5G readiness should be a key strategic driver for TowerCos. They must consider unlocking new modalities for site acquisition, ‘lite’ site build and camouflaged sites.
monetization model is heavily dependent on MNOs, the telecom market and a limited product/service portfolio. An analysis of six major publically listed TowerCos across key geographies shows that the Y-o-Y revenue growth for FY2019 is considerably lower than that of FY2018 across the board (see Figure 2: Revenue and revenue growth of key publicly listed TowerCos globally). Two TowerCos even exhibited a decline in revenues.
As traditional revenue models come under increasing stress, it is imperative that TowerCos undertake radical realignment in their strategy for “where to play” (revenue and business model) and in their approach for “how to win” and “how to configure” (operating model shifts) to remain profitable and ahead of the curve.
Transforming where to play
Significant opportunities lay in expanding revenue streams by mining existing markets and by diversification through expansion of asset portfolio, product offerings/ services and customer base to both adjacent and new markets. Asset ownership is a key source of competitive advantage for a TowerCo. Some of the key adjacent and transformational opportunities for TowerCos include 5G, fibre, IoT and Edge data center.
5G is expected to drive network densification:
The key to this is the use of street furniture and in-building solutions to build “small cells” for rapidly increasing network capacity. 5G readiness should be a key strategic driver for TowerCos. They must consider unlocking new modalities for site acquisition, ‘lite’ site build and camouflaged sites.
The key to network densification will also be MNOs focusing on fiberizing their network backbone. Fibre has the potential to enhance the value of towers and improve co-location economics by enabling MNOs to decommission microwaves. TowerCos can consider deploying fibre providing product offerings like fibre-tosite and metro rings. These are likely to be imperative to achieving significant returns on 5G investments.
The internet of things (IoT) is a rapidly growing market with many non-telecom players investing heavily. Companies are likely to increasingly require asset space to deploy the various IoT connectivity options (LoRAWAN /
NB-IoT) and IoT devices. IoT has a broad base of end-use industries including retail, government, manufacturing and IT/Telecom. TowerCos can look at building an IoT Infrastructure-as-a-Service model.
Edge data center are typically data centers positioned closer to the end-users enabling digital services (including content services, cloud computing and online streaming) to provide higher quality of service with faster speeds and much lower latencies. Edge data centers are typically smaller facilities that are situated at the edge of a network.
Operating model shifts (transforming how to win and how to configure)
The TowerCo ecosystem is seen undergoing a paradigm shift in terms of revenue model evolution. To win in this ecosystem, it is critical for TowerCos to consider focusing on re-configuring their Operating Model. Figure 3 (Future operating model – TowerCo 2.0) provides a proposed operating model for a TowerCo 2.0. The critical horizontals are customer centricity and end-to-end digitization of operations. The future operating model would need to focus on changes to some key domains.
Sales and marketing domain:
A proactive sales model where TowerCo leverages AI-based analytics utilizing GIS information, RF planning and site information to identify locations with underutilized tower capacity with low margins and potential for co-location – a Lat-Long marketing approach to continuously improve tenancy ratios and return on assets. Extending this to a “self service” model where customer can initiate sales orders based on site availability through digital platforms.
Order management and fulfillment domain:
Digital interventions offer a significant opportunity to reduce both cost and time to market. From proposal acceptance, TowerCos typically initiate multiple activities across various functions and vendors for site acquisition, construction (Civil/Mechanical/Electrical) and rollout.
TowerCo should consider deploying an “Infrastructure Factory” model for mechanizing site deployment to improve time to market. 3D printing and fabrication of site component could be a fascinating arena of play to
significantly speed-up deployment. Similarly, deploying a modular architecture for site design can enable faster co-location.
Operations and fault management domain:
cities), public transportation, special economic zones and real estate players through institutional acquisition.
In India, 5G networks are expected to be launched by mid-2021. Telecom operators are gearing up for the launch by putting tools and technology pieces in place and likely to roll out 5G services as soon as the spectrum is available from the government.