Wireless Communication Tower Construction Research Paper

Pages: 66 (14579 words)  ·  Style: MLA  ·  Bibliography Sources: 0  ·  File: .docx  ·  Level: Master's  ·  Topic: Construction  ·  Written: September 16, 2017

” American Tower, 2014. Accessed 15 Sept 2017. http://www.americantower.com/Assets/uploads/files/PDFs/investor-relations/Americantower_investorrelations_towers-101_2Q14.pdf]

2.24 Tower Company Financial Feasibility

The chart below provides an illustrative example of the financial feasibility of the project, where RoI is calculated as Gross Margin divided by Construction/Upgrade Costs.

A concrete example of how this model might operate in a Municipality such as JHB:
  1. Municipality Signs Development Lease with mast developer/investor for 15 years WHEREAFTER Municipality owns all infrastructure, mast, takes over tenants lease on mast and earns all revenue etc. going forward at no additional cost;
  2. Municipality to earn either fixed (current market rentals for a ‘site / land’ on which a mast is erected is say R10 000 per site per month OR revenue share income based on say 30% of income;
  3. Cost of tower / mast, inclusive of infrastructure, R600 000.00 to R1 200 000.00 m per site;
  4. Number of sites for mast installations - 500;
  5. An average of 4 tenants per mast at a rental of R15 000 per tenant, namely R60 000 per site per month;
  6. 5 or 10 year loan from financial institution to mast / tower company investor erecting masts / towers on leased land at an interest rate of 11% (Prime plus 0.5%).
  7. Management costs, if applicable: R46 000.00
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2.25 Short and Long-Term Enhancement of the Municipal Balance Sheet

Municipal balance sheet enhancement both in the short term (immediate rental income) and long term (future ownership of all the assets / masts / towers due to development lease structure, affording ownership to revert to the Municipality following expiration of the development lease in which time all assets would have been paid by the mast / tower developer).

3 Cost

Research Paper on Wireless Communication Tower Construction Assignment

If Management is Outsourced: “The cost per site depends on the scope of work, but our average cost per site is USD $3,500 [R 46124.75]. However the cost varies according to what we have to cover.”[footnoteRef:9] [9: “How to Build a Separate P&L for Each Tenant.” Tower Xchange, Issue 4 (2013), pp. 58. https://www.towerxchange.com/wp-content/uploads/2015/08/TowerXchange_ISSUE_4.pdf]

While “costs of maintenance, rentals and electricity are considerably lower in SA than in other African nations,”[footnoteRef:10] there remain some considerations when gauging the capex requirements per year. American Tower supplies the following criteria for assessment: [10: Thabiso Mochiko, “Tower Sharing Benfits.” Financial Mail, 9 Sept 2016. Accessed 14 Sept 2017. https://www.businesslive.co.za/fm/fm-fox/2016-09-09-tower-sharing-benefits/]

3.1 Direct Cost of Operations:

  • Ground rent
  • Monitoring
  • Insurance
  • Real estate taxes
  • Utilities and fuel
  • Site maintenance
Land Interest Attributes
  • Long-term leases: average remaining ground lease term is approximately ~12 years internationally
  • International escalators are typically based on local inflation indexes
Pass Through
  • Our international markets typically pass through a portion of their operating expenses to the tenant (e.g., ground rent, fuel)
Fixed Cost Structure of Towers
  • Additional tenants result in minimal incremental operating costs[footnoteRef:11] [11: “Introduction to the Tower Industry and American Tower.” American Tower, 2014. Accessed 15 Sept 2017. http://www.americantower.com/Assets/uploads/files/PDFs/investor-relations/Americantower_investorrelations_towers-101_2Q14.pdf]
Towers are not limited to their initial outlay. Height can be expanded to accommodate more tenants. Multiple antenna mounting scenarios can be devised using whips, panels, microwaves, and many other combinations through RF design. Port hole additions may be utilized to allow for more coaxial cables. Tower reinforcements can be added to provide structural strength. Foundations can be strengthened to increase the load capacity of the tower. Backup power generators can be supplied to ensure maximum productivity. Shelters can be stacked, one atop another, to maximize ground space. Ground space can be extended to accommodate maximum equipment of tenants on the tower. In short, there is no end to the variations that can be constructed to meet the needs of both tower tenants and owners.

4 Socio-Economic Benefits

4.1 Improved Infrastructure

Greater tower infrastructure rollout opportunities for use by MNOs and other tenants on a scale never seen before. This would prepare municipalities for 5G- integration and superb service for all consumers.

4.2 Broad-Based Black Economic Empowerment (BBBEE)

This proposal will also meet governments’ Black Economic Empowerment goals in affording historically disadvantaged people the opportunity to participate in opportunities they would usually be unable to participate in. By using land to construct towers and expand MNOs, the Municipality creates jobs particularly for BBBEE. A BEE rating certificate of level 1 could easily be obtained by the Municipality by selectively hiring or outsourcing jobs to address racial inequalities in the following ways:
  1. Small and Medium Enterprise Development and Job Creation in terms of establishment of a service and maintenance team to maintain the towers being erected;
  2. Pre-negotiation of leases with mobile phone operators, networks, data providers etc. for various sites to facilitate easy raising of funding by Black Economic Empowerment, small enterprises or other entities who may need to raise finding for capital investments to be incurred in tower infrastructure.

4.3 Increasing Leverage

Additionally, tenant leases of 5-15 years would be leveraged to raise funding, pay for the tower within the lease period, and afford a significant profit to the investor undertaking the tower development after having secured the ‘development lease’ over the land provided by the municipality.

Pre-determining the full development costs of infrastructure, supply and install prices of different types of towers in different locations (as may be required by the networks and tower tenants will give an idea of the scope of the project. This, in turn, will enable successful bidders to have an idea of the cost of the tower together with the pre-negotiated revenue (minimum) for the mast. This essentially enables the investor to merely raise funding and have the mast installed.

Leverage… [END OF PREVIEW] . . . READ MORE

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