News & Events – Uptime

• Uptime won new managed services contract in two new circles i.e. Tamil Nadu and Kerala. It also got new comprehensive Operations and maintenance contract in Maharashtra & Goa circle, and a contract in the same circle for Operation and maintenance with another customer.

• Uptime won Telecom Implementation Contract with three OEM’s in 16 circles.

• Uptime won Turnkey Service contracts in 6 circle for different operators.

• Government Makes New Regulations for EMF Standards
  In response to health fears relating to EMF radiation, Gov of India is now requiring network and tower operators to measure radiation developed by wireless phone equipment and make applicable corrections. Penalties for non–compliance includes a fine in the amount of INR 50,000 per month and shut–down of the site in the event of non–compliance.

  To assist telephone operators and tower companies meet the requirements expeditiously, UtpimeInfratel has created a unit within its Consulting Division specially equipped and trained to measure EMF levels at selected sites and recommend corrective measures. Satyajeet Limaye, Uptime’s CEO said “The scope of the requirements is very broad and we are pleased to be able to help our telecom partners meet the deadlines imposed by government.”

  Uptime has assigned 50 trained engineers to meet strong demand from operators and tower owners concerned about non–compliance with government regulations.

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• Uptime Infratel receives Investment from Strategic Investor
  To finance its growth in the telecom infrastructure sector in India and other rapidly growing regions, Uptime has received an infusion of equity capital from a foreign strategic investor.

  Satyajeet Limaye, Uptime’s CEO said the investment coincides with a significant expansion in the demand for telecom infrastructure services in India, due to the nation’s movement from 2G to 3G and expansion into rural areas. Limaye said “The additional capital has allowed us to significantly expand our operations into new parts of the country and into new services. Now, Uptime truly provides end–to–end solutions for the telecom industry.”

  In addition to expanding the scope and geographical coverage of Uptime’s existing Site Construction, Engineering and Managed Services business, the new funds have been used to expand its Consulting Services and Product based Solutions. Consulting Services include EMF measurement and correction and Energy Management. Product based solutions includes energy saving and OPEX saving devices which are provided as part of Managed Services. Uptime has hired over 100 engineers, technicians and related support staff in the last few months to satisfy the new orders.

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• Reducing OPEX is the new trend in Managed Services
  Reducing OPEX has become such a hot button among telephone operators and tower owners that Uptime Infratel has introduced new energy saving and productivity enhancing products as part of its Managed Services offering. On the energy saving front, Uptime can now include in its monthly services an electronic controller device that monitors the diesel generator and other sources of power and selects the optimal source for given conditions. The result is a 20–40% reduction in diesel consumption depending on available sources of power.

  To improve the productivity of its engineers and network ‘uptime’ for its customers, Uptime has developed a proprietary SMS based device to remotely turn on and off the diesel generator. Satyajeet Limaye, CEO said “this device saves multiple wasted journeys for our technicians and ensures the diesel generator is back in operation without significant delay. The result is maximum ‘uptime’”.

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News & Events – Industry

• Infra Managed Services In Consolidation Phase.
  By Satyajeet Limaye, CEO, Uptime Infratel

  While consolidation in the tower owning business has produced industry giants like Indus in India and American Towers (world–wide), consolidation in the field operations and maintenance sector is only recently gaining momentum in markets like India and Africa.

  In theory, tower owners should benefit from outsourcing operations and maintenance to third parties through reductions in operating costs (OPEX) and the opportunity to focus on core activities like acquisition and asset management. In practice, most operations and maintenance providers have been so small, under–capitalized and low–skilled that most of the benefits have not been fully realized.

  In a recent issue of tele.net, Mr. B. Ramanand, COO of American Towers Company (India) said “To change the paradigm of excellence and value from the number of towers to excellence in service delivery, a complete change in mindset across all sections of tower companies is required. Operations jobs were left to lower–level employees who were far removed from the strategic areas of tower valuations and enterprise value, and operations teams employed primitive technologies and almost no management techniques. They were supported by multiple small–time vendors whose main qualification was geographical presence rather than skill sets and strengths. No large operations company has emerged and the tower industry still has not seen the benefits of working with larger organizations, and the greater value that could be derived.”

  There are two main factors that explain why few operations and maintenance companies in India and Africa have reached a size and level of professionalism that would make them really useful strategic partners to tower owners. First, the industry is still fairly new and firms that might have started life three years ago as diesel fillers have not had time to develop professional management skills. Second, such firms typically do not have access to debt and equity capital.

  With these challenges in mind, in mid–2010 the executive team at Uptime Infratel prepared a new business plan to capitalize on the firm’s strong management, technical and engineering capabilities. These capabilities have been a key part of the firm’s successful construction and installation of over 10,000 BTS sites since 2002 and current management of over 5,500 sites under Managed Services contracts. Elements of the business plan are as follows.

  First, the existing operations and maintenance, tower construction and equipment installation business was repositioned as a pan–India turnkey solutions provider and strategic partner. Second, an industry consolidation strategy outlined how small firms could be aggregated at low or no cost. Third, the plan described how Uptime would incorporate OPEX reducing solutions into its Managed Services, particularly in the areas of energy savings. Fourth, senior management’s expertise in automation software technology was translated into new systems for controlling all aspects of project and operations management. Fifth, new revenue streams from consulting and support services were identified relating to Uptime’s expertise in the areas of electromagnetic field emissions, energy management and clean technologies. The new business plan was immediately successful in securing a new equity investor and increased lines of bank credit.

  The new capital has been put to use immediately. The re–branding includes a re–positioning of the firm’s verticals so customers better understand the features and benefits of Uptime’s services and products. New project management and financial software is now operating and performing well. Several small firms have been taken over which has expanded the firm’s geographical footprint throughout India. Discussions are being finalized with major tower owners to form new (and expand existing) strategic partnerships to outsource all operational tasks, including managed capacity and energy management.

  The impetus for consolidation in Managed Services is coming from service providers and tower owners needing to reduce OPEX and CAPEX due to radically lower ARPUs and margins. However, only well capitalized firms will be able to invest in the necessary equipment, training and systems, and deploy the significant amounts of working capital needed to provide Managed Services in multiple markets. Furthermore, lower margins are soon expected to pressure service providers and tower companies to outsource all aspects of energy management to Managed Services providers, with the primary goal of reducing diesel consumption and creating energy from alternate sources. This will require even higher levels of technical and management expertise and most likely the need to finance the capital required to invest in energy optimizing systems, improved batteries and alternative energy products like solar. Only those Managed Services firms that can afford to participate in the financial risks of such investments will be able provide the solutions that the tower owners are seeking.

  In a sign that tower owners appreciate Uptime’s expanded Managed Services and energy management capabilities, sales orders since November 2010 have increased substantially. We believe Mr. Ramanand is right when he says “the emergence of a few large service providers who would assist tower companies with professional service offerings is the need of the hour.”

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• tele.net Magazine
  Vol No 11 Issue No 9 September 2010
  Time To Transition – Tower companies need to revise strategies to create higher customer value
  B. Ramanand, COO, ATC India.
  

  Are we seeing the end of the boom time for the tower industry? Or the beginning of the new phase in the growth of the industry? Over the past few months, a number of major changes have taken place in the Indian telecom landscape, the first being the close of the 3G auctions, which resulted in huge payouts by telecom operators, forcing them to re–think their rollout strategy. The second was the steep decline in the average revenue per user (ARPU), which put a never–seen–before kind of pressure on margins. And if this was not enough, a ban on telecom equipment imports was imposed by the Government of India. Regulations permitting intra–circle roaming added yet another dimension to the slowing down of new builds, particularly for the new telecom licensees.

  These multi–pronged pressures have resulted in a complete standstill in building new towers over this year, with operators’ annual plans deferred, modified and in some cases even shelved. Further, 3G will not lead to significant rollouts or additional revenues for tower companies as was earlier expected. While multiple scenarios appear to be evolving, there is no doubt that we are clearly seeing warning signals for the tower companies and that the era of large–scale rollouts of towers is gradually coming to a close.

  In the face of multiple pressures from both customers and the environment, it is time for tower companies to rethink their strategies and create a value proposition for their customers in the next adjacent space to new builds – the operations space. Operational excellence in customer service and service delivery will act as key differentiators among tower companies. While this may be true for any industry, it must be remembered that tower companies have equated excellence with the number of towers added to their portfolio. This was what was demanded in order to build the enterprise valuation of the company that has been driven by numbers and not by the quality of service delivery.

  To change the paradigm of excellence (and, therefore, value) from number of towers to excellence in service delivery, a complete change in mindset across all sections of tower companies is required. Operations jobs were considered mundane and left to lower–level employees who were far removed from the strategic areas of tower valuation and enterprise value. Operations teams employed primitive technologies and almost no management techniques. They were supported by multiple small–time vendors whose main qualification was geographical presence rather than skill sets and strengths. To expect professional quality of operations from such low–skilled organizations would be clearly demanding too much. No large operations company has emerged and the tower industry has still not seen the benefits of working with larger organizations with superior professional skills. They are yet to understand on a total cost basis that such organizations will deliver greater value to them. This myopic view can be attributed perhaps to the short–term, new build approach adopted hitherto.

  The emergence of a few large service providers who would assist the tower companies with professional service offerings is the need of the hour. A parallel can be drawn with telcos that have outsourced their active infrastructure operations to managed services (MS) vendors who are also the equipment suppliers. The MS vendor has created a slot for itself as a policemen of the tower companies and not as a partner to deliver combined value to the common end–customer.

  This situation has resulted in a duplication of efforts by the MS vendors and tower companies, both of whom now need to have a physical presence at every tower in the country. This, coupled with the lack of a combined approach towards a common goal, has added to the inefficiency and costs, the burden of which is being borne by the end–customers. The emergence of a combined active and passive infrastructure services offering would go a long way towards solving this problem. Whether the MS vendors would enter the operations space of the tower companies or vice versa is not the main question here. What is important is whether such a combined active–cum–passive offering can provide greater value to the customer through higher efficiencies and lower costs.

  Yet another area of concern for both the service provider and the customer is the lack of efficient energy management. The pass–through mechanism, in spite of all the good intent of its proponents, has failed miserably. And what is worse is that the end–customers have lost all control, over their power and fuel expenditure. The tower companies today have no incentive to improve performance in energy management; moreover, the use of primitive management methods has often led to local–level, quick–fix solutions. After struggling to improve the pass–through model, both sides are now convinced that the only way forward is to make the pricing structure akin to the pricing of a hotel room, where the rental fee charged isinclusive of all services. The pressure on the bottom lines of operators and the recent slowdown have led to a shift in focus from building new towers to lower fixed power and fuel models. However, there have been limited experiments on fixed power and fuel models, and not much headway has been made with regard to this. Both sides have very rigid viewpoints but are in agreement that this is the only way forward. It is only a matter of time before some common ground is found. Some of the tower companies, especially the smaller tower companies, have come up with such offerings. However, the large tower companies are yet to attempt such offerings on a major scale.

  The single price, all–inclusive combined energy offering appears to be the first step towards addressing this issue. Energy as a commercial venture would, therefore, be the next logical step supported by strong data and cost management. It will not be long before energy management profit ventures take root either within or outside the tower companies. Once this happens, the reluctance of the tower industry to invest in new technology solutions will automatically disappear and the company with the best offering will emerge the winner.

  The single price, low–cost combined energy offering will become another differentiator, which in turn will lead to a revision of relationships between captive tower companies and their owners. In fact, we are already witnessing some dilution in the relationships of owners 1rith their captive tower companies. The owner–operators are now willing to make concessions and are going out of their way to accommodate a lower–cost, better operated tower even if it doesn't belong ill their captive partner. Currently, the percentages are not very significant but are nevertheless an ominous sign for captive tower companies. The conflict between building a tower for adding enterprise value for their owners and building a profitable tower for themselves is taking deep root, forcing captive tower companies to revise their strategy of dealing with their owners.

  Yet another dimension is the owner–service provider relationship between telecom companies and captive tower companies. Towers were considered a strategic asset in the early days and were not shared, even if there were towers belonging to competitors nearby. This approach continued for some time after the formation of tower companies, until the impact of the current pricing model, which envisages reducing rentals and energy costs with the addition of each tenant, was fully appreciated. Such tower companies will, however, have lower tenancies and will continue to be the beneficiaries for some time to come till tenancy ratios improve across portfolios. Apart from lower tenancies, these tower companies will also carry the burden of uneconomical single–tenant towers. Telcos now are seeking the best deals in spite of restrictive covenants of dealing with captive service providers even if it means making compromises. Such an approach is a welcome sign and perhapswe are seeing the end of the preferential treatment given to captive tower companies and the beginning of more healthy competition based on quality of customer service and satisfaction. Another area where the tower industry is yet to make significant progress is in the adoption of new technology. In spite of multi–directional efforts made by all sections of the industry towards this end, no worthwhile technology solutions have been found to address the key operational issues of cost optimisation and quality of service. For example, there is little use of technology while providing reliable power, and fuel data and solutions. What is being done is limited to pilots and there are no significant innovations that can be applied across the board. Nor has there been any significant reduction in the capital cost of building a tower. The changing telecom landscape will ring the death knell for cost–plus pricing and sooner or later, tower companies will, be driven to invest in new technologies to bring down costs in line with their customers' expectations.

  The days of large–scale new builds are over and tower companies now need to establish their competitive position in the marketplace through tailored offerings bolstered with a genuine concern for customer needs and excellence in operations. Within these terms of reference, multiple competitive offerings can be generated to the advantage of the end–customer. The changing landscape of Indian telecom will hasten the process of this redefinition, leading to a more mature Indian tower industry.

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