Mobile Network Operators increasingly don't own towers and other infrastructure

Absa Insights is a portal where the bank’s sector experts share essential learnings and new developments with its clients and other businesses. The world is changing; so in 2019 Absa has introduced a series of events featuring high-level thinking around Consumer Goods and Services, Agriculture, Telecommunications, Mining and Energy and Infrastructure. Bookmark Absa Insights, where the bank shares insights from discussions designed to help you navigate the ever-shifting trends that are shaping the economy.

pixabay.com, 2019

Mobile network operators (MNOs) have all but lost traditional revenue streams such as voice and SMS.

Data consumption is exploding, but wildly popular over-the-top (OTT) services such as WhatsApp, Skype, Netflix and thousands of others are threatening to turn MNOs into mere utility-type businesses.

To make matters worse; companies have to invest massive amounts in new infrastructure continuously.

Telco operators are changing their business models

From being capital intensive, infrastructure-heavy businesses they seem to grow in focus to more service-type businesses...

Premeshin Naidoo, Absa Corporate Investment Bank

Traditional revenues have eroded heavily through OTTs. They are trying to find new revenue sources through digital services... focusing on IT and cloud offerings... video, music and entertainment type services... Mobile money and digital finance and insurance type of offerings...

Bora Varliyagci, CEO - DigitalThings

Fixed line infrastructure providers are building towers... considering themselves as turnkey infrastructure providers... making substantial investments...

Juanita Clark, CEO - FTTX Council Africa

For MNOs to provide services requires expensive infrastructure, increasingly supplied by independent infrastructure owners and operators.

These independent operator-owners then leverage the economy of scale of serving multiple MNOs to bring the cost of capital investment down.

In 2009, almost none of the towers [in Africa] were managed by tower companies. Today, more than 60% of towers on the Continent is operated by tower companies...

Bora Varliyagci, CEO - DigitalThings

Outsourcing the capital expenditure intensive part of the business allows it to be competitive in services

As services and infrastructure become segregated, infrastructure players are consolidating assets between different owners to bring down costs further.

Two types of telecommunication providers are emerging:

  • The asset/infrastructure owners (fixed lines, towers, data centres, etc.)

  • MNOs (providing the applications and services to consumers and businesses)

For more detail, listen to Premeshin Naidoo (Absa Corporate Investment Bank) facilitating a discussion between Bora Varliyagci (CEO, DigitalThings) and Juanita Clark (CEO of FTTX Council Africa) on the evolution that the Fourth Industrial Revolution will bring and opportunities around digitisation.


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