Infrastructure Sharing in the telecoms sector
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19 June 2019
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Global growth of infrastructure outsourcing
In markets around the world, the same factors are driving the growth of the passive infrastructure market: particulars differ, but all carriers are being asked to deliver more for less. This pushes telcos to continue to deploy denser, more robust high-speed networks, which puts a strain on their ability to deploy sufficient passive infrastructure to support active network deployment.
Understanding the options
There are many options for sharing infrastructure, ranging from passive sharing, such as managed services or tower sale and leasebacks, to active sharing, including RAN sharing and core network sharing, or spectrum sharing. While you need to understand the balance sheet impact of each option, your choice will also critically depend on understanding the legal pros and cons of the different structures.
Getting down to detail
Telcos face numerous questions with any infrastructure programme. How will you deal with term and renewal rights? How do you strike the balance between reserving space for the anchor carrier and providing colocation opportunities for other carriers? In emerging markets, how will you deal with local legal requirements, pricing of power and other local concerns? What remedies should be available to the carrier if service levels are not met? How does a telco’s need to provide state-of-the-art functionality to its customers square with the financial model underlying the sharing transaction?
As telcos may not use their full spectrum capacity, leasing can provide a way to reallocate spectrum to match demand. How can they balance these efficiencies against the technical and legal issues? How can spectrum leasing agreements take into account the risk of interference by the regulator, whether motivated by national security concerns or redistribution of existing spectrum to allow new market entrants?