Tuesday, October 19, 2010

Renewable Energy Outsourcing – What Next in Outsourcing and Renewable Energy?

Renewable Energy

Increasing Use of Renewable Energy is a Global Trend. Focus is on improvement in technology and availability of options – Solar, Wind, Fuel Cells etc

But there is no business case of Renewable Energy without government subsidies or incentives – grants, feed in tariffs, capex subsidy, tax breaks etc

Only off grid areas where there is no electricity supply have business case for implementing Renewable Energy provided there is strong business need for electricity

Off grid Telecom Sites have strong business need for electricity and have business case for implementing Renewable Energy

Current business model is prohibiting wide scale use of Renewable Energy in Telecom Sites . Why?

1. Capex intensive projects - Benefits are long term but investment is short term.

2. Renewable Energy needs specialized resources to plan and implement projects

• Which source to choose? – Solar, Wind, Fuel Cell etc or optimum combination of each
• Which Technology to choose? – Myriad of Technology to choose from – PV, Thin film, Poly Crystalline, Solar Thermal, Horizontal Axis Wind Turbine, Vertical Axis Wind turbine, Methane Fuel Cell, Hydrogen Fuel Cell, Flow Batteries etc
• How to get reliable data on performance of different technologies? – Technologies are untested for long term benefit claims by vendors

3. Difficulty in running Operations and Maintenance of Renewable Energy Operations?

• All renewable energy resources are intermittent and nature dependent. How best to optimize their usage and prepare for redundancy?
• Decision on Capex vs Opex
• Maintain specialized workforce for trouble free operations.
• Scale might not be enough to recruit specialized human resources and deploy new technologies for proper operations

In short Renewable Energy needs specialization and scale that is not core to Telecom Operators. This is a familiar problem with widely accepted solution in other industries – Outsourcing

What drives Outsourcing ? Focus on core business processes and outsource other businesses processes. Here other processes are also specialized processes that need specialization and scale. Third party specialized service provider can provide these services with agreed Service Levels (SLA)

Outsourcing started with Manufacturing and later got extended to IT and Business Processes. Advances in Technologies and rise in expertise in developing countries led to offshoring as an extension of outsourcing concept

Applying Outsourcing to Renewable Energy Problem

Solution – Renewable Energy Outsourcing

Outsourcing services provided by Third Party (Outsourcing Company) to Telecom Operators. Outsourcing company will

• Sell Power at unit or Kwh Basis
• Utilize Economics of Specialization and Economics of Scale
• Decide among combination of one or more different renewable energy options
• Decide Capex
• Own Renewable Energy Assets
• Responsible for all Opex and Maintenance
• Responsible for Service Levels as per Agreement (SLA)

This is different from equipment financing or Leasing Model since apart from financing, outsourcer has additional responsibilities of dimensioning and deciding on optimum Capex and Opex , to meet SLA's.

This model can be further extended. Outsourcing Company can

• Centralize and provide renewable energy services to multiple telecom clients from single site.
• Provide Renewable Energy to other needy customers such as schools, hospitals, offices, community centres and agriculture farms from single renewable energy site.

Possibilities are endless and Model is scalable.

The demand from Telecom Operators is strong, but supply is not catching up ( some local companies are experimenting on this though). Here also, outsourcing industry can show the way. Earlier Outsourcing was provided by shared service or captive operations, later outsourcing moved to third party as this industry evolved.

In Renewable Energy Outsourcing, Telecom Operators can come together and invest in Renewable Energy Outsourcing Company as they did in Tower Infrastructure Companies. Later supply will increase to fill up the demand.

Tuesday, October 12, 2010

With friends like Vodafone, Blackberry doesn’t need enemies

Analysts are predicting that RIM or maker of Blackberry is going down with competition from likes of Apple and other smartphones.

Analysts are of further opinion that only miracle can lift this company and this is going the path of Palm.

I had the different opinion. I loved my blackberry and so did I saw my other corporate colleagues and friends love for the blackberry.

I was bullish on RIM other than my personal preference , analysing RIM from Warren Buffetology. A similar analogy: Buffet mentioned that when American Express was going down he went around and saw People using American Express cards. Thus, he was convinced that American express will never go down and he made huge dividends on this bet.

I was thinking on the above lines that similarly Blackberry will never go down. Corporate guys love this and other guys aspire this. Blackberry is like a status symbol or an aspirational value: a corporate honcho using blackberry like he drives Mercedes or stays in a six star hotel or drinks johny walker or wears Armani…

As long as the status symbol is maintained and users love using blackberry, RIM is safe. But that is changing now….

Watch this ad of Vodafone aired on television in India that is ridiculing office guys and attracting a larger crowd to blackberry with tag line “Not just for office guys”

I sincerely hope Blackberry protects its core corporate office guys rather than bending it self to teenage crowd who may any day ditch blackberry for stylus Apple.

Wednesday, October 6, 2010

Telecom M&A Buzz Q3 Jul - Sep 2010

Based on True Rumours and Telecom Research

DoCoMo, Pakistan

NTT DoCoMo is reported to be interested in making investment in Pakistan (Jul 2010) – Economics of Globalization

Millicom Tigo, Honduras

Millicom has got operating control of its Celtel Operations in Honduras (Jul 2010)- Economics of Control

Telefonica, Vivo Brazil

Telefonica got control of its Brazilian operations Vivo in a deal with Portugal Telecom $9.8 Billion (Jul 2010) – Economics of Control

Vodafone, China, US, France, Poland

Vodafone selling minority stakes in China Mobile, SFR ,Verizon Wireless and Polkomtel (Jul 2010) – Operation Excellence

Clearwire, Imagine Ireland

Clearwire is buying 7% stake in Irish WiMax Operator Imagine (Jul 2010) – Economics of Technology & Investment

Etisalat , Suntel Sri Lanka

Etisalat is considering acquisition of CDMA operator Suntel in Sri Lanka (Jul 2010) – Economics of Subscribers

Essar, Vodafone India

Essar group is planning to sale its 33% stake in Vodafone Essar (Jul 2010) – Profit Booking

EVN Telecom, Vietnam

EVN Telecom wants to sell its 30% stake to Strategic Investor (Jul 2010) – Funds Requirement

Orascom Poland, Serbia

Orascom is considering investment in Poland and Serbia ( Jul 2010) – Economics of Globalization

Zain Tanzania

Tanzania government keen to buy 60% stake in Zain Tanzania now held by Bharti Airtel (Jul 2010) – Government Control

Copaco, Hola Paraguay

Paraguay’s Landline operator Copaco has purchased Mobile operator Hola (Jul 2010) – Economics of Subscribers

TeliaSonera, Stofa Denmark

TeliaSonera has sold its Denmark subsidiary Stofa to Ratos , a Private Equity Firm ( Jul 2010) – Operations Excellence

Batelco, Bahrain, North Africa, Asia Pacific

Bahrain’s Batelco plans to invest $1.5 Billion on Acquisition in North Africa and Asia Pacific. It looks to buy smaller independent operators. ( Aug 2010) – Economics of Globalization

France Telecom, Medi Morocco

France Telecom is in talks to buy Morroco’s second largest mobile operator Medi Telecom (Aug 2010) – Economics of Globalization. Transaction completed in Sep 2010.

France Telecom, Deustche Telecom, Tusmobil Slovenia

Tusmobil is being sold to an European operator. It can be either France Telecom or Deustche Telecom (Aug 2010) – Economics of Globalization

Orascom, Vimpelcom

Orascom is under talks with Vimpelcom to sell its operations in few countries ( Aug 2010) – Economics of Globalization . Transaction completed in October 2010

Telecom Italia, Telecom Argentina

Telecom Italia is planning to increase its stake in Telecom Argentina (Aug 2010) – Economics of Globalization

DoCoMo, Tata India

DoCoMo is planning to increase its stake in Tata DoCoMo, though denied by Tatas. (Ag 2010) – Economics of Control

Djezzy, Algeria

Algerian government wants to purchase Djezzy from Orascom. ( Sep 2010) – Government Control

Sotel TChad, Chad

Government has sold majority stake in Sotel TChad to UK firm MidCost (Sep 2010) - Privatization

T Mobile , Clearwire , USA

Clearwire is in talks with T Mobile for stake sale to raise funds for network expansion (Sep 2010) – Fund raising

Etisalat , DB Telecom India

Etisalat is planning to raise its stake in Indian Venture DB Telecom (Sep 2010) – Economics of Control

Etisalat, Idea Telecom India

Etisalat is looking for investment in one the incumbent operator and not ruling out Idea Telecom (Sep 2010) – Economics of Globalization

Etisalat , Zain Middle East

Etisialat has submitted bid for $10.5 billion for majority stake in Zains remaining assets in Middle East and Africa (Sep 2010) – Economics of Globalization

Deustche Telecom, Kosovo Telecom (PTK) Kosovo

Five bidders have submitted bids for 75% stake in Kosovo Telecom – Deustche Telecom, Orascom, Turk Telecom, Telekom Austria, SabaFon (Sep 2010) – Privatization, Economics of Globalization

Polkomtel, Poland

75% stake is on sale and it might go to PE players if none of the telecom groups bid. Vodafone has 24% stake and first right of refusal. (Sep 2010) – Profit Booking

SK Telecom, Lighsquared USA

SK Telecom is considering investment in Greenfield LTE Operator Lightsquared. (Sep 2010) -Economics of Globalization and License

TDC Sunrise , Switzerland

Denmakr’s TDC is selling its Swiss subsidiary Sunrise to PE Player CVC. (Sep 2010) – Operation Excellence

Telefonica, Telenor

Is Telefonica , Telenor Merger or strategic alliance possible? – Economics of Globalization

France Telecom, Deutsche Telecom

Is France Telecom , Deustche Telecom merger possible ? France Telecom is denying it but possibility is there. – Economics of Globalization

Telenor, Vimpelcom

Telenor already has significant investment in Vimpelcom. Could these two companies merge? – Economics of Globalization