CMI Conference November 2014: A Market Model study
Description: CMI Conference November 2014: A Market Model study of mobile infrastructure Sharing in Africa Mårten Sundquist KTH University Background Network Infrastructure sharing A strong general trend From vertical to horizontal business model -
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slide1. CMI Conference November 2014: A Market Model study
of mobile infrastructure Sharing in Africa
Mårten Sundquist KTH University<br>
slide2. Background – Network Infrastructure sharing A strong general trend
From vertical to horizontal business model - cooperation by competitors - outsourcing of services - divestment of key network components
Different technical solutions
Regulatory aspects - Preservation of competitive environment
Financial aspects<br>
slide3. Background – Africa Spectacular subscriber uptake development
Mobile broadband dominating internet access
Operators stronger position
Financial situations increasingly challenging for MNOs
Growing economies<br>
slide4. Research Questions What types of innovative network sharing cases can be identified in Africa and how do they differ from the ones in Europe?
What are the business rationales of the new types of network operators? Methodology Market review
Identification and data collection of innovative cases
Analysis<br>
slide5. Case 1: Tower companies in Nigeria Tower companies strong development in Africa 2013-15
Business: - buy and lease-back towers - try to get additional operators per site => Network sharing
Service scope wide in Africa - power solutions - security - design of new operator site solutions<br>
slide6. Nigeria Tower Co market 175 M population
Growing economy
145 M SIMs (but still majority without phone)
Networks growing
Tower co 2-3BUSD divestment 2014<br>
slide7. Nigeria Tower Co Business Rationale Off-load balance sheet
Cost reduction<br>
slide8. Case 2: Rural Network operator Tanzania Tz 950 000 km2 38M inhabitants
~50% population coverage.
Three main MNOs in Tz (Vodacom, Millicom and Bharti)
Challenge: how to build cost efficient rural coverage
Business idea: - Create independent rural “network operator” - Sell capacity whole-sale to network operators<br>
slide9. SNT - Rural Network Operator Independent network operator created
900 MHz spectrum from regulator
Sell capacity whole-sale to existing operators
Three operators on-board
Some resistance from MNOs - Core business - SNT not always first
Low margin business
World unique setup.<br>
slide10. Rural Operator Business Actors 2G/3G<br>
slide11. Case 3: National combined LTE network in Rwanda Rwanda 26 000km2 - 12M population
Three large MNOs (MTN, Millicom and Bharti) running 2G/3G
One LTE license (170MHz on 800, 900 and 1800) given to KT/JV
LTE capacity wholesale to three operators
Compete via technology advantage World unique setup!<br>
slide12. Rwanda Integration<br>
slide13. Rwanda: Views of different actors Rwanda government + JV - Decreased overall investment - Quick rollout - Competition via technology
MNOs - Intrusion in Core business - “Network ready for LTE” - Complex integration
Vendors - Less sales
End-users - Remain to be seen…<br>
slide14. Case 4: M-Pesa Kenya Mobile payment systems generally not successful
But: In Africa hugely successful - Large unbanked population - Undisturbed by regulations - Creative solutions
M-Pesa Kenya - Operated by Safaricom (Vodafone) - 18% of Safaricom revenue - 25% of Kenya’s GDP pass through M-Pesa<br>
slide15. M-Pesa Application sharing Due to regulation and competitor pressure, M-Pesa is 2014 opened up for competing MNOs
Mobile System Application Sharing!!!
M-Pesa ecosystem include: - 85 000 agents - Application and mobile system interconnect - Central bank supervision<br>
slide16. Summary Horizontalization of business models<br>
slide17. Summary network sharing in Africa There are many interesting, innovative and even world unique cases of network sharing in Africa
Cases 2 and 3 should be considered by national regulators in many countries – not only in Africa
Paper Contribution: Increase understanding of: - Network sharing research topic - African mobile market - Regulators and vendors choices for network sharing<br>
slide18. Thank you!<br>
of mobile infrastructure Sharing in Africa
Mårten Sundquist KTH University<br>
slide2. Background – Network Infrastructure sharing A strong general trend
From vertical to horizontal business model - cooperation by competitors - outsourcing of services - divestment of key network components
Different technical solutions
Regulatory aspects - Preservation of competitive environment
Financial aspects<br>
slide3. Background – Africa Spectacular subscriber uptake development
Mobile broadband dominating internet access
Operators stronger position
Financial situations increasingly challenging for MNOs
Growing economies<br>
slide4. Research Questions What types of innovative network sharing cases can be identified in Africa and how do they differ from the ones in Europe?
What are the business rationales of the new types of network operators? Methodology Market review
Identification and data collection of innovative cases
Analysis<br>
slide5. Case 1: Tower companies in Nigeria Tower companies strong development in Africa 2013-15
Business: - buy and lease-back towers - try to get additional operators per site => Network sharing
Service scope wide in Africa - power solutions - security - design of new operator site solutions<br>
slide6. Nigeria Tower Co market 175 M population
Growing economy
145 M SIMs (but still majority without phone)
Networks growing
Tower co 2-3BUSD divestment 2014<br>
slide7. Nigeria Tower Co Business Rationale Off-load balance sheet
Cost reduction<br>
slide8. Case 2: Rural Network operator Tanzania Tz 950 000 km2 38M inhabitants
~50% population coverage.
Three main MNOs in Tz (Vodacom, Millicom and Bharti)
Challenge: how to build cost efficient rural coverage
Business idea: - Create independent rural “network operator” - Sell capacity whole-sale to network operators<br>
slide9. SNT - Rural Network Operator Independent network operator created
900 MHz spectrum from regulator
Sell capacity whole-sale to existing operators
Three operators on-board
Some resistance from MNOs - Core business - SNT not always first
Low margin business
World unique setup.<br>
slide10. Rural Operator Business Actors 2G/3G<br>
slide11. Case 3: National combined LTE network in Rwanda Rwanda 26 000km2 - 12M population
Three large MNOs (MTN, Millicom and Bharti) running 2G/3G
One LTE license (170MHz on 800, 900 and 1800) given to KT/JV
LTE capacity wholesale to three operators
Compete via technology advantage World unique setup!<br>
slide12. Rwanda Integration<br>
slide13. Rwanda: Views of different actors Rwanda government + JV - Decreased overall investment - Quick rollout - Competition via technology
MNOs - Intrusion in Core business - “Network ready for LTE” - Complex integration
Vendors - Less sales
End-users - Remain to be seen…<br>
slide14. Case 4: M-Pesa Kenya Mobile payment systems generally not successful
But: In Africa hugely successful - Large unbanked population - Undisturbed by regulations - Creative solutions
M-Pesa Kenya - Operated by Safaricom (Vodafone) - 18% of Safaricom revenue - 25% of Kenya’s GDP pass through M-Pesa<br>
slide15. M-Pesa Application sharing Due to regulation and competitor pressure, M-Pesa is 2014 opened up for competing MNOs
Mobile System Application Sharing!!!
M-Pesa ecosystem include: - 85 000 agents - Application and mobile system interconnect - Central bank supervision<br>
slide16. Summary Horizontalization of business models<br>
slide17. Summary network sharing in Africa There are many interesting, innovative and even world unique cases of network sharing in Africa
Cases 2 and 3 should be considered by national regulators in many countries – not only in Africa
Paper Contribution: Increase understanding of: - Network sharing research topic - African mobile market - Regulators and vendors choices for network sharing<br>
slide18. Thank you!<br>