A full service model to deliver rural coverage

TowerXchange met with South African entrepreneur Sibusiso Mvelase recently to find out more about his new rural offering, Infratel. He explained how the towerco offering grew out of over ten years’ experience providing a full service tower solution for some of Africa’s biggest operators, and how they identified rural coverage as an opportunity to maximise their ultra-low cost tower model. The underlying technology, provided by TAG Telecoms, one of his companies , has already been proven through deployment at 800 sites in the DRC. But now Sibusiso has created leaseback or revenue share options enabling him to offer his ultra-low cost sites on a zero capex basis.

TowerXchange: Tell us more about the businesses you represent and how they interact – Megatron, TAG Telecoms and Infratel?

Megatron designs and manufactures tower structures. TAG Telecoms offers satellite solutions and intergrates power systems and rural coverage solutions, towers, solar panels, et cetera – a full telecoms service for our customers. We’ve been doing it since 2005, so almost 10 years now. TAG isn’t a towerco – it’s a straightforward system integrator . But over the last few years as we have worked with our clients we’ve found they are increasingly asking for a lease option because they want to share the revenue or lease their towers rather than take on all of the capex and opex requirements. Infratel is our towerco offering rural coverage lease option. So Megatron designs the tower, TAG integrates the solutions together, then Infratel will take over and operate the solution for the customer.

TowerXchange: What is the reasoning for keeping all three companies distinct?

We offer individual services to our clients as well as joining up the three companies, and we also have separate shareholders. Each company provides different services but we can also offer an end to end solution from tower and power design to running the network.

TowerXchange: Can you tell us more about how you have created a proposition which enables rural connectivity?

There are about 1bn people not covered in the world rural market and operators can offer more than voice or data to these communities but also mobile money, health and education solutions. As the first mover into rural markets, an operator can acquire market share very quickly, but the challenge for operators is that they can’t justify a large capital investment for a small community. The sites we will put in to rural areas can earn an average of US$4,800 monthly which means they are paying for themselves within 12 months. They are designed to support an area of around 5,000-6,000 people.

We try to build sites economically for US$45,000-50,000 fully installed and managed. These are full rapid deployment and 100% off-grid running only on solar and batteries, we deploy them within five days, they are easy to build and you can relocate them easily as well. We make sure our own teams are always there to ensure health and safety requirements are complied with. By doing this we can reach communities which couldn’t be reached before due to prohibitively high capex requirements. For example, using our solution, you can cover over 50,000 people with only $450,000 investment .

What we’re working on with Infratel are lease options which are either supported by revenue share models or a model where clients can lease the tower from us. To date, we’ve only been selling our rural solution outright through TAG on a capex model for mobile network operators, but now we find there’s a real need for leaseback options for customers. Operators can’t afford to deploy in rural areas and need to respond to immediate needs such as pressure to increase capacity in urban areas. This model allows them to free up capital for other projects. We’re still in discussions with our customers about deploying this offering but we’ll probably roll out this model within the next six months.

We want to take the service and deploy it at as many sites as we can as we see that another 250,000 cell sites are required globally, mostly in less populated semi-rural and rural areas. What’s great about our solution is also that if the site changes or is not feasible it’s portable, so you can always move it to a different area. You can also offer external charging for the local community – charging phones becomes a vital business for the community which also ensures no vandalism on the site.

TowerXchange: What is your footprint in sub-Saharan Africa? We understand you have a number of sites in DRC, can you share some of your story there?

As TAG we’ve built over 800 sites in the DRC but as Infratel we’re just starting with the model for the rural  leaseback. Using our leaseback rural coverage model we are aiming for 2,000 sites to be fully deployed by January 2016. They’re quick deployment sites so if a client requires 1,000 sites we can do that quickly and with three clients we can easily have 2,000 sites in place by the beginning of next year.

In DRC our experience has been mainly working with Vodacom and building sites for them. Although we have also done some work as TAG for clients such as Airtel as well. Right now we’re talking to a number of clients who are interested in our towerco solutions.

TowerXchange: Do you plan to begin your towerco offering in DRC before moving elsewhere?

No, we’re looking to grow everywhere, and we have been receiving requests from all over the continent. We’re talking to operators mainly at group level so we’re looking at rolling out in multiple countries. It also depends on the local team if they’re willing to deploy these solutions. In DRC there’s a particularly interesting opportunity as a lot of rural sites need to be deployed.

TowerXchange: What can you tell us about the design of your cell sites and how your energy equipment works?

We’ve got different solutions depending on the site but all of our sites are 100% off grid sites, no generator, no grid power at all. For example we will often use solar panels to charge a battery for when there’s no sunlight which can run for a further 24 hours. We run on very low power to achieve this. Other clients want more power so they can hang more equipment on their towers but power is the biggest investment for the ultra-low cost cell site. If they request this we will add in additional solar plants for them but we always advise clients to deploy active equipment with lower capacity as otherwise it stops being an ultra-low cost site and you can’t deploy as quickly and cheaply to recoup investment as soon as possible.

TowerXchange: Tell us more about the transportation and installation logistics needed for your sites.

For a full site, you can put the whole thing on a three tonne truck and three or four people can offload it without a crane. You can build the site with your hands; even the batteries only weigh 50-60kgs, which means you can pick up any part of it without lifting equipment. It’s incredibly easy to ship and install.

TowerXchange: How do you deal with security? What pragmatic approaches have you taken to ensure security of your sites?

First of all, we send our team leader to meet the locals. You want the locals to feel it’s their investment. They have to feel it’s their property which they need to protect - if it’s damaged they can’t make calls. Getting the chief to buy into this is really important. We also pay locals a fee to go and clean the solar panels; as soon as you give someone a responsibility to make sure the site is looked after, they buy into it. As I mentioned earlier, we also offer access to power for the community which gets great buy-in.

TowerXchange: How about opex? What kind of costs are needed to run these sites? 

Operational costs are very low as we budget just US$80-100 per month just for the cleaning of solar panels et cetera. The site operates pretty much by itself. The only power is solar so you don’t need to interfere. We have a very low failure rate for the sites.

For more information on our rural solution visit www.ruralcoverage.com