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EXECUTIVE SUMMARY:
SomTowers is an Infrastructure Provider company that builds, owns, operates and maintains passive network infrastructure on a shared basis for mobile telecom operators and ITES providers. The Company was formed in August 2012. Its objective is to provide network design and planning, network deployment, network operations & maintenance, infrastructure management, application management and professional services to telecom operators and enterprises. The company is planning to raise capital in the form of equity and debt to start its operation Dec 2012. The purpose of this plan is to prepare detailed financial model for assessment of feasibility of such projects, building scenarios and sensitivity charts, calculation of risk and returns associated with the project and valuation of SomTower Limited subjected to present and expected future market conditions. SomTowers vision is to provide world class managed infrastructure & allied services to the service providers to optimize their service delivery capability. In the initial years of operation the company will focus on telecom sector, with almost 100 % of its proposed capital expenditure till FY 14 earmarked for developing and owning passive Infrastructure for sharing among mobile service providers.

Passive Telecom Infrastructure Sharing:

Mobile networks have base stations (or cell sites) which have active and passive infrastructure components. Active components include the antenna, trans-receivers,

switches, feeder cables, Node B, and microwave radio equipments. Passive (or nonelectronic) components include the land, tower, shelter, air-conditioning equipment, diesel electric generator, battery, electrical supply, technical premises and easements, pylons etc. Passive infrastructure in a mobile network essentially involves acquiring land,

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Setting up towers and electrical and civil works that needs to be in place before operators can install the active infrastructure which brings mobile services to the consumers. In a typical cell site build-out, almost 65% of the total cost is attributed to passive Infrastructure and 35% to active infrastructure. In this Plan, passive cell site Infrastructure has also been henceforth referred to as towers or sites. Mobile operators are required to setup more and more BTS (cell) sites due to the exponential growth of mobile subscribers in Somalia and limited availability of spectrum. B and C Circles (where traffic density may not be as high as metros and Circle A) are expected to drive future subscriber growth and requirements for cell sites will be higher to ensure greater coverage.

To cover large stretch of almost 1,500 Kilometers of national highways, additional 500 towers (one tower for every 3 Kilometers of highway) will be required in near future to ensure better connectivity. Proposed build out of 4G networks are expected to further drive substantial growth in the number of towers over the next few years. However, creating new infrastructure by each operator separately leads to duplicating huge capital investments. It also contributes to mushroom growth of telecom towers and deteriorating skylines in urban areas, which has already led to some local municipal and state governments to regulate and restrict the erection of new mobile towers.

The continued pressure on cellular tariffs, higher infrastructure costs for network deployment particularly in semi- urban and rural areas and compelling need to reduce time to market for network roll outs have led operators to share and even outsource their infrastructure requirements from third party infrastructure providers like SomTower.

Sharing promotes capital efficiency as it allows more than one service provider to leverage and ride on common infrastructure. In its simplest form, it involves two or more operators jointly using the common passive infrastructure in a cell site. While viewed largely as a measure to reduce CAPEX and operating expense, such sharing also leads to improvement of service quality (by ensuring site space for service providers and reducing
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black spots) and the environment (by reducing number of cell sites and towers). In outsourcing, operators take passive infrastructure and tower space from third party infrastructure companies on a monthly rental basis to host their radio and transmission equipments. Outsourcing provides significant benefits to operators. It enables them to save on capital expenditure (it actually converts CAPEX into OPEX in the form of lease rentals) and focus on their core activities of sales, marketing and branding, while leaving the cumbersome task of managing the site development process and site operation and maintenance to third parties who exclusively deal with such activities. Active infrastructure sharing is not popular across the globe for several reasons, the most important being increased inter dependency among competing service providers. However, tower sharing and outsourcing of tower ownership is an accepted practice in many developed markets. In countries like USA, UK and Australia there are

independently owned tower companies who rent tower space to various mobile operators. The United States has arguably the most developed independent mobile tower market, with independent tower companies owning over half of all mobile towers in that country. Mobile tower owners generate revenue by owning the towers and leasing space on the towers to mobile telecommunications operators, under long-term contracts. Under this business model, ownership of the base station equipments coupled to the towers is retained by the mobile telecommunications operators. In addition to rental payments, mobile tower owners generally receive a fee for installing customers' base station equipment on the tower. Mobile tower owners also receive services revenue for operations and maintenance of the passive infrastructure. Regulators all over the world favor passive sharing of infrastructure. Results of detailed financial model indicate that with given expansion plans and assumptions, SomTower will create value for its shareholders, investors, clients and promoters. The project is expected to generate high cash flows which will be sufficient enough to pay back its debt liabilities and to generate and equity IRR of 36%.

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