updated as of JULY, 2013
Altobridge
COMPANY BACKGROUND
Altobridge develops wireless network solutions that reduce network
operating costs in delivering mobile voice, mobile broadband, and big
data services. For remote, rural areas Altobridge designs, builds, and
deploys low-cost mobile communications infrastructure — both hardware and software solutions. The Altobridge lite-site™ is a technology solution that enables mobile network operators (MNOs) to deliver
mobile connectivity to rural areas on a commercially viable basis. The
Altobridge lite-site™ has been adopted by MNOs in South East Asia,
the Middle East, and Africa.
The wireless network solutions provider was founded in 2002 and is
a privately held company; shareholders include its employees, Intel
Capital, IFC, and Enterprise Ireland—a government agency focused
on the development of the business sector. Altobridge employs over
130 people, is headquartered in Ireland, and has offices and factories
in Malaysia, the USA, and China. Its solutions have been deployed in
over 30 countries worldwide.
ALTOBRIDGE’S INCLUSIVE BUSINESS MODEL
There are major challenges in delivering mobile connectivity to people in
remote, scattered rural locations. These include high rollout and backhaul
costs1, limited or no access to power, and small customer bases. Mainstream
technology for mobile communications is designed to serve urban locations
that have access to the power grid and large customer bases of several thousand subscribers. This is unsuitable for off-grid rural areas. The high capital
and operating costs associated with mainstream technology combined with
low tariff structures — sometimes less than $.01 a minute — result in costs
exceeding revenues.
To address these challenges, the company developed the Altobridge litesite™, a low-cost, solar-powered technology solution that enables MNOs
to bring mobile connectivity to people living in remote, off-grid areas. The
Altobridge lite-site™ is designed to serve communities with a population size
of 100 to 1,500. Altobridge deploys the solution for MNOs, but also has relationships with companies such as Ericsson and Nokia Siemens Networks that
sell its products under license.
At the heart of Altobridge’s offering is a series of technologies including backhaul optimization, Local Connectivity™ (local call switching inter and intra
base transceiver station or BTS) and Split ArchitectureTM (transmission and
power optimization), which drive down communications delivery costs for
MNOs by reducing the cost of satellite usage and power consumption.
Low Capital Expenditure (CAPEX) is the first key benefit of the Altobridge
lite-site™. A typical urban base station that facilitates wireless communication between the user equipment (mobile phones and other devices) and the
network consists of a 30+ meter lattice tower with mounted telecommunications equipment, antennas, radio receiver and transceiver. At the base a
shelter houses the BTS equipment, air conditioning units, and access to the
power grid. The cost per site is about $250,000. Altobridge has lowered the
cost by using outdoor, pole-mountable, passively-cooled2 base stations that
use solar power. The solution has 15-meter poles with mounted micro base
stations so the MNO can provide targeted service to small rural populations
without the need for macro network backhaul and infrastructure. Total costs
1 Backhaul is the link between the base transceiver station (BTS) and the core networK
over which all traffic must be carried i.e. voice, SMS, data, and signaling.
2 No energy consuming mechanical components are used
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per site including the base station, solar technology, VSAT equipment, and
installation is less than $50,000.
Low Operating Expenditures (OPEX) is the second key benefit of the
lite-site™. To lower operating expenditures, Altobridge had to address
three areas:
•• Energy: Power costs can comprise 50% of the operating costs of
a micro base station. Altobridge has reduced energy costs that
typically run from $6000 to $15,000 down to virtually zero due
to its low power BTS which uses only 90W. Instead of expensive
and polluting diesel generators in off-grid areas, Altobridge uses
alternative energy solutions such as solar; base stations can be
retrofitted with this technology. Finally, the company has reduced
the number of batteries needed for the back-up energy source.
•• Backhaul: Backhaul transmission costs can account for 40%
of operational costs as the remote nature of a typical rural site
requires backhauling via expensive satellite bandwidth. Backhaul
optimization solutions that compress traffic and implement local
call switching can lower the cost of bandwidth for the MNO by
reducing the amount required. The software compression solution
Altobridge uses cuts bandwidth for a typical voice call from 14 kbps
to just 4 kbps, creating a cost reduction before local switching.
The result is a more than 50% reduction in the bandwidth
capacity of the satellite needed to transmit calls and data, which
lowers transmission costs. The Altobridge lite-siteTM has reduced
transmission costs from $900 to $250 per month.
•• Installation and Maintenance: The Altobridge lite-siteTM is designed
for quick and easy deployment in remote areas since it uses
a monopole on which an all-in-one base station is mounted,
solar panels, and VSAT for satellite backhaul. In instances where
Altobridge operates and maintains the solution for an MNO, the
company sources local personnel, provides advanced technical
training, and builds strong teams on the ground. A smaller site
space and lower power requirements reduce the installation costs,
while maintenance costs such as diesel transport for generators and
security to prevent fuel theft are not incurred.
Inclusive Business Models — Guide to the Inclusive Business Models in IFC’s Portfolio
CASE STUDY
Altobridge
DRIVERS FOR ALTOBRIDGE’S INCLUSIVE BUSINESS MODEL
•• Vision to create technology solutions to bring affordable mobile connectivity to remote
areas
•• Significant unmet demand for mobile connectivity – an estimated 1.6 billion people live
in remote rural communities
•• Growing demand from MNOs for affordable mobile communications technology in offgrid rural area
Altobridge was founded with the vision to remove
the technical and commercial barriers that deny
remote, rural communities access to affordable
mobile voice and internet connectivity. The biggest
hurdles to connecting these communities are
expensive telecom towers, high power costs, and
expensive satellite bandwidth that carries the data.
As a result, the capital and operating expenses of
a potential deployment create a weak business
case for MNOs to serve sparsely populated areas.
Altobridge’s founders recognized that MNOs and
their traditional equipment suppliers were focused
on urban network expansion. The company
sought to position itself at the cutting edge of lowcost and efficient off-grid technologies in mobile
communications.
connected to basic telecommunications services
and 1.3 billion are expected to still be living in
remote communities in 2030. These areas have
micro-economies with a prized high Average
Revenues per User (ARPU) segment consisting of
farmers, traders, and suppliers who conduct business via mobile phones. Third, as urban markets
reach saturation and MNOs seek growth opportunities in peripheral communities, they will require
cost-effective technology to deliver mobile connectivity on a profitable basis. MNOs that are first
to reach remote villages benefit from first-mover
advantages as areas of about 1,000 subscribers
can only sustain a single MNO. Altobridge supplies
the technology for MNOs to take advantage of
this potential growth segment.
A second business driver is significant, unmet
market demand. About 1.6 billion people are not
RESULTS OF ALTOBRIDGE’S INCLUSIVE BUSINESS MODEL
•• The Altobridge lite-site™ is deployed in 10 countries; over 750,000 new mobile
subscribers connected in remote communities
•• The Altobridge lite-site™ has delivered EBITA margins between 65-85%, making a 75%
IRR possible for MNOs
•• Altobridge recognized as a World Economic Forum Technology Pioneer in 2012
The Altobridge lite-site™ has been commercially
deployed in 10 countries: The Falkland Islands
(British Overseas Territory), Ghana, Indonesia,
Malaysia, Mongolia, Niger, Oman, Papua New
Guinea, Solomon Islands, and Tonga. MNOs in
these countries have connected over 750,000
new subscribers in remote communities to mobile
communications networks. The Altobridge litesite™ has a proven record of delivering EBITDA
margins in excess of 65% and as high as 85%,
making a 75% Internal Rate of Return possible for
MNOs. Higher ARPUs than national averages and
a sufficiently large subscriber base per site support
a short payback period of less than 24 months and
high profit margins.
Mobile connectivity via the Altobridge lite-site™
has brought great benefits to remote villages such
as Mambi in West Sulawesi in Indonesia. Previously
dependent on a single satellite phone, the village
now has mobile connectivity through PT Indosat.
Mambi and surrounding villages have low population densities, are 2-5kms apart, and are a five
hour drive from services such as hospitals. The
new mobile phone subscribers report they can
compare prices for rice, coffee, and cocoa they
wish to sell, obtain health advice without travelling far, communicate with relatives, and better
manage day-to-day work.
Altobridge has received significant recognition
over the years including being named a World
Economic Forum Technology Pioneer in 2012 and
the GSMA Mobile Innovation Grand Prix Finalist
in 2009.
Inclusive Business Models — Guide to the Inclusive Business Models in IFC’s Portfolio
IFC’S ROLE AND VALUE-ADD
Since 2010, IFC has invested $8.125 million in
equity in Altobridge. This is critical long-term
growth capital for a young company. IFC’s investment will help reduce the risk perception related
to Altobridge’s innovative products as few investors
are willing to provide long-term equity risk capital
for such growth stage projects. IFC’s prior investment experience in companies that are at a similar
stage of development is also a key value-add to
Altobridge.
As Altobridge grows, its relationship with IFC will
help the company access other sources of finance
to expand into new markets. In addition, IFC will
advise the company in corporate governance, insurance, environmental and social issues, financial
management, and future capital raising efforts.
Finally, IFC can leverage its global industry knowledge as well as relationships with MNOs in the
telecommunications industry to assist Altobridge
in targeting and accessing companies that could
serve remote communities.
IFC’s Investment:
$8.125 million in equity
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