Joint network investments key to survival

Joint network investments key to survival

Nicole McCormick/Ovum  |   February 07, 2011
OvumTwo years ago the world was rocked by the global financial crisis, pushing up the cost of capital. The expectation was that operators, especially in emerging markets, would move towards network sharing in response.
 
At last, mobile operators in emerging Asia-Pacific markets have realized that millions of dollars can be cut from opex and capex through network collaboration – but more operators need to jump on the bandwagon, including some LTE operators. As competition from over-the-top players grows, operators in emerging markets must bury their egos and collaborate to survive and prosper.
 
Celcom and Digi, second- and third-ranked operators in Malaysia, announced in January 2011 that they expect to save more than $650 million in opex and capex over ten years as part of their newly-inked joint network pact. That sort of saving can’t be ignored by other operators in emerging markets.
 
Celcom and Digi have agreed not only to share transmission networks, but base stations as well. The pair will share and upgrade more than 4,000 base stations, each retiring 1,000 sites no longer required. Network costs for these operators account for around 10% of revenues.
 
Pan-Asian mobile investor Axiata, Celcom’s controlling shareholder, understands the importance of such deals. The group now has network share deals in place in five markets, spanning an astonishing 17 operators in the region, including in Bangladesh and Indonesia.
 
In Bangladesh, for instance, Axiata-owned Robi and the country’s number one player GrameenPhone, which is 55%-owned by Digi’s parent Telenor, announced a similar network collaboration in February 2010. Robi and GrameenPhone are currently sharing 800 base stations, of a total 1,000 agreed sites. Subsequently, Robi has also inked an infrastructure-sharing agreement with the country’s second largest operator, Orascom’s Banglalink.
 
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