Singapore-based Pinnacle Towers has made a move into its second market with the acquisition of Bangladeshi towerco AB Hightech (ABHT). The digital infrastructure platform secured funding from KKR in November 2020 and has deployed capital in the Philippines under its subsidiary Frontier Tower Associates Philippines. In this article, TowerXchange brings you all you need to know about Pinnacle, Frontier and AB Hightech, and what the deal means for the Bangladesh tower market going forward.
Introducing Pinnacle towers
Pinnacle Towers invests in, builds and operates telecommunications infrastructure with a particular focus on towers and related assets. The services they offer include tower and microsite solutions, data centers, optical fiber, small cell and DAS.
In November 2020, global investment firm KKR announced a deal to fund Pinnacle’s expansion. At the time, Pinnacle had recently become one of the first entities to secure a provisional license to operate from the Department of Information and Communications Technology (DICT) through its subsidiary Frontier Tower Associates Philippines. From inception the company has always had the ambition to become a regional player in the Asia Pacific infrastructure space.
Pinnacle’s leadership team includes a number of industry veterans with an extensive history in successful towercos and wireless carriers across the world. Chairman and CEO Patrick Tangney co-founded leading Myanmar towerco Irrawaddy Green Towers (IGT) in 2012, while COO Yvonne Steel served as CFO at IGT’s largest competitor, Apollo Towers, from 2019 to 2021. Pinnacle CFO Tim Knowles previously enjoyed an eight-year stint as head of M&A/corporate development at Etisalat.
Building a strong track record in the Philippines
Throughout 2021 Frontier established itself as a leading tower company in the Philippines, specializing in build to suit and deploying more sites for MNOs Smart and Globe than any other towerco. Frontier was the first towerco to reach 500 build to suit sites in July 2022 and it has continued to roll out new locations at pace. The entity was linked to the first sale leaseback (SLB) deal in the country, although Smart opted to sell its towers to Malaysian-based companies edotco and EdgePoint Infrastructure in two separate transactions.
Frontier secured the majority of its BTS sites in regional locations outside of Metro Manila, focusing primarily on more remote sites that can help connect remote Islands and rural locations across the archipelago.
Globe’s first sale and lease back deal saw Frontier achieve significant scale – the agreement was the largest of the five deals that have broken in the Philippines so far – with 3,529 towers sold at a price of US$810m. Including its predicted BTS sites, Frontier has jumped from around 130th to 54th on the TowerXchange global towerco leaguetable.
Figure 1 - 2022's SLB transactions in the Philippines
2,600 of these towers are located in Luzon and roughly 900 in Visayas and Mindanao. In addition to the sale and leaseback, the transaction included a committed build to suit order for 750 towers.
The closure of the first 800 of these sites was announced on September 27th 2022 – which again highlights the efficiency of the operation Frontier has built.
ABHT acquisition
The latest news coming from Pinnacle is perhaps the most exciting yet – its entrance into the high-growth potential market of Bangladesh. While tower sharing reform was implemented in both Bangladesh and the Philippines at the same time, there are stark contrasts between the approaches taken by the DICT and Bangladeshi Telecom Regulatory Commission (BTRC).
While the DICT initially licensed 23 common tower companies in the Philippines, and more have been awarded permission to operate since, Bangladesh awarded licenses to just three new towercos in November 2018 alongside the incumbent edotco.
Delays caused by disputes in the agreements and the Covid-19 pandemic meant rollouts were slower than expected, but ABHT, alongside Summit and Kirtonkhola Tower (ATC), began building sites in 2021.
ABHT has built a total of 225 sites to date. 50 of these towers have come from a build to suit agreement with Bangalink. The remaining 175 were built with Robi as the anchor tenant.
Patrick Tangney, Chairman and CEO of Pinnacle, said, “We are incredibly excited to invest in Bangladesh and support the continued expansion of digital connectivity, which is so central to inclusive economic development, in such a vibrant market.”
Chowdhury Nafeez Sarafat, Vice Chairman of ABHT, added, “The entry of Pinnacle into the Bangladesh market is great news and an opportunity for the country’s telecom sector. We look forward to continuing to help develop the telecom infrastructure of the country.”
Adnan Imam, FCCA, Director of ABHT, said, “This is a great opportunity for ABHT and I am thrilled to be able to work with an established platform with global expertise. We look forward to working closely with the highly experienced team and to make a difference to the people of Bangladesh.”
It is understood that ABHT will be rebranded as Frontier Towers Bangladesh Limited, in line with Pinnacle’s branding in the Philippines. An official process is underway, with a further announcement expected from Pinnacle in the coming weeks.
Figure 2 – Estimated tower ownership in Bangladesh
What next for Pinnacle in Bangladesh?
Pinnacle has begun to build a new management team with a core focus on local talent. The CEO of the new business will be Serajus Saleheen who has spent time at edotco, Telenor, Ericson and IBM.
The Frontier Bangladesh team will be filled with ex-employees of towerco industry, the country’s MNOs, and those already hired have experience in building and managing thousands of the country’s existing mobile sites.
The team will initially focus on the rebranding and integration of the two businesses and delivering more build to suit towers. Immediate targets also include securing a BTS agreement with Telenor-owned Grameenphone, which operates the largest tower portfolio of the four operators and also enjoys the largest mobile market share.
With backing from KKR, Pinnacle will also prudently consider potential acquisitions in Bangladesh when they make sense. There are a number of sale and leaseback transactions expected soon in Bangladesh.
In line with the strategy across the VEON group – Banglalink is looking for a buyer for 5,500 of its 6,200 towers. It is likely that the entire portfolio will be sold to just one of the four tower companies. Similarly, Telenor and Grameenphone have launched a process to sell 12,000 of Gremaeenphone’s towers.
Since edotco has been declared by the BTRC to have significant market power and has been limited to acquiring a maximum of 25% of any towers sold by MNOs, Kirtonkhola Tower, Summit and now Frontier seem like frontrunners.
More about the Bangladesh Tower Market
Bangladesh provides an excellent market for a towerco to achieve fast and significant growth. Alongside the opportunities to acquire towers from operators, tower sharing is advanced in Bangladesh and there is a significant requirement for more towers. Across APAC markets tracked by TowerXchange, only Mongolia, The Philippines and Nepal have a higher number of sims per tower, indicating BTS potential beyond what has already been allocated in contracts to the four towercos.
This is combined with what might be the most towerco-friendly regulation in the world. Upon the granting of licenses, MNOs are not permitted to build their own towers, and beyond a November 2023 deadline are not permitted to share with one another on an MNO-owned site.
Current estimates predict 2,500 Grameenphone sites are shared by at least a second operator, and the same is true for 1,000 each of Bangalink and Robi’s. After the November 2023 deadline, the MNO that owns the tower must sublet to a towerco that in turn rents space to the co-locating operator.
There is a mature understanding of the processes, regulations and commercial arrangements from both tower owners and tenants. Sharing between MNOs started in 2009 and edotco established its presence in Bangladesh in 2013. This is in stark contrast to the Philippines, where incumbent MNOs Smart and Globe shared very little infrastructure.
In terms of operating conditions, the rainy season demands exceptional cell site autonomy which makes Bangladesh a key market for energy vendors, particularly those that can help with energy storage. In April 2019, edotco announced its partnership with Zass Energy Services (ZES) to start deploying the very first methanol-based fuel cells in Bangladesh and several other energy vendors have entered the country since.
Elsewhere, 5G rollout is in its infancy, with the first trials completed in December 2021 by state-owned MNO Teletalk. All four operators acquired spectrum in April 2022, but Teletalk’s rollout was put on hold as the government wants to prioritise the completion of 4G. Bangladesh may soon be home to smart cities, with both Japan and China proposing partnerships at different locations across the country.
Want to meet with the Pinnacle and Frontier Teams?
Patrick Tangney, Tim Knowles and Yvonne Steele are joining TowerXchange Meetup Asia as part of our expert speaker lineup. If you want to learn more about the Bangladeshi or Filipino tower market, make new contacts with towerco leaders and join the who’s who’s of APAC towers in Singapore this year, make sure to register today.
