Business Model of Tower Companies

Hi Alfredo, it depends big time if we talk about mature markets or not, if we talk only about passive infrastructure or not, etc. if you narrow the scope I will be happy to share with you some guidance

As Jorge rightly points out, there are a number of factors that affect towerco business models such as market maturity, geographical size, geomorphology, regulatory environment, kind of sharing (active, passive etc), number of operators, availability of utilities (power, backhaul and its form e.g. fibre, ?wave) etc.

Tower business is a typical managed IaaS . The secret is simple - if the towers are shared the cost is lower for each mobile operator. But the price must be right and the regulatory environment should be stable.

Thanks for your responses. Let’s assume mature markets where the regulatory environment is safe and stable. This company wants to deliver internet service to the unconnected regions in the market where population density is low (e.g. 5 people per square km). The question here is,
1) what’s the ratio of active/connected users? Shall we assume that if we cover a region with 100 people only a 10% or 15% will be simultaneously connected?
2) what’s the minimum bandwidth to allocate to connected users? 200kbps? 500kbps? 1Mbps?
3)What is the average infrastructure cost (CAPEX) an operator incurs to add a new customer (increase capacity). $50/user? $20/user? $10/user?
We are assuming that price of services in unserved or underserved regions will be same as across rest of network and that cost of universal service may be subsidized.

Hope this clarifies it.

Thanks for your help
AS

Hi Alfredo, from your questions I understand it is not a tower business indeed but rather a telco business. Coming to the questions:
1) This is more an assumption to the business model that shall be analysed with sensitivity analysis during business plan calculation. If we are talking about unconnected regions it should be a Greenfield market but at the same time I assume the GDP per capita is low in that regions, hence if you keep same price as connected regions this may affect user take-up, unless it is a touristic regions. 10% is a good base point but in a blue sky scenarios you can even touch 30% if you are the only player in that market
2) For unconnected regions I guess starting with 500kbps is fair with the aim to reach 1Mbps as customer base increase
3) Here depends on: (i) technology you use (WiMax, LTE, etc); (ii) if you have to build towers or relay on existing one; (iii) frequency bandwitdth at your disposal; (iv) if you have to build or not electricity and transmission connection to the tower. I can tell that CAPEX intensity (as % of revenues) must be between 10% and 15%

Hope this help
F

Jorge, happy to talk over skyepe. Which timezone are you working from? I’m CET
Thanks
Alfredo
Skype ID: aserrano40

Jorge, I’m in Amsterdam at the Telecom Infra Project until Thursday. I can do Friday or any day next week. Thanks for understanding.
AS

No worries, Monday 18 @10.30AM?

Hi, You have to combine Two types of Business, the traditional Hosting/housing model (already touched in previous responses) plus the Real State Market model . Doing this you will have the traditional Tower marker already characterized.
In case You can start to forecast for the future you will need to introduce new comming services taking care of RAN Sharing, BackHauling, Edge Cumputing, 5G,... and start to imagine what is going on!!

BR, Carlos