Betrigen Solutions

case study

Introduction


The use of Traction and leadacid batteries is ever growing in East and Central Africa both in the commercial and retail sectors of the market with telecommunication, transport and logistics companies being among the biggest users. The major types being 2V Traction batteries popular with electric vehicles (forklifts, golf carts, pallet trucks) and telecommunication companies, and the 12V AGM VRLA blocks being common for solar application and fleet and logistics companies.

Tanzania, being one of the biggest economies and markets in the region with highest number of Base Transceiver Stations (BTS) accounts for a big chunk of the batteries market. Batteries account for a big chunk of operational expenditure for industries, telecommunication companies, fleet & logistics companies. With increased competition and rising business operation costs, companies are continuously focusing on cost reduction measures in an effort to survive and grow.

There lies the potential of the Battery Life Extension solution; the telecoms industry with over 20,000 BTS and over 70,000 solar installations and as of December 2018 this clearly gives a clear indication of the potential size of the market. The average annual battery consumption stands at over 30,000 for the telecommunication sector, slightly over 42,000 for solar, over 3,000 traction and in excess of 180,000 for the fleet segment translating to over 20 million Dollars.

The BS is therefore a perfect solution for the Tanzanian market and will be a welcome solution among the key market segments. The solution will help both in cost reduction as well as disposal by reducing number of batteries disposed annually. Currently, no such solution exists in the market with retail clients opting for charging and refurbishment (short term solutions) while corporate clients disposeoff used batteries.

Key Market Segments and Size

Telecommunication Sector

Tanzania has six (6) key players (Airtel, Tigo, Vodacom, Halotel, TTL and Zantel) in Telecommunication sector including the tower leasing companies. They come with a combined number of about 19,000 BTS sites spread across the country. The companies mainly use 12V batteries in their BTS stations with an average of 8 12V batteries per BTS. The companies dispose averagely 29,000 batteries annually and acquire slightly above that number given that averagely 600 new sites are put up annually.

Solar & Fleet Sector

Solar is a really high growth sector in the country with NBS statistics report of 2017 indicating an annual average purchase of 42,600 units. This is quite significant and with the reduction in cost of solar panels coupled with push for green energy and reliable power supply, consumption can only rise further. Tanzania also enjoys a lot of sunshine hence making the solar industry a frontier for growth.

The fleet segment is another high growth sector and consists of truck companies, courier companies, public transport companies and the Tanzania Railways. The heavy fleet users consumes in excess of 100,00 batteries annually (TBS Statistics as of December 2017). Battery cost is one of their key cost drivers for the fleet and logistics companies. The market is steadily growing with averagely 42,400 new units being introduced annually.

Industrial Sector (Traction)

This another key market segment that is currently underserved in the market. It is considered a high margin market given the costs associated with acquisition of new batteries. Statistics on number of industrial batteries does not exist but going by of established industries in Tanzania eclipsing the 300 mark this points to an annual consumption of over 20,000 units. Applications are mainly for Electric Vehicles (forklifts, golf carts, pallet trucks), as power backups for industrial machines and data centers as backup. Common use if the 2V Traction batteries making up 48V.

Current Battery Brands in the Market

The current major battery dealers in the market are:
1. DT Dobie, Auto Express, Yuasa batteries,
2. Chloride Exide
3. Imports (India, China and Europe)

The players in the battery supply chain will not offer direct competition as this is not their line of business. In addition, the current technology available is the battery recharging which is a short term solutions and the key players would not go for that as it may have negative implications on their brand.

We plan to target and grow with the Telecom, Solar and Industrial (Traction) sectors as we explore the other sector (fleet) for expansion and growth. These form the key markets which we are able to effectively penetrate with ease. Our approach is informed by need to manage capitalize on already established sectors with ready clientele and allow our scalability to be informed by response of the various market segments.

Business Proposition

We propose to setup a franchise with BS in Tanzania with an eye on the Central Africa market given Tanzania the gateway to those markets. Statistics from our preliminary secondary feasibility study (with data from the National Bureau of Statistics and Telecommunication companies) indicate that over 200,000 batteries of various grades are consumed annually in the Tanzanian market. This gives us confidence that the market size in Kenya alone is viable and has potential for good returns.

Given that this is a new technology in the market, we expect a phased takeup in the corporate segment as they test the reliability of the technology while a high takeup in the small and midsized companies and retail clients. Parastatals are also expected to adopt the solution with the bottle neck being the lead time given the bureaucracy in decision making and procurement processes.

Note: Please note the statistics above exclude industrial static batteries (heavy use backup batteries as no available statistics exist on the same. From our secondary research in Tanzania, we have over 300 FMCG companies with ISO 2008 operating an average of 3 forklifts per production / distribution center running of 48V batteries and a number of independent forklift dealers (hire and lease).

Key power and players in energy sector are also heavy consumers of backup batteries. Our preliminary engagement with manufacturing entities indicate that they have power backup systems for their equipment & monitoring systems running of batteries.

Potential Target Clients

1. Telecommunication companies
2. Solar backup batteries
3. Traction: Electric Forklifts (FMCG) target players in F & B, agriculture, pharmaceuticals and the Ports
4. Industrial backup batteries (data centers, equipment monitoring and alarming systems and power installations)
5. Fleet and Logistics: Trucks, HCVs and Bus companies

Key Assumptions

1. Telcos in Tanzania predominantly use 12V batteries
2. Telcos replace atleast 20% of the total batteries on site every year
3. Each Telco site has a total of 8 12V batteries
4. Current average warranty period is 3 years across all the sectors
5. Solar clients have an average of 2 12 V batteries
6. Only 60% of the registered vehicles are in active use
7. Batteries currently are disposed with scrap metal dealers
8. Fleet and logistics vehicles have minimum of 2, 12V batteries
9. FMCGs with ISO 2008 are replacing gas forklifts with electric forklifts in their warehouses /production centers

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