Conditions that promote tower sharing
Market conditions that make tower sharing more likely are:
• Mature networks: Network maturity is a very important aspect that drives tower
sharing. In countries where the war to gain a customer is still being fought on the
grounds of better network coverage, operators will not be willing to share tower
assets as it would mean giving away the advantage of a wider/better network
• Growing market: Growing markets mean an ever-increasing need to expand
network for the operators. If operators have the ability to share towers, they will
typically be able to roll networks out much faster
• High cost regional/rural areas still being rolled out: Operators tend to have a
rollout obligation as part of their licenses. This could mean several unprofitable
investments as certain sparsely populated rural areas might need every operator
to set up a network. Tower sharing can be a good option for such rollouts as all
operators can rely on a single set of infrastructure for their network
• New entrants looking to build scale: Because towers take time to build, new
entrants can increase their speed of network rollout by sharing towers with
existing operators
• Pressure on costs: In an increasingly competitive market, low cost is the key to
profitability, and operators can save on Capex and Opex by sharing towers.
Benefits
Low market penetration and decreasing profit margins for telecom operators
in the emerging markets have made tower sharing an attractive proposition.
National regulators in countries like Bahrain have gone a step further in supporting
infrastructure sharing by publishing a range of tower sharing template agreements on
their websites. The major benefits of sharing passive infrastructure for operators are:
• Infrastructure spending: Allows operators to cut down on capital expenditure.
Infrastructure cost for operators is estimated to decline by 16% to 20%.
The tower companies, on the other hand, derive regular annuity income.
Tower sharing can be instrumental in allowing a number of operators to enter
remote regions that would normally have very high rollout costs. Ever-increasing
demand to roll out 3G/Wimax/LTE networks has been putting a lot of pressure
on the infrastructure spending of operators. Reduced costs of infrastructure can
allow more money to be spent on enhancing infrastructure
• Network operation cost: Results in rationalisation of operational cost due to
reserves produced by sharing site rent, power and fuel expenses
• Enhanced focus on service innovation: Alleviates pressure of network rollout
and cost management from operators, allowing them to focus on customer
service in a highly competitive and customer-centric industry. This becomes
especially important in a regulatory environment demanding fast rollout of
services
• Lower entry barrier: Active and passive infrastructure sharing will result in lower
entry barriers, allowing smaller players to penetrate the market.
Infrastructure Sharing Brochure | 3