An honest approach to consultancy

iStock_000010827673XSmallReal Wireless was recently commissioned by an investor client to provide independent advice on the prospects for one of their investments.

The client runs a specialist hedge fund: amongst their investments they had a significant position with a large wireless technology company with diverse business models. Our client believed they had spotted a hidden synergy between these different business models which other investors had not noticed. These synergies, in their view, meant that the company was undervalued, giving rise to scope for more growth. They planned to invest further in the company, and were seeking independent validation of this strategy prior to the investment.

We conducted a review of the company in question: we examined technology trends in the industry, the company’s offering and business models, and the opportunities for the synergies which our client had observed. We conducted anonymised interviews with key industry figures and created a set of scenarios for the future evolution of the company. For each of these scenarios we analysed the likelihood of occurrence and the impact on the company’s prospects.

We concluded that, while the company was in a good position to continue its business into the future, competitive threats would increase, the company’s differentiation was likely to reduce, and there were hidden factors which could potentially weaken it significantly. The synergies which had been identified by our client, while not well known, were still apparent but crucially we concluded that it did not represent an opportunity for growth.

This was not the outcome that our client wanted to hear: they had hoped to enhance the value of their fund through this extra investment. However we felt it was right, consistent with our role as independent expert advisors, to properly express our views, backed up with the evidence we had gathered and the logic for our position.

Some months later, unprompted, our client sent us the following note:

“I thought I would drop you a note to say how valuable the work was that you and your team did for us last year. We altered our view completely on [company] following the project and sold out of it at around $XX. Today it trades at $XX-40% and the news seems to be getting worse. It saved a reasonable loss to the fund – I would estimate about Z% of our NAV [net asset value], significant in money terms and it would have been time consuming to track and manage the position.

“It might have been tempting to develop a positive spin on the research – this would have been more likely to get follow on work. I admire the fact that you were both confident enough and honest enough to reject our thesis. I am certain that this honest approach to consultancy will help you to build a long-term brand.” 

Real Wireless: independent wireless expert advisors.

Mobile coverage in rural areas – a step in the wrong direction? UK currently has around 54,403 mobile phone masts dotted around the country — many of which are on land leased to the major telecoms companies by local landowners.

4,000 leases are due to expire this year, and this could lead to serious consequences for  telecoms companies and consumers alike. In the absence of any regulation, lease renewal negotiations could lead to significant demands from landlords for rent increases in a large number of cases. Telecoms companies will then need to either pass on this cost to the consumer, through more expensive tariffs, or remove macrocells completely and create coverage or capacity gaps. The Telegraph recently wrote an article on this topic.

Macrocells are still vital to mobile coverage

Despite advances in small cell technology and Wi-Fi calling, macrocells remain the backbone of the mobile network, delivering the majority of the UK’s coverage and capacity.

There’s no alternative to macrocells, either, that doesn’t involve some form of relationship with a property or asset owner. In-building connectivity solutions like small cells and DAS do improve coverage and capacity in homes, offices and public buildings, but they will never replace macrocells entirely and do not provide wide area coverage in towns and around the countryside.

Operators need to protect their investment

Vital infrastructure is often expensive to provide and macrocells are no different. Operators naturally want to keep hold of their existing assets, given they’ve invested heavily in constructing macrocells in the first place.

Operators and landowners both know the difficulties with finding alternative sites for macrocells and obtaining planning permission and the time and cost associated with doing this would be significant — whilst the operators could resort to invoking code powers this is not a step that would be taken likely but it cannot be discounted completely as an idle threat.

How rent rises will affect mobile provision

The first impact of rent rises is likely to be felt by users in those locations where high costs force MNOs to remove macrocells, resulting in coverage or capacity gaps. Site closures aren’t going to happen overnight, though. MNOs will fight to keep their sites at rental levels that are either at or below the current level. But if landowners insist on increasing site rent by excessive amounts then users will no doubt have to bear the brunt of the costs through higher tariffs. Most likely the operators will pass some costs onto the users and absorb the majority but this will lead to less investment in new infrastructure in their networks and invariably lead to a negative impact on the digital economy generally.

Can the government intervene ?

The story of land rentals is an old chestnut in the mobile industry. The cycle of site acquisition, rental renewals and notices to quit will carry on as long the mobile industry exists — unless the government  is prepared to intervene to help regulate the rental levels that MNO’s pay for this essential infrastructure. At the same time, MNO’s need to realise that landlords and building owners should not have their genuine development plans for their land or property undermined by MNO macrocells that may have been on there for many years.

The reliance the British public currently places on their mobile communications and, within a few years, the reliance that the Police and other emergency services will have on their vital communications being carried by mobile networks suggests that this particular debate should be opened up and that representatives from the various parties (MNO’s Property owners and Government) can create a solid and sustainable basis that will help maintain mobile communications services throughout the UK.

New study finds latest PMP can deliver almost twice the ROI for MNOs and ISPs compared to traditional last-mile infrastructure

Real Wireless modelling reveals the total cost of ownership of different last-mile data transport technologies for backhaul and enterprise access

London UK, 19 January 2016 — The latest point-to-multipoint (PMP) last-mile solutions can reduce backhaul total cost of ownership (TCO) by as much as 50% and generate 1.8x higher return on investment (ROI) for enterprise access. These are some of the findings from the new Real Wireless report into the cost and time to breakeven of last mile data transport in multiple deployment scenarios.

The study, carried out by independent wireless experts Real Wireless, looks at the TCO of installing and running backhaul networks based on a range of wired and wireless technologies. Analysis found that site-related costs dominate TCO, accounting for around half of a five year TCO. The report revealed PMP solutions offered up to 50% TCO savings over point-to-point (PTP) and managed fibre, largely due the aggregation of multiple links to a single hub site.

For the study, Real Wireless modelled a case study of an ISP, building out a network to supply carrier-grade connectivity to enterprises. It found that PMP microwave and sub-6 GHz resulted in the fastest time to break even, potentially enabling an ISP to connect 67% more customers and generate 1.8x higher ROI compared to PTP equivalents. The report also highlighted the increased revenue possible with PMP at licensed microwave frequencies; this can generate a further 30% higher ROI than PMP in sub-6GHz bands. The increased revenue of PMP microwave was due to its ability to offer both higher capacities and a superior grade of service than its unlicensed equivalent. The ISP model can equally apply to a mobile operator’s network division, where the higher ROI equates to greater financial efficiency and more ability to invest in network footprint.

“The new report highlights the variety of last mile technologies available and how the right choice can almost halve a network’s TCO.” said Oliver Bosshard, Managing Consultant, Real Wireless. “It’s clear from the report that MNOs and ISPs should carefully consider the knock-on impact their choice of technology will have for their future revenues and growth. Particularly in enterprise deployments, operators and ISPs should look carefully at the latest available transport options to determine what will deliver the best business case.”

Managed fibre networks, albeit scalable to higher capacities, were found to have a significantly higher TCO when compared to wireless approaches. PMP solutions were also shown to offer a much quicker ROI versus PTP solutions, because PMP lends itself to the sharing of hub sites and bandwidth between customer terminals. However, PTP links were found to more suitable for longer links and lower site densities.

Real Wireless considered a range of transport options for the study, including managed fibre, V-band and E-band PTP, microwave PTP and PMP and sub-6 GHz unlicensed PTP and PMP. The model includes not only the initial outlay for equipment but also the more significant aspects of installing and running it over time.

The full report is available to download for free from the Real Wireless website.