Cutting through the Clutter

A problem with Telecom Infrastructure business strategy is that everyone wants to be the Jordan Belfort in the room! Believable, Charismatic and trusted……. even while spouting BS!

Nobody wants to be a spoilsport, the guy who reads all the fine print, the guy with the problems.

Therefore, a candid, single page, primer placed discreetly before attendees, during management meetings, can ground the meeting discourse & inject a healthy dose of reality. Especially before a strategy / business deck is presented.

Here is my favorite primer content: -

1.??????CapEx enables the business, while OpEx sustains the business. The twins are here to stay, in good times and bad. But the direct business benefits of deployed CapEx / OpEx (in terms of Revenues and Tenancies) will always remain Uncertain. If some brave guy shows a slide with numbers correlating the two.....rest assured it is 10% projection and 90% speculation.

2.??????It always gets worse before it gets better. This truth applies to all NW investments targeted to improve NW uptime and meet SLA’s. There is no KPI called (NW Availability improvement achieved (in minutes), per dollar). When the CTO presents NW availability projections (in an attempt to bid for additional CapEx/OpEx), it is his 100% creative guesswork. Cut some slack folks!

3.??????If one of your top CapEx drivers is Fiber deployment, something right is happening in the TowerCo. Do not try to fix something that is not broken. A quick Approval is recommended on most occasions.

4.??????Do not permit the CFO to bring up Free Cash Flow and Cost of Capital (WACC) during NW budget planning meetings. Finance value drivers eat business value drivers for breakfast! Wrong decisions are guaranteed to be made.

5.??????Do not permit the CTO to present multiple RAN deployment options available to TowerCo customers (for e.g., Frequency based, NSA/SA based, antennae based, Market based, Service based, etc.) and hope that a consensus builds in the meeting about which option, the customers are most likely to adopt. Such discussions are futile, and no planning is possible. In today’s recessionary, liquidity crunch type of environment, it is for the Mobile Service Providers to be transparent and clearly define in advance the type of Infrastructure that is required from the TowerCo.

6.??????However advanced be your Asset Management System, for planning purposes, it is safe to assume only 70% -80% correlation between FAR and Site Asset Database. Make planning decisions accordingly.

7.??????For the young CXO, it would be a good reminder to point out that the TowerCo business model was conceptualized long ago with the basic premise that Power & Fuel costs must be “passed through” to its customers. This efficient model quickly becomes a leaky model when this premise is cancelled.

8.??????A smart rule of thumb is that a TowerCo is likely to be healthy if its Non-Current Assets are equal to or more than 2.5 to 3 times the value of its Current Assets less Trade & other Receivables.

9.??????Never let the CHRO ‘normalize’ existing staff strength and make it the staffing baseline. There are no clear-cut global benchmarks for an efficient ratio of - (Number of employees per Tower). Some TowerCo’s are full service, some are steel & grass only, some manage Fiber, some do not. Some have disproportionately large number of poles, small cells, DAS & street furniture each classified as a site. Perplexing indeed! In my experience, an average benchmark for CXO’s to keep in mind is: -

For a Full Service, conventional Independent TowerCo: ?41-45 employees per Tower

For a Steel & Grass, Conventional Independent TowerCo: 9- 15 employees per tower

10.??The Plan requiring Least CapEx is the Best Plan. This truth is applicable to most decision points across TowerCo business Cycle. When provided with multiple plans for acquisition, site roll out, site upgrade, site replacement, power system upgrade, tower strengthening exercise, etc., each with different revenue projections, choose the plan with the lowest CapEx requirement. Irrespective of revenue opportunity loss! Do not get swayed by numbers on tenancy potential, densification, etc. Think like a Baniya (google it) when it comes to making choices.

11.??Delaying CapEx upgrade programs and instead Investing in building up Cyber Security Infrastructure covering NDR, EDR, IAM, TI, PAM, VM, MDM, and DLP is a far-sighted option!

12.??‘Digitalization’ cuts both ways. It is a disruptive, painful and possibly an adverse business impacting exercise if not thought through. Do not let the CIO push a digitalization agenda unless the digital ambition is clear, digital priorities are defined, digital governance structure is agreed and use cases, technology delivery model and architecture are first agreed in house!?

More to come........