Rural base station operations cost 35% more – Telcos

Telecommunication companies face significant cost pressures when deploying and operating base stations in rural areas, spending an average of 35 per cent more than in urban locations.

GSMA, the global industry body for telcos, disclosed this in its November report.

The document titled “Rural Renewal: Telcos and Sustainable Energy in Africa”, indicated the economic strain associated with rolling out networks in areas with low population density.

The key challenges include higher energy costs, increased expenses for backhaul infrastructure, and the need for robust towers and civil works.

A key finding of the report revealed that “a base station in a remote rural area costs, on average, 35-40 per cent more for an operator to run than in a city, though this can be higher in some countries.”

The report added, “The higher energy costs largely come from having to use diesel where grid access is often patchy or nonexistent, meaning low electrification rates.”

Further, GSMA emphasised that adopting renewable energy solutions can help mitigate the high energy costs associated with rural base stations.

“Improving energy access and embracing renewable technologies can help telcos reduce costs and accelerate rural network expansion,” the report added.

Backhaul infrastructure, essential for connecting rural base stations to core networks, remains another major cost driver.

Backhaul costs in rural areas are 110 per cent higher than in urban locations, according to GSMA, largely due to the challenges of laying fibre over vast, sparsely populated regions.

The combined pressures of energy and backhaul costs continue to hinder the profitability of rural network deployment, limiting the ability of telcos to expand connectivity in underserved areas.

According to the National Bureau of Statistics, diesel prices averaged N1,426.09 per litre monthly, with telecom operators consuming over 50 million litres of diesel each month to fuel their infrastructure.

An analysis by The PUNCH in October revealed that major telcos, including MTN and Airtel, spent an estimated N71.3bn monthly on diesel, amounting to a staggering N570bn over the eight months from January to August 2024.

These rising costs have intensified the strain on operators’ profit margins, particularly in rural areas where grid access is limited and diesel generators remain a primary power source.

In response to these challenges, major telecom companies are increasingly shifting their focus to renewable energy sources such as solar, wind, and lithium batteries.

This transition aims to reduce operational costs and promote sustainability, particularly in regions where diesel reliance has become unsustainable.

The Chief Technical Officer of Airtel Nigeria, Harmanpreet Dhillon, said the operator is focused on expanding grid connectivity and deploying alternative energy solutions across its operations in Nigeria.

“The most important factor for us here in Nigeria is the grid,” Dhillon stated. “Our first goal is to connect all of our sites to the grid, as many of our base stations currently lack grid connectivity. Once we achieve this, we’ll reduce our reliance on generators, which in turn will cut down our diesel consumption.”

The mobile operator is working closely with power distribution companies to ensure consistent grid availability at its sites. “With the grid in place, our generators will operate less frequently, directly lowering our environmental impact,” he said.

In September, a senior telecom executive, who requested to remain anonymous, revealed to The PUNCH that telecom giant MTN, with about 80 million subscribers, spends over N30bn monthly on diesel to power its approximately 25,000 base stations.