As today’s smartphones are becoming smarter by providing faster, better and richer experience to end users, there is an evolution happening at the telecoms infrastructure front as well. Next generation telecom towers are likely to co-exist with DAS and small cell ecosystems, consume lesser amount of energy, provide better coverage and at the same time, managed and operated by tower specialists and not be a burden on telecom operators.
Zia Askari from TelecomDrive.com speaks with Arianna Neri, Head of Americas and Asia, TowerXchange on trends in the tower segment and how various geographies are bracing up to strengthen on their telecom tower infrastructure.
What are some of the trends that are shaping tomorrow’s tower industry?
The Southern and Southeast Asian tower industry is very diverse and fragmented so we can’t really speak about a unified industry as such. With an array of single-country towercos and only one, recently established multi-country organisation – edotco – the trend towards large, international towercos is at its very beginning.
Depending on the maturity and development phase of each country, we were able to identify a few key characteristics for each of them.
A more mature block is represented by India and Indonesia. Indian towercos own about two thirds of the country’s towers, and are now focused on operational excellence, opex reduction and a shift towards green sites, whereas Indonesian towercos have achieved excellent tenancy ratios and EBITDA, but are still competing to acquire MNO’s portfolios. In spite of these differences, both countries are working toward 4G LTE and this is particularly interesting for Indonesia, where approximately 58,000 (64% of) towers are still owned by MNOs and could potentially pass hands to towercos to raise capital for the investments needed to bring 4G LTE to the country.
Countries like Malaysia, Sri Lanka and Bangladesh show very different dynamics and characteristics but have in common a generally favourable environment for towercos – thanks both to the regulatory framework and a fast expanding pool of subscribers.
Thailand, in spite of its very high penetration rate (above 130%) has just now seen the creation of its first towerco – the True Growth Infrastructure Fund (TRUEGIF) – owned by True Corporation and SBC Asset Management.
Where do you think is the big growth going to happen in the tower industry?
edotco, the newly launched Axiata’s cross-country towerco, represents a milestone for the tower industry is Southern and Southeast. In fact, to date, edotco is the only towerco operating in more than one country and could push other towercos to expand internationally. The creation of edotco is putting countries like Malaysia, Pakistan, Cambodia, Bangladesh and Sri Lanka in the news and we are interested to see how edotco will foster the development of the regional tower industry.
Myanmar is a unique green field rollout environment where the GSMA forecast that 17,300 shared towers will be rolled out by 2017 (there are currently only 1,800). TowerXchange’s comprehensive coverage of the Myanmar rollout includes analysis of four towercos contracted to build phases 1 and 2 – the first 5,000 towers – of the rollout (IGT and Apollo – partnering with Telenor, and PAT and MTC partnering with Ooredoo), as well as new entrant towercos such as Square1 Infrastructure’s Myanmar Infrastructure Group.
A lot of operators are putting emphasis on having green ecosystem and here they are putting much of their effort towards green towers. What is your opinion on this trend?
With power and fuel costs accounting for 30-40% of opex for MNOs and towercos, it is only natural for them to increasingly seek alternative energy solutions and shift towards greener and more cost-effective options. The shift towards cost saving and operational excellence has already begun in countries like India, were Indus Towers for example started reducing reliance on diesel generators by installing batteries at 20,000 of its 112,000 sites which results in saving of up to 3.6 million litres of fuel per year.
We are also interested in the adoption of renewable solutions such as solar, wind and fuel cells. To give an example, many African towercos are implementing for renewable energy solutions to reduce diesel costs opex, especially in areas where fuel theft is a reality. However, it should be noted that tower companies’ initial ‘improvement capex’ investments tend to be focused on right-sizing DGs, upgrading battery banks and strengthening towers for co-location.
Also, there are next generation technologies such as Distributed Antenna Systems or DAS which can potential reduce the overall size of towers considerably. How do you look at the adoption of such technologies in developing nations?
DAS solutions won’t replace towers but they will definitely compliment the macro-network in areas where permitting a macro tower is challenging such as downtown metropolitan areas.
In countries like Brazil DAS is booming to add coverage and capacity in high density indoor areas such as malls and subways and outdoor sites such as highways. Rather than being a threat to towercos, multi-tenant DAS and small cells represent another business and revenue stream to provide extra coverage and capacity especially where network densification is required for 3G and 4G.
Moving forward especially in 4G era, what kind of role will be played by telecom towers?
As emerging markets progress from 2G to 3G and 4G, the need for cell site densification becomes more acute. Site separations are dropping below 500m between large tower sites, with filler sites in urban areas, creating a demand for more macro and small cells. The coincidence of MNO’s need to provide outstanding QoS to a data-hungry subscriber base yielding declining ARPU, while at the same time investing in next generation technologies, creates an incentive to MNOs to focus on their core business and to divest tower assets to specialist independent towercos. Trusted as independent players, these towercos create value by “sweating” the assets – leasing up co-locations – creating a new class of telecoms infrastructure firm which investors find very attractive.
In light of the above trends, what will be the role of TowerXchange Meetup in Singapore?
TowerXchange are creating a must-attend platform for key executives from the Southern and Southeast Asian telecom tower industry, bringing together tower strategists at MNOs, the c-suite from the towercos, plus their investors, advisors and strategic partners. With many events focused on active equipment and VAS, TowerXchange Meetups are designed purely for the passive infrastructure industry. TowerXchange Meetups are not conferences, they are networking-driven, invitation-only events, fuelled by small group round table breakout sessions devoted to specific countries, financial or operational issues.
How many industry delegates are likely to attend this event? and what was the turnout in the last event?
For the TowerXchange Meetup Asia, we expect approximately 200 attendees to gather in Singapore. Our landmark Meetup Africa is now in its second edition and attracts over 250 key executives from the African telecom tower industry. We also hosted 220 decision makers from the LatAm tower industry a our recent TowerXchange Meetup Americas, including 18 of the region’s 20 leading towercos, so we know how to bring this community together.