Likusasa: The future is now

Likusasa are a pan-African ICT project manager and constructor offering comprehensive services incorporating infrastructure construction, cell site design and installation, and diesel, hybrid and PV energy solutions. Likusasa have built approximately 3,000 greenfield cell sites in Africa and retrofitted many thousands more. TowerXchange spoke to Likusasa’s CEO Gary Staunton about the impact of towercos entering the African telecoms infrastructure market, and innovations to improve the economics of rural connectivity.

TowerXchange: Thanks for speaking to us today Gary. How has the increasing role played by independent tower companies in Africa affected the greenfield new site build business?

The operator has different objectives from a towerco. The towerco is essentially a real estate company that generates income from rentals, while an operator’s generates data and airtime revenue.

In the recent past, when infrastructure defined an operator, operators rolled out sites either through site build contractors or equipment vendors. Nowadays, if an operator wants to roll out 1,000 base stations, their first question is now usually “how many can we co-locate?” as co-location incurs less risk, and the time from investment in equipment to generating income from the site is much accelerated.

To ensure long term sustainability, towercos prefer towers with capacity to maximise potential tenancies and power systems that can minimise opex costs. In rural areas towercos might build for a single tenant, but in urban areas builds are almost always for multiple tenants, with designs to accommodate potential future expansion. For example in urban Nigeria it’s common to see high capex, heavy towers with power systems that can accommodate three or four tenants. When building new tower sites, towercos have some tough choices to make balancing maximum business potential specification with cost.

The practical impact of the introduction of towercos and the co-location model to Likusasa’s traditional market is significant. As much as 40-50% of newly installed base stations would now be expected to be co-located and this percentage is expected to increase as the model further develops. Back in 2002 we were building around 500 greenfield sites a year – that’s probably down to 200 now, so more than half of our business is related to co-locations these days. We have had to make adjustments to the way we work and expand the services that we offer to accommodate this emerging demand. This includes surveys, tower upgrade assessments and designs, improved database systems and the development of many opex reduction innovations for power, control and security.

Econet, Vodacom & MTN are substantial clients of ours through their various OpCo subsidiaries, but as the market evolves we serve a larger variety of clients with different business objectives.

TowerXchange: Is the transfer of assets from operator-captive to independent towercos good news from your perspective? What are the quick fixes towercos use to improve opex and add capacity?

It’s neither good or bad news for companies like Likusasa. Towercos have a different business objective focused on maximising return on asset investment but in some cases they have in-house capabilities similar to ours. We have worked with some of the most prominent African companies including American Tower, Helios and more recently IHS and we fully expect to continue to support these companies with the services and innovations they require to make their business models successful.

There is often a wide variety of tower and power specifications among the assets that have been rolled out across Africa, and as towercos make new acquisitions they have to establish a detailed understanding of each tower site.

Likusasa provides design and construction services that assist towercos with assessment of tower structural capacity, modifications for improvement and replacement or relocation of towers.

We also provide associated power audits that include making recommendations on efficiency improvements, like managing dirty power from grid connections, hybrid and PV retrofits and sizing generators for the specific capacity requirements of an increasing number of tenants. Likusasa is familiar with and has deployed thousands of network management systems that monitor and control fuel, power metering and other site operations. All of these systems have the ability to significantly improve site efficiency.

TowerXchange: Likusasa has a particularly strong reputation for joining up the logistics between product manufacturers and the successful installation of equipment at new and retrofitted cell sites. Talk to us about the logistics of installing cell sites.

Procurement responsibility is often shared between ourselves and the client due to the arrangements that a client would have with its preferred technology suppliers. However, there are significant logistical challenges in coordinating hundreds of site builds or upgrades across a dispersed and often remote geographical area such as coordinating deliveries from various African, European, American and Asian manufacturers and integrating these imported technologies using mainly local resources to meet strict SAQ/ CW / TI time and quality KPI’s.

Likusasa have an extensive and successful track record in this area and have developed an enviable organisation of people supported by systems, processes and in country resources that can face these challenges and deliver to client expectations.

TowerXchange: How are Likusasa able to use local resources to deliver highly skilled technical projects?

We’ve got good systems, strong partners and the required supervision skills to train and manage hard-working, local workforces.

Likusasa will typically have significant operations in five or six African countries at any one time. These operations are used as a base for projects and operations in other countries which maximises our overhead efficiency so we can remain competitive.

We have over 250 core permanent staff with excellent constructions technical, engineering, administration, HSE, quality management, commercial management and project management skills, overseeing 500-750 short term contract resources. The number of contracted resources fluctuates as we gear up down according to project requirements.

Likusasa invests in its people and encourages development. We have different levels and approaches to human resource development. For instance we do regular HSE awareness presentations and we maintain HSE certification such as tower climbing. We support our technology partner product training programs by sending our in-country technicians to our partner training facilities for installation and support certification. We encourage formal external training at accredited academic institutions both in-country and internationally and in some cases we partner with these institutions to establish training and development programs for project management and business leadership.

TowerXchange: How are Likusasa innovating to make connecting the next billion mobile subscribers economically viable?

Extending coverage, improving capacity and introducing data technologies all form part of our business portfolio. For us, “connecting the next billion subscribers” means many things including making rural communications economically sustainable for single and multiple operator sites.

Likusasa recently won a project in East Africa to design and implement low cost 35m/55m towers on sites with grid power that is typically interrupted or of poor quality. We’re working with selected partners and the operator to build those sites for less than $70,000 each which at that cost a significant achievement.

In southern Africa, we’re helping a regulator fulfill a challenging rural coverage communications requirement using large solar powered multiple operator co-location sites. This design considers future proof designs for macro sites in the rural application that use microwave transmission.

In another example, we were presented with a brief to provide connectivity to 120 rural areas with a $35m budget and a 12-18 month time window. Using our innovative approaches, we came up with a low opex, community engaging business model requiring $10m capex that could be deployed in 6 months, based on Altobridge 2G/3G radios, a solar PV power system, that incorporates a highly efficient VSAT backhaul.

We find that there is no silver bullet to reduce costs. You have to value engineer the network plans and site designs taking into account the objectives of all the stakeholders including the regulator, operators, and local communities. One of the main sustainability objectives that Likusasa contributes to is the reduction of capex and opex to present a business case that provides a decent return with low ARPU’s.