Network infrastructure strategy workshop ideas for CXOs

Reading yesterday at the National that Etisalat’s Indian subsidiary has signed a US$2.2 billion (Dh7.34bn) infrastructure outsourcing deal to launch services without the need to build its own network, I wanted to use this opportunity to share our thinking on this as we have been successfully supporting different clients in addressing the network sharing disjunctive, and most of you might find this material interesting.

Coming back to the previous announcement, Etisalat will use a telecommunications network built and maintained by Reliance Communications, one of India’s largest telecommunications companies, rather than building its own network as it has done in other markets such as Egypt and Nigeria. Outsourcing the construction and maintenance of the physical infrastructure that powers mobile networks has become a hot topic in the industry, as mobile operators look to cut costs and boost margins.

Specifically, the Indian market (which added as many new mobile customers as the entire Arab world combined last year) is emerging as a leader in the outsourcing field. Industry analysts have forecast that 150,000 mobile transmission towers need to be built in India by the end of next year, simply to keep up with demand in the world’s fastest-growing telecommunications market. The construction boom has attracted a number of overseas players, willing to capture a share of India’s mobile infrastructure market.

Now, let’s analyze the case. As a mobile operator, this decision might be in the top-strategic issues to address in the short/mid term. The question here is to understand the real impact that this type of agreements have in the operator’s long-term strategy. We have been helping different entrants in emerging markets, and most of them have understood that the entry strategies in these markets should change towards a model where the financial performance is significantly improved and the time-to-market is considerably reduced.

My understanding is that Etisalat looked for answers to these questions before deciding to sign such an agreement: Where are the strategic options to consider before making this decision? What type of operator do I want to be? What were the possible Network Alliance and Network Sharing models to consider? Which are the trade-offs in cost of ownership vs. cost efficiency? Is this an opportunistic case in a country, or this will conform a decision to be rolled-out in other countries? Do the numbers fly: yes or no?

We recently had a workshop with the CEO of a mobile operator that has recently launched in an emerging market in the Middle East and will soon expend the footprint. We helped them to address some of these topics in what was a constructive discussion session. I have prepared a sanitized and shorter version of the document shared with a selection of the most relevant slides.

Case you are working in the business case of a network sharing agreement, you will find it interesting. Enjoy the reading.

Best, CVA.