Telcos battle 35% higher costs for rural network deployment – report

Telecommunication companies face significantly higher expenses when deploying and operating base stations in rural areas, with costs averaging 35% more than in urban locations, according to the GSMA’s November report, “Rural Renewal: Telcos and Sustainable Energy in Africa.”

The report highlighted that low population density, increased energy expenses, backhaul infrastructure costs, and the need for robust towers contribute to the financial strain of rural network rollouts.

“A base station in a remote rural area costs, on average, 35–40% more to run than one in a city, and this can be even higher in some countries,” the report revealed.

The reliance on diesel-powered generators due to limited grid access is a major cost driver, with telecom operators consuming over 50 million litres of diesel monthly. Diesel prices averaged N1,426.09 per litre this year, translating to an estimated N71.3bn monthly fuel expenditure by major telcos, including MTN and Airtel, between January and August 2024.

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Backhaul costs also remain a challenge, with rural infrastructure expenses 110% higher than in urban areas due to difficulties in laying fibre across sparsely populated regions.

To address these challenges, telecom companies are shifting towards renewable energy sources like solar, wind, and lithium batteries to reduce operational costs and promote sustainability. Airtel Nigeria’s Chief Technical Officer, Harmanpreet Dhillon, emphasized the importance of expanding grid connectivity to reduce reliance on generators.

“The grid is crucial,” Dhillon said. “Connecting our sites to the grid will reduce diesel consumption and environmental impact, ensuring more sustainable operations.”

The GSMA report urged operators to adopt renewable technologies to mitigate costs and accelerate rural network expansion. Despite the financial challenges, telcos remain committed to bridging the connectivity gap in underserved areas.