Active infrastructure sharing for 4G in Mozambique

Is active sharing coming to Africa? After a decade of sharing passive infrastructure, Godwin Makyao, the founder of Maktech thinks that sharing active network equipment is the next phase for mobile networks in Africa. African MNOs have limited capex to deploy each year, and have to deal with unreliable power which push up their opex. Active sharing can reduce both. Starting in Mozambique, but with his eyes on Tanzania and Madagascar too, Maktech is planning to roll-out 4G base stations for operators while offering shared antennae and shared active management and maintenance to up to four operators in the very near future. 

If you would like to know more, Godwin Makyao will be taking part in TowerXchange Meetup Africa, in Johannesburg, on October 8-9th, click here to register or email Anna Mayhew at amayhew@towerxchange.com for more details.

TowerXchange: First please introduce yourself – how did you get into the telecoms business?

I have been in telecoms for almost 20 years. After graduating from university I began working for a telecoms operator in Tanzania called Tritel (1999-2000), but I soon moved to work with Vodacom and received further training in South Africa. I was one of first engineers working on Vodacom’s Tanzanian network and set up the maintenance for the whole country.

Spotting an opportunity, in 2002 I stepped down to start my own business at 26.

Maktech ultimately ended up doing 98% of Vodacom Tanzania’s telecoms work. For example, 90% of their active equipment has been installed by Maktech. We have since expanded into Mozambique, and have done some projects in Madagascar and Botswana. My philosophy has always been to win work by removing the pain points felt by operators. 

TowerXchange: Please tell us about the history of Maktech and about your experience maintaining passive telecoms infrastructure – what is your footprint, and how many sites do you currently manage?

Maktech was Vodacom’s prime local contractor in Tanzania after Vodacom outsourced their passive infrastructure maintenance in 2008. However, that changed when Helios Towers entered Tanzania, buying towers from Tigo in 2010 and from Vodacom in 2013. Maktech continued to work with Helios initially and provided maintenance on 500 sites, but with the entry of towercos into Tanzania, Maktech changed direction to begin providing active maintenance. 

Maktech’s culture is high delivery and doing work right first time. We are not a lowest cost supplier which is why it made sense for us to move into active maintenance. We started as a main partner with Nokia on their equipment deployment on Vodacom’s towers. We had 95% of all the work in Tanzania including NOC management, installation, optimisation and maintenance. This totals about 600 sites. 

We have a similar situation in Mozambique, where we also work with Vodacom. We are currently working on a countrywide expansion, providing new installations of active equipment and also focusing on provision of total solutions for active and passive maintenance to 800+ sites.

TowerXchange: What has inspired your ambition to build, maintain and manage active networks in Africa? Are you aiming to become a completely independent NetCo?

This is my new focus.

We have been looking at how towercos work and taking lessons from Helios and American Tower. I want to do for active equipment what they have done for power and passive infrastructure. 

When you look at active equipment, there is nobody making sharing a reality and there is room to do that. Operators need someone to manage their active equipment, someone to install the cable and equipment and manage the radio side, someone to overcome the challenge of space at the tower, permitting and all planning of new equipment at the tower – and that can be Maktech. 

Modern 4G equipment from Nokia, Huawei or Ericsson can be easily shared. One antenna can be shared by four operators, the RF component from top of the tower to cabinet top can be combined and distributed to up four operators, and fibre backhaul can serve far more than ten operators for a number of kilometres to their Radio Network Controller (RNC) and Base Station Controller (BSC). Transmission can be shared too through metro-links in urban areas, with other innovations such as point-to-multipoint also enabling big savings. 

By using the latest technology and managing the active network ourselves, we can allow operators in places like Mozambique to focus on managing their core network, their billing systems, their advertising and customer service. Maktech can bring the signal up to their BSC, RNC and Mobile Switching Centre (MSC) and take away the pain point of running a radio network. Maktech can manage this network on the ground and partner with Nokia or other OEMs who provide the enabling technology. 

TowerXchange: Why have you started in Mozambique and not a more developed market like South Africa, or one where you have a larger footprint, like Tanzania?

South Africa is too far down the road towards 4G and Tanzania already has Helios Towers facilitating infrastructure sharing. Mozambique has none of that. Mozambique is still an emerging market, it has some sites on 2G and some on 3G but almost none of 4G and that creates an opportunity for rolling out 4G in a different way. This makes it the perfect place for Maktech to bring a new model that can take away the pain that operators are suffering. Once we prove this model can work in Mozambique we can then try Tanzania and work with other MNOs and towercos.

TowerXchange: What regulatory barriers are there for a non-MNO managing active networks? How do you overcome these?

In Mozambique they are putting new regulations in place to encourage sharing. There is top-level support from the Government, which buys into the principle that sharing can speed up digital infrastructure investment, especially in fibre. For example, in Maputo a lot of installed fibre is above ground suspended from electricity poles and they want to encourage sharing to prevent this. The Ministry of Communication, regulator and some big operators importantly all like the idea of sharing being applied to the 4G rollout and future expansion of network deployment in Mozambique. 

There are regulations for who can use what spectrum which could slow down rollout, but Maktech is not planning on owning spectrum. We will operate the active infrastructure network but the spectrum used will always belong to the operator using our equipment, so this removes potential regulatory hurdles from our plans. 

TowerXchange: Talk us through the technology set-up for an actively managed site – how many networks can you run and how does the network work?

Ideally you would be running an active network for four operators. You can provide a very good service to four operators while also making a very healthy margin. Maktech will provide access to a shared antenna with four ports connecting to a single cable leading to a shared cabinet for all four operators, minimising space required. As this solution is aimed for 4G we would also be providing fibre backhaul and removing the requirement for microwave backhaul. 

TowerXchange: Talk us through the economics of active management – what is the impact on capex and opex for an MNO? Why would an MNO want to sacrifice coverage or quality of service as differentiators?

In terms of capex reductions, we have no public numbers yet, but we are expecting rollout to be up to 35% cheaper for the roll-out of 4G. You still require a tower, backhaul, power, cabinet and antennae, but each of those costs is minimised by sharing an active network. 

Opex should be 20-40% cheaper, but the major savings only come from a full-scale change in business model. You do not see major savings if you share your active network in just one region, you need to retain far too many capabilities internally. 

The full saving on opex comes from embracing a total business change and no longer having a staff who maintain your radio network, your cable, your equipment, replacement and maintenance. You switch to a small team which monitors whether Maktech is hitting its KPIs. Instead of Vodacom employing engineers for example, they will just have a few people monitoring us and they can move to core business of selling data and airtime instead.

So we reduce capex and opex significantly for operators, but we will also increase quality of service and expand their coverage 

TowerXchange: Network sharing can reduce capex and opex, but capital required is still substantial, how do you plan to finance your network rollout?

We are still finalising our plans for Mozambique, so I do not have a final answer for you. Importantly we have the support of a major big operator and the Government in this initiative, who are very interested in the idea. So we are currently looking for investors to come in and support this project. We also expect to make use of vendor finance. 

There is some risk to investing in a developing market, but because of our operator backer’s critical position in the country, and the backing of the Government, we will have access to forex once an investment is made and capital has been injected into Mozambique. Because Maktech is already based in Mozambique, a lot of on-the-ground work can be funded locally. 

TowerXchange: How do you envision to future relationship between Maktech as an active network manager and towercos in Africa? 

I would be happy to partner with a towerco. There is still a question mark around lease rates on towers but this is a question of finding the right financial model. Moving from four tenancies to one implies a large reduction in lease rates to towercos, and if operators already have contracts with a towerco for space it may be difficult to renegotiate for a large saving. But there are also towers which are so loaded that combining some tenancies will avoid expensive strengthening or open up space for additional tenancies. 

We do not want to be managing power, so a collaborative approach to tower management is essential. On other hand this model is for removing a main pain point for towercos which is how to create more space for more tenants on their existing towers and rooftops, and how to increase the efficiency of their tenant’s equipment on their tower, especially when coming to active and radio equipment, which is not their core business.

TowerXchange: Do you see this solution as a better fit for bringing greater connectivity in difficult to reach rural areas, or as something suited to accelerating 4G rollout, or something which is suitable for all mobile networks?

This is a project aimed at Africa’s urban areas. It is in urban areas that you are seeing a proliferation of equipment, and rooftop sites which lack the space for lots of additional 4G antennae. You also achieve opex efficiencies more rapidly because you have more sites in a denser configuration.

On sites in rural areas there is usually a lot of space on the tower, so utilisation not so important. Rural sites often only receive 2G and there is not the loading you see in urban areas. The model still reduces capex and opex, and will help connectivity reach rural areas more rapidly, but we will start in urban areas. 

TowerXchange: Tell us about your vision for the future of the company – what would success look like in Mozambique and which are the next markets for Maktech?

My vision is to bring active infrastructure network sharing to Mozambique and rollout the county’s 4G network. The response I have received from the country’s operators tells me I can do it. Maktech is already a trusted partner in the market. There has been a culture change in the country over the last five years as sharing has become more normal – active management and a shared 4G rollout is the next step. I do not see the financial barriers as the major obstacle. Once we have the contracts and commitments from the operators then we can do it. In five years from now I plan to be running Maktech in Mozambique and more African countries much like a towerco, but focused on the active network sharing.

If you would like to know more, Godwin Makyao will be taking part in TowerXchange Meetup Africa, in Johannesburg, on October 8-9th, click here to register or email Anna Mayhew at amayhew@towerxchange.com for more details.