active network sharing business models in asia pacific · this report analyses active network...

© Analysys Mason Limited 2014

Active network sharing business models in Asia–Pacific

Research Report

Active network sharing business models

in Asia–Pacific

April 2014

Nipun Jaiswal and Chris Nicoll



About this report

This report analyses active network sharing in Asia–Pacific

(APAC) from a technical and business perspective.

It defines the main types of network infrastructure sharing:

passive, active and core network sharing.

The report provides a detailed summary of active network

sharing operator partnerships in APAC, as well as analysis of

the take-up of active network sharing in the region.

It also describes the key business models that operators use

to implement active network sharing.

The report presents in-depth case studies and strategies

showing how operators have successfully, or unsuccessfully,

implemented active network sharing.

It concludes with recommendations for operators.

This report is based on several sources:

Analysys Mason’s research – including our Wireless

networks tracker, and telecoms market reports for

Hong Kong, Malaysia and Vietnam

interviews with stakeholders in APAC.

2

Regions Countries

Developed Asia–Pacific (DVAP) Australia

Hong Kong

Japan

Singapore

South Korea

Taiwan

Emerging Asia–Pacific (EMAP) Bangladesh

China

India

Indonesia

Malaysia

Pakistan

Thailand

Vietnam

Figure 1: Summary of geographical coverage [Source: Analysys Mason, 2014]

Operators Country

PCCW Mobile HK 3 Hong Kong Hong Kong

EVN Telecom (now

Viettel Telecom)

Vietnamobile Vietnam

Maxis REDtone International Malaysia

Maxis U Mobile Malaysia

Figure 2: List of operators covered in case studies [Source: Analysys Mason,

2014]



Contents

6. Executive summary

7. Executive summary [1]

8. Executive summary [2]

9. Types of network infrastructure sharing

10. Types of network infrastructure sharing

11. Asia–Pacific market analysis and insights

12. Passive sharing has proliferated in APAC, whereas active network

sharing has failed to gain traction

13. Active sharing deals in APAC have occurred for a variety of reasons

stretching back to 2004, but have not gained significant momentum

14. The technical and financial structures of these deals vary considerably

15. Operators’ focus on coverage-based competitive differentiation has

hindered adoption of active network sharing in APAC

16. Malaysia is the most progressive market in APAC in terms of active

network sharing

17. Strategic business case for active network sharing in Asia–Pacific

18. There are four business models for active network sharing

19. Business model: Greenfield

20. Business model: Mutual leasing

21. Business model: Wholesale

22. Business model: Consolidation

3

23. Operator case studies

24. Operator case studies: Business cases that drive operators to share

active network infrastructure

25. Case study – 3 and PCCW Mobile: Hong Kong mobile

market overview

26. Case study – 3 and PCCW Mobile: Operator overview

27. Case study – 3 and PCCW Mobile: The operators bid jointly to

win paired LTE 2.6GHz spectrum and agreed to share their RAN

28. Case study – EVN Telecom and Vietnamobile: Vietnam mobile

market overview

29. Case study – EVN Telecom and Vietnamobile: Operator overview

30. Case study – EVN Telecom and Vietnamobile: Two small players

partnered to implement a shared greenfield roll-out

31. Case study – Maxis and REDtone: Malaysia mobile market

overview

32. Case study – Maxis and REDtone: Operator overview

33. Case study – Maxis and REDtone: The regulator encouraged

network sharing by awarding spectrum to several incumbents

34. Case study – Maxis and U Mobile: Operator overview

35. Case study – Maxis and U Mobile: Several factors influenced

the operators’ decision to adopt RAN sharing

Slide no. Slide no.



Contents

36. Case study – Maxis and U Mobile: Network sharing can generate

revenue in the long term as well as capex and opex savings

37. Recommendations

38. Recommendation 1: Operators in EMAP should consider active network

sharing for their forthcoming LTE deployments [1]

39. Recommendation 1: Operators in EMAP should consider active network

sharing for their forthcoming LTE deployments [2]

40. Recommendation 2: Operators can address the rural broadband

coverage challenge by collaborating and active network sharing

41. About the author and Analysys Mason

42. About the author

43. About Analysys Mason

44. Research from Analysys Mason

45. Consulting from Analysys Mason

4

Slide no.



List of figures

Figure 1: Summary of geographical coverage

Figure 2: List of operators covered in case studies

Figure 3: Infrastructure elements included in different types of network

sharing

Figure 4: Publicly announced network sharing arrangements by type,

Asia–Pacific

Figure 5a–b: Publicly announced active network sharing agreements in Asia–

Pacific

Figure 6: Factors that have hindered adoption of active network sharing in

Asia–Pacific

Figure 7: Active network sharing business models

Figure 8: The greenfield model for active network sharing

Figure 9: The mutual leasing model for active network sharing

Figure 10: The wholesale model for active network sharing

Figure 11: The consolidation model for active network sharing

Figure 12: Mobile market share based on active subscribers, Hong Kong,

2013

5

Figure 13: Mobile market share of active SIMs by operator, Vietnam, 2009–

9M 2013

Figure 14: Active SIMs by subscription type, and penetration rates of

contract subscriptions and mobile broadband, Malaysia, 2009–9M

2013

Figure 15: Mobile market share of active SIMs by operator, Malaysia,

3Q 2013

Figure 16: Factors that motivated Maxis and U Mobile to share a RAN

Figure 17: The benefits of RAN sharing for Maxis and U Mobile

Figure 18: Operational and planned LTE networks by region, November

2013

Figure 19: LTE trials in progress by region, November 2013

Figure 20: Examples of publicly announced active network sharing

partnerships that aim to increase broadband coverage of rural

areas, worldwide


Active network sharing business models in Asia–Pacific 13

Active sharing deals in APAC have occurred for a variety of reasons

stretching back to 2004, but have not gained significant momentum

Figure 5a: Publicly announced active network sharing agreements in Asia–Pacific [Source: Analysys Mason, 2014]

Operator 1 Operator 2 Country Operating

model Sharing

technology Type of sharing Launch date Deal value

Deal length

(years)

Hutchison

Telecommunications Telstra Australia Greenfield

W-CDMA

(2100MHz) Active RAN December 2004

AUD450m

(USD413m)

8 (ended August

2012)

Singtel Optus Vodafone Australia Greenfield W-CDMA Active RAN November 2004 AUD700m

(USD642m) 10

Banglalink Grameenphone Bangladesh Greenfield No data Active RAN

and backhaul February 2010 No data No data

Celcom Axiata Altel Malaysia

Mutual

leasing

(MVNO)

LTE (2.6GHz) Active RAN July 2013 No data No data

Maxis U Mobile Malaysia Wholesale GSM, W-CDMA,

LTE (2.6GHz) Active RAN October 2011 No data 10

Maxis REDtone

International Malaysia

Mutual

leasing

LTE (2.6 GHz),

2G, 3G

Active RAN

and spectrum July 2012 No data

5 (could be

extended to 10)

MCMC

(regulator)

REDtone

International Malaysia

Wholesale

(neutral

host)

No data Active RAN November 2012 MYR82.5m

(USD26m) 3

PCCW Mobile HK 3 Hong Kong Hong Kong Greenfield LTE (2.6GHz) RAN and MOCN August 2011 No data No data

EVN Telecom Vietnamobile Vietnam Greenfield W-CDMA Active RAN April 2009 USD338m No data



Business model: Greenfield

In this model, the operators form a new joint venture (JV)

company. It is usually a 50:50 JV launched under a new

brand name.

The new JV company bids for the spectrum and rolls out a

new shared network.

The operators can choose to share the network roll-out

through the new JV company and keep their commercial

services separate.

The greenfield model helps the operators to reduce capex

and opex as well as spectrum acquisition costs, and enables

operators to expedite network roll-out and service

commercialisation.

Joint roll-out of the new network allows the operators to fulfil

the minimum coverage requirements under the terms of

licence allocation. The operators may have found it difficult to

do so had they acquired the licence individually.

Some examples of operators that have deployed this model

in APAC are: 3 and PCCW Mobile (Hong Kong), EVN

Telecom and Vietnamobile (Vietnam), Hutchison

Telecommunications and Telstra (Australia), and Optus and

Vodafone (Australia).

19

Figure 8: The greenfield model for active network sharing [Source: Analysys

Mason, 2014]

Joint greenfield network roll-out (new)

Joint venture

Greenfield

Joint spectrum bidding (3G/4G)

No leasing

MNO 1

Limited

network

MNO 2

Limited

network

New shared network build-out

Greenfield

model


Active network sharing business models in Asia–Pacific 41

Executive summary

Types of network infrastructure sharing

Asia–Pacific market analysis and insights

Strategic business case for active network sharing in Asia–Pacific

Operator case studies

Recommendations

About the authors and Analysys Mason



About the authors

Nipun Jaiswal (Analyst) is an analyst in Analysys Mason’s Singapore office. He specialises in the Asia–Pacific

telecoms, media and related technologies markets. He is an expert in tracking, analysing and forecasting telecoms

market data, and in providing corporate strategy, competitive analysis, market insights and market intelligence. Prior

to joining Analysys Mason, Nipun was an industry analyst at a leading growth consulting firm, based in Kuala

Lumpur, Malaysia. Nipun has a strong technical background, having worked extensively on mobile network

management solutions in the OSS domain for a Tier 1 telecoms equipment vendor based in Europe and India.

Nipun holds an MBA in global business from the S P Jain School of Global Management (Singapore and Dubai) and

a degree in Computer Engineering from Bharati Vidyapeeth University (India).

Chris Nicoll (Practice Head) is the head of Analysys Mason's Network Technologies and Enterprise and M2M

research practices. His primary areas of specialisation include wireless access technologies, wireless traffic

forecasting, mobile infrastructure and operator strategy. Chris has more than 20 years of expertise as a leader in

defining telecoms strategy. Prior to joining Analysys Mason, Chris held Principal Analyst positions at ACG Research

and Nicoll Consulting, where he developed marketing strategy and positioning for leading telecoms operators. At

Yankee Group, Chris was a member of the Yankee Group Research Council and provided thought leadership to the

research organisation. At Lucent and Alcatel-Lucent, Chris was director of strategic marketing, overseeing the

company's corporate positioning and messaging, including public affairs and analyst relations. Chris also led the

Telecom Infrastructure team at Current Analysis, where he developed a global analyst team, as well as oversaw

consulting engagements and managed client relationships. Chris has also held marketing and network engineering

positions at Netrix, Tymnet and Visual Networks. Chris holds a BS in Communications with minors in Computer

Science, Psychology and Marketing from Florida State University.

42



About Analysys Mason

Knowing what’s going on is one thing. Understanding how to take advantage of events is quite another. Our ability to understand the

complex workings of telecoms, media and technology (TMT) industries and draw practical conclusions, based on the specialist

knowledge of our people, is what sets Analysys Mason apart. We deliver our key services via two channels: consulting and research.

43

Consulting

Our focus is exclusively on TMT.

We support multi-billion dollar investments, advise clients on

regulatory matters, provide spectrum valuation and auction support,

and advise on operational performance, business planning and strategy.

We have developed rigorous methodologies that deliver tangible

results for clients around the world.

For more information, please visit www.analysysmason.com/consulting.

Research

We analyse, track and forecast the different services accessed by

consumers and enterprises, as well as the software, infrastructure

and technology delivering those services.

Research clients benefit from regular and timely intelligence in

addition to direct access to our team of expert analysts.

Our dedicated Custom Research team undertakes specialised and

bespoke projects for clients.

For more information, please visit www.analysysmason.com/research.



Research from Analysys Mason

We provide dedicated coverage of developments in the telecoms, media and technology (TMT) sectors,

through a range of research programmes that focus on different services and regions of the world.

44

Alongside our standardised suite of research programmes, our Custom Research team undertakes specialised, bespoke research

projects for clients. The dedicated team offers tailored investigations and answers complex questions on markets, competitors and

services with customised industry intelligence and insights.

To find out more, please visit www.analysysmason.com/research.



Consulting from Analysys Mason

For more than 25 years, our consultants have

been bringing the benefits of applied intelligence

to enable clients around the world to make

the most of their opportunities.

45

Our clients in the telecoms, media and technology (TMT)

sectors operate in dynamic markets where change is

constant. We help shape their understanding of the future

so they can thrive in these demanding conditions. To do

that, we have developed rigorous methodologies that

deliver real results for clients around the world.

Our focus is exclusively on TMT. We advise clients on

regulatory matters, help shape spectrum policy and develop

spectrum strategy, support multi-billion dollar investments,

advise on operational performance and develop new

business strategies. Such projects result in a depth of

knowledge and a range of expertise that sets us apart.

We help clients solve their most pressing problems,

enabling them to go farther, faster and achieve their

commercial objectives.

To find out more, please visit

www.analysysmason.com/consulting.



Published by Analysys Mason Limited • Bush House • North West Wing • Aldwych • London • WC2B 4PJ • UK

Tel: +44 (0)20 7395 9000 • Fax: +44 (0)20 7395 9001 • Email: [email protected] • www.analysysmason.com/research • Registered in England No. 5177472

© Analysys Mason Limited 2014. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical,

photocopying, recording or otherwise – without the prior written permission of the publisher.

Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason Limited independently of any client-

specific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only.

Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK

publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark.

Analysys Mason Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Mason Limited shall not be under any liability for loss or

damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party.

active network sharing business models in asia pacific · this report analyses active network...

Documents