveness of the market while maintaining its regional leadership within South America, the Chilean government’s strategy has been to minimise regulations applied to the industry


Chile has a population of around 17.4m, and had 23.7 million mobile subscriptions at the end of 2013, giving mobile penetration of 136%. 5% subscriber growth is forecast for 2014, tapering off over subsequent years. 70% of

subscriptions are Prepaid. There are 3 principal mobile network operators: Entel PCS, Movistar (Telefónica) and Claro (América Móvil), and 6 mobile virtual network operators (MVNOs).

Opportunity for TowerCo entry with focus on high Lease Up Rate (LUR)

Opportunity for Outsourcing by MNO to TowerCo

Limited opportunity for new entrant TowerCo

3G 4G

Cu

rren

t Sh

arin

g

Non

ePa

ssiv

eA

ctiv

e

Technology Deployment

Chilean Mobile Operators

CLARO 24%

MOVISTAR 37.5%

ENTEL PCS37.2%

NEXTEL 0.5%

NETLINE 0.0%

MNOs

MVNOs

GTD MOVIL 0.0%

INTEREXPORT0.0%

VIRGIN 0.4%

VTR MOVIL 0.3%

Chile

4 MNOs : Entel PCS, Movistar (Telefónica) and Claro (América Móvil) and 6 MVNOs

23.7 million unique subscriptions at the end of 2013- mobile penetration of 136%.

Mobile broadband subscribers have increased by 894% over the last 5 years

LTE spectrum issued in 2.6Ghz and 700Mhz bands and initial services launched in 2013

Ley de Infraestructura para Torres de Antenas – “Tower Law” introduced in 2012

Restricts tower construction in saturated areas

Outlines compensation scheme for local areas

Tower Law constrains operators’ ability to deploy new towers - expected to lead to more sharing going forward.

Third party tower operators, like ATC and Torres Unidas, started their activities in 2010 and manage around 1,600 towers between them (with ATC the market leader)

With the new tower regulations, demand for mobile broadband, recent investments in LTE and the price war led by MVNOs, and with more than 8,000 towers spread over the country... Chile represents an attractive market for tower operators

subscriptions). Between 2009 and 2013, mobile broadband penetration experienced rapid growth due to improved mobile coverage and the explosion of smartphone adoption. Whilst fixed broadband connections increased by 35%, mobile broadband increased by 894% during this period (see figure 2).

4G DevelopmentsIn 2012 telecoms regulator Subtel held an auction for 120MHz of 4G spectrum in the 2.6GHz band, divided into 3 blocks of 40MHz, which attracted more than a dozen operators - although only

the three main operators submitted bids. Entel spent around US$8,852,360 while Claro paid US$2,907,781 and Movistar US$503,841.

LTE services began to be commercialized by Claro in June 2013, quickly followed by Movistar and Entel. In April 2014, Subtel announced that Movistar, Entel and Claro had also each won a spectrum block in the 700 MHz band for a total combined of US$22 million. The three operators have 24 months to deploy their networks nationwide, to expand the coverage of 4G mobile services and broadband connections across the country, and national roaming must be offered to other operators including MVNOs and entrants. At present, 4G penetration is still low – there were only 39,000 subscribers at the end of 2013, according to Subtel.

The tower sharing marketIn June 2012, the Government adopted the Law on the Regulation of Trans-Receiver Antennae for Telecommunications Services. The “Tower Law” requires that existing towers in sensitive and congested areas be shared with other operators, decommissioned or compensation be paid to local areas. Local areas can either to choose to camouflage towers to reduce the visual impact of the site or accept a tower structure that includes compensation to the community up to 30% of the value of the tower.

The new law on recognises that past deployment of towers impacts on the urban landscape and provides retroactive mitigation measures on


– leading historically to considerable mobile technology diversity. Today, except public entities using CDMA2000, all of the networks in Chile rely on GSM to provide services – arguably as a result of the abundance of spectrum originally given to Entel (60 MHz), which over the last decade has caused non-GSM operators to migrate to GSM.

3G services were launched by the 3 main operators in 2007, and Entel and Movistar also introduced 3.5G in the same year via HSPA and HSDPA technology. There were 9.7m 3G subscriptions in December 2013 (41% of all

Figure 2 : Internet Connections per Access Type

Internet Connections per Access Type

Fixed Broadband

2009

7.00

6.00

5.00

4.00

3.00

2.00

1.00

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existing towers, but exclusively in two cases:

< In areas defined as tower-saturated – i.e. where there are more than two antenna support towers within 100 metres; and< In areas defined “sensitive” – i.e. where there are schools, hospitals, nursing homes and other similar areas defined by Subtel, and which have also been formally identified by the municipalities within their respective communities.

This new law restricts network operators’ ability to deploy new sites and towers which is expected to lead to more sharing going forward. However if an operator chooses not to share its infrastructure with other operators, it would be forced to pay the equivalent of 50% of the replacement value of the tower, or 20% if the tower is camouflaged. Major MNOs have negotiated tower sharing agreements or paid compensation in about 80% of sensitive/congested areas designated by the regulator. However passive sharing is not significant outside sensitive/congested areas and there is no active sharing in the market.

In 2010, American Tower launched operations in Chile under the name ATC Sitios de Chile and purchased 287 base station sites from Telefónica Chile. In 2011, ATC acquired another 140 sites from VTR. With the introduction of the Tower Law in 2012, ATC acquired another 558 sites from Movistar for the sum of US$96 million. Today the ATC portfolio in Chile contains 1,116 sites.

In 2012, Peruvian based Torres Unidas also acquired over 400 wireless towers from Telefónica.

With the new tower regulations, the recent investments in LTE rollout and a raging price war led by MVNOs, and with more than 8,000 towers spread over the country, Chile represents an attractive market for tower operators

Alexandre is a Consultant within Mott MacDonald’s Technology and Communications practice and has a considerable experience in mobile, terrestrial and satellite telecommunications. In the last 4 years, Alexandre has worked on several telecommunications infrastructure developments around the world. Most recently, Alexandre has been part of a Mott MacDonald team commissioned to execute an advisory study for a towerco looking to invest in developing markets

Guest columnist Alexandre Dole

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Strong fundamentals will see the Chilean tower market heat upRegulatory changes and ideal business conditions will drive the country’s telecom sector growth

Jake Grant, ICT Industry Analyst, BMI

By comparison to some of its Latin American neighbours, the Chilean market for third-party tower companies has been relatively muted, particularly since the end of 2012, when the last major transaction took place. The three major Chilean mobile network operators have seen declining contributions in voice revenues and shrinking profit margins, as capital expenditures are increased to cater to a growing transition to non-voice and mobile data services. With these financial pressures, combined with coverage requirements and other network maintenance and upgrades, it is common for operators to sell non-core towers assets to third-party independent tower companies but this was not the case during 2013 or Q1 2014.

Towers Act Has Slowed Down Asset SalesWe attribute this largely to the passage of Law No. 20.599, which set regulations for the construction of antennas and telecoms infrastructure to encourage co-location and decrease the environmental impact of tower saturation. Voluntary co-location had previously existed in the market, however, the Towers Law now requires that wireless infrastructure is built with the capacity to share with other mobile providers. It also sets more stringent conditions for the installation of towers in saturated areas (areas with two or more), as well as restricting the construction in sensitive areas (such as near schools, hospitals, nurseries), requires approval for towers over 12 metres high and establishes compensation for local communities. With such rigorous conditions regarding tower sharing between mobile operators

Read this article to learn:< The status of the Chilean telecom tower industry

< How regulatory changes have impacted the telecom market development

< The deployment of 4G LTE networks in Chile

< The attractiveness of the Chilean telecom market for foreign investors

The market for communication tower sharing appears to have cooled in Chile, following the enactment of Law No. 20.599 published on June 11 2012, which established regulations for the installation of antennas and transmission stations telecommunications services. Furthermore, economic headwinds from a slowdown in Chinese demand for industrial metals exports have also led to slower GDP growth and weaker investment. Despite these trends, the Chilean telecoms market maintains the strongest fundamentals in the region, backed by a favourable business environment and our outlook for the towers market is more positive over the longer term, as growth in 3G/4G services increases along with consumer spending power.

Keywords: BMI Analysis, Chile, Market Overview, South America,

Towercos, MNOs, 3G, 4G, Rental Rates, Co-locations, Infrastructure

Sharing, Market Forecasts, Country Risk, Regulation, Transactions,

Towers Act, Spectrum Auction, License, MVNO, Investment,

Telefónica Chile, Entel PCS, Movistar, Claro, América Móvil


and tower construction, we believe this has acted as a disincentive for operators to sell to third-party tower providers. Tower companies may also be hesitant to enter the Chilean market, cautious of how the laws may affect their operations and potentially in anticipation of further regulations.

In the wake of the reforms, mobile operators noted how these additional complications would result in increased costs, as they compensate local communities and make retroactive adjustments to their existing tower portfolios. Although charging rival operators in order to share infrastructure should help recoup some of this expenditure, it is possible that they will not be able to recover the full investment.

Additional 4G Spectrum Will Require Investment Despite these problems in the short term, we view the longer term picture in Chile as more positive and conducive to the tower sharing trend. The February 2014 auction of 700MHz 4G spectrum, will provide for the deployment of 4G networks to support the existing holdings of 2.6Ghz spectrum awarded in July 2012. Both licences came with rollout and coverage requirements, focusing on underserved areas of the country and encouraging high quality of service. In order to meet these commitments, the three main operators will need to invest heavily in infrastructure, expanding their current portfolios by three to four times their current size. With higher costs of construction due to the Towers Act, operators could look to divest non-core tower assets to third parties in order to

fund this heavy capital expenditure burden. Chile is one of the more developed mobile markets in Latin America, with 3G connections accounting for 26.8% of total subscriptions at the end of 2013, following growth of 29% year-on-year. This shows a strong demand for higher value services in the country and 4G is therefore likely to be met with some demand. We believe the country has a subdued consumer story over 2014 as a result of exchange rate weakness and higher inflation that will weigh on purchasing power. However, our view over the next decade is a lot stronger, as the country tries to diversify away from its dependence on mining to a more consumer-driven economy,


Source: Telefónica, BMI

which should lead to greater spending power for mobile subscriptions and smartphones, for example.

Furthermore, networks are obliged to account for MVNOs and will also need to include measures for handling capacity from machine-to-machine (M2M) connections. The rise in mobile data looks set to continue in Chile and will be one of the outperformers in the region in terms of 3G/4G subscriptions and non-voice revenues. Mobile operators will therefore need to explore tower sharing options as a way to handle the extra capacity.

Rise In CapEx Cuts Into Margins Telefónica Chile KPIs, 2008-2013

Mar-0

8

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-13

June-08

Mar-0

9

Mar-1

0

Mar-1

1

Mar-1

2

Mar-1

3

Sept-08

Sept-09

Sept-10

Sept-11

Sept-12

Sept-13

June-09

June-10

June-11

June-12

June-13

60

50

40

30

20

CapEx As % of Revenue

OIBDA Marging (%)


The Most Stable Business Environment In Latin AmericaAlso working in Chile’s favour is the more stable and favourable business environment that the country offers in comparison to the rest of the region. Chile offers foreign investors some of the world’s most competitive business costs. Privatisation and deregulation have created sophisticated public utility and telecoms industries, while corporate taxes and labour costs are moderately low. Market-friendly policies and strong

institutions have been the hallmark of the Chilean government in recent years, and we believe that the country will continue to set the benchmark for political stability in the region going forward. While the market for towers has cooled since 2012 as a result of the Towers Law and economic headwinds leading to lower foreign investment in the economy, the longer term picture for Chile is still the strongest in the region and we expect to see the market for tower companies pick up as the rise in 3G and 4G services continues to pick up

Strong Demand For 3G From Strong Competition Total 3G Subscriptions, 2009-2013

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2 ,000,000

1 ,000,000

Jan-09

Apr-09

Apr-10

Apr-11

Apr-12

Apr-13

Jul-0

9

Jul-1

0

Jul-1

1

Jul-1

2

Jul-1

3

Oct-09

Oct-10

Oct-11

Oct-12

Oct-13

Jan-10

Jan-11

Jan-12

Jan-13

3G Connections, LHS

3G As % Mobile, RHS

Source: Subtel, BMI

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The hotspots for turnkey infrastructure deployments in Latin AmericaMER Group Telecom Division compares demand for towers and DAS in LatAm and Africa

Uri Bar Yosef, MER Group, Telecom Division

TowerXchange: We’ve spoken to MER Group about your presence and capabilities in Africa - in which countries are you active in the Americas? What capabilities do you have locally? Uri Bar Yosef, GM, Infrastructure unit, MER Group, Telecom Division: MER Group’s Telecom division has operated in Latin America for 13 years and is currently active in Argentina, Chile, Peru, Bolivia, Colombia, Panama and Mexico. We are also active in Ghana, Tanzania, DRC, Mozambique, Cote d’Ivoire and Kazakhstan and have legal entities in several other countries where we carried out projects, and therefore are ready to re-enter those local markets should client engagements require. MER’s Telecom Division capabilities in Latin America are very similar to those in Africa; we undertake turnkey infrastructure implementation projects and as well as design, manufacture and supply our own Tower structures, i.e. provide ‘A-Z’ site construction and maintenance services, as well as supply camouflaged and quick deployment towers, TI services and installations, and in building solutions. MER Telecom Division is part of the broader MER Group and leverages its proven global track record, comprehensive knowledge and accumulated expertise to seamlessly deliver technologically innovative and best-of-breed solutions including M2M enablement and vertical market applications, Mobile Financial Services, cloud billing, MVNO enablement, as well as on/off

Read this article to learn:< MER Group Telecom Division’s operations and capabilities in LatAm and beyond

< The attractiveness of the tower market in Chile: 3 strong carriers, an established towerco market,

mandated rural infrastructure sharing and strong BTS opportunities

< Demand for new towers in Mexico, Peru and Bolivia, and the challenges of the Argentinian market

< What determines whether single or multi-tenant towers are installed

< The growth of the IBS market in LatAm and in Africa, and the appeal of shared DAS

Uri Bar Yosef is uniquely well qualified to compare the African and Latin American tower markets having spent 15 years with MER Group Telecom division, working his way up from an entry level position through roles in Africa, then moving to Chile to become CEO of their local operation, before returning to their head office in Israel to become General Manager of the global Infrastructure operation, part of the group’s Telecom division.

Keywords: Who’s Who, Managed Services, Steelwork, O&M, Construction, Installation, Capacity Enhancements, Loading, Network Rollout, Build-to-Suit, Regulation, Tax, Retrofitting, Warehousing, Multi-Country Partner, IBS, DAS, VMI, Masts & Towers, Customs, Infrastructure Sharing, Americas (South), Africa, Argentina, Chile, Peru, Bolivia, Colombia, Panama, Mexico, Entel, American Tower, Telefónica, Movistar, Entel, Claro, América Móvil, Nextel, VTR, MER Group, MER Telecom


board and remote/contactless payment solutions for public transport operators.

TowerXchange: Looking back on your time as CEO of MER Telecom Chile, tell us about the tower industry in Chile. Uri Bar Yosef, GM, Infrastructure unit, MER Group, Telecom Division: Chile is a very developed market, led by two big operators with 6-7 million subscribers each; Telefónica (Movistar), which of course operates tens of thousands of towers across South and Central America, and Entel, a substantial local private operator which recently made an acquisition in Peru. Claro (part of América Móvil) also has over 3 million subscribers, Nextel entered Chile a few years ago, but is not as big yet, and VTR which is licensed but seemed to be focusing more on cable. American Tower is becoming strong in Chile - they bought 836 towers from Telefónica in three transactions, and are doing a lot of build-to-suit work with all the operators. (TowerXchange: American Tower’s Q3 2013 announcement states that they then owned 1,153 towers in Chile). As in any other market, when a towerco acquires assets, they undertake carry-overs and upgrades to build capacity for additional tenants. Construction of new sites seems to be never ending in Chile! There is a strong regulator in Chile, including a Telecom law which for example often means

towers can be a maximum of just 12m high in urban areas, which makes it difficult to provide capacity for more than two tenants, as well as usually requiring that no other tower be located within 80m. Regulations also enforce infrastructure sharing in rural areas. MER Telecom Division is proud of its ability to forecast and adapt to market requirements not only in Chile but all over Latin America, Africa and other regions where it is operating. For example, the growing population in Chile caused capacity problems, so we developed a new quick deployment tower which took just one to two days to get on the air. After the regulations changed and required the camouflage of towers in many areas, we developed a series of new camouflaged products to comply with the new law - we developed our own creative camouflage solutions including Palm trees, Chimney poles, billboards and advertisement towers, which look like the sail of a ship. TowerXchange: How do local import duties and other tax regimes affect international suppliers selling into Latin America? Uri Bar Yosef, GM, Infrastructure unit, MER Group, Telecom Division: Of course all suppliers are affected by taxation costs, and each country has own rates, which we take into our consideration. Since we manufacture our own towers and our engineering is very cost effective, we are able to compete even with local manufacturers.


Being an international company, MER Group manufactures most of its structures at its two large plants in Israel. We ship to our local branches and ensure we have half a year of inventory available to respond quickly to time-sensitive orders. We also use local factories to manufacture accessories and smaller fixed infrastructure assets in Chile and Mexico, where we manufacture monopoles locally. TowerXchange: In which countries do you anticipate the greatest demand for new cell sites in Latin America?

Uri Bar Yosef, GM, Infrastructure unit, MER Group, Telecom Division: Mexico is a huge country and implementation of network extensions is on a scale far beyond the rest of Latin America (except for Brazil, although we’re not operating there at the moment). MER Telecom is installing 400-500 towers per year in Mexico, so it’s critical that we have stock available on demand. We maintain stock of a variety of towers so we can select the right design for the local wind conditions and loading, which is critical for us in order to maintain a good market share in Mexico. Peru is also an important market for us. Chilean carrier Entel acquired Nextel Peru in Q2 2013, and is working on permitting, ready for a big expansion planned for this year.

Argentina is a relatively problematic market for us - unstable because of the economy, with harsh restrictions on quotations. We are importing some


towers but it’s a challenging market, so we are trying to open local manufacturing facilities. So in summary, we see Mexico, Chile and Peru as particularly strong markets for us - there’s also a vast implementation movement in Bolivia.

TowerXchange: Do the majority of the towers you are building in Latin America have capacity for multiple tenants? Are you getting a lot of work upgrading the structures of existing towers for multiple tenants? Uri Bar Yosef, GM, Infrastructure unit, MER Group, Telecom Division: It depends on the client! Generally the Latin American carriers will deploy

single tenant towers, maybe with capacity for a subsequent generation of technology, unless regulators mandate infrastructure sharing. Regulations can change the market completely, for example in Chile carriers have to build large towers for multiple tenants because of mandated infrastructure sharing. Of course towercos think more about building capacity for multiple tenants, but at the end of the day everyone wants to minimise capex. Wherever there is a towerco there is work to upgrade structures, for example in Chile we have a big site survey and reinforcement project for the local towerco.

TowerXchange: How do the requirements of carriers and towercos differ between Africa and Latin America? Uri Bar Yosef, GM, Infrastructure unit, MER Group, Telecom Division: The biggest difference between Africa and Latin America is that of the power grid in South America. A much greater proportion of each country is electrified in South America - there are very few sites running diesel generators as their primary power source. Where there is no grid in Latin America, carriers and towercos think twice about whether to construct a site, whereas in Africa there is often no choice! TowerXchange: How does the market for In Building Solutions (IBS) in Latin America compare to Africa?

“ “MER Telecom is installing 400-500 towers per year in Mexico, so it’s critical that we have stock available on demand

““

We think IBS will be a big trend in the near future in Africa, driven by urban capacity and the need to reduce network congestion in densely populated buildings. As a matter of fact we’ve recently started some deployments for Helios Towers Tanzania

Uri Bar Yosef, GM, Infrastructure unit, MER Group, Telecom Division: The growing need for indoor capacity is not something that can be ignored, however the market for In Building Solutions is more developed in South America than in Africa. We’re seeing an increasing volume of DAS deployments in big cities in South America. MER Telecom recently acquired DAS manufacturer Optiway to strengthen its capacity and capability in DAS, so we are now able to offer end to end DAS services from design and engineering to installation and optimisation, including passive equipment and active DAS with optical signal transmission. TowerXchange: Are DAS deployments of similar value to macro sites? And are towercos starting to get into this market?

Uri Bar Yosef, GM, Infrastructure unit, MER Group, Telecom Division: DAS deployments can cost US$50-200,000, so it’s a similar value engagement for us to a macro site. The towercos are starting to get into the DAS market - nobody wants two or three different antennas in a building, so again this is an opportunity to acquire IBS sites, install DAS equipment and offer that infrastructure to multiple operators. Our DAS technology supports multiple operators with multiple technologies from a single set of antennas, with one set of feeders supporting multiple BTS. We think IBS will be a big trend in the near future in Africa, driven by urban capacity and the need to reduce network congestion in densely populated buildings. As a matter of fact we’ve recently started some deployments for Helios Towers Tanzania. TowerXchange: Finally, please sum up how you differentiate Mer Group’s Telecom Division from competitive turnkey infrastructure providers in Latin America. Uri Bar Yosef, GM, Infrastructure unit, MER Group, Telecom Division: As an international company, Mer Telecom’s capabilities are much stronger than the smaller, regional companies we compete with in Latin America. Mer Telecom has superior logistic, manufacturing, financial, engineering, and quality assurance capacities and experience.

However, it’s also critical that we have a local presence in Argentina, Chile, Peru, Bolivia, Colombia, Panama and Mexico to keep up with changing market dynamics in these countries. There’s nothing like direct contact with the client to tailor our services to best meet their needs and provide quick, cost effective solutions


Towercos: an increasingly relevant client for LatAm integrated solution providersFrom television data networks to 4G LTE: the path to innovation of a Chilean solution provider

Francisco Briceño, Vice President, Operations, AJ Ingenieros


TowerXchange: Tell us about your company, its operation and offerings

Francisco Briceño, Vice President, Operations, AJ Ingenieros: AJ Ingenieros was founded in Santiago de Chile in 1986, by Gabriel Olavarría and Félix Olavarrí a, both engineers. Since then, the company has always been active as a provider of solutions for the infrastructure sector and started by focusing on television data transmission networks.

To date, we are a fully integrated solution provider, offering services to the mobile sector such as tower design and installation, engineering, construction and due diligence, among others.

Originally based in Chile, AJ Ingenieros is now active in the Dominican Republic, Guatemala, Mexico, Peru, Colombia, Panama and Costa Rica among others. We count more than 1,200 employees regionally with 500 of them based in our Headquarters in Chile.

TowerXchange: Who are your key clients in the region? In which countries do you operate?

Francisco Briceño, Vice President, Operations, AJ Ingenieros: The majority of our business comes from carriers such as Movistar, Claro and Entel which represent 60% of our operations.

Our second group of clients and almost 30% of our business is represented by OEMs such as Ericsson, Huawei and others due to existing contracts they have with carriers whereby some of our services are required.

AJ Ingenieros was set up in Chile before mobiles even penetrated the market. Initially active in setting up data transmission networks, the company quickly entered the mobile industry in the nineties and has since then offered its services to the growing Latin American telecom industry.

In this exclusive interview, Francisco Briceño, Vice President, Operations for the company, shares his views on the evolution of the regional telecom industry, how regulatory changes have impacted the telecom tower sector and how towercos are becoming an increasingly relevant player in the region.

Read this article to learn:< How important are towercos for an integrated solution provider?

< The importance of strengthening and upgrading projects on towerco-owned portfolios

< The new Chilean telecommunication law and its impact on tower construction

< Key success factors when selecting an integrated solution provider

< The growth potential of the Chilean and Peruvian telecom markets

Keywords: AJ Ingenieros, Interview, Chile, Peru, Dominican Republic, Guatemala, Mexico, Colombia, Panama, Costa Rica, Movistar, Claro, Entel, Nextel, OEM, Huawei, Ericsson, Towercos, Managed Services, Central America, South America, 4G, LTE, Construction, Installation, Due Diligence, Infrastructure Sharing, Regulation

We are now actively working with tower companies which represent the additional 10% of our business. With the exception of Mexico - where we have been working with towercos for quite some time - I’d say that this client is a relatively new category for us. We have been working with tower companies for the past three to four years. However, this area is growing fast and the demand for our services by towercos is expanding.

Whereas it is a completely accepted model in North America and Europe, towercos are still establishing their presence in Latin America. Therefore, I can foresee their role becoming increasingly important over the next few years as carriers divest their tower portfolios and towercos become the direct owner of passive infrastructure. However, we need to keep in mind that for some carriers towers are still an extremely strategic asset.

The region still lacks maturity to fully accept towercos but I can see the perception shifting - it’s a matter of time.

TowerXchange: Tower transactions tend to unlock pent up maintenance work and tower strengthening projects - have you seen much demand for these kind of projects? If so, please share an example or two.

Francisco Briceño, Vice President, Operations, AJ Ingenieros: We have definitely experienced a growth in demand for strengthening projects since towercos came into play.

First of all, since we have been active for thirty years, a lot of the existing towers we are asked to work on have been built and installed by us. This industry tends to favour continuity when it comes to business relationships and we have been working on several strengthening projects on infrastructure we built several years ago.

To date, the majority of these projects focus on strengthening and upgrading existing towers to


host multiple tenants. We haven’t done a lot of maintenance projects yet as some of the facilities we work on are relatively new.

Moreover, tower companies are increasingly contracting us to develop due diligence projects prior to portfolio acquisition. We analyse and evaluate portfolios tower by tower, asset by asset, and we deliver a full report. Our engineering department has been very active with engagements

Image courtesy of AJ Ingenieros


such as this lately, much more than in the past.

TowerXchange: Regulators often need to protect the environment when permitting building new towers. How are your products helping to preserve the environment? Is there a growing demand for camouflaged towers?

Francisco Briceño, Vice President, Operations, AJ Ingenieros: In 2012, the Chilean Senate approved a new law establishing clear rules regarding telecom tower installation. Specifically, the law sets parameters with regards to towers spacing in sensitive areas near schools, hospitals, gardens etc. The law favours tower sharing and the installation of camouflaged towers in order to preserve the landscape and reduce the visual impact of greenfield projects.

We have had a camouflaged tower offering for the past six years with a portfolio of products including tree-like towers, totems, advertisement boards and rooftops. We have various solutions which depend on the area chosen for the new project but all of them respond to the need to reduce the visual impact of telecom towers.

Clients tend to opt for these solutions in order to comply with law but also to maintain a positive relationship with the community. Although the price is somewhat higher than for standard towers, as it must take into consideration ornamental factor as well as technical ones, some clients have no choice but selecting these solutions as it allows them to establish service in areas otherwise unreachable to due legal restrictions.

TowerXchange: How do you ensure your services are delivered on time and within budget?

Francisco Briceño, Vice President, Operations, AJ Ingenieros: First of all, we allocate one project manager for each specific client in order to create an open relationship between the two with clear communication and understanding of deadlines, key milestones and requirements. Therefore, our clients have one point of contact within AJ Ingenieros throughout the duration of the project. This is a highly efficient system which has allowed us to create long standing, successful relationships with our clients.

Moreover, there is only one company - AJ

Ingenieros - responsible for the entire project, from design to completion. This model has been adopted in Chile and is the preferred model throughout the region as it has so far ensured optimal communication between parties as well as success in meeting deadlines and working within budget.

By establishing offices in each country where we operate, our project managers and teams have direct, on the ground relationships with each client. The only centralised aspect is production which is entirely undertaken by our Chilean factory.

TowerXchange: What are the critical success factors tower operators should consider when selecting a design and manufacturing partner?

Francisco Briceño, Vice President, Operations, AJ Ingenieros: I’d say that the key factor is experience. We have been active for more almost thirty years and have installed over 7,000 towers across the region. It’s safe to say we know our business inside out and experience is the main reason for our success.

Manpower, quality and standards of design and services as well as local presence are other critical aspects I’d recommend each company takes into consideration when selecting a business partner.

We don’t offer standardised solutions. Our products are fully customised and we work with clients to find the perfect solution depending on their requirements. This is the most efficient

“ “We have been active for almost thirty years and have installed over 7,000 towers across the region

solution to ensure we deliver products within budget.

TowerXchange: Are contracts in Latin America typically just for the manufacture and supply of towers, or are they end-to-end “turnkey” projects from manufacture to installation and maintenance?

Francisco Briceño, Vice President, Operations, AJ Ingenieros: We do work with some subcontractors

which we have been partnering with for several years. We use them for certain services such as site acquisition, installation and drive tests.

However, it’s important to note that we resort to outsourced partners when and if needed as we are able to offer all these services in-house. When the demand for services peaks, we employ our team first and then contract trusted external companies for projects we cannot fully cover with our own employees.


The telecom market is cyclic and has its own peaks which usually correspond with the launch of new technology. During those hectic times, we are able to cover a high volume of projects thanks to our internal resources and to a network of highly experienced subcontractors.

TowerXchange: Out of the countries where you are currently active, which are the ones with the biggest potential in terms of the growth of their telecom tower sector?

Francisco Briceño, Vice President, Operations, AJ Ingenieros: This is quite a positive time for the Chilean telecom market and we have several projects in the pipeline. Since two frequency auctions were successfully completed, we are now very busy with the installation phase.

The same can be said about Peru with the arrival of a new player - Entel - that has recently acquired Nextel and a subsequent growth in projects.

Both markets went from the legal phase of auctions and bids to the executional phase which for us correspond with a very active and promising time. That said, the volume of business we are able to generate very much depends on how the market responds to new offerings. 4G LTE is a new technology and the demand for it will set the pace for our workload.

Beside Chile and Peru, we see very good opportunities in Colombia due to its size and demand growth

Image courtesy of AJ Ingenieros

Special feature:

When we launched TowerXchange two years ago, independent towercos owned just 10% of Africa’s towers, and they were still viewed with both interest and caution by investors and by the infrastructure and M&A strategists at Africa’s leading MNOs. Just two years later, and the African tower industry has achieved “launch velocity” – the rate of growth is so substantial that it seems nothing can stop it reaching scale, and MNOs and investors are all eager to get a piece of the action. The 17% of towers currently owned or operated by towercos will rise to almost 40% by the end of 2014, driven by Airtel’s imminent sale of all 15,000 African towers, which in turn has triggered several other tower portfolios to come to market. In this special feature, TowerXchange updates and consolidates our African market sizing data and forecasts, placing them alongside a preview of the Airtel tower deal. The Airtel transaction is interesting because it includes attractive portfolios in proven towerco markets, and more frontiersy markets where the towerco business model has not yet taken root. We analyse markets at either end of the spectrum of the Airtel deal; the sought-after Nigerian towers, and the more challenging, but potentially rewarding, towers in Burkina Faso, Chad and Niger.

Africa migrates to the independent tower business model

Don’t miss:82 TowerXchange’s market size and growth forecasts for the African tower industry89 A preview of Airtel’s African tower sale93 BMI and Mott MacDonald take a closer look at the tower markets in Burkina Faso, Chad and Niger98 The changing shape of the Nigerian tower industry100 How Hotspot Network built a portfolio of 100 towers in Nigeria


TowerXchange’s market size and growth forecasts for the African tower industryAfrican tower industry achieves ‘launch velocity’


The African independent tower market is led, and will continue to be led, by the ‘Big Four’ African towercos; IHS (10,500 towers), American Tower (5,099 towers in Africa), Helios Towers Africa (4,851) and Eaton Towers (2,500), supplemented by a couple of significant West African regional towercos, Helios Towers Nigeria (1,300) and SWAP Telecoms & Technologies (1,459). See Figure 1. TowerXchange are also tracking half a dozen or so African ‘middle market towercos’, although none yet has a tower count into quadruple-digits. It’s not just the proportion of towers owned by towercos that make the African tower industry so important, it’s the fact that the independent towerco’s assets are among the most bankable infrastructure assets in sub-Saharan Africa, yielding proven, relatively low risk revenues over long term contracts with ‘investment grade’ anchor tenants. The separation of telecoms infrastructure from the retail risk contained within the mobile network operator is rewarded by relative favorable relative multiple arbitrage – investment into African tower companies values some at fifteen to twenty times EBITDA. Meanwhile mobile network operators divesting their towers benefit from the opportunity to release cash and pay down debts or invest in new technologies, and/or stabilise opex, while refocusing on their core business of selling airtime, improving the customer experience and developing value added services. TowerXchange are often asked, “for what multiple of TCF (Tower Cash Flow) are African towers changing

25,000 towers are already owned, or managed and marketed, by Africa’s independent towercos, representing 17% of the Africa’s estimated 150,000 towers. There are currently 38,500 towers for sale in Africa, with a major deal involving Airtel’s 15,000 African towers expected imminently. By the end of the year, Africa’s independent towercos will own more towers than MTN – TowerXchange forecast that towercos will own 38.8% of Africa’s towers at the end of 2014.

Read this article to learn:< The current size and forecast growth of the independent tower market in Africa

< Who are the main players and where are they active

< Transactions to date and the cost per tower paid

< Where the next African tower transactions will take place

< The implications for towercos, investors, MNOs and suppliers

Keywords: Editorial, Towercos, Research, Deal Structure, Market Overview, Valuation, Investment, Market Forecasts, First Mover Advantage, Bankability, Pass-Through, SLA, Joint Venture, Sale & Leaseback, Operational Lease, Infrastructure Sharing, Africa, IHS, American Tower, Helios Towers Africa, Eaton Towers, Helios Towers Nigeria, SWAP Telecoms and Technologies

By Kieron Osmotherly, CEO, TowerXchange

hands?” Unfortunately, with only one publicly listed towerco in Africa, TCF data, lease rate and lease term information is not readily available – rightly so, it’s competitively sensitive! Thus we have to resort to cost per tower as a very crude indication of value – figure 3 consolidates what data is available in the public domain. Digest this particular table with caution – the value of a tower is a function of the existing tenancy ratio, structural capacity, lease back rate and lease term, so looking at dollars per tower in isolation tells only a fragment of the story. Investors’ appetite for African towersAn estimated US$1.6bn of capital has been pumped into tower transactions in Africa to date, and twice that amount could be spent in the next year, driven by Airtel’s sale of 15,000 towers, the potential


sale of MTN’s prized 9-10,000 Nigerian towers, Etisalat’s tower sale in Nigeria, and the continuing restructuring of the ownership and management of Orange’s African tower assets. Where once upon a time, at the beginning of this decade, Daniel Lee was pitching a relatively unproven African independent towerco business model to a shallow pool of prospective early investors, now it can seem that there is more capital chasing towercos than there are investible opportunities. The biggest challenge for towercos is no longer raising capital. It’s no longer a battle to convince management teams at operators to release the value locked in their towers, because while ‘first

2002 1903 1194

719 1946550

5099


Figure 1: Estimated number of towers owned or managed by towercos in Africa Figure 1a: Count differentiating towers that are owned from those that are managed and marketed by towercos


mover advantage’ may be largely a myth in terms of the impact of bringing towers to market first on valuations, there certainly seems to be ‘last mover disadvantage’, and nobody wants to be left with fast-depreciating assets stranded on their balance sheet. The biggest challenge for towercos is simply to keep up; to develop and recruit scarce talent to manage

new local towerco opcos; to concurrently close one deal while conducting due diligence on the next; in the meantime securing the next tranche of investment; while at the same time structuring programmes to optimise the site level profitability of the assets they’ve already acquired.So, if you’re frustrated because you can’t get the CTO or CEO of a towerco on the phone to pitch your


Figure 2: African towerco footprintsFigure 3: Cost per tower, a crude measure of value

2010

2010

2010

2010

2010

2010

2011

2011

2012

2012

2012

2012

2013

2013

2013

2013

Millicom / Tigo + Helios

Vodafone + Eaton

Cell C + ATC*

MTN + ATC

Starcomms + SWAP



MTN + ATC

Orange + Eaton

Warid + Eaton

MTN + IHS

MTN + IHS

Orange + IHS

Orange / Telkom Kenya + Eaton

Vodacom + Helios

MTN + IHS

Ghana

Ghana

South Africa

Ghana

Nigeria

DRC

Tanzania

Uganda

Uganda

Uganda

Cameroon

Cote d’Ivoire

Cameroon & Cote d’Ivoire

Kenya

Tanzania

Rwanda & Zambia

$120k

?

$307k

$228k

$214k

$103k

$131k

$175k

?

?

$173k

$151k

?

?

$86k

?

Year Deal Country Cost

* Cell C deal included 1,400 towers plus additional towers under construction


company’s proposition, try hanging about in the departure lounge of one of Africa’s hub airports, because these guys are clocking up the air miles in pursuit of the next deal! Operational challengesWhile most towercos are very lean enterprises, with much of the construction, maintenance and energy


logistics outsourced, the towerco management team still has to steer the business through substantial operational challenges, ranging from the evaluation and upgrade of structures for multiple tenants, to improving visibility and accountability within the O&M supply chain and evolving from reactive to predictive maintenance, and combating fuel theft. These operational battles are fought against

a backdrop of strict Service Level Agreements that impose harsh financial penalties if uptime drops below targets that are often substantially higher than had been achieved within the portfolio pre-sale. However, with few exceptions, anchor tenants and co-location tenants report satisfaction with

2010 Millicom / Tigo Ghana Helios 750 $54m for 60% Joint venture

2010 Vodafone Ghana Eaton 750 Not applicable Operational lease

2010 Cell C South Africa American 1,400* $430m Sale and leaseback

2010 MTN Ghana American 1,876 $218.5m for 51% Joint venture

2010 Starcomms Nigeria SWAP 407 $81m Sale and leaseback

2010 Millicom / Tigo DRC Helios 729 $45m for 60% Joint venture

2011 Millicom / Tigo Tanzania Helios 1,020 $80m for 60%** Joint venture

2011 MTN Uganda American 1,000 $89m for 51% Joint venture

2012 Orange Uganda Eaton 300 Unknown Sale and leaseback

2012

2013

Warid

Orange

Uganda

Cameroon & Cote d’Ivoire

Eaton

IHS Africa

400

2,000+

Unknown

Unknown

Sale and leaseback

Managed services

2012

2013

MTN

Orange/Telkom Kenya

Cameroon

Kenya

IHS Africa

Eaton

827

1,000+

$143m

Unknown

Sale and leaseback

Managed services

2012

2013

2013

MTN

Vodacom

MTN

Cote d’Ivoire

Tanzania

Rwanda & Zambia

IHS Africa

Helios

IHS

931

1,149

1,269

$141m

Approx $75mn for 75.5%

Unknown

Sale and leaseback

Joint venture

Sale and leaseback

*Cell C deal included 1,400 existing towers plus additional towers under construction**Millicom/Tigo’s stake in Helios Towers Tanzania reduced to 24.5% after Helios acquired towers from Vodacom Tanzania in 2013

Figure 4: Africa’s biggest tower sharing transactions to date

Year Operator Country TowerCo Est. # of towers Publicly stated purchase price Deal structure


the quality of service they receive from tower companies – in most cases uptime targets are being met and exceeded, and it seldom takes many weeks to add a new tenant to a tower, so it seems Africa’s towercos are getting to grips with the operational challenges. What makes many emerging market towercos unique is that the ‘traditional steel and grass’ business model is supplemented by a substantial energy logistics play. Power pass through contracts,

which leave energy largely in the hands of the tenant, are falling out of favour in sub-Saharan Africa, and TowerXchange would be surprised to see any deals closed this year with a power pass through clause (with the possible exception of South Africa, where we are not forecasting a tower transaction until 2015). To date, only American Tower has made substantial use of power pass throughs in their African transactions, with power pass through clauses in effect at ATC Ghana, Uganda and South Africa.

Is the balance of power shifting from MNOs to towercos?Yes, the balance of power is shifting insofar as if you want to sell equipment and services for telecom towers, an ever-increasing proportion of those towers are transferring from operator-captive to owned and/or managed by independent towercos. And the sale of assets is typically accompanied by an extensive build-to-suit programme, so whether you focus on legacy towers or greenfield new builds, towercos are becoming your most important clients in Africa. But no, the growing scale of the African independent tower sector is not likely to result in unchecked increases of lease rates. Lease rates have declined and stabilised in Africa since the early days when a tenancy in downtown Lagos could fetch US$7,000 per month. And the tower industry is ‘kept honest’ by the simple fact that if the cost of leasing a tower becomes too high, mobile network operators would resume building their own sites. Fierce competition between towercos in several markets also serves to keep lease rates fair, ensuring value for towerco investors, for tower tenants, and ultimately for African mobile subscribers. What next?TowerXchange forecasts that the independent towerco sector in Africa will more than double in size to a tower count of 64,000 by the end of 2014, increasing again to 84,500 by the end of the following year – see figure 5. Figures 6 and 7 show where tower transactions have taken place and where we anticipate them taking place in the

Figure 5: African tower industry achieves launch velocity

End of Year

2009

2010

2011

2012

2013

2014(f)

2015(f)

Est total # of towers in Africa

120,000

125,000

130,000

140,000

150,000

165,000

180,000

Est # of African towers owned or operated by towercos

100

6,000

9,000

16,661

*25,510

*64,000

*84,500

% of African towers owned by towercos

0.001%

4.7%

6.9%

11.9%

17%

38.8%

46.9%

*Includes an estimate of the number of towers owned by a small but growing segment of regional ‘middle market’ towercos

coming year. The current explosive growth of the tower industry will slow from late 2015 as the tower companies will have acquired assets from the majority of tier one African operators. The implications? If you have aspirations to build a towerco of scale in Africa, then your time is running out. It may be better to acquire than bid against Africa’s ‘Big Four’, who are largely seen as the only credible bidders for African tower portfolios of scale. However, TowerXchange is picking up the early signals of an emerging middle market of regional and frontier-market towercos, targeting markets too small or perceived as too risky to attract the ‘Big Four’, or leveraging relationships with local RAN Planners and Rollout Programme Managers to target build-to-suit opportunities. While universally acknowledged to be a ‘lumpy business’, most African towerco business plans are broadly on track. Tenancy ratios are approaching the magic number of 1.8 in several markets, great news for towercos and their investors, with the promise that this may unlock more capital intensive, longer term payback investments to improve site level profitability. If 2014 and early 2015 is best described as a ‘land-grab’ period for the African tower industry, from late 2015 a period of consolidation is likely to commence – if for no other reason than by then, the majority of the most desirable tower portfolios, associated with credit worthy prospective anchor tenants, will have been transferred from operator-captive to Africa’s ‘Big Four’ towercos


123456

Figure 6: TowerXchange tower transaction heat map: current state

No tower transaction completed or rumouredEither rumours of a tower transaction (unconfirmed), or the country is known to be on at least one towerco’s hit list, or there is a registered Africa Towers subsidiary in the countryRumours of a potential tower transaction have been confirmed by TowerXchangeTower transaction believed to be imminentOne or more tower transactions have taken place, no more transactions expected imminentlyOne or more tower transactions have taken place, more transactions are expected imminently

Legend



Figure 7: TowerXchange tower transaction heat map: end of 2014 forecast

123456

No tower transaction completed or rumouredEither rumours of a tower transaction (unconfirmed), or the country is known to be on at least one towerco’s hit list, or there is a registered Africa Towers subsidiary in the countryRumours of a potential tower transaction have been confirmed by TowerXchangeTower transaction believed to be imminentOne or more tower transactions have taken place, no more transactions expected imminentlyOne or more tower transactions have taken place, more transactions are expected imminently

Legend

Have you missed one of the past seven editions of TowerXchange?

Tower Xchange

Tower Xchange

Don’t miss TowerXchange’s checklist of the data you need to buy and sell towers

ISSUE 2 | FEBRUARY 2013 | www.towerxchange.com

The front lines of the African Tower IndustryWho’s who in the telecoms infrastructure supply chain

Standard Bank: aggressive bids likely to continue Helios take you inside the due diligence process Who’s who: turnkey infrastructure and law firms TowerPower: reducing Africa’s reliance on diesel

Africa’s New telecoms infrastructure journal

Tower Xchange

Tower Xchange

Top 200 decision makers in African towers invited to TowerXchange Meetup

ISSUE 3 | April 2013 | www.towerxchange.com

Marc Rennard: Why Orange is sharing towersStructuring deals to meet the requirements of each affiliate

Why IHS invested in Cameroon and Cote d’Ivoire

Eaton CTO Thomas Jonell’s procurement priorities

Egypt’s 4 companies licensed to lease infrastructure

Growth stock ATC vs the PE-backed towercos


Tower Xchange

Tower Xchange

Join 200 African tower decision makers at the TowerXchange Meetup

ISSUE 4 | June 2013 | www.towerxchange.com

African tower market heats up

TowerXchange maps past, current and future tower transactions


< HTN, SWAP and BMI on the Nigerian tower market

< Tower deal news from Egypt, Mali, Senegal & Rwanda

< Who’s whos in Managed Services, RMS & TowerPower

< A closer look at Telkom Kenya’s deal with Eaton

Tower Xchange

Tower Xchange

TowerXchange forecasts the growth of African towercos from 23k towers today to 54k by the end of 2014

ISSUE 5 | September 2013 | www.towerxchange.com

Let’s meet up!Top 200 decision makers in African Towers converge at TowerXchange Meetup

< Vodacom and Etisalat’s tower strategy

< MTN’s tower strategy in Rwanda and Zambia

< Tanzania case study with exclusive HTA interview

< TowerCo of Madagascar, FTS and Eaton interviewsThe journal for the emerging market telecom tower industry

Tower Xchange

Tower Xchange

TowerXchange extends our coverage to include Africa and the Americas!

ISSUE 6 | December 2013 | www.towerxchange.com

The drivers of SBA Communications’ expansionExclusive interview with Kurt Bagwell, President - International, SBA Communications

The journal for the emerging market telecom tower industry

TowerXchange Africa:< Airtel’s 15,000 African towers may be sold country by country

< The risks and rewards of operating towers in DRC

< Rural infraco pioneers Connect Africa and AMN

< Insights and images from the TowerXchange Meetup Africa

TowerXchange Americas:< Brazil case study: 9,000 new towers needed for World Cup

< Accelerating new tower construction - the Lei das Antennas

< Brazil’s Ministry of Communications’ view of the tower industry

< LatAm transactions to date, plus new deals by AMT and SBAC

For a limited period, you can download back issues FREE at:

www.towerxchange.com/publicationsEnsure you have the entire back catalogue of TowerXchange, which provides a record of emerging market tower industry evolution, and a comprehensive index of proven solution and service providers in Africa, LatAm and Asia.


A preview of Airtel’s African tower salePortfolios for sale in proven and unproven tower markets will change the characteristics of the acquiring towercos


Airtel’s long rumored sale of all 15,000 of their African towers is nearing completion. Some TMT news outlets have announced the structure of the deal but, having spoken to the CEOs of Africa’s towercos, TowerXchange can confirm that those reports are premature and that the final shape of the transaction is yet to be determined. Nonetheless, here’s what we do know. Airtel is prepared to sell off their 15,000 towers in digestible ‘chunks’ rather as one single portfolio. While there will be fierce competition for Airtel’s towers in proven tower markets, there may have been only one bidder in some of the less proven tower markets, giving rise to a question as to whether Airtel’s valuation will be met in each country. Certainly, as operators of ‘Africa Towers’ and shareholders in Bharti Infratel, Airtel has the expertise to retain any assets that do not attract a bid above a nominal ‘reserve price’. However, it seems likely that most of Airtel’s Africa towers will be sold. Most commentators agree that IHS, Helios Towers Africa, Eaton Towers and Helios Towers Nigeria are all bidding for the segments of the Airtel portfolio that attract their interest, and it seems that American Tower is not participating in the process. This could be a due to a combination of Airtel wanting to shed responsibility for energy logistics while American Tower prefers a power pass through clause, or it could be a reflection of American Tower’s finite appetite for the country risk present in many of Airtel’s operating countries. It could simply be that American Tower

Read this article to learn:< Some headline KPIs concerning Airtel’s African towers

< The potential impact of the Airtel tower transaction on the characteristics of Africa’s four biggest PE-

backed towercos

< Why American Towers may not be participating in the process

< Differentiating between the assets in ‘frontiersy’ and established tower markets

< A closer look at Tanzania as an example

Keywords: News, MNOs, Towercos, Research, Deal Structure, Acquisition, 3G, First Mover Advantage, Bankability, Pass-Through, ARPU, Country Risk, Anchor Tenant, Sale & Leaseback, Private Equity, Infrastructure Sharing, Africa, Burkina Faso, Chad, Congo Brazzaville, Democratic Republic of Congo, Ghana, Gabon, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, Seychelles, Sierra Leone, Tanzania, Uganda, Zambia, IHS Africa, Helios Towers Africa, Helios Towers Nigeria, Eaton Towers, Airtel

Commentary:< Although Airtel states that they have 17,792 sites on their network, after the deduction of co-locations, the total number of sites for sale is believed to be closer to 15,000< 3G antennas mounted on 39% of Airtel’s towers indicates a substantial opportunity to secure “amendment revenue” for acquiring towercos as anchor tenant Airtel continues their 3G rollout in many countries

Figure 1: Proportion of sites on the Airtel network running 3G

10,869

6,923

prefers to deploy capital in the US domestic, LatAm and European markets. Airtel has not appointed a banker adviser, but reports suggest they are handling the transaction efficiently themselves, with the process proceeding broadly in line with their ambitious target timeline – let’s put it this way, we expect to be writing an analysis of a completed Airtel tower sale in the Summer edition of the TowerXchange Journal!

Frontier market towersIf, as rumoured, one tower company acquires the towers in the majority of countries shown in figure 5, where local RAN Planners and Rollout Managers are not used to co-locations on independent towers being available, then that tower company is going to look more “frontiersy” to prospective future investors and strategic partners. Don’t misunderstand our analysis – taking on a frontiersy portfolio may not be a bad thing – we’ve often seen an exaggerated initial uptake of tenancies after the first tower transaction in a market as pent up demand for co-locations is unlocked. However, to date Africa’s towercos have only proved the efficacy of the business model in some of the more obviously attractive markets such as Nigeria, Ghana, Tanzania and South Africa, so whichever towerco acquires Airtel’s towers in their frontier markets is going to have an evangelical mission to promote the virtues of tower sharing to tenants and regulators alike.While there will doubtless be many local


Figure 2: Subscriber growth on the Airtel network

Figure 3: ARPU running through the Airtel network

10

20

30

40

50

60

70

80

69.44m

March 2014

March 2014

$5.5

5

6

$5.5

$5.9

$5.8

$5.7

Dec 2013

Dec 2013

Sept 2013

Sept 2013

June 2013

June 2013

March 2013

March 2013

68.3m66.38m64.2m63.12m


stakeholders to win over in markets like Burkina Faso, Chad and Niger, with a rapid mobile subscriber growth from a low base and positive GDP growth, the runway for long term growth is tremendous. As we’ll see in the subsequent BMI and Mott MacDonald analyses, Airtel are not the only credit worthy tenant in these markets, but there are challenges to be overcome, not the least of which being energy logistics in countries with less than 15% electrification, and the unpredictability of regulations in a countries characterised by volatile domestic politics.

Will the Airtel transaction stimulate competition among towercos in established markets, or reinforce the market leadership of first movers?

The other side of the Airtel tower sale may attract several bidders to the process. The crown jewel in SSA African telecoms is Nigeria, which means towers assets in that country are sure to be in great demand. We’ll look more closely at the Nigerian market later in this special feature.

The sale of Airtel’s towers in Tanzania and DRC will doubtless have piqued the interest of Helios Towers Africa, which already has very successful operations in both countries, while it will be interesting to see how IHS responds to the sale of Airtel’s towers in Rwanda and Zambia, following so hard on the heels of their acquisition of all 1,269 of MTN’s towers in those countries. Exponents of the independent tower business model unsurprisingly but rightly advocate that only one or at the most two towercos should operate in any given emerging market country, in order for to creates the best opportunities to exploit economies of scale. For example, Ray

Figure 4: Exponential growth in data on Airtel’s network (data shown in millions of MB)

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

March 2014Dec 2013Sept 2013June 2013March 2013

6,4115,383

4,215

3,1403,003Figure 6: Estimated breakdown of the ownership of Tanzanian towers

Helios Towers Tanzania (acquired from Millicom-Tigo and Vodacom)Zantel (believed to be for sale)AirtelOthers

2,449

711

1,400

240


O’Shea of Tanzanian O&M subcontractor NEWL explained the impact of Helios Towers Africa entering Tanzania: “where once we had dedicated teams for each operator, and field engineers spent a large proportion of their time on the road, now our model is regional, with each local team looking after a cluster of 20-25 towers for a mix of operators.” ConclusionThe sale of Airtel’s African towers will redefine the landscape for Africa’s four largest PE-backed independent towercos. Some of them, probably one of them, will take on a more frontiersy character, but if the acquisition of assets in markets with significant country risk is reflected in the purchase price, it can still be a good deal. Other tower companies may have their first mover advantage in proven tower markets reinforced with supplemental acquisitions, or they may find themselves facing fierce competition.However, TowerXchange’s main conclusion is that this is a highly investible, attractive portfolio of tower assets; it’s early days for mobile data in Africa, but the number of MBs of data running through the Airtel network has more than doubled in a year, and Airtel are a savvy and credit-worthy anchor tenant -a good business partner for towercos. The PE-backed towercos are going to emerge from the Airtel transaction significantly closer to achieving scale, so the door for new market entrant towercos to come into Africa via any method other than acquisition may be closing

Figure 5: Airtel ‘s towers are include countries that are both proven and unproven tower markets

Countries where Airtel is active and there is NO

existing independent tower market of scale

Countries where Airtel is active and there is an

existing independent tower market

Countries where Airtel is not active

Share Square: Burkina FasoIn Burkina Faso, ARCE (Autorіte de Regulаtіon des Communіcаtіons Electronіques), the national regulator, shares very limited information on its current and future position with respect to tower sharing. According to MM (Mott MacDonald) analysis, there is some inter-operator sharing in Niger, with one operator sharing less than 1 per cent of its sites and the other almost one-third. Burkina Faso has an average mobile penetration rate for SSA – 69.4% at y/e 2013. All three mobile operators were granted a 3G license in February 2012. There were zero mobile broadband subscribers at the end of 2012 – 3G services were launched in 2013. A tender for a converged network, including 3G, was launched by ARCE on 25 April 2013. However, no decision has yet been delivered by ARCE. In November 2013, Swiss owned YooMee Africa indicated that it may be targeting Burkina Faso for the rollout of TDD LTE Technology. It partnered with Alcatel-Lucent to expand operations in West and Central Africa through the rollout of wireless broadband services based on TDD LTE technology. However, no information has been located to suggest any availability of LTE in the country Sources: MM analysis, GSMA, TeleGeography, ARM


Burkina Faso has a population of 17.2 million and is served by 3 mobile network operators: Airtel (Bharti Airtel), Telemob (Onatel) and Telecel (Planor afrique). With 11.9 million mobile subscribers, penetration stands at 69.4%. Across the three mobile operators two are dominant:< Telemob had 4.6m subscribers at y/e 2013 (38.9% market share)< Airtel had 4.4m subscribers at y/e 2013 (36.6% market share)< Telecel had 2.9m subscribers at y/e 2013 (24.5% market share)




3G 4G

Cu

rren

t Sh

arin

g

Non

ePa

ssiv

eA

ctiv

e


Telemob

Airtel

Telecel

Burkina Faso Mobile Operators

38.9%

36.6%

24.5%

Burkina Faso

3 MNOs: Telemob, Airtel, Telecel. Fourth to be licensed soon?

Subscriber penetration at 69.4%, but 3G penetration low at 0.47%. 3G licences to be issued to all operators soon? No activity regarding LTE.

Sharing not mandated by regulator – although some sharing is taking place according to MM analysis.

Share Square: NigerThe Multisectoral Regulatory Authority or (ARM) is responsible for telecommunications within Niger. ARM have indicated an impending decree to harmonize infrastructure sharing (passive and active), but they are still in the process of ratification. The decree defines the rules and the principles of sharing telecommunication infrastructure. This aims to avoid duplication of infrastructure, allow easy deployment of telecommunications services and networks, promote competition and ensure compliance with essential requirements, namely the protection of the environment and report of urban planning and land use. According to MM (Mott MacDonald) analysis sharing between operators is low – ranging from 5% – 7% of their sites on other operators. Mobile penetration is very low Niger – 23% at y/e 2013. In 2011 the Ministry of Communications announced that it wanted to establish 3G and invited firms to apply for the first two licences. However, to date, only Orange appears to have any 3G subscribers. According to the World Bank, the Government aims to have 72% of the population covered by mobile by 2015 – but it is not clear how it intends to achieve this. ARM recently stated, in a study led by MM, that there is no program for LTE/4G licensing at the moment but operators are expressing their desire to roll out LTE for fixed broadband application (WLL). To date, there appears to be little activity with regard to LTE Sources: MM analysis, GSMA, TeleGeography, ARM


Niger has a population of 18.2 million and is served by 4 mobile network operators: Airtel (Bharti Airtel), Moov (Etisalat), SahelCom (Sonitel) and Orange. With 4.2 million mobile subscribers, penetration stands at 23.0%. Across the four mobile operators two are dominant:< Airtel had 1.9m subscribers at y/e 2013 (44.2% market share)< Orange had 1.4m subscribers at y/e 2013 (34.3% market share)< Moov had 0.6m subscribers at y/e 2013 (14.5% market share)< SahelCom 0.3m subscribers at y/e 2013 (7.0% market share)




3G 4G

Cu

rren

t Sh

arin

g

Non

ePa

ssiv

eA

ctiv

e


Airtel

Orange

Moov

SahelCom

Niger Mobile Operators

44.2%

34.3%

14.5%

7%

Niger

4 MNOs: Airtel, Orange, Moov, SahelCom

Subscriber penetration low at 23.0%, and 3G penetration very low at 0.27%. No activity regarding LTE.

The local regulatory authority has developed a decree to harmonize infrastructure sharing (passive and active) and it is in the process of ratification.

Some tower sharing is taking place amongst operators.

Burkina Faso, Chad and NigerGuest columnist Kenechi Okeleke looks at three countries where Airtel and Etisalat are considering outsourcing their towers

Kenechi Okeleke, Senior Analyst, BMI

Generating InterestBefore the second half of 2013, Africa-focused tower firms and their suppliers took a long-term view of possible expansion into Burkina Faso, Chad and Niger. That view changed significantly in the months following the announcements by Airtel and Etisalat that they planned to outsource the management of mobile towers owned by their respective subsidiaries across Africa, including the three landlocked West African nations. Airtel is present in all three markets while Etisalat operates in Burkina Faso and Niger through Atlantique Telecom.

The markets also play host to at least one otherinternational operator. Orange and Tigo, both ofwhich have adopted tower sharing services in other African markets, operate in Niger and Chad respectively, while Maroc Telecom is active in Burkina Faso. Maroc Telecom is set to take over the operations of Atlantique Telecom on the back of Etisalat’s acquisition of Vivendi’s 53% stake in the Moroccan incumbent.

The risks are high...An assessment of the risks associated with operating in either or all of the three markets under consideration underscore the seeming reluctance of tower firms to enter the markets just yet. But as operators give serious thought to tower sharing services, we believe the time is right for tower firms and their suppliers to identify these risks and formulate strategies to manage them if they are to take advantage of the long term growth opportunities in the entire sub-region.

Read this article to learn:< Risks: <15% electrification, low population density and low ARPUs

< The nature of potential security threats from Al-Qaeda and Boko Haram

< Domestic political volatility

< Opportunities: multiple MNOs with fierce competition and a long runway for subscriber growth

< Encouraging macroeconomic growth

Burkina Faso, Chad and Niger offer strong expansion opportunities for independent tower firms considering the level of mobile competition and the prospect of subscriptions growth in each of the countries. But are the risks worth the efforts and investment? BMI highlights some risks that tower firms and their suppliers must consider in their bids to enter those countries.

Keywords: Research, Market Overview, Investment, Market Forecasts, ARPU, Regulation, Country Risk, Off-Grid, Solar, BMI Analysis, Infrastructure Sharing, Africa, Burkina Faso, Chad, Niger, Airtel, Etisalat, Atlantique Telecom, Orange, Tigo, Maroc Telecom, Vivendi, Business Monitor International


Access to power - With less than 15% electrification rate in all three countries, according to the World Bank, tower firms will have to rely on alternative sources of electricity to power cell sites, especially those in rural areas where the majority of the population live. Network operators have largely relied on diesel generators, but these assets are expensive to maintain and are partially responsible for thin operating margins and sluggish expansion of network coverage to underserved areas. BMI believes that renewable and potentially cheaper sources such solar will receive strong attention as new towers are built in more remote areas. The three countries are located in the Sahel and benefit from year round sunshine.

Population density - This is another factor weighing on universal access in the three countries. Burkina Faso fares better than its neighbours in this regard with a population per square kilometre of 61.8 at YE13, according to BMI data, compared to Chad and Niger at 10 and 14.1, respectively. Although this factor increases the likelihood that tower firms will be obligated to deploy new, strategically located towers for optimum network coverage, we also highlight the fact that it makes a strong case for tower sharing by operators in order to avoid unnecessary duplications.

ARPUs - Mobile ARPUs in the three countries are low by regional standards at less than US$5. We forecast ARPUs to trend further downwards as operators extend services to rural areas. This will be a major consideration in the negotiation of tenancy rates on independent tower sites. That said, this risk

can be mitigated by potentially high tenancy ratios, especially for tower firms operating as a monopoly or with significant first mover advantage.

Security - The three countries lie in a volatile region, with terrorist threats from Islamist groups such as Al- Qaeda in the Maghreb in north and Boko Haram from the south. The war in Mali in 2013, when French and Nigerien troops helped the Bamako government to recapture the north from Islamist and separatist elements, spilled over into Niger, with terror attacks taking place in the military town of Agadez, and another targeting the Areva uranium mine at Arlit, as direct reprisals for its involvement in the conflict. The threat of terrorism in the north is extremely costly, not only to the Nigerien government, but also firms operating there.


Niger and Chad share a border with north-east Nigeria, where the increasingly violent Boko Haram group operates. Boko Haram’s terrorist activities are causing floods of refugees to cross into the south of Niger and Chad, and although the terrorist group appears not to be interested in widening its aims to encompass its neighbours as well, authorities in the region are worried that it could soon broaden its remit. Should Boko Haram begin to operate in Niger and Chad, we believe the local authorities in those countries would be hard-pressed to contain the insurgents. Regional powerhouse economy Nigeria has thus far failed to curb the violence, and Niger and Chad’s security services have limited capacity to do so.

Politics - The next presidential elections in Burkina Faso are scheduled to take place in November

Real GDP growth

12

Per

cen

tage

2011 2012 2013e

Chad

Niger

Burkina Faso

2014f 2015f 2016f 2017f 2018f

10

8

6

4

2


2015. Political tensions are already rising as it looks increasingly likely that President Blaise Compaoré will attempt to amend the constitution in order to serve another term in office, possibly through the holding of a referendum on the matter. Public protests against this move have intensified across the country. However, Burkina Faso lies in an extremely volatile region politically, and many will be happy for the known Compaoré to continue in office. The president won more than 80% of the vote in 2010.

In Niger, the current government under President Mahamadou Issoufou was elected in 2011 elections deemed by international observers to

have been free and fair. However, the country is prone to military coups, a trait in common with the rest of the region. Issoufou’s election came after a year-long military junta ousted President Mamaduo Tandja in 2010, and any perceived failure to produce inclusive growth could lead to an overthrow of the government by either the people or the army.

Domestic politics in Chad are equally volatile as highlighted by a revolt within the ruling party in November 2013, which cut short Joseph Djimrangar Dadnadji’s troubled premiership. BMI believes that the transition was managed by long-serving President Idriss Déby Itno, and we expect little

change in policy from the new government, which will be headed by Kalzeubet Pahimi Deubet. However, we doubt that the appointment of Deubet will meaningfully address popular or opposition concerns. The structural threats to Chad’s economic system are growing, and the new prime minister will face the challenge of managing an increasingly restive governing party. Real power in Chad rests with President Déby, meaning that the overall direction of policy is unlikely to change.

...But could be worth the effortThe presence of multiple operators and relatively high level of competition between them in each of the three markets is arguably the most important factor stimulating investor interest. A pioneer tower firm with first mover advantage in one or more of these markets is almost certain to record strong tenancy and site revenue ratios.

Other notable factors include the expected endorsement of tower sharing services by the respective telecoms regulators, especially if it promises to extend network coverage to underserved areas, and the potential for sustained subscriptions growth in those markets over the medium to long term. In Niger, the telecoms regulator, Multisectoral Regulatory Authority (ARM), has sponsored a decree to harmonise infrastructure sharing (passive and active), although this is awaiting ratification.

In terms of subscriptions growth, Chad and Niger’s mobile penetration rates are among the lowest in Africa, at 36.8% and 34.8% respectively at YE13,

Mobile Subscriptions (Thousands)

2011 2012 2013 2014f 2015f 2016f 2017f 2018f

5,000

10,000

15,000

20,000

Chad

Niger

Burkina Faso

according to BMI data. Although Burkina Faso has a much higher penetration rate of 72.1% at the end of the same period, we project it to rise to 96% by 2018, equivalent to net addition of around 6.5mn subscriptions over our five-year forecast period.

Beyond the telecoms market dynamics, the macroeconomic outlook for Burkina Faso, Chad and Niger is encouraging, at least in terms of headline growth and potential for increased economic activities. Burkina Faso has been the fastest-growing economy in the five-member Union Economique et Monétaire Ouest- Africaine (UEMOA) currency bloc over the past five years. From 2009 to 2013, annual real GDP growth in Burkina Faso averaged 6.3%. The closest any of the other five members came to matching this was Niger, where growth averaged 5.4% over the same period. Over the next decade we expect Burkina Faso to remain a regional outperformer in terms of economic expansion, with real GDP growth averaging 6.9% between 2014 and 2018.

The growth of Niger’s extractive industries will be one of the primary forces behind GDP growth, which we forecast to average 6.3% between 2014 and 2018. The country is a major uranium exporter, and investment into new mines, and continued uranium exports, will support growth despite a fall in global uranium prices. For its part, Chad’s headline growth will reach 9.6% in 2014, according to BMI data, owing to a brief increase in oil production, but we predict that economic expansion will subsequently slow as oil production stagnates and lack of reforms hold up new investments


The changing shape of the Nigerian tower industryTowerXchange forecasts that 84% of Nigeria’s towers will be owned and operated by independent towercos by the end of 2014

TowerXchange thought we’d take another look at the Nigerian tower industry in the light of the potential transfer of an estimated Nigerian 18,000 towers from operator-captive to independent towercos before the end of 2014. If Hotspot Network’s example is typical, showing the cost a a Nigerian cell site to be around US$236k, then the replacement value of the tower assets coming to market in Nigeria would be around US$4.25bn. Nigeria is critical to the profitability of Africa’s tier one MNOs, who seem to have reached a consensus that their tower assets are no longer a source of competitive differentiation – either that, or they simply don’t want their towers to become stranded assets on their balance sheet as their competitors sell! Airtel’s Nigerian towers are to be sold as part of their pan-African tower deal. The process to sell MTN’s towers has been under way for several months. And Etisalat appointed advisors at the turn of the year with a view to divesting their Nigerian towers. Incumbent towercos IHS, Helios Towers Nigeria and SWAP already own and operate an estimated 4,400 Nigerian towers.

Glo, who are not reputed to be big fans of sale and leaseback transactions, seem unlikely to divest their assets, while many of the towers belonging to the former CDMA operators, now consolidated into Capcom, were sold several years ago. According to BMI’s analysis of the Nigerian market in TowerXchange, “SWAP sealed an US$81.4mn sale and leaseback deal with Starcomms in December 2010 for 407 of the CDMA operator’s 557 towers.

“ “Airtel’s Nigerian towers are to be sold as part of their pan-African tower deal. The process to sell MTN’s towers has been under way for several months. And Etisalat appointed advisors at the turn of the year with a view to divesting their Nigerian towers


The agreement was for an initial 15 years. For its part, HTN signed a long-term tower lease agreement worth hundreds of millions of dollars with Multilinks and claimed it was owed around US$252mn at the time former parent company Telkom South Africa was looking to divest its stake in 2011. Starcomms and Multilinks suffered subscription losses and have recently been acquired by Capcom.”

These prospective transactions take place against a backdrop of a particularly challenging cell site energy situation in Nigeria; 50% of Nigeria’s towers are off-grid, with a further 40% on unreliable grids. At the recent GSMA Green Power for Mobile Working Group in Lagos attended by TowerXchange, it was reported that an average of five hours of power was available per day at Nigerian cell sites, with only 60% of that usable due to poor quality. Diesel theft remains a major concern in Nigeria. Substantial BTS and amendment revenue opportunities are also present in Nigeria; “New towers are being deployed at a rate of 4-5,000 per year. The 2G & 3G Base stations (including rooftops and other PoPs) are growing at 7-8000 per year, about half with 2G equipment, half 3G,” said Inder Bajaj, CEO of Helios Towers Nigeria in a recent interview with TowerXchange. Other positive factors for towercos and investors interested in Nigerian towers include the absence of fixed line service, LTE moving from trial to launch, and the potential for mobile subscriber penetration and mobile data usage growth. There is the potential to achieve healthy tenancy ratios in Nigeria; according to HTN’s Bajaj the pioneering towerco has “800 greenfield sites on which we have tenancy ratios of 2.6, which is one of the highest tenancy ratios in the global tower industry.” “All of the Nigerian operators should be looking to put their towers on the market. Whoever sells their towers first gets the best valuation,” asserted Fazal Hussain, former CEO of SWAP

Nigerian towers for sale (estimated counts)

9,000

5,000

4,000

4,000

2,500

1,300

700

MTN

Airtel towers

Etisalat towers

4,000 remaining operator captive towers, primarily

belonging to Glo

Existing independent towerco owned towers:

IHS

HTN

SWAP

Please feel free to contact the TowerXchange team

For editorial & speaking enquiries regarding Africa or Asia:

Kieron Osmotherly

CEO & Head of Africa


M: +44 7771 148001

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Arianna Neri

Head of Americas


M: +39 338 111 2103

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Annabelle mayhew

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Harpreet Sohanpal

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The TowerXchange Journal is published by Site Seven Media Ltd.


How Hotspot Network built a portfolio of 100 towers in NigeriaFrom billboards and BTS programmes to full co-location services

Morenikeji Aniye, CEO, Hotspot Network

TowerXchange: Please introduce us to Hotspot Network Limited. Morenikeji Aniye, CEO, Hotspot Network: Hotspot Network Limited is an upcoming indigenous telecommunication infrastructure sharing service provider. The company currently has a long tenure build-to-suit agreement with two major telecoms operators to make infrastructure available to them for the purpose of co-location. Hotspot is in the process of becoming a co-location service provider to a third major operator. The company built over 100 towers in the past eight months and achieved a turnover of over US$2mn within the same period. We have projected to acquire and build minimum of 250 sites in the next 12 months, growing our portfolio to about 1,000 sites in the next five years. TowerXchange: How did Hotspot build up your initial portfolio of 100 towers? Morenikeji Aniye, CEO, Hotspot Network: We started by building a pool of billboards through agreements with multiple vendors, enabling us to offer these billboards to RF planners on a five year lease. We have since moved into towers and monopoles. We have constructed 100 towers in high traffic areas, mainly in the big cities such as Abuja, Lagos, Port Harcourt and Kano. The towers were constructed under build-to-suit agreements with

Read this article to learn:< The origins and growth of a ‘middle market’ towerco in Nigeria< A view of Nigerian towerco economics: lease term, lease rates and the cost of new sites< The impact of the potential sale of Airtel, MTN and Etisalat’s Nigerian towers< How Hotspot Network is financed and their appetite for investment

Morenikeji Aniye is CEO of Hotspot Network Limited, a ‘middle market’ towerco with more than 100 towers in major Nigerian cities. Morenikeji, who owns 60% of Hotspot Network limited, spent 16 years in various RF Planning and Optimisation roles, including for MTN Nigeria, MTN International and Zain (now Airtel), before becoming CEO of Verreaux Technologies Limited, a diversified towerco, hybrid energy equipment and managed service provider which was the forerunner of Hotspot.

Keywords: Who’s Who, Towercos, O&M, Construction, Lease Rates, Investment, New Market Entrant, Build-to-Suit, Billboards, Sale & Leaseback, Private Equity, Debt Finance, Infrastructure Sharing, Africa, Nigeria, Benin, Ghana, Cote d’Ivoire, Airtel, Etisalat, MTN, Hotspot Network


Airtel and Etisalat, but Hotspot Network owns all 100 towers. TowerXchange: What are the typical terms for your leases? And do you offer the tower or the tower+power? Morenikeji Aniye, CEO, Hotspot Network: For now, Hotspot leases only co-location space on our towers under 15 year agreements, renewed every 5 years. The generator, antennas and ancillaries are all owned by the MNO tenant.

TowerXchange: Tell us about the economics of running a towerco in Nigeria – how does the capital cost of a new site typically break down, and what is the ‘going rate’ for a tenancy on a Nigerian tower? Morenikeji Aniye, CEO, Hotspot Network: The capital outlay for a new site varies according to the cost of the underling land acquisition, different permits et cetera, but an illustrative example is included in figure 1. The ‘going rate’ for a tenancy in a major metropolitan centre in Nigeria is around


US$4,000pcm, inclusive of space and maintenance.

TowerXchange: Tell us about your interest in moving beyond site acquisition into managed services. Morenikeji Aniye, CEO, Hotspot Network: In addition to acquisition of co-location sites across the country, we also want to start a full co-location service, which will include site maintenance and management, site integrated maintenance services and participation in sale and leaseback opportunities. Once we move into maintenance, we’ll outsource so we won’t have to add staff and will be able to focus on tower acquisition and co-location sales. We intend to offer site maintenance and management on our own and third party sites.

TowerXchange: Independent towercos already own over 3,000 of Nigeria’s estimated 25,000 towers. With Airtel’s Nigerian towers about to be sold, and MTN and Etisalat’s Nigerian towers up for sale, what would be the impact on your business of an estimated 18,000 additional towers transferring from Nigerian operators to other independent towercos? Morenikeji Aniye, CEO, Hotspot Network: Hotspot Network lease rates are cheaper than our competitors and we have signed agreements with our tenants and partners, so are well positioned to deal with these challenges.

Site 11


By the end of 2014, over 80% of Nigeria’s towers could be owned by independent tower companies, which will limit mobile network operators’ appetite to build their own towers, which should mean more build-to-suit opportunities for companies like Hotspot. TowerXchange: How is Hotspot Network financed? Morenikeji Aniye, CEO, Hotspot Network: We started with zero capital, but our vision has brought us to this scale. Hotspot now has a credit line with a local bank, but we need to raise money through the capital markets to compete with IHS and Helios Towers Nigeria. We would also consider strategic investment from an international company interested in using Hotspot Network as a platform to enter the attractive Nigerian market. Ultimately, we’re more interested in growing the business than in owning the business. TowerXchange: What is your vision for the future of Hotspot Network? Morenikeji Aniye, CEO, Hotspot Network: We would like to expand Hotspot Network within Nigeria and into Ghana, Benin and Cote d’Ivoire for a more expansive West African footprint. In order to get to that scale, we are currently seeking to bring in private equity, debt or international towercos investors; we cannot do this alone, so we’re open to all positive business partnerships

Figure 1: Capital outlay for a new Hotspot Network tower in Nigeria

Line item

Equipment

45m 3 legged lattice tower + related ancillaries

RMS alarm

AVR / ISL (Indoor)

Battery and rectifier

Palisade fence

RF materials

2 x 15KVA generators inc ANF and alarm panels, 5,000L diesel tank and Nepa box

Subtotal equipment

Services

Site preparation

Shelter installation

*Exchange rate applied: US$1 = 161.3 NGN Source: Hotspot Network

Tower works

Civil works

AC power application

Generator installation

RF services

Subtotal services

Additional costs

Warehousing and transportation

Security at site and set of locks

Site acquisition, permit and community issues

Total capital outlay

Shelter inc entry panel air conditioning, RMS sensor, electrical reticulation and surge protection etc

Cost in NGN

7,305,770

232,500

1,222,950

2,379,250

866,915

687,425

5,866,750

22,653,668

523,435

218,937

3,008,550

2,646,935

46,500

26,892

232,500

6,703,750

434,000

179,800

8,100,000

38,071,218

4,092,108

USD equivalent*

45,293

1,441

7,582

14,750

5,371

4,259

36,346

140,344

3,243

1,356

18,638

16,398

288

167

1,441

41,530

2,689

1,114

50,179

235,851

25,369


Special Feature:

TowerXchange presents exclusive interviews with the business leaders of three towercos that are redefining the Asian tower industry. President Director Nobel Tanihaha introduces STP, Indonesia’s third largest towerco with 3,500 towers. Tanihaha explains STP’s acquisitions to date, BTS opportunities, and diversification into fibre and microcells. Axiata has taken a very progressive view of their tower assets, spinning out and launching their own towerco earlier this year. edotco has an initial footprint in Malaysia, Bangladesh, Sri Lanka, Pakistan and Cambodia, but provides a platform for the acquisition of further assets and for the consolidation of parallel capacity. edotco has a vision to be more than just a tower operator - to learn more, TowerXchange spoke to CEO James Maclaurin and CTO Sairam Prasad. And don’t miss TowerXchange’s exclusive interview with John Stevens, CEO of Irrawaddy Green Towers, contained within “The Myanmar Tower Dossier” special feature.

Towerco Perspectives: interviews with the leaders of STP, edotco and IGT

In this special feature:

104 STP ’s view of the Indonesian tower industry

107 Launch of Axiata’s towerco inaugurates a collaborative era of

Asian telecoms

109 How edotco is operationalising their vision to ‘enable connectivity’

119 How Irrawaddy Green Towers plans to rollout 1,500 towers for

Telenor Myanmar

STP President Nobel Tanihaha’s view of the Indonesian tower industryWith no concrete plans for 4G LTE development, Indonesia still holds plenty of opportunities for tower companies

Nobel Tanihaha, President Director, STP


TowerXchange: Please introduce STP and the role you play in the Indonesian tower industry. Nobel Tanihaha, President Director, PT SOLUSI TUNAS PRATAMA (STP): STP is one of four active tower companies of scale in Indonesia and is currently number three in the market after Protelindo and Tower Bersama. The fourth tower company is Mitratel, which is a subsidiary of Telkom, a government owned entity. STP own and operate approximately 3,500 telecommunication sites. Our tower tenancy ratio to date is approximately 1.7, and has grown at a CAGR of over 45% since 2010. STP has been growing thanks to the acquisition of existing portfolios from local operators such as Axis, Bakrie and Hutch Telecom. Moreover, we have acquired tower portfolios from a few small tower companies in the past years: Nurama Tower (176 towers, 182 shelters and 100km of fibre), HCPT (200 towers) and ISP Group (493 towers and 287 shelters). Since December 2012, STP has started building its own towers and, therefore, is now organically growing in addition to acquiring existing portfolios. STP’s revenue and EBITDA are growing at a CAGR of around 40%, and our EBITDA margins remain over 80%. TowerXchange: Can you give us a snapshot on the Indonesian telecom business?

The geographical composition of Indonesia, an archipelago of 17,508 islands, is a challenge per se for tower companies and their suppliers looking at expanding their footprint nationwide. But to date, the biggest obstacle to the development of the local tower industry has been the absence of 4G LTE auctions. While the number of mobile operators has decreased from eleven to seven over the past few years, tower companies are increasingly involved in BTS projects with over 6,000 new towers being built every year.

In this exclusive interview, Nobel Tanihaha, President of STP, Indonesia’s third largest tower company, offers a personal view of the local industry, its challenges and potential for the future. Listed on the Indonesian stock exchange in 2011, STP owns 3,500 cell sites, a little over 500 of which are shelters and indoor DAS, as well as 2,073km of fibre network.

Read this article to learn:< The Indonesian telecom tower industry: operator consolidation, towerco growth and greenfield

projects

< STP’s growth strategy and tower tenancy ratio

< Prospects for spectrum to be made available for LTE in 2015, and potential stimulus for the sale of towers

< What role are microcells and fibre optics playing in Indonesia?

Keywords: STP, Tower Bersama, Protelindo, Mitratel, Indonesia, Interview, Towercos, Axis, Bakrie Telecom, Telkomsel, XL Axiata, Indosat, Hutch Telecom, ARPU, Tenancy Ratio, Market Overview, Acquisition, 4G, LTE, Build-to-Suit, Microcell, DAS, Fibre Optic, PT Platinum Teknologi


Nobel Tanihaha, President Director, STP: First of all, it is important to note that in Indonesia there are restrictions in terms of tower investments and companies need to be local in order to operate. To date, foreign companies aren’t allowed to enter the market. Until a few years ago, Indonesia hosted eleven mobile operators but thanks to some consolidation and trading cessations, we now have seven. I would say that there isn’t room for that many operators in the country and I’d expect the number to decrease to four or five in the future.

The largest operators are Telkomsel, XL Axiata and Indosat, followed by a number of smaller companies such as Hutchinson and Axis.ARPU in Indonesia has been declining steadily and is now reaching bottom rock at approximately US$2.27. Operators are struggling to increase ARPU worldwide and Indonesia is simply following the same global trend. To date, operators have stopped building their

own towers and tower companies have been involved in greenfield projects with a fairly constant deployment rate of approximately 6,000 new towers per year.

TowerXchange: What is the status of 4G LTE network rollout in Indonesia? Nobel Tanihaha, President Director, STP: In Indonesia, the Ministry of Telecommunication

“ “To date, operators have stopped building their own towers and tower companies have been involved in greenfield projects with a fairly constant deployment rate of approximately 6,000 new towers per year


and Information is still looking for a suitable frequency band for 4G LTE and there aren’t any auctions currently planned. There are only two active TD-LTE licenses issued by the government which covers Jakarta. Auctions aren’t likely to happen anytime soon in light of the upcoming national elections. I believe that once the elections are over, the government will start planning spectrum licenses and I wouldn’t be surprised if that happens in 2015.

That said, I think that once 4G LTE licenses are awarded, operators that still own their towers will start divesting more assets in order to finance the network rollout. For example, PT

Indosat sold 2,500 of its telecom towers to Tower Bersama for about US$519mn in 2012.

Just like everywhere else, the need for funding to finance 4G LTE investments will push operators to sell towers but as of now, there isn’t a lot of pressure on large operators to divest their assets.

TowerXchange: There have been rumours regarding the possible sale of Mitratel, is that likely to happen? Nobel Tanihaha, President Director, STP: The decision behind the sale of a government owned company such as Mitratel can be extremely difficult to be articulated in Indonesia as any sale of the company needs to receive the approval of the Parliament and other official bodies. At one point, Mitratel was rumoured to be for sale but that has been denied as the government didn’t approve it. TowerXchange: Is the cost of power ‘passed through’ to the tenants in your portfolio?

Nobel Tanihaha, President Director, STP: Yes, operators that lease space on towers still pay their own power. TowerXchange: STP has invested in fibre optic infrastructure through the acquisition of PT Platinum Teknologi – tell us about the drivers behind the acquisition and the company’s business model

Nobel Tanihaha, President Director, STP: In light of the growing pattern of smartphone penetration in mature markets such as the United States and the subsequent need for microcells, we decided to follow that market trend and anticipate it. Fibre optics will boom once microcells are needed throughout the country. While we wait for a nationwide need, Jakarta is already a good market and we decided to acquire PT Platinum Teknologi after the company signed a twenty-year contract with the local government to install microcells throughout the city. PT Platinum Teknologi filled a gap in the market as it offers a service no one else is able to provide in Indonesia. We foresee microcells growing steadily as part of our business offering, especially with the future launch of 4G LTE. The largest mobile operators in the country will all request small cell installations in large cities. TowerXchange: What percentage of your business comes from Build-to-Suit projects? Nobel Tanihaha, President Director, STP: To date, all greenfield projects in Indonesia are handled by tower companies and we have been very active in building our own towers as well as developing BTS projects on behalf of mobile operators. I’d say that 80% of our current business is generated by BTS projects

“ “We foresee microcells growing steadily as part of our business offering, especially with the future launch of 4G LTE. The largest mobile operators in the country will all request small cell installations in large cities

Launch of Axiata’s towerco inaugurates a collaborative era of Asian telecoms


edotco’s vision extends beyond towers to power, fibre and Wi-Fi

The edotco visionSpeaking at the launch of edotco, Dato Sri Jamaludin Ibrahim, President and CEO of Axiata said “edotco is an independent tower company that will manage passive infrastructure, share physical sites and related civil infrastructure, and perhaps in the future provide field services support and maybe even active infrastructure. Quite importantly, we will promote green energy management.” Axiata’s President and CEO shared his hope that edotco would become one of the top five towercos in the world. The inauguration of edotco represented the culmination of a two year project from initial conception to launch. edotco Group CEO James Maclaurin steps up from the role of Group CFO at parent company Axiata, a post he held for three years, prior to which he had served as CFO at Helios Towers Africa, Vodafone Central Europe & Africa, and Celtel International. Judging from YouTube videos from the launch, Maclaurin also plays a decent jazz-saxophone! Maclaurin is joined on the edotco management team by CFO Thivanka Rangala, COO Nashad Emir, and CTO Sairam Prasad. “The telecoms industry has to collaborate to find ways of working together and reducing parallel capacity; the number of sites on hills,” said Maclaurin. “Ultimately this is about improving quality of service to the user. This is an important start for the Axiata Group and for the industry to shift forward with a more collaborative mindset,” Maclaurin continued. “Using edotco’s

Following its launch earlier in 2014, edotco has become the largest independent towerco in Southeast Asia. Parent company Axiata becomes the first telecommunications company in Asia to set up it’s own independent towerco.


to reduce energy opex and the group’s carbon footprint.

“We are as much a fibre business, especially in the last mile, as a passive tower player moving forward,” suggested Maclaurin. “Fiberisation of sites is required – we feel that in urban and semi-urban locations we’ll have to fiberise within a certain period of time, especially with LTE being rolled out in Malaysia.” edotco also hinted at an appetite to support partnerships in Wi-Fi: “it may make sense to take a collaborative approach to the deployment of Wi-Fi. We believe individual operators providing infill solutions – Wi-Fi hotspots – is not necessarily working commercially,” concluded edotco CEO James Maclaurin. edotco’s appetite for acquisitions?TowerXchange and other commentators feel that edotco will be used as an investment vehicle to make new acquisitions. TMT Finance suggests “While the expectation is that all existing subsidiaries will offload towers into edotco, the decision will lie with each subsidiary, with the case for offloading towers ‘required to make economic sense’, with Axiata putting forward the business case for each individual market. (Our) sources said this would be more difficult in markets such as India, where Axiata is a minority shareholder, for example.” Certainly the formation of a Pan-Asian tower company will galvanise the tower industry in the region

seed assets, 13,000 towers and 12,000km of fibre in Pakistan, we have aspirations to expand within South and Southeast Asia.” edotco has launched in Bangladesh and Malaysia, with launches in Cambodia, Sri Lanka and Pakistan imminent. Looking beyond the tower“We’ll grow both in terms of the volume that we’re

driving through our infrastructure by taking on more tenants, but also by looking for innovative energy solutions. In some of our markets, over the next two to three years grid energy will become more expensive than renewable solutions,” added edotco’s CEO. Serving Axiata’s 220mn customers requires the equivalent of a 41MW power station – the launch of edotco is seen as an opportunity

Some of the illustrious attendees of the edotco launch

How edotco is operationalising their vision to ‘enable connectivity’


TowerXchange’s exclusive interview with the CEO and CTO of the new Asian towerco

TowerXchange: Thanks for speaking to us James. What’s the current progress of the launch of edotco? James Maclaurin, CEO, edotco: Right now our focus is on spinning out assets, operationalisation, synergisation, and rationalisation. We’ve launched to our B2B customers, but the asset transfer process is still ongoing. Co-location sales are under way in a few countries, and we’re already driving volumes onto our infrastructure. We are in the process of spinning out towers into separate legal entities. We’ve got individual co-location teams in place and synergy teams at the centre of the business whose services are shared by all the opcos. The next step will be to engineer merger deals between tower portfolios in-country for those operators who show willing. We have a collaborative mindset and we are open for business! TowerXchange: What’s your view of the current state of the independent tower industry in Southeast and Southern Asia? James Maclaurin, CEO, edotco: Our markets are kicking off with the independent towerco initiative a bit late and, as a result, a lot of networks are quite mature with significant parallel capacity. For example, Bangladesh is already 60% penetrated. With around 25% of the population below the

Read this article to learn:< Comparing the decommissioning of towers in Africa and Asia

< The criticality of securing management buy-in when spinning towers out of an operator

< edotco’s growth strategy

< edotco’s energy plan and procurement strategy

Keywords: Who’s Who, C-Level Perspective, MNOs, Towercos, Energy, O&M, Transfer Assets, Opex Reduction, Co-locations, Air Conditioning, Renewables, DG Runtime, Procurement, NOC, IBS, Decommissioning, Sale & Leaseback, Stakeholder Buy-In, Infrastructure Sharing, Asia, Malaysia, Bangladesh, Sri Lanka, Cambodia, Pakistan, Bharti Infratel, Axiata, edotco

edotco is a unique towerco with a vision around ‘enabling connectivity’, that extends beyond towers to energy management, fibre and In-Building Solutions (IBS). With the launch of edotco in Malaysia, Bangladesh, Cambodia, Sri Lanka and Pakistan to B2B customers earlier this year, TowerXchange spoke exclusively to CEO James Maclaurin and CTO Sairam Prasad.

edotco CEO James Maclaurin demonstrates his jazz-saxophone skills at the launch


view that in every market towers will eventually be shared – there’s a fine line between guarding your network and getting to market first, and deriving a bit more value from the assets. As soon as there’s another player chasing co-locations, it diminishes the value of your own towers – there are a finite number of tenants you can go after. So it is all about timing. TowerXchange: What is the growth strategy for edotco? Is there a phase of leveraging Axiata assets initially, or can edotco be used as an acquisition platform to acquire new assets and enter new geographical markets?

poverty line, subscriber growth is already leveling off – but Bangladesh is nevertheless our highest growth country, but starting to level off. In Malaysia there are 14 state-backed towercos, and 20 small independent towercos. The lease rate is reasonably healthy, and there has been no destructive price war, but it remains a crowded market. In many countries in Asia, too often we see four towers within 75m of each other. One of our objectives is to rationalise networks by engineering deals to merge portfolios and take out that parallel capacity. If we can sweat assets more effectively, we can provide better yields for tenants as opex is saved, through investment in energy efficiency. We’ll also accelerate fiberisation and the replacement of microwave links. Without exception all of our customers in Malaysia are requesting information on our roadmap to fiberisation of at least urban and in some case semi-urban sites. TowerXchange: We haven’t seen much decommissioning of towers as networks are rationalised in Africa – do you foresee the market taking a different shape in Asia? James Maclaurin, CEO, edotco: Independent towers have been more additive in Africa. For example, I recall from my time at Helios Towers Africa that their pioneering deal with Millicom included a rationalisation provision to take out spare capacity.

In contrast, we have made progress with a Malaysian operator, for whom we’ve taken out 100 sites already. For us the name of the game is building robust networks, maximising volumes and sweating the assets; putting as many tenants as possible on the towers and driving as much traffic as possible through the fibre – delivering value by helping our clients get more bang for their buck. TowerXchange: I appreciate there is a long way still to go, but two years into Axiata’s project to spin out your own towerco, what’s the main lesson you’ve learned that might be transferrable to other MNOs trying to pursue a similar strategy?

James Maclaurin, CEO, edotco: The key is to ensure alignment with the vision amongst senior management. As CFO of Axiata I sponsored the project to spin out the towers and fibre, and was fortunate to receive unequivocal support from the CEOs of our local OpCo, the Group CEO and the Axiata Board. I have previous experience where there wasn’t alignment among senior management, where some retained the attitude that the network was proprietorial and a source of competitive advantage. I feel that perspective is unjustified in most markets. There are exceptions of course, like Papua New Guinea where Digicel has 80% market share or Kenya where Safaricom is similarly strong. However, when I was on the board of Safaricom, Michael Joseph and I were of the same

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the name of the game is building robust networks, maximising volumes and sweating the assets; putting as many tenants as possible on the towers and driving as much traffic as possible through the fibre – delivering value by helping our clients get more bang for their buck


James Maclaurin, CEO, edotco: edotco is a regional player with an aspiration to build a globally significant towerco. In terms of tower count we’re already quite far up the list – we have 13,000 already. We are committed to a long term investment lifecycle and mindset – independent towercos are private equity funded with five year exit timelines, although that timeline may be pushed out a bit in some cases because deals came to market slower

than originally anticipated. The important point is that private equity funded towercos need exit provisions. edotco doesn’t have exit provisions, we’re not of a mindset to exit; we’re not up for sale and never will be. Our Malaysian government linked investors have a supportive and long term mindset. The Asian tower industry is an exciting space to be in – there are a lot of deals and potential deals in the pipeline. The only frustration is that it takes a long time to close tower deals in Asia – we’ve already pushed the timeline out on a number of deals. There remains an educational curve to go through with customers and would-be M&A and sales and leaseback partners. Would-be partners’ progress along that learning curve can often be defined by the state of their balance sheets, and the extent to which they really buy-in to the infrastructure sharing concept – those that buy-in are keen to monetise their assets before the value of their towers drop. If one deal opportunity collapses and we buy somebody else’s towers in the same country, the value of the original party’s towers drops.

You can’t apply conventional M&A methodologies to tower transactions. Sale and leasebacks can only be completed with a considerable degree of latitude to enable compromises to be found. These are often 15-year deals, and there are a tight set of economic variables and drivers that enable deals to be done.

In my opinion, it doesn’t make sense for markets to have more than one or two towercos of scale – it’s a long term, stable cash flow business, regulated to an extent – it doesn’t lend itself to excessive competition.

TowerXchange: Thanks for speaking to TowerXchange Sairam. Please introduce yourself – what’s your background and what brings you to edotco? Sairam Prasad, CTO, edotco: Wireless communications came to India in the mid 1990’s. Fortunately I was one of the first few who joined the bandwagon. I have seen wireless networks and technology growing from plain voice services back then to where they are today.

In this wonderful journey, I was fortunate to work with some of the best telecom groups like TATA Bell Canada International, Birla Tata AT&T, Idea Cellular, Bharti and now Axiata. I started my telecom career as Wireless Network Engineer and have extended my experience vertically and horizontally over the years by doing various roles involving managing complex networks like planning, projects, operations, IT and supply chain. My experiences in managing tower networks started in early 2008 when I joined WTTIL, now known as Viom Networks, as Head of Operations and Chief Project Head. We started the journey with 5,000+ towers and grew big to launch two

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Sale and leasebacks can only be completed with a considerable degree of latitude to enable compromises to be found. These are often 15-year deals, and there are a tight set of economic variables and drivers that enable deals to be done


nationwide GSM networks for Telenor and Tata DoCoMo. From there I moved to Bharti Infratel as CTO and Head of Operations. Bharti Infratel is a deeply penetrated network that operates in some of the toughest terrains in India. Hence this provided me with an opportunity to break through some of the complex issues being faced like energy costs and network uptime. TowerXchange: What attracted you to join the edotco team? Sairam Prasad, CTO, edotco: After spending six years in SLT roles with two big towercos, I came across the news of Axiata forming an independent regional towerco. I liked the Group and the edotco vision. edotco has a different model, we’re not just a towerco, and our mission is to become one of the most admired Asian infrastructure service providers. We’re not just spinning out, operating and managing assets, we’re also looking at in-country consolidations and other initiatives. The edotco vision is enabling connectivity with an environmental conscience. So I am here to operationalise those values, and to do my bit of value add to our multinational footprint aspirations. TowerXchange: What lessons can be learned and transferred from the relatively mature Indian tower industry to the emerging tower industry in Southeast Asia?

Sairam Prasad, CTO, edotco: The Indian tower industry over years has learnt and kept on fine tuning their business model. A few of the important achievements of the Indian towercos include: 1. Operator collaboration to form joint venture towercos2. The evolution of energy cost models from power pass through3. The removal of parallel capacity, shutting down low tenancy sites4. Handling the regulatory norms around EMF radiation, green energy, and Health & Safety TowerXchange: Axiata provides the equivalent of a 41MW power station – what solutions would you consider investing in in to improve the energy efficiency of cell sites? Sairam Prasad, CTO, edotco: Our various footprints have different energy challenges. For example, some of our geographies have pure 2G networks while others have matured to overlay 2G, 3G and 4G networks as well. Similarly electricity availability and quality in different markets also vary considerably. Hence we have an energy plan that is most suitable and optimised to each footprint but primarily aimed at: a) Reducing energy consumption per tenantb) Redicing diesel consumption per tenantc) Improving energy efficiencies in power systems

d) Using efficient cooling solutionse) Adopting alternate and green energy solutions As part of our vision, we have stated our ambitious goal to reduce our carbon footprint by up to 40% by 2018 using new and advanced energy technologies.

TowerXchange: What’s your personal view about the economics of alternate energy

Sairam Prasad, CTO, edotco


in effect in a few markets, it’s already crossed over or on the verge of cross over soon. Once the above issues are overcome, all other benefits like low carbon, low opex, reduced maintenance and long term sustainability are great to have. TowerXchange: Finally, the CEOs of the leading tower manufacturers, RMS and power solutions read TowerXchange so on their behalf, I’d like to ask how does edotco buy equipment and services? Sairam Prasad, CTO, edotco: We have already sent out several RFPs, received responses from vendors, and have moved to the next level of evalutation. We are also working on several long term projects. Unlike a conventional towerco which provides just tower space, edotco will be providing integrated infrastructure services like tower space, O&M, energy management, last mile fiber, IBS et cetera. So there will be more RFPs to follow. Our priorities today are to put in place various advanced systems like RTOC, an end to end IT system, optimised tower structures, and energy efficient technologies and services. We like to benchmark our costs to the best of the industry globally and leverage our scale so that we provide most cost optimised solutions to our customers James Maclaurin, CEO of edotco, has kindly agreed to join the TowerXchange ‘Inner Circle’ Informal Advisory Board.

sources like solar, fuels cells and wind power? Sairam Prasad, CTO, edotco: I have carried out good number of studies around various alternate energy solutions over years starting way back in 2008. Back then we had two main challenges:a) Making the business case work as the cost per unit of production using these sources tends to be higher than conventional sourcesb) Technology adoption related issues like

customising products to suit telecom needs, a lack of scaled deployments et cetera

However over last six years, things have improved. Cost of energy using conventional sources has increased exponentially, while the cost of producing using alternate energy is continuously going down. Most of the vendors also have customised products developed and tested for telecom use. Examples of scaled deployments are

CEO James Maclaurin at the recent B2B launch of edotco

Special feature:

Rated the most exciting tower market in the world by members of the TowerXchange LinkedIn group, 10,000 shared towers are being rolled out in Myanmar over the next two years, the majority of which will be off-grid. You can understand why the lobbies and coffee shops of Yangon’s top hotels are packed with tower industry executives! In this continuation of TowerXchange’s coverage of the Myanmar tower rollout, we speak to the CEOs of Telenor’s two towercos, Irrawaddy Green Towers and Apollo Towers, and feature a comprehensive overview of the legal and regulatory frameworks within which the rollout will operate. And checkout pages 91-99 of issue 7 of the TowerXchange Journal for further Myanmar coverage.

The Myanmar tower dossier

In this special feature:115 TowerXchange’s analysis of the structure of the Myanmar tower industry119 Our exclusive interview with John Stevens, CEO of Irrawaddy Green Towers124 Site acquisition challenges in Myanmar, by Polastri Wint & Partners129 Camusat secures contract to rollout 500 towers for Apollo Towers132 Flexenclosure secures their largest eSite order to date from Apollo Towers135 Announcing the TowerXchange Meetup Asia 2014!


The structure of the tower industry in MyanmarNew license holders Ooredoo and Telenor partnering with four towercos to roll out 10,000 shared towers in two years


Phase one of the rollout of towers in Myanmar, which has already commenced and will run through the end of 2014, will consist of approximately 5,000 towers, concentrated in and around Myanmar’s three main cities; Yangon, Mandalay and Naypyidaw. Phase two, commencing in 2015, could consist of a further 5,000 towers and is likely to extend deeper into rural Myanmar. Four towercos are currently active in Myanmar, each of which has been issued temporary licenses to enable them to acquire sites and commence civil works, and each assigned initial tranches of 1,000-1,500 towers by the two newly licensed international operators, Telenor and Ooredoo. Reports from the front lines of site acquisition suggest it will be challenging to secure land leases to get new sites installed, but plenty of site hunters are scouring Myanmar for cell sites! All land belongs the government in Myanmar; citizens can only lease land. If foreign companies secure an investment permit they are allowed to enter into long term leases of up to fifty years, with two ten year term extensions (for details of the application of real estate, investment and telecommunications law to the tower roll out, read our interview with local law firm Polastri Wint & Partners). Introducing Myanmar’s towercos and their role in selecting power equipment In phase one of the rollout, Ooredoo has assigned

TowerXchange has consolidated dozens of sources to sketch our initial impressions of the shape of the Myanmar tower rollout. With around 1,800 towers already standing, owned by incumbent operators MPT and YPT, new international license holders Telenor have engaged Apollo Towers and Irrawaddy Green Towers, while Ooredoo have engaged MTC (Digicel) and Pan Asia Towers (Protelindo) to rollout an initial 10,000 independent towers over the next two years.

Read this article to learn:< The timelines for the phased rollout of towers and the distribution of sites among Myanmar’s four

towercos, including TowerXchange’s forecast Myanmar tower count

< Which towercos offer tower+power, which have a power pass through

< The investment and tower strategies of MPT and YPT

< Early signs of the MCIT’s involvement in limiting parallel infrastructure

< A summary of the challenges and opportunities for the Myanmar tower rollout

Keywords: Towercos, Construction, Market Overview, Investment, New License, Network Rollout, Tender, Pass-Through, Leasing & Permitting, Regulation, Off-Grid, Greenfield, Infrastructure Sharing, Asia, Myanmar, Apollo Towers, Irrawaddy Green Towers, Pan Asia Towers, Myanmar Tower Company, Digicel, Protelindo, Tillman Global Holdings, Alcazar Capital, VIOM QUIPPO, SREI Group, Tower Bersama, edotco, KDDI, Orange, True Corp, Deloitte, Roland Berger, Telenor, Ooredoo, MPT, YPT

By Kieron Osmotherly, CEO, TowerXchange

1,250 towers each to MTC and Pan Asia Towers. Telenor has assigned 1,001 towers to Apollo Towers and 1,500 to Irrawaddy Green Towers. Ooredoo has pledged to spend $15 billion on its network infrastructure throughout its 15 year license. Ooredoo partner MTC (Myanmar Tower Company) was given a head-start by parent company Digicel’s work on staffing up and building a radio network plan in support of their ultimately unsuccessful bid to acquire one of Myanmar’s two international MNO licenses. The consortium behind MTC also includes Yoma Strategic Holdings, one of Myanmar’s leading real estate companies. There has been speculation that Ooredoo is considering acquiring a 10% stake in MTC, although this has not yet been confirmed. Ooredoo’s other towerco partner is Pan Asia Towers, part of the Protelindo stable, whose roots trace back to Gearon Communications, so they have considerable experience and resources to draw upon. Power costs are believed to be passed through to the tenant by MTC and Pan Asia Towers. Ooredoo issued an RFI in March 2014 seeking to explore opex sharing business models for cell site energy, but the complexity of establishing an ESCO in Myanmar means a capex model remains an option for Ooredoo, who will likely make their own power system procurement decisions and instruct their towerco partners what to roll out. Telenor has taken a slightly different approach,


Challenges and opportunities for the Myanmar tower rollout

Under-developed transport infrastructure means challenging inland logistics

Lack of rural electrification

Monsoon rains

Immature local banking and insurance industry

Limited telecoms construction experience of local contractors

Unrest, particularly in Northern region

Difficulty co-ordinating rollout of shared infrastructure across four MNOs and four towercos

Ownership of land prohibited

Unable to access religious and agricultural real estate

Site acquisition – lease ownership often unclear, lease holders reluctant to sign

Some sanctions remain in place, some individuals are on US and other black lists

Anticipated import complexities and taxes

Telecommunications Law, including definition of terms of Network Facilities Provider License, not yet passed

Secure local partner and use limited weight equipment loads including light weight towers

Hybrid and renewable energy solutions with deep cycle batteries

Robust fleet

Foreign banks able to enter Myanmar after they join the ASEAN Economic Community single market in 2016. Small, state-dominated Myanmar insurance market being liberalised

Expat management trains local resources

Continuing efforts to maintain a ceasefire

Progressive MCIT strongly discourages tower builds at duplicate sites

Long term leases for foreign companies with an investment permit

Access to the significant amount of land owned by government

Local and expat site hunters working very hard to overcome the challenges

Check the ownership of local partners

Vendors report that taxes are reasonable, with efficient handling and warehousing through the main port

Government has issued temporary licenses

Challenges Opportunities / solutions


assigning tower and power to their towerco partners, Apollo Tower Company and Irrawaddy Green Towers. Apollo Towers Vice Chairman and CEO Francois Lorelli told TowerXchange that they had been assigned 1,001 towers by Telenor, to be delivered by end of September. Lorelli continued: “We will own the site passive assets i.e. the towers, the

power equipment, the shelters if any, the fences and the land leases. We will be fully in charge of security, this means that we have the access control for all our tenants. Telenor has chosen to pay the exact amount of power used, i.e. the electricity and fuel costs will be passed through. For other tenants we’ll offer a flat power fee per site category as an option.”

Apollo Towers’ ownership structure and management team shares some personalities with Africa’s Eaton Towers. Apollo Towers is a subsidiary of Tillman Global Holdings LLC, a Delaware LLC wholly owned by Sanjiv Ahuja. Former CEO and COO of Orange, subsequently Chairman and CEO of LightSquared, Ahuja is one of the co-founders of Eaton Towers. Apollo’s management team includes Lorelli, formerly a consultant to Eaton, and Eaton alumni Philip Cooper (CFO) and Brian Edwards (Operations Director). Last but not least, receiving 1,500 towers from Telenor in phase 1B, are Irrawaddy Green Towers – a joint venture between Alcazar Capital’s Golden Towers, and India’s VIOM QUIPPO, backed by SREI Group. Alcazar Capital had explored several tower opportunities in Africa and Southeast Asia, and owns a small portfolio of towers in Vietnam. Irrawaddy reportly issued an RFP for cell site energy solutions at good and bad grid sites, based on a five year TCO, but like all four towercos there is likely to be a threshold of capex they can deploy initially. You can read more about Irrawaddy Green Towers in our interview with CEO John Stevens. Incumbent operators and OEMs in Myanmar Myamnar’s incumbent operators are intrinsically aligned. YPT (Yatanarpon Teleport) is 51% owned by the other incumbent MPT (Myanmar Post and Telecommunications). MPT and YPT own some

Average precipitation in Myanmar (in)

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towers, have a limited BTS programme, and are likely take co-locations on the new towers being rolled out ahead of their funding being secured.

New prospective international towerco and telco partners are jostling for position. Tower Bersama and Axiata’s edotco are both thought to be holding discussions over potential opportunities in the towers space, while Japan’s KDDI and Orange are seeking to partner with and invest in MPT. Axiata and Thailand’s True Corp are believed to be in discussions with YTP. YTP is being advised by Deloitte and MPT is thought to be advised by Roland Berger. TowerXchange understands that until Autumn of 2013, MPT bought most of their equipment through Huawei, but that MPT has subsequently outsourced their network of an estimated 1,800 towers to ten different Local Support Partners (LSPs), with two LSPs each receiving 400-500 towers. In terms of the OEMs, Huawei dominated the equipment and service market in Myanmar and continue to hold substantial market share, however Ericsson recently opened an office in Myanmar and the Swedish OEM is becoming increasingly visible. Myanmar: on the road to creating a global benchmark for successful tower sharing Myanmar could be a unique proof of concept for the independent tower company business model.

It seems all the new towers in Myanmar will be built, owned and operated by towercos. To date the Myanmar Ministry of Communications and Technology (MCIT) has refused to grant permits to build towers in conflicting locations, which could maximise tower sharing and fuel healthy tenancy ratios. When one considers the capital commitments made by Telenor and Ooredoo to secure licenses, and the imminent capital injections into

incumbent local operators MPT and YPT, there will be no shortage of credit-worthy tenants in Myanmar. The partnership between the tower industry, a forward-thinking government, and tenants on an aggressive rollout timetable could make Myanmar a global benchmark for successful tower sharing. TowerXchange will, of course, keep you informed and connected to the key stakeholders as the Myanmar tower rollout progresses!


Forecast Myanmar tower count by end 2014*

Source: TowerXchange research

MPT

Apollo Towers

*Removal of duplicate sites at the request of MCIT notwithstanding

5000 1000 1500 2000

Irrawaddy Green Towers

Pan Asia Towers

MTC

1800

1500

1250

1250

1001

How Irrawaddy Green Towers plans to rollout 1,500 towers for Telenor MyanmarThe progressive attitude of government is facilitating the co-ordinated, accelerated rollout of independently owned towers

John Stevens, CEO, Irrawaddy Green Towers

TowerXchange: Please introduce Irrawaddy Green Towers. John Stevens, CEO, Irrawaddy Green Towers: Irrawaddy Green Towers is one of four new tower companies operating in Myanmar. We started out as Golden Towers, a newly formed towerco with a small portfolio in Vietnam, and an interest in Myanmar. Golden Towers found ourselves on a shortlist of two towercos, together with VIOM QUIPPO, bidding for the award of a contract for 1,500 towers for anchor tenant Telenor Myanmar. Telenor liked our speciality in power, and liked the proven track record of VIOM QUIPPO, so we joined forces in a 50-50 partnership to create a stronger combined towerco. TowerXchange: What is your experience of attracting capital to finance emerging market towercos, and how is Irrawaddy Green Towers financed? John Stevens, CEO, Irrawaddy Green Towers: Whereas four years ago I was exploring an opportunity to launch a towerco in Cambodia, which ultimately didn’t come to fruition largely due to a lack of investor appetite, now it seems like there is too much capital chasing too few emerging market tower deals. Golden Towers is backed by Alcazar Capital, a private equity firm out of Dubai, while our partners VIOM QUIPPO’s financing comes from their original investors, SREI Group. We were

Read this article to learn:< The origins of Irrawaddy Green Towers: a JV between Golden Towers and VIOM/QUIPPO< Leveraging Community Centres to provide ancillary services at remote cell sites< The implications of under-developed transport infrastructure – limiting the weight of physical loads< Irrawaddy’s TCO focused procurement strategy – looking for better than 20% IRR< Government support: temporary licenses for towercos, easing access to government land, and not permitting duplication of sites

John Stevens is a tower industry veteran with over 25 years’ experience, having served in senior management positions and rolled out thousands of towers with US Unwired, Tarpon Towers and Sprint PCS. However, John is probably best known as the former CTO of SBA Communications, where his responsibilities included sales and incubating SBA Power Services. John currently owns Infinigy Engineering and his own towerco back in the US, but his passion remains emerging market towers, which is what brings him to Myanmar…

Keywords: Who’s Who, Towercos, C-Level Perspective, Construction, Investment, Tenancy Ratios, Network Rollout, Pass-Through, Off-Grid, Unreliable Grid, Hybrid Power, Solar, Procurement, Skilled Workforces, Infrastructure Sharing, Southeast Asia, Myanmar, Telenor, Ooredoo, YPT, MPT, Apollo Towers, Myanmar Tower Company (MTC), Pan Asia Towers, VIOM, QIPPO, Golden Towers, SREI Group, Alcazar Capital, Irrawaddy Green Towers


oversubscribed in our first round of financing of US$150mn, now fully raised, and our original partners are funding us further to our total of US$300mn. We’re also counting on a fair amount of vendor financing, similar to everyone else’s strategy. TowerXchange: Please introduce us to your leadership team and their respective roles. John Stevens, CEO, Irrawaddy Green Towers: TowerXchange has already spoken to Karim Dakki, our CFO. Karim is a finance guy from the Alcazar Capital team. My COO from the United Kingdom, Simon Payne, brings with him extensive deployment experience in towers, power and fiberoptics. We found him lounging in Liverpool after recent stints in Zimbabwe and Burundi, having previously held a group level implementation role at Celtel. Further my Board Chairman, Arun Kapur has very strong experience on the proven concept of Community Centres, which they’ve deployed at thousands of sites in India. Community Centres provide ancillary services at cell sites located in small communities, many of which hitherto had little in the way of digital communications with the outside world. The Community Centres typically consist of a small building with a computer and a dedicated Internet connection, enabling local citizens to access banking, e-commerce, health services et cetera. We setup these Community Centres very simply initially then, as the


community gets comfortable using basic services, more services get layered on such as an ATM or vaccine refrigerators. We’ve received a lot of support for such initiatives from the Myanmar government and from Telenor, who share the same philosophy of community development.

TowerXchange: How would you describe the challenges and opportunities of rolling out towers in Myanmar?

John Stevens, CEO, Irrawaddy Green Towers: Everything in Myanmar flows through Yangon.

The construction team


There’s a decent port with warehousing capacity, and roads from India, China and Thailand. However beyond Yangon, there’s not much infrastructure. The single biggest challenge in Myanmar is the lack of transport infrastructure – there are good roads to Naypyidaw and Mandalay, but beyond that, the roads and bridges often can’t handle heavy goods vehicles, so we have to limit the physical weight of loads, and we expect to use oxen and mules to get construction products to remote sites. In Northern sites where we have site hunters out, it can take a two to four day round trip to get information back to Mandalay! Another long-term challenge in Myanmar is the under-developed banking and insurance business. For example, Telenor requires its partners to have robust insurance, and want that flowed down to their subcontractors, but many of the contractors in Myanmar don’t have insurance because of the deficiencies of the local financial services industry.

TowerXchange: Can you give us a sense of the geographical focus of those initial 1,500 sites for Telenor, the timelines and the progress of your rollout to date? John Stevens, CEO, Irrawaddy Green Towers: Both Telenor and Ooredoo have roughly 2,500 sites to rollout in phase one, the timetable for which is ‘yesterday’ through the beginning of 2015. Actually, the rollout breaks down into phase 1A

and phase 1B, the former being concentrated on the bigger cities where the operator is going to get the best bang for their buck; Yangon, Mandalay, Naypyidaw, Taungoo, Bago and Tharrawaddy. Irrawaddy’s towers are in phase 1B, some in Yangon, but many in the next blush out. TowerXchange: Tell us about the power situation in Myanmar. John Stevens, CEO, Irrawaddy Green Towers: The structure of Telenor’s contracts with Irrawaddy Green Towers and with Apollo Towers includes both the tower and the power. My understanding is that MTC’s and Pan-Asia’s contract with Ooredoo includes only the tower, with power being handled under separate vendor purchase contracts.

There is little grid power beyond big cities, and with no near-term opportunity to extend the grid. We estimate two thirds of Myanmar’s cell sites will be off-grid. Even in the big cities a significant portion of sites need backup generators because grid power is not reliable enough. Sometimes it’s a timing issue – even if grid power is available, how long will it take to connect? Irrawaddy Green Towers is taking a hybrid approach. We’re considering solar in areas where the climate makes it a possibility – Telenor has a mandate to deploy green power where possible – but the engineering and economic circumstances at a lot of sites won’t support renewables, so we’ll roll out a lot of DG+battery hybrids. TowerXchange: Can you give us an insight into Irrawaddy Green Towers’ procurement strategy? John Stevens, CEO, Irrawaddy Green Towers: Acquiring the steelwork is relatively easy, selecting power solutions is more challenging. There are no shortage of renewable, DG and energy storage solution providers, but sometimes the technical data in their marketing literature doesn’t reflect the results you get onsite. Our procurement strategies are focused on Total Cost of Ownership (TCO), rather than focusing purely on initial capital outlay, which means we have some appetite for longer term payback solutions. Telenor has exacting requirements, and punitive terms in case their towercos fall short of

“ “roads and bridges often can’t handle heavy goods vehicles, so we have to limit the physical weight of loads, and we expect to use oxen and mules to get construction products to remote sites

their SLAs in terms of uptime, so we place more emphasis on technical capabilities than financial costs to ensure we install robust power solutions. Ultimately, we look for better than 20% IRR, and from day one we’re probably slightly less than that on power. Let’s put it this way; Irrawaddy is spending 60% more on energy solutions than VIOM did in India – that certainly led to some healthy internal debate!


TowerXchange: How has Irrawaddy Towers addressed the challenge of finding skilled and experienced people to install and maintain cell sites in such a challenging context? John Stevens, CEO, Irrawaddy Green Towers: Our strategy is unique in Myanmar in that Irrawaddy has two local equity service partners that have construction expertise and some telecom experience. For tower construction and tower

climbing, we’re bringing in experienced expat management to train local staff. All the towercos are taking a similar approach to training inexperienced local labour to take over later on. In Irrawaddy’s case, around a third of our staff now are expats, who will train locals, exposing them to O&M experience ready to take over. We expect our staff to include 80% Myanmar citizens in two years. TowerXchange: How supportive has the Myanmar government been in terms of licensing towercos whilst the new Telecommunications Law is still in draft form? John Stevens, CEO, Irrawaddy Green Towers: The Myanmar Ministry of Communications and Technology (MCIT) have been tremendously supportive and have adopted a very progressive strategy.

Whilst the new Telecommunications Law progresses from draft form to take effect, the MCIT has granted temporary licenses to all four Myanmar towercos, and can award more if necessary. Irrawaddy already had a license in place allowing for leasing land and building tower infrastructure through one of our local equity partners. The Myanmar Government has been very helpful. This rollout project is so large, with so many moving parts, that the government has regularly convened meetings between stakeholders and the

The Irrawaddy Green Towers project office


appropriate ministers, and has proactively helped to streamline and standardise processes. Rollout timetables are aggressive, and there are strong deadlines with penalties on Telenor and Ooredoo if those deadlines are not met, and the government doesn’t want be the cause of any hold ups. TowerXchange: How have government policies taken effect on the front lines, for example, how easy has it been to acquire sites (particularly to handle leasing and permitting) in Myanmar? John Stevens, CEO, Irrawaddy Green Towers: We cannot own real estate in Myanmar, but we are leasing land for 15-25 years, depending on location and the individual deal – this is an established way

of working in the tower industry. Challenges remain as the ownership of agricultural land is not clear, therefore agriculture land is currently not available to us, but all parties are currently trying to work that out with the government. And the Myanmar government itself owns much of the land, and most of the ministers are willing to work with us to support the rollout of telecommunications.

TowerXchange: What has been your experience of how the MCIT might encourage or ensure infrastructure sharing, and enforce privity around sites? John Stevens, CEO, Irrawaddy Green Towers: The tower companies and operators are summoned to Naypyidaw on a weekly basis to meet with the MCIT. We have all had to submit site list and locations to the MCIT, they conducted an internal evaluation, and yesterday the MCIT released a list of around 15% of sites that were conflicting sites. The MCIT has asked the tower industry to get together to resolve this as they won’t allow duplication of tower assets. There are some fascinating conversations over dinner needed to resolve this, as ultimately the four towercos are all in competition, but in the long term the MCIT’s approach is going to be great for the environment and for tenancy ratios. It’s in the tower industry’s interest to resolve this; we don’t want to do the wrong thing, harm the landscape and harm our

reputations, as has happened in certain other emerging tower markets where the hillsides are crowded with towers. The Myanmar government understands the risk of duplicate sites and will proactively prevent this issue up front. TowerXchange: Finally, please sum up how you see the future for Irrawaddy Towers and for the Myanmar rollout. John Stevens, CEO, Irrawaddy Green Towers: The operators and towercos leading the rollout in Myanmar are all experienced and, together with a very progressive approach from the MCIT, the process is being managed smartly. By the end of 2014, we’ll have two international operators with roughly the same tower count, and four towercos with similar sized portfolios. We’ll have our successes and failures along the way of course, but this is only phase 1A and 1B. There’s a large phase 2 of the rollout which we’ll start talking about in the middle of this year, and commence in 2015, which might include a further 2,500 towers each for Telenor and Ooredoo. MPT are YPT are not standing idly by, they are closing in on partnerships with foreign investors to bring in fresh equity and enable them to compete with Telenor and Ooredoo. Doubtless MPT and YPT will have their own tower building programmes, but with the MCIT limiting duplicating sites and the rollout already started, the two local incumbent operators will become tenants on many of the towers we’re building now

“ “

yesterday the MCIT released a list of around 15% of sites that were conflicting sites. The MCIT has asked the tower industry to get together to resolve this as they won’t allow duplication of tower assets …in the long term the MCIT’s approach is going to be great for the environment and for tenancy ratios

Site acquisition challenges in MyanmarPolastri Wint & Partners’ experiences acquiring 1,500 sites for one of Myanmar’s towercos

Wint Thandar Oo & Karina Peng, Polastri Wint & Partners

TowerXchange: Please introduce Polastri Wint & Partners with a particular emphasis on your work in telecoms in Myanmar. Wint Thandar Oo & Karina Peng, Polastri Wint & Partners: Polastri Wint & Partners is a leading law firm, based in Yangon, Myanmar comprising twenty lawyers and four partners. We represent various players in the telecommunications sector including a tower company, telecommunications equipment vendors, and telecommunications service providers. We also provide the full range of legal services across sectors including corporate, tax, major infrastructure, energy and natural resources. In respect of the on-going nationwide site acquisition exercise, we work with our affiliates in various States and Regions of Myanmar to undertake land due diligence on proposed sites, both greenfield and rooftop. This is achieved through investigation of title based on review of title documentation and checks conducted physically at the Land Title Registry, followed by “on the ground” investigations with among others, the neighbourhood community. We have also advised on the provisions of lease agreements to be entered into between land holders and our towerco client from a Myanmar law compliance perspective. Additionally, we also assist our client with lease execution formalities and registration of leases. TowerXchange: What process have the operators used to engage towercos in Myanmar?

Read this article to learn:< With an investment permit granted under the Foreign Investment Law, towercos can lease land for up

to an initial term of 50 years, which term may be extended for two consecutive terms of 10 years each

< The challenges of the lack of registration of interests in land; and of restrictions on use of religious land

for business purposes

< The status of Myanmar’s draft rules for the implementation of the legal framework under the new

Telecommunications Law 2013; and the urgency of issuing relevant licenses

< What you need to know about importing telecommunications equipment into Myanmar

TowerXchange had a unique opportunity to chat with one of the leading law firms in Myanmar, Polastri Wint & Partners, who are currently acting for one of Myanmar’s towercos as they acquire sites for 1,500 towers across the country. For an insight into the realities of site acquisition in Myanmar, TowerXchange spoke to Senior Partner Wint Thandar Oo and Partner Karina Peng.

Keywords: Interview, Lawyers & Advisors, New License, Rental Rates, Market Entry, Network Rollout, Regulation, Country Risk, Site Acquisition, Leasing & Permitting, Customs, Infrastructure Sharing, Southeast Asia, Myanmar, Telenor, Ooredoo, MPT, YTP, Polastri Wint & Partners


Wint Thandar Oo & Karina Peng, Polastri Wint & Partners: From our experience, the operators have used a very thorough and exacting process to select towerco partners, over numerous (intense) negotiation sessions, making sure risks are shared or passed on as much as possible to towercos. Not surprisingly, as the selection process went by, it seemed that many interested towercos walked away. Hence, the towerco field narrowed considerably, so much so that the operators were obliged to take a more reasonable approach in contract negotiations.

Early this year, telecommunications licenses were issued to Telenor and Ooredoo, the two international operators (about a year after the


Union Government called for expressions of interest for the same), triggering their respective telecommunications infrastructure rollout obligations. The operators have chosen towerco partners for the first tranches of sites.

TowerXchange: Please sum up the risks facing towercos and their suppliers in Myanmar.

Wint Thandar Oo & Karina Peng, Polastri Wint &

Partners: The Telecommunications Law having just come into force and effect on 8 October 2013, is subject to on-going interpretation and refinement in respect of its practical effect. With the delay in the enactment of rules implementing the Telecommunications Law, and also the lack of any concrete policy applying to towercos - perhaps the biggest risk for towercos is commencing site acquisition activities prior to being granted the relevant licenses. Be that as it may, there is no

Myanmar Yangon accredit Chantal de Bruijne / Shutterstock.com“ “With the delay in the enactment of rules implementing the Telecommunications Law, and also the lack of any concrete policy applying to towercos - perhaps the biggest risk for towercos is commencing site acquisition activities prior to being granted the relevant licenses


choice but to commence work now if the aggressive roll-out deadlines are to be met. There is also a fair amount of political risk to stomach, with elections scheduled for 2015 and lack of closure of a nationwide peace treaty among various ethnic groups. Geographically, mountainous terrains particularly in Upper Myanmar coupled with lack of proper transport infrastructure, reduces access to these areas, increasing time and financial costs for delivery of sites. With little grid power available beyond the more densely populated areas, alternative sources of energy supply will have to be considered. The low electrification rate also presents a barrier to investments in and/or an increase

in existing investments in the manufacturing sector. Consequently, towercos would be hard pressed to obtain locally sourced industrial output such as building materials (including appropriate quality cement) and steel frames. This all makes investment in tower infrastructure risky, but the potential rewards, considering Myanmar’s market of 60 million people may mean that pioneers are persevering! TowerXchange: Do the towercos also take on responsibility for power in Myanmar, or is that ‘passed through’ to the operator tenants?

Wint Thandar Oo & Karina Peng, Polastri Wint & Partners: From our experience, power solutions

are required to be offered by towercos as part of the entire site delivery package – sites must be duly installed with passive infrastructure and power solutions, so that all that a carrier needs to do is to mount their antennas. TowerXchange: Are operators asking towercos just to build the sites or do the towercos own the structures and lease space to the operators? Wint Thandar Oo & Karina Peng, Polastri Wint & Partners: Towercos will build and own the structures, with space on the structures to be leased or licensed to operators. TowerXchange: In your experience, does there seem to be a commitment to sharing towers among the operators? Wint Thandar Oo & Karina Peng, Polastri Wint & Partners: From our experience, the operators will look to share towers. As a matter of fact, the Telecommunications Law specifically permits the sharing of network facilities between licensees. Logically, the towerco business model will not make sense with one tenant per tower, and operators will be forced to share because of high capital and operating expenditure, particularly at the many hard to access areas and off-grid sites.

TowerXchange: What are the most salient points of real estate law in Myanmar that affect the telecom tower industry?

Wint Thandar Oo & Karina Peng, Polastri Wint &

Yangon Myanmar accredit Chantal de Bruijne / Shutterstock.com

Partners: Under the Myanmar Constitution, all lands belong to the Union Government; citizens can only lease land, with long term leases being renewed without much ado. For a foreign registered company or a company registered in Myanmar, whose shares are wholly or partially owned by non-Myanmar citizens or foreign registered companies, the single most restrictive provision can be found in the Transfer of Immoveable Property Restriction Act 1987, which prohibits their entry into leases of immoveable property of more than a year. Notwithstanding, foreign investors may apply for grant of an investment permit under the Foreign Investment Law 2012, under which regime, foreign investors may be allowed to enter into long term leases of up to fifty years, with two ten year term extensions. With an investment permit, the foreign investor would also be entitled to certain tax exemptions and reliefs. There is no single piece of land legislation defining real estate law in Myanmar; with various categories of land being subject to separate laws and regulations. There is also a multitude of land title documentation for different categories of land, not to mention different procedures and practices applying to transfers of interests in land and registration of such transfers at various levels of administration. Given the above, the processes involved in conducting due diligence, to be able to get through to final lease execution and registration is needless


to say, time-consuming. Short-cuts are never recommended when it comes to leasing immoveable property in Myanmar, considering that locals still have the practice of (purportedly) transferring land over a handshake. Also, very often, transfers of interests in land are not registered (when they ought to be) for avoidance of stamp duty payment or otherwise.

One particular provision that has raised a lot of concern of late among operators and towercos alike is a provision in the Foreign Investment Law 2012 which states that religious lands cannot be leased for “operating any business”. In a region such as Mandalay, where there are many temples, strict adherence to this provision would have an adverse affect on network coverage in Myanmar’s second

most populous city! The towercos are lobbying to make this point to the Government, and to push for amendments to this and other parts of the legal framework, not conducive to site acquisition. TowerXchange: What kind of a license will a towerco need in Myanmar? Wint Thandar Oo & Karina Peng, Polastri Wint & Partners: Foreign held towercos will require an investment permit under the Foreign Investment Law, and like every company in Myanmar they will need a commercial registration under the Myanmar Companies Act. As rolling out telecoms infrastructure is very capital intensive, towercos will also need an import permit to bring in equipment. Under the Telecommunications Law, a towerco would also be required to obtain a license to provide Network Facilities Services, defined therein as “service of leasing any element or combination of elements of physical infrastructure which is used for the provision of (telecommunications) network services”. While Network Facilities Service license is defined in the new Telecommunications Law, detailed requirements and procedures for application and grant of such license (as provided in the draft Rules for the Telecommunications Sector issued for public consultation in December 2013) are yet to be formalised. Pressure is mounting on the Union Parliament to pass the said rules quickly to enable operators to meet the roll-out timetable set out in the terms of their respective licenses.

“ “

the processes involved in conducting due diligence, to be able to get through to final lease execution and registration is needless to say, time-consuming. Short-cuts are never recommended when it comes to leasing immoveable property in Myanmar


TowerXchange: Will Competition Law in Myanmar affect the conduct and lease pricing of towercos?

Wint Thandar Oo & Karina Peng, Polastri Wint & Partners: There is no single Competition Law in Myanmar. Be that as it may, the Telecommunications Law 2013 contains provisions which prohibits anti-competitive practices amongst telecommunications licensees; but their exact impact on lease pricing is yet to be known. However, taking into account all the risks, and demand for tenancies not just from Telenor and Ooredoo but also local operators Myanmar Posts and Telecommunication (MPT) and Yatanarpon Teleport (YTP), we feel lease pricing will be determined by the market.

We think there is less risk of interference with lease pricing, and greater risk of word spreading among private leaseholders, driving up rental rates. TowerXchange: What do companies need to know about importing telecoms equipment into Myanmar? Wint Thandar Oo & Karina Peng, Polastri Wint & Partners: Until recently, private telecommunications operators and contractors were not permitted in Myanmar. Only Government-owned enterprises had the right to import telecommunications equipment – the market has only just liberalised. With an investment permit issued by the Myanmar Investment Commission and an import permit, issued by the Ministry of Commerce, foreign towercos and their suppliers can import telecommunications equipment, with the recommendation of the Ministry of Communications and Information Technology, and where relevant, with the issuance of a telecommunications equipment license issued by the Posts and Telecommunications Department (which list of equipment will be formalised once the Telecommunications Rules have been enacted). Importers will be required to provide detailed information on the equipment proposed to be imported including the volume and specifications of such equipment, as part of the application for an investment permit. TowerXchange: How would you summarise your view of the telecom tower market in Myanmar.

Wint Thandar Oo & Karina Peng, Polastri Wint & Partners: The telecom sector is very dynamic in Myanmar – things change day by day. Plans and schedules are revised time and time again. With no single law or regulation covering and connecting land use, build permits, registration of telecommunications tower sites and the right to take security over tower assets or land lease rights (not to mention the lack of implementing rules under the Telecommunications Law), it is safe to say that investors willing to invest in Myanmar should most certainly be practical, patient and persistent. As sites have been acquired and telecommunications infrastructure have been successfully rolled out even in war-torn areas of the African continent, we do not see any reason why it cannot be done here in Myanmar. Towercos are now on the ground in Myanmar. Everyone is geared up, the site hunters are out, and sites are being acquired. The legal processes we have set up are going smoothly; we will start with due diligence on the ground soon, and expect the first leases to be signed within the next one to two months, targeting having all 1,500 leases completed over the next few months. The Ministry of Communications and Information Technology are happy to support the installation of towers in Myanmar – the Government would like a swift, seamless progression to extend telecommunications access across Myanmar, with the help of local operators, the new international operators and their towerco partners

“ “taking into account all the risks, and demand for tenancies not just from Telenor and Ooredoo but also local operators Myanmar Posts and Telecommunication (MPT) and Yatanarpon Teleport (YTP), we feel lease pricing will be determined by the market

Camusat secures contract to rollout 500 towers in Myanmar for Apollo TowersA perspective from the front lines of tower installation in Myanmar

Richard Thomas, Chairman, Camusat

TowerXchange: For TowerXchange readers not already familiar with Camusat, please introduce your company. Richard Thomas, Chairman, Camusat: Camusat is a global market leader in the implementation of telecom infrastructure, with a deep expertise in building telecom towers. We have a presence in 32 countries worldwide, and earlier this month announced partnership with Apollo Towers to build 500 towers for them, and for their anchor tenant Telenor, in Myanmar. TowerXchange: What’s your view of the opportunity in Myanmar? Richard Thomas, Chairman, Camusat: Myanmar is a great country to work in – the people are very disciplined and eager to help. This new project pushes both Camusat and Apollo Towers to be pioneers in a country at an inflexion point of rapid telecom market growth from its current nascent stage in the process. Myanmar is a virgin market. The penetration of mobile services is very low; this is genuinely one of the last countries in the world requiring substantial telecoms infrastructure rollout. While this push will create both new challenges and opportunities for Camusat and Apollo Towers, common commitment to the goal of delivering value to Apollo’s customers and to the people of Myanmar will enable the partnership to write one of the first pages of the modern telecom history in Myanmar and sustain the country’s growth.

Read this article to learn:< Leveraging Camusat’s logistics best practices to overcome transport and power infrastructure challenges in Myanmar< Site acquisition in Myanmar< Investing in local people and resources to deepen the talent pool in Myanmar< Rolling out 7-10,000 towers in Myanmar over the next five years

Camusat are old friends of TowerXchange – their ‘whatever it takes to get the job done’ culture has enabled this global managed service provider to prosper in frontier markets where others would fear to tread! So it is no surprise to see Camusat entering the challenging virgin market of Myanmar, where they already have 70 staff on the ground and are gearing up to commence rollout in April of 500 towers for Apollo Towers. TowerXchange caught up with Camusat Chairman Richard Thomas to find out more.

Keywords: Managed Services, O&M, Construction, Installation, Health & Safety, Network Rollout, Leasing & Permitting, Off-Grid, Hybrid Power, Solar, Wind, Greenfield, Logistics, Site Surveys, Skilled Workforces, Multi-Country Partner, Infrastructure Sharing, Southeast Asia, Myanmar, Apollo Towers, Telenor, Camusat


TowerXchange: Camusat has a reputation for tackling and overcoming logistical challenges in some of the most challenging telecoms markets worldwide – how have your experiences in Africa and the Caribbean prepared you for the Myanmar rollout? Richard Thomas, Chairman, Camusat: Overcoming logistical challenges is one of Camusat’s specialties! We know this kind of country very well. The climate in Myanmar makes installation and maintenance of towers complicated, particularly during the rainy season in August and September when there can be huge variations in rainfall and water levels, so we need to be ready and equipped. However, we’re used to these challenges from our extensive experience in countries like Madagascar and Haiti. We’ve been in Myanmar for over a year now, so we’ve studied the environment and implications for logistics. TowerXchange: What is Camusat’s role in the rollout of towers in Myanmar and at what stage are you in this process? Richard Thomas, Chairman, Camusat: We are at the first stage of the rollout. Camusat is currently leading site acquisition, much of which has been completed. We’ve brought in experienced site hunters from abroad to work with and train local teams, yielding some good results. Each team is fully compliant with local regulations and processes. Our e-Sight asset management and site



acquisition platform – homemade – is very helpful in finalising geotechnical studies, building permits and other documentation in an efficient and proactive way. We will commence civil works in April for an initial 500 sites for Apollo Towers. We’ll also be implementing energy supply solutions. After installation, we will offer full O&M services.

TowerXchange: Is the focus of this initial rollout concentrated on Myanmar’s three biggest cities, or is it reaching out into rural areas? And what is the power situation in Myanmar?

Richard Thomas, Chairman, Camusat: These first stage sites are concentrated primarily in Yangon, Mandalay, and Naypyidaw, so Camusat has built a local organisation in each city.

There is little grid power beyond Myanmar’s three big cities, so we are already implementing some sites with unreliable or no grid connection. Solar hybrids can be used where consumption is low, but there are few locations with good wind. Hybrid power will be widely implemented at cell sites in Myanmar, and in many locations gensets plus batteries will be the most efficient solution.

TowerXchange: What skills and resources have you had to import, and what have you been able to use locally? Richard Thomas, Chairman, Camusat: We have

found some good local civil works partners in Myanmar. While our local partners often don’t have much experience with telecoms construction, they have talented people and a good culture, so we leverage Camusat’s know-how and experience to train local teams. Camusat already has 70 people in Myanmar, but the emphasis for many of our expats is to train local people. As part Camusat’s broader strategy to build strong foundations in Myanmar, we are proud to confirm our commitment to invest in local resources, training the local personnel for improvement of the required skills and knowledge transfer to local talent pool, thus enriching the local communities in multiple ways. One of our main areas of focus within the Camusat Academy has been to train people to respect health, safety and security considerations. When it comes to raw materials, importing steelwork from China and India to Myanmar is easy enough, and much of the equipment and concrete can be sourced locally. TowerXchange: To what extent is Myanmar using a coordinated rollout of shared towers between operators? Richard Thomas, Chairman, Camusat: We don’t know the over-arching coordination strategies of the operators and towercos. However, I can say that while Myanmar may be coming late to mobile

“ “while Myanmar may be coming late to mobile telecommunications, the country will rollout the latest technologies and implement a modern rollout plan using independent towercos to save capex and opex

telecommunications, the country will rollout the latest technologies and implement a modern rollout plan using independent towercos to save capex and opex. TowerXchange: Finally, how do you see the future for Camusat in Myanmar? Richard Thomas, Chairman, Camusat: As the rollout reaches full scale, we expect 7-10,000 towers to be installed in Myanmar within the next five years, by which time Camusat expects to have 300 staff in Myanmar. We are starting with construction services, but will eventually offer end to end passive infrastructure management services

Flexenclosure secure $multi-million deal to rollout eSite for Apollo Towers in Myanmar“By far our largest eSite order to date” – David King, CEO, Flexenclosure

Mattias Karlsson, VP eSite, Flexenclosure

TowerXchange: Congratulations on winning Flexenclosure’s largest ever order for eSite from Apollo Towers in Myanmar - please tell us how you secured the order.

Mattias Karlsson, Vice President eSite, Flexenclosure: eSite is a perfect fit for the


customer’s requirements in Myanmar as it has been developed to be used in rural areas with limited if any access to power infrastructure.We were also one of the first hybrid power solutions vendors in country, demonstrating clear commitment to Myanmar when many others still considered it too much of risk and an unknown quantity. That early start gave us the opportunity to fully understand the challenges that the towercos were facing and we established a strong relationship with Apollo Towers, who had a very clear plan for their business which matched very well with our product strengths. TowerXchange: Please tell us about the cell site energy context in Myanmar - I understand grid power is very limited beyond the big three cities… Mattias Karlsson, Vice President eSite, Flexenclosure: Outside the three main cities grid coverage is more-or-less non-existent. This is not an issue for eSite though as it is designed for plug-and-play upgrade for solar power. The initial roll out is anticipated to be mainly in locations with some grid

availability, but most of the future sites will be 100% off grid. TowerXchange: I understand energy logistics are also a challenge given the under-developed transport infrastructure in Myanmar - how does that improve the business case for hybrid solutions in terms of reduced truck rolls versus DG+battery hybrids, and how does Flexenclosure intend to work around the installation logistics challenges? Mattias Karlsson, Vice President eSite, Flexenclosure: Flexenclosure’s eSite is perfect for a challenging deployment like this one in Myanmar. eSite is a single cabinet solution which minimises the need for extended on-site installation work, and a two man team can handle the entire installation in a single day. Fully integrated into eSite is eManager, an advanced tool for site power network optimisation. eManager installation and future software updates can be done entirely remotely, with no-one needed on site. And on-going eSite management can also be handled completely remotely, whether fine-tuning for improved performance or correcting an error or issue caused by an on-site event. eSite can deliver up to 90% reduction in diesel fuel consumption, CO2 emissions, and energy-related opex, and the best sustained performance over time versus any competing hybrid power system. So the business case in terms of reduced truck rolls is clear.


In addition, we have been working very closely with local partners who have helped us to understand and overcome specific infrastructure challenges, and we will continue to work together throughout the project to ensure the smoothest possible rollout. TowerXchange: With an estimated 7-10,000 towers to be rolled out in Myanmar in the next five years, do you have a sense of the proportion of those towers that might be built on unreliable or off-grid sites? What does the future hold for Flexenclosure in this exciting country? Mattias Karlsson, Vice President eSite, Flexenclosure: Our sense is that close to 80% of these sites would be off grid. As for the future, we are wholly committed to successfully delivering on this first project for Apollo Towers and to extending our footprint in the country in follow-on deployments

““

Myanmar is the largest remaining green-field market for cellular mobile networks and this is a great opportunity to do the right thing by designing a world class green network from day one. Flexenclosure’s eSite provides us with a flexible turnkey solution backed up by a strong deployment and support team. The use of renewable energy options and minimal use of diesel generators will benefit both our bottom line and Myanmar’s environment - Francois Lorelli, CEO, Apollo Towers

An eSite from Botswana

Coming soon...

Meetup AsiaQ4, 2014

TowerXchange's unique, round-table driven, invitation only gathering for the top 200 decision makers in the tower industry comes to Asia!

< Opportunities in the Myanmar tower roll out

< Perspectives from the Indonesian market

leaders

< Axiata's edotco launches in five countries

< Independent tower model comes to Vietnam

& Cambodia

< Indian tower market re-ignited

Which city should the event be held in: Bali, Bangkok, KL or Singapore?

Send your suggestions to: [email protected]

www.flexenclosure.com/tower

Providing new power to the ICT industry

eManager by Flexenclosure

Operation

Property

Site logistics Engineering

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Local Server Humidity 22.8 Low

Local Server Pressure 991.8 Rather Low

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Local Server Physical Memory 31815

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Temperature 21.8

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in

eSite hybrid power for shared sites• IndustryleadingOPEXreduction

• Optimisedsinglecabinetsolution

• Fullremotenetworkmanagement

Flexenclosure’s eSiteTM is a diesel-battery hybrid power system for telecom sites that cuts diesel costs, CO2 emissions and energy related OPEX by up to 90%.

eSite delivers the best sustained performance over time versus any competing hybrid power system.

Special feature:

Ground round lease aggregators seek to acquire the land under the highest value towers, in some cases creating a new towerco, in other cases creating a portfolio of assets which is often subsequently divested to existing towercos. Ground lease aggregation is a tough business often involving going literally door to door with thousands of private landlords to build an infrastructure portfolio one asset at a time. As US-based ground lease aggregators reach scale and attract sophisticated capital investment, TowerXchange speaks to two of the market leaders to learn more about the business model and to ask whether the ground lease aggregation model could transfer to emerging markets?

Ground lease aggregators

Don’t miss:136 What lies beneath – TowerXchange’s introduction to ground lease aggregation137 TriStar’s Matt Newton on ‘Building a towerco from the ground up’141 TowerPoint Capital’s Jesse Wellner suggests ground lease aggregators and towercos can be allies


What lies beneathGround lease aggregators disrupt the tower industry

Ground lease aggregators exploit a gap in many towerco’s business models – few of the US towercos own more than a third of the land under their towers. Often targeting the highest value sites, which boast the most tenants, ground lease aggregators painstakingly canvass site owners with a proposition to transfer or buyout expiring leases. As such, lease aggregators are felt by some to do be a threat to the towerco business model as they transfer margin from towerco’s to land owners’ balance sheets. As lease aggregators start to attract big-ticket PE-investment, TowerXchange thought it was time we looked at the model and examined whether this layer of the tower industry could take root in emerging markets. Ground lease aggregation is an increasingly crowded market in the US, with upwards of a dozen active players, including TriStar and TowerPoint Capital, who are interviewed in the following pages, Unison, Landmark Dividend, Wireless Capital Partners and AP Wireless. An ecosystem of proven brokers and advisors has also developed to support owners of real estate under cell towers as they consider their options in terms of buyouts and renewals.


Telecoms real estate is a highly fragmented market, with many landlords only owning the land under a single site. With the lease aggregation model dependent on expiration of the existing lease, aggregating the land under cell towers is a long-term, labour-intensive process. With exit strategies often consisting of selling substantial portfolios of sites to towercos, the challenge of reaching scale represents a barrier to entry. Meanwhile, the ‘Big Three’ US towercos, Crown Castle, American Tower and SBA Communications, are all investing to acquire more land under their towers, both through their own lease aggregation initiatives, and through the acquisition of portfolios from lease aggregators – for example Unison sold 1,800 sites to American Tower in September 2011 for US$500mn and Wireless Capital sold 2,300 towers to Crown Castle in January 2012, also for US$500mn. Transferability to emerging marketsTo date, ground lease aggregators have concentrated on the North American tower market, but certain aggregators and advisors are believed to have an appetite for international markets.

Ground lease aggregators are sensitive to the

potential of emerging market towers, particularly in Brazil, Mexico and South Africa. Ground lease aggregators are also attracted by many of the same macro economic factors as towercos (multiple credit-worthy operators, spectrum for LTE, favourable legal and regulatory environment, low country risk), which suggests they may prioritise many of the same countries as towercos. However, the opacity of land ownership in many emerging markets, combined with relatively weak zoning laws that make it more possible to simply relocate towers, doesn’t make the lease aggregation model readily transferrable everywhere. Meanwhile, international towercos are increasingly inserting right of first refusal and/or the right to buyout leases clauses into their ground leases to protect their portfolios against third party ground lease aggregation

US ground lease market overview

< Data traffic growth: 50% CAGR to 2018

< Average tenancy ratio: approaching 3.0

< Estimated tower count: 135,000

< Estimated count of rooftops and other PoPs:

100,000

< Towerco tower ownership: >75%

< Towerco land and rooftop ownership: <25%

Source: TriStar Investors

Building a towerco from the ground upTriStar targets the real estate under the highest value third party towers

Matt Newton, Vice Chairman, TriStar Investors

TowerXchange: Please introduce TriStar Investors and the role you play in the telecom tower industry. Matt Newton, Vice Chairman, TriStar Investors: TriStar is a US-based tower operator. We are also the leading aggregator of land and property rights beneath existing third-party towers throughout the US. TriStar is a nine-year old enterprise that was founded by wireless industry pioneers and has grown with the financial sponsorship of several leading private equity firms. TriStar’s core strategy since our inception is to assist landowners in sharing in the increased value of their property. We also deliver solutions to our mobile operator customers that reduce their operating costs by providing them substantially lower rents than other tower operators. Our focus is solely on the highest value cell tower properties: those with the most tenants (typically three and four tenant towers). This is where our strategy has the greatest impact on landowner values as well as the highest cost saving potential for mobile operators. When we launched in 2005, our business was a niche opportunity. Today, the acquisition of cell tower land and property rights represents one of the most fundamental business strategies in the tower industry. Every major tower company in the US is now using considerable financial and human capital resources to address the opportunity in cell site land acquisition. In hindsight, it’s hard to believe that the majority of the US tower

Read this article to learn:< How the ground lease aggregation business model works, and its transferability to emerging markets

< About the gap between towerco ownership of towers and ownership of the underlying land

< About the size and investment potential in the land lease aggregation segment

< How TriStar identifies and secures the highest value sites

< How TriStar has achieved scale in this highly fragmented segment

Matt Newton has been part of the telecom industry for 20 years, initially with Columbia Capital and more recently as Vice Chairman of TriStar Investors. As a Partner with Columbia Capital, Matt focused on wireless infrastructure investments, backing companies such as Extenet Systems as well as Jim Eisenstein’s Optasite. In 2005, Matt led Columbia Capital to provide startup capital to David Ivy, the former Vice Chairman of Crown Castle. David Ivy is the Founder and CEO of TriStar Investors, a new towerco with an innovative model that targets the real estate under the highest value third-party towers. Three years ago, David asked Matt to take an operational role, and he’s now a fulltime member of the TriStar team.

Keywords: How to Guide, Interview, Towercos, Ground Lease Aggregators, C-Level Perspective, REIT, Acquisition, Investment, Tenancy Ratios, Business Model, Exit Strategy, Bankability, Active Infrasharing, Leasing & Permitting, Rooftops, Private Equity, Americas (North), Americas (South), South Africa, USA, Europe, KKR, Blackstone, Colombia Capital, TriStar Investors


industry sits on top of leased land with expiring ground leases. But that is why there is such a great opportunity for TriStar. More than 75% of the cell towers in the US have been consolidated by the major tower operators over the past 15 years. But less than 25% of the corresponding land has been consolidated. The next ten years could witness the consolidation of more than 100,000 land and rooftop sites. With a focus on superior wireless infrastructure assets, TriStar will continue to be the industry’s leader and it’s most innovative operator. TowerXchange: What’s your role in the business Matt and can you give our readers a sense of the scale of TriStar? Matt Newton, Vice Chairman, TriStar Investors: We’re a team of 40 employees, so we all help out in a number of areas. My primary responsibility is on financing, M&A and overall corporate strategy. TriStar’s portfolio count is approaching 1,000 sites. Although this represents a small percentage of the estimated 135,000 towers in the US, our sites currently average four tenants per tower and are generally highly strategic locations and “carrier hub” sites. TriStar only focuses on these types of premium assets. Within the “premium infrastructure” segment we are the clear market leader and our scale is fairly significant. TowerXchange: Does TriStar and the other lease aggregators actually operate tower networks,


or focus solely on the acquisition of real estate beneath the towers?

Matt Newton, Vice Chairman, TriStar Investors: This is what makes TriStar unique. While other lease aggregators focus solely on buying real estate and managing ground lease portfolios, TriStar has extensive experience as a tower owner and operator. By operating towers after the expiration of the existing ground lease, TriStar creates substantial additional value.

While other lease aggregators buy real estate under towers, TriStar is looking to build a tower operating business by starting with the land under the most valuable existing towers where the tower operator doesn’t own the real estate and doesn’t share much of the value with landowners. In this model, we’re able to deliver cost savings to carrier tenants and incremental cash flows to landowners, while still leaving a healthy margin for ourselves as the long-term tower operator. TowerXchange: All sites are not created equal, so tell us about SmartSites™, TriStar’s data warehouse of cell site and landowner information, and give us a few hints about your proprietary scoring hierarchy. Matt Newton, Vice Chairman, TriStar Investors: SmartSites™ is the most advanced technical platform in our industry. We built it internally and it delivers a variety of capabilities across all aspects of our organization. Everyone at TriStar uses it every day. In particular, SmartSites™ provides

invaluable data and analytics in the form of a scoring hierarchy for our site acquisition efforts. When we consider a site for acquisition, it’s not just a question of how many tenants are on a tower, but also who they are. Tenant quality is critical. Equally important is that we have done our own engineering assessments of the core transport networks, so we understand how the carriers have networked signalling and how this impacts the location-based nature of a tower asset. It also allows

““

TriStar’s portfolio count is approaching 1,000 sites. Although this represents a small percentage of the estimated 135,000 towers in the US, our sites currently average four tenants per tower and are generally highly strategic locations and “carrier hub” sites… While other lease aggregators focus solely on buying real estate and managing ground lease portfolios, TriStar has extensive experience as a tower owner and operator


us to assess the future potential for site leaseup as well as network consolidation. We also track the remaining duration of the underlying lease, as sites where the lease has the shortest remaining term have the greatest interest to us. It takes time to wait for ground leases to expire – we have a long duration business model! Finally, we pay strict attention to local and regional zoning to understand the likely permanence of a location. It’s the location, not the tower, that provides most of the value. TriStar has conducted physical site surveys of more than 50,000 towers, including the majority of all multi-tenant towers in the US. All of this information is stored in SmartSites™. Access to this data and the analytics we derive from it creates enormous operating leverage for TriStar. As the universe of target sites expands over the next few years, we feel we have all the tools necessary to remain a leader in site acquisition and to do so in the most cost-efficient manner in the industry. TowerXchange: It strikes me that the owners of ground leases under towers must be a highly fragmented segment of the industry - how do you go about achieving scale? Matt Newton, Vice Chairman, TriStar Investors: It is an incredibly fragmented industry segment – most landowners own just a single site. This creates limitations in how quickly scale can be achieved. However, it also provides sizable advantages for those that have already achieved scale, like TriStar.

TowerXchange: Take us into your office and explain how TriStar engages with a new land owner. Matt Newton, Vice Chairman, TriStar Investors: All our contacts are initiated in-house. No landowner dialogue is outsourced. We contact landowners by letter and phone, but it usually culminates with a face to face meeting over the kitchen table to explain how TriStar differs from our competitors, and to discuss the variety of different financial options available to the land owner. Again, it’s a time consuming process – while closing a deal with

a land owner can be done in two months or less, often it can take several years.

TowerXchange: Do investors see ground lease aggregators as an bankable proposition? And what is your strategy to provide investors with an exit to realise RoI?

Matt Newton, Vice Chairman, TriStar Investors: Absolutely. Investors are attracted to the wireless industry’s incredible growth story: mobile data traffic and the proliferation of mobile devices, coupled with highly predictable cash flows and a customer base of mostly investment-grade counterparties. It is viewed as fundamentally a real estate thesis with enhanced growth potential. Our industry segment was largely passed over by major investors for some time. That is not true anymore. The past two years has seen the arrival of very sophisticated private equity capital, including the Blackstone Group, KKR, and several other PE firms. The investments they have made in land aggregation validate the asset class. A more competitive field should also push valuations higher and the capital injection is likely to accelerate consolidation and stimulate the towercos to move faster. As far as exit potential, in the US there is a very fluid secondary market for land portfolio sales. There has been more than US$2bn in aggregate transaction value over the past two years. There have also been over 300 tower industry transactions in the US over the last decade, so

“

“

The past two years has seen the arrival of very sophisticated private equity capital, including the Blackstone Group, KKR, and several other PE firms. The investments they have made in land aggregation validate the asset class

it’s reasonable to expect the most likely exit for our investors would be a strategic sale or equity refinancing. An IPO is also something investors may find attractive as the public markets have been successful avenues of value creation in our industry. TriStar has examined the option to convert into a REIT at some point in the future. If we were to have an IPO it is likely we would convert to a REIT prior to the financing. TowerXchange: Do you see an opportunity for the ground lease aggregation model to be extended to emerging markets? What characteristics of land ownership and real estate


law are required for your business model to work? Matt Newton, Vice Chairman, TriStar Investors: Yes. In fact we are aware of several companies already acquiring land assets in Central and South America, South Africa, and several European countries. This is something TriStar is considering, although we haven’t yet found a market that presents as good an opportunity for ground lease acquisition as the US market. The requirements as we assess international market entry entail the following: < A favorable legal system with regard to property rights< Multiple wireless operators (preferably three or more) with adequate spectrum and infrastructure resources< Favorable regulatory frameworks< The appropriate political, economic, and currency environment TowerXchange: Please breakdown what “favorable legal systems with regard to property rights” consists of. Matt Newton, Vice Chairman, TriStar Investors: Our first question is “can foreign companies own the land under towers?” We then look at the underlying real estate law, and the mix of public versus private land ownership. Where the underlying land ownership is opaque, it doesn’t provide a great framework for our business model, so we have less

appetite for such emerging economies. TowerXchange: What’s your personal view of the evolution of the independent towerco business in emerging markets? Matt Newton, Vice Chairman, TriStar Investors: I haven’t looked at emerging market towers for a few years. When I last looked, it struck me that at some point there’d be a bifurcation of quality versus non-quality assets – that you’d see a lot of towers in emerging markets providing minimal use. There were many assets constructed without co-location in mind. I also think network sharing could be a real dynamic that operators seek to leverage in certain markets. However, the mobile economies in emerging markets are clearly growing at a rate that is an order of magnitude higher than the US. For markets with robust economies and multiple wireless operators, the tower business looks like it did in the US many years ago. TowerXchange: Finally, do you forsee opportunities for the diversification of the land lease aggregation business model? Matt Newton, Vice Chairman, TriStar Investors: A number of the other land lease aggregators are expanding their business into billboards, wind farms and other passive infrastructure. They are primarily finance platforms that will acquire any infrastructure with proven cash flows. TriStar is not likely to pursue these opportunities. We will continue our focus on acquiring land and operating towers as ground leases expire

“ “we are aware of several companies already acquiring land assets in Central and South America, South Africa and several European countries. This is something TriStar is also considering

Ground lease aggregatorsand towercos can be alliesViews on the US domestic and international ground lease markets from TowerPoint Capital

Jesse M. Wellner, TowerPoint Capital

TowerXchange: What role does TowerPoint Capital play in the tower industry? Jesse M. Wellner, Principal and Managing Director, TowerPoint Capital: TowerPoint Capital is a portfolio company of Private Equity investor GTCR. We aggregate the ground leases under communication towers and rooftop base stations, exclusively in the US domestic market, but we are always keeping current on new opportunities to find valuable assets for our portfolio inclusive of international markets like Latin America, Europe and Asia. These opportunities are very exciting but also present unique challenges that our firm is yet to fully grasp. Our current understanding of risks in international markets places the prospects of any significant deployment of capital into the long-term category. TowerXchange: What’s the scale of the TowerPoint Capital business? Jesse M. Wellner, Principal and Managing Director, TowerPoint Capital: The TowerPoint team includes fifty employees and independent contractors. Like most specialty finance businesses, we’re a blend of front and back office functions, weighted towards the front end which is tasked with consulting and partnering with landlords on their cell site locations. The firm grows primarily through acquisition, deploying mid to high eight figures USD annually, and secondarily through future lease up activity at our cell site locations nationwide.

Read this article to learn:< How the time it takes to build originations capacity represents a barrier to entry< Why it’s a good time for landlords to sell< How to be seen as a ‘friendly aggregator’ by carriers and towercos< Opportunities for lease aggregators secure first mover advantage in emerging markets

Jesse Wellner has been part of the ground lease aggregation business for the past ten years, starting out his career in the space at Unison Site Management in early 2004. Subsequently, as principal and founder of the Well Street Group, he acted as lead adviser on the conveyance of more than $50 million in US and international towers. Jesse joined the TowerPoint Capital team (then Communications Capital Group) in 2009 when equity partner RBS Greenwich Capital recruited him help oversee the originations platform.

Keywords: Who’s Who, Ground Lease Aggregators, Interview, First Mover Advantage, Exit Strategy, Rooftops, Masts & Towers, Americas (South), Americas (North), USA, Brazil, Mexico, GTCR, TowerPoint Capital


TowerXchange: It strikes me that the front end, origination part of your business is critical in dealing with a highly fragmented market. Jesse M. Wellner, Principal and Managing Director, TowerPoint Capital: Despite a substantial amount of consolidation over the past ten years, control of ground lease assets is indeed fragmented. The large majority of assets are still held by non-institutional stakeholders. Ground lease aggregation is like building a meal out of grains of rice, one lease, a single US$150k deal at a time. The time and investment it takes to ramp up originations capacity represents a significant barrier to entry. This business requires a staff of knowledgeable originators consistently reaching out to land owners and making a credible case to partner with us. TowerXchange: What is your view of the current state of the ground lease aggregation business in the US? Jesse M. Wellner, Principal and Managing Director, TowerPoint Capital: We’ve seen significant increases in efficiency driven by tower company consolidation of Wireless Service Provider (WSP) owned assets and the entrance of more competition. While the increased demand has led to better execution for landlords it may be coming at some cost to quality interactions with landlords. My sense is that landlords are becoming increasingly frustrated by a lack of professionalism and overly aggressive canvassing by the lease aggregators. I

suspect this dynamic serves as a real impediment to landlords motivation to transact. Having said that there is no question that the near term bubble around these assets has created a great opportunity for sellers to take advantage of prices that are unlikely to go much higher – it’s a good time to sell. With the specter of further WSP consolidation, technological advancements resulting in more network flexibility for WSPs and interest rates moving higher there’s not a lot of argument for higher prices. TowerXchange: Do ground lease aggregators have to be adversaries of towercos? Jesse M. Wellner, Principal and Managing Director, TowerPoint Capital: While some ground lease aggregators have taken a more aggressive approach in dealing with the industry captives (incumbent towercos and WSPs), TowerPoint has pioneered a strategy rooted in partnership. Our landlords, the WSPs and the towercos are TowerPoints customers and all are key to creating long term value. We have strong contracts with WSPs and strong relationships with the big towercos who have viewed us as a friendly aggregator with whom they have been more willing to trade with. US towercos play an enormously important role in our industry and will continue to grow through acquisition. To the extent aggregators choose to exploit soft spots on tower company balance sheets, like near term expiration sites, they may achieve short term gains but it could be at the expense of


the relationship. Our approach is not to bite the few hands that feed us, and to maintain symbiotic relationships with our customers. The strategy of purchasing ground leases with near expirations can be viewed as a nuisance business by the towercos. Towercos are quite sensitive to this strategy because amongst other things investors track the average duration of their ground leases. Controlling the ground for a longer period mitigates the risk of higher rental rates, which allows for more predictable economic forecasting. Towercos have done a very good job over the last few years of defending ground leases under their captive tower sites.

TowerXchange: What are ground lease aggregator’s options for value creation and exit strategies?

“ “Ground lease aggregation is like building a meal out of grains of rice, one lease, a single US$150k deal at a time


Jesse M. Wellner, Principal and Managing Director, TowerPoint Capital: At TowerPoint Capital, we’re sensitive to looking for value. We’re disciplined about what assets we acquire. We prefer assets with significant upside, such as rooftops with potential for extra assets, or towers on tight compounds where we can benefit from additional tenants needing more ground space. As an infrastructure investor, we’re structuring transactions for the next 50-100 years. As a result we’re less exposed to near term events like interest rate volatility. This enables us to take a more long term view of strategic sales or other exit opportunities. Historically ground lease portfolios have been sold to towercos, but that doesn’t preclude other possibilities. TowerXchange: Is there an opportunity for ground lease aggregators outside of the US? Jesse M. Wellner, Principal and Managing Director, TowerPoint Capital: I suspect there is growing interest in international markets on the part of US aggregators. The limiting factor for US aggregators will likely be a lack of financial and operational capacity as well as limited expertise in international markets. It’s difficult to know what challenges, legal, operational financial and otherwise an aggregator might face in a new country particularly a developing one. However, the companies who can manage these risks effectively and execute internationally will likely be rewarded as first movers.

TowerXchange: You mentioned a personal interest in Brazil and Mexico – what’s your view of opportunities there, given that the independent tower industry is less mature in those markets than in the US? Jesse M. Wellner, Principal and Managing Director, TowerPoint Capital: My sense is that some international markets like Latin America bear comparison to the early days in the US 10-15 years ago when it was all about speed of deployment for the WSPs and towercos. There might be a lot less competition for land, but significantly more risk in terms of knowing what the landscape will look like. However, early participants like US towercos are likely to take the defensive lessons learned when building out the US market. They’ll close loopholes more quickly and be better positioned to anticipate more predatory aggregators

“ “Historically ground lease portfolios have been sold to towercos, but that doesn’t preclude other possibilities

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Special feature:

With the help of Telemisis, TowerXchange looks at best practices in the selection and installation of RMS. We also take a first look at the new automated server architecture based Towerhawk™ RMS system from Caryon Development, while also revisiting old friends at azeti and AIO Systems. Over the eight editions of TowerXchange, we’ve profiled xx different RMS, ILM, access control and Site Management System solution providers. Here’s an index for your reference:

From RMS to ILM and Site Management platforms, part seven


Accruent in issue 7Acsys in issue 4AIO in this issueAKCP in issue 6Azeti in this issueBroadnet in issue 3Caryon in this issueGalooli in issue 4HMS in issue 5Inala in issue 3

Infozech in issue 7InfraSTAT in issue 6Invendis in issue 4NAAP in issue 7Qowisio in issue 4Quintica in issue 4Tarantula in issue 5Telemisis in issue 3Westell in issue 7

Download FREE back issues of the TowerXchange Journal at www.towerxchange.com/publications

A wise man once said “You can’t always get what you want, but if you try sometimes you just might find you get what you need.” That wise man was Mick Jagger, but his point readily applies to the selection and deployment of RMS solutions for cell sites!

TowerXchange has seen many RFPs for RMS come back to market 18-24 months after an initial trial and rollout failed, so we thought we’d look at some of the most common reasons why RMS deployments fail, and how those challenges can be overcome.

How to select and deploy an RMS to meet your needsWhy some RMS deployments fail, and how to overcome the challenges

to meet the demands of deployment at remote cell sites in emerging markets. TowerXchange has collected numerous examples of the substantial operational efficiency improvements possible through RMS, but it remains critical that RFPs and RFQs (Requests For Proposal and Requests For Quotation) are aligned with the MNO or towerco’s specific requirements, that a structured process is followed during trials, and that the right partner is selected to implement the solution.

Too many RMS deployments fail because the specification is driven by what can be done instead of what needs to be done. Too many RMS deployments fail because of a lack of structure in the procurement process.

Too many RMS deployments fail because of a conflict of interests within the supply chain. Too many RMS deployments fail because, let’s be honest, some lower cost solutions are not suitable


The specification must be driven by what needs to be done instead of what can be done There can be a law of diminishing returns as the specs for RMS get more complicated and the quotations more costly. Fuel tank and power system monitoring is a no-brainer at off-grid and unreliable grid cell sites, and often pays for itself within six months. Access control solutions pay a handsome dividend particularly if you have a problem with pilferage from within the supply chain. CCTV adds considerable cost and competes for scarce bandwidth, so may be best deployed at sites where third party theft and vandalism problems are particularly acute. RMS requires maintenance itself, such as dealing with power surges that get through surge protection, so the more RMS equipment you install, the more components can fail, and the more ongoing maintenance opex you are going to incur. Buyers need to ask themselves what the focus of their deployment should be, where they will find the best RoI, and whether they need full functionality at every site, or whether a simplified specification could be implemented with less cost, complexity and risk. “We’ve seen some RFPs that call for highly specified systems and, unsurprisingly, the quotes from robust, proven RMS vendors come in over budget. Some buyers try to monitor everything on a triple digit budget per site, so they do it with

lower quality equipment that isn’t robust enough to work in the field. Too often we see those RFPs back again a couple of years later after a failed implementation,” said Chris Begent, Commercial Director at Telemisis. A structured procurement process

Define the requirements of RMS from different internal stakeholders: the O&M team, your refueling subcontractor and business management. Whether managed in-house or outsourced, all your stakeholders have got to share their requirements and ‘buy-in’ to the RMS deployment. Rank requirements with priorities 1-10 to help you ensure only functionality that will actually be of use makes it into the spec; there’s no place for ‘nice to know’ data, it’s only going to make the solution more costly and complex. Shortlist RFP recipients. Give vendors an indication of budget if you can, as vendors will then be able to give you a better idea of what functionality you’ll be able to achieve, and to what extent you may have to standardise your approach versus customising for different sites. You don’t need to break-in an unproven RMS provider. There are a handful of ‘telco-grade’ RMS vendors whose solutions have been proven at thousands of cell sites in Africa, Asia and Latin America – read interviews with the key players at www.towerxchange.com/category/whos-who/monitoring-management, contact each company


2000L of diesel is a very ‘liquid’ asset at remote cell sites, and represents a big temptation for thieves and, let’s be honest, for staff and contractors. If you have a problem with pilferage, you need to select and invest in a solution that addresses your specific problem. Before investing in CCTV, decide what will you do if you see someone breaking in. Can security reach the site in time to intervene? Would you want your security contractor to intervene with a thief who might be armed? What is your priority? Are you trying to prevent theft of fuel and equipment from sites, or is the priority simply to know that fuel is missing so you can refuel before the battery bank is discharged and the site does down – if so, a fuel sensor gives you the fuel level, delivery confirmation, and theft alarms, all at fraction of cost of an access control system or CCTV.

Selecting and deploying an access control and CCTV solution to meet your needs

Using conventional padlocks on gates and shelters provides negligible security given the number of cloned keys that will quickly enter circulation, particularly if you have to grant access to multiple subcontractors from multiple tenants. It can therefore be useful to use a centrally programmable key, which means you need an electric lock. Using an electric lock on gates often means the power cable may be exposed, so make sure you make the best choice to meet your needs: FailSecure systems lock if the power is cut, FailSafe systems unlock if the power is cut. The correct type of lock needs to be fitted for the purpose as fitting a “standard Mag Lock” is insufficient for a gate as it is easily forced open with a kick but a purpose designed gate lock will hold but requires gates to be in good condition. Investing in premium electric locks will achieve only so much if old, wobbly gates in perimeter fencing make it difficult to line up the bolts and lock. You need to understand your problem. Is your gate lock for logging who enters the site, is it a deterrent for an opportunistic thief who has a means of cloning old fashioned keys, or are you trying to thwart a more determined thief who will simply ram, climb or cut through your perimeter fence if he can no longer use his key?


that seem to be able to meet your needs, and ask for references from their clients. If you ask vendors to propose a solution, rather than ask for a quote for a specific component, they may have a variety of ways in which they can solve similar problems at different price points. Take a structured approach to trialing RMS over

a period of at least two months to sort out which suppliers can meet your requirements, and make a commitment to weed-out suppliers that fall short. Narrow the field down to two or three vendors that you know are going to work, then look at costs.

As if selecting and trialing an RMS solution weren’t difficult enough, next comes the most challenging step of all: implementation.

Conflicts of interests within the supply chain

One of the most common reasons that RMS deployments fail is in cases where MNOs and towercos subcontract the installation of sensors to their O&M partners, often the same company that manages fuel logistics. There is logic in that these companies know the specific conditions and requirements of individual sites. However, it may not be in that contractor’s interests to optimally

“ “Take a structured approach to trialling RMS over a period of at least two months to sort out which suppliers can meet your requirements, and make a commitment to weed-out suppliers that fall short


install and maintain an RMS solution that will contribute to the reduction of maintenance truck rolls and diesel consumption.

Therefore it is increasingly common for MNOs and towercos to ask the RMS manufacturer to install the solution in-country. However, this solution only works some of the time. There are one or two RMS vendors that have their own substantial team of field engineers, or who are affiliated with multi-country turnkey infrastructure subcontractors, but several of the most reputable RMS manufacturers are just that – expert manufacturers – they don’t necessarily have deployment resources or experience in every country. Towercos and MNOs original thinking, to use

trusted installation companies with a local footprint, is certainly more economical than flying in a RMS engineers just for that job. But it’s a conflict of interests to ask the vendor of fuel to monitor itself. Most towercos and MNOs have two or three preferred vendors. They may allocate refueling and O&M to Company A, Company B may have tendered and not got the contract – so ask Company B to deploy the RMS – they have a strong incentive to ensure Company A are kept

honest! Keeping your alternate supplier happy is also handy when it comes to contract renewal! Finally, a note of caution for RMS entrepreneurs and investors seeking contracts with emerging market MNOs and towercos. MNOs and towercos like to contain their risk by contracting as a local OpCo, with limited if any exposure to the Group HQ entity. It’s the oldest advice in the book, but contract with the parent company if you can

Chris Begent, Commercial Director Telemisis: “I’m glad to read that TowerXchange are advocating a structured, appropriate approach to buying RMS that focuses on ROI – even if it’s not always in our interests for simpler spec systems to be ordered! I think it’s in everyone’s interests that whoever wins an RMS tender comes out other side with a system that meets the customer’s requirements and is installed right first time.” “Done right, RMS saves a lot of money, done wrong it costs more than it’s worth,” continues Begent. “I’m always happy to put prospective customers in contact with any one of Telemisis’ existing clients. Telemisis’s SitePro is a solid, reliable, quality solution and it does what we say. Telemisis use our experience and technical knowledge to provide cost effective solutions for all markets” “As specialists in RMS with many years of experience in designing systems we find that

receiving RFPs with details of what information is required, rather than orders for specific sensors, enables us to create intelligent and efficient designs using proven sensors designed by us or sourced from trusted specialist manufacturers and combining data to create a cost efficient design to meet the client’s needs.” “Too often we see RMS solutions come back up for tender 12 to 18 months after an initial vendor selection, which must be incredibly frustrating and costly for buyers. We whole-heartedly support TowerXchange’s assertion that a shift in focus to a structured vendor selection process would improve the situation. A structured RMS vendor selection, which includes a trial phase with clearly defined success and selection criteria, that must be met by the successful vendor, is the most likely process to deliver a solution that fulfils the true needs of carriers and towercos,” concludes Telemisis’ Begent

Telemisis’ experience of how RMS is bought and sold

Chris Begent, Commercial Director, Telemisis

A data backbone to optimise tower managementGemalto partners with ConnectM to deliver intelligent tower management solutions to serve its global telecom customers

Sriram Chidambaram, CEO, ConnectM

TowerXchange: Please introduce our readers to ConnectM - what role do you play in the telecoms infrastructure ecosystem?

Sriram Chidambaram, CEO, ConnectM Technology Solutions: ConnectM is a six year old company focused on providing remote monitoring and management solutions for several verticals. We’re able to demonstrate significant value adds in the management of telecom towers, but we also provide services for ATM, industrial, building and energy management monitoring. ConnectM is a proven solution managing 5,000 towers in India, 4,000 in Africa and we just won an order in Southeast Asia, so we focus on many of the same geographies as TowerXchange – in fact we’re hoping to get into Latin America as well! TowerXchange: We’ve spoken to some players in the RMS category who are focused on hardware, others more focused on backend data analysis – what’s ConnectM’s focus?

Sriram Chidambaram, CEO, ConnectM Technology Solutions: Initially ConnectM focused on our own hardware, but over the years we’ve become hardware agnostic – we can integrate with third party sensors in the field. Our core value-add lies in the backend analysis of data; in building software applications and customising data analytics to improve tower management. Today ConnectM has tie-ups with different hardware manufacturers worldwide, and can

Read this article to learn:< The five KPIs to monitor and optimise cell site performance and efficiency< Examining data analytics to reveal trends and generate predictive maintenance alerts< Installed software versus managed service< Crossing boundaries to interface with different stakeholders in complex supply chains< How ConnectM leverages their partnership with Gemalto to increases their reach into the telecom market, and increase the variety of devices they can integrate with

The award-winning ConnectM platform has been chosen as the first RMS to integrate with Gemalto’s M2M horizontal data platform, enabling ConnectM to connect with an even greater range of devices. ConnectM has already contracted close to 9000 towers across India, Africa and South East Asia and enables intelligent tower management through its software and analytics capabilities. To find out more about the partnership, TowerXchange spoke to CEO Sriram Chidambaram.

Keywords: Who’s Who, Intelligent Towers, Monitoring & Management, Access Control, Opex Reduction, Fuel Security, Uptime, KPIs, Site Visits, Asset Register, Shelters, RMS, Site Management System, Asset Lifecycle Platform, Job Ticketing, Infrastructure Sharing, Africa, Southeast Asia, Southern Asia, India, Myanmar, Gemalto, ConnectM


deliver comprehensive tower management solutions with business analytics. We are confident in the value and RoI we can deliver with our total solution.

TowerXchange: The first question our readers want to know is “is it proven in the field” – who is using this platform and where?

Sriram Chidambaram, CEO, ConnectM Technology Solutions: ConnectM is working with three major towercos in India in some pretty tough locations where there is rampant fuel theft, and uptime issues because of energy supply deficiencies. We also work with three tier one operators across eight or nine countries in Africa. We recently won a contract in Myanmar where our local partner will manage the hardware installation, and ConnectM will provide the backend data analytics. So ConnectM is a proven solution, not slideware! TowerXchange: What are the key performance indicators used at the NOC to manage and optimise the performance of distributed cell sites? Sriram Chidambaram, CEO, ConnectM Technology Solutions: There are five different vectors on which our clients use ConnectM to monitor and optimise cell site performance and efficiency.

1. Energy monitoring; particularly to reduce diesel consumption at unreliable grid and off-grid sites, enabling our clients to reduce the working capital requirement for fuel 2. A real-time view of site alarms; minimising SLA penalties whenever a tower is down, whether it be due to the temperature shooting up in the shelter, DG malfunction, a battery bank failing, et cetera


3. Security and access management; controlling who gets access, integrating feeds from third party security cameras, and determining who was present in the event of lost or stolen assets 4. Maintenance opex reduction; ensuring adequate information is available about the health, condition and function of towers, so clients don’t have to send technicians for every issue, making tower maintenance more efficient,

ConnectM Telecom Tower Remote Monitoring Solution Features

efficient tower management. Our ticketing and workflow can provide the ‘system of record’ or a ‘single version of the truth’. We gather alerts from shelters and from equipment, and we have built intelligence based on which we can determine which alarms can be delayed, and which to escalate, and who, how and when to escalate them. One of our core values is the ability to generate logical alarms. We have learned how to cross boundaries to interface with different stakeholders in the supply chain. For example, certain alarms are escalated directly to equipment maintenance contractors, so the job ticket may go to the DG service contractor, perhaps via our mobile or automatic voice calling options. By using these simple mobile extensions, the technician can attend the problem, then update to close the ticket. TowerXchange: How has ConnectM’s partnership with Gemalto benefitted your business? Sriram Chidambaram, CEO, ConnectM Technology Solutions: We’re very excited about this partnership. ConnectM has a strong understanding and experience of technologies for tower management – we understand the processes and pain points of towercos, and we have a roadmap of what they can do using the data we collect. Gemalto is large company with considerable reach, and many strategic relationships in the telecom space. The Gemalto platform enables ConnectM to

and ultimately optimising to the point of achieving preventative maintenance 5. Asset tracking; with sites distributed over remote geographies, tracking assets as they are added to sites is a key parameter Our clients want to see data driven analytics – to examine the top performing districts or clusters, or consider the top five reasons for downtime. We can analyse trends to generate predictive alerts. TowerXchange: We have interviewed several Site Management and Infrastructure Lifecycle Management solution providers - what’s your view on the best way to deliver your services? As an installed license for clients, from the cloud, or as a managed service offering where your own analysts interpret the data and ensure integration between alarms and job ticketing?

Sriram Chidambaram, CEO, ConnectM Technology Solutions: We don’t have strong preference for one use-case versus the others, and ConnectM has been implemented under all these scenarios. We provide some clients with a complete managed service, monitoring through the cloud. Other customers buy our hardware and software and run it themselves, and we’ve delivered in-house analytic solutions too. Personally, I believe the managed service delivered via the cloud yields the best economies of scope and scale, and there’s an element of business

intelligence driven efficiencies we can deliver as we can learn from different clients we serve in the cloud.

TowerXchange: How do you unify information flows, and therefore projects and workflows, across complex, outsourced and sub-contracted supply chains?

Sriram Chidambaram, CEO, ConnectM Technology Solutions: Indian tower operators face many of the same challenges as their counterparts in Africa. There are many different stakeholders, each with different information needs – the tenant, the towerco, O&M and refuelling subcontractors and equipment providers. ConnectM can serve as an ERP or backbone for


“ “ConnectM can serve as an ERP or backbone for efficient tower management. Our ticketing and workflow can provide the ‘system of record’ or a ‘single version of the truth’

work with different hardware, to aggregate data, refined by us to make intelligent decisions to control equipment. Partnering with Gemalto increases ConnectM’s reach into the telecom market, and increases the variety of devices we can integrate with.

TowerXchange: Finally, how would you differentiate ConnectM’s solution from competitive RMS, Infrastructure Lifecycle Management and Site Management Systems? Sriram Chidambaram, CEO, ConnectM Technology Solutions: We have four key differentiators. 1. Our end to end approach; we have invested a lot of time in making sure we recommend the right partners and integrate the right hardware 2. Tower industry experience; we have developed logical rules specific to the tower industry, which are the product of managing 9,000 towers in difficult geographies 3. Customisation; our solution is architected at the application level to enable us to quickly customise, preparing new reports and new dashboards – we recognise that customer needs change, and that management need different analyses and reports as their networks evolve 4. Data analytics; we’ve built modules to predict downtime, helping customers with optimise fuel loads and deploy replacement capex efficiently


Gemalto leverages M2M capabilities to enable cell site management platforms and services

Gemalto is renowned as the world leader in digital security, and they are applying their expertise to the evolution of cell tower monitoring, management and maintenance. Gemalto has created a horizontal platform to collect data from M2M-enabled devices and make that available upstream to analytical intelligence platforms. The platform has been created through a combination of the data communication modules for M2M of Cinterion, a company Gemalto acquired in 2010, together with another acquisition, SensorLogic, a software platform for M2M data. Gemalto is now integrating cell tower monitoring and management applications into this horizontal platform. One of the first site management system providers to port their software to Gemalto’s data platform is ConnectM. As you’ll see in the interview with ConnectM’s CEO Sriram Chidambaram, ConnectM has a six-year track record of success, and is currently used to monitor and manage 9,000 towers in India and Africa. ConnectM collects data from sensors at distributed cell sites, conducts analyses and integrates with job ticketing, enabling predictive analysis and maintenance. The system has been particularly successful at helping to reduce fuel theft within the supply chain. By monitoring and managing power use, and comparing

with site access records, ConnectM can detect outliers, making it harder to hide fraud. This kind of analytic intelligence not only helps detect fraud, it also finds patterns to optimise power usage, and enables cell site operators to be proactive in working with their suppliers to optimise site efficiency and reduce energy opex. Gemalto is currently working with ConnectM on a comprehensive trial at a single cell site, which will yield a full demonstration with ten months of comprehensive data. Kenneth Lowe, Director of Business Development for SensorLogic M2M Platforms at Gemalto concludes: “We’re excited to be working with ConnectM, but we are also keen to partner with other participants in the TowerXchange community. While ConnectM is the only platform we can talk about at the moment, we have other service providers who are building on our platform already. Our objective is to build an ecosystem of solutions around our horizontal data platform, which has open APIs suitable for integration with virtually any device at a cell site. It’s easy to setup, and our open APIs enable users to stand up independent monitoring dashboards for specific devices – you don’t need to build a vertical app for every KPI. Using our platform, you can simply pass data into your existing NOC systems, and have the flexibility to expand and customize outside of any standalone app.”

All towers are not created equalCaryon Development advocate the creation of ‘Smart Towers’ at critical hub sites

Lee Cantley, Caryon Development

TowerXchange: Please introduce our readers to Caryon Development – what role do you play in the tower industry? Lee Cantley, VP Sales & Marketing, Caryon Development: Caryon is the provider of state of the art “Towerhawk™” cell tower and DAS monitoring systems. With the rapid global expansion of high value/high cost cellular equipment on towers and incorporated in DAS systems, more sophisticated tower infrastructure monitoring capabilities are necessary to keep pace. Caryon “Towerhawk Systems” monitor all tower functions in real time, improving operating efficiency and tower functionality while providing valuable analytics to reduce costs for tower operators and carriers by enabling more efficient truck rolls and related cost reductions.

TowerXchange: Please tell us what you can measure at a cell site. Lee Cantley, VP Sales & Marketing, Caryon Development: The “Towerhawk” systems capabilities list is extensive (all patents pending) and added functions can be made at the request of the towerco, backhaul provider or carrier:< Watchdog circuit: is a secondary means of access to the site if there is a system malfunction in the main fiber connection. < Grounding: special patent pending circuits monitor the “ground” of the tower, lights, on site structures, radios and main site grounding

Read this article to learn:< The importance of twist and sway monitoring from a structural safety point of view

< How to upgrade to ‘Smart Towers’ with intelligence onsite

< How upgrading to ‘Smart Towers’ at hub sites can enable tower operators to access government

investment in Public Safety Networks

< The evolution of DAS monitoring

Caryon Development has created a state of the art, remote monitoring solution based on an automated server architecture. This unique architecture enables the user to not only monitor the critical systems of a cell site in real-time but to also have full control of that site. Caryon’s Towerhawk™ systems monitor generators, fuel tanks, batteries status, grounding, fiber and other equipment on the tower as well as remote monitoring of the twist and sway of towers – particularly important to ensure H&S at older towers and for critical microwave alignment. Caryon recognizes the importance of prioritising critical hub sites, and investing in robust and comprehensive monitoring systems to create ‘Smart Towers’.

Keywords: Who’s Who, Monitoring & Management, Market Overview, Fuel Security, Loading, Health & Safety, Site Visits, NOC, DAS, RMS, Job Ticketing, Spare Parts, Americas (North), Caryon Development


loop. When any registered ground is loose or removed, and/or the main site grounding loop is damaged, an alarm is generated for that specific grounded element. This is critical for lightning suppression, theft of grounding bars or bad grounding connections potentially saving millions every year in damaged or stolen items.< Structural safety and stability (twist and sway): Our sensors monitor and record tower movement and excessive sway or dangerous tower situations. With aging towers, changes in wind loading, high wind and corrosion as well as tower overloading with heavier carrier equipment, the risks of catastrophic tower failure are of concern. < Microwave misalignment: can be readily identified and whether the failure is temporary due to a storm or a situation needing attention as with tower overloading. < Tower loading and structural analysis: Currently, engineering consultants “estimate” tower loading capacity. Repairs and reinforcement are undertaken based on a visual inspection of the tower. Towerhawk systems provide concise data, not estimates. Alarm points are programmed into the system so that any at risk tower is immediately identified.< Lighting and generators: Tower lighting functionality is continuously monitored to reduce outages. Generator functions are also monitored for starting capability, battery health and accurate fuel levels. Generators can also be tested remotely and the status reported. All monitoring functions and status are visible on a customer dashboard of all sites monitored. Caryon provides an instrument package enabling monitoring of all

generators regardless of age and make. < Surveillance: Programmable camera systems including pan, tilt and zoom functionality enable on-site surveillance regardless of how remote a site may be. Camera arrays and enhanced resolution provide resolution in complete darkness giving the ability to view and record even when the cell site may not have any outdoor lighting. Area “alarm masking” is also utilised to report any “on tower” activity, non-authorised visitor or perimeter issues.


TowerXchange: Does Caryon Development focus on a particular category of sites with common characteristics? Lee Cantley, VP Sales & Marketing, Caryon Development: Our focus to date has been on two categories; ‘Hardened Sites’ and ‘Remote Sites’. Hardened Sites: Comprehensive “Towerhawk” systems are being deployed on towers and sites that are especially critical and/or vulnerable (e.g. Hub Sites) to insure seamless monitoring and communication at all times. Remote Sites: As one example, Caryon has been developing a “plug and play” hardened generator and security system for remote locations where site visits are difficult but information on backup power, fuel levels and security are critical. TowerXchange: Our readers always want to know ‘how proven is the solution in the field, so can you tell us a bit about where Towerhawk is in use in the US today?

Lee Cantley, VP Sales & Marketing, Caryon Development: Our systems have been running on US cell sites since August 2013. We have placed equipment in challenging environments to evaluate performance over our recent harsh winter, and they have stood up well to changing temperatures, precipitation, and wind velocity. Our testing and engineering site performed flawlessly during this past winter and we

““Comprehensive “Towerhawk” systems are being deployed on towers and sites that are especially critical and/or vulnerable (e.g. Hub Sites) to insure seamless monitoring and communication at all times

continue to make significant inroads into the DAS monitoring, fiber and backhaul arenas with our patented technologies. Caryon has several NDA’s in place with various entities and is developing customised monitoring solutions and roll out programs for those companies. We are also looking at several opportunities globally from towercos seeking help to resolve fuel theft problems at their sites. Caryon is also in discussion with several equipment manufacturers interested in integrating our technology into generators and other cell site equipment, and with backhaul service providers interested in adding monitoring to their bandwidth services. We expect our solutions to be deployed at over 1,000 tower and DAS locations by the end of 2014. TowerXchange: Tell us about the opportunities in DAS.

Lee Cantley, VP Sales & Marketing, Caryon Development: Remote monitoring of DAS represents a significant opportunity, and Caryon’s involvement in DAS may equal or even exceed our involvement in towers. There is an emerging market for mobile users and businesses that demand immediate interactivity while working, shopping, traveling or attending live sports and entertainment events. At sporting events for example, if users can’t IM and watch on-demand coverage at the


event, they won’t buy a ticket! And they can be incredibly hungry data users, with several tethered devices. This is one of the elements driving demand for DAS to boost capacity in venues and stadiums. DAS as a means of filling in coverage gaps and communication between towers in areas with a challenging topography, such as in tunnels and under passes is growing exponentially.

We anticipate launching our DAS monitoring solutions in Q2 2014.

TowerXchange: What is the capital outlay on a per site basis? Lee Cantley, VP Sales & Marketing, Caryon Development: We provide extremely cost effective systems for DAS installations, hub site monitoring and every type of cellular communication site in between. The capital outlay depends on what kind of site we’re working with and the specific monitoring involved. Typical tower installations range from US$5,000 to US$15,000.

TowerXchange: Talk to us about the economics of remote monitoring versus truck rolls. Lee Cantley, VP Sales & Marketing, Caryon Development: Towerhawk systems pay for themselves with just a few “accurately informed” truck rolls and/or monitoring fees to carriers. Rolling trucks to repair tower problems is a hit and miss proposition at best. On many occasions either the wrong vendor has responded to the service call or many have responded and are not needed. Being able to identify the problem before hand insures the right service tech is dispatched and carrying the right equipment and repair parts. This saves both time and money. Towerhawk monitoring systems identify a problem accurately and immediately.

““Remote monitoring of DAS represents a significant opportunity, and Caryon’s involvement in DAS may equal or even exceed our involvement in towers


Towercos can then send well informed and outfitted crews or notify a carrier crew of problems with precision, saving time and money. The Towerhawk “Watchdog Circuit” and back up connection at each Caryon deployed site enables “back door” diagnosis, accessibility and repair even in the event of loss of other tower connectivity.

TowerXchange: How do towercos buy remote monitoring systems (RMS)? What has been your experience of engaging with engineering and with business departments? Lee Cantley, VP Sales & Marketing, Caryon Development: Engineering staffs are the first audience at towercos. They understanding that we are not marketing a traditional and limited function monitoring package where the primary intelligence is back at the NOC and the site systems are essentially passive connections that only transmit when a problem accrues, this is essential to our message. Caryon systems provide data analysis and reporting functions from intelligent data gathering systems located at each site with back-up systems in the event of power outages or communication interruption. These are “Smart Tower” standalone systems that do not require a NOC to enable system operation. Engineers understand the need for backup systems, tower stability, safety issues and key function access at all sites. In addition, Caryon also offers specialised NOC and reporting capability for our entire suite of systems.

Once engineering personnel understand and buy in, we then have a foundation for discussions with business development and corporate planners. The recognition that “Smart Towers” are a valuable asset to a company allows planners to add intelligent monitoring to their systems as they propose new towers or negotiate with carriers for tower installations or additional tower equipment installations and fees. TowerXchange: Please define what you mean by a ‘Smart Tower’. Lee Cantley, VP Sales & Marketing, Caryon Development: Just as there was a transition from basic phones to smart phones, there is a need for a transition from basic towers to smart towers. Currently tenants have a variety of location choices and there is often little to distinguish one tower location from another. In other words other than location the towers are really a commodity and a frame on which to hang antennas. However in today’s business environment it is an advantage when a particular tower or group of towers has intelligent monitoring of the site built in and available. These functions add to tower reliability and make them more attractive to carrier tenants. We believe the benefits to the tower companies in improved performance and reduced maintenance costs coupled with carriers knowing that the site meets their long term needs is a real advantage. We’ve seen statistics stating that In 1985 there

were 900 cell sites in the US. Today there are about 190,000. Each cell tower represents a substantial infrastructure installation in its own right, with potentially millions of dollars worth of active equipment, backup power solutions and fiber backhaul connections. Many of these cell sites are unmanned and in remote locations requiring sites be secure and operating within certain parameters. Site security is moving in

““

towers are really a commodity and a frame on which to hang antennas. However in today’s business environment it is an advantage when a particular tower or group of towers has intelligent monitoring of the site built in and available

the direction already in place in the electrical infrastructure. As one example of a perennial problem we address, copper theft is a US$2 billion problem and the theft of copper wiring and grounding bars from cell sites is a significant element of that statistic. Perhaps even more importantly, removal of copper cabling and grounding bars from a tower site leaves the entire infrastructure at the site vulnerable to lightning strikes and the consequent damage. Theft of fuel from sites is a similar high value problem that we can address with accurate real time fuel level reporting, alarming and site surveillance and recording.

TowerXchange: What role can Smart Towers play in public safety networks? How does government interest in critical hub towers add value to those sites?


Lee Cantley, VP Sales & Marketing, Caryon Development: The US “FirstNet” and other public safety programs will help identify critical tower locations and encourage or require system hardening at those locations. Hardening a site includes many of the functions in the Caryon Towerhawk systems. These towers must function during natural disasters and other critical events. All “Towerhawk” systems are designed to be public safety oriented and FirstNet ready. Imagine a public safety incident that relies on first responder communication capability and/or massive public notification. Take for example an area hit by hurricane. The first responder and tower systems are online before the disaster and can be checked and serviced. Monitoring capabilities verify that systems are functioning and generators ready. During and after the

disaster, the status of all towers and functions are accessible. Re-routing and emergency systems can be effectively deployed and a real time communications assessment is in place. We feel public safety network initiatives on a global basis will create participation opportunities for the owners of critical hub sites in all markets including emerging markets.

TowerXchange: Finally, please sum up how you differentiate your solutions from competitive RMS – why is it so important that your solution is built on an automated server architecture base rather than an IP base? Lee Cantley, VP Sales & Marketing, Caryon Development: We firmly believe that tower monitoring must be intelligent at the tower thereby creating “Smart Towers”. Communication towers are key infrastructure systems on which we rely as citizens and businesses as well as public agencies. There are millions of dollars invested in on-site carrier and tower equipment at all towers that must function seamlessly on a continuing basis. This cannot be done effectively utilising IP based systems that rely on simplified on-site connections without on-site intelligence. This responsibility can only be accomplished by on-site intelligent digital control systems that can be programmed for precise data responsiveness, monitor key functions using on-site measuring programs and transmit intelligent information seamlessly

“ “We feel public safety network initiatives on a global basis will create participation opportunities for the owners of critical hub sites in all markets including emerging markets

How to reduce opex with ZERO capex while benefitting from a top RMS solution…And how to secure remote cell sites

Asher Avissar, CEO, AIO Systems

TowerXchange: Please introduce us to AIO Systems, its offering and footprint.

Asher Avissar, CEO, AIO Systems: AIO Systems was established in 2006 by a core team of professionals with many years’ of work experience in the field, who realised there was no comprehensive RMS solution available in the market.

AIO Systems responded to the need for an integrated system to manage remote, unmanned sites in a cost-effective way, while using technologies which enable monitoring, control, management and automated optimisation.

AIO Systems’ solution has sixteen distinct modes of operation, each suited for specific needs, per site and per client. It interconnects with up to 76 elements of equipment on the site, instantly and effortlessly. AIO’s capability to integrate advanced technologies, our thorough understanding of the client’s needs, as well as the human factor of our outstanding operational workforce, make AIO the leader in its field.

AIO Systems has a proprietary solution for in-building which enables management companies to maximise the value of their managed assets. Our solution is the client’s ERP for comprehensive and efficient management of a variety of assets, in a number of optional business models which could prove relevant to the agreements between the tower management companies and their clients.

To date, AIO is active in Africa, Eastern Europe, Asia

Read this article to learn:< The financial and operational benefits of a cutting edge RMS solution< The key features of a robust security solution for remote sites< AIO’s zero capex service model< The adoption of hybrid energy solutions in Latin America and globally

While the telecom industry moves swiftly towards an era of unmanned, remotely located sites, MNOs and tower companies need partners capable of responding to their growing need for cutting-edge remote management and monitoring solutions. AIO Systems was established to offer telecom companies worldwide next generation solutions to control inaccessible sites, while still delivering excellent RoI.

With over fifteen years’ of international experience in the field, Asher Avissar co-founded AIO Systems with the goal of creating a leading organisation able to offer its clients not only first class products, but also tangible financial benefits.

Keywords: AIO Systems, Interview, Monitoring & Management, Access Control, Energy, Africa, Eastern Europe, Asia, Central America, South America, Hybrid Power, Security, RMS, KPI, RoI, Investment, OPEX, CAPEX, Towercos, MNOs


and Latin America. We started operations in LatAm in 2012 and currently we are in various stage of sales process with seven major clients on that continent.

AIO has installed 48,000 bases worldwide, mostly in the telecom segment but we also have a few patented solutions in other industries such as Oil and Gas, and Smart Grids (Power Utility).

TowerXchange: Who are your main target clients in Latin America?

Asher Avissar, CEO, AIO Systems: Our target market segment in LatAm are the tower management companies to which we offer a comprehensive package with significant added value. The variety of convenient deal schemes we are able to offer, combined with the proven track record worldwide, gives clients the confidence to choose AIO as the preferred solution for such critical tasks. However, AIO also offers great value to MNOs, especially in the fields of security and workforce efficiency.

TowerXchange: Explain to our readers your Total Security Solution and what its key advantages are.

Asher Avissar, CEO, AIO Systems: AIO’s security solution is designed to handle in excess of a thousand remote unmanned sites. AIO’s challenge is to deliver an affordable, yet professional solution, which will fulfil a variety of security needs.

Distant sites often cannot be allocated the same security solutions as manned indoor facilities. Therefore, AIO offers a controller which, in addition

to control and management of infrastructure, delivers access control, video surveillance, alarm and perimeter security as well as triggering active and passive security elements, generating automated alerts to nearby patrols and command centres.

Specifically, the solution consists of three layers of security. The first, external layer identifies intruders near to the site by various security elements such as: external cameras, outdoor motion detectors, beam sensors detecting human presence near the fence surrounding the site. Upon first layer alert, by means of our intelligent access control solution, the system


will identify if an unauthorized person is trying to enter the site. The system will take the following actions if it identifies unauthorized entrance: video recording, turning on outdoor lights, automatic voice communication with the NOC to enable direct communication between the command centre and hostile trespassers on site, automated alert sent to nearby security patrols.

Upon intrusion, the internal second layer security circle will be activated by various elements such as: indoor motion detector, magnetic door sensor, shock sensor, spring sensor and fuel-cover sensor.

AIO System remote site security system

The following security actions will be taken indoors: video recording, pepper spray, high decibel siren, site lights and an urgent alert sent to security patrols. The solution includes visible as well as hidden tamper-proof elements, and is offered in various business models such as long-term service agreements. The price is moderate compared with the benefits to the client.

TowerXchange: Please tell us about AIO Systems’ service model.

Asher Avissar, CEO, AIO Systems: AIO offers its clients attractive deal schemes which enable them to benefit from our technology without any capital or budgetary investment. The benefit is not solely financial; in fact, our clients benefit from AIO’s ongoing commitment in the implementation of the system and its related work processes.

Our teams escort the client, hand-in-hand, for 24-48 months to meet their KPIs, and the client pays only


for the service - not for the equipment. This type of model is very attractive to many of our clients worldwide, and we are planning to launch it in Latin America as well. Additional models can be discussed with each client to suit their specific needs.

TowerXchange: Please tell us about your Hybrid Management solution. How do you ensure ROI within a few months of its deployment?

Asher Avissar, CEO, AIO Systems: AIO’s hybrid solution optimizes energy consumption by automatically choosing between several sources. In order to dramatically reduce power consumption of remote sites, AIO uses alternative sources such as LFP batteries, solar energy, wind turbines, and so on. The system’s algorithms channels maximum energy with minimum cost, and we have achieved results of up to 48% reduction in energy expenses for our clients. With such sharp decrease in expenses, the return on investment for the system can be reached within as little as several months.

TowerXchange: Are hybrid energy solutions in demand in Latin America? Which clients/countries are adopting this model?

Asher Avissar, CEO, AIO Systems: There is a global awareness to carbon footprint and reduction of energy consumption. The environmental issues are gaining momentum, and the costs of energy in operating remote sites are heavy, both in financial terms as well as environmental. In addition, reducing costs of maintenance and prolonging the lifespan of equipment is a major concern in operating large-scale infrastructure. These issues are valid all over the world, as well as in Latin America. Together with the other elements of our solution - AIO delivers its clients significant savings both in the short and in the long term

“ “The system’s algorithms channels maximum energy with minimum cost, and we have achieved results of 48% reduction in energy expenses for our clients

AIO System NOC

Wireless sensors as a deployment acceleratorReduce installation costs, enable remote configuration and eliminate cable theft using azeti’s SONARPLEX technology

In order to reduce risk, companies that operate cell sites equip them with Remote Management Systems (RMS) for monitoring and management of all mobile towers directly from a Network Operations Center (NOC). Using sensors connected to onsite equipment like the HVAC (for example controlling temperature and humidity), generator sets, fuel tanks or the intruder detection system, the NOC obtains mission-critical information on the condition of certain onsite components. This helps to adjust maintenance intervals to an efficient level by reducing unnecessary truck rolls. In case of malfunction, field engineers can be sent to the site concerned immediately in order to prevent complete shutdown or restore functionality quickly. Deployment - cablingThe installation of sensors combined with an RMS requires knowledge, time and, in the case of wired sensors, cabling! These factors can increase the rollout costs tremendously as cabling is a time and resource intensive process. If this critical part of an RMS rollout is not done well, then additional costs and time delays can be expected. The deployment of wireless sensors addresses the aforementioned challenges within the rollout process. By installing wireless sensors that are based on the ZigBee protocol, the rollout time at each site can be cut significantly. In addition, the wireless feature enhances the flexibility of placing a sensor, enabling the optimisation of sensor readings. Even if it was placed at the wrong

Read this article to learn:< The business case for RMS

< How wireless sensors facilitate easier installation while eliminating cable theft

< The low maintenance requirements of azeti’s sensors

< The importance of selecting RMS solutions that are sensor agnostic

Operating a telecom network is a challenging task. Due to the great number of mobile towers that contain a wide variety of onsite equipment, the risk that a single component fails or is removed is always threat. This could lead to the complete shutdown of one or more cell sites or even a complete network failure. The resulting costs associated with SLAs and downtime, repairing damaged equipment, replacing stolen equipment, and the workforce management of field engineers means there is a significant financial risk for operators.

Keywords: Who’s Who, Monitoring & Management, Installation, Opex Reduction, Batteries, Business Case, SLA, Uptime, Site Visits, NOC, RMS, NexSysOne, azeti


location, it is easy to replace the sensor again while not losing time for recabling. This has the potential for significant savings during the rollout process, especially in large deployments with a couple of thousand sites. Deployment - configurationThe configuration of wireless ZigBee sensors is also a fast and easy task. Once connected with the azeti NG M2M Multipurpose Gateway, the sensor is detected automatically with no further need of an adjustment by the field technician at the site. Everything else regarding the setup can be done

remotely from the NOC. This easy installation makes additional help of a consultant or further training for field technicians unnecessary, contributing to a lean cost structure of the rollout process. Cable theftA major issue is cable theft. Since many of the cables are made from copper, there is a clear incentive to steal and sell the wires, since the prices of raw materials rise steadily. Especially in remote areas, it is difficult to protect onsite equipment including the cables. Thieves are aware of the low risk being caught by the police or any security company. If are cables removed, wired sensors fail to work, which could lead to damage the site. The wireless connectivity feature lowers the risk based on the fact that without cables, which can be sold easily on local markets, there is no incentive for cable theft. MaintenanceApart from the equipment to be monitored at the cell site, sensors need occasional maintenance. With azeti’s SONARPLEX technology, the battery life of the wireless sensors can be displayed with the ability to notify the maintenance staff if a battery has to be changed, which demands only a screwdriver and takes two minutes. The notification allows for an efficient planning of maintenance tasks, so that field engineers can take care of the sensors while they are at the site anyway. azeti’s mobile application can facilitate the work


of those engineers by helping them on the spot to detect the sensors, which need maintenance. Sensor agnosticThe azeti NG M2M Multipurpose Gateway supports common industry standard protocols for sensor communication including ZigBee. Operators of cell sites have the full flexibility to choose and deploy any sensors that meets their requirements. In addition, to switch from one sensor vendor to another is a simple process and provides the possibility to deploy the latest generation sensors. ConclusionWireless sensors (ZigBee) improve an RMS roll-out by eliminating the cabling requirement as well as making the configuration process as simple as possible. This leads to a faster deployment and reduced installation costs. Relocating sensors is easy and increases the flexibility of site setup tremendously, whilst the risk of cable theft (and associated downtime) is completely removed. azeti’s SONARPLEX technology for remote monitoring and management of distributed cell sites provides the advantages of wireless sensor connectivity while preserving its capabilities of connecting to wired sensors and legacy hardware. The obtained information of every sensor at the site can be processed locally by SONARPLEX running on the azeti NG M2M Multipurpose Gateway. This enables to forward only useful information to the NOC, where the data of the entire network is consolidated using the NeXsysOne SiteOne NOC software

““

Wireless sensors (ZigBee) improve an RMS roll-out by eliminating the cabling requirement as well as making the configuration process as simple as possible. This leads to a faster deployment and reduced installation costs. Relocating sensors is easy and increases the flexibility of site setup tremendously, whilst the risk of cable theft (and associated downtime) is completely removed

Site Management - Made Intelligent

you haveAs

seen itbefore

never

Remote Site Management

azeti Networks enhances the features of

SiteOne by enabling the support of wireless

sensors. This facilitates the roll-out process

by saving time to install sensors while also

making cables unnecessary.


Special Feature:

Henrik Kamstrup of Intelli Towers lifts the lid on the structural due diligence that goes into evaluating tower portfolios, and shares some trade secrets about how to find additional wind load capacity in existing towers without having to invest in structural enhancements. Also in this edition, Arlin Bleclic, President of CLEARGOL Towers Brazil puts forward the controversial opinion that some of Brazil’s towers might be unsuitable for upgrade to accommodate multiple tenants. Do you agree? TowerXchange also chats with Intelli Site Solutions, who operate a portfolio of rooftops, billboards and towers in Mexico, in which we learn about the volume of demand for new towers, and for IBS, in the coveted Mexican market. Finally, we also introduce TowerXchange readers to global tower provider Orion.

Rooftops, masts and towers, part 4

Don’t miss:167 Intelli Towers explain how to minimise the total cost of evaluating and strengthening existing towers171 CLEARGOL: Can Brazilian towers accommodate multiple tenants?175 Intelli Site Solutions provide a neutral host to accelerate time to market for Mexican carriers179 Orion: From boutique manufacturer to global tower provider

How to minimise the total cost of evaluating and strengthening existing towersTaking advantage of the latest research and norms will minimise upgrade costs


TowerXchange: What is your experience on various tower assessments in emerging markets? Henrik Kamstrup, CEO, Intelli Towers: A site assessment must always be an objective exercise in order to provide the correct judgement of the tower. If a tower-supplier and/or executing subcontractor are hired for the assignment, the focus can be of various characters and not the optimal solution for the towerco since the core expertise for these companies is the onsite build and not the static analyses. Also it is of importance that the tower assessment is done in a proper way as the consequences can be huge. We have seen examples where pictures are linked to a report about the site, but the pictures are from another site - and pictures are important evidence and part of the basic information for the static analysis. In all cases, it is important that what is measured and pictured on site, is the same information provided in the static analysis. In our system, we have a feature that automatically uploads the pictures taken at the exact location using its coordinates, which is why configuration and safety issues are eliminated. We have seen several assessment reports looking very nice and using to standard reports and tools, but looking into the content and details it’s worth nothing due to the data input being wrong or tools are not used correctly. But from a layman’s point of view it looks impressive and that is a disaster as the towerco should be able to rely on these assessments and plan their investments accordingly.

TowerXchange always enjoys a dialogue with Henrik Kamstrup and his team at Intelli Towers, a unique analysis and design engineering company that focuses on tower values, designs, lifetime and capacity upgrades. Over the years, Henrik has experienced that towerco’s often don’t get a correct impression of their tower assets due to low quality assessments reports and fake pictures.

Read this article to learn:< How you might be cheated by a very nice-looking asset register

< That nearly all towers can be utilised more

< How to increase tower capacity without strengthening

< The key-points you should focus on when evaluating a tower portfolio

Keywords: How to Guide, Strategic Consultancy, Valuation, Due Diligence, Capacity Enhancements, Risk, Loading, Health & Safety, Foundations, Data Room, Build-to-Suit, Wind, Site Visits, Site Surveys, Sale & Leaseback, Masts & Towers, Asset Register, Africa, Intelli Towers

Henrik Kamstrup, CEO, Intelli Towers

TowerXchange: Tell us what is of importance for the towercos, whether they are buying, or just maintaining towers? Henrik Kamstrup, CEO, Intelli Towers: It is of high importance that the selected executing parties work in an objective way with one focus only: to verify that the existing tower and foundation has the necessary bearing capacity/strength without any need for reinforcements or tower swaps. Further, it is of high importance to verify the remaining life time of the total structure (including the foundation) and that the tower is ‘safe’. Important structural items to consider when buying: < Is existing documentation available and is it liable?

< Does the existing documentation include: < Tower geometry < Profile and bolt dimensions < Steel quality/strength < Loading and levelling < Production place and date of the tower < Date of erection on site < Pictures of assembly < Pictures of foundation depth and reinforcement before concrete casting < Pictures of final foundation before backfill (if used) < Geotechnical report TowerXchange: How can Intelli Towers increase tower capacity without physical and costly strengthening of the towers?


Henrik Kamstrup, CEO, Intelli Towers: Todays research has changed the safety philosophy so we can reduce the uncertainties around some parameters, whereas “in the old days” we had to be “on the safe side”. Using the latest norms and proven methods of optimised calculated effective wind areas of antennas, cables, MW’s et cetera, and further using the actual wind speed (and not an

overall) for the exact physical site location, provides great savings. This is not just a theoretical exercise, as it will mature into significant savings on upgrade by using state of the art design research, norms and experience.

TowerXchange: Give us some examples of where strengthening is most effective?

Disorganised installation: significant tower capacity can be gained simply by organising a random installed cable spread in order to minimise its wind surface and optimise its placement in the tower with regards to the actual wind direction. With practical on site optimisation strategies, together with usage of all allowed theoretical aspects in the Norms, the capacity gain in the towers can be significant for a minimum of cost


Henrik Kamstrup, CEO, Intelli Towers: In the cases where strengthening is necessary, the greatest effect you will receive usually comes from the most simply designed towers, i.e. towers with as few members as possible. Having multi-profile towers, such as transmission-towers with a multiple secondary bracings, means the effect of reinforcement is

limited compared to simple V-lattice towers.

TowerXchange: What do you think should be the minimum sample size for a site assessment in a due diligence phase? Henrik Kamstrup, CEO, Intelli Towers: In our

experience, 10-20% would be sufficient but the final number depends on the total amount of towers with a globally chosen spread across the country or area of the tower placements. It is important to confirm whether there is an overload of the same design of towers within the chosen 10-20% or not. If not, the case probably requires expert support. TowerXchange: We recently featured an interview in which it was suggested that a number of towers sold in Brazil may not be suitable for upgrade and co-location – what’s your view on that? Henrik Kamstrup, CEO, Intelli Towers: We have encountered a very few towers which need to be dismantled and replaced. We’ve designed rectification projects for old corroded towers erected in the 1970’s and 80’s and even then you can often extend both the tower’s lifetime and capacity. So I would be surprised if there were that many towers in Brazil that could not be upgraded for co-location. And as said before: It’s now possible to take advantage of the latest research and usage of the latest norms. TowerXchange: Finally, please sum up what you think should be the priorities when evaluating a portfolio of telecom towers. Henrik Kamstrup, CEO, Intelli Towers: There are several key questions I believe buyers and investors in towers should consider:1. How trustworthy is the seller’s asset register?2. Do you have the correct estimated value of the

Rusty towers: rusty towers do still have several years of remaining lifetime which can be determined by Intelli Towers in order to calculate the value of the tower. However, the strength will decrease over the years, which is why Intelli Towers provide the capacity programme in order to ensure that the loading never becomes higher than the actual current limit

assets and on what basis?3. Is there sufficient bearing tower and foundation capacity available for the placement of future tenants?4. Do you need to build clauses into the deal to protect yourself against substantial deviations between what is reported and what is actually on any sites you do not visit during the due diligence process?5. Do you have to invest substantial capital to strengthen the towers you are considering acquiring?6. Once you’ve acquired the towers, how can you add more bearing capacity at the lowest possible cost?7. How can you evaluate and update the existing concrete, non-documented foundations at the lowest possible cost?8. How do you extend the lifetime of existing structures, for example corroded towers along the coastline?9. When you participate in a build-to-suit program for the future network expansions, which type of towers and foundations (design, capacity, life time and reusable foundations) do you need to install?10. Do you know how to purchase and install the markets most competitive towers and foundations? The most important consideration isn’t the cost of the static analysis, the most important thing is total cost of the project and the time line. If you accept a minor extra spend on static analyses and thereby take advantage of our specialised software and general expert experience, we can help the towerco’s save significantly on:

1. The upgrade costs by reducing the capital deployed per tower e.g. from US$20,000 to US$5,000 or less. As mentioned we have experienced several cases where you can strengthen a tower for free (i.e. the cost of the static analysis and no other cost) by using the

latest norms and standards correctly, and by simply taking into account the correct location of the actual tower and the load2. The built-to-suit cost of towers and foundations3. Losses in asset value due to limited lifetime of purchased structures


Dangerous cast-in bolts and nuts: existing cast-in bolts can be in a dangerous condition and are often subject to major problems and high costs if not rectified in time. It can be difficult to see but is crucial to the tower value when buying. Intelli Towers has invented an effective rectification program for corrosion challenges

Can Brazilian towers accommodate multiple tenants?Why US telecoms integrator CLEARGOL is exploring opportunities in Brazil

Arlin Bleclic, President, CLEARGOL Towers Brazil

TowerXchange: Please tell us about CLEARGOL, its activities and footprint.

Arlin Bleclic, President, CLEARGOL Towers Brazil: Cleargol Technologies is a system integrator founded in North America in 2008. Its footprint is mainly in the mid-atlantic region comprising DC, Maryland and Virginia among other states. We work with wireless carriers and turnkey vendors to develop and build telecom sites and, additionally, we have expertise in specific areas such as VoIP and other internet-based activities. However, our main focus is on the tower construction industry. CLEARGOL employs forty-five people in North America.

We have recently decided to enter the Brazilian market. This business decision came in light of the continuous expansion of its national telecom industry. In fact, we believe that to date, there are more growth opportunities in Brazil than in North America.

In Brazil, we will focus our attention on the tower construction and maintenance business. However, we are also considering the acquisition of a small tower portfolio. Currently, we have a team of seven people active in Brazil and this is likely to increase as we start developing projects. Our goal is to start working in the field by Q3 of this year.

We are currently in talks with three Brazilian system integrators/construction companies that we are considering acquiring. These acquisitions would give us an opportunity to take over a fairly large portfolio of projects and clients. These companies have

Read this article to learn:< How a niche U.S. system integrator is transferring its knowledge to Brazil

< Main differences between the Brazilian and North American telecom tower industry

< The structural inadequacy of many Brazilian towers to host multiple tenants

< How a web-based system supported by processes can boost a company’s credibility

Arlin Bleclic is the President of CLEARGOL Towers Brazil, a subsidiary of CLEARGOL Technologies Inc. a U.S. based system integrator. Thanks to his entrepreneurship and personal ties to Brazil, he has recently embarked on a journey to enable his company’s expertise and technical abilities to serve the ever-growing Brazilian telecom tower industry. In this exclusive interview, Arlin shares with us his views on the tower construction business in Brazil, key differences between the U.S. and Brazilian tower industry and expectations for his new venture.

Keywords: CLEARGOL Technologies, CLEARGOL Towers Brazil, Interview, Brazil, South America, North America, USA, Passive Equipment, System Integrator, Towers, Construction, Installation, Acquisition, Co-locations, Capacity Enhancements, Market Entry, Build-to-Suit, Business Case, Retrofitting, Site Surveys, Skilled Workforces, American Tower, SBA Communications


the right contracts in place with key stakeholders in Brazilian towers, but they lack the funds and experience to take them to the next level. This is what CLEARGOL will focus on.

TowerXchange: Who are your main clients and in which countries do you operate?

Arlin Bleclic, President, CLEARGOL Towers Brazil: In North America, we work with major carriers and turnkey vendors.

In Brazil, we currently have one member of staff developing our business by talking to all major tower companies such as American Tower and SBA Communications. At this stage, we are going through the qualification process with them in order to be able to acquire their projects.

TowerXchange: Can you give us a comparison between the North American and the Brazilian telecom tower industries?

Arlin Bleclic, President, CLEARGOL Towers Brazil: First of all, most of the tower related work in the States comes from large system integrators whereas this isn’t yet the case in Brazil. I would say Brazil is an open landscape still being shaped. This is the main reason we decided to create an opportunity to establish our local presence, and focus on our core skill-set of building and managing sites.

Health and safety standards and working conditions are still a bit more challenging in Brazil than in the U.S.


In Brazil, demand for towers is greater than the supply. There is a huge need for experienced contractors able to meet the growing demand to build new towers. In fact, as of now, Brazilian towercos are still more focused on the leasing aspect of the business rather than on build-to-suit (BTS) projects. CLEARGOL wants to fill that gap and become the leading contractor dealing with most of the tower construction work in Brazil.

In the US just like in Brazil, there are several construction companies trying to compete against each other. I believe that a lot of them lack the knowledge of technology and active equipment-related aspects of the network, and are only focused on the construction side of projects. Nowadays, construction and technical skills need to go side by side when developing projects for the telecom industry.

Another challenge in Brazil is that lots of contractors can be very skilled when it comes to building sites, but they don’t know how to handle the related paperwork. I am referring to site packages, site pictures and other necessary documents that some companies just don’t seem to know how to manage. CLEARGOL developed its own system and procedures which greatly simplify every aspect related to paperwork and bureaucracy.

In Brazil, we are bringing systems and processes which took us years to establish, and we believe that the telecom industry will benefit from the presence of an experienced integrator.

TowerXchange: Are new towers in Brazil generally being designed to host multiple tenants?

Arlin Bleclic, President, CLEARGOL Towers Brazil: There are hundreds of towers in Brazil being transferred to towercos which aren’t suited to host multiple tenants. These towers were built following old engineering principles and they simply cannot handle the wind load of more than one tenant. This is an important issue for towercos looking at monetizing their portfolio acquisitions. In the U.S. there are better managed central databases to store information related to sites, and most towers are suitable for the co-location of multiple carriers’ equipment.

To my knowledge most new towers in Brazil are being built to host multiple tenants.

With regards to upgrading existing towers, there

“ “There are hundreds of towers in Brazil being transferred to towercos which aren’t suited to host multiple tenants. These towers were built following old engineering principles and they simply cannot handle the wind load of more than one tenant


isn’t always the right business case to invest, so some towers are literally being rebuilt from scratch. Ultimately, this is a business decision tower companies need to make as they discover these issues, taking into account the related engineering cost and the potential revenue each specific tower can generate.

TowerXchange: What percentage of your work

comes from carriers vs towercos?

Arlin Bleclic, President, CLEARGOL Towers Brazil: In the U.S., it really depends on each specific project and I expect it to be the same in Brazil. Ideally, we would like to work directly with carriers but when sites are owned by towercos, it depends on the structure of their contract. In fact, as carriers and towercos split responsibilities with regards to site

management and maintenance, we are likely to work with both depending on the nature of the project.

TowerXchange: Which states are you focusing on in Brazil?

Arlin Bleclic, President, CLEARGOL Towers Brazil: For now, we are focusing our attention on São Paulo, Rio de Janeiro, Paraná and Minas Gerais.

On one hand, this is due to the fact that the contractors we are looking at acquiring are based in these three states. Moreover, the states are host to major metropolitan areas with several opportunities for companies like ours.

This is the same approach we have followed in the U.S., focusing on one specific area rather than covering the whole country and then grow our business from there.

TowerXchange: What is CLEARFLOW? And how does it optimise the flow of information between the different stakeholders in the passive infrastructure ecosystem?

Arlin Bleclic, President, CLEARGOL Towers Brazil: CLEARFLOW is a web-based system we created to store and update information related to the lifecycle of each project we develop. A system without processes is nothing and CLEARFLOW is supported by a strong set of procedures we have set up over the years to streamline our workflow.

Thanks to CLEARFLOW and our internal expertise,

A screenshot of CLEARFLOW

we are able to track every single aspect related to a project, including site acquisition, health and safety concerns, zoning issues, the status of each license, stock of material, contractors management, et cetera. It’s a very solid web-based system which supports an experienced and organized team.

With CLEARFLOW we are able to generate daily reports on the progress of a specific project, load pictures of new sites as they are being constructed, send these details to the client in real time, produce final reports at the end of the project as required by carriers and, in general, communicate to our clients and contractors important information without wasting any time.

TowerXchange: Finally, please sum up how you would differentiate CLEARGOL from other TI providers?

Arlin Bleclic, President, CLEARGOL Towers Brazil: CLEARGOL is becoming a stable partner for telecom companies looking at developing new projects in Brazil. Our past performance in the U.S. serves as a great reference to fully understand the quality and commitment we put in every project.

I also believe that CLEARFLOW sets up apart from the competition. Having a powerful in-house tool combined with skilled personnel with years of experience in North America is a definitive plus

We build and develop sites. And along with it, we strive to keep track of every aspect of our work, update our clients regularly and keep innovating


< Access to the “Internet of People” in emerging market towers – a trust web of over 5,500 decision makers in passive infrastructure

< Independent analysis and commentaries on the prospects for tower transactions in selected countries

< The latest industry emerging market tower industry news – BEFORE it’s published in the TowerXchange Journal, accessible 24/7 from desktop, tablet or mobile

< A comprehensive archive of TowerXchange’s interviews and analyses, searchable by topic, country, company or grouped by category (e.g. interviews or how to guides)

< The latest news and registration information about TowerXchange’s Meetups.

Visit the TowerXchange.com website

Tower Xchange

Rooftops, billboards and IBS offer accelerated time to market for Mexican carriersIntelli Site Solutions leverages relationships with local real estate developers to offer a database of 4,000 potential sites

Felipe de Antuñano, CEO, Intelli Site Solutions

TowerXchange: Please introduce Intelli Site Solutions - what role do you play in the telecoms infrastructure ecosystem? Felipe de Antuñano, CEO, Intelli Site Solutions: We are a ‘neutral host’, a provider of telecoms infrastructure for outdoor and indoor coverage. Intelli Site Solutions is a young, local company, well connected with the major commercial developers and real estate players in Mexico, which has enabled us to create some interesting agreements for outdoor and indoor installations. We have a database of over 4,000 locations, primarily rooftops and billboards, plus a few mini-towers and monopoles and approximately 200 self-supported & guyed towers with an average height of 60m or 200ft. These can be developed to help carriers improve capacity, particularly in dense urban areas and in exclusive developments where it’s difficult for carriers to extend their coverage. We undertake site acquisition and complete the turnkey project. We own our infrastructure, and lease space on those structures so carriers can add their equipment and quickly get on air. TowerXchange: What are the advantages of rooftops and billboards over macro sites? Felipe de Antuñano, CEO, Intelli Site Solutions: Zoning and permitting towers is complicated - we prefer to ‘think outside the box’. Using rooftops and billboards gives us a huge advantage in terms

Read this article to learn:< A snapshot of an alternate breed of infraco: leasing rooftops and billboards in dense urban areas

< The benefits of rooftops and billboards in terms of cost and time to market

< The progress of LTE deployment in Mexico

< Demand for 600-1,000 new sites per carrier per year in Mexico

< The market for IBS in Mexico

Network planning isn’t just about towers. Increasing data consumption is driving a requirement for additional capacity, particularly in dense urban areas such as Mexico City and Monterrey - and LTE will increase the need for cell site densification. Rooftops, billboards, mini-towers and IBS will play an increasingly important role in radio network planning - not as a substitute for macro towers, but as an invaluable supplement. Intelli Site Solutions offer new ideas for quick and low cost infrastructure deployments.

Keywords: Who’s Who, Steelwork, Passive Equipment, 4G, Network Rollout, Densification, Permits, Retrofitting, Rooftop, IBS, Americas (North), Mexico, Telcel, Telefónica, Iusacell, Nextel, Intelli Site Solutions


of time to market compared to macro sites, which are subject to long processes of site acquisition. We can also leverage our relationships and agreements with real estate developers to offer sites at very competitive rates. TowerXchange: Who are your target clients? Felipe de Antuñano, CEO, Intelli Site Solutions: Our clients are Mexico’s four major carriers. We believe there are other potential clients including Internet and wireless broadband service providers. We are also closely watching the development of the public wholesale network announced by

the Mexican government. They’re planning on developing a wholesale LTE network, using the 700MHz band, enabling regional service providers to offer LTE services. It’s an ambitious plan, and the scale and timeframe of the project are not yet clear.

TowerXchange: How are Intelli Site Solutions’ sites marketed to potential clients?


Felipe de Antuñano, CEO, Intelli Site Solutions: Our database of potential locations is mapped and made available to our clients so they can analyze it against their radio network plans, and identify points where they need help with coverage or capacity.

Once a site has been selected, we conduct the site surveys and plan civil works. Intelli Site Solutions

“ “the Mexican government (are) planning on developing a wholesale LTE network, using the 700MHz band, enabling regional service providers to offer LTE services


has our own in-house engineering and design team, but we use third party contractors for civil works and maintenance.

TowerXchange: What is driving demand for supplementary sites?

Felipe de Antuñano, CEO, Intelli Site Solutions: Increasing data consumption means carriers

need more capacity, particularly in dense urban areas. Mexico City is our most active and dynamic market, where network planner preferences are shifting towards quick deployments and rooftops, especially for LTE which requires cell site densification. Monterrey is also key; another densely populated city where LTE is already being rolled out. 60-70% of the activity is in those big two cities, but there’s a lot going on in Guadalajara and

“ “

Mexico City is our most active and dynamic market, where network planner preferences are shifting towards quick deployments and rooftops, especially for LTE which requires cell site densification

other major cities. Most of the smaller towns and main roads are covered, and don’t have the same need for cell site densification given the relatively low traffic. It is also important to mention that there are still large areas of the country that are lacking coverage particularly rural areas.

TowerXchange: How would you characterize the status of LTE deployment in Mexico? Felipe de Antuñano, CEO, Intelli Site Solutions: Telcel has a large LTE rollout, with substantial

Intelli Site Solutions coverage map

““

Intelli Site Solutions uses infrastructure innovations to offer coverage where carriers need it - not just typical macro tower sites. This enables us to accelerate time to market and offer low cost solutions to our clients. We have a database of 4,000 potential sites ready to have infrastructure deployed

coverage in the major cities and currently entering new markets. Telefónica is rolling out this year (2014), and are currently moving from trial to rollout. Nextel are in a similar position. One of the barriers to LTE is the planning of the network because the spectrum availability is limited. Smartphone penetration in Mexico is also relatively low compared to many countries, and purchasing power is limited in smaller towns and rural areas.

TowerXchange: Given that Telcel owns the largest network in Mexico, and all the other carriers have sold towers, does that affect each carriers appetite for co-locations on towers and rooftops? What’s the demand for new sites in Mexico? Felipe de Antuñano, CEO, Intelli Site Solutions: You’re right that all the carriers except Telcel have sold most of their towers, mainly to American Tower. Telcel still builds their own sites, and sometimes they use providers like us for specific requirements. The other carriers are mainly focused on co-locations or build-to-suit.

Demand for new sites is incredible in Mexico. The pending reforms might have slowed demand slightly in Q1 2014, but appetite for investment continues - each carrier is adding around 600-1000 new sites per year. For our main two carrier clients, growth is driven more by capacity than coverage.

TowerXchange: What role does DAS and other IBS play in network planning in Mexico?

Felipe de Antuñano, CEO, Intelli Site Solutions: There is huge demand for in building coverage. While new real estate projects have IBS implemented within architectural designs, there is a substantial retrofit market, mostly in large office buildings, shopping malls, airports, arenas, stadiums and other venues that gather crowds where carriers need coverage and capacity. IBS

are deployed at pinpoint locations according to demand. It’s a growing market with positive outlook, but some carriers prioritize IBS more than others. TowerXchange: Does Intelli Site Solutions offer services beyond Mexico, or have any plans to do so in the future? Felipe de Antuñano, CEO, Intelli Site Solutions: Of course we are interested to expand, but we believe there is plenty of work to be done in Mexico. Once growth slows in Mexico, we’ll look for other markets. But for the moment, our priority is to consolidate and fulfill the full potential of the indoor and outdoor market in Mexico. TowerXchange: Finally, please sum up how you would differentiate Intelli Site Solutions from competitive telecoms infrastructure companies. Felipe de Antuñano, CEO, Intelli Site Solutions: We are a local company - well connected, with solid agreements with real estate developers and real estate companies. Intelli Site Solutions uses infrastructure innovations to offer coverage where carriers need it - not just typical macro tower sites. This enables us to accelerate time to market and offer low cost solutions to our clients. We have a database of 4,000 potential sites ready to have infrastructure deployed


From boutique manufacturerto global tower providerHow a local tower provider started serving the global telecom industry

Andrei Pop, Commercial Manager, Orion

TowerXchange: Where does ORION fit in the telecom tower ecosystem?

Andrei Pop, Commercial Manager, Orion: First of all, I want to salute all the participants in the TowerXchange meeting and TowerXchange readers, and congratulate for the great work you and your team do in the field of telecom. Orion has been working in the field of telecommunication since its creation back in 1992, when the main activity was integration of TV networks. Afterwards, Orion started acting as a turnkey telecom integrator in Romania and the Moldavian Republic for customers such as Orange and Cosmote.

Nowadays, our main activity is the manufacturing of steel structures for the telecom industry, all the way from towers to small parts. This switch in activities became a necessity for us when we got involved in GSM network development.

To date, we are leaders in tower supply in Romania and over the past few years, we became the supplier of choice for Orange and Vodafone in Europe, Africa and Latin America.

TowerXchange: What is your telecom tower manufacturing capacity and can you tell us about some example clients?

Andrei Pop, Commercial Manager, Orion: Orion has a boutique factory with a manufacturing capacity of 15.000 tons per year for angular towers and around 7.000 tons per year for tubular towers.

Read this article to learn:< The history behind Orion global expansion, its footprint and operations< The cost of service and other key factors when selecting a tower provider< Which towers are best suited for upgrading capacity for multiple tenants

Orion started serving the Romanian telecom industry in 1992, and over the years have expanded its operations into Europe, Africa and Latin America. In this interview, Andrei Pop, Commercial Manager for the company, shares his views on what it takes to become a global tower provider at a time of constant changes, increased tower demand and technological challenges.

Keywords: Orion, Interview, Romania, Moldavian Republic, Orange, Cosmote, Vodafone, Europe, Africa, Latin America, Steelwork, Passive Equipment, Construction, Installation, Logistics, Procurement, Masts & Towers, Tower Manufacturer, Mobile Network Operators, System Integrator


Our clients are mainly turnkey integrators and we work as an accredited supplier of steel works for Orange and Vodafone. Additionally we are involved in several governmental projects nationwide.

Moreover, we count on several reliable partners which having been cooperating with us since we launched our manufacturing facility.

TowerXchange: I understand ORION has towers installed in the Europe, Africa and LatAm - how

do client requirements differ as you move from region to region?

Andrei Pop, Commercial Manager, Orion: Yes, we do serve several European, African, Middle Eastern and Central American countries.

Every telecom integrator operates differently and each company analyses all the required factors before developing a site using their own guidelines and criteria. It would definitely help to have a standardised production process in place


however, we are very flexible and able to satisfy each customer requirement to achieve the optimal result.

TowerXchange: Talk us through the manufacture, import and inland logistics processes that take a tower from your factory to a client’s site - where does the delivery cost and delivery time come from?

Andrei Pop, Commercial Manager, Orion: Thanks to a well established, long standing relationship with our suppliers, we are able to acquire raw materials in a swift and timely manner through our logistic department, which allows us to launch tower production in a relatively short time.

For our existing, recurring clients, we keep raw materials in stock based on an estimated forecast which allows us to start production in virtually no time. For urgent cases, Orion is able to deliver 500 tons of telecom towers completed with accessories in fifteen days - which is a pretty quick turnaround.If our clients request it, we can handle the transportation to sites but nowadays, most of our clients have their own centralised procurement departments which handle the logistic phase to ensure control over operations and in order to save on shipments.

TowerXchange: Excuse the simplistic question, but what are the tradeoffs when selecting a steelwork partner - why are some towers cheaper than others, what are the implications for lifetime and Total Cost of Ownership (TCO)?

Orion’s facilities in Romania


Andrei Pop, Commercial Manager, Orion: The cost of service is definitely a key factor but other issues come into play such as the geographic position of the supplier, its flexibility and speed of service and definitely, the added value in terms of its competence, expertise and level of communication offered. Our company has years of experience and high standard of quality which definitely help us when it comes to acquiring new customers.

With regards to the price per tower, the key component affecting the quotation is the raw material along with the required labour and technology implemented.

TowerXchange: What is the tradeoff between tailor made solutions to meet the specific requirements of each cell site versus installing standard, and therefore lower cost, towers?

Andrei Pop, Commercial Manager, Orion: Standardised solutions represent the optimal solution for both the manufacturer and the integrator. By following the same production guidelines for towers with different heights, the manufacturer is able to decrease the cost of production and, as a consequence, the final cost of the tower.

TowerXchange: What types of tower structures are suitable for upgrading capacity for multiple tenants, and which aren’t?

Andrei Pop, Commercial Manager, Orion: Towers based on seamless pipes projects have the highest

antenna surface, therefore they are the most suitable option for multiple tenants from the first erection. Angular towers are strong enough for more than one operator as well. Moreover, they are cheaper and lighter than tubular ones.

TowerXchange: Finally, please sum up how you would differentiate ORION from other tower manufacturers.

Andrei Pop, Commercial Manager, Orion: Orion is a small company being handled like a family business and our core values are based on quality, flexibility and reliability. Having this in our DNA, we are focused on establishing transparent and long term partnerships and as I’ve personally stated in our last advertising campaign we do not work as a steel structure supplier, we are your steel production department

“ “Towers based on seamless pipes projects have the highest antenna surface, therefore they are the most suitable option for multiple tenants from the first erection

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A fight has broken out within the pages of TowerXchange – a face-off between widely used lead-acid batteries supplied by Trojan Batteries, and a vanadium redox energy storage solution offered by Imergy, whose electrolyte lease model could enable flow battery technology to breakthrough into the volume market. We’d love to advertise another battle between wind, solar, fuel cells and optimised grid power, but as we know these energy sources are complimentary in many scenarios. Nonetheless… in the wind corner –Bergey Windpower, whose solutions are powering over 1,000 cell sites. In the fuel cell corner – Ballard, who make the case for fuel cells at rooftop and off grid cell sites. In the solar corner, Power-One, who want to retrofit cell sites with PV arrays to slash diesel consumption. Representing the case optimise use of grid power, TSi Power propose an AVR and surge protection solution that critically increases the AC input window from +/- 20% to +/- 30%, sufficient to ride out most voltage variances even in countries like Nigeria.

TowerPower - reducing energy opex for emerging market telecom tower operators, part seven

Read all about it!

183 Bergey Windpower ask “When does wind power make sense?”

190 Ballard make the case for LatAm towercos to get more involved

in power

195 Power-One explain how hbrid energy can reduce or eliminate

diesel consumption

199 TSI Power explain how to make grid power more usable

204 Imergy offer a unique leasing option to drive vanadium redox

into the volume market

209 Trojan Battery as “Are you choosing the right batteries?


When does wind power makes sense?Bergey’s high quality wind turbines have paid for themselves many times over

Mike Bergey, President, Bergey Windpower

TowerXchange: Please introduce Bergey Windpower and in particular your experiences in telecom energy.

Mike Bergey, President, Bergey Windpower: We were under-capitalised when we launched back in 1977 - I remember my father asked me what was the smallest amount I could live on - I wish I hadn’t answered that question so honestly! After three years of product development, we shipped our first 1 kW turbine in 1980, our first for telecom in 1981, our first 10 kW turbine for telecom in 1984, and have been active in telecom energy ever since.

Bergey Windpower is now an established and stable supplier. Of Bergey’s nine to ten thousand installations worldwide, around a third are telecom. The telecom industry represents the largest customer base for our 1 kW units, for the 10 kW units the grid-tie segment is much larger.

TowerXchange: The first question our readers always ask is ‘how proven is the solution in the field’, so please tell us about your deployment experiences, particularly in Africa, Latin America and Asia.

Mike Bergey, President, Bergey Windpower: The use of our wind turbines in telecom is concentrated in emerging markets because we’re a well-matched solution for off-grid sites where, alone or alongside solar, wind power is able to save a lot of opex compared with diesel. Bergey Windpower turbines have been installed in over 50 countries.

Read this article to learn:< How much wind resource is needed to power a cell site with a 1.5-4.5 kW load?

< How to easily find out the wind resource available at a given location

< Experiences from the successful use of Bergey wind turbines at 55 Safaricom sites

< Robust wind turbines lasting 30+ years versus low cost solutions that might last 2 years

< Up front capex versus lease models

In the 1970’s, Karl Bergey, an aircraft designer-turned Professor of Aeronautical Engineering at the University of Oklahoma, was conducting feasibility studies looking at wind power. When the oil embargo hit the US, Karl was tagged as an alternate energy expert. Meanwhile, son Mike Bergey was studying Mechanical Engineering and leading a team that won the wind energy portion of an international design competition. When Mike graduated in 1977, father and son launched Bergey Windpower, now the world’s leading manufacturer of small wind turbines, which are in use at over a thousand cell sites worldwide.

Keywords: Who’s Who, How to Guide, Energy, Opex Reduction, Loading, Off-Grid, ROI, Hybrid Power, Renewables, Solar, Wind, Retrofitting, DG Runtime, Community Power, Africa, Americas (South), Americas (North), Asia, Kenya, China, China Mobile, Safaricom, Bergey Windpower, Orange, Telkom Kenya


The highest concentration of our telecom sites are in Asia. For 16 years we had an operation in China, where we built all our 1 kW turbines. Our largest customer was China Mobile, and there are around 300-400 cell sites with our turbines in China, where it is common practice to use multiple 1 kW solutions, rather than larger turbines, as there is less concern about land usage. Smart Communications in The Philippines also uses 1 kW turbines at around 100 remote sites, for which they won the first GSMA Green Power for Mobile award in 2008.

Bergey Windpower’s dealer in Nairobi, WinAfrique Technologies, were the first to introduce small wind for remote cell sites in Africa. In 2007-8 Safaricom undertook a three site pilot leading to the installation of Bergey’s 10 kW turbines at 55 sites in Kenya. Wind was the primary power source at each of those sites, leading to a DG runtime saving of better than 80%. WinAfrique also installed Bergey 7.5 kW turbines for Orange in Kenya and documented similar KPI’s at six trial sites (see Figure 1). In Africa we also have 7.5 kW turbines installed in South Africa, Angola and Tanzania.


TowerXchange: How much wind is enough wind to provide power to a cell site?

Mike Bergey, President, Bergey Windpower: As a rule of thumb for site selection, we recommend wind power at sites with average wind speeds of 5.5-6mp/s (13mph) at a height in the 80-100ft range, assuming the turbines will be mounted on a separate tower.

If we can put wind turbine on top of an existing 40m telecom tower, we can be competitive with a lower average wind speed. However, while our

““

we recommend wind power at sites with average wind speeds of 5.5-6mp/s (13mph) at a height in the 80-100ft range, assuming the turbines will be mounted on a separate tower. If we can put wind turbine on top of an existing 40m telecom tower, we can be competitive with a lower average wind speed

Figure 1: Orange Telkom Kenya wind solar hybrid trial at six sites yielded KShs 10,736,719, or 90.5% diesel opex savings

Site

Mt Kulal 24

24

24 1.07 6,750 360.83 1,552,500 82,991

24 3.05 6,750 1,030.78 1,620,000 247,387

24 5.05 6,750 1,704.06 1,802,250 454,984

24 0.91 6,750 306.82 2,598,750 118,125

0.04

2.61

6,750

6,750

12.77

879.30

2,639,250 4,995

1,647,000 214,549

Before AfterAfter Before

Total

Before After

11,859,750 1,123,031

Pelekech

Kakuma

Nakobothan

Lokichoggio

Maparasha

DG runtime hrs per day Opex per day (KShs) Diesel opex (KShs)

< Trial ran between 230 and 391 days < “Before” sites ran 2 DEG consuming 2.5L/hr at KShs112.50/L at site < “After” sites ran wind solar hybrid Source: WinAfrique Technologies

turbines create no antenna interference issues or deflection problems for microwave backhaul, we find that very few existing telecom towers have the structural headroom to hold a wind turbine large enough to significantly lower the opex. One of our R&D objectives is to develop the technology to control the thrust load, enabling us to retrofit wind power turbines on more telecom towers.

TowerXchange: It’s a common misconception that wind is an oversized energy solution for cell sites given their typical load. What’s the range of load your turbines can support? And what’s the turbine size to output ratio? Mike Bergey, President, Bergey Windpower: If you’re talking about micro cell sites with a 100W load, then yes wind power is oversized. But as you get to 1-3 kW of telecom equipment load, with air conditioning on top, a wind system can make a lot of sense. Most of the cell sites we’re powering with our 7.5/10 kW turbines are in the 1.5-4.5 kW range, often with some solar involved (although with wind often the larger component). Seasonal issues mean that in some months you’ll have excess energy, but we’re good at sizing systems for lowest lifecycle cost of energy. At a typical wind resource site we run at a 20-25% capacity factor. With controls, storage and conversion losses, the power available to support the telecom load is in the 1-2 kW range from a 10kW wind turbine – similar to solar. At a site with a better wind resource, a capacity factor or 30-35% enables 2-3 kW load range.


The best lifecycle cost of energy is often achieved when you’re providing 75% from renewables, and 25% from backup diesel generators – if you go higher than that you get into diminishing returns as you waste more high capex wind and solar generating capacity. TowerXchange: How can carriers and towercos quickly assess whether a particular site might be a viable option for wind power? Mike Bergey, President, Bergey Windpower: Just

send us the co-ordinates and we’ll tell you! Finding out the wind resource available at a given location used to be a big challenge – data was very poor quality in emerging markets as a result of meteorological equipment that was mounted too low, or was poorly maintained. Therefore the wind resources in many emerging markets have been underestimated.

We have access to better wind maps now, with subscription services from companies who offer worldwide modeling combining balloon data with GIS and flow modeling. Bergey Windpower subscribes to a wind database from 3Tier and we’ve integrated that data into our online design tool called WindCAD. We provide our dealers and partners free access – all we have to do is enter a longtitude, latitude and the height of the tower, and we get an instant performance prediction.

Sometimes I think the telecom industry has no idea how easy it is to evaluate a list of sites for potential use of wind power – if a network planner or towerco sends us an NDA and a site list, we can tell them quickly which sites have sufficient wind resources to be candidates for wind power. TowerXchange: Can you give an idea of the typical payback for installing wind power at cell sites? And what’s the longevity of your telecom wind power solutions? Mike Bergey, President, Bergey Windpower: Bergey have a few systems that have been in

““

Bergey have a few systems that have been in situ for over 30 years, and a lot that have been operating for over 20 years, all with minimal maintenance and replacement component costs. The longevity of our turbines means many of our systems that have paid for themselves four to six times over!


situ for over 30 years, and a lot that have been operating for over 20 years, all with minimal maintenance and replacement component costs. The longevity of our turbines means many of our systems that have paid for themselves four to six times over! We used to say that we designed solutions for a 30-year lifespan, but they’re lasting longer than that so we have no idea how long they’ll last!

The key point is that this is not an experimental technology; our turbines have a substantial track record, supported by documented KPI studies and boat loads of data about fuel savings. When other renewable energy solution providers claim a hypothetical 90% DG runtime reduction, we have the data to prove that our solutions work and they work over time.

TowerXchange: How do you sell, directly or through dealers?

Mike Bergey, President, Bergey Windpower: We prefer the dealership model, where we partner with a local dealer for installation and after sales support. 90% of our sales come through dealers, including WinAfrique Tecnologies in East Africa, Tricom Structures in South Africa, Wireless Chile in South America, Mast-Och in Scandinavia, and AJ Telecom in the Caribbean. TowerXchange: How does the TCO of wind compare with solar? Mike Bergey, President, Bergey Windpower: The typical payback in our telecom applications is in the two to five year range, depending on the wind resource and delivered cost of fuel. Wind power isn’t really in competition with solar – there are sites suitable for wind, sites suitable for solar and sites where, even if solar panels were free, it would make sense to exploit both complimentary energy resources. After all, wind speeds increase at night, during inclement weather and during winter seasons when there are less hours of sunshine per day. The declining cost in solar is a near term challenge, but in the long term it builds the market for our wind turbines. The lower price of solar encourages MNOs and towercos to put in solar instead of dual diesel gensets and more aggressively pursue retrofits. But, if the site is at a higher or lower latitude then there’s not enough solar resource in the winter to carry the load. And there are sites with rainy or cloudy or

foggy seasons where the solar resource is much reduced for months at a time. Every spring we start getting calls from MNO’s in the northern hemisphere who had site reliability problems over the winter. In the fall we get the calls for the southern hemisphere!

Also as the load grows with new technologies and new tenants on towers, in many places it will be more cost effective to add capacity with wind


rather than more solar, given the availability of more hours of green energy supply and the smaller footprint of wind solutions (on a retrofit you can install a 10kW system with a foundation footprint of around of 10m², and with a monopole you could need as little as 4m²). And of course wind power has no theft issues whatsoever!

The economics of wind power are very sensitive to the wind resource. Performance goes up essentially as the square of the available wind resource – where solar is linear. A small difference in wind speed makes an exponential difference in energy output for us. Good wind sites, with wind speeds of 6mp/s or more at the top of the tower, have a cost advantage due to superior capacity factors. BTS sites often have the best wind resources in the area because the sites are elevated and well exposed. The challenge facing Bergey Windpower and our competitors is to reduce the cost of wind to become competitive at lower wind resource sites. TowerXchange: Tell us about your “Affordable Green Site Program”.

Mike Bergey, President, Bergey Windpower: The Affordable Green Site Program is our in-house R&D effort. We’re trying to reduce the total cost of wind power to match the capital cost of dual diesel solutions for new rollouts, and to come up with an affordable retrofit solution. Bergey Windpower is working with some

significant radio, battery and electronics system vendors to better integrate monitoring and control, taking different approaches to energy storage management, with a significant improvement in battery longevity and TCO. Our Affordable Green Site initiative also includes a community power effort. This involves installing a more powerful wind turbine to enable rural electrification, using a guyed tower which is safeguarded by the community because it also provides power to the school, water pump, or a health clinic. We’re trying to reduce equipment costs and provide some value to the local community, and trying to escape the fortress approach to site security.

TowerXchange: Which financial model works best in telecoms, an up-front capex or a lease model?

Mike Bergey, President, Bergey Windpower: From our dialogue with the telecom industry, it’s become clear that capex and opex budgets are often separate – saving opex doesn’t necessarily unlock additional money on the capex side. As things stand, for a given annual capex budget, operators can put in twice as many brown power as green power sites, so we need to move toward a leasing or financing approach and take away the initial capex burden. Bergey was the first company to have the lease model available for grid-tie small wind, where we’re working with United Wind to lease 10kW

““

it’s become clear that capex and opex budgets are often separate – saving opex doesn’t necessarily unlock additional money on the capex side. As things stand, for a given annual capex budget, operators can put in twice as many brown power as green power sites, so we need to move toward a leasing approach and take away the initial capex burden

always reliable, and went under. I’d urge buyers to look for the track record of their potential supplier. It’s rare that a CTO or his staff would understand wind technology deeply enough to sort the wheat from chaff, so seek reliable third party references. I would advise MNO’s and towercos to only work with companies with five years or more history – that’s the best due diligence. Bergey Windpower have the longest and most successful track record, the highest reliability and most robust designs. We welcome comparisons


turbines to farmers and home owners. Leasing has been game-changer in the grid-tie market, and it will bleed over to off grid telecom. It will be interesting to see how this business model fits into the telco market. TowerXchange: Where would the capital come from to enable a lease model for telecom wind power?

Mike Bergey, President, Bergey Windpower: Bergey’s core competency is wind power technology, so we’d prefer to supply to a company that has the experience, resources and access to capital. Third party leasing will have an impact, but an alternate model would be for towercos and MNOs to use export finance institutions, many of which are willing to make low interest, long term loans at a lower cost than the savings renewable energy yields – so a deployment could be cash flow positive from the get-go. TowerXchange: Finally, what differentiates a premium wind solution like Bergey’s from some of the lower cost solutions in the market? Mike Bergey, President, Bergey Windpower: In the wind business more than anywhere else, you get what you pay for. The initial capital outlay is important of course, but reliability and ruggedness are critical to ensuring your capital is invested wisely. It’s clearly better to invest in slightly more expensive solutions like Bergey’s, which last 30 or more years, than cheap wind power solutions that might last two years. Interestingly, a significant segment of our telecom market is retrofits to replace failed wind turbines from other suppliers. The original towers and wiring is often reusable. Lots of new entrants have come and gone in the small wind power business – many became highly leveraged, manufactured products that were not

““

It’s clearly better to invest in slightly more expensive solutions like Bergey’s, which last 30 or more years, than cheap wind power solutions that might last two years

Bergey Windpower Norman, OK USA [email protected] www.bergey.com

Add wind power to your solar-diesel off- grid sites to reduce OPEX and increase reliability.

Bergey is the world’s leading supplier of wind turbines to the telco industry.

FACT: Orange Telkom Kenya wind solar hybrid sites achieved 90.5% diesel opex savings

From power to active infrasharing; opportunities for LatAm towercos to look beyond passive infrastructureFuel cells are the optimal energy back-up power solution for rooftops and critical sites but towercos are yet to get involved

Pedro Yarahuan, Director of Sales – CALA Region, Ballard Power Systems

TowerXchange: Please introduce Ballard, its key activities and footprint with regards to Latin America

Pedro Yarahuan, Director of Sales – CALA Region, Ballard Power Systems: Ballard is a global company offering fuel cell technology solutions to a variety of industries. Fuel cells are a clean source of energy and to date, we have shipped around 150 MW of hydrogen fuel cells worldwide and thousands of systems designed specifically for outdoor telecom sites.

The Latin American market is one of our fastest growing regions. In 2013, we counted twelve commercial deployments and to date, the count has increased to fourteen. Our customers are all major regional carriers including América Móvil, Telefonica, Digicel and LIME as well as TSTT in Trinidad and Tobago and Bahamas’ BTC. We have two new deployments in the pipeline which will bring our project count to sixteen over the course of 2014.

We address the backup power needs for the global, and specifically Latin American, telecom markets and focus our attention on outdoor sites with power demands up to 5kW DC.

The ideal sites for Ballard solutions are in urban environments, where regulation forbids the use of diesel generators; or areas with a high degree of theft and security problems which result in diesel generators being stolen, and rooftops.

Read this article to learn:< Ballard Power Systems’ offering and footprint in Latin America< How fuel cells can provide an ideal solution for rooftops< Fuel cell applications in off-grid, remote telecom sites< Why tower companies in LatAm aren’t getting involved in the power game

Pedro Yarahuan joined Ballard Power Systems almost two years ago, after more than six years of experience with other fuel cell manufacturers and twenty years at Ericsson. His wealth of knowledge goes beyond fuel cells and their applications, and spans into the key dynamics of the telecom tower industry in the CALA region. In this exclusive interview, he shares his views on Ballard’s offerings, challenges and opportunities of urban and rural sites in Latin America, and some interesting insights as to opportunities beyond passive infrastructure for carriers and towercos.

Keywords: Ballard Power Systems, Latin America, Caribbean, América Móvil, Telefonica, Digicel, LIME, TSTT, BTC, Trinidad and Tobago, Bahamas, Interview, Energy, Passive Equipment, Rooftops, South America, Central America, Urban vs Rural, Infrastructure Sharing, Fuel Security, TCO, Pass-Through, Densification, Active Infrasharing, Off-Grid, Fuel Cell, Hydrogen, NOC, RMS


TowerXchange: Latin America is experiencing a high growth in demand for rooftops. How is Ballard’s offering suitable for rooftops?

Pedro Yarahuan, Director of Sales – CALA Region, Ballard Power Systems: Fuel cells are an ideal solution for carriers and tower companies looking at setting up cell sites on rooftops as they allow them to overcome the problems caused by traditional diesel generators.

In fact, landlords usually don’t allow the use of diesel generators on rooftops and, if they do, they’d demand that the carrier provide power for the entire building rather than for the cell site alone. This means that the carrier is forced not only to equip the rooftop with a very large diesel generator but it’s also deemed responsible by the landlord in case of its failure.

Hydrogen fuel cells eliminate this problem from the root.

TowerXchange: What are the advantages of hydrogen fuel cells from an environmental perspective? And from a technical and economic standpoint?

Pedro Yarahuan, Director of Sales – CALA Region, Ballard Power Systems: The environmental advantages are a key component of our offering. In fact, the fuel used in our systems, also called hydroplus, is 100% bio-degradable and spill control requirements are very light given its properties. This results in considerable savings in terms of site

preparation and spill containment procedures.

Fuel cells are a silent, light solution. Our generators weight less than 300kg and are relatively small compared to traditional DG. Moreover, they don’t require connectivity to the AC panel as they consume a small amount of DC power (250W) in standby.

The Ballard remote monitoring capabilities are


extremely powerful. Systems are built from the ground up, considering SMNP protocol requirements, which virtually interfaces with every NOC centre available in the market. Practically, this means that the technician does not need to go to the site to perform advanced troubleshooting, verify its status and, if needed, connect with the factory and with the main office to solve any problem straight away thanks to the availability of local trained technicians and a tiered support system

Courtesy of Ballard Power Systems

back to the experts at Ballard. The result is very low incidences of downtime and much faster response times supporting end users of the technology. This is a very big differentiator of our technology against anything else in the market.

Someone might object that our products aren’t the most economical. But we are confident that the Total Cost of Ownership (TCO) of our fuel cells clearly shows the economic advantages of using this technology. These economic facts are publicly available on our website.

Featuring fuel autonomies of 40 hrs and above, thanks to the system’s ability for truly dynamic power delivery, coupled with very low cost of preventive maintenance by only having to clean or replace two air filters every year (or every 500 hours) and refuelling as needed, make this solution a great choice for telecom carriers.

TowerXchange: Which regions and specific areas demand fuel cells rather than traditional generators?

Pedro Yarahuan, Director of Sales – CALA Region, Ballard Power Systems: Ballard fuel cells are the perfect answer for high-end residential areas, and busy commercial settings equipped with rooftops.

Imagine a site in Kingston, Jamaica or in Nassau, Bahamas. In these areas, a call from a tourist can cost up to US$ 5 per minute and the local carrier simply cannot afford a low quality service. This is where our solutions come handy.


TowerXchange: How does the business case for fuel cells at off-grid sites stack up in Latin America and the Caribbean?

Pedro Yarahuan, Director of Sales – CALA Region, Ballard Power Systems: In remote, off-grid areas Ballard fuel cells need to be part of a more complete balance of plant involving alternative generation, battery banks and controllers . We will be happy to cooperate with carriers and site owners looking at providing coverage in remote areas as our fuel cells are an ideal complement for these types of solutions going forth.

It is also pertinent to mention that carriers struggle to make good RoI when providing coverage to remote, off-grid areas. The site revenue just does not justify high OPEX solutions. At the same time, carriers struggle with investing on expensive CAPEX solutions, as it would take decades in recuperating investment. That’s the challenge of off-grid sites. I am referring to very small villages in very remote locations throughout the CALA region where communities are likely to share few phones, mostly with pre-paid plans and maybe single digit internet connections. The business case to reach these areas needs to consider government investment to help carriers justify CAPEX or OPEX investments and we foresee that such availability of funds will take some time to develop.

On the other side and to date, the opportunity in Latin America is now well beyond coverage and is focused heavily on differentiation of services in urban areas and multiple services with the same access to the subscriber. People want more offerings, products and competitive bundles and this is what carriers are paying close attention to. Remote areas will take some time to become a priority.

TowerXchange: Is security a major problem in Latin America? If so, which areas are posing the hardest challenges?

Pedro Yarahuan, Director of Sales – CALA Region, Ballard Power Systems: From a security standpoint, some areas of Latin America pose hard challenges to overcome.

““Imagine a site in Kingston, Jamaica or in Nassau, Bahamas. In these areas, a call from a tourist can cost up to US$ 5 per minute and the local carrier simply cannot afford a low quality service


In fact, theft of diesel, copper and equipment is a reality especially in areas affected by natural disasters and endemic poverty. Moreover, remote areas present additional technical challenges that require expertise beyond imagination. When a company is required to install a system on top of a high mountain or near a volcano, the team involved in the project doesn’t only have to be technically equipped but able to sustain physical challenges, modify site environmental conditions, etc.

With specific attention to theft, security is an issue not only in remote areas but can affect urban sites as well. We are aware of sites placed in key metropolitan locations where generators are locked in cages and patrolled 24/7.

TowerXchange: Are you currently working with tower companies as well as carriers?

Pedro Yarahuan, Director of Sales – CALA Region, Ballard Power Systems: To date, we haven’t started working with tower companies but we are very eager to discuss our solutions to them.

The key opportunity for the tower industry to serve carriers with power solutions is finding a solution to the severe fines imposed on carriers by the LatAm governments for shortcomings in site availability and/or quality of service. Energy provision to the site can stop functioning not only due to lack of maintenance but in case of natural disasters as well as theft.

Therefore, and due to the aforementioned potential fines, tower companies are reluctant to get involved in selling energy to carriers as an additional service as they would then be responsible for continued power service, which in the event of a power failure, could result in carriers directly passing through penalties issued by the government to the tower company.

We believe that tower companies could add value to the industry by offering extra services such as power, but the trend of towercos owning sites is a relatively new dynamic in the region and the balance is still being defined.

In light of this, many co-located sites have one

“ “The key opportunity for the tower industry to serve carriers with power solutions is finding a solution to the severe fines imposed on carriers by the LatAm governments for shortcomings in site availability and/or quality of service

Courtesy of Ballard Power Systems

generator per tenant which is far from being a cost effective solution. In order for things to change, the tower proprietors need to open a channel of conversation with local regulators to eliminating or amending the penalty system. If governments decide to eliminate fines, tower companies could add lot of value to the telecom industry, beyond passive infrastructure.

TowerXchange: What’s your view on why América Móvil have been more reluctant to sell their towers than other LatAm carriers?

Pedro Yarahuan, Director of Sales – CALA Region, Ballard Power Systems: There are carriers that see their passive infrastructure as strategic, amongst them, América Móvil. Some carriers define sites as “productive” as they generate revenue for the company by generating excess electricity at some of its sites and sell it back to the National utility company.

Telecom sites are normally placed in the best traffic locations throughout the region and this is the key reason for some carriers to not wanting to sell nor share their sites. One of the few exceptions is in high end beach resorts where, due to regulatory limitations, carriers need to share towers.

Tower companies could create productive sites just like other carriers do these days. In some instances, telecom sites are conceptualised as “telecom oasis” because all the equipment can be hidden in sculptures and site can host a variety of services such as stores, hotspots, coffee shops,


restaurants, etc. These sites aren’t just telecom hubs but fully operational commercial centres that generate revenue for carriers and its affiliated commercial partners.

TowerXchange: How do you see carriers’ strategies evolving in the 4G era?

Pedro Yarahuan, Director of Sales – CALA Region, Ballard Power Systems: I believe that regional carriers are looking beyond passive infrastructure sharing and more closely at active infrasharing. This is a very interesting option for carriers looking

at cost-effective options to rollout 4G LTE but it’s definitely a threat for tower companies as it reduces the number of potential tenants they can attract to their sites.

Interestingly, while some carriers haven’t shown strong interest in Latin America to share its passive or active infrastructure, they also own MVNOs in the U.S., One example is TracFone, owned by one important LatAm regional group, where the carrier is heavily involved in buying capacity rather than towers in North America. TracFone is a very agile company able to offer cost effective plans and devices to its subscribers, and the company doesn’t need telecom towers.

An interesting trend along those lines is the Multi-Play strategy which is now gaining popularity in the Caribbean.

On these sites, the carrier installs a system called DLC (Digital Loop Carrier), which can provide TV services, landline, mobile, hotspots and security services via a single access point to the subscriber. This means that whoever owns the best real estate to locate a DLC access point will be able to offer multiple services to its customers, hence an important revenue generator to the carrier

I think tower companies should take a closer look at this trend as they could potentially get involved too. In order to function, the site of a Multi-Play system needs to be within a ½ mile of the subscriber, which implies a need for cell site densification in the areas where it’s offered

““

Tower companies could create productive sites just like other carriers do these days. In some instances, telecom sites are conceptualised as “telecom oasis”... These sites aren’t just telecom hubs but fully operational commercial centres that generate revenue

How hybrid energy solutions can reduce or eliminate diesel consumptionRetrofitting cell sites with solar hybrid solutions to slash opex

Kai Hennum, Product Manager, Power-One

TowerXchange: Thanks for speaking to us today. Please tell us where Power-One fit in the telecoms infrastructure ecosystem.

Kai Hennum, Product Manager, Power-One: When towercos acquire assets from MNOs, their first priority is to reduce opex. Furthermore, MNOs are seeking to reduce opex, so they can extend services to low population density, low ARPU, increasingly remote areas.

With the continually increased cost of delivered diesel, problems with fuel theft and the watering down of diesel, cell sites currently running diesel gensets 24/7 have an incentive to retrofit with hybrid energy solutions. Hybrid energy allows the tower operator to switch off the genset, cycle the batteries, and reduce or even eliminate diesel consumption, slashing fuel costs and maintenance opex.

Power-One designs and produces rectifiers, controllers, inverters, converters and power system solutions around these. In the hybrid market, we are purely a commodity supplier and don’t have the infrastructure or inclination to take on end-to-end projects and turnkey management. So our strategic partners combine our products with batteries, RMS and subcontractor services.

Personally, I am responsible for the network power systems globally which includes our hybrid offering. For hybrid systems, the majority of deployments have, of course, been in Africa, and for our standard products we have a presence in the rest of EMEA

Read this article to learn:< How hybrid energy power solutions can reduce or even eliminate diesel consumption< How to evaluate a site’s suitability for solar hybrid energy< A comparison of solar, wind and fuel cell energy solutions for telecoms< The capex required to retrofit a cell site with hybrid energy< Specializing in energy equipment design and manufacture vs diversifying into turnkey service provision

Power-One designs and manufactures energy-efficient power conversion and power management solutions for renewable energy, and is one of Africa’s leading hybrid commodity suppliers. Power-One supplies through strategic partners to help MNOs and towercos reduce genset usage to 10-20% of current levels. TowerXchange spoke to Power-One’s Product Marketing Manager, Kai Hennum, about the company’s footprint in Africa and beyond.

Keywords: Hybrid Energy, Opex Reduction, DG Runtime, Rectifiers, Batteries, Maintenance, Renewables, Solar, Wind, Fuel Cells, Retrofit, Greenfield, Capex, RoI, Outdoor Equipment, Infrastructure Sharing, Africa, Nigeria, Power-One, Mexico, Central America, Latin America, Caribbean, South East Asia, Indonesia, India


and APAC as well as North and Central America, so we see South America as a major potential growth market for us, particularly for hybrid power systems.

TowerXchange: Where have Power-One’s solutions been installed in Africa?

Kai Hennum, Product Manager, Power-One: Power-One had the first CDC trial system installed in Africa around 2007 and has since been developing a standard system portfolio for CDC and Solar. The promotion and trialing of hybrid solutions during the last six to seven years since has mainly been with African MNOs and towercos through regional partners. We used to joke that there seemed to be more trial hybrid cell sites in use in Nigeria than non-trial sites! Tower operators are increasingly convinced that hybrid is the right technology choice to reduce energy opex.

Power-One works with integrator partners to supply some of the main towercos in Africa for countries like Uganda, Tanzania and DRC. More recently, we have provided the equipment for hybrid solar sites in Nigeria and for pure solar as well which is an interesting development. We are gaining information that will serve to improve performance and we are experiencing an increase in demand for pure solar.

Power-One solar and genset hybrid solutions have been rolled out in the Niger Delta, helping to eliminate fuel requirements at a lot of sites. Diesel deliveries in this area had been subject to shall

we call them “unofficial local taxes”, while some roads are impassable for six months a year during the rainy season. So these kinds of smaller, more difficult to access sites are ideal for solar hybrid.

Our models show that a lot of regions of Africa are generally suitable for solar, then we can use simulation and RoI tools to evaluate which is the best solution for each specific site location. With many years of experience in Africa under our belts, Latin America will be an excellent opportunity for us to share our extensive knowledge base with the regional partners there.


TowerXchange: What information does the tower operator need to evaluate a location for solar?

Kai Hennum, Product Manager, Power-One: Obviously, the most important evaluation is to establish that the site has exposure to the sun. For Africa, the conditions for solar are good but on a local level there could be shading and other conditions that come into play which can have considerable effects on the solar contribution and hence the RoI.

Also, there is the practical aspect of having the

Hybrid System - Courtesy of PowerOne

space available for the panels. In some RFQs, we have seen that several football fields of solar panels would be needed to cover the load and battery autonomy requirements, so often we had to bring the expectations/specifications down to a realistic level after our internal review and simulations.Furthermore, the battery autonomy requirements can represent practical limitations, particularly for pure solar since a lot of solar power is needed when it is the only energy source and batteries need to be recharged regularly.

In the early days, we spent a lot of time calculating RoI, HOMER modeling, etc in order to find the optimised system setup for specific sites. Nowadays, and particularly for the towerco business this is either part of the scope for the towerco itself or for the integrators/turnkey supplier while our involvement is to configure our standard products accordingly. The knowledge base has changed completely during the last three to four years; typically when a request for a hybrid system comes to us the customers nowadays usually know what they want. We do have extensive simulation tools enabling us to model hybrid system performance to a high degree of accuracy and advise what the performance of a system solution will be.

TowerXchange: How do the different renewable energy sources for cell sites compare?

Kai Hennum, Product Manager, Power-One: We have experience with wind and fuel cells. The obvious reason solar is more appealing is that solar


panels are cheaper than wind turbines. Solar panel costs have come down substantially over the last two to three years. Wind hybrid solutions suffer in comparison because wind turbine manufacture is not as commoditised as solar. This makes it difficult to offer a relatively cost competitive wind power solution. It seems like every wind power site needs to be customised which, together with the capital cost of the equipment, limits market acceptance of wind power to date. And on a basic level, sunshine is more predictable than wind!

The GSMA Green Power stats show that most green cell sites are generator optimised, with the second most being solar hybrids, and a distant third group of wind plus solar plus CDC sites, most of which are still in trials.

Another challenge is that wind turbines seldom go to a specification low enough for a 1.5-2kW cell site. Generally, there isn’t a huge amount of wind in Sub-Saharan Africa, a few coastal areas notwithstanding.

The fuel cell solutions I’ve seen in India where they’ve deployed two meter high cabinets full of twenty hydrogen cylinders to give maybe 72 hours of standby time on a cell site are not feasible for use in Africa and other locations. 72 hours is not a lot when we’re trying to reduce generator runtime by 75% or more.

Fuel cells might work at sites with permanent gas supplies. It’s certainly a green method, but it only really works at sites with high grid availability and

reliability. Fuel cells work best with 95%+ mains availability, and might perhaps be viable in certain parts of North Africa and South Africa.

Even in Europe, the fuel cell powered sites I’ve seen feature large separate rooms for hydrogen storage. Replacing diesel with hydrogen also doesn’t take away the fuel logistics costs.

We have yet to do detailed analysis for the South American continent but the assumption is that the demand split between CDC, Solar hybrid, Wind and “other” will be more or less in line with what we have seen in Africa and other regions, with CDC and Solar representing more than 90% of the overall demand.

TowerXchange: What typical capex outlay is required to retrofit a site with hybrid energy, and how does that compare to greenfield sites?

Kai Hennum, Product Manager, Power-One: Retrofitting a site is more complex as there is often an incentive to use what is already there, which again leads to more ad hoc power solutions for each site. More commonly though, the old power system is shut down and the site is re-wired to the new hybrid equipment which is often a low footprint outdoor enclosure. Tower operators will often ask the contractor to take old rectifiers back to their warehouse for use on legacy sites. So end to end turnkey retrofits are often more expensive than greenfield installations.

At greenfield sites we’re seeing a focus on ease of


deployment and installation with less concrete civil works buildings, and more use of outdoor equipment – compact, cabinetised, and fitting in smaller areas or with containerised solutions. For solar, it is very common to house the power equipment in a small enclosure that is placed under the panels.

As for the capital outlay, this of course depends on variables such as solar power percentage etc. At a 1.5-3kW site you’re probably looking at US$15-20,000 or upwards inclusive of new equipment, shipment, installation, and removal of old equipment. Based on a cost per delivered liter of diesel of US$1.50, you’re looking at RoI in around 12 months.

Costs are going to vary for demographic reasons and other factors, for example a lot of the logistical costs are higher in Nigeria whether it’s something as simple as hotels being expensive or something as fundamental as the road network being under-developed but again such variables are typically evaluated in a lot of details by the towercos themselves.

TowerXchange: Given that towercos seldom upgrade capacity before additional tenancies are sold, how do you support the modular approach towercos take to power systems?

Kai Hennum, Product Manager, Power-One: Fundamentally, our system solution caters for either considering future load/tenant increase at the time of deployment, or to add this on in the field

as tenancies are added. Retrofitting is not as cost effective as building in the capacity from the outset as it requires a return visit to the site, it is also a more labor intensive installation and hence more prone to mistakes.

We recommend that more power shelves are included for additional converters, and expand with additional modules only as they go along. However, for towercos keeping a tight reign on capex investments until tenancies are secured, it’s often the preferred solution to deploy with a cost optimised system setup. For the same reasons, CDC is often deployed to achieve immediate opex reductions with a minimal capex investment with solar being added later on, similarly with our

modular approach, this allows adding on solar capacity along the way in order to further reduce the genset duty cycle and opex.

TowerXchange: Finally, can you sum up how Power-One differentiate yourselves from your competitors?

Kai Hennum, Product Manager, Power-One: As a commodity supplier with more than twenty years of experience in the telecom power systems industry, we have combined our experience with knowledge from our renewable energy activities and believe that we have developed a portfolio of hybrid power systems tailored particularly for telecom applications that very few vendors are able to match. In particular, we have invested a lot of time and resource on understanding the battery technology that is typically deployed for off grid and hybrid solutions and have implemented complex algorithms to ensure optimised battery lifetime.

We then tie up with strategic partners as we don’t want to be a turnkey supplier. Other equipment manufacturers are trying to get into the service space, where the value of deals is certainly bigger. Power-One just supplies equipment, and will sign non-circumvention agreements. A big turnkey project can take a month to put together, in which time we can supply equipment to five or six strategic partners – we have the capacity to work on a greater number and variety of different projects. So our partners today know we won’t be in competition with them for service contracts tomorrow

“ “Retrofitting is not as cost effective as building in the capacity from the outset as it requires a return visit to the site, it is also a more labor intensive installation and hence more prone to mistakes

How to make more grid power usableTSi Power’s power protection, conversion and UPS solutions proven at thousands of emerging market cell sites

Nam Paik, Director of Sales, TSi Power

TowerXchange: Please introduce our readers to TSi Power. Nam Paik, Director of Sales, TSi Power Corporation: We design and manufacture telecom power protection, conversion and backup products for use by telecom operators around the world. Our primary products are Outdoor XUPS, Outdoor DC UPS, VRP and VRX, an outdoor version of the VRP. TSi Power initially concentrated on indoor UPS. However, in 1998, our new owner Peter Nystrom moved TSi Power in the opposite direction from where the big companies were going. We began concentrating on outdoor systems with a wide input range and focused on an ‘anywhere in the world’ design philosophy. With our larger competitors focusing on easier to solve power problems, 98% of TSi Power’s business comes from rugged, all-weather outdoor solutions. We develop power solutions for remote cell sites accessible only by 4WD vehicles and where extra-large fuel tanks are necessary to maximise autonomy. I like to think of TSi Power as an all terrain vehicle, whereas our competitors are luxury sedans designed for driving down the freeway! TowerXchange: How can operators and tower companies protect their sites against downtime due to rolling blackouts? Nam Paik, Director of Sales, TSi Power Corporation: For telecom sites without backup generators, telecom service outages can occur when the site

Read this article to learn:< How AVR (automatic voltage regulation) protects against voltage variances, increasing the number of hours of mains power you can use< How to protect your cell sites against rolling blackouts< How to protect against lightning strikes< Comparing the energy requirements of DAS and shared macro sites

Nam Paik has been with TSi Power for 25 years. During this time, he has seen the business switch from a focus on indoor UPS to robust outdoor UPS with a wide-input range capable of maximising use of grid power in challenging emerging market situations. In this interview, Nam explains how to overcome common challenges such as voltage variances, rolling blackouts and lightning strikes, using examples from TSi Power’s work with clients such as MTN and Zain.

Keywords: Who’s Who, Energy, Opex Reduction,

Batteries, Outdoor Equipment, Uptime, Unreliable Grid,

Line Conditioning, ROI, Solar, DG Runtime, DAS, UPS,

AVR, Rectifiers, Africa, Southern Asia, Mexico, India,

Pakistan, Uganda, Cote d’Ivoire, MTN, Zain, TSi Power


loses utility power or when the battery backup time is insufficient to ride through a six-hour power outage. Such outages are common in emerging markets, where a lack of generation capacity results in daily power cuts of several hours as utilities resort to “rolling blackouts” to spread the power shortage evenly among all customers. When telecom-grade battery backup units, such as Outdoor XUPS or Outdoor DC UPS with over eight hours of battery capacity are used to prevent service downtime, it results in opex minimisation and increases customer satisfaction, rather than risking customer complaints and defections to competitors. TowerXchange: Why is surge protection so important at emerging market cell sites? Nam Paik, Director of Sales, TSi Power Corporation: Due to lack of budgets and resources on the part of utilities, there is very little utility-provided surge protection against lightning strikes or other transient events on an AC power line, resulting in frequent and catastrophic equipment damage when lightning strikes overhead transmission lines or nearby structures. The result can be telecom service outages of several hours while damaged equipment is being repaired (or several days if lightning damaged equipment cannot be repaired in the field and must be replaced). This can be very costly to telecom operators both in terms of equipment repair/replacement costs and customer defections to competing carriers.

The correct implementation of surge protective devices will minimise telecom equipment damage and resulting telecom service outages. TowerXchange: TowerXchange attended a recent GSMA GPM Working Group in Nigeria, where we heard complaints that at unreliable grid sites with six hours per day of grid, only 60% of that power could be used. How much grid power can be rendered usable through line conditioning and voltage regulation? Nam Paik, Director of Sales, TSi Power Corporation: The voltage of the AC mains is subject to variances,


particularly in countries like Nigeria. Sensitive, expensive telecom equipment typically has a +/- 20% tolerance, but voltage varies +/- 30%. So you need AVR (automatic voltage regulation), surge protection and backup generators in case of mains interruption. High quality, telecom-grade AVR such as TSi Power’s VRP or VRX will extend the useful voltage range to plus or minus 30%, or 160-320v, which should be sufficient to cover the variances in Nigeria. Below 160v, electricity is useless and dangerous – motors will jam, so power companies usually cut the power below 160v. Similarly over 280v they should cut the power off, but that’s not always the case in Africa, where the culture is typically “we’ll give you any power we can generate!” This means it is critical for cell site owners to buy their own protection system, including cut off switches and voltage regulators. Having the widest input voltage regulator is key. For example, this contributed to MTN Uganda’s success and market leadership. MTN were proactive in anticipating problems, and addressed the need for voltage regulation ahead of their competitors. While MTN invested in TSi Power’s premium solution, some of their competitors deployed cheaper solutions with a narrower input range. Uptime was affected, QoS and reputation suffered, so MTN’s market leadership increased. TowerXchange: One of the first questions our readers ask is “how proven is the solution in emerging markets”? So tell us how your solutions are used in Uganda.

“ “

The voltage of the AC mains is subject to variances, particularly in countries like Nigeria. Sensitive, expensive telecom equipment typically has a +/- 20% tolerance, but voltage varies +/- 30%. So you need AVR (automatic voltage regulation), surge protection and backup generators in case of mains interruption

Nam Paik, Director of Sales, TSi Power Corporation: MTN Uganda started using TSi Power’s VRE-3000 units early in 1998 when the rectifiers powering their first 50 cellular base stations failed frequently. This was because the nominal 230 vac mains voltage in Uganda can vary from 160 vac during peak working hours to 300 vac in the middle of the night. By 2003, several hundred VRE-3000 units were being used to protect all of MTN Uganda’s BTS equipment against unstable mains AC voltages. In early 2004, VRP-3000/5500 replaced the VRE-3000/5000 – the VRP series precision PWM voltage regulators provided an even higher level of performance and reliability by providing a cycle-by-cycle correction of output voltage and 230 vac +/-3% voltage.

MTN Uganda has purchased several hundred VRP-5500 units since 2004, including 170 more VRP units for installation at 170 new locations built during 2010. They report having even better performance and reliability results. There were about 1,000 TSi Power’s AVR units operating in Uganda by the end of 2010. Uganda Telecom and Celtel Uganda (now Zain Uganda) have also used many of TSi Power’s products.

UltraTec in Uganda has been TSi Power’s partner in Uganda since, taking care of MTN Uganda and all other customers in Uganda with logistical services, warranty repair and out-of-warranty repair service work.


TowerXchange: I believe TSi Power solutions are also in use in Nigeria, Ghana, Cote d’Ivore, Congo and Zambia… Nam Paik, Director of Sales, TSi Power Corporation: In 2004, TSi Power won a large contract from V-Mobile in Nigeria (now Airtel Nigeria) to supply about 300 sets of VRP-ILC. From 2004 to 2007, Celtel Nigeria and other Nigerian mobile phone companies purchased and installed about 1,000 VRP-ILC units in Nigeria. In late 2008, Zain Ghana purchased more than 100 Outdoor VRP-ILC -15000- 5339 units for their network upgrade and expansion program in early 2009.

TSi Power won two large contracts from MTN Cote d’Ivore for over 600 Outdoor VRP-ILC -15000-5339 units for their network expansion project in 2007 and 2008.

We have also installed CRE-3000 units at 30 sites for a satellite communications company in Congo, as well as at 50 regional satellite communication sites in Zambia where the UPS systems kept shutting down due to unstable mains AC voltages. After five years, all 50 SLC units are still operating flawlessly.We also have equipment installed in India, Pakistan and Mexico. TowerXchange: What should be the priorities when optimising the energy efficiency of

AC Mains Input Voltage Windows

315 V

Shut down and/or damage to equipment

Severe derating, shut down and/or damage to equipment

Borderline operation (over-voltage)

Derating and increased heat (brownout)

Safe Area of Operation

264 V

250 V

210 V

184 V

150 V


emerging market cell sites? Nam Paik, Director of Sales, TSi Power Corporation: Minimise power consumption with low energy equipment and create economies of scale by deploying uniform AVR and UPS solutions. The first step is to replace any transmitters that are more than five to six years old. While old transmitters might require 5000w for a single signal, new energy efficient transmitters might use 3000w to carry signals from three or four carriers, using less kWh to produce three to four times the revenue from a shared site. Air conditioning is a particularly inefficient use of energy, so consider installing air-cooled transmitters that don’t need an air conditioned container. Install an AVR like ours to maximise use of grid power – while unreliable, mains is typically the cheapest power available. Ten-year-old AVRs will frequently break down, so invest in new solutions to maintain the 99.9% uptime that customers expect, otherwise you risk creating a risk of single point of failure at a shared site that can interrupt multiple operators’ revenue. I would recommend installing slightly oversized rectifiers to charge 12 hours of battery power. With such a solution, if power is only available half the time, you can run on your fully charged batteries for the other half of the time. This system reduces DG runtime and cuts fuel consumption by 90-95%. I would also recommend installing solar panels if

you can make your sites look boring to protect from vandalism and theft! Selecting an energy storage solution like Durathon, with a 15-year lifetime even under challenging conditions with daily charge and discharge, is worth the capital outlay – proactive thinking is required to succeed in this business! TowerXchange: What are the design elements that contribute to maximising robustness and temperature resilience in outdoor systems? Nam Paik, Director of Sales, TSi Power Corporation: Conventional power conversion systems are designed for benign indoor environments only and are not suitable for use in outdoor conditions, where they will quickly fail. Unlike indoor power conversion systems, outdoor systems must be specifically designed and manufactured for the challenging outdoor conditions. It is crucial that inclement weather, contaminants, corrosive substances, moisture, vibration and other hazards are not able to damage the system.

TowerXchange: How do UPS requirements differ between DAS and macro cell sites?

Nam Paik, Director of Sales, TSi Power Corporation: A typical DAS base station requires about 200-300 watts per transmitter, up to a maximum power consumption of 1,200 watts with four different transmitters for four carriers. Therefore, a small DAS base station can be powered and protected by a solution like our Outdoor DC UPS-250-7070, whereas

a larger 120 vac (or 230 vac) powered DAS base station shared by three or four operators might be powered by our Outdoor XUPS-1500-7070. In comparison, a typical macro-site requires 5-10kW for the three to four transmitters needed for a site shared by three to four carriers. When air conditioners and other ancillary devices are included, peak power consumption can be 15-20kW for each macro cell site.

Typically, three-phase AC service is used (either 120/208V or 230/400V three phase) for most macro cell sites, with a 15-22.5 kwatt, three phase AVR. They’ll also use traditional telco rectifiers, with a three phase input with 4 x 3kW rectifier modules for N+1 redundancy, 54 vdc output and a two-hour battery bank, just for the transmitters. Most macro cell sites are backed up by a diesel generator for power outages with a duration beyond the typical two hours of battery backup time. TowerXchange: What kind of ROI can TSi Power’s solutions deliver? Nam Paik, Director of Sales, TSi Power Corporation: Let me give you one example from MTN Uganda. From 1999 to 2005, during their six years of network build-out period, MTN Uganda purchased about 150-200 VRP-5000 units per year to protect all of their new BTS sites.

At US$1,500 per unit, capex investment was US$200-


300k per year, protecting tens of millions of dollars in annual network expansion capex. All of the over 1,000 VRP units are still in service at MTN Uganda in 2014. By 2005, MTN Uganda had over 1,000 BTS sites in operation throughout Uganda and captured 85% market share in mobile communication business in Uganda. In fact, around 2005 MTN displaced Coca Cola as “most favorite brand” which Coca Cola held for decades. I don’t think it is possible to achieve such domination of the market unless MTN’s network reliability and uptime is over 99.9% (or less than a few hours of down-time per year). Being proactive

in solving poor grid power quality in advance and spending 2% more capex during their during network expansion phase, MTN Uganda avoided being “penny-wise and pound-foolish” and avoided fighting fires later with scarce opex budgets. ROI was at least 50 times the investment! TowerXchange: How would you sum up the difference between TSi Power’s premium solutions and lower cost alternatives? Nam Paik, Director of Sales, TSi Power Corporation: Telecom-grade solutions like TSi Power’s UPS and VRP solutions might cost twice as much as out-of-the-box, one size fits all solutions, but TSi Power’s solutions have been proven to last ten+ years, delivering 10-20 times better ROI than low-cost equivalents. TSi Power performs a thorough evaluation of the customer’s objectives, operating conditions and technical requirements for the telecom power protection and backup products we propose, ensuring that we provide the correct system-level solution rather than the “our box is 20% cheaper” approach used by vast majority of our competitors. To protect expensive telecoms equipment from failure and to guard against churn and liabilities from accidents brought on by application failure, it is crucial to work with an proven, innovative outdoor power system supplier, such as TSi Power. TSi Power’s manufacturing facility includes in-house

engineering, assembly, testing and circuit board production, which allows us to develop and produce the needed technologies while minimising reliance on outside suppliers. However, we also maintain excellent relationships with key suppliers of major components, so they become intimately aware of our needs, as well as the needs of our customers. This results in improved efficiencies and quality over time – new systems can be quickly developed and existing systems can be quickly modified to meet customer requirements. TSi Power’s workforce is highly skilled and has a very low turnover rate. This ensures that the specialised, detailed knowledge required for designing and producing outdoor systems is continuous and eliminates the need to constantly instruct and train new workers. Many outdoor applications are highly individualised which warrant very small production runs – sometimes only a single unit – along with fast turnaround times. TSi Power specialises in low-volume production runs with the ability to custom design and manufacture products with short lead times. Finally, TSi Power designs its own power conversion systems to very rigid specifications and very broad component tolerances, thereby reducing the risk of failure and increasing the range of environments in which the systems can be used. The systems are specifically ruggedised with heavier components and proprietary coatings to eliminate the danger from moisture, salt and other contaminants

“ “

Being proactive in solving poor grid power quality in advance and spending 2% more capex during their during network expansion phase, MTN Uganda avoided being “penny-wise and pound-foolish” and avoided fighting fires later with scarce opex budgets

Imergy’s unique leasing option opens volume market for vanadium redox energy storage technologyEnergy storage innovation attracting interest from operators, towercos and ESCOs

Tom Tipple, Imergy Power Systems

TowerXchange: Please introduce Imergy Power Systems and your role in the telecoms infrastructure ecosystem. Tom Tipple, Regional Vice President, Imergy Power Systems: Imergy manufactures a range of vanadium redox energy storage solutions, and has been operational since 2006. Originally operating as Deeya Energy, who built an impressive base of technology and clients in India, we changed our name at the end of 2013, coinciding with the introduction of new investment and a new management team. Our new management team comes with impressive credentials; Bill Watkins is an award-winning CEO who previously headed up Bridgelux and Seagate Technology, and Tim Hennessy was President of Prudent Energy and CEO of VRB Power Systems Inc. which commercialised the VRB® technology. Imergy is the first company to take flow battery technology to the next stage – driving down costs while maintaining high quality. Our innovative approach to manufacturing and financing takes us into the specialist area of serious volumes, delivering batteries not in the usual orders of tens, but in orders of thousands of units. TowerXchange: The first thing our readers usually want to know is “how proven is the solution in the field”, so please tell us about your experiences at cell sites in India, Africa and Indonesia over the last two years.

Read this article to learn:< How a fast charge profile and the flexibility of partial charge and discharge states offer the most cost

efficient performance

< Why Imergy’s vanadium redox batteries come with a standard five year warranty, while lead-acid

batteries often need replacing in 18-24 months with an unenforceable warrantee

< How to scale energy storage solutions as you move from 2.5kW to 10+kW peak load

< Leveraging manufacturing innovations to drive volume

< How Imergy’s electrolyte lease model reduces upfront capex by 50%, making vanadium redox

competitive with lead-acid batteries

TowerXchange caught up with Tom Tipple, one of the evangelists of vanadium redox energy storage technology, as he settled into a new role as Regional VP for Europe, Africa and the Middle East at Imergy Power Systems. Vanadium redox batteries are known to be a good fit for emerging market telecoms, in that they have a ten+ year lifespan and can partially charge or discharge an unlimited number of times according to the availability of grid or renewable power sources without any degradation in performance. However, the capital cost of vanadium redox technology has been prohibitively expensive for many applications… until now!

Keywords: Who’s Who, Energy Storage, Opex Reduction, Batteries, Air Conditioning, Off-Grid, Unreliable Grid, ROI, Vanadium Redox, ESCOs, Hybrid Power, DG Runtime, Africa, Asia, Middle East, Imergy Power Systems


Tom Tipple, Regional Vice President, Imergy Power Systems: The predecessor to Imergy, Deeya Energy, focused on the Indian market, where their manufacturing base was located, and where they have over 75 systems installed over five years with virtually no failures. Clients include Airtel and American Tower, and we’re about to sign a 200 system order with a big Indian telecoms operator in the next month. We continue to see significant market demand for our products. With the new investment and new management team, Imergy is now more of an international

company, seeking opportunities in Africa, the Middle East and Asia (for example Myanmar and Indonesia) – one of my objectives is to broaden our international horizons.

TowerXchange: What has been the interest in your solutions from Africa?


Tom Tipple, Regional Vice President, Imergy Power Systems: We’re talking to most of the African towercos and several MNOs, and have three pilots scheduled from June – one in the West, one in the East and another in Southern Africa. We currently have an active trial in Nigeria with our smaller 2.5kW system, which is great for single tenant

“

“Clients include Airtel and American Tower, and we’re about to sign a 200 system order with a large Indian telecoms operator in the next month. We continue to see significant market demand for our products

Imergy’s new ESP5 5 kW rated system

remote sites, but not ideal for multi-tenant towers. The new ESP5 system addresses that higher power requirement. TowerXchange: What is the ‘sweet spot’ for the load your systems are able to support? And how are solutions scalable as single tenant towers become multi-tenant sites? Tom Tipple, Regional Vice President, Imergy Power Systems: From an applications point of view, we are an ideal storage technology for microgrid, off grid and weak grid solutions, with or without PV installation.


We’ll be introducing our new ESP5 system in August, which is a nominally rated 5kW system (at its most efficient), but able to output at a continuous 7kW. So we can now address small, remote installations with our 2.5kW system, right up to larger multi-tenant sites with our 5kW system. Once you get to loads above 8kW, you simply add a second system. For data centres and other larger installations, we have a 30kW / 120kWh energy storage system available in October and a new 250kW modular solution due in 2015, for large solar farms, grid stabilisation and load shifting. In terms of modularity and scalability, as long as

the customer specifies up front that he requires a modular solution, which means we add an additional slot for an additional stack, it adds a small 5-10% cost to be upgradeable from a 2.5kW to a 5kW stack. We can also increase energy capacity simply by adding more electrolyte.

TowerXchange: For readers unfamiliar with vanadium redox technology, please explain why it is so well suited to energy storage at emerging market cell sites.

Tom Tipple, Regional Vice President, Imergy Power Systems: The whole idea of using vanadium redox is to maximise energy saving – we capture power from the grid, from diesel generators and from any renewable power sources as quickly as possible through the batteries’ fast charge capability. Our batteries are used in diesel hybrid solutions or as backup power for weak grid sites where outages occur on a daily basis.

But the unique thing about Vanadium Redox batteries is that they can cycle an unlimited number of times, using the full charge capacity, whereas other energy storage technologies such as lead-acid are handicapped by a finite lifecycle, and you need to follow strict guidelines to maximise that lifecycle. You have to make many compromises with lead acid battery solutions to maximise the life expectancy. Physics tells you that lead acid is simply not the right technology for long term cycling or for partially charged requirements. Cheap in the short term, but with poor performance and needing constant replacement.

5 kW, 30 kWh stack charge-dischage characteristics


Vanadium redox batteries will last at least ten years and this life expectancy is totally independent of the number of cycles. With vanadium redox you can stop and start charging and discharging at any state of charge with no effect on the performance or life expectancy of the battery. That’s absolutely critical for sites on weak grids where you don’t know when the power will come back on.

TowerXchange: The warranties on the batteries used on cell sites are notoriously difficult to claim against – what’s unique about Imergy’s solution in that respect?

Tom Tipple, Regional Vice President, Imergy Power Systems: We offer a five year warranty as standard; we don’t have any warranty limitations on temperature, number of cycles and depth of discharge, and we’ll sell an extended ten year warrantee at very low additional cost. In comparison, lead acid battery warranties have guidelines covering temperature, depth of discharge and charge profile management. In order to claim a replacement battery under warranty, you need comprehensive records to prove you kept to the manufacturers recommended guidelines, and

no-one really has that depth of record keeping. Very few companies have managed to get their money back or replacements covered under the warranty on a lead acid battery; it’s elusive. TowerXchange: What’s the timeline to ROI in Imergy’s vanadium redox batteries? Tom Tipple, Regional Vice President, Imergy Power Systems: Due to the straight line / fast charge capability, the ESP5 can deliver a much higher run time saving than other battery technologies, so we offer better opex savings on fuel. On a typical off grid site, the ROI is well under two years. The TCO figures over three years and beyond are better than other storage technologies as there is no replacement cost. For most equipment buyers, achieving an ROI under over three years is critical, while ESCOs looking at seven years power provision contracts find the vanadium redox system a very compelling proposition.

TowerXchange: What is unique about Imergy Power Systems ESP installations’ chemistry and manufacturing process?

Tom Tipple, Regional Vice President, Imergy Power Systems: Thanks to the unique chemistry of the electrolyte, our vanadium redox batteries have a high temperature rating – up to 50 degrees, which means in most locations you don’t have to worry about cooling. Other competitive energy storage solutions have much lower temperature restrictions, meaning they need some sort of cooling, which adds a parasitic load.

The cell stack is the brain of the system; it converts electrochemical energy into electricity. With most flow batteries, the membrane component of the cell stack has been inherently expensive to produce. However, Imergy have a unique cell stack design that reduces our manufacturing cost enormously while maintaining efficiency.

We have also outsourced manufacturing to Flextronics who are a highly reputable contract manufacturer. They bring volume production capability at low cost without compromising on quality. TowerXchange: Even if your energy storage solutions can deliver twice the opex savings compared with lead-acid batteries, how do you overcome the difference in initial capital outlay? Tom Tipple, Regional Vice President, Imergy Power Systems: Up to now the business case for vanadium redox has always suffered because of a higher up front capital cost compared to lead-acid; however the new ESP5 offers energy capacity at just over $700 / kWh which represents a real price breakthrough for small systems. This is a complete system price including a built in generator controller, remote monitoring system and housing – not just the battery part.

We are also able to offer a split capex-opex financing model which reduces the upfront capital outlay. We lease the electrolyte separately from the capex items such as cell stacks, housing


controllers and electronics. By retaining ownership of the electrolyte, and leasing it over a five year period, we can bring down the capex element by 50% making it comparable to a lead-acid solution. This model is particularly attractive to the growing numbers of ESCOs as they can afford to take advantage of advanced storage solutions, generating better savings with much more of a levelised cash outlay. How can we do this? The electrolyte simply does not change over time – it has retained, re-usable value. We’re happy to take the electrolyte back if the customer ever moves to a new energy storage system. All the other energy storage systems are entirely disposable – a large proportion of our system is entirely re-usable. TowerXchange: What does it cost? Tom Tipple, Regional Vice President, Imergy Power Systems: The outright capital purchase price for a 5kW / 30kWh system (equivalent to a 48VDC 1,200 Ah lead acid battery solution operating at 50% DoD) is around US$22,000 in volume, and includes a five year warranty. Ordering the same system under our split capex-opex model reduces the upfront capex to around US$11,000, equivalent to a good quality lead acid system. Over a two year period, the monthly lease for the electrolyte works out at around half the cost of replacing the lead acid batteries. At the end of the five year lease, if a new energy storage innovation becomes available, we take back the

electrolyte – all the customer has to do is deliver it to a port of convenience to collect. Or he can opt for an extended five year warranty at minimal cost. We have designed the system to be a simple replacement into most existing sites. The ESP5 includes its own battery hybrid controller to manage the generator run time according to the charge capacity – plus a remote monitoring system measuring performance that can either be independent or ported to a third party RMS. The only additional equipment you need a charging device onsite, and we can usually work with existing equipment on site. The cost of a complete ESP5 system with its enhanced OPEX saving performance now makes Vanadium Redox flow battery technology a very attractive proposition

“ “By retaining ownership of the electrolyte, and leasing it over a five year period, we can bring down upfront capex by 50%

Batteries represent 40-50% of site capex: are you choosing the right ones?Quality, suitability and testing are key factors to maximise ROI and uptime when selecting a battery vendor

Chris Bieck, Director, Trojan Battery Company

TowerXchange: Please introduce your company, offering and geographical footprint

Chris Bieck, Director, Trojan Battery Company: Trojan Battery Company has more than 85 years of expertise in manufacturing high quality, long life deep-cycle flooded, AGM and gel batteries to serve the renewable energy and telecom industries. Founded in 1925, Trojan provides deep-cycle batteries for BTS sites which operate on unreliable grids or completely off-grid, use PV solar arrays, or other renewable energy systems, and/or hybrid/charge discharge cycling (CDC) solutions.

Trojan has four manufacturing plants in the U.S. and operates warehouses in Germany and Singapore that enable us to swiftly respond to our customers’ needs around the world. We are currently planning to set up a facility in Africa to serve the growing demand from the continent for premium cycling batteries. Trojan manufactures all of its batteries in the U.S. to ensure that its rigid quality standards are met.

Trojan manufactures deep-cycle batteries which meet the requirements of mobile network operators and towercos for premium quality deep-cycle batteries to provide DC power to sites on unreliable grids or off grid. Trojan specializes in serving carriers and towercos serving rural communities in emerging markets.

Trojan’s global reach allows it to work with key players in the industry which includes telecom vendors, power systems integrators, OEMs, MNOs

Read this article to learn:< Why opt for deep-cycle batteries at off-grid and unreliable grid sites

< Which markets are adopting premium battery solutions

< Engineering challenges related to PV solar and diesel sites

< What customers need to know before picking the right batteries

Trojan Battery Company was founded in 1925 and is one of the world’s leading manufacturers of deep-cycle batteries. In this exclusive interview, we discussed with one of the company’s directors, Chris Bieck, the key drivers behind the adoption of deep-cycle batteries in the telecommunications industry, the main differences between premium deep-cycle batteries and stand-by batteries and how the telecom industry perceives and distinguishes between these two different battery solutions.

Keywords: Trojan Battery Company, Interview, Energy, South America, Central America, South East Asia, Africa, Batteries, Batteries, Fuel Security, Uptime, Off-Grid, Unreliable Grid, Hybrid Power, TCO, Renewables, PV Solar, American Tower, Claro, Digicel, Dominican Republic, Haiti, Nicaragua, System Integrator, Myanmar, Cambodia, Laos, Vietnam, Indonesia, Philippines, Nigeria, Kenya, Uganda, Tanzania, Mali, Niger, Botswana


and towercos.

TowerXchange: Tell us about the business case for renewable energy at distributed cell sites.

Chris Bieck, Director, Trojan Battery Company: Our products suit the needs of unreliable and off-grid sites, and sites running on PV solar or hybrid applications.

The most common solutions today in the market that are designed to reduce diesel fuel consumption are hybrid or charge discharge cycle (CDC) systems. The most common hybrid or CDC solutions use a combination of diesel generators (DG) and deep-cycle batteries to power the load at the BTS site. Other hybrid solutions incoprorate a DG, batteries as well as PV solar and perhaps wind.

The main objective of a hybrid solution is to reduce the consumption of diesel fuel and the runtime of the disel generator. Diesel fuel is often times the single largest OPEX cost to the MNO and towerco today and increasingly the most important area where costs can be reduced at a site especially as diesel fuel prices rise globally and diesel subsidies are phased out in many countries.

The main tool managing the multiple power inputs in a hybrid system is a power controller. The controller monitors and manages the power status of the site, provides automated onsite management of the DG, and manage the state of charge (SOC) of the battery array which are the main components of hybrid system. A reliable deep cycle battery

array is critical for the stable and predictable operation of the hybrid/CDC system, as well as for the MNO or towerco to reach its TCO goal of reducing its OPEX and dependence on fossil fuels.

More complex solutions include another power source such as a PV solar array. This not only reduces the cost related to running the site but contributes considerably to minimise the site’s carbon footprint.

Sites running on hybrid or renewable applications are built with an emphasis on reducing fuel consumption. Diesel is a problem due to its cost, environmental consequences and loss due to theft.


While some sites are near a grid, they are not connected because of the difficult and slow process, as well as the high cost of obtaining permits to connect to the grid. For these sites, diesel used to be the obvious alternative. Today, solutions combine different sources of energy and batteries allowing companies to rely less and less on diesel and more on batteries and alternative sources of energy.

TowerXchange: Talk to us about the cycle life of Trojan’s batteries

Chris Bieck, Director, Trojan Battery Company: Trojan Battery only produces premium grade

Indian site using Trojan Battery products

lead acid deep-cycle batteries. The charge/discharge cycle or cycle life of a Trojan battery, or any lead acid battery, depends on many factors. These include the routine used to charge the batteries, whether or not the batteries are taken to a full state of charge (SOC) on a regular or daily basis, the temperature at which the batteries are stored, and the depth of discharge at which the batteries are cycled. If they are flooded batteries, the user needs to stick to a regular maintenance routine, topping them off with distilled water.

The duration of Trojan batteries also depends on the overall engineering of the site. Companies which work with Trojan on these installations offer many different solutions in which the amount of time the battery is expected to power the load varies from 4 hours to several days.

On average batteries represent between 30% to 40% of the total CAPEX of a site running a hybrid or renewable energy solution. It can be more depending on how long the site must be able to operate autonomosly and how long it takes to charge the batteries correctly to perform up to their best potential. The cost for battereis can run as high as 60% of the total systems cost.

One of our key challenges is educating Trojan customers to understand that cheap battery solutions seldom pay off in the medium to long term. Many systems fail because they work with stand-by batteries that die just a few months after installation. This is a very expensive lesson for the customer as they then have to incur CAPEX


costs they did not anticipate shortly after installing a new solution in their network. Therefore, we always recommend that customers ensure that they pick a product which has been tested to independent international recognized standards by an accredited testing laboratory and not trust the battery vendor’s published specifications in their sales and marketing literature for a particular battery which more often than not is misleading.

The MNO and towerco should seek independent and highly qualified confirmation of the true performance of a battery before making a choice.

Trojan Battery tests all of its batteries to the IEC 61427 standard. This is a a globally recognized indendepent standard which best emulates the conditions a lead acid battery will experience in a hybrid or PV solar solution. Most importantly it gives the MNO and towerco an independent standard by which it can benchmark one battery vendor’s cycle life claims against another vendor’s cycle life claims.

The IEC 61427 standard subjects the battery to a set of operating conditions that more closely resemble what it will actually face in the real world, with the results providing the closest estimate of the battery’s service life in an PV or hyrbid application in the field.

The IEC 61427 test guarantees that each battery is tested in exactly the same way. This test provides companies a tool to compare and contrast

different batteries it is considering for PV solar and hybrid installations and determine if the batteries they are being sold are truly deep cycle and their true cycle life verses the published cycle life the vendor claims.

The IEC 61427 standard subjects the battery to partial state of charge (PSOC) cycles in which the batteries are discharged before they reach a full state of charge. This is a very common occurrence in hybrid and renewable energy systems. This requirement significantly reinforces the applicability of the IEC 61427 standard for batteries in hybrid and PV systems.

Trojan suggests that the MNO or towerco insist that each battery vendor provide them with the results of their battery tested to the IEC 61427 standard by an independent globally recognized and accredited testing company. If the vendor claims to provide a deep-cycle battery for PV solar applications, then it should have tested its batteries to this standard.

By insisting that all of its battery vendors test to the IEC 61427 standard, MNOs and towercos will not have to rely on the published cycle specifications the vendor provides in its marketing and sales literature or trust the internal tests of the vendor which in most cases are desgined to put their battery in the best light possible. Insisting that all its batteries vendors provide the final IEC 61427 test results of a battery which have been performed by a qualified independent laboratory will help you quickly make an “apples to apples”


comparison between different battery vendors.

TowerXchange: Where do you get most demand from the telecom sector for your batteries, LatAm, Africa, Asia or elsewhere? And what proportion of your business comes from towercos compared to MNOs?

Chris Bieck, Director, Trojan Battery Company: Trojan Battery is most active in South East Asia in countries such as Myanmar, Cambodia, Laos, Vietnam, Indonesia and the Philippines, as well as in Africa and Latin America.

Additionally, we serve the Indian subcontinent which is a very price sensitive market and yet, one where we are experiencing great success. We have recently won a contract after a two-year trial with American Tower Corporation (AMT) to supply battery systems for a hybrid application which also incoporates PV solar using our deep-cycle Premium line of flooded batteries. In this specific case, AMT realised that the TCO dramatically improved when using flooded batteries. While flooded batteries require a bit of maintenance, they offer a longer lasting and more cost-effective solution. The maintenance of the batteries is automated by using a Trojan self watering kit, which will considerably reduce the OPEX of maintaining the site.

In Africa, we are working mainly in sub-Saharan countries such as Nigeria, Kenya, Uganda, Tanzania, Mali, Niger and Botswana.

Latin America is a smaller market in light of its fairly good power infrastructure, however, we still work with companies such as Claro to provide solutions in countries that need alternative power solutions such as Peru. We are particularly active in the Caribbean and Central America in such markets as the Dominican Republic, Haiti, Guatemala, El Salvador and Nicaragua.

Today approximately 80% of our business comes from towercos and 20% from MNOs.

TowerXchange: Some cell site operators report that battery theft is almost as acute a problem as diesel theft. What can be done to reduce the stealability of cell site batteries?

Chris Bieck, Director, Trojan Battery Company: This is an issue for all lead acid battery vendors as people steal batteries to either recycle the lead that they contain, or use them in common consumer applications such as cars or to run household products.

Possible solutions would be to either avoid using 2V and 12V batteries which are suitable for a variety of commercial and consumer applications and use different voltage batteries such as a 8V AGM battery which Trojan will release shortly. Batteries also can be buried in underground storage cases.

In order to reduce the problem, we are currently designing a passive and active cooling cabinet and rack system for our batteries which can be locked,

making it harder for potential thieves to access them.

TowerXchange: Talk to us about the role of Trojan Battery’s agent network in ensuring replacement batteries are available just in time.

Chris Bieck, Director, Trojan Battery Company: We have a network of distributors in over 120 countries and, thanks to our existing and planned warehouses, we are able to serve our clients quickly worldwide as we often have a stock of our batteries in-country or in-region. Our distributors stock our products and can meet the demand virtually at anytime, anywhere.

TowerXchange: Finally, please sum up how you would differentiate Trojan Batteries from competitive cell site energy storage solutions.

Chris Bieck, Director, Trojan Battery Company: Trojan Battery has been around for almost 90 years and this is definitely a winning factor when proving our credibility. We have a long history and reputation for manufacturing high quality cyclic batteries. Our investment in advanced R&D facilities and quality control processes ensures that our deep-cycle batteries meet the requirements of the industries in which we operate.

Because of our first rate manufacturing facilities in the U.S. and independent third-party testing, we can guarantee the quality of our products and have a very low failure rate over the course of our history

Special feature:

With around 2,000 new DAS being rolled out every year in the US, what is the opportunity in emerging markets? TowerXchange takes a look at opportunities in DAS for towercos in general, and in LatAm in particular, with the help of multi-band, multi-tenant DAS network implementation specialists Deltanode. TowerXchange also chats with Thomas Bell of Anritsu to learn about “the rusty bolt effect”, or “Passive Intermodulation”, where damaged or corroded components generate interference and compromise performance. Passive intermodulation testing is particularly important for LTE deployments, as performance is dependent on the signal to noise ratio.

Beyond passive infrastructure, part three

In this special feature:214 Deltanode: The LatAm telecom industry

gears up for a new wave of DAS

217 Anritsu on the ‘rusty bolt effect’


The LatAm telecom industry gears up for a new wave of DASDensification and a maturing telecom industry are driving the change

Henrik Huss, CEO, Deltanode

TowerXchange: Please tell us about Deltanode, its activities and footprint

Henrik Huss, CEO, Deltanode: Deltanode is a relatively young company founded in 2005 with the aim to offer enhanced solutions for the wireless communication industry. Since 2008, we have been focusing our attention on the implementation of Distributed Antenna Systems (DAS) networks.

To date, the majority of our business comes from the United States and Canada where we have more than 2,000 units in operation. The North American DAS market is constantly growing and is the traditional home of DAS, in fact our largest client is a North American Neutral Host.

Lately, we have captured some interesting business opportunities in Scandinavia, our home market. Quite a few DAS opportunities are related to large infrastructure projects like tunnels and bridges, which require public safety networks to be combined with commercial coverage, all co-located in the same DAS infrastructure. For the past five years we have been active in Mexico and two years ago, we decided to actively pursue opportunities in Latin America.

Right now, we are looking at expanding our operations into Brazil and some Spanish speaking countries in the CALA region.

TowerXchange: Please tell us about the role that DAS and other smaller cells play in network planning, particularly in emerging markets

Read this article to learn:< The expansion of DAS in North and Latin America< What drives the development of DAS in emerging markets< Deltanode’s specialised offering of high power outdoor DAS< How to overcome the lack of fibre when rolling out DAS

Distributed Antenna System (DAS) networks have been deployed extensively in North America to offer coverage in targeted locations and to provide additional data-handling capacity in high-traffic areas. With the advent of 4G LTE and an impressive growth in subscriptions, Latin America is the perfect target for Deltanode, a Swedish based company focused on DAS networks and mobile coverage solutions.

In this exclusive interview, Henrik Huss, CEO of Deltanode, shares his insights into the future of DAS in Latin America and which challenges and opportunities lie ahead for telecom companies.

Keywords: Deltanode, Interview, North America, Central America, South America, Brazil, Canada, United States, Co-locations, DAS, Infrastructure Sharing, Multi-band, Densification, Scandinavia, Fibre, LTE, 4G, Regulations, FCC, Licenses


Henrik Huss, CEO, Deltanode: With the expansion of mobile connectivity, DAS is becoming the option of choice to provide multi-operator, multi-band systems in large, public venues such as stadiums and shopping malls.

DAS is the ideal solution to offer a common platform to several carriers to expand their network outreach beyond towers.

In the U.S., DAS is a secondary and yet fundamental business development opportunity for tower companies.

Brazil, thanks to the upcoming World Cup and Olympics, is driving the change in terms of DAS and gearing up to ensure connectivity is offered in stadiums, highways, airports etc cetera.

TowerXchange: What is the tipping point that will persuade a tower company or a carrier to go from thinking about DAS to then implementing DAS?

Henrik Huss, CEO, Deltanode: Historically, tower companies have strong cash-flow and this is a major driver that pushes them in favour of DAS. As previously mentioned, it is fairly normal for them to look at DAS after they have developed their tower strategy.

However, without MNOs driving the demand, the business case for DAS isn’t there. When an operator decides to extend its signal beyond towers, then towercos know the time is right to invest in DAS rollout.

TowerXchange: What is the expected market size in Latin America?

Henrik Huss, CEO, Deltanode: It is tricky to assess the market size of Latin America but looking at the U.S., the average is in the area of 2,000 new DAS nodes per year. And this refers only to neutral host, high power outdoor DAS rollouts. In addition to this there is a very large in-building market.

We expect LatAm to become a relatively big market for us, somewhat aligned to the US.

TowerXchange: How do you compare the procurement requirements between carriers and towercos? Are they seeking fundamentally different solutions, for example for single versus multiple tenants?

Henrik Huss, CEO, Deltanode: There are two sets of requirements that we have to deal with, when developing a project. On one hand, we need to


focus on the existing regulation - FCC’s in the US for example - and then, there is a considerable amount of homologation and internal approvals for each specific client.

In terms of solutions, I’d say that the single-signal solutions are mostly required by MNOs whereas towercos prefer to install multi-band and

“ “

In the U.S., DAS is a secondary and yet fundamental business development opportunity for tower companies

Courtesy of Deltanode

multi-tenant DAS. We specialise in the latter as our products have great performance and high reliability and are suitable for complex projects.

TowerXchange: What are the implications for backhaul for DAS in light of fibre not being widely implemented in emerging markets?

Henrik Huss, CEO, Deltanode: DAS works over relatively short distances. Therefore, if we consider a downtown or sub-urban environment, with high


rise buildings, we can use existing fibre to the buildings where we look at installing our systems, it is normally possible to deploy new fibre at reasonable cost as the distances are relatively short. There is of course some issues with permits in those cases.

In the US, fibre is more common but in Latin America the problem can be easily solved. Additionally, most of the buildings we target do have fibre inside as they tend to be new builds.

TowerXchange: What is the average project length, from day zero to completion?

Henrik Huss, CEO, Deltanode: A project would normally take anything between twelve and eighteen months and this includes all the permits and documentation phases.

With regards to Latin America, the regulatory process is more complicated. However, we know that some countries are now adjusting their telecom regulations – this is a welcome change for our industry as we hope the licensing process will be streamlined.

TowerXchange: Finally, please sum up the value proposition for carriers and towercos in emerging markets to invest in DAS… and what differentiates Deltanode from other potential partners in DAS?

Henrik Huss, CEO, Deltanode: First of all, I believe that the time is right for DAS in Latin America.

And if companies are looking at complex projects, Deltanode has the right set of tools.

We provide a very modular system, highly flexible and adaptable, which is a key component when making a business decision on a DAS project. In fact, the life of a DAS is approximately fifteen years, and clients are likely to make changes to the system over the course of its lifecycle. Whether they look at adding frequency band or upgrading to LTE, our system is easily adjustable thanks to its modularity.

To date, we haven’t experienced any reliability issue and thanks to our open source coding, there aren’t any license fees required. Our clients install the equipment and most operations are web-based.

We offer a highly reliable product and, thanks to our large installed base and track record, we are confident we can be a partner of choice in Latin America as we are in North America

“ “I believe that the time is right for DAS in Latin America

Indoor building system using Deltanode in downtown Toronto

The rusty bolt effect: why Passive Intermodulation testing is becoming globally relevant4G LTE is driving the change in terms of testing requirements

Thomas Bell, Senior Product Manager, Anritsu

TowerXchange: Thomas, nice to meet you at MWC! Please introduce yourself to our readers

Thomas Bell, Senior Product Manager, Anritsu: I have been involved in base station antenna manufacturing since 1995 and with Passive Intermodulation testing since 1997. At that time, we were working with this test from the manufacturing side and since 2009, I have been active in the field to help transition this knowledge to the practical field side.

Currently, Anritsu is selling the PIM Master in Latin America, Africa, Europe and South East Asia along with North America and we have been globally successful.

TowerXchange: Please tell us about your products and their evolution in the past few years

Thomas Bell, Senior Product Manager, Anritsu: At Anritsu, we have been selling the Site Master for years now as a tool to verify installation quality. It does so by measuring reflections in the RF path. Eliminating reflections caused by kinked cables or poorly made RF connections improves transmission efficiency, allowing more energy to make it through the antenna feed system and into the sector.

Today, we are also concerned about noise or interference generated by the transmitted signals as they pass through the RF infrastructure. Self

Read this article to learn:< Anritsu’s testing and measurement offering and its increasing importance in light of 4G LTE network rollouts< Why carriers should invest in extra testing when deploying 4G LTE< How a loose connection can slow your network from 20Mb to a few Mb per second

Anritsu was founded in 1895 in Japan under the name of Sekisan-sha and then established as Anritsu Electric Corporation in 1931. With approximately 4,000 employees in twenty countries and sales volume surpassing 94,000 million yen, Anritsu is now a global company offering a wide array of cutting edge products and services in the R&D, manufacturing, sales and maintenance of testing and measurement instruments for the telecom industry.

We had the pleasure to meet and speak with Thomas Bell, Senior Product Manager for Anritsu, at the Mobile World Congress this year and get a snapshot of how network evolution is changing the way carriers need to test their equipment.

Keywords: Anritsu, 4G, LTE, North America, Latin America, Africa, South East Asia, Central America, Interview, Core Network, Passive Equipment, Active Equipment, Installation, Testing, Passive Intermodulation testing, Measurement, Network Rollout, Thomas Bell, Mobile World Congress


interference known as Passive Intermodulation, or PIM, can be generated by very simple things such loose RF connectors or corroded parts. This has been known in the industry for a long time as the rusty bolt effect. If components are somehow damaged or if RF connectors aren’t properly tightened, this can jeopardise performance.

The Site Master is a great tool for identifying reflections, but a different test instrument is required to identify PIM. The PIM Master was developed to perform this test and identify the location of components that need repair.

TowerXchange: Why is the Site Master not enough anymore?

Thomas Bell, Senior Product Manager, Anritsu: LTE deployments are the main driver for PIM testing. The performance you get from an LTE system is dependent on the signal to noise ratio. The stronger the signal is compared to the noise, the faster the data can be transmitted.

PIM that falls in an operator’s uplink band acts as interference and increases the noise floor. Carriers can set up a state of the art LTE network but if they don’t tighten and clean every RF connection the whole system can run at a few MB per second instead of 20MB per second.

PIM testing is a necessary investment for operators that want to get maximum performance from their LTE network. Passive

Intermodulation testing is not new and has been a requirement for component manufacturers since 1997. Now we have portable test instruments capable of making this measurement in the field. This allows carriers to measure the passive intermodulation of the assembled RF path, to make sure it is good enough to support LTE.

Operators typically start off by purchase a few sets of PIM test equipment for their technicians to help de-bug PIM problems in the field. Within a few months, they usually determine that they are fixing problems on brand new installations. Soon after that, PIM testing usually becomes a site acceptance test for all new installations.

There is a lot more awareness now in the industry regarding the impact of PIM on LTE network performance. Operators now often plan for PIM testing as part of their LTE deployment strategy and include funds to cover the testing in their capital budgets.

TowerXchange: In which markets is the PIM Master in demand?

Thomas Bell, Senior Product Manager, Anritsu: North America has been the market with the largest demand for Passive Intermodulation Testing in light of the advanced status of 4G LTE deployments and the availability of portable PIM test solutions since 2009. In North America, the LTE networks have been deployed at 700MHz,


which is highly susceptible to PIM interference and carriers have to be extra conscious regarding their data rates due to competition. To date, the PIM Master is a standard test for the majority of carriers in North America.

However, carriers worldwide need to realise that VSWR testing doesn’t exclude Passive Intermodulation and viceversa. Any system planned for LTE should be tested both ways to ensure coverage, signal strength and the desired speeds are achieved. Companies don’t want to invest billions to then realise that a loose connection is slowing down the data rate, right?

“ “Companies don’t want to invest billions to then realise that a loose connection is slowing down the speed rate, right?

Tower Xchange

Meetup Africa 2014October 20-21, Johannesburg

Meetup Asia 2014Q4, Bangkok or Bali

Meetup Americas 201528-30 April, Hollywood, FL

towerxchange-issue_8

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