The largest transfer of tower assets to date in the MENA region took place in 2019, with STC carving-out and establishing TAWAL as its own towerco. Over 14,000 towers now sit on TAWAL’s balance sheet and the towerco has wasted no time in searching out new business, upgrading towers and defining its green power strategy. After stop-start discussions with Mobily, and delays to IHS Towers acquisition of Zain’s towers, the tenancy ratio in Saudi Arabian is still only around 1.1x. With 5G investment underway and infrastructure sharing encouraged by the regulator TAWAL plans to increase this substantially. TowerXchange speaks with Richard Ltaif, Chief Strategy and Governance Officer of TAWAL, to discuss how TAWAL is establishing itself as an independent tower manager in Saudi Arabia and its short-term and long-term priorities.
TAWAL are Diamond Sponsors of the 2nd Annual TowerXchange Meetup MENA 2020, in Dubai on the 28-29 January, find more details on how you can meet them on site here
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TowerXchange: Please introduce TAWAL – what assets do you have on the ground? What has been the rationale for the carve-out from STC?
Richard Ltaif, Chief Strategy and Governance Officer, TAWAL:
In Dec 2018, STC announced the carve-out of its towers and the establishment of a new subsidiary – TAWAL – to provide leading integrated ICT infrastructure services in the Kingdom of Saudi Arabia.
The carve-out was decided to ensure the efficient utilisation and monetisation of those valuable assets. TAWAL was launched on April 1st, 2019 after obtaining its license from CITC making it the region’s largest Telecommunications Tower Company.
Today, TAWAL owns a portfolio of more than 14,000 telecom towers spread across the Kingdom and is establishing itself as the leading player in the Saudi telecommunications infrastructure market, aspiring to extend its services and coverage across the region.
TowerXchange: What is your timeline for TAWAL to achieve operational independence from STC? And what governance frameworks have you put in place to ensure transparency and availability of sites to all KSA operators?
Richard Ltaif, Chief Strategy and Governance Officer, TAWAL:
Most of the aspects of the business have already been transferred to TAWAL. There are some operational elements which are still with STC and we are working towards a complete operations handover by April 2020.
Providing fair access to our existing and potential customers is at the core of our business model. From a governance perspective, we have set up a robust Governance Framework to show our autonomy and are managed by a diverse Board which includes independent telecom infrastructure experts who have held leadership roles at American Tower Company and Indus Towers Limited.
From a licensing perspective, CITC mandates no discrimination and every commercial contract we sign is scrutinised by the regulator to ensure fair treatment.
At the operational level, we are developing a world-class site-request platform for our customers to have equal and transparent access to our site database and an opportunity to raise site sharing requests.
Testimony to our efforts is the recent signing of a Framework Services Agreement with Saudi internet service provider Integrated Telecom Company (ITC), just 7 months after launch.
TowerXchange: TAWAL has taken control of 14,000 towers from STC. What proportion of these sites are already shared? Is there typically structural capacity to enable co-location, or is improvement CAPEX required? Can you share your targets for increasing the tenancy ratio?
Richard Ltaif, Chief Strategy and Governance Officer, TAWAL:
TAWAL currently owns around 40% of the overall tower infrastructure in Saudi Arabia.
Only 10% of those sites are currently shared. MNOs have had limited incentives to share in the past. However, with increased pressure on profitability, capacity increase requirements, and the pressure to cover rural areas, we believe the market for infrastructure sharing has promising days ahead.
Since we took over the sites, TAWAL has been investing heavily in increasing capacity of our sites to ensure they are “sharing ready” as much as possible. I can tell you that capacity will be made available for all the sharing requests.
We have set ourselves aggressive targets for sharing and you will hopefully hear more news like ITC in the near future.
TowerXchange: What’s the approximate ratio of ground-based towers versus rooftops in your portfolio? Have you taken on any of the DAS, small cells and IBS sites from STC? And how do you anticipate your blend of site typologies evolving as KSA enters the 5G era?
Richard Ltaif, Chief Strategy and Governance Officer, TAWAL:
Approximately 70% of our sites are ground-based towers, the rest are rooftops. As of now, we haven’t taken up other site types from STC.
Due to higher band requirements of 5G and a small coverage area, we believe that operators will need a greater number of sites to offer the same level of coverage as they currently do for 4G. We expect that 5G may impact the blend of our site typologies as there will be a higher demand for small cells.
TowerXchange: Do you anticipate substantial decommissioning of the overlapping site in KSA, as a culture of infrastructure sharing is increasingly adopted, or will most existing sites be retained for infill/capacity?
Richard Ltaif, Chief Strategy and Governance Officer, TAWAL:
Since the advent of mobile services in the Kingdom, the three main telecom operators have rolled-out their infrastructure independently with very limited sharing. This has led to the build-up of sites very close to each other in many cases. With the emergence of an independent operator like TAWAL, we believe that there is an opportunity to promote sharing which will hopefully lead to decommissioning of such sites.
On the other hand, the launch of 5G may create densification requirement and may require some of the sites that are in relative proximity to remain for infill use.
The project management of both construction and O&M will be in-house. However, on-the-ground execution will be outsourced to suitable expert vendors in tower building and site O&M
TowerXchange: Will TAWAL be keeping construction and O&M in-house, or do you plan to outsource?
Richard Ltaif, Chief Strategy and Governance Officer, TAWAL:
The project management of both construction and O&M will be in-house. However, on-the-ground execution will be outsourced to suitable expert vendors in tower building and site O&M.
For site construction, TAWAL will be responsible for project management, procurement and quality assurance. For O&M, TAWAL is building a state-of-art Tower Operating Centre (TOC) for 24/7 monitoring. Our goal is to embrace Digital and Automation from the start to ensure efficient operations and serve our customers better.
TowerXchange: Can you share some highlights of TAWAL green energy initiatives?
Richard Ltaif, Chief Strategy and Governance Officer, TAWAL:
Renewable energy is one of the key initiatives identified under “Vision 2030”. The government has already taken the necessary steps to improve the power mix at the national level.
We at TAWAL have identified diesel reduction and green energy use as important pillars of our strategy. We are currently executing multiple initiatives to minimise our diesel consumption and to promote green energy.
We have identified sites where the grid is not very far and are making efforts to get these sites connected. Secondly, for few remote sites which were earlier running on diesel, we have changed them to solar and are monitoring their performance.
TowerXchange: Do you have ambitions outside of the Kingdom? If so, how is TAWAL financed and what does this mean about your capacity for buy and leasebacks in other markets in MENA?
Richard Ltaif, Chief Strategy and Governance Officer, TAWAL:
TAWAL’s vision is to become the leading provider of infrastructure services in the region. We intend to expand geographically in the medium term once we have established TAWAL as the partner of choice for infrastructure sharing in KSA.
The structuring of any deal in the region will be decided based on the discussions with our shareholders and financial advisors.
TowerXchange: Please summarise your vision for the role of TAWAL in the 5G era in the Middle East and North Africa.
Richard Ltaif, Chief Strategy and Governance Officer, TAWAL:
We expect that substantial investments will be required to offer higher speeds powered by the latest technologies. We believe that TAWAL will be a key enabler for this technology advancement by providing cost effective and timely infrastructure sharing services to network operators.
TAWAL are Diamond Sponsors of the 2nd Annual TowerXchange Meetup MENA 2020, in Dubai on the 28-29 January, find more details on how you can meet them on site here
Download TowerXchange MENA Dossier 2020
