CAPEX efficiency and service quality improvement via tower sharing in the Indonesian telecommunication industry: optimisation model using comparison of genetic algorithm and simulated annealing methods

Abstract

Fierce competition among operators and low-profit business, a decrease in ARPU and ROI, and an increase in CAPEX have all challenged the telecommunication operators to manage their operational activities more efficiently. The high CAPEX of BTS towers is a burden on the telecommunication industry in Indonesia. Its 'single tower, single operator' system is an indication that the operational activities in the Indonesian telecommunication industry are not being run optimally. This research aims to examine the relationship between capacity and location of towers, and their impacts on CAPEX efficiency and service quality improvement. This research uses genetic algorithm and simulated annealing methods. The significance of this research is in its novel contribution, namely clarifying the relationship between capacity, location, CAPEX, and service quality. In comparison, the previous research only used a single optimisation method, while this research uses two, thus providing a better formulation for future research. In conclusion, this research aims to examine how optimum capacity and location affect CAPEX efficiency and improve service quality. The simulated annealing method has been proven to be the best method to address the issues discussed here.