TowerXchange spoke to a senior representative of the TMT team at Standard Chartered Bank, from whom many of the infrastructure sharing RFPs originate.
He told us, “the valuation derives not just from the number of towers, but tenancies, location, capacity and potential for revenue contribution. Investment banks use proprietary models to figure out these metrics, looking across the technical, financial, and strategic angles. Valuation models vary dramatically. It goes far beyond the asset-based perspective, which is just the metal and real estate, to the potential of a site to generate revenue and profit.”
TowerXchange has mirrored Standard Chartered’s methodology, asking Ramboll and Ganges Internationale, two of the world’s foremost tower design companies, for their perspective on the technical evaluation of multi-tenancy towers. We’ve followed Standard Chartered’s roadmap to subsequently take a look at the financial and strategic evaluation of tower portfolios, drawing on the experience of Mott MacDonald, who have undertaken evaluations for American Tower and Eaton Towers in Africa. “It’s critical to evaluate what proportion of the tower portfolio are genuinely shareable; location, structural integrity, and to get a sense of the subscribers per point of service and demand forecasts,” says Andrew Doyle, Managing Director of the technology & communications practice at Mott MacDonald.
By way of a cautionary tale, TowerXchange spoke to a consultant with extensive experience of African telecommunications infrastructure, who said: “I know of one instance where the operator sold assets to a towerco, and that towerco targeted a tenancy ratio of 2.3 to be successful. However, less than half the towers in the portfolio were shareable as they were overloaded, poorly constructed, or just in a sub-optimum location. There wasn’t capacity for three to four tenants on the remaining premium shareable sites, so the 2.3 tenancy ratio target was very challenging!” However, it is possible to strengthen legacy towers to boost capacity and realize aggressive tenancy rations, as Ramboll and Ganges explain in the next articles.
Shareability as a service
Shareability isn’t just a function of the technical and financial potential of a site – service matters; specifically, the timeline between requesting a tenancy and the first day you generate revenue. A recently launched network complained “although we were able to agree bulk tower sharing deals to our advance 5 year plan, securing a couple of thousand sites, tower sharing didn’t really accelerate our time to market – some co-locations took 24 to 30 months to agree with the operators! However independent towercos like American Tower and Eaton were up and running much faster.”
TowerXchange understands that American Tower measures the cycle time between a tower request and the first day the tenant earns revenue. ATC say they can get a new tenant up and running in a month. It’s a simple case of working closely with their customers and ensuring that everything is there and is ready when a new tenant arrives with their equipment vendor.
