Mobiserve: Tower deal imminent in Egypt

Mobiserve has an outstanding pedigree in managed services, rollout and equipment installation. They manage 18,000 cell sites, primarily in MENA. With the towerco business model spreading to North Africa, particularly Egypt, Mobiserve has licensed and launched MobiTower, backed by Delta Partners and INVEST AD. TowerXchange caught up with Mobiserve CEO Tarek Aboualam, and Chief Commercial Officer Karim El Azzawy, who also serves as Managing Director of MobiTower, in a busy café at Mobile World Congress…

TowerXchange: Are Mobiserve interested in moving up the value chain and becoming a towerco?

We are certainly interested in the tower acquisition and leaseback business. We are one of three companies that have acquired a license in Egypt as a tower operator, which enables us to build and share towers. MobiTower is our towerco subsidiary based in Egypt.

The towerco business is just starting in Egypt. We are in deep talks with all the operators, in some cases in advanced negotiations.

When Mobiserve decided to move into the towerco business, we knew we lacked some experience and know-how. So we are in serious talks with a major international player working in the tower business in other countries. While Mobiserve bring the local knowledge of operations and rollout in North Africa, this other company are more experienced in how to negotiate a deal, structure a contract and build revenues. One of Mobiserve’s shareholders is Delta Partners, another expert in the tower industry, and they are helping too.

TowerXchange: Tony Dolton, CTO of Vodafone Egypt said “I believe it would be difficult to make a traditional towerco business case without some sort of network consolidation so for a towerco model to work in a country like Egypt we probably have to have a slightly different model than the traditional one” (see Tony’s interview here). Tarek,  do you think a multi-operator joint venture towerco, like Indus Towers, could work in Egypt?

That is a valid option. The operators are certainly seriously considering retaining a portion of the equity and retaining more control over their networks. Once the tenders published their requirements, which could be as soon as Q2 2013, everything will be clearer.

The three major operators in Egypt Mobinil (France-Telecom), Vodafone Egypt and Etisalat are talking to each other, and talking separately to tower licensees. Infrastructure sharing is going to happen in Egypt, and it will be good for everyone. Each operator seems to be taking a slightly different position, but variety enriches the discussion!

TowerXchange: Is the regulatory environment in Egypt conducive to infrastructure sharing?

The regulator has done their part regarding issuing permits and licenses to be able to build towers and sell tenancies to all mobile network operators, and Mobiserve has secured one such license.

TowerXchange: Thanks for your views on the potential tower deal in Egypt. Please introduce us to Mobiserve so we can understand your role in the market.

Mobiserve is a regional company managing 18,000 sites across eight markets covering North Africa, the Middle East and Southern Asia. We have also worked in East Africa when projects require. Our customers include all the big operators plus equipment manufacturers like Huawei and Ericsson.

Mobiserve was formed in 1999 by Orascom to help with their subsidiaries’ rollout. Five years ago, in December 2008, Mobiserve was sold to InvestAD, our major shareholder, and Delta Partners.

We are mainly in managed services, network rollout, and equipment installation. We also build towers and shelters in our own factory, Mobifactory, although we also install third party steelwork.

TowerXchange: Tell us about the biggest new contract Mobiserve won last year.

One of the greatest challenges we faced last year was increasing the scale the business by 50%. Rather than the usual one-year, annually renewed outsourcing agreement, we signed a major telecom operator to a three-year, full turnkey and maintenance contract covering preventive maintenance, corrective maintenance for active and passive equipment, generators, refueling, security, O&M and backhaul; a full outsourcing agreement for 6,000 cell sites.

TowerXchange: What are the critical success factors behind managing such a substantial and distributed managed service contract?

The key to success is the use of local resources. Local knowledge at a regional, even street-level. These important team members know the local electricity and fuelling challenges, so it is essential for us to maintain close contact with street-level.

The co-ordination of managed services depends mainly on human capital, which in turn depends on the capability of senior project managers in regional offices that control 29 local offices spread all over Egypt.

On top of those human resources, Mobiserve have developed our own software to monitor alarms that come from sites, and to manage maintenance job ticketing, so we know where we need to intervene to fulfill SLAs. We develop weekly reports to show the status of every region and to ensure we’re in line with SLAs and KPIs, and those reports are shared with the client.

TowerXchange: How do you maximise maintenance performance?

Preventative maintenance is of course a key part of the O&M activity within our turnkey solution. We have a program to check every site according to the client’s need. It might be once every week or fortnight – a scheduled check that the site is functioning within norms. Any deviation from standards is reported to the client, and our supply chain management team handles the logistics of spare part inventory management.

We are able to install, manage and maintain equipment manufactured by all the vendors. Each vendor has its own system for control, monitoring and quality, and each has it’s own KPIs. We try to normalise our way of doing business to develop standard, comparable KPIs. This enables us to compare different regions to see areas where we can enhance, and areas where have we mastered the job so the people concerned can spread their know-how from one region or country to the next.

For the third year in a row, Mobiserve have been awarded best partner of the year by one of our key clients, including being top ranked for both managed service KPIs as well as for new sites rolled out. Also, for the 5th year in a row, Mobiserve were invited by a major Chinese equipment vendor to attend their prestigious engineering conference.

I feel that North African operators’ tower strategy is more similar to European rather than Sub-Saharan Africa thinking. It’s a balance sheet rather than operationally motivated transaction

TowerXchange: How would you compare the tower industry in North Africa to that in Sub-Saharan Africa?

I feel that North African operators’ tower strategy is more similar to European rather than Sub-Saharan Africa thinking. It’s a balance sheet rather than operationally motivated transaction, with objectives to free cash, lower capex, and focus on the core business, rather than the more technically motivated decisions in Sub-Saharan Africa, which aim to pass on operational challenges to specialist towercos.

TowerXchange: Are there opportunities for towercos in North Africa beyond Egypt?

There is interest from at least two other North African countries, albeit in much earlier stages than in Egypt. In one country interest is led by the regulator, which is in talks to shape infrastructure regulation before the market pushes them to a new reality. In another country the push is coming from the Group level of a local one of the local OpCos.

TowerXchange: Thank you gentlemen, would you like to wrap up the interview by summing up Mobiserve’s capabilities in the tower industry?

It all boils down to our ability to manage our teams in the field, and to deliver against SLAs. That’s what makes Mobiserve interesting; our hands-on experience of managing 18,000 towers, and trust we have earned from operators.

Our model has evolved to meet the demands of the telecom industry today. Every operator is seeking to reduce their cost level while enhancing their service level, and that means they need to master and control the network. Infrastructure sharing is where the industry is going. A serious partner like Mobiserve, with local experience and know-how, can really add value to the tower industry.