south asia and middle east telecom infrastructure - analyst briefing
TRANSCRIPT
South Asia & Middle East Telecom Infrastructure: Growing in Pursuit of a Connected World
Frost & Sullivan’s Growth Consulting can assist with your growth strategies
Aandal Margabanthu
Rahul Agarwal
Information & Communication Technologies
4th August 2011
2
Today’s Presenters
Aandal Margabanthu, Research Associate,
Frost & Sullivan
Rahul Agarwal, Consultant,
Frost & Sullivan
3
Focus Points
Agenda
� Scope of the Study
� Wireless Infrastructure Market
� Market Definitions
� Key Ecosystem Participant for the Telecom Infrastructure & Broadband Market
� Drivers and Restraints for Telecom Infrastructure
� Business Models
� Explosive Growth in Mobile Subscribers
� Rising Towers in SAME
� BTS Growth fuelled by next generation technologies
� Top Trends in the Wireless Infrastructure Market
� Increase in Data Traffic
� Growing Infrastructure Sharing Practice-Pros and Cons
� Strategic Conclusions
� Broadband Market
� Market Definitions
� Drivers and Restraints for Broadband Market
� Explosive Growth in Broadband Subscribers
� Strategic Conclusions
4
Scope of the Study
The study deals with the Telecom infrastructure in India, Bangladesh, Sri Lanka, UAE, Saudi Arabia and
Egypt. The study provides an insight into the Wireless Network Infrastructure and the Broadband
Infrastructure of the region.
The wireless segment discusses about the Mobile Infrastructure assets of the region and provides an idea
about the total number of Telecom Towers and Base Transceiver Stations in each country. It discusses the
major drivers and restraints that affects the market and its impact on the industry in the forthcoming years.
The study does not cover the backhaul network or other network components like microwave links or
antennas. However the Capital Expenditure for microwave links and antennas in all the regions have been
included.
The study on broadband market focuses upon the state of broadband internet in the region along with
penetration and other key statistical inputs. The study highlights key access technologies prevalent in the
regions along with key service providers and maps the competitive landscape. Market drivers and restraints
help formulate market potential going forward and forecast the fate of access technologies and their
significance in the growing broadband market of the region. The study briefly touches upon the cable
infrastructure and does not include insights on broadband equipment installations.
6
Market Definitions
Wireless Infrastructure
Passive Infrastructure
includes the non electric
components like the tower and the pylons, diesel electric
generator, battery, air
conditioners and equipment
shelter.
Backhaul is the connection between each tower’s Base
Transceiver Station (BTS)
and base station controller
(which controls multiple
BTS’s from different towers) usually through microwave
radio or optical link
Active Infrastructure
includes radio antenna, base
transceiver station (BTS),
microwave equipment,
transceiver and signal processing devices.
Passive Infrastructure Backhaul Infrastructure Active Infrastructure
Site Sharing
Sharing of the common site to
house the physical towers and
equipment like antennas and
BTS of multiple vendors
Mast Sharing
The concept of using the same
physical tower to install
antennas belonging to multiple
operators
Antenna SharingSharing the same antenna to receive and transmit radio frequencies of multiple
operators
RoamingPermitting the subscribers of other service
provider to access its own network
Radio Access Network Sharing
Sharing of Radio Access Network (RAN)
implies sharing of resources that connect
the user equipment with the Core network
of the service provider
Spectrum Sharing
Leasing or renting a part of the bandwidth held by a telecom service provider to
another service provider
7
Key Ecosystem Participant for the Telecom Infrastructure & Broadband Market
Saudi Arabia
Saudi Telecom Company
Mobily
Zain Saudi
India
Indus Tower
Reliance Infrastructure
BSNL
Bharti Infratel
Viom Networks
GTL
MTNL
Bharti Airtel
Egypt
Mobinil
Vodafone Egypt
Etisalat Misr
Telecom Egypt
Bangladesh
Grameenphone
Banglalink
Robi Axiata
Airtel Bangladesh
Banglalion
Qubee
Sri Lanka
Dialog Axiata PLC
Mobitel
Etisalat Lanka
Airtel Lanka
Sri Lanka Telecom
United Arab Emirates
Etisalat
Du
Huawei, ZTE, Alcatel Lucent, Ericcson, Nokia Siemens Networks, Cisco etc some of equipment vendors who provide end to end active
infrastructure solutions in the SAME regionSource : Frost & Sullivan
8
Drivers and Restraints for Telecom InfrastructureM
ark
et
Dri
vers
Mark
et
Res
train
ts
1-2 years 3-4 years 5-6 yearsExplosive growth in the mobile subscribers fuelled by
increasing affordability and decreasing service and
handset prices
Increase in the usage of data and value
added services
Introduction of next generation technologies like
3G,3.5G,4G
Increasing CAPEX and OPEX requirements
owing to rising fuel and material costs
Focus on quality of service for
competitive differentiation
Decreasing ARPU across the region has
affected the operators margin
Telecom Infrastructure Market: Key Market Drivers and Restraints (SAME), 2010-2017
Source: Frost & Sullivan analysis.
Infrastructure sharing practice on the increase
HighMediumMedium
MediumMediumMedium
Medium Medium High
HighHighMedium
HighMedium
HighMediumMedium
MediumHighHigh
High
9
Business Models
Operator OwnedOperator Owned Demerged EntitiesDemerged Entities
Joint AlliancesJoint Alliances Independent Tower CompaniesIndependent Tower Companies
• Supports the parent operator’s network
• Single tenant
• The entire CAPEX and OPEX has to be borne
by the operators
• Fast being replaced by the sharing models
• Example Etisalat,Saudi Telecom Company etc
• Supports the parent operator’s network
• Single tenant
• The entire CAPEX and OPEX has to be borne
by the operators
• Fast being replaced by the sharing models
• Example Etisalat,Saudi Telecom Company etc
• The parent operator hives off its tower assets
into a separate business unit
• Unlocks the potential of the tower assets
• For the incumbent,it is estimated to generate a
revenue increase of upto 15%
• Example Bharti Infratel,Reliance Telecom
Infrastructure
• The parent operator hives off its tower assets
into a separate business unit
• Unlocks the potential of the tower assets
• For the incumbent,it is estimated to generate a
revenue increase of upto 15%
• Example Bharti Infratel,Reliance Telecom
Infrastructure
• Formed as a Joint Venture between two or
more operators
• Reduction in CAPEX and OPEX is possible
• Encourages Infrastructure Sharing
• Enables the operators to concentrate on their
core functions like customer relations and
subscriber retention etc
• Example Indus Towers in India
• Formed as a Joint Venture between two or
more operators
• Reduction in CAPEX and OPEX is possible
• Encourages Infrastructure Sharing
• Enables the operators to concentrate on their
core functions like customer relations and
subscriber retention etc
• Example Indus Towers in India
• Not backed by operator; remains as the best
option for new entrants as it reduces the time to
market
• Based on the multi tenant principle,which leads
and huge CAPEX and OPEX savings
• Example GTL Infrastructure, American Tower
Company in India
• Not backed by operator; remains as the best
option for new entrants as it reduces the time to
market
• Based on the multi tenant principle,which leads
and huge CAPEX and OPEX savings
• Example GTL Infrastructure, American Tower
Company in India
Different Business models that the Tower Business follow are
Source: Frost & Sullivan
10
0
500
1000
1500
2000
2010 2017
Subscribers(mn)
India Bangladesh SriLanka UAE Saudi Arabia Egypt
Explosive Growth in Mobile Subscribers
• The South Asian and Middle Eastern markets have been witnessing an explosive growth in the subscriber base in the recent years due to increased affordability and innovative and price competitive services offered
• Another reason is the availability of cheap handsets with enhanced features like 3G support etc• Voice services still corresponds to about 80% of the operators revenues but there is an increase in data
usage• The ARPU will continue to decline in the region • There is a huge potential for growth in the region as the rural areas in countries like India, Bangladesh
and Egypt do not have a mobile penetration which is on scale with the population • A major proportion of the subscribers is expected to come from India followed by Bangladesh
972.6
1777.4CAGR: 9%
Source : Frost & Sullivan
11
Rising Towers in SAME
0.58
0.420.38
38.8
10.1
0.0
0.1
0.2
0.3
0.4
0.5
0.6
CY 09 CY 10 CY 17
Tow
ers
(mn)
0
5
10
15
20
25
30
35
40
45
Tow
er G
row
th R
ate
(%)
Tow ers(million) Tow er Grow th Rate(%)
Source: Frost & Sullivan
• Towers are expected to grow at steady CAGR of 4.8%• Increased CAPEX and OPEX requirements coupled with decreasing ARPU has resulted in the adoption
of the tenancy model wherein more number of BTS are colocated on the same tower• Infrastructure sharing practice is on the rise to curtail the network expenditures• New technological innovations in the tower industry include usage tubular towers design, intelligent
network ,fuel cells ,free cooling, etc• Alternate sources of energy like solar and wind are being used to power the installations
CAGR: 4.8%
12
BTS Growth fuelled by next generation technologies
• The BTS considered here is inclusive of 2G(GSM/CDMA),3G,3.5G and 4G BTS for the study period• Introduction of technologies like WCDMA,HSPA/HSPA+ ,WiMAX, LTE, UMTS etc has increased the
demand for BTS• Increased per user data usage and the advent of mobile broadband will drive the growth in the number of
BTS• Active infrastructure sharing may hinder the growth in BTS numbers. However there is currently not
enough support from the technological and regulatory front for BTS sharing • Overall tenancy ratio for SAME in 2010 is 1.6x and by 2017 it is expected to reach 3.3x
0.440.66
1.91
49.3
190.3
0.0
0.5
1.0
1.5
2.0
CY 09 CY 10 CY 17
BT
S(m
n)
0
50
100
150
200
BT
S G
row
th
Ra
te(%
)
Number of BTS BTS Grow th Rate(%)
CAGR: 16.4%
Source : Frost & Sullivan
13
Trend #1: Increase in Data Traffic
3G and 3.5G services have been launched
in India, UAE, Saudi and these countries
will have commercial 4G launch by 2011
or 2012. The entire region will have next
gen technologies launched in the next 2
years
3G and 3.5G services have been launched
in India, UAE, Saudi and these countries
will have commercial 4G launch by 2011
or 2012. The entire region will have next
gen technologies launched in the next 2
years
• Poor fiber connectivity and high
cost of copper and optical fiber
• Mobile broadband through dongles
(EVDO) and handsets(3G) is now
the preferred medium to increase
the low internet penetration in the
region
• Poor fiber connectivity and high
cost of copper and optical fiber
• Mobile broadband through dongles
(EVDO) and handsets(3G) is now
the preferred medium to increase
the low internet penetration in the
region
Increase in Data Usage will need drive the growth
in wireless infrastructure
Increase in Data Usage will need drive the growth
in wireless infrastructure
• Intense competition has resulted in
decreased tariff in the region which has
in turn resulted in a decreased ARPU.
The focus is now on VAS and data to
bolster the ARPU
• In a high churn market, innovative data
services will help retain customers
• Intense competition has resulted in
decreased tariff in the region which has
in turn resulted in a decreased ARPU.
The focus is now on VAS and data to
bolster the ARPU
• In a high churn market, innovative data
services will help retain customers
• Availability of affordable feature rich phones in the region
• Increasing penetration of smartphones
• Availability of affordable feature rich phones in the region
• Increasing penetration of smartphones
Source : Frost & Sullivan
14
Trend 2#: Growing Infrastructure Sharing Practice-Pros and Cons
Reduces the entry barriers
and the time to market for
new entrants
Reduces CAPEX and OPEX
thereby enabling network
expansion in rural areas
Helps focus on core operations like
customer relationships, subscriber
retention etc
Helps improve service offerings by
facilitating innovative and price
competitive services
Optimizes existing resources and
reduces negative environmental impact
Unbundling of resources can result in a
revenue increase of up to 15% for the
operators Reduces the growth in the
total number of towers
and affects the tower company growth
Reduced competitive
differentiation for existing
operators
Complexity involved with the
day to day operations of the
cell site
Lack of secure technological
support especially in case of
sharing Active Infrastructure components like BTS (Node B)
etc
Advantages and Disadvantages of Infrastructure Sharing
Source : Frost & Sullivan
15
Strategic Conclusions
22Shift from Voice to Data Services with VAS now acting as a revenue generation and differentiation tool
Shift from Voice to Data Services with VAS now acting as a revenue generation and differentiation tool
33There will be an increase in the numbers of tenancies in the region
There will be an increase in the numbers of tenancies in the region
44Next generation Technology Deployments across the region will positively affect the network infrastructure requirement
Next generation Technology Deployments across the region will positively affect the network infrastructure requirement
55In the future, the focus will shift to improving Quality of Service
In the future, the focus will shift to improving Quality of Service
11Increasing adoption of Infrastructure Sharing in the region
Increasing adoption of Infrastructure Sharing in the region
Source: Frost & Sullivan.
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Market Definitions
Broadband Subscription in the region has the following access technologies considered
India ADSL, 3G, WiMAX
Bangladesh Fiber, 3G, WiMAX
Sri Lanka ADSL, Fiber, 3G, 3.5G, WiMAX
UAE ADSL, Fiber, 3G
Saudi Arabia ADSL, Fiber, HSPA, WiMAX
Egypt ADSL, 3G, HSDPA
The statistic is measured irrespective of the type of device used to access the Internet, or the method of payment.
Subscriptions and forecasts are not inclusive of LTE technology
18
Drivers and Restraints for Broadband MarketM
ark
et
Dri
vers
Mark
et
Res
train
ts
1-2 years 3-4 years 5-6 yearsGrowing Economy - Increasing access to PC and
affordable smartphones. Social awareness and Literacy
Increase in data usage and VAS
Introduction of next generation technologies
like 3G.3.5G,4G. Laying down
infrastructure to support increased usage
Low level of PC penetration in emerging
economies of South Asia
Pro active Government - Initiatives encouraging computer
and Internet use and IT and Internet-related businesses
Lack of infrastructure in emerging economies
– Expensive to lay down the infrastructure for
wired expansion
Broadband Market: Key Market Drivers and Restraints (SAME), 2010-2017
Source: Frost & Sullivan analysis.
Affordability, limited coverage and literacy rates
in rural areas of the emerging economies
HighMediumMedium
LowMediumHigh
High Medium Low
LowMediumHigh
HighMedium
HighMediumMedium
MediumHighHigh
High
19
Explosive Growth in Broadband Subscribers
Source : Frost & Sullivan
0
500
2010 2017
Subscribers (MN)m
n))
India Bangladesh SriLanka UAE Saudi Arabia Egypt
30.8
340.6
CAGR: 41%
Broadband Subscriptions
• Pro active government, growing economy and increasing social awareness and literacy in the region bodes well for broadband market. Explosive growth in the mobile subscriptions along with Introduction of next generation networks will further aid the growth
• Increasing preference for mobile subscriptions over fixed line coupled with limited coverage and poor wireline infrastructure in the countries of India, Bangladesh will make wireless broadband a preferred medium
20
0
500
2010 2017
Subscribers (MN)mn))
India Bangladesh SriLanka UAE Saudi Arabia Egypt
Explosive Growth in Broadband Subscribers
15.9
242.2
CAGR: 47.6%
Source : Frost & Sullivan
Wireless Broadband Subscriptions
0
500
2010 2017
Subscribers (MN)mn))
India Bangladesh SriLanka UAE Saudi Arabia Egypt
14.7
97.9
CAGR: 31.2%
Wireline Broadband Subscriptions
21
Source : Frost & Sullivan
54.21%
54.75%
50.21%
23.92%
30.26%
16.63%
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%
India
Bangladesh
Sri Lanka
UAE
Saudi Arabia
Egypt
Broadband Subscriptions CAGR (2010 – 2017)
• There is a huge potential for growth in the region as countries like India, Bangladesh and Sri Lanka will grow at a CAGR close to 54% whereas the developed Middle Eastern countries of Egypt, UAE and Saudi Arabia are expected to grow at a modest CAGR close to 23 per cent
Explosive Growth in Broadband Subscribers
22
Strategic Conclusions
22Mobile Broadband is set for explosive growth and would be the preferred mode of broadband adoption
Mobile Broadband is set for explosive growth and would be the preferred mode of broadband adoption
33In Middle East wireline access would continue to co exist with wireless access owing to superior infrastructure
In Middle East wireline access would continue to co exist with wireless access owing to superior infrastructure
44India, Sri Lanka and Bangladesh to have mobile broadband as the preferred mode of access
India, Sri Lanka and Bangladesh to have mobile broadband as the preferred mode of access
11
Deployment of next generation networks would drive the growth in the region. India and Bangladesh await 3G while other countries are embarking on LTE
Deployment of next generation networks would drive the growth in the region. India and Bangladesh await 3G while other countries are embarking on LTE
Source: Frost & Sullivan.
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For Additional Information
Caroline Lewis
Corporate Communications
91.022.6607 2000
Aandal Margabanthu
Research Associate
Information & Communication Technology Practice
Abhishek Chauhan
Senior Consultant
Information & Communication Technology Practice
Rahul Agarwal
Consultant
Information & Communication Technology Practice