Infrastructure Sharing LCC 26MAY2011 - cdg.org€¦ · Wireless Infrastructure Sharing Arnaldo Palamidessi arnaldo_palamidessi@lcc.com CDG Africa Conference 26 May 2011. Confidential
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LCC PresentationTitle Goes Here
26th May 2011
Wireless Infrastructure Sharing
Arnaldo Palamidessiarnaldo_palamidessi@lcc.com
CDG Africa Conference26 May 2011
Confidential Information 2
Anything familiar in this picture?
Confidential Information 3
Agenda
• Why Share Infrastructure
• Sharable Infrastructure
• Business Models
• Market Examples
• Getting Started
• About LCC
Confidential Information 4
Why Share Infrastructure
• Recapture past spent capital– Through sale of existing
infrastructure
• Save future capital expenses– By allowing others to host your
network
• Speed‐up deployments– By using existing structures
• Respond to regulatory pressure– Through sharing your own
infrastructure
Createsincreasedoperationalexpense as a substitute for financing expense
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What Can You Share?
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Description Positives Negatives
1‐for‐1 Swap Operators shares sites at no cost on an equal count basis
‐ Avoided CapEx for new builds
‐ Avoided OpEx
‐ Very limited in size‐ Difficult governance‐ No capital recovery
Value‐for‐Value Swap
Sites at no cost on an equal value basis; better sites have more value
‐ Avoided CapEx for new builds
‐ Avoided OpEx
‐ Negotiating value‐ Difficult governance‐ No capital recovery
Sale‐Lease back
Operators sell passive infrastructure to a 3rd party and pay monthly lease
‐ Large cash payment‐ Clear governance‐ More focused business model
‐ Loss of control for critical network components
‐ Higher OpEx costs‐ Loss of upside‐ Tied to a critical supplier
Joint Venture Majority
Operator forms a separate company and sells a minority stake in its passive infrastructure to a partner.
‐ Moderate‐sized cash payment
‐ Clear Governance‐ Clear Control‐ Allows operator to capture more upside
‐ Difficult finding an investor
‐ Complicated governance‐ Higher OpEx‐ Limited capital recovery‐ Other operators may not prefer to co‐locate due to conflict of interest
Business Models
Confidential Information 7
Business Models
Description Positives Negatives
Joint Venture Minority
Operator forms a separate company and sells a majority stake in its passive infrastructure to a partner.
‐ Moderate to large‐sized cash payment
‐ Clear Governance‐ Allows operator to capture some upside
‐ Loss of Control‐ Complicated Governance
‐ Higher OpEx‐ Other operators may not prefer to co‐locate due to conflict of interest
Operational Outsource
Operator maintains ownership of the assets, but allows an outsource provider to operate the assets and profit from leas‐up
‐ No loss of control of assets
‐ Lower OpEx than sale‐lease back
‐ Potential to capture long‐term upside
‐ May be difficult finding a partner
‐ No capital recovery‐ Difficult to disentangle
Build‐to‐Suit Operator contracts for a provider to build sites and host the operator on those sites
‐ Avoided CapEx for future sites
‐ No capital recovery‐ Provider may refuse site build requests
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Business Model Matrix
LowControl
HighControl
Low CapEx Savings
High CapEx Savings
Sale
Sale‐‐ Lease back
Lease back
Joint VentureJoint Venture
BuildBuildTo SuitTo Suit
OpsOpsOutsourceOutsource
SiteSiteSwapSwap
Confidential Information 9
TARGET BUYER DATE DEAL DETAILS Implied EV/Tower
Starcomms, Nigeria
SWAP Associates
December 2010
• Sale-Lease back deal relating to 407 of Starcomms 557 towers in Nigeria
• 15 year agreement • $81.0M USD deal value
$200k
Millicom (TiGO Tanzania)
Helios Towers Africa
December 2010
• Minority Joint Venture • Millicom agreed to sell approximately 1,020 towers to Helios
Towers Tanzania • TiGO Tanzania will retain a significant minority interest in
Helios Towers Tanzania • $80.0M USD deal value
$136k (ownership of 60%)
MTN Group, Ghana
American Tower Corporation (AMT)
December 2010
• Minority Joint Venture • Joint venture between AMT (51% stake) and MTN Group
(49% stake) to acquire 1,876 of MTN Ghana's existing sites • AMT will also need to build at least 400 new sites in Ghana for
both MTN and other wireless operators in the next 5 years • $428.3M USD deal value
$228k
Millicom (TiGO DRC)
Helios Towers Africa
December 2010
• Minority Joint Venture • Tigo DRC agreed to sell 729 towers to Helios Towers DRC • Millicon to retain a 40% minority interest in the JV • $45.0M USD deal value
$103k (ownership of 60%)
Cell-C, South Africa
American Tower Corporation (AMT)
November 2010
• Sale-Lease Back • Deal includes the 1,400 towers owned by Cell-C and up to
1,800 additional towers not built yet • $430.0 USD deal value
$134k
Millicom (TiGO Ghana)
Helios Towers Africa
January 2010
• Minority Joint Venture • Millicom agreed to sell approximately 750 towers to Helios
Towers Ghana • TiGO Ghana will retain a minority interest in Helios Towers
Ghana • $33.3M USD deal value
$74k (ownership of 60%)
Vodafone, Ghana
Eaton Towers October 2010
• Operations Outsource • Eaton Towers signed a 10-year contract to take over the
operations and co-location management of 750 towers for
Example Transactions
Confidential Information 10
Getting Started
> Determine your strategic drivers• Control vs. CapEx vs. OpEx
> Know your regulatory regime• Strict restrictions on siteing towers drives higher values
> Document your sites well
> Select your business model based on your strategic drivers
> Issue an RFP to experienced partners
> Pick your partner well• You have to live with them for a long time
> Get experienced help through the process
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LCC Company Snapshot
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Our Global Presence
Permanent Offices
Project Mode
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LCCLCC’’s Customer Base Is Diverse and Expansive s Customer Base Is Diverse and Expansive
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Our Global Services PortfolioOur Global Services Portfolio
Consultancy & Network Audit
Network Design
Network Deployment
Network Optimization
Network Maintenance
Network AuditProcesses AuditPerformance AuditBusiness modelingVendor EvaluationTechnology evaluationFIT & FOTA Testing
Network ArchitectureNominal PlanningDetailed PlanningNetwork ThinningEquipment
ConfigurationDatabase Build and FillRF and Core Network
Site Acquisition Site DesignSite ConstructionEquip. InstallationEquip. CommissioningEquip. IntegrationTower, Microwave,
Fiber
Drive testsMeasurement activities
BenchmarkingPost-processingNetwork TuningOptimization – RF &
CoreE-911 Location Testing
Preventive Maintenance
Corrective Maintenance
Technical Support Network OperationsNetwork ManagementNetwork MigrationsField Maintenance
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