Asset management typically involves a systematic process of deploying, operating, maintaining, upgrading and disposing of assets in a cost-effective manner. In the context of a telecom tower company however, asset management can be defined as managing the quantity, capacity and condition of the active and passive telecommunication equipment across the tower portfolio. While such a definition is related to the physical asset on site, it is important to note that these physical assets have commercial ramifications.
This can be better understood by comparing the telecom tower and the real estate industries. In fact, the tower industry is sometimes referred to as the “vertical real estate”.
Drawing parallels
In the real estate industry, two important factors that affect the rent are space and location. For instance, in a shopping mall, there are a number of spaces available that can be let out to retail brands. The mall owner needs to calculate the rental based on the amount of space allocated to a particular customer. Also, it has to be ensured that each customer stays within the space allotted to it and does not encroach on space reserved for others.
Similarly, the tower industry, too, looks at the space available versus the tower lease, and the location versus the tower lease. Like a shopping mall, we have a tower with spaces that need to be allocated to customers. Therefore, a tower company should ensure that the correct amount of space is allocated to a customer. Also, the customer should stay within the space allotted to it, or pay for the adjacent space and the additional loading. Further, the customer should pay according to the location, that is, a premium price for higher locations on the tower as they offer better loading capacity. Moreover, the assets need to be correctly linked to the tenant lease and, in turn, to the master service agreement so that they are billed correctly.
The key differentiator between the two industries is the round-the-clock upgrades that a tower company needs to undertake. As mobile technology continues to evolve and demand for data increases, operators are installing more equipment at the sites to cater to the rising demand. Moreover, there will be an amalgamation of technologies and equipment at the site, which will further complicate the management of the tower site. Also, it is important to note that these upgrades are taking place across the tower portfolio and if assets placement and movement are not tracked accurately, there could be a tremendous impact on the top line. This underlines the need for asset tracking.
Benefits of tower asset management
Accurate asset tracking gives tower companies access to updated data about their tower sites, which can be linked to the revenue stream by pricing the customer correctly. This can help them minismise revenue leakages. Further, asset tracking and management can improve the time to market because a tower company knows where exactly the free spaces are available and, therefore, ensure hassle-free installation for a new customer. It also helps tower companies adhere to engineering as well as design plans, and maximise the usage of space and loading. This, in turn, can aid tower companies in maximising their returns on capital invested.
Implementing telecom tower asset management
Managing tower sites has a direct linkage to the valuation of the company and tower companies are beginning to realise this. Tower owners in emerging markets are becoming increasingly conscious about closely tracking assets on their towers because they realise there are significant commercial ramifications of tracking and managing space utilisation, reservations, asset movement and linkage of each of the assets to the tenant lease.
Tower companies are beginning to show significant interest in adopting a central and flexible software platform. In fact, software has evolved significantly and many new solutions for mapping a particular business model are being introduced. As the tower industry is constantly evolving, tower companies are looking to ensure that they have a defined product roadmap. In addition, they are looking for long-term partners, end-to-end knowledge, trust and experience with local nuances.
Till now, the Indian tower market had been focusing on operations and maintenance. Going forward, the enforcement of equipment rights through asset tracking and management needs to be ensured. While there are various tools available in the market, tower companies should keep in mind the long-term value arising from a particular product before deploying it for managing and tracking their assets.
Based on a presentation by Adhiraj Singh Bisht, Head of Sales, Asia Pacific, Tarantula
