Editorial

Exploring BTS outsourcing, Collocation options for cost reduction

Published

16 years ago

May 26, 2008

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Telecommunications operators are faced with operational challenges that include theft and vandalization of equipment as well as pressure from authorities to reduce number of towers. These bring to bear the need for operators to explore ways through which the rising operational cost could be reduced, and such options are outsourcing of base transmitter station and collocation of infrastructure.

Telecommunications operators have at different times lamented high operating cost as a major challenge in delivering better quality of service to their subscribers. This brought about the need to seek ways through which the cost will be reduced. One of these options which operators have not wholesomely embraced is Base station outsourcing of some of their businesses to other companies, whose core business it is, and collocation of infrastructure.

BTS outsourcing model involves contracting with another company or person to do a particular function. Almost every organization outsource in some way. Typically, the function being outsourced is considered non-core to the business. An insurance company, for example, might outsource its janitorial and landscaping operations to firms that specialize in those types of work since they are not related to insurance or strategic to the business. Just like in other industries operations of telecommunications service providers could as well be outsourced, Global System for Mobile communications (GSM) and Code Division Multiple Access (CDMA) operators can outsource a lot of their operations such as customer care, data hosting, base station management, sales outlets among others. The outside firms that are providing the outsourcing services are third-party providers, or as they are more commonly called, service providers.

Although outsourcing has been around as long as work specialization has existed, in recent history, companies began employing the outsourcing model to carry out narrow functions, such as payroll, billing and data entry. Those processes could be done more efficiently, and therefore more cost-effectively, by other companies with specialized tools and facilities and specially trained personnel.

Currently, outsourcing takes many forms. Organizations still hire service providers to handle distinct business processes, such as benefits management. But some organizations outsource whole operations. The most common forms are information technology outsourcing (ITO) and business process outsourcing (BPO).

Business process outsourcing encompasses call center outsourcing, human resources outsourcing (HRO), finance and accounting outsourcing, and claims processing outsourcing. These outsourcing deals involve multi-year contracts that can run into hundreds of millions of dollars. Frequently, the people performing the work internally for the client firm are transferred and become employees for the service provider.

Collocation

It is a fact that up till this moment, when most of the advanced Countries of the World have put the issue behind them, government in many African Countries are still working on the roll out of basic infrastructure, including those of information and communications Technology. It is a common site to see telecoms operators running parallel infrastructures within the same location.

But according to some industry analysts, sharing of such infrastructures could have reduced the cost of operation, as well as duplications and wasting of scarce resources. Apart from this negative impact which such activities have on the environment, it will also significantly increase the efficiency of telecommunication supply in an economy.

He same is true in the case of sharing building space to co-locate operator’ cable and radio transmission facilities and related equipment. Availability of infrastructure sharing and collocation can significantly decrease barriers to competitive entry. The acquisition of right of way and other permits require building pole lines or towers dig trenches or install ducts and conduits can be time consuming and expensive but can be avoided through collocation of infrastructures.

In some Countries, only Government, entities, such as the incumbent operator, has clear legal authority to obtain ‘right of way’ occupy public property or expropriate private property. In this case, sharing of infrastructures and collocation can reduce cost of the new entrant, and at the same time provide additional revenues to incumbents.

Some regulators require incumbents to permit infrastructure sharing and collocation of a new operator’s transmission facilities in their exchanges. Other operators, including new entrants, are frequently required to cooperate as well, at least in the sharing of infrastructure that is seen to be environmentally degrading, such as towers. In some countries, third parties that own support infrastructure, such as electrical power utilities, are also encouraged to participate in sharing arrangements.

Some level of sharing of infrastructure occurs without regulatory intervention. Both sharing parties can benefit from the arrangements. In this case sharing of infrastructure is often seen as a matter to be free negotiation between operators. But in some other countries, incumbents resist sharing their infrastructure. In such markets, regulatory intervention will be required to implement efficient sharing and collocation arrangements.

Collocation Models

According to a top engineer in one of the leading mobile telecoms firms in Nigeria, all part of a mobile network can be shared between two or more network operators. This ranges from passive elements such as sites, towers, buildings and transmission links, through to radio transmission management, up to a common network infrastructure.

The most common and basic level of sharing occurs when two or more mobile operators share sites, with each putting up their own radio masts and installing their own equipment site sharing.

Usually, the space on masts and antennae are also shared. Partners that share sites may share all site related infrastructure which includes ownership right or right to-use of the site building or shelter, tower or masts, the power supply and battery backup, cabling and antennas as well as transmission equipment.

Site sharing is suitable for densely populated area with limited availability and expensive sites such as underground subway tunnel as well as for rural areas with their associated high cost for transmission and power. Regulators often promote site sharing in order to allow new operators to build their networks more easily by re-using existing sites.

It is interesting to note that mast and antennae sharing have the backing of some environmental groups as it reduces the impact they have on views, particularly in rural areas.

Beyond the site sharing level, the base station equipment, which manages the transmission of signals over the mobile network, can also be shared. In such scenario, each operation deploys its frequency, cells control and network management, while they share facilities such as Radio Base Station (RBS), Radio Network Controller (RNC) and transmission.

Mobile virtual Network Operator (MVNO) is a good model of collocation. One element of this arrangement is the fact that the MVNO does not have a mobile license and uses either parts of or the entire infrastructure of another operator.

Essentially it involves an operator that does not own or control radio spectrum or associated radio infrastructure but does own and control its own subscriber base with the freedom to set tariffs and to provide enhanced value added services under its own brand. Such arrangements can lead to increased service-based competition while also benefiting the operator that owns the infrastructure.

Benefits

There are many reasons that companies outsource various jobs, but the most prominent advantage seems to be the fact that it often saves money. Many of the companies that provide outsourcing services are able to do the work for considerably less money, as they don’t have to provide benefits to their workers, and have fewer overhead expenses to worry about.

Telecommunications operators are gradually embracing collocation which has provided an opportunity for some companies to explore to manage cell sites for operators’ collocated Base Transmitter Stations. Industry watchers believe that if operators collocate their infrastructure it will help them reduce cost of duplicating such infrastructure as well as provide opportunity for them to outsource management of collocated sites to other companies as is been witness with what IHS model. IHS is BTS building company, unlike other tower building companies; it has come up with an outsourcing model of managing BTS for operators. The company through Mallam Bashir El-Rufai, who is its chairman, said that, it has found out that management of BTS by operators with the attendant challenges of theft, vandalization of equipment is diversionary to operators’ effort in delivering quality of service. This he said could be addressed by operators outsourcing the management to experts that will solely focus on collocation and managing of BTS for them to reduce cost.

Running of base stations has constituted a very big challenge for Telecom operators in the country. Mallam Bashir El-Rufai, chairman, Infrastructure Hi-tech Services (IHS) said that GSM operators spend an average of $5,000 monthly to run a base stations. This expenditure include, servicing of generators, fuelling, and security among others. He noted that if operators outsource or rent base station it will take off them the problem of vadalization of equipment and theft of generating set among others.

But Collocation has Obstacles

In spite of the benefits of co-sharing of infrastructure, Nigerian telecoms operators are yet to fully avail themselves of the opportunities in the system. There are pockets of co-sharing of infrastructure among operators in Abuja necessitated by the local authority’s implementation of a policy geared towards forcing operators to do just that.

Mr. Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators of Nigeria (Alton) said one of the major obstacles to co-sharing of telecommunications infrastructure in the country has to do with the fact that from inception of network roll out in Nigeria, there was no provision for operators to co-share infrastructure.

He added that cp-sharing of infrastructure allows a network operator to put his network performance in the hand of the other operator who owns the infrastructure being shared. To this end, if the operator is involved in any legal issues that may require his network to be shut down as was witnessed in Mobitel and Intercontinental bank, the services of the network operator sharing such facility will also be disrupted.

He noted that some operators lack maintenance culture which could also jeopardize network performance of other operators sharing such infrastructure especially in a situation where there is a breakdown in agreement as a result of maintenance lapses. Adebayo cited example of a tower that collapsed in Victoria Island in Lagos about three weeks ago, arguing that if other operators were sharing such facility with that operator not only that network operator’s service will be disrupted but others sharing it.

Other challenges to co-sharing of infrastructure include, technology differences where some telecommunications operators operate with different frequency that does not encourage sharing, for example the height of Code Divisional Multiple Access (CDMA) towers are higher than that of Global System for Mobite communication (GSM).

Adebayo is therefore of the opinion that in spite of the benefit of co-sharing of infrastructure, operators should not be forced to go into it as such effort will not achieve the desired growth so far enjoyed in the industry.

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Editorial

FG Reiterates Commitment to Achieving 17 SDGs

Published

3 years ago

September 8, 2021

Chike Onwuegbuchi

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The federal government has reiterated its commitment to achieving all the 17 Sustainable Development Goals (SDGs) to promote economic growth and eliminate poverty in Nigeria.

The Minister of Special Duties and Intergovernmental Affairs, Senator George Akume, gave the assurance at a news conference on Tuesday, in Abuja ahead of the “Inaugural Partnership Economy Summit”, scheduled for September 14 and 15.

According to Akume, the primary purpose of the summit is to diversify the economy, promote rural growth, as well as generate sustainable jobs for the youths.

Achieving this, the minister emphasised on partnership with other stakeholders as it was the responsibility of his ministry to achieve the aim of its mission and the creation.

“The framework for the upcoming summit, guided by the principles of Public Social Private Partnership (PSPP) is being designed to develop, promote a multi-Iayered collaborative socio-economic platform for the government, the business sector as well as the civil society.

“In order to achieve this, President Muhammadu Buhari established the ministry with the mandate to develop and implement policies, programmes and projects for the effective and efficient delivery of the gains of Economic Growth and Recovery Plan,” Akume said.

He said the ministry was also charged with the mandate of collaborating with the private sector to create employment for a large number of Nigerian youths, adding that it is also meant to implement a strategy towards the realisation of the president’s June 12 promise to take 100 million Nigerians out of poverty in 10 years.

“Nigeria is among the countries in the UN that signed a pact to implement the SDGs by 2030, in the words of Ban Ki-Moon, former Secretary-General of UN in 2016.

“Nigeria is not left out in its plan towards achieving the SDGs, and how far has Nigeria gone to achieving the 806 goals is part of the questions that the upcoming summit seeks to address,” Akume explained.

He stated that to tackle the issue of poverty and unemployment, the ministry is in partnership with a number of stakeholders, including the Ministry of Industry, Trade and Investment; and Small and Medium Enterprises Development Agency of Nigeria.

Others are Raw Materials Research and Development Council, National Orientation Agency, Association of Local Government of Nigeria and SDGs Nigeria as well as MYK Psymmons Solutions Limited to come up with achievable solutions to all the challenges.

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Editorial

Smile Voice Service Will Give Nigerians Different Experience – Obiejesi

Published

9 years ago

September 21, 2015

Comms Week

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Dr. Ernest Azudialu Obiejesi is the chairman, Smile Communications (Nigeria) Limited. He first founded Obijackson West Africa Limited in the early 1980’s before diversifying into the oil and gas industry with Nestoil in 1991.
Dr. Azudialu-Obiejesi sits on the board of directors of several companies including Julius Berger Nigeria PLC, and is the Chairman of the Board of Neconde Energy and Smile Communications.‎
He recently addressed the media on the investment plans of Smile in Nigeria; peter ugwu was there for Nigeria CommunicationsWeek.

Smile Communications $365million Fund Raising
I am Dr. Ernest Azudiala Obiejesi, the chairman of Smile Communications in Nigeria and a major shareholder in the Smile Holdings limited; comprising, Smile South Africa, Smile Dubai, Smile Tanzania, Smile Uganda and Smile Democratic Republic of Congo (2016). In that capacity, we look at Smile as one of the best things that has happened in the telecommunications industry, both in Nigeria and Sub-Saharan Africa. Smile, actually, is a data telecoms company operating on 800Gigahertz Spectrum with 4G LTE licence.
Recently, we embarked on a major capital raise to make sure the company is financially stable to be able to carry out its business and network expansion plans around Africa.
The financial raise was not an easy one. It took us quite a lot of energy, because the management staff had to deal with banks in different parts of Africa. At the end we raised USD ($) 356million; which is a debt and equity.
The aim of this financing is mainly to finance to our growth; to accelerate our expansion drives, so that we will be able to a robust network smiling around Africa.
Due to the speed of the 4G LTE network it becomes very practicable that we should be able to have other networks spread across Nigeria very fast, such that we get the spectrum operating efficiently in Nigeria before other competitors catch up with us.
Secondly, we promised Nigerians a network that will enable the growth and expansion of businesses. That is already happening both in Nigeria and the rest of Africa. So, we are consolidating.

Smile’s Shareholders
As stated earlier, Smile is a pan-African telecommunications provider that owns and operates mobile wireless 4G LTE broadband networks in the 800GhZ band.
The shareholders are comprised of Al Nahla Group, a Saudi Arabia-based company, which is the majority shareholder; Renven Investment Holdings, a pan-African investment vehicle, in which Nigerian investors, including the Obijackson Group, are the majority and Verene, representing Smile senior management and social entrepreneurs from South Africa.
Also, Telecom investments, a South Arabian-based investment company is a shareholder in Smile; Capitalworks, an active alternative management company, spreading in investment in the African mid-market; the PIC, which is the biggest pension fund in the world; and Smile employees. So, we came together to compose the company called Smile. Nigeria is the largest telecoms market in Africa and that entails why Smile’s business in the country accounts for about 80% of the total operations. That is what makes Smile Nigeria very big and our participation in the country.
Smile in other African countries are getting it and will grow big too. The fund we secured is one of the biggest funds ever raised in the telecoms industry in Africa, especially with regards to a business that is somewhat a startup. Therefore, the management staff are happy with the feat we could achieve.

Smile Brazing Up For Voice Network
I have already mentioned we intend to expand the existing 4G LTE (mobile) broadband network in Nigeria and Sub-Saharan Africa. With the fund, we intend to complete our expansions to other countries.
The more critical is Nigeria which is huge and for you to nurture such business to maturity you must spread out; cover all parts of the country.
The essence is for subscribers do witness continuity in the network coverage as they move from one part of the country to another.
Secondly, we are preparing for Smile’s clear voice network (CVN). We believe that before the end of this year we would have rollout out our CVN. Therefore, apart from data, we can use Smile’s spectrum voice-wise. Some of these are the reasons we had to go into the fund raising.

Where Smile Is Headed
This funds raised answer that question. This is young company and we don’t want to go public before pre-maturely.
Listing on Stock Exchange goes beyond having the certificate; you must have something to sell. At the moment we can’t take a product that is not known to the people to NSE which will be a hard sell.
With this kind of funds raised we believe that we have all the financial strength to expand the network and unleash clear voice network. So, we don’t think we will need the help of an IPO or listing on the floor of the Nigeria Stock Exchange (NSE) in the nearest future, because, before we complete the deployment of the funds, I am sure that the returns on investment will create enough funds to enable us embark on any other future investments. #
I also want to mention that one of the reasons for having a business case here is to support the growth of the economy and improve on the lives of Nigerians through job creation. The telecoms business has been proven, across the globe, as catalyst to improving the gross domestic product (GDP) of any economy.
We believe that with the kind of speed this broadband has and the facilities, the tendencies are there to create jobs for a lot of Nigerians.
It is going to impact on every sector, particularly, the entertainment industry as local content is key in the internet business.
Nigeria being one of the fastest growing economies in Africa, we believe that this type of network will help Nigerians grow faster while consolidating the gains already made in the economy.
I think it is a very welcome development and requires a lot of support. However, we as the shareholders and as the Chairman in Nigeria, we are not resting on our oars until Nigerians smile as they should in the internet connectivity and voice network-wise. Smile within the next two years would have become a success story.
At the moment an IPO is not going to be successful; not a good business strategy and we look at it as something that will come secondary. It is not a matter of dinning with the devil with a long spoon, rather be sure you are not in the menu.
You may take the pain of going through the processes of NSE; even the compliance requirements of an IPO and at the end of the day you might not secure the fund.
Even though is it more expensive the way we are doing it now, due to the interest way, but is a sure way to create a marketable brand before considering going public.

The Participating Institutions on the Fund Raising
The Development Bank of South Africa was there. Diamond Bank of Nigeria and EcoBank Nigeria also participated. PIC, the leading pension fund in South Africa; the Industrial Development Corporation of South Africa and the Standard Chartered Bank were part of it too.
So, it was a consortium of banks that made it possible to raise the fund. On the equity aspect is where we put in our money alongside the Saudi Arabian partners.

Percentage of the Funds Smile Will Invest In Nigeria
If you look at the analysis with regards to Smile as a pan-African company, but the majority of the business is in Nigeria. This is market where about 80% of Smile business comes from. So, it is also expected that about 80% of that money will be spent in Nigeria.
This is the economy the company hopes to invest and recoup its resources too. This is where we have the population, growth tendencies, the businesses, and the oil and shows you that Nigeria is very large and sustainable for businesses too.
Therefore, both in infrastructure deployment and the funds usage, it is expected that Nigeria will have a fair share. Other market will be sharing the remaining percentage.
This simple analysis was part of the reasons the pan-African banks doled out the funds. They know Nigeria has the capacity to give back what is invested.

Why Smile Is Venturing Into Voice Network
The answer is very clear. The network runs on a superior spectrum. The idea is to give Nigerians clear voice network service. We know what the experience is today with other networks at the moment. The whole idea is to encourage good quality network service.
That is why the funds are very key, because once you commence and cover the areas; the voice network is going to be very clear.
There are testimonies that Smile’s 4G LTE in Nigeria is better than that used in London. Is it the same technology, but the one here offers better quality. Such testimonies point to the saying that Nigeria is at the forefront of global development; we want to be there with every other country.
We can’t be behind again. We are working with the Ericsson in this area to make it happen. We will start deploying by October and hope to commence fully before the end of the year.

Primary Segment on Clear Voice Network
It is important we understand that Smile is not going there to starting “fighting” the likes of MTN, GLO, Etisalat or Airtel, rather our strategy will set us apart…

…But You have A Market Share?
Yes, we do have market share, but we do wholesale as well. We expect that some of the big players can leverage some of the underutilized spaces we have.
What we are trying to do is, within the broadband, we are trying to take some of our free network and use it for voice over. If Smile is there for data and you can make calls from any part of the world, then, it gives you a whole package.
We have already created a niche for our selves and work towards adding a voice service. Without that we might not be able to utilize all the space we have on the band. Therefore, it is not a question of going to wrestle power, cut out from the subscribers of MTN, Glo and others.

How Will Rural Dwellers Will Benefit
We have to understand that 4G LTE broadband is the next level of telecom experience. Anyway, in the villages, almost everybody has telephones, but what percentage of them use or require data services. To adapt to data services, you need smartphone, laptops, or other smart devices too.
The 4G LTE is an advanced technology and Nigeria is moving fast from the voice to data. It is only when greater percentage of the population works with data services that this business will boom.
Those villages are not where the problems are rather the number of people who play in the data segment. Surely, data service is where the world is headed to. So, our target is every person or business that needs data service.

Was $365million The Needed Fund to Embark on Smile’s New Expansions Phase?
The quickest way to answer that is, $365million is a function of the companies coming together to look at what we want to achieve over the years.
The banks then looked at it and agreed on the projections they believe we can achieve. It is just like saying we want to cover Lagos, Abuja and Port Harcourt and the banks say no.
What you can do now is to cover Kaduna, Kano, etc, within the next three years. Leave Lagos for now. Therefore, the fund is a function of the agreement between the two plans. In the funds are equity and debt; most importantly, this cash is available for the company to deploy more services. The shareholders had made major investments. Before we secured the present funds, the company has been existing.

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Editorial

Jonathan Ranks as 6th Richest President with $100m

Published

10 years ago

October 8, 2014

Comms Week

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President Goodluck Jonathan of Nigeria has been listed as the 6th richest African president by known wealth, according to Richest Lifestyle, a US-based website.

In an article titled, ‘Richest African Presidents 2014′, the US website compiled a list of the nine richest presidents and kings in Africa.

There are 47 nations in Africa, led by different leaders who have been ruling for several decades.

According to the article, President Jonathan is worth $100million. It is however unclear how the US based website got their figures.

But newsrescue.com, another website amplified further when it said that some of these leaders and their families are very rich and their wealth are considered ill-gotten.

“They make their wealth from natural resources of these nations through the creation of companies under the names of their families. Here is a brief overview of the richest Presidents in Africa” the website added.

Nigeria CommunicationsWeek cannot independently verify the claims.

Other African presidents and kings on the list include;Jose Eduardo dos Santos of Angola – Net Worth: $20 Billion; Mohammed VI of Morocco – Net Worth: $2.5 Billion; Teodoro Obiang Nguema Mbasogo of Equatorial Guinea – $600 Million; Uhuru Kenyatta of Kenya – Net Worth: $500 Million; and Paul Biya of Cameroon – Net Worth: $200 Million.

Others are: King Mswati III of Swaziland – Net Worth: $100 Millio, The monarch shares the number 6 spot with President Jonathan; Idriss Deby of Chad – Net Worth: $50 Million; and Robert Mugabe of Zimbabwe – Net Worth: $10 Million.

newsrescue.com amplified further when it said that some of these leaders and their families are very rich and their wealth are considered ill-gotten.

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