LTE provides new hope for ailing state telcos April 11 2016

In the early years of 3G, there was a significant time lag between deployments in developed mobile markets, and those in most emerging economies. Indeed, some of those still have sparse 3G availability outside major city centers and, in some cases, will move straight to 4G for further capacity and coverage enhancements.

In 4G, the pattern has been very different. Some of the very first commercial roll-outs were in unexpected markets (Uzbekistan was the first country to have two competing commercial LTE networks). And deployments have been going on in parallel in all kinds of economies, especially as some emerging markets have looked to LTE to improve overall broadband availability where wired infrastructure is lacking.

These trends are starting to inject new life into some of the world’s more sleepy state-owned telcos, which suddenly have new tools with which to meet their broadband obligations and a chance to improve their cost bases and competitiveness.

In Nigeria, the national telco was defunct, but has risen from the ashes with a new brand, NTel, and plans to offer LTE services in major markets from this weekend. After years of delay, the government completed the privatization of incumbent telco Nitel, and its mobile arm Mtel, last year. It has been acquired by a consortium called Natcom, which paid $252.5m and made its final payment this month, freeing the newly named NTel to start commercial operations.

Having been out of action for so long, NTel enters a market which is already crowded, but claims its newly minted 4G network will give it an advantage over rivals like the local subsidiaries of MTN and Bharti Airtel. MTN is the market leader with a 42% share, followed by Globacom, Airtel and Etisalat. The country also has 2.1m CDMA customers, and there are also several smaller LTE providers such as Smile and Swift.

NTel will offer its 4G services first in the largest two cities, Lagos and Abuja. CEO Kamar Abass says the firm now has deals with channel partners and all the required regulatory approvals from the Nigerian Communications Commission (NCC), including permission to offer VoLTE. So far, the company has deployed 200 kilometers of fiber in the cities of Lagos, Abuja and Port Harcourt, and about 600 mobile base stations in Lagos and Abuja running in the 900 MHz and 1.8 GHz bands and supporting LTE-Advanced with MIMO. A further 200 mobile sites are planned for this year.

Meanwhile, India’s troubled state telco BSNL is also preparing to launch 4G and hoping this will revive its fortunes and make it more competitive against private sector rivals like Bharti Airtel, Vodafone and Idea Cellular. It has conducted a soft launch of LTE services in Chandigarh and is now looking to roll out 4G in 14 of India’s 22 operating circles this year, though it has not given a firm timing. BSNL has rights in all the circles except the major metro areas of Delhi and Mumbai, which are the preserve of the second state telco, MTNL.

Initially, BSNL will deploy LTE base stations on its existing GSM towers to save on passive infrastructure costs, but it will no doubt be looking for partnerships in that area, since its 2G sites are unlikely to be adequate to enable good coverage for 4G – BSNL’s spectrum is in the 2.5 GHz TDD band, whose relatively high frequency means that a large number of cell sites are needed for universal coverage.

BSNL is currently deciding whether to pay for its new base stations upfront from the capex budget or to adopt a revenue sharing model with its vendors. In the latter approach, it would supply its passive infrastructure and spectrum, while a vendor or franchisee would provide the base stations. BSNL would own and bill the customers and would share the revenues with its partner.