Analysys Mason Broadcasting and Mobile Towers Jan12

Broadcasting and mobile towers: key factors
affecting investment opportunities

Analysys Mason webinar 26 January 2012
21454-482
Introducing our presenters

Marco Cordoni
Partner
Tower market demand and supply
Terry Norman
Principal Analyst
Facts and figures on traffic and costs
Llus Borrell
Partner
Broadcasting tower opportunities
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Briefing agenda
Marco Cordoni: Tower market demand and supply

Terry Norman: Facts and figures on traffic and costs
Llus Borrell: Broadcasting tower opportunities
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Contents

Drivers of demand for sites
Supply of towers
Tenancy ratio for tower companies
Pricing considerations for tower companies

Cost considerations for tower companies
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Market demand for towers
The demand for towers is driven by a variety of

factors, some of which vary by market maturity
Driver
Emerging markets
Relevance
Effect
Developed markets
Relevance
Effect
Market
structure
Fixed wireless entrants

Mobile data entrants
Technical
3G roll-out
Availability of rooftops
Rural broadband targets
Commercial
Coverage
Capacity for voice traffic
Capacity for data traffic
WiMAX/LTE roll-out
Multi-technology/band equipment
Regulatory
Nil
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Key:
Low
Medium
Medium-High
Positive impact Neutral impact Negative impact
High
Drivers of demand for sites Market structure
New data players are emerging and are likely to

stimulate tower demand
Developed markets
(mobile data as complement to fixed)
Emerging markets
(fixed wireless data substitution effect)
Regulators are reserving spectrum for new

entrants to build competition in mobile broadband
Poor fixed-line infrastructure encourages

the entry of fixed wireless operators
Belgium: 2100MHz reserved for new entrants in

the 2011 3G auction (Tecteo Telenet). 2600MHz
could be reserved for new entrants in the 2011
4G auction
France: fourth 3G licence issued in 2009 (Free)
WiMAX/LTE: numerous operators are launching

fixed-wireless services in the bigger cities of
African countries (e.g. Nigeria, Tanzania and
Uganda), in India and in many Latin American
countries
Netherlands: 2012 auction reserves a 10MHz

block at 800MHz for each of two new entrants
Sweden: spectrum caps on existing operators in
2.6GHz auction as a way to attract new entrants
in 2008 (Intel Capital Corporation)
Spectrum auction rules may attract new entrants

that are likely to require towers
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An increase in tower demand, initially in urban

areas, is likely as new operators focus on
urban deployments
Drivers of demand for sites Technology
The spectrum bands used for 3G and 4G sites

have different impacts on demand for towers
4G (WiMAX/LTE)
3G (HSPA)
800MHz
2600MHz (or higher)
2100MHz
Developed markets
Developed/emerging markets
Emerging markets
Most European countries

have undergone digital
switchover and released
digital dividend spectrum
Some European countries are not

switching off analogue TV until
2015 (e.g. Poland); LTE is likely to
be launched in 2600MHz
Operators are still

rolling out 3G networks
in emerging markets
Operators in emerging markets

(e.g. Africa) are also launching
WiMAX in this or higher bands
Good propagation
characteristics means
there is limited demand
for new towers (colocation
on existing ones)
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Only a small part of 3G/4G base station coverage expansion

translates into incremental demand for towers.
However, with 3G/4G sites having smaller radii than 2G sites,

there will be need for 3G/4G-only in-fill sites
Drivers of demand for sites Technology
New RAN equipment and antenna systems could

erode the demand for towers
Vendors have developed antennas
that can run multiple services and
bands
(e.g. tri-band 2.2GHz 3G and
900/1800MHz 2G and dual band
2G 900/1800MHz), allowing
different technologies to run on the
same antenna and feeder systems
Dual band: GSM 900MHz + 1800MHz

Legacy
New
Separate antenna Common antenna, Common antenna

separate feeders
and feeder
and feeders
Legacy
Multiple
cabinets
New RAN equipment has also

been developed, with the ability to
run multiple technologies (2G, 3G
and LTE) in one cabinet
New
Single
cabinet
Multi-technology RAN equipment: 2G and 3G
Operators may not require additional tower space to deploy new networks
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Drivers of demand for sites Regulation
Broadband targets could raise demand for rural

towers in developed markets
High cost of
rural fixed
broadband
2020 European Commission

broadband target: broadband
for all EU citizens by 2013
Digital
divide
National broadband targets

to provide basic broadband
services to all citizens
Governments
impose rural
coverage
obligations
France: 800MHz licensees must cover 99.6% within 15 years

Germany: 800MHz licensees must roll out to rural areas first
Sweden: one 800MHz licence must provide at least 1Mbit/s to a
list of (rural) addresses
UK: following the 2012 auction, one 800MHz licensee must cover
95% of the population
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Wireless rural
broadband
services
Demand for
towers in
rural areas
10
Contents

Supply of towers
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11
Supply of towers
Besides self-build, towers can be shared between

MNOs or sourced from tower companies
Region
Sharing between operators (JV)

Examples
Outsourcing to tower companies
Degree
Examples
Degree
North
America
Not prevalent
Prevalent ownership of tower assets by

independent tower companies
Europe
Telefnica O2 and Vodafone

in Germany, Ireland, Spain
and the UK
The tower company model, although

important, is not as prevalent as in the USA
Latin
America
Ecuador
Independent tower companies in Brazil and

Mexico
Middle
East
Multiple deals in Kuwait,

Qatar and UAE
Not prevalent
Africa
Agreements in Kenya,
Morocco and South Africa
Increasingly dominant in Nigeria, Tanzania,

Ghana and South Africa
Asia &
Pacific
Three mobile operators in

China share cell-site
facilities
Strong in Australia, India and Indonesia.

Bangladesh, Bhutan, Nepal and Pakistan are
following Indias independent TowerCo model
Key:
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Nil
Low
Medium
Medium-High
High
12
Supply of towers
Several factors affect operators propensity to

share/outsource sites, and may vary by market
Developed markets
Driver
Relevance
Commercial
Regulatory
Relevance
Effect
Coverage differentiation
Tower build restrictions
Mandated/encouraged site-sharing
Cost reduction
Raise cash
Focus on core services
Roll-out speed
Nil
Key:
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Effect
Emerging markets
Low
Medium
Medium-High
Positive impact Neutral impact Negative impact
High
Supply of towers Commercial
13
An MNO renting 75% of its sites from tower

companies can reduce its Year 1 costs by 60%
Renting sites reduces
build capex
After five years, MNOs can

experience up to 20% opex
deficit compared to
self-owned sites
The value of
tower companies to MNOs
is sensitive to the break-even
point that depends on the
relative capex and opex
Assumes an MNO rolling out 10 000 sites
in a developed country
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Source: Analysys Masons research division
Supply of towers Commercial
14
MNOs are spinning off towers to raise cash and

focus on key services
Operator problem
Rationale to spin off tower assets
Expensive external debt financing

(e.g. high leverage following earlier
investments/M&A activity)
Release cash for re-investment

in new technologies or coverage
Difficulty creating value from services
Operator Country Acquirer
Rationale to spin off towers
Optus
Australia CCI
Focus on customer service
Zain
Africa
Bharti
Pay off some of the debt taken on following M&A
Tigo
Ghana
Helios
Improve capital and operating efficiency; focus on core activities
MTN
Ghana
ATC
Reduce costs (network roll-out and passive infrastructure)
Cell C
SA
ATC
Generate cash and enhance quality and network coverage
Sprint
USA
TowerCo
T-Mobile
USA
Planned
Finance roll-out of an LTE network
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Source: Tower company websites, operator websites,

news articles and press releases
Supply of towers Regulatory
15
Tower build restrictions may force operators to

seek alternatives for colocation
Build restrictions imposed by national or local authorities
affect the ability to build towers
Developed markets
Emerging markets
France: Paris town hall prevents operators

from building new sites
Ghana: no build permit unless the closest

tower is >400m away
UK: towers require planning commission

approval
Kenya: new tower only allowed if equipment

cannot be accommodated on an existing
tower
USA: local community zoning approval

required; often restrictions put into place
Nigeria: towers above 30m height require

approval
Restrictions on building towers increases operators willingness to share tower space with
competitors:
this is especially relevant in cases where restrictions are so prohibitive that they impact the
operators ability to build towers altogether
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Supply of towers Regulatory
16
Regulation surrounding site-sharing can

encourage or force operators to co-locate
Regulators around the world are implementing regulation
that encourages or mandates site-sharing between operators
Encouraged
Mandated
Developed markets
New Zealand: mobile site-sharing is
mandatory upon request by an MNO
Emerging markets
Ecuador: mandated site-sharing
China: mobile operators are required to

share cell-sites
Jordan: operators required to provide
infrastructure sharing/colocation
EU: site-sharing encouraged through the

EU Framework Agreement
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India: guidelines promoting infrastructure

sharing
Bangladesh: infrastructure sharing
guidelines to maximise use and avoid
network duplication
17
Supply of towers
Complexities of negotiating with competitors

encourage the use of TowerCo services
Driver
Negotiation
complexities
w/competitors
Contractual
agreement
Time to market
Asset
ownership
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Effect on
use of tower
companies
Rationale
Factors such as level of sharing and structure of JV/site swap

complicate the operator site-sharing model.
JV/site swaps tend to be more adversarial in terms of
negotiation, potentially at greater risk of failure
Tower company contracts provide cost certainty, allowing

operators to forecast costs more accurately. They imply lower
capex but higher opex than site-sharing JV/site-swap between
operators
MNOs are able to offer services sooner which is particularly
relevant for new entrants. It also allows them to meet
regulatory coverage requirements faster
A site-sharing JV provides operators with greater control of

their assets
18
Supply of towers
FDI restrictions concerning towers could, in some

cases, reduce investment opportunities
FDI restrictions
Indonesia
As of 2008, foreign investment in companies owning and

developing telecoms towers is banned and ownership
must be 100% Indonesian
Foreign companies that already built towers had two
years (as of 2008) to comply with the 2008 regulations
Ghana
As of March 2011, the Ministry of Communications

issued a new directive under which Ghanaians must own
at least 30% of companies providing infrastructure
services for telecoms operators
India
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As of 2009, 100% FDI is permitted in telecom

infrastructure companies, subject to the Indian Foreign
Investment Promotion approval
Source: Press releases
Decreasing level of investment

restrictions in telecoms infrastructure
Country
19
Contents

Supply of towers
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20
Tenancy ratios are a key value driver for a tower

company
Benchmark of tower companies
tenancy ratios
3.00
70%
Emerging markets
Developed markets
2.50
Benchmark of tenancy ratio vs.

EBITDA margin
ATC
2010 20092008
2010
60%
2009
2.00
0.50
African TowerCo 2 FY 10
Crown Castle - Group - FY 08
African TowerCo 1 FY 10
East Europe TowerCo SEP 11
Bharti Airtel - India - FY 09
American Towers - FY 10
GTLI - FY 10
0.00
EBITDA margin (%)
1.00
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2008
50%
1.50
African
TowerCo 1
Crown Castle
40%
African
30% TowerCo 2
East Europe
TowerCo
20%
10%
FY12
0%
0.5
1.0
1.5
2.0
2.5
Tenancy ratio
Lower incremental cost vs. price for additional tenancies results in

an increasing EBITDA margin with tenancy ratio
3.0
3.5
21
Operators with lower coverage are more likely to

use tower companies, increasing tenancy ratios
Relatively high coverage
58% of sites located

within 2km
sites
%%of
sites
of Tigo
32%
35%
30%
25%
20%
13%
15%
10% 7%
6%
6%
4% 4% 4%
3% 3% 2% 3% 3% 2%
2% 3%
2% 1%
5%
0%
0%
Shortest distance between Operator 2

sites in Africa (km)
35%
30%
25%
18%
18%
20%
15%
11%
8%
10%
5%
5%
4%
4%
3% 4%
3% 3%
2% 2% 2% 1% 2% 2%
5% 0%
0%

within 2km
<0.4
0.4-1
1-1.5
1.5-2
2-2.5
2.5-3
3-3.5
3.5-4
4.-4.5
4.5-5
5-6
6-7
7-8
8-9
9-10
10-15
15-20
20-25
>25
<0.4
0.4-1
1-1.5
1.5-2
2-2.5
2.5-3
3-3.5
3.5-4
4.-4.5
4.5-5
5-6
6-7
7-8
8-9
9-10
10-15
15-20
20-25
>25
sites
of MTN
sites
%%of

Relatively low coverage

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35%
30%
25%
20%
17%
15%
11%
10%
9%
9%
10%
7% 8%
6% 6%
3% 3% 3% 2% 2%
5% 0%
1% 1% 1% 1%
0%

within 2km
<0.4
0.4-1
1-1.5
1.5-2
2-2.5
2.5-3
3-3.5
3.5-4
4.-4.5
4.5-5
5-6
6-7
7-8
8-9
9-10
10-15
15-20
20-25
>25

within 2km
sites
%%of
sites
of Airtel
35%
30%
25%
17%
20%
12%
15%
11%
10%
6%
6% 5%
4%
4% 4% 4% 4%
3%
3% 2% 3% 2% 3% 3%
5% 1%
0%
<0.4
0.4-1
1-1.5
1.5-2
2-2.5
2.5-3
3-3.5
3.5-4
4.-4.5
4.5-5
5-6
6-7
7-8
8-9
9-10
10-15
15-20
20-25
>25
of Vodafone
%%
of sitessites

22
The attractiveness of the sites in a tower companys

portfolio is a key factor in tenancy ratios
Distance from tower companys sites to the nearest
Operator 2 sites in main city in Africa (km)
Tower company vs. Operator 2 sites

in main city in Africa
Vodafone
% of %
of sites sites
20%
18%
16%
16%
12%
12%
48% within
400m
16%
14%
12%
8%
8%
4%
4%
2%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
<100
100-200
200-300
300-400
400-500
500-600
600-700
700-800
800-900
900-1k
1k-1.5k
1.5k-2k
2k-2.5k
2.5k-3k
3k-3.5k
3.5k-4k
4k-4.5k
4.5k-5k
>5k
0%
TowerCo
Operator 2
Tower company vs. Operator 4 sites
in main city in Africa
Distance from tower companys sites to nearest

Operator 4 sites in main city in Africa (km)
% of sitessites
% of Vodafone
20%
16%
12%
14%
12%
12%
10%10%
10%
10%
10%
34% within
400m
8%
8%
4%
4%
2%
0% 0% 0% 0% 0% 0% 0% 0%
TowerCo
Operator 4
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<100
100-200
200-300
300-400
400-500
500-600
600-700
700-800
800-900
900-1k
1k-1.5k
1.5k-2k
2k-2.5k
2.5k-3k
3k-3.5k
3.5k-4k
4k-4.5k
4.5k-5k
>5k
0%
23
Estimating site demand requires complex

modelling
Calculated for each year from 2011 to 2020
Population by
settlement
Penetration by
geotype
Subscribers by
settlement and
operator
Market share
by operator
2G spectrum
allocations
2G usage by
geotype and
operator
2G site
capacity by
operator
2G
subscribers by
settlement and
operator
2G usage by
settlement and
operator
2G capacity
sites required
by settlement
and operator
3G
subscribers by
settlement and
operator
3G usage by
settlement and
operator
3G capacity
sites required
by settlement
and operator
3G usage by
geotype and
operator
3G site
capacity by
operator
Total capacity
sites required
by settlement
and operator
Maximum of
capacity and
coverage sites
Existing
towers by
operator and
settlement
Annual tower
market share
by settlement
Own sites
available by
settlement
Allocate co-lo
tenants by
tower market
shares
Split B2S sites

according to
tower market
shares
Calculated once only, then phased by year

Cell radius by
technology
and frequency
band
3G spectrum
allocations
Sites required
by settlement
for blanket
coverage
Annual rollout
prioritised by
un-served
population
Estimated
radius by
settlement
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Source: Analysys Mason
Calculate
tenancy ratios
per settlement
24
Contents

Supply of towers
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25
Rental fees typically follow price escalation

mechanisms outlined in binding contracts
with escalation mechanisms in place as
per the colocation contracts
Rental fees for anchor tenants

vary between markets
40
Tower companies
35
30
20
Inflation
15
10
Exchange rate
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African TowerCo 3
GTL
MG
East Europe TowerCo 2011 discount
East Europe TowerCo 2015 discount
IT
East Europe TowerCo 2011
East Europe TowerCo 2015
Emerging markets
Developed markets
KE
BW
CC
AT
SBA
African TowerCo 2
5
African TowerCo 1
USD per year (thousands)
25
Fuel cost
ARPU
Source: Analysys Mason, operator reports
Eastern
Europe
African
1
African
2
26
Additional tenants often pay lower prices than

anchor tenants due to building costs
Benchmarks for discounts for additional tenants
16%
15%
14%
13%
13%
Discount
12%
11%
10%
8%
8%
8%
7%
7%
6%
6%
7%
5%
4%
3%
2%
Discount for 2nd operator

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Discount for 3rd operator
Operator H
Operator G
Operator F
Operator E
Operator D
Operator C
Operator B
Operator A
0%
27
3G/4G colocation may result in a small revenue

upside but typically no increase in tenancies
Examples
Pricing structure
East European
tower company
One base fee accommodates six antennas for both 2G and 3G

technologies for ~USD1550 per month
African tower
company 1
One base fee accommodates three antennas only for 2G

technology for ~USD2800 per month
Additional ~USD800 per month to accommodate three
additional antennas for both 2G and 3G technologies
Anchor tenant base fee accommodates three antennas for
~USD3000 per month and right to install additional equipment
at no extra charge
Base fee accommodates 2G technology for ~USD650 per
month
Additional ~USD110 per month for an overlay 3G BTS
African tower
company 2
Indian tower
company
Effect on
revenues
3G operators are not likely to pay standard monthly rentals for an overlay 3G network
therefore incremental revenues from new technologies are likely to be small
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Contents

Supply of towers
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29
Tower companies cost structures vary

significantly across markets
Direct cost breakdown of tower companies
100%
100%
100%
1%
90%
90%
90%
29%
80%
80%
70%
70%
70%
60%
60%
60%
50%
50%
50%
40%
40%
80%
41%
57%
40%
30%
30%
20%
20%
20%
10%
10%
30%
58%
14%
African
TowerCo 1
Insurance & Other
FuelOperation & Maintenance
Fuel & Electricity
Operations and maintenance

Other expenses
10%
18%
0%
0%
0%
82%
African
TowerCo 2
Insurance and Other
Operation
and maintenance
Fuel
& electricity
Fuel & Electricty
Operations and Maintenance

Other expenses
East European
TowerCo
Insurance
& Others
Operations & Maintenance
Operations and Maintenance

Other expenses
In some emerging markets, fuel is a key cost component as towers are either not connected
to a power grid or the power grid is unreliable, requiring diesel generators
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30
Tower companies incur significant capex for new

towers but minimal capex for new tenants
additional colocation capex could reach
~USD10 000 per new tenant
Build capex lies between USD150 000 and

USD173 000 per tower
12,000
200
180
160
173
167
166
161
155
Indoor
152
10,000
150
140
8,000
100
80
60
USD
USD (thousands)
120
6,000
40
20
4,000
Outdoor
0
2,000
0
African
African
TowerCo 1 - TowerCo 1 outdoor tenant indoor tenant
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African
TowerCo 2
31
The valuation of each tower varies significantly

across markets
250
229
Average USD139 000

per tower
170
2000
Dec-08 May-09
Jan-10
4500
Feb-10 Mar-10
~50 000
Sep-10
CellC South Africa

American Tower
GTLi
Reliance Infratel
TTML India
Quippo
2535
3200
Nov-10
Tigo DRC
Helios
750
Essar India
American Tower
Aircel India
GTLI
17 500
74
MTN Ghana
American Tower
1660
98
Tigo Tanzania
Helios
5000
113
107
131
Starcooms Nigeria
SWAP
700
102
Tigo Ghana
Helios
No. towers 0
under
transaction
134
India Xcel
American Tower
100
153
WTTIL India
Quippo
150
50
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197
193
Optus Australia
Crown Castle International
Valuation per Tower

(USD 000)
200
407
1020
1876
729
Dec-10
103
32
Briefing agenda

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33
Contents

The commercial context for network sharing and tower
companies
The cost to support traffic growth
Cost savings through network sharing
Analysys Mason Research
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34
The commercial context for network sharing and tower companies
Globally, connection numbers and the traffic per

connection are increasing
and to 301MB per month in

emerging markets (CAGR 28%)
Connections worldwide will grow
from 5 billion to 7 billion (CAGR 7%)
Average wireless network traffic

per connection worldwide
900
Traffic (MB per month)
Traffic is expected to increase to

892MB per connection per month in
developed markets (CAGR 31%)
700
500
300
100
-1002011
World
Penetration has almost reached

saturation in developed markets
2014
Developed markets
2015
2016
Emerging markets
8
7
6
5
4
3
2
1
0
2011
World
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2013
Average number of wireless

network connections worldwide
Connections (billion)
In emerging markets, the number of

connections is expected to grow
substantially
2012
Source: Analysys Mason, 2011
2012
2013
2014
Developed markets
2015
2016
Emerging markets
35
The commercial context for network sharing and tower companies
Traffic is growing at 42% per annum, but data

revenue per GB is falling at 18% per annum
Assuming operators continue using

the flat-rate pricing model, we
predict revenue of less than USD4
per GB by 2016 in both developed
and emerging markets
The degree to which tiered pricing is

adopted in the future will affect this
forecast
3500
Traffic (PB per month)
Revenue is falling at 18% per

annum
Traffic from mobile connections worldwide

3000
2500
2000
1500
1000
500
0
2011
World
2012
2013
2014
Developed markets
2015
2016
Emerging markets
Revenue per GB of mobile

broadband traffic worldwide
14
Revenue per gigabyte

(USD)
We expect mobile traffic to grow

from 570PB to 3243PB per month
by 2016 (CAGR 42%)
12
10
8
6
4
2
0
2011
World
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2012
2013
2014
Developed markets
2015
2016
Emerging markets
36
Contents

companies
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37
How much will it cost to build the networks to

deliver 42% traffic growth?
Billions (USD)
Forecast RAN capex spend for

Western European operator*
50
40
30
20
10
0
2011
2012
2013
2014
2015
2016
Billions (USD)
Forecast RAN capex spend for Western

European operator with 50% cost reduction*
Within five years, their RAN

expenditure will be eight times what
it is today
Alternatively, operators could deploy

network cost reduction strategies
A realistic increase in network spend
can only be achieved if operators cut
their network carriage costs by
around 50%
12
10
8
6
4
2
0
2011
2012
2013
LTE (data)
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If operators service demand by

simply building more sites the cost
will grow dramatically
2014
2015
2016
UMTS (data)
*GSM, UMTS (R '99 and HSPA), MIMO, Dual Carrier, LTE

Key requirements: upgrade to HSPA+, acquire

spectrum, deploy LTE and reduce costs
Operators will employ a mix of the following to reduce costs:
upgrade existing HSPA base stations to HSPA+ as required
buy spectrum as it becomes available; deploy 800MHz and 900MHz

deploy LTE (mass-market deployment from 2013)
employ self-optimising networks
maximise use of network capacity management and optimisation

techniques
deploy small cell solutions (active network offloading) enhanced capacity,
2530% savings per site vs. building new sites
offload as much traffic as possible onto indoor (fixed broadband) network
share networks: 2030% cost savings with passive sharing
21454-482
38
39
Contents

companies
21454-482
40
Network or infrastructure sharing comes in many

different forms
No sharing
Passive
(site)
sharing
Site share
+ joint
roll-out
Active
network
sharing
Spectrum
sharing
Deeper
(core)
sharing
Increased network sharing
Separate sites
Shared sites
Shared sites
Shared sites
Shared sites
Shared sites
Separate
planning
Separate
planning
Joint planning
Joint planning
Joint planning
Joint planning
Separate
base stations
Separate
base stations
Separate
base stations
Network sharing
Network sharing
Network sharing
Separate
spectrum
Separate
spectrum
Separate
spectrum
Separate
spectrum
Shared
spectrum
Shared
spectrum
Separate
core network
Separate
core network
Separate
core network
Separate
core network
Separate
core network
Shared
core network
Increased cost savings (and risk)

21454-482
10%
10%
5%
0%
5%
45%
45%
40%
40%
35%
35%
30%
30%
25%
25%
20%
20%
Router pricing
Spares
Emerging
Microwave backhaul
Site acquisition and
design
Network testing
Node B/BTS
Power
Building, rigging, and
materials
0%
Typical capex costs per site

Typical opex costs per site
Developed
Transportation
Other expenses (fees)
Security
Insurance
Management (G&A)
Spares
Maintenance manpower
Power maintenance
RF engineering support costs
MW backhaul annual costs
Electricity/Diesel
H/W / S/W annual support
Land rent
21454-482
15%
15%
41
and offers considerable cost-saving

opportunities
42
As an example, we examine potential savings

under two RAN-sharing scenarios
We consider the costs and benefits over five years of two different types of
RAN sharing
Scenario A is a joint-venture: a new build, with roll-out of an LTE network. A

total of 2500 sites are deployed, evenly spread over five years
Scenario B is a consolidation of two mature networks in an emerging
market for example, two GSM networks:
we modelled two cases where the site count is reduced evenly over five
years, by either 1000 or 1500 sites
For both scenarios, we modelled passive sharing only
On each site, the operators share the mast or pole, cabin and utilities, but each
has a separate antenna, eNode B and backhaul
21454-482
43
Results show potential savings are substantial in

both the joint-venture new build
Scenario A: Cumulative capex and opex
savings in a developed market
Scenario A: Cumulative capex and opex

savings in an emerging market
18%
35%
16%
30%
25%
Percentage saving
Percentage saving
14%
20%
15%
10%
12%
10%
8%
6%
4%
5%
2%
0%
0%
Year 1
Year 2
Year 3
Capex
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Year 4
Year 5
Opex
Year 1 Year 2 Year 3 Year 4 Year 5

Capex
Opex
44
and for the consolidation of two networks

Scenario B: Cumulative opex savings
in an emerging market
Scenario B: Ratio of annual opex saving to

capex spend in an emerging market
1.2
Ratio of opex saving to annual capex spend
16%
Annual perceentage opex saving
14%
12%
10%
8%
6%
4%
2%
0%
Year 1
Year 2
Year 3
1500 site case
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Year 4
Year 5
1000 site case
1.0
0.8
0.6
0.4
0.2
0.0
Year 1 Year 2 Year 3 Year 4 Year 5
1000 sites
1500 sites
Break-even line
45
In the UK, Vodafone and O2 have used passive

sharing to reduce costs
Site count and population coverage:
Vodafone and O2 UK

Orange UK
100
14000
70
10000
60
8000
50
6000
40
30
4000
20
2000
50
6000
40
30
4000
20
2000
10
0
2007
Site count
percentage population coverage Orange

(2007 to 2010)
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8000
2010
Orange
70
60
0
2007
80
10000
10
90
12000
Site count
80
Percentage of poulation coverage
90
12000
Site count
100
Vodafone
O2
14000
2010
Percentage population coverage

20072010
Vodafone
O2
46
T-Mobile and Three have saved costs and

extended coverage through active sharing
21454-482

Three and T-Mobile
14000
12000
80
10000
60
8000
6000
40
4000
20
2000
0
2007
2010
3 UK
T-Mobile
percentage population coverage 3 UK
(2007 to 2010)
percentage population coverage T-Mobile
(2007 to 2010)
100
Site count
The extension to coverage has

helped Three move to pole position in
carrying data. It claims to carry 70%
of the countrys mobile broadband
data traffic
Handover and roaming handover
have been very challenging to
manage
A frequency converter was needed to
shift Threes carrier to within 20MHz
of T-Mobiles to allow MORAN to be
implemented
It is rumoured that as many as 4500
T-Mobile sites are awaiting
decommissioning
47
Other important considerations (drivers)

Cost saving and coverage extension
Mobile Broadband Network Limited (MBNL) in the UK has a unique active
network-sharing agreement because it covers the consolidation of established
sites, as well as the development of new sites. Consolidation is a notoriously
troublesome process
Extending coverage into rural areas
In Spain, Orange and Vodafone have an active network-sharing agreement
that was devised to develop mobile broadband coverage in rural areas
21454-482
48
Other important considerations (drivers)

An evolutionary path for obsolete technologies e.g. CDMA (WiMAX?)
The case of Bell Mobility and TELUS in Canada demonstrates the potential for
established partnerships to deepen, and for sharing to pave the upgrade path
for CDMA operators
A route to market for operators that fail to win a licence
EVN Telecom and Hanoi Telecom (Vietnamobile) in Vietnam demonstrate that
operators can use a sharing arrangement in order jointly to acquire a 3G
licence
Cost-effective LTE roll-out
Net4Mobility in Sweden, which was the first LTE network-sharing agreement to

be announced
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49
Infrastructure sharing brings benefits that

encourage support from regulators
Consumer benefits: more widespread mobile services, faster network roll-out,
increased choice of suppliers and lower cost of services
Sharing offers a cost-effective means of delivering mobile broadband services

to rural communities which helps bridge the digital divide
May stimulate competition: e.g. shifting the focus of operators differentiation
from coverage towards services, or by enabling new entrants to launch their
services more rapidly
Environmental benefits: decrease in number of cell-sites, which reduces visual
impact and lowers energy consumption if power supplies shared
Pooling spectrum for RAN or backhaul operation is sometimes allowed, to

optimise the use of national spectral resources. However, operators are often
required to use their assigned frequencies as a condition of RAN sharing
21454-482
50
and regulation is increasingly supportive

Passive infrastructure sharing is permitted in many countries worldwide
Active infrastructure sharing is less commonly supported, but is
becoming more widely considered, especially because of its potential
benefits for rural broadband
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51
Examples of passive sharing
Sweden
Country
Date
Details
Poland
July 2011
Polska Telefonia Cyfrowa (T-Mobile), and PTK Centertel (Orange) formed

50:50 JV NetWorkS! to manage an infrastructure sharing agreement. Around
3500 sites will be dismantled in the next three years
Denmark
June 2011
TeliaSonera and Telenor will give each other access to their respective
network towers in areas where they would otherwise have had to build their
own. The two companies will also establish a common infrastructure
company that will operate the joint network
Austria
April 2011
T-Mobile and Orange announced a network partnership agreement

concerning the joint use of their existing 3G infrastructure in rural areas
Czech
Republic
February
2011
Telefnica O2 and T-Mobile signed an agreement on sharing 3G networks.

The six-year cooperation covers infrastructure
Belgium
October 2009
BASE (KPN Group Belgium) and Mobistar agreed to jointly acquire and build
new sites for their respective mobile networks
Italy
August 2009
Vodafone and Telecom Italia Mobile agreed to share passive infrastructure.

The agreement covers existing and future passive network equipment, such
as civil works, electricity poles and pylons and energy systems
Italy
July 2009
Telecom Italia Mobile and 3 struck a site sharing deal. This included: poles,
cables, electricity supply and conditioning systems and other civil
infrastructure
Spain,
Germany,
UK,
March 2009
Telefnica O2 and Vodafone, announced that they would share infrastructure

in several European markets in an effort to cut costs and protect profit
margins
Spain
January 2008
France Telecoms Orange and TeliaSoneras Xfera Moviles (operating under

the Yoigo banner) announced a five year agreement to share their network
infrastructure in Spain
Denmark
Ireland
United
Kingdom
Poland
Germany
Belgium
France
Czech Rep.
Austria
Spain
Italy
This table represents only a selection of examples of passive infrastructure sharing. Omissions
include passive sharing agreements in the Netherlands and Cyprus which have been superseded
by mergers and acquisitions while other deals have been superseded by active and active+
sharing agreements
21454-482
52
Examples of active sharing

Country
Date
Details
Poland
July 2011
Polska Telefonia Cyfrowa (T-Mobile), and PTK Centertel (Orange) formed

50:50 JV NetWorkS! to manage a RAN sharing agreement
France
October 2010
Agreement between SFR, Orange, and Bouygues Telecom for 3G (HSPA+

at 900 Mhz) active Radio Access Network (RAN) sharing
UK
December
2007
T-Mobile and H3G founded a 50:50 JV company, MBNL, to consolidate their

3G networks, with estimated cost savings of around GBP2 billion
UK
February
2010
Orange and T-Mobile agreed to spectrum and RAN sharing. 10 000 base
stations to be fitted with Huawei's FlexiRAN architecture
Sweden
April 2009
Tele2 and Telenor formed a JV, Net4Mobility, to build shared national LTE
and GSM networks
Spain
November
2006
RAN-sharing agreement Orange and Vodafone for towns with populations

below 25 000
Sweden
United
Kingdom
France
Poland
Spain
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53
Even deeper sharing spectrum sharing
Sweden
Country
Date
Details
Status
Poland
July 2011
Polska Telefonia Cyfrowa (T-Mobile), and PTK Centertel

(Orange) formed 50:50 JV NetWorkS! to manage a RAN
sharing agreement
Around 3500 sites

will be dismantled
in the next three
years.
France
October
2010
Agreement between SFR, Orange, and Bouygues

Telecom for 3G (HSPA+ at 900 Mhz) active Radio Access
Network (RAN) sharing
Active
UK
December
2007
T-Mobile and H3G founded a 50:50 JV company, MBNL,

to consolidate their 3G networks, with estimated cost
savings of around GBP2 billion
Active
UK
February
2010
Orange and T-Mobile agreed to spectrum and RAN

sharing. 10,000 base stations to be fitted with Huaweis
FlexiRAN architecture
Active
Sweden
April 2009
Tele2 and Telenor formed a JV, Net4Mobility, to build

shared national LTE and GSM networks
Active
Spain
November
2006
RAN-sharing agreement France Telecom and Vodafone

for towns with populations below 25 000
Active
United
Kingdom
France
Spain
21454-482
54
Contents

companies
21454-482
55
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21454-482
56
Related publications from Analysys Mason

Recent publications
Wireless network traffic worldwide: forecasts and analysis 20112016
Spectrum: valuing that which has no intrinsic value

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Forthcoming publications
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The changing shape of the radio access network and the impact of
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Site sharing is becoming increasingly important to MNOs in the Middle
East
21454-482
57
Briefing agenda

21454-482
58
Contents

Why?
Initial considerations
Trends and challenges impact on investment case
Future opportunities
21454-482
59
Why?
Broadcasting tower investments have gained

momentum over the last 12 months
M&A momentum Four transactions worth in total over EUR1.1 billion
Czech
Republic
Date: December 2010

Target: CRA
Buyer: Macquarie
Seller: Falcon (Mid Europa)
Deal value: around EUR574 million (source: The Australian)
Poland
Date: March 2011

Target: Emitel
Buyer: Montagu
Seller: Telekom Polska
Deal value: around EUR432 million (source: unquote.com)
Netherlands
Date: June 2011

Target: Alticom
Buyer: Infracapital
Seller: TDF
Deal value: around EUR100 million from TDF (source: Telecompaper)
Spain
Date: October 2011

Target: Axion (regional player)
Buyer: Antin Infrastructure Partners
Seller: TDF
Deal value: around EUR115 million (source: InfraNews)
21454-482
60
Contents

Why?
21454-482
Initial considerations European broadcasting towers
Broadcasting towers in Europe some initial

considerations
Broadcasting tower companies in Europe are different from typical
tower companies such as American Towers
Different service mix

Greater readiness to outsource the transmission network
Stronger importance of regulation
21454-482
61
62
Terrestrial remains the most important TV

distribution platform in the EU
HHs terrestrial position
in selected EU countries (2009/2010)
Main distribution platform

Second distribution platform
21454-482
Third and fourth distribution platform
Terrestrial remains the most

important TV distribution platform
in the EU:
e.g. more than 33% of
households
In some countries, terrestrial is a
second platform and enjoys a
good position:
e.g. Finland
In some countries, terrestrial
plays a limited role, well behind
cable and satellite
Source: Ofcom, EAO, national regulators
63
DTT/DSO has been a major driver of change in

Europe and will continue to be so until 2015
DTT/DSO has had a significant
effect on the structure of the TV
market
More than 13 countries have
already successfully completed
the analogue switch-off
In the majority of EU countries,
the transition is in progress and
is expected to be completed by
2013
Progress of DSO in Europe
ASO complete
Analogue switch-off (ASO) underway
DSO not formally launched
21454-482
Source: DigiTAG, Ofcom, Analysys Mason
64
Broadcasting tower companies are the most

common in Europe but other options exist
Ownership of main terrestrial
broadcast network operators
Digita
Norkring
Teracom
RTE NL
Levira
Teracom
Arqiva
Alticom
Norkring Media Broadcast

esk Radiokomunikace
TDF SwisscomORS Antenna Hungria
Norkring
RTP
SIC
TVI
Broadcasting tower companies are

the most common approach across
Europe
In some markets, major telecoms
groups provide broadcasting tower
services
TV channels have their own
broadcasting infrastructure in a few
countries
OiV
Abertis
Mediaset
RaiWay
TV channels
Telecoms groups
21454-482
Broadcasting tower companies
Digea
Source: Ofcom, EAO, national regulators
65
they can occupy different positions in the

value chain and use various models
Standard market structure one main broadcasting tower operator
Channels
Multiplexing
Distribution to towers
Broadcasting towers
France
TDF
TDF
Spain
Abertis Telecom
Abertis Telecom
Netherlands
Alticom
UK
Arqiva
Arqiva
Arqiva
Czech
Republic
CRa
CRa
CRa
Vertically integrated market structure several broadcasting tower operators

Channels
Italy
21454-482
RAI DTT
channels
Multiplexing
Rai,
Distribution
RaiWay
Source: Public sources, Analysys Mason
Broadcasting
RaiWay
66
The long-term sustainability of DTT is determined

by a number of factors
Success of DTT
Content
Breadth and quality of content on DTT:

number of channels
availability of premium content
pay-TV offerings
All this is determined by the willingness of
broadcasters to join the DTT platform
Quality
Technology and quality of service (QoS) for
DTT vis--vis other platforms:
coverage
possibility/need for a return path
QoS
21454-482
Prices
Affordability of DTT is more favourable
than other digital platforms, in terms of:
set-up prices (one-off payments of
set-top boxes (STBs), other
equipment such as
dishes and connections)
recurring (e.g. monthly) fees
Platforms
Development of other platforms to
maintain a competitive edge:
technological improvements to enable
content-rich services
imposition of regulatory measures
67
SMP remedies are often, but not always, imposed

to favour competition
Typical process for SMP designation and remedies
1
Market/submarket
definition
Three-criteria test
Failed
No ex-ante regulation
(but ex-post could apply)
Passed
Ex-ante regulation
applicable
3
SMP
Remedies
21454-482
Transparency
Non discrimination
Obligation to publish a reference offer
Access obligation
Price control (methodology usually not specified)
68
Contents

Why?
21454-482
Trends and challenges Impact on investment case
69
Trends and challenges key issues to be

investigated
Selected key factors
Key issues
Role of DTT as a platform
Dominant and marginal role and impact on pricing
DTT/DSO
Progress against DSO
MUXes (capacity)
Potential for growth or reduction
Broadcasters economics
traditional and new
Pressure on number of clients and revenue per client
Over-the-top services growth
Threat to viability of the platform in the short or long

term
Value chain position
Revenue and margin opportunity
Spectrum/HDTV/Pay DTT
Neutral or potential upside
Radio DAB
Potential for analogue radio switch-off?
Regulatory evolution
Potential for ex-ante or ex-post pressure
Incumbent or challenger
Extent of reliance on incumbent network
Low
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High
Relative
importance
70
FTA DTT model is based on large presence but

niche pay-DTT model can also succeed
Forecast of pay-DTT household penetration (%) in selected countries
20%
European average
15%
France
Italy
10%
Netherlands
2016
2015
2014
2013
2012
UK
2011
0%
2010
Spain
2009
5%
2008
Pay DTT household

penetration (%)
25%
FTA DTT has been most successful in countries where terrestrial

was the main historical platform
Except for Italy and Sweden (c. 15% of households), pay DTT
has had limited success typically:
penetration of less than 10% of households
it has had little impact on the overall pay-TV market
21454-482
71
DTT role can significantly increase when taking into

account secondary TV sets
Secondary TV sets seem also

to be an important element for
countries with limited
penetration of DTT for primary
sets like Germany
UK penetration of analogue terrestrial on

primary and secondary TV sets, 200610
70%
63.9%
60%
Penetration as % of TV sets
In the UK, over 25% of HHs

had a secondary TV set reliant
on terrestrial
50.4%
50%
40%
39.5%
31.0%
30%
24.4%
20%
21.4%
13.6%
10%
0%
2006
2007
11.2%
2008
8.7%
2009
Analogue terrestrial on primary

Analogue terrestrial on secondary
21454-482
Source: Ofcom digital progress update Q4/10
7.3%
2010
72
DTT spectrum can be awarded at different levels

creating different business models
UK Distribution of multiplexes
and transmission
TV channels
Multiplex
(licence
holder)
Modulation
scheme
Multiplex
transmission
provider
21454-482
France Distribution of multiplexes

and transmission
MUX 1
MUX 2
MUX A
MUX B
MUX C
MUX D
BBC1,
BBC2,
CBBC,
BBC3,
BBC News,
BBC Red
Button
ITV1, ITV1
+1, ITV2,
Channel 4,
Channel
4+1, More4,
E4,
Channel 5,
Rabbit
ITV3, QVC, bid

tv, ITV2+1, E4,
5*, 5 USA,
Quest,
Challenge,
CITV, Teletext
Hols, 1-2-1
Dating
BBC4,
CBeebies,
BBC
Parliament
Pick TV,
Dave, Dave
ja vu, E4+1,
The Big
Deal,
Create and
Craft, Pricedrop, Gems
TV, Pick
TV+1, Food
Network
Yesterday,
Film4,
4Music, Viva,
Ideal World,
ITV4, Rocks
& Co, Russia
Today, Al
Jazeera
English, Sky
Text
BBC
Digital 3&4
(ITV + C4)
SDN
(ITV)
BBC
Arqiva
(NGW)
Arqiva
(NGW)
16-QAM
64-QAM
64-QAM
16 QAM
16QAM
16QAM
Arqiva
MUX 1
MUX 2
MUX 3
MUX 4
MUX 5
MUX 6
TV Channels
(licence
holder)
France 2
France 3
France
France 5
LCP/Publi
c Snat
Local TV
France 4
I-Tl
BFM TV
Direct 8
Direct Star
Gulli
Canal +
Canal+ HD
Canal +
Cinema
Canal +
Sport
TPS Star
Plante+
CFoot
M6
W9
Paris
Premire
NT1
Arte HD
Multiplex
manager
Socit de
Gestion du
Rseau
(France
Tlvisions)
Nouvelles
TV
Numrique
s
(Lagardere
)
Cm. Du
Numrique
Hertzien
(Canal Plus)
Multi 4
Multiplex R5 SMR6 (TF1)
(Socit
opratrice du
multiplex R4)
Compression
technology
MPEG-2
MPEG-2
MPEG-4
MPEG-2/
MPEG-4
Multiplex
transmission
provider
TF1 HD
TF1
France 2 HD Arte
M6 HD
TMC
TF6
LC1
Eurosport
France
NRJ 12
MPEG-4
TDF and, to a lesser extent, Towercast
Source: DTT channel/service allocation by multiplex,

Digital TV Group (DTG)
MPEG-2/
MPEG-4
73
With DTT/DSO, EU broadcasting markets are getting

more competitive in number of TV channels
Overall, as a guideline, if:
Evolution of competition level (HHI*)
by market in selected countries (200409) HHI>1800, a market is concentrated
2,500
2,000
1800>HHI >1000, a market is moderately

concentrated
Denmark
Spain
1,500
Sweden
Austria
Italy
1,000
France
Germany
UK
500
21454-482
HHI<1000, a market is more competitive

TV markets in the EU have become more
competitive in the last ten years, but in
economic terms they are still largely
moderately concentrated
In the USA, HHI is <1000, so the market is far
more competitive (similar to what could be
expected with connected TV)
The competitive landscape appears to have
changed less in terms of revenues, as many
new TV channels are controlled by PSBs and
historical commercial broadcasters this might
put pressure on broadcasting revenues
Source: EAO, Analysys Mason

*HHI = Herfindahl index
74
DTT/DSO and financial crisis are putting pressure

on broadcasters TowerCos are somehow isolated
EUR million
Evolution of operating revenues for Europes major

commercial TV groups, at 2005 prices (200110)
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
-35%
A3
-45%
ITV
-14%
TF1
-21%
-21%
TV4
RTL
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Operating budget cuts could put pressure on transmission costs but they are
relatively small for larger players (only a few % of revenues)
21454-482
Source: EAO, EIU, Analysys Mason. Excludes Mediaset,

whose revenues include many other elements
Revenue
growth,
200610
75
Sustainability of TV channels on DTT might be

assessed based on broadcasters economics
Selected examples
DTT transmission costs

as % revenues
Long-term sustainability?
Historical broadcaster A
Less than 1%
DTT costs are not main concern
Historical broadcaster B
Less than 3%
Historical broadcaster C
Less than 3%
New broadcaster A
Less than 20%
DTT costs are significant but

broadcaster might be able to cope
with it
New broadcaster B
Between 20% and 40%
It might require some innovative

pricing to favor a new entrant
Future new broadcaster
More than 40%
Unlikely to be sustainable long term

probably requires closer look into
incremental revenues
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76
OTT might challenge DTT in the long term as

vendors forecast an explosion of video traffic
Internet video traffic in Europe (201015) Internet video-to-TV traffic will increase
10000
9000
8000
Central and Eastern

Europe
Western Europe
PB per month
7000
6000
14-fold in Western Europe and 24-fold in

Eastern Europe between 2010 and 2015
In the UK, consumption of video delivered
through the Internet to a video screen will rise
from 8% of total Internet video traffic in 2010 to
14% in 2015
In Germany, Internet video will account for
more than half of all Internet consumption by
2013
5000
4000
3000
In France, 67% of broadband connections will

exceed 10Mbit/s in 2015, up from 36% today
2000
The average broadband speed in Central and

Eastern Europe in 2015 will be 20Mbit/s
1000
0
2010 2011 2012 2013 2014 2015
With a 58% CAGR over five years, this forecast would support an aggressive and
disruptive development in connected TV space
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Source: Cisco VNI Forecasts 2011
77
Only if you consider OTT to substitute linear TV this

might pose a threat this seems long term
Scenario 2 Online video as a
substitute for traditional TV
Consumption of online video vs TV (min)
Scenario 1 Online video is

complementary to traditional TV
250
200
150
100
50
TV
21454-482
Online Video
78
Conclusion
Selected key factors
Comments and lessons
Role of DTT as a platform
Potential for both large penetration (FTA) and small

penetration (pay TV)
DTT/DSO
Significant change pre- and post-DSO
MUXes (capacity)
Different models exists this will affect the revenue and

margin profiles
Broadcasters economics
traditional and new
New TV channels economics will be more difficult and might

need innovative commercial approaches
Over-the-top services growth
Probably long term but needs to be assessed on a case-bycase basis
Licensing/Value chain position
Very different models can be developed
Spectrum/HDTV/Pay DTT
Digital dividend could be negative
Radio DAB
Unlikely in the short to medium term
Regulatory evolution
Different approaches based on market definition
Incumbent or challenger
Very different models as incumbent or challenger
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79
Contents

Why?
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80
Divestment and State sales could trigger new

transactions in 2012 and beyond? [1/2]
For discussion Selected main tower companies, shareholders and
potential transaction rationale
Country
Main broadcasting
towerco
Main shareholder(s)
Type of tower company
Potential
transaction
rationale?
Austria
ORS
ORF (60%), Medicur Holding (40%)
TV channel
State sale?
Belgium
Norkring Belgi
Telenor
Telecoms operator
Non-core?
Croatia
OIV
Republic of Croatia
Broadcasting towerco
State sale?
Czech
Republic
esk
Radiokomunikace
Macquarie Infrastructure
Recent
transaction
Denmark
Teracom Danmark
Teracom Group (Swedish state)
State sale?
Estonia
Levira
TDF (49%) / Estonian State (51%)
Divestment?
Finland
Digita
TDF
Divestment?
France
TDF
TPG Capital
Unlikely?
Germany
Media Broadcast
TDF
Divestment?
Greece
Digea
Mega, ANT1, Alpha, Alter, Star, m and

Skai
TV channel
Outsourcing?
Likely?
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Less likely?
Unlikely?
81
Divestment and State sales could trigger new

transactions in 2012 and beyond? [2/2]
For discussion Selected main tower companies, shareholders and
potential transaction rationale
Country
Main broadcasting
towerco
Main shareholder(s)
Type of tower company
Potential
transaction
rationale?
Ireland
RT NL
RTE Irish state
TV channel
State sale?
Italy
RAI Way
RAI Italian state
TV channel
State sale?
Elettronica
Industriale
Mediaset
TV channel
Outsourcing?
Netherlands
Alticom
Infracapital
Recent
transaction
Norway
Norkring
Telenor
Telecoms operator
Non core?
Portugal
RTP
RTP Portuguese State
TV channel
State sale?
SIC
SIC Impresa
TV channel
Outsourcing?
TVI
TVI Grupo PRISA
TV channel
Outsourcing?
Slovenia
Norkring d.o.o
Telenor
Telecoms operator
Non core?
Spain
Abertis
La Caixa, ACS, CVC
Follow up recent
changes
Sweden
Teracom
Teracom Group (Swedish State)
State sale?
UK
Arqiva
CPPIB (48%), Macquarie (32%)
Unlikely?
Likely?
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Less likely?
Unlikely?
82
Contact details
Marco Cordoni
Terry Norman
Llus Borrell
Partner
Principal Analyst
Partner
marco.cordoni@analysysmason.com
terry.norman@analysysmason.com
lluis.borrell@analysysmason.com
Analysys Mason
Bush House, North West Wing
Aldwych
London WC2B 4PJ
UK
Tel: +44 (0)845 600 5244
Fax: +44 (0)20 7395 9001
Analysys Mason
Bush House, North West Wing
Aldwych
London WC2B 4PJ
UK
Tel: +44 (0)845 600 5244
Fax: +44 (0)20 7395 9001
Analysys Mason
Jos Abascal 44 4
28003 Madrid
Spain
www.analysysmason.com
21454-482
Tel: +34 91 399 5016

Fax: +34 91 451 8071

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What factors drive demand for towers?

What factors drive demand for towers?

How do different spectrum bands impact tower demand?

How do different spectrum bands impact tower demand?

Broadcasting and mobile towers: key factors

affecting investment opportunities

Introducing our presenters

Marco Cordoni: Tower market demand and supply

Llus Borrell: Broadcasting tower opportunities

Marco Cordoni: Tower market demand and supply

Pricing considerations for tower companies

Market demand for towers

The demand for towers is driven by a variety of

Fixed wireless entrants

Rural broadband targets

Positive impact Neutral impact Negative impact

Drivers of demand for sites Market structure

New data players are emerging and are likely to

Regulators are reserving spectrum for new

Poor fixed-line infrastructure encourages

Belgium: 2100MHz reserved for new entrants in

WiMAX/LTE: numerous operators are launching

Netherlands: 2012 auction reserves a 10MHz

Spectrum auction rules may attract new entrants

An increase in tower demand, initially in urban

Drivers of demand for sites Technology

The spectrum bands used for 3G and 4G sites

2600MHz (or higher)

Most European countries

Some European countries are not

Operators are still

Operators in emerging markets

Only a small part of 3G/4G base station coverage expansion

However, with 3G/4G sites having smaller radii than 2G sites,

Drivers of demand for sites Technology

New RAN equipment and antenna systems could

Dual band: GSM 900MHz + 1800MHz

Separate antenna Common antenna, Common antenna

New RAN equipment has also

Multi-technology RAN equipment: 2G and 3G

Drivers of demand for sites Regulation

Broadband targets could raise demand for rural

2020 European Commission

National broadband targets

France: 800MHz licensees must cover 99.6% within 15 years

Marco Cordoni: Tower market demand and supply

Besides self-build, towers can be shared between

Sharing between operators (JV)

Outsourcing to tower companies

Prevalent ownership of tower assets by

Telefnica O2 and Vodafone

The tower company model, although

Independent tower companies in Brazil and

Multiple deals in Kuwait,

Increasingly dominant in Nigeria, Tanzania,

Three mobile operators in

Strong in Australia, India and Indonesia.

Several factors affect operators propensity to

Tower build restrictions