How independent towercos make mobile broadband more investible

YooMee is a transformational high speed broadband service provider with a footprint in Cameroon and Cote d’Ivoire, and a vision to help close the digital divide across sub-Saharan Africa. YooMee’s experiences offer a direct comparison of the practicalities of rolling out a high speed mobile broadband service before and after the entry of independent towercos. YooMee launched is operations in Cameroon in 2011, before the transfer of MTN and Orange’s towers to IHS, and found its time to market significantly accelerated as it as it utilized IHS’s shared sites when they launched more recently in Cote d’Ivoire. To learn more, TowerXchange spoke to YooMee Chief Executive Dov Bar-Gera.

TowerXchange: Please introduce our readers to YooMee.

YooMee Africa is an operator providing fast wireless Broadband internet, using 4G LTE, in sub-Saharan Africa. The company is a Swiss-based company founded in 2010 with a mission of closing the digital divide.

YooMee’s founders successfully founded telecom and internet companies in the last 15 years. I am a serial entrepreneur and had sold all my businesses in 2007 and tried to retire, but I did not manage to do it. Some people in SSA approached me and described the lack of fast internet services as a major obstacle for the development of e-government, e-health, e-education and other necessary services mainly in the business sector. That attracted me to come and provide state of the art fast internet Broadband.

After founding YooMee, we started searching for licenses, and we found a very supportive regulator in Cameroon who told us how to apply for spectrum and permissions. Everything takes quite a while in sub-Saharan Africa – in the case of Cameroon it took us one year to secure a license, so in mid-2011 we started to establish our first network.

TowerXchange: How did you rollout your first sites in Cameroon? What were YooMee’s initial experiences trying to secure tenancies on MNO-captive towers?

Back in 2011, we had to build our own sites in Cameroon, because we found it almost impossible to work with the owners of the existing towers. The two market leading operators, MTN and Orange, effectively had an oligopoly, and their expectations from prospective tenants were outrageous. So we built our own rooftop sites in Yaoundé and Douala. There was a good inventory of high rise buildings, and relatively liberal construction laws, so construction was not too onerous.

TowerXchange: How did your network rollout in Cameroon compare with your more recent rollout in Cote d’Ivoire?

We entered Cote d’Ivoire after IHS had secured the rights to market MTN and Orange’s towers for co-location, and that has had a huge impact in terms of shortcutting our to time to market. Whereas previously we needed to negotiate with landlords, secure permits and engineer power solutions in order to get new sites up and running, leveraging the independent towerco’s sites reduced our lead time significantly.

Co-location doesn’t reduce workload significantly. We still have to use our own engineers to evaluate and make sure we can use the towers, and we still have to supervise operations. But working with an independent towerco gives us access to a greater variety and a better choice of towers.

TowerXchange: What is the status of your rollout in Cote d’Ivoire at the moment? And what is the vision for the future of the network?

We secured final regulatory approval to launch in Cote d’Ivoire at the end of December 2013. We signed an agreement with IHS in the first week of January, and by the beginning of April we were up and running with 20 sites. Today we are close to 40 sites. So far all our sites are co-locations, but we may have to build some of our own sites as some towers are totally full, or are inappropriate for other reasons. YooMee is just in Abidjan for now, but we plan to have an additional 50-60 sites in total in Cote d’Ivoire.

TowerXchange: I read on your website that covering a new city requires approximately 25 BTSs and takes 4-5 months – how has that timescale changed working with a towerco in Cote d’Ivoire?

Using independent towers reduces the total amount of time to deploy a network from 4-5 to 3-4 months.

Access to towerco’s independent towers reduces the time to have the infrastructure under contract, but it doesn’t reduce time it takes to connect to the core network, which remains independent of the towerco. So using shared towers frees a lot of engineering resources to concentrate on the core network and on backhaul.

Backhaul is still a weak point with the towercos, and one which I hope they’re going to improve. We’ve encountered problems when the towercos buy the towers, but the anchor tenant sits on the backhaul assets and won’t share.

TowerXchange: Are your Service Level Agreements (SLAs) being met?

The most important component of the SLA is power availability. For the moment, it’s ok, but not good.

Availability of new towers is excellent around 80% of the time. The exceptions tend to occur in around 20% of cases where landlords obstruct the process during the change of ownership. When the rental agreement is transferred, some landlords try to participate in the new revenue streams.

In general, if I have access to eight out of ten new sites within the agreed timeframe, I consider that a good response.

We are still encountering quality control issues, whether related to unreliable local grid power, backup power, or the age of batteries. When I talk to other tenants they all have the same issue – towercos are acquiring thousands of towers, but it takes time to get all the quality control issues covered. We are paying for space and power, and IHS are able to offer an acceptable SLA for the power. IHS is not supporting our own components, such as switching components on and off, so we are looking for an independent provider to do that.

TowerXchange: How do the costs of co-locating compare to building your own sites?

Co-location only makes even more sense if we receive a full service from the towerco. If we need to use our own technicians for first and second level service, then the cost benefit analysis comes out in favour of building our own sites quite fast.

Of course we did a lot of calculations and modeling before signing a contract with IHS. We found that leasing a tower cost more than building our own site after three to four years, but with today’s lease pricing structure, and with full power support from the towerco, we felt that leasing over building is advantageous due to the value of time to market.

TowerXchange: How do YooMee’s requirements as a tenant differ from those of the anchor tenant mobile network operators?

While we ideally want to mount our antenna at a similar height as the anchor tenant’s, sometimes we have to compromise.  Since we use the latest TD-LTE technology, we are significantly less demanding tenants. The total space we require is less than either a 3G or a 2G antenna, and the power requirements of our antennas are significantly more modest.

TowerXchange: What technology has YooMee rolled out in each country?

We initially rolled out in Cameroon in 2011 an 16e WiMAX. LTE was still in developing stage and not ready for the market.

We have rolled out TD-LTE in Cote d’Ivoire and will be upgrading our network in Cameroon to TD-LTE soon.

TowerXchange: Why leapfrog other technologies and go straight to LTE?

The WiMAX era is over now. With the exception of 3.5GHz, at 2.3-2.5GHz we find TD-LTE is more flexible, which makes hunting for spectrum easier. Having said that, we have found it easy to find people interested in buying the second hand WiMAX equipment which we are replacing in Cameroon!

China Mobile are a good partner in TD-LTE – they see smaller players like us as a way of driving device sales volume, so we have good co-operation and a constant flow of interesting products and innovations.

Ultimately, all the customer cares about is stable and fast connectivity!

TowerXchange: Are LTE devices affordable?

Whatever price devices are, it is always too expensive!

The first smart phones six or seven years ago cost over €500, and had weak functionality. Now you can get an excellent smart phone for less than US$100.

The cost of LTE enabled devices is still relatively high compared to 3G. Half a billion 3G dongles have been sold compared with a few million LTE dongles. But consumers are excellent evaluators, and they see difference between 3G and LTE service immediately. Thanks to the volume being driven by China Mobile and the big US operators, devices that cost US$120 six months ago, cost now US$65. Still, the cost of a new modem constitutes a significant part of an average Ivorian’s monthly income. We don’t subsidies devices.

TowerXchange: How can the transformation from operator-captive assets to independent towerco owned assets accelerate the rollout of broadband in Africa?

In the telecoms business, you have a very short lifetime to control any given market. Many global telecom companies that had once looked unbeatable are now struggling.

Towercos enabling access to SSA’s towers, and new devices enabling faster broadband, herald the end of the era of MNO oligopolies controlling telecoms in SSA. MNOs are losing the power to inhibit the development of competition; they can’t afford to retain their towers, they need cash, and similarly they are going to lose their exclusivity in the purchase of devices.

Sharing towers is a critical change, but it is only one in a long row of changes we will see in the next few years. SSA will open up to innovative new market entrants which will accelerate the availability of affordable, high speed broadband.

An interesting next step in improving market competitiveness would be to look at access to submarine cables, which is still being monopolised by the incumbent operators, and which remains the main obstacle to large scale broadband in Africa. If the towercos could take over the submarine cable landing points, that would be great!

TowerXchange: With a number of prospective new entrant service providers securing licenses but ultimately failing to come to market because of the challenges and costs of rolling out networks in Africa, how do you think the availability of shared towers affects the investibility of prospective startups?

As one of YooMee’s founders and investors, I feel that the independent tower story has a profound effect on startups like ours. A lot of prospective investors in our company were excited about our proposition, but ultimately didn’t invest because they felt the established operators had a competitive edge, particularly in terms of infrastructure. The moment independent towercos start providing access to SSA’s existing infrastructure, the competitive advantage of the traditional players is diminishing and innovative players like YooMee become more investible.

This change in the investment landscape can be critical for companies like ours that are for-profit, but which are also generate strong economic and social positive impact on the region. We believe in the benefits of bringing high speed internet and rich media platforms. Companies like YooMee are the driver of growth for internet usage in the region. According to a major study by the World Bank, every 10% increase in broadband penetration results in a 1.4% GDP increase in developing countries.

TowerXchange: Tell us about YooMee’s subscribers – is it a B2B or B2C-centric service?

We serve both the B2C sector and at the same time we have built a strong B2B customer base. We have different sales teams taking care of each sector. The same rules apply for customer care, as the need for support is different. Our B2C  activities have a long term view of this  business. You can’t generate sufficient revenue in SSA without B2C. Our B2B activities are focused on SME, as we believe that the real growth will come from this part of the B2B sector. We even support this business activity by introducing the first digital business city directory in Cameroon under the name www.ici.cm. More than 11,000 businesses have registered on this innovative platform.

We were surprised to see that our subscribers were not just early adopters. Among our 24,000 subscribers in Cameroon you will find many middle class people who understand that Internet access is important for the family – for their children’s education, for connecting with the job market, but most important over 3,000 business owners that understand the importance of the internet for their business development.

There is also a lack of entertainment outside of working hours in Douala and Yaoundé. There might be just a dozen or so concerts per year, there are no cinemas; entertainment is minimal and expensive, so high speed Internet delivers rich media like youtube clips, movies and songs is an interesting alterative.

TowerXchange: Where next for YooMee?

Our goal is to extend our high quality service across sub-Saharan Africa, with an initial focus on West and Central Africa.

We are talking with many different regulators in the region. Our next country could be Ghana, Guinea Conakry, Sierra Leone or even Liberia, Mozambique or Senegal. Our choices of countries are based on GDP growth – markets where there is strong growth of the middle class, as well as size of population, GDP, competition and availability of licenses.

TowerXchange: Finally, how can broadband help to bridge the digital divide in Africa? Please sum up your vision for YooMee Africa.

Acceleration of adoption of high speed broadband internet adoption is critical to closing the digital divide. This can be done by making available rich media content (youtube, movies, songs) and online resources (search, surfing, communication) at a competitive price. SSA lags behind the developed world in scientific and economic research due to lack of access to real time information. Closing the digital divide in SSA will enhance creation and expansion of small and medium enterprise, accelerate e-commerce, create employment opportunity in value added services and promote the availability and the level of medicine. It is critical to political and economic development.

The launch of YooMee in Cameroon and Cote d’Ivoire was game changing in sub-Saharan African mobile broadband. We provide high quality broadband and best of class customer care – a totally new customer experience. That has a tremendous social and commercial impact. We approach the business sector as solution partner, not just a connectivity enabler.

While some companies focus on the best talent, and others focus on technology, we just focus on our customers. YooMee put the customer at the center of all activities, to ensure the best customer experience, supported by the best customer care, and an exciting range of products.