Saudi’s leading towerco puts best foot forward with a vision for efficiency and sustainability

TAWAL inherited over 14,000 towercos from parent company stc in early 2019 - the largest transfer of tower assets to date in the MENA region. The primary focus began on assembling a quality team with their attention fast turning to increasing tenancy ratios, infrashing, 5G investment and green energy. TowerXchange speaks with Mohammad Alhakbani, CEO of TAWAL, to discuss how this newly formed business has successfully established itself as an independent towerco and to understand its strategic vision and ambitions for future growth.

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Join us at TowerXchange Meetup MENAon the 30-31 March to discuss the latest developments in the MENA market and meet the industry’s key decision makers.

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TowerXchange: How has the business model, operations and culture of TAWAL changed as you worked towards your April 2020 deadline for operational independence from stc?

First of all, thank you for the opportunity to share TAWAL’s journey towards becoming a leading regional towerco. While we discuss the future, I am glad to share that during the last 12 months, we have been able to achieve breakthrough milestones ahead of schedule to prepare for operational independence from stc.

We developed a detailed plan which identified all needed activities for TAWAL to achieve 100% self-sufficiency. I am proud to share that we have successfully launched fully autonomous TAWAL in April 2020, exiting all transitional services that stc was extending to TAWAL over the past year. By autonomous TAWAL, we mean that TAWAL is now 100% self-sufficient with its own independent board and governance structure, processes, operations, strategy and management team. Our relationship with our parent company stc remains strong from a pure client-service provider relationship, based on the signed Master Service Agreement (MSA).

In terms of organisational structure, we are now a team of 230 employees, all with very broad experience and backgrounds, coming from all three major local telecom operators, vendors, consultants, and towercos. Our culture remains that of a start-up with a very dynamic and fast-paced environment.

TowerXchange: In 2019 you reported that just 10% of your sites had a second or third tenant. How successful have you been in meeting TAWAL’s aggressive targets to accelerate the adoption of infrastructure sharing?

The introduction of a neutral host towerco is relatively new to the KSA market, especially where the coverage of 4G networks exceeds 92% of the population. The market shift from the traditional approach of building single tenant networks to rendering services of an efficient neutral host provider is gaining momentum. As such, we have started adding new co-locations over the last few months and our tenancy ratio is in line with our target of 1.15 at this stage. We are already serving all the MNOs and other licensed operators that previously used to deal with stc. We have also signed a landmark agreement with ITC in November 2019 and have started delivering sites to our newest client.

A. How has your portfolio developed in terms of ground-based and rooftops since January 2020 to date? The majority of our new sites are ground-based/coverage sites.

B. Has the government supported any initiatives? The government through its regulatory body i.e. CITC has been extremely supportive in putting in place necessary tower related regulations and encouraging investments in such business.

C. How many companies are now tenants? All key licensed operators in KSA are our clients with more to come.

D. What is your current tenancy ratio? Our current tenancy ratio is 1.15

TowerXchange: How have you been able to use local partners to manufacture, install and maintain your towers? Has there been an opportunity for international suppliers to participate? Which areas are well served domestically, and which areas do you need more foreign involvement?

Since inception to date, TAWAL’s vendor partner policy is based on a healthy mix of both local and international partners. We are engaging with international partners for high-end solutions that will make our operations more robust and efficient. A good example is our ongoing partnership with Vertex to implement our tower management system, and Ericsson for operating our network. We are fully aligned with Saudi Vision 2030 to promote local content for services and products available in KSA, for example, we are working with local partners to build and upgrade towers.

We have recently launched the iSupplier module and most of the leading domestic and international suppliers have already registered. All future RFPs will be routed through this module. Any potential domestic or international supplier should in turn register for future opportunities of working together.

TowerXchange: What challenges or opportunities has Covid-19 presented for your business and how have you had to adapt? What do you think will be the long-term effect?

Without any doubt, the Covid-19 pandemic has impacted the way we operate. But as an agile organisation, we quickly reorganised and adapted. Whilst it has thrown many challenges, it has also opened the door for new opportunities. We can analyse the impact of the pandemic from two perspectives.

1. Market Impact: The pandemic has impacted almost all economies and most sectors. We are fortunate that the impact on the telecom sector has been relatively limited so far. Amid this pandemic, the telecom sector has emerged as a clear enabler which kept economies and people connected and ticking. The demand for more data and higher speeds is growing and we believe that the medium-long term outlook is bullish for the telecom sector. The pandemic has accelerated the need for high-speed 5G networks and once the situation stabilises, the MNOs may go for an aggressive roll-out of their 5G networks. 

2. Business Operations Impact: Since we are a start-up, most of our processes and systems are digital for the most part, and our migration from “work from office” to “work from home” was relatively seamless. One key challenge was to ensure our 24*7 TOC operations, which we were able to manage without any downtime. One quick action we undertook was establishing TOC at multiple locations to ensure continuous and uninterrupted monitoring of our network. Today, we are proud to announce that TAWAL during these times of crisis has been able to improve its PIN availability and has been enabling people to stay connected to their dear ones and work from home. 

There were some key achievements in our process of automation and digitisation:

- We quickly automated several of our manual processes.

- We are adopting innovative technologies for better monitoring of our network.

- We decentralised our processes to enable support field crews to operate with more autonomy.

- We introduced digital signature as a means to legalise contract with landlords and site owners.

TowerXchange: What is TAWAL doing in terms of energy innovation and how much do you plan on investing in green energy in the short and long-term?

We have identified two main initiatives on diesel reduction and green energy solutions. Firstly, we have identified sites where the grid is not very far and in turn, we are exerting our efforts and increasing our investment to connect these sites to the grid. Secondly, for sites which are far from the grid, we are looking for hybrid solutions (mix of solar/ DG/ Battery Banks) to reduce diesel consumption without compromising the PIN availability of these sites. We are already stress-testing the different combination of hybrid solutions and based on the outcome of this phase, it will be replicated across the off-grid sites. Apart from reducing diesel consumption by up to 30%, hybrid solutions will improve the lifetime of power generators as well. We believe that with the successful implementation of these two initiatives, we can reduce our diesel consumption substantially over the next 12-18 months.

TowerXchange: You are one of the first towercos born in the 5G-era, what lessons would you offer other towercos looking to support the rollout of 5G? For example, have you had to build capabilities in small cells or inbuilding solutions?

One key lesson for all telecom infrastructure providers is to understand “what business they are in”. Historically, it has been interpreted as building new towers, tower sharing and maintenance. However, we at TAWAL interpret it differently. We are in the business of “enabling our clients to roll-out their network at cheaper costs, at a faster pace and with higher availability”. This view has been actively appreciated and resonated well with our clients. 

In the 5G era, clients increasingly expect towercos to augment their product portfolio and become more of a one-stop-shop for all services related to infrastructure. The key adjacent services which towercos are expected to offer are IBS, small cells, FTTT et cetera. TAWAL is already working towards building capabilities for these solutions.

- We recently obtained a IBS license and have started building our own capabilities to serve our customers.

- On small cells and street furniture, we are working with clients and real estate developers to conduct a proof of concept (POC) and test the market. Since the technology is relatively new, we will use a pragmatic approach and build capabilities once the future needs for small cells becomes apparent.

TowerXchange: How do you envisage TAWAL will support project NEOM? What will be the role of towercos for street furniture, small cells and inbuilding solutions in helping develop smart cities?

Let me first explain how the newly developed cities, i.e. smart cities are changing the way network planning is done. Typically, the already developed cities had the inhabitants and the network planning done to serve these population clusters. However, in newly developed areas, network planning is embedded in the city masterplan with earmarked spots for towers and network infrastructure. TAWAL is working with its MNO clients and newly developed smart cities like NEOM to build their network and make these cities investment ready and liveable.

The role of towercos in the development of smart cities will be to lead the building of a seamless network of towers, street furniture and small cells, next to IBS which can make way for investments in new-age businesses.

TowerXchange: As MENA’s largest towerco, can you tell us about your plans to expand into other Middle East and North Africa markets and how you assess which market is appropriate?

TAWAL celebrated recently its first year anniversary and there are strategic milestones yet to be achieved before expanding beyond the Kingdom. However, in the medium-term, TAWAL has an ambitious plan to grow both in scale (beyond KSA) and scope (beyond towers). In due time, we will be assessing different expansion strategies and identifying accordingly the markets that represent a strong opportunity and fit for TAWAL.

TowerXchange: Can you share your vision for how TAWAL will work with other towercos and MNOs as it matures into a major new player in the industry?

Our vision is to “become the leading regional ICT infrastructure service provider”. To realise this vision, we have set ourselves three objectives:

1. Enable operators to enrich the communication needs of customers by accelerating the roll-out of future technologies (e.g. 5G, IoT) and the Vision 2030 Digital transformation.

2. Drive MNOs, the government and businesses to operate more effectively and cost-efficiently by enhancing co-location and realising operational efficiencies.

3. Make a positive impact on the local community and ensure environmental sustainability by contributing to community development and promoting renewable energies.

Our vision and objectives are the guiding stars for us. We will work with MNOs to roll out their network faster, more efficiently and with higher availability. With other towercos, we wish to partner to understand the common pain points of the industry and find joint solutions to eventually make this industry efficient and sustainable. Some of the common themes where we will try to work with other towercos and regulators will be:

- Sharing of technical knowledge in areas of mutual interest.

- Providing inputs on strengthening the regulatory environment to improve infrastructure sharing, network roll-outs, et cetera.

- Partnering on different sustainability initiatives.