IHS Markit: Top 5 Trends in Telecom Infrastructure Sharing in Emerging Markets

By Stéphane Téral, executive director of research and analysis, mobile infrastructure and carrier economics, IHS Markit

Editor’s Note:   Two Charts from GSMA are inserted into Stephane’s post below.

Overview:

As service providers operate in saturated markets everywhere in the world, they increasingly focus on customer satisfaction and retention and on business and network transformation, which require increasing dedicated resources. However, significant revenue growth may no longer be achievable, so it is necessary to de-emphasize network operations through outsourcing and managed services as well as network sharing to preserve margins and sustain cash flow.

GSMA says annual mobile revenue growth will be 1 to 2% annually till 2020 (when 5G first starts to be deployed). \

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Below are five trends IHS Markit Technology is seeing in telecom infrastructure sharing in emerging markets:

Trend #1: Nigeria is the most successful network sharing country.  Africa, India, and Latin America are three geographies where network sharing has been working well. Although India pioneered network outsourcing back in 2005 and since has moved fast to network sharing and managed services, it is EMEA that is leading this area now with network sharing deals all across Eastern Europe and Africa. We can’t really pick a particular country because consolidation among service providers led to pan-African shared networks. However, in Africa I think Nigeria, the most populous African country, is the most successful and innovative telecom infrastructure country.

Trend #2: IHS Towers is the largest tower company in emerging countries
EMEA-based IHS Towers has become the largest of its kind (www.ihstowers.com) and is contributing to the success of Nigeria. The IHS Towers business model consists of buying the cell towers from the service providers, and leasing and managing those towers for the service providers. This allows the company to minimize operational expenditures (opex costs), and service providers can better focus on the customer experience.

Trend #3: We’ll see more HIS Towers-like companies in the future
Mobile subscriptions are at saturation everywhere in the world, putting pressure on revenue growth. Therefore, more and more service providers will sell their towers to companies like IHS Towers, which is in a strong position to keep growing. There is also the opportunity for others to create competition in the tower business.

Trend #4: The tower business is moving from emerging to developed countries
This is already happening in Italy. Given the revenue crunch across Western Europe, it is only a matter of time before we see more and more service providers selling their towers to a towerco specialist.

Trend #5: Network function virtualization (NFV) will provide the next wave of operational efficiencies in network sharing
By moving more network functions from hardware to software, using off-the-shelf IT components and platforms, the cost of network nodes decreases and new services can be turned up and down at a power of a click. Overall, with the concept of network slicing, it will become easier to share networks among several service providers.

GSMA says regions where mobile subscriber penetration is lower will experience higher revenue growth through 2020.

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Many of the themes discussed in this research note are explored in greater depth in IHS Markit’s recent Mobile Infrastructure Market Tracker report.
For information on purchasing this report, contact the sales department at IHS Markit in the Americas at (844) 301-7334 or technology_us@ihsmarkit.com; in EMEA at +44 1344 328 300 or technology_emea@ihsmarkit.com; or APAC at +604 291 3600 or technology_apac@ihsmarkit.com

References:

http://www.telecomlead.com/telecom-equipment/trends-telecom-infrastructure-sharing-emerging-markets-79286

https://www.gsma.com/

 

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