Energy Efficiency Is New Operator Focus

Data Will Drive Operator Expenditure
3G & 4G Mobile Subscriptions As % Of Market

Saudi incumbent STC has announced a deal with Ericsson to deploy energy efficient mobile infrastructure starting in Princess Noura University, Riyadh. The deal follows a global procurement deal reached between the two companies in 2012 for Ericsson to supply all of STC's subsidiaries , leading BMI to believe Ericsson's solution may be rolled out in other markets. With subscriber growth slowing , but demand for services remaining high, operators are under pressure to keep providing data-heavy services and lower running costs , therefore making energy efficient infrastructure an important part of operator strategies.

STC reached the deal with Ericsson in July 2012 and included its subsidiaries Oger Telecom and Malaysia's Maxis Group, with the operators having a combined subscriber base of 140mn over eight countries. The new towers aim to reduce operator costs by using less land space and requiring less energy to power the units, having a positive impact on operating expenditure. The manufacturer states that its Tube Tower technology can house more antenna and dishes compared with traditional towers, further increasing its appeal.

While STC's initial roll-out of the new towers is restricted to a small area of Riyadh, the company's operations in several of its markets may be stronger candidates for using energy efficient infrastructure. Margins in highly competitive markets such as India, Indonesia, Malaysia and South Africa are already under pressure and lowering operating costs is a focus for all STC operations. In addition, these markets tend to have more limited access to power, further vindicating the need for less power hungry infrastructure. A Capgemini estimate suggests electricity accounts for 15% of network operating expenses for European mobile operators. In emerging markets, more limited access to power means alternatives such as generators are used, so power costs are much higher for the market's players.

BMI believes mobile broadband will be a driving force behind broadband growth in emerging markets, providing ample opportunities for operators to generate stronger revenues from non-traditional mobile services. While this is a huge opportunity for operators, managing the costs of networks becomes increasingly important to maintain bottom lines. Mobile is already a capital intensive sector and technology continues to move quickly, requiring almost continual investment in upgraded infrastructure. BMI expects energy efficient and alternative energy infrastructure to become an increasingly important segment of the telecoms infrastructure market and become the standard for new infrastructure as it reaches the market.


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