Cost Analysis of Deploying Femtocells in Speed Trains in Nigeria to Improve Indoor Coverage and Capacity of LTE Network

Abstract

The cost analysis of deployment of femtocells in speed trains along Abuja-Kaduna standard gauge railway line to improve the coverage and capacity of Long Term Evolution (LTE) network for 5000 commuters using that route daily is presented in this paper. Additional cost will include the cost of femtocells procurement, license, installation, backhaul, operation & maintenance. The cost analysis is carried out using techno-economic model to determine the business viability of embarking on such a project by LTE network providers in Nigeria. The estimated capital expenditure (CAPEX) and operating expenditure (OPEX) as well as the projected revenues accrues from this project form the cash outflows and cash inflows are used to simulate the net present value (NPV) and internal rate of return (IRR) in MS Excel environment on a discount rate and tax rate of 22%, and 30%, respectively to determine the feasibility of the investment. The results of their NPV values which are positive show that the macro-femtocell arrangement in speed train plying Abuja-Kaduna railway route is cost effective for a life time of 10 years and is feasible up to an IRR 53% which exceeds the estimated discount rate of 22%. The value of the payback period indicates that it will not take long for any LTE network provider in Nigeria to recover their investment. The result of the NPV sensitivity analysis shows how various cost and non-cost parameters affect the cost-effectiveness of such investment.