Research Notes

Infrastructure providers are losing revenues due to operators’ challenges

New report documents that infrastructure providers like Ericsson, Huawei, Alcatel-Lucent, NSN and ZTE are losing revenue due to the challenges that mobile operators are currently facing with their mobile network antenna mast business area
When politicians and the regulative authorities around the world allocate mobile licences, they often forget to ensure that mobile operators have some sort of support that includes acceptable terms and conditions regarding the whole business area of erecting the many mobile network masts and antennas that will ensure mobile consumers the best possible mobile coverage.

For example, in Brazil mobile operators are simply not allowed to sign up new customers if they have coverage or capacity problems and are fined if they violate those rules, but at the same time the Brazilian mobile operators are having great difficulty in getting permission to erect new mobile network masts and antennas.

Between June 2011 and July 2012, Strand Consult conducted a large international project that not only closely examined the terms and conditions that mobile operators are working under in the mobile network antenna business area, but also actually greatly improved the terms and conditions for the Danish mobile operators even before the report was published on the Danish market.

Our report “How mobile operators can reduce costs for mobile masts and improve mast regulation” not only describes the terms and conditions of mobile business area, we also describe how mobile operators around the world can greatly improve their current negotiation position when upgrading and expanding their mobile network antenna infrastructure.

One of the conclusions that the report clearly shows is that mobile infrastructure providers like Ericsson, Huawei, Alcatel-Lucent, NSN and ZTE are losing revenue due to the challenges that many mobile operators around the world are currently battling against in the mobile network antenna business area. Our investigation showed that the slow processing of antenna mast building applications, increasing antenna mast location rental prices and totally unreasonable demands on where operators are allowed to erect mobile network masts and antennas is not just costing a great deal of money for the mobile operators, but is also having a financial impact on the mobile network antenna infrastructure providers.

The conclusions in our report are very clear:

• The slow processing of antenna mast building applications is slowing the expansion of mobile broadband.
• The rental prices for mobile network antenna masts and antenna locations are having a negative influence on the mobile operators’ OPEX.
• Unreasonable demands on where mobile network antenna masts or antennas are allowed to be placed are resulting in increasing prices for antenna sites.
• Increasing costs of expanding mobile networks are having a negative influence on mobile operators’ CAPEX.

What we have learned from our research leaves us in no doubt; the mobile infrastructure providers will find it more difficult to sell mobile network antenna infrastructure in the coming years.

We have spent a great deal of time analysing this business area in many regions around the world and on all the major international mobile markets and we are seeing the same trend everywhere; it is becoming increasingly difficult and increasingly more expensive to erect mobile masts and mobile antennas. At the same time the rental prices for existing mobile masts and antennas are literally exploding, regardless of the fact that the general revenue from mobile traffic has significantly decreased over recent years.

This is the worst possible news for mobile infrastructure providers and can only result in the infrastructure providers selling less and seeing increasing pressure on their mobile infrastructure prices. When city councils are stalling antenna mast building applications, less mobile antennas can be erected and mobile operators have no choice but to spend extra time and resources on trying to upgrade and expand their networks. In addition, mobile operators are also paying more and more rent for existing antenna mast locations, which is again increasing the operators’ OPEX and putting even more pressure on the infrastructure providers.

Our new report concludes that if infrastructure providers like Ericsson, Huawei, Alcatel-Lucent, NSN and ZTE do not focus on this area, their infrastructure sales will come under a great deal of pressure both regarding sales volume and infrastructure prices.

Get more information about our new report.

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