The new home of Kuala Lumpur, Malaysia proved to be the perfect backdrop for TowerXchange Meetup Asia’s milestone 10th annual event in November 2023.
The country is going in a forward-thinking direction, voiced Malaysia’s Minister of Communications, Fahmi Fadzil during a special one-on-one interview with TowerXchange’s Product Director Matthew Edwards.
Over the years the country has overseen significant digital transformation, driven by 5G densification, the imminent strengthening of the country’s Data Protection Act that will have positively reverberating effects on Malaysia’s approach towards cybersecurity infrastructure, and investment from multinational hyperscale corporations.
The tower industry offers huge opportunity to tackle the massive challenges of both cutting-edge high speed connectivity in densely populated urban huts as well as the huge remaining rural infrastructure gap, said Fadzil.
He said this might represent a window of opportunity in the future where increased maturity of satellite-to-device technologies might be able to resolve. “As we all know, satellite phones are extremely cost prohibitive. However, there are some interesting ideas – satellites as towers would be quite interesting to look at, particularly to resolve some of the problems of connectivity,” Fadzil enthused.
Asia’s ‘Digital Tiger’
Fadzil said the goals around ubiquitous connectivity – including achieving total 4G coverage, a later wide rollout of 5G, and the issuing of a tender for a second MNO license to drive competition was all part of Malaysia’s vision to position the country globally as Asia’s ‘Digital Tiger’.
Boosting its digital economy is the key; “You can build the roads, you can make sure the guardrails are there for you to use it safety but at the end of the day, it’s about the kind of quality transactions that can take place.”
Fadzil added whilst there were different approaches to how Southeast Asian countries tackle creating a digital economy, the importance of positioning Malaysia as a data centre hub and a competitive alternative for global organisations headquartered in advanced and neighbouring locations like Singapore, would be key to its aspirations.
Fadzil’s interview in front of a fully engaged audience set the tone for conversations around how digital enablement will manifest. In the 2023 event’s diamond sponsored keynote presentations, Suresh Sidhu, CEO, EdgePoint Infrastructure voiced about the key parameters for value creation during his keynote speech on what makes a towerco tick. Although he set out his stall voicing that the towerco industry has been a generationally slow business, its role in providing fundamental communications “forever” validates its importance in serving populations of different generations.
2023 posed a mixture of market pros and cons to flare up. ASEAN economic growth, 5G and new 4G coverage rollout, continuing data growth, a mobile first strategy as a benefactor for growth and the growing opportunity for fibre and adjacencies, were tempered by external factors. Respectively these were rising interest rates, an industry structure that emphasised MNO mergers and new models, MNOs being more selective in roll out, price sensitive customers, and fewer sale leaseback (SLB) opportunities.
He felt those knock-on effects will either continue or be remedied in 2024 by certain developments such as more aggressive network expansion, more focus on 5G and the unconnected, more fibre, power and emerging proof of concepts such as micro edge and small cells, MNO consolidations furthered, SLB/consolidation and exit ramblings.
Those market developments seem to give varied approaches to delivering operational success in the tower industry. EDOTCO’s presentation emphasised on value creation, as Group CEO Adlan Tajudin said his company was leaning upon being data driven – leveraging on AI for decision making, data leveraging and in predictive maintenance.
This is all gearing towards advancing connectivity in a way that will ably serve the requirements of Gen Z and Gen Alpha demographics. According to Tajudin, some 43% of the workforce in 2030 will be made up of those two generational audiences. He added that the average usage by the beginning of the next decade will go up to around 415 gigabytes per month. “It is important when we build the network In the future. we have to build competencies to the needs of gaming, as an example of key use cases, in general,” he voiced. In the shorter term, he felt that MNOs were tightening up spending, but was more open to M&A activity for possible business synergies.
MNOs are operating “under pressure” in some Asia markets, opined Tajudin, and said they were cutting down in terms of spending and other macroeconomic challenges, focusing on selective builds and outsourcing a large bulk of capex infrastructure, Tajudin said.
ESG also was a run-along, adjacent theme to the digital proposition conversation, with customers conscious on the activities around carbon emissions and carbon neutrality, according to Tajudin. “It’s very important for us to deliver that because, moving forward, this could be the requirements that could be expected of a tower company in order for you to participate in any transactions moving forward.”
M&A activity and future growth
M&A activity has further shaped Asia’ tower market, albeit in a climate where current high interest rates, inflation, slowdown, rising geopolitical tensions and macroeconomic headwinds act as inhibiting factors. South Asia continues to be fairly active, with a number of deals concluding over the last 12 months, with several more in process.
Those headwinds are biting, and one of the panel speakers in the session ‘inflation, M&A and managing a towerco in today’s economy’ said the economic turbulence in Australia with regards to high interest rates has created stress among their customers, but also emphasised the value in creating healthy partnership ecosystem between the towerco and the MNO.
“If the longer-term picture and where the counterparties are also stable, I see the emergence of an opportunity for towercos that are willing to deploy capital to go on a journey of partnering with the MNOs in this instance”. “I think what the towerco brings to the party is the capacity to deploy capital and assist in delivering connectivity.”
Despite external macroeconomic pressures it seems that towercos in the region have been resistant to such forces and driven healthy commercial activities as those mentioned. The future growth subject provided room to ponder in the quick fire insights session on what new opportunities represented for towercos.
One presenter from American Tower outlined that exponential data growth in the coming years will create increased demand: He said it was expected that there will be approximately 15% data growth in the last five years, with 2.5 to three times more demand in the next 5-7 years. He said no country or region in the world will experience data growth at anywhere between 5-8%. “[Asia] is the only bastion of growth for the next few years in the world economy” .
Meetup Asia showcased the region’s tower industry in a buoyant mood, in an area of the world where demand for data is thriving, leading to a huge preponderance of towers in Asia. Where data is being consumed is also an important factor, as Matthew Edwards from TowerXchange highlighted in his opening State of the Market presentation – pointing to commercial opportunities to bring better indoor connectivity coverage from facilities such as entertainment venues to other public spaces and other premises such as offices, homes and other public buildings. Such developments and future potential perhaps proves that Asia’s tower market has some interesting times ahead.
