Tower Sharing in MEA to Save $8 Billion

According to a white paper on the potential of network sharing in the MEA region published by Delta Partners, there are more than 200,000 mobile network towers in operation in Middle East and Africa, and about 100,000 more are expected to be deployed during the following 5 years. In addition, the paper also notes the fact that carriers invest around 10-20 percent of their revenues to upgrade the currently existing sites or to roll out new ones so that they could increase network capacity and coverage.

“Network sharing is not a recent trend, but the current economic environment, increasing competition and pressure on margins across MEA markets is making operators consider it in order to achieve significant savings in capex and opex. In some cases, infrastructure sharing is the only viable way to access rural areas and penetrate lower end segments,” says Victor Font, managing partner. “We believe that over $8 billion can be saved in the next 5 years if operators collaborate and start sharing their networks assets.”

As many of you might already know, some of the largest wireless operators in the world have recently announced deals for sharing network resources, including Vodafone and Telefonica, which partnered last month to jointly use parts of their European network infrastructure. Furthermore, a series of multi-billion dollar network sharing deals that have been recently concluded in India are meant to offer better quality and coverage, environmental friendliness and savings amounting to a whole lot of Euros.

“The same shareholder value can be created in the MEA region, but many operators are still a little cautious as they see their network assets as a key asset and differentiator,” says Chris Datta, principal. “our analysis has shown, however, that a potential downside in market share is far outweighed by the extra benefits of cost saving on both opex and capex. In other words, operators would have to drop their market share by over 10% to not create value.”

Victor Font also stated that operators, investors and regulators are supporting site sharing and that such deals are expected to become a key trend this year and the next one in the Middle East and Africa. He also added that the success of the trend lied “in the negotiation and structuring of the deal,” which translated in the inclusion of “passive and/or active network elements, existing towers or just new towers” in the partnerships. One challenge that these deals would have to overcome was the execution, Font concluded.