Asia News

Summary of tower industry news across Asia

Bangladesh: edotco raising their stake in their Bangladesh opco

The Bangladesh Telecommunications Regulatory Commission (BTRC) has approved Axiata’s plans to alter the shareholding structure of its operations in Bangladesh. Axiata’s towerco edotco will buy back 31.01% of shares in edotco Bangladesh from sister company Robi Axiata, which currently holds a 51% stake in the tower unit. edotco will hold 80.01%, while Robi will retain 19.99%.

Bangladesh: edotco installs two wind turbines

edotco Bangladesh has installed two wind turbines at Shah Porir Dwip of Teknaf and Cox’s Bazar to support the need for power in remote coastal regions of Bangladesh.

“The deployment of these wind turbines is part of our proof of concepts in renewable energy. It is an important step in our initiative to enable continuous connectivity through innovative and sustainable means, while reducing carbon footprint at the same time,” said Darryll Sinnappa, Managing Director of edotco Bangladesh. “Initiated three months ago, the wind turbine project is now producing an average of 12.11 kWh per day. We intend to deploy wind turbines in all off-grid sites in coastal areas, where the solution is feasible subject to wind speed and towers structure. Plans are afoot to deploy another ten wind turbines in the year 2017.”

Bangladesh: VimpelCom to bring Bangalink towers back to market

VimpelCom is preparing to bring their ~6,000 Bangalink towers back to market for sale and leaseback, as the tower industry steps up efforts to lobby the BTRC for a more favorable licensing environment. The Bangladeshi regulator had issued a draft tower license framework which would both restrict foreign direct investment, and limit the market to two towercos, moves that would suppress interest in the Bangalink towers while hindering the operations of edotco, which operates just under 8,000 of Bangladesh’s ~30,000 towers.

Cambodia: edotco to serve as exclusive agents of Xinwei

edotco has consolidated their position as the leading towerco in Cambodia by signing an exclusive agent agreement with Chinese operator Xinwei, adding over 500 towers to the 2,500 site portfolio edotco is marketing for co-location in the country.

edotco has been providing co-location services to Xinwei since their launch in Cambodia in 2013. Xinwei previously had aspirations to start their own towerco in the country, having acquired 1,000 towers from Khmer Unified Network Communicate (KUNC) in December 2015.

China: China Tower Corporation reaches tenancy ratio of 1.4

By the end of 2016 CTC’s portfolio grew to approximately 1.7mn towers, representing roughly 200,000 new builds in the last year. Recently CTC’s chairman of the board, Liu Aili (据ソ食) noted that tower sharing on new towers is around 1.7, while in some areas, tenancy ratio is as high as 1.91. On average, since the formation of CTC in July 2014, tenancy ratio is 1.4 for all towers. Note tenancy ratio in China is often expressed in percentages, thus the figures above were originally quoted as 70%, 91% and 40% respectively.

China: China Tower Corporation issues tenders

Through its Tower Online Platform, CTC has posted notice for the fifth round of tower products, including monopole and non-monopole, with a submission timeline between 8 January to 13 January, 2017. Similarly, the second round of tender for shelter products is open from 6 January to 16 January. In addition, CTC has also posted tenders for various products and services across provinces on another website, seeking contractors for everything from site identification and evaluation, to site power connection, and remote monitoring services.

China: MNOs need independent towercos to fulfill demand

All three Chinese MNOs put out orders to the independent towercos in January 2017 as CTC remains unable to keep up with build demand.

China: Mixed-ownership reform pilot involving China Unicom parent company pending approval

China United Network, the parent company of China Unicom has been selected by the National Development and Reform Commission to participate in a mixed-ownership reform pilot. Five other State-owned enterprises were also chosen. Industry analysts believe this could inject new domestic strategic investors into the organization and thereby reduce some state ownership. Internet-related and private enterprises such as Baidu, Alibaba, and Tencent were suggested as potential candidates. Another iteration of the reform could be stock-based compensation to better incentivise management and employees. There is also potential in giving management more autonomy, though control would be expected to remain in the hands of the State. In the mean time, China Unicom also announced a partnership with Baidu on mobile internet, artificial intelligence, and more.

China: Goldman Sachs values China Tower Corporation at 10x 

China Tower Corporation’s (CTC) revenue by year-end 2016 is projected to be CNY ¥60.6bn, growing to CNY ¥71.8bn in the next year, according to a report released by Goldman Sachs Global Investment Research in September. The firm believes despite a loss in 2Q2016 due to interest expense, CTC’s EBITDA margin is robust and will reach 52% at the end of 2016, and 55% in 2017. “In line with Chinese telco stocks’ 30% discount to global peers, we applied a 30% discount to global towers’ 2017E EV/EBITDA of 14.1X to arrive at 10X 2017E EV/EBITDA as our valuation metric for China Tower,” said the report.

India: Brookfield to acquire majority stake in Reliance Infratel, now named Towercom

After many years of rumoured sale, Reliance Communications (RCOM), India’s #4 MNO, has signed a binding agreement with serial tower investors Brookfield for the sale of ~45,000 towers and related infrastructure for Rs 110bn (US$1.64bn). The deal is to be structured to create to an SPV named Towercom, in which Brookfield would own 51% and RCOM 49%.

In December 2015 RCOM signed a non-binding agreement with Tillman Global Holdings, backed by TPG, but the deal fell apart when due diligence revealed a substantial valuation gap.

India: RCOM and Aircel merge

The merger between Reliance Communications (RCOM) and Aircel has created a US$5bn 50-50 joint venture, with RCOM’s previous consolidation target MTS (Sistema) retaining a minority stake in RCCOM. The merged entity will hold just under 20% of India’s allocated spectrum, will have just under 200mn customers, and around 10% revenue share of the mobile market. The deal will help RCOM cut its debt by more than 40% (US$3bn).

India: Anil Ambani describes RCOM and Reliance Jio ‘virtual merged’

Reliance Communications Chairman Anil Ambani said his Reliance Communications (RCOM) has achieved a “virtual merger” with his brother Mukesh Ambani’s Reliance Jio. With RCOM also merging with Aircel, the combined entity will be among the top operators in 12 circles and will pass the one million mark in terms of 4G subscribers.

India: Rumours of Idea Cellular-Vodafone India merger

Idea Cellular have denied rumours voiced by CNBC-TV18 that India’s #3 operator is exploring a merger with #2 Vodafone. While a merged entity would breach 50% market share limits in several circles, and may be compelled to return some spectrum to government, Morgan Stanley analysts suggested that the merger would could make the industry would become even more competitive in the long term, enabling the restructuring of costs.

While towercos are generally bullish about MNO consolidation putting more spectrum into the hands of MNOs with capital to invest in their network, the consolidation of #2 and #3 MNOs could put a significant number of tenancies at risk when the lease agreements wound down. However, this risk would be somewhat mitigated by the rational sharing environment already existant between Idea and Vodafone, which are both partners in Indus Towers.

India: GTL seeks to restructure its balance sheet

Lenders to GTL Infrastructure, which owns almost 30,000 towers in India, have accepted a proposal to convert some part of the towerco’s debt into equity under the Reserve Bank of India’s (RBI’s) strategic debt restructuring scheme, which allows lenders to a company to pick up a controlling stake by converting a part of the debt owed to them into equity. This in turn may facilitate the exit of GTL Founder, Manoj Tirodkar, who is seeking to restructure the balance sheet of GTL Ltd. GTL Infrastructure owns almost 30,000 towers in India but has a value less than 10% of the value realised when Viom Networks (42,200 towers) was sold to American Tower.

TowerXchange understands that in order to facilitate a sale, GTL Infrastructure may be split into high value and distressed assets, with most of the value contained within subsidiary Chennai Networks, which holds the ~17,500 towers acquired from Aircel in 2010 for US$1.8bn. With Aircel representing the lion’s share of revenue on the Channai Networks sites, the portfolio could be of interest to RCOM, and their towerco subsidiary Towercom (formerly Reliance Infratel).

India: Reliance Jio signs 25,000 tenancies

The Economic Times reports that Reliance Jio has taken 14,000 tenancies with Indus Towers, securing a 1% discount on leases where Jio is the second tenant, 5,000 towers with American Tower, securing a 12.5% rebate when using currently vacant towers, and 6,000 tenancies with GTL.

India: Reliance Jio intends to build a further 45,000 towers to support their 4G rollout

Reliance Jio has bucked the trend in India of contracting towercos to build new sites, opting instead to build 25,000 of their own towers, many of which are lightweight, single tenant monopoles for infill. According to news agency PTI, the operator has since told the Telecom Minister that it intends to install a further 45,000 new towers.

India: ASSOCHAM forecasts tenancy ratios in India to reach 2.9 by 2020

A KPMG study commissioned by the Associated Chambers of Commerce India (Assocham) forecasts that the average tenancy ratio on India’s towers is expected to increase from 1.95 in March 2015 to 2.9 by March 2020, driven by mobile broadband rollout. Net tower additions were significantly higher in 2014-15, at about 6,300, compared to 3,200 in 2013-14.

“India has been the most preferred destination for investment in the tower sector in the Asia. Since 2008, seven out of the top 20 deals in Asia in tower sector have originated in India,” Sunil Kanoria President ASSOCHAM said.

India: Bharti Infratel net profit up 31% year on year in Q216

Benchmark listed Indian towerco Bharti Infratel’s Q216 consolidated revenues grew 8% YOY, while EBITDA rose 10% to Rs 1,454 crores, representing an operating margin of 44%. Bharti Infratel’s tower count rose to 89,791, inclusive of their 42% share in Indus Towers, while their tenancy ratio reached 2.21.

Tenancy ratio growth was described by analysts as “muted”, reflecting that initial 4G rollout was being facilitated by “loading” (adding 4G equipment to existing 2G and 3G towers), rather than through the addition of tenancies on new towers.

During the quarter, Bharti Infratel completed a share buyback for Rs 2,000 crores, while a consortium led by the company was awarded the Bhopal Smart City project.

India: Larsen & Toubro to implement Nagpur smart city project

Larsen & Toubro subsidiary Smart World and Communication will lay 1,200km of fibre, sett up 136 Wi-Fi hotspots, and establish 100 digital interactive kiosks while developing surveillance systems. “After Jaipur, this is the most significant step in the country’s journey towards establishing smart cities and we are delighted to be participating in transforming Nagpur into one,” said SN Subrahmanyan, Deputy Managing Director and President, Larsen & Toubro.

India: BSNL complete world’s largest solar tower installation ahead of schedule

Key partners VNL and HFCL have helped BSNL complete installation of 2,199 solar powered towers across ten Indian states. The project, which was part of efforts to strengthen security mechanism to combat left wing extremist insurgents, was conceived of by the Department of Telecom and funded by the USOF.

India: BSNL investing US$375mn in 20,000 new base stations

BSNL’s US$375mn infrastructure expansion programme is targeting the installation of 20,000 new base transceiver stations with a view to improving service quality. The majority of the sites will be installed in the second half of BSNL’s financial year.

India: Leading infrastructure investors interested in stake in Bharti Infratel

Bharti Airtel is exploring the sale of a significant stake in their towerco Bharti Infratel, which is currently 72% owned by the operator, with the balance held by public shareholders. In a statement to the Bombay stock exchange, Bharti Airtel had said: “the board of directors at its meeting held on October 25 has authorized a committee of directors to evaluate options for monetization of a significant stake in Infratel.”

Blackstone, KKR, the Canadian Pension Plan Investment Board and Brookfield have all been linked with the opportunity in the Economic Times, which suggests as much of 40% of equity could be up for grabs, valued at around US$4bn. Investors will also be interested in using Bharti Infratel as a means of accessing India’s largest towerco Indus Towers, in which Bharti Infratel owns a 42% stake.

India: Idea Cellular seeks to divest stakes in Indus Towers and in its captive towerco

Idea Cellular is reportedly seeking to raise US$2.2-2.7bn by monetising both its captive towerco and its stake in Indus Towers. The Economic Times reports that BAML has been mandated to find a buyer. Infrastructure Services Limited (ICISL) is a 100% owned subsidiary of Idea Cellular. The captive towerco reportedly owns anything from 9,600 to 11,000 towers. Idea also owns 16% of Indus Towers through Aditya Birla Telecom Limited (ABTL), which in turn is 16-30% (reports vary) owned by serial tower investors Providence Equity.

In related news, VC Circle reports that Providence Equity is seeking to swap it’s holding in ABTL for a direct stake in Indus Towers.

India: American Tower interested in more acquisitions in India

With tens of thousands of Indian towers still potentially up for grabs in M&A, American Tower still has an appetite to supplement their footprint in the country.

“We are open to discussions with any potential sellers,” American Tower Chairman and CEO James Taiclet told the Economic Times. American Tower recently completed the acquisition of a 51% controlling stake in Viom Networks, expanding their Indian tower count to 57,987.

In the same interview Taiclet explained that tower valuations in India were typically lower than worldwide (11-12x compared to 19-20x worldwide) because of the differing contract structure in India. For example, in India existing tenants benefit from discounted lease rates when a new tenant is added, while “loading” is subject to only a relatively small fee – “amendment revenue”, which is essentially the equivalent in the U.S., can add the value of another tenancy to a U.S. contract.

India: Delhi’s dispute with the tower industry to be resolved by mediation

The ugly battle between Delhi’s three municipal corporations and India’s towercos and MNOs will have to be settled by mediation. Tower industry stakeholders accused the municipalities of hiking installation fees 5x, while the municipalities claim the 4,668 new sites installed since (more than half Delhi’s fleet) have are illegal – and almost 1,000 sites have been sealed, exacerbating quality of service challenges in the city.

India: Indian tower industry gets a ‘shot clock’

India’s telecom department will issue a new set of rights of way rules on November 15 2016, providing a framework for settling permitting disputes in a time-bound manner. The framework resembles the ‘shot clock’ (named after the time limit to shoot in basketball) which was credited with easing permitting and build in the U.S.

In India MNOs or towercos will pay a one time administrative fee of Rs 10,000 to apply for a site (Rs 1,000 per kilometre of fibre). If the request originates with a local authority, a 30 day limit is applied for submission of the plan, with a 90 day limit for the completion of works. If the authority fails to respond within 60 days, permission will be deemed granted.

Indonesia: Tower Bersama to buyback US$115mn in shares

Indonesia’s second largest towerco Tower Bersama has commenced a share buyback. “The company can execute the buyback using internal funds,” said finance director Helmy Yusman Santoso. Santoso added that the move would erase the treasury stock, making the company;s capital structure more efficient.

Malaysia: edotco secures record US$600mn investment

Axiata and it’s subsidiary edotco announced a record US$600mn primary and secondary equity private placement deal with Innovation Network of Japan (INCJ) and sovereign wealth fund Khazanah. Under the transaction transaction, which attracted substantial interest, INCJ secured an undisclosed number of primary shares for US$400mn, while Khazanah secured secondary shares for US$200mn. Axiata plans to retain a majority stake for the foreseeable future. The deal means edotco is unlikely to IPO before 2018-19. At the Q416, edotco owned 17,054 towers, and managed over 8,100 more, across five Asia countries. The cash injection will be used to both bring Axiata debts below 2.5x, and to support M&A by edotco.

Malaysia: edotco plans to add 10,000 towers in 3-5 years

edotco plans to scale to over 25,000 towers through organic and inorganic growth as Axiata drives the business toward an IPO, which could take place in 2018.

Malaysia: edotco to provide 25 LoRa network sites to support IoT

edotco will provide 25 sites for low-power, long-range wireless protocol (LoRa) networks in Malaysia’s Klang Valley, supporting Axiata and Atilze’s IoT services. “The efficiencies and seamless connectivity that can be achieved by leveraging our wide infrastructure coverage and regional footprint will enable breakthrough applications to be implemented,” said edotco’s Wan Zainal Adileen Wan Puteh.

Malaysia: Sacofa calls for RM1bn investment to help Sarawak achieve 95% broadband penetration

State-backed towerco Sacofa, which has 1,000 towers and 10,000km of fibre in Sarawak, has called for RM1bn (US$225mn) to be invested into the State’s infrastructure to progress from current levels of 53% to achieve the government’s target of 95% broadband penetration by 2020.

“Although this is an ambitious target, with hard work and continuous strong support from the state government we are confident of delivering this objective,” said Deputy Chairman Datuk Syed Ahmad Alwee Alsree in The Borneo Post, while revealing that he hoped half the money for the network investment would come from government, half from Sacofa.

Myanmar: New CEO to lead MPT-KGSM joint venture 

Toshitake Amamiya has been named as the new CEO for MPT-KGSM, replacing Takashi Nagashima who led the business since its formation in July 2014. Amamiya was most recently managing KDDI’s business clients’ portfolios worldwide and has held executive roles across various units and countries, including being the CEO of the Advanced Business Development Division and the General Manager of Consumer Business Strategy Division between 2005 and 2016 with the organisation in Japan. Amamiya also spent over seven years in South America, overseeing the operations of wireless network operator Hola Paraguay S.A., which KDDI previously had part-ownership of, as its COO from 1998 to 2004.

Myanmar: License formally awarded to Myanmar’s fourth telco; no launch until 2018

The Ministry of Transport and Communication in Myanmar formally awarded a license to the country’s fourth operator on 12 January. Led by Vietnam-based Viettel, a consortium of 11 local companies, plus a subsidiary of military-run Myanmar Economic Corporation called Star High Public Company, the new firm goes by Myanmar National Tele & Communications (MNTC). The brand name under which the telco will offer its services remain unknown. It is reported that while SIM cards could be issued later in the year, services would not be launched until 2018. MNTC paid $300mn for the license, which has a 15-year term.

Myanmar: OCK orders 80 eSites from Flexenclosure for Myanmar

Myanmar’s newest towerco OCK has ordered 80 eSites from Flexenclosure, which already has installed over 1,200 eSites in the country for two other towercos. The eSites are fully integrated hybrid power systems, complete with batteries and gensets. Flexenclosure has full turnkey responsibility for system manufacturing, supply, delivery, installation and final commissioning. Telenor is the anchor tenant on OCK’s sites.

Myanmar: MIG sells for US$12.7mn to Hong Kong’s Shining Star International 

After months of speculation, it was formally announced in October that Singapore Myanmar Investco (SMI) sold all of its shares in Myanmar Infrastructure Group (MIG) to Hong Kong-based Shining Star International Limited Corporation. The deal is reportedly around US$12.7mn. The Shining Star Group is a well-established group within China/Hong Kong, focusing primarily on real estate, hotel and property management, education, healthcare, sports, and tourism businesses in China, Myanmar, and south-east Asia in general.

Myanmar: Incumbent fourth operator Viettel to invest up to $2bn over five years 

Tower and tenancy growth are on the horizon in Myanmar as Vietnam’s Viettel will enter the market as the fourth operator through a consortium. Licensing is still underway, with completion expected at the end of 2016 and operations beginning early 2017. Viettel is said to own a 49% stake in the venture, with 23% belonging to a consortium of 11 local companies, and 28% by Star High Public, which is backed by Myanmar Economic Corporation (MEC).

Myanmar: 4G services now offered by all three operators 

State-owned Myanmar Post and Telecommunications (MPT) began a soft launch of 4G LTE service in October, available in six locations in Yangon and two in Nay Pyi Taw. Out of the three operators in the country, MPT was the last to the game, with Ooredoo leading the pack in May and Telenor following closely in July. MPT, with backing from Japan’s KDDI has indicated it plans to invest US$2bn over the next ten years to further extend its network across the country and provide high-quality services.

Myanmar: Operators looking to bid on 1800MHz spectrum auction in 2017

Myanmar’s 2600MHz spectrum auction on 17 October came and went without much fanfare for the operators. Telenor and MPT initially showed interest, but at the end withdrew their applications. Ooredoo never applied in the first place as it was waiting for the 1800MHz auction, expected to take place in the first quarter of 2017. All three MNOs are looking to expand their coverage via the lower frequencies.

Myanmar: Data services key to Telenor’s future business growth 

Telenor Myanmar will shift to focus on growing its data services with existing customers as “super hyper growth has flattened,” said CEO Lars Erik Tellmann in an interview with Reuters. Telenor is currently the number two MNO in the country with 18 million subscribers. The company has a network of 6,800 towers, with plans for an additional 3,200 by the end of 2018.

Myanmar: Yoma sells 12.5% stake in edotco for US$35mn

Axiata Group Berhard, the Malaysia-based operator and parent company of edotco, has excersied a call option to increase its stake in Myanmar from 75% to 87.5%. The additional 12.5% stake was purchased for US$35mn from Yoma Strategic Holding Ltd., who will retain the remaining 12.5% interest in edotco Myanmar. “Our original investment of US$20 million has now grown to US$70 million, of which half is being sold,” said Melvyn Pun, Chief Executive at Yoma, as quoted in Singapore’s The Strait Times. The transaction was reported in early November.

Thailand: TOT tower joint venture with AIS may be back on

State owned operator and concession-holder TOT has resumed consideration of setting up a tower joint venture with Advanced Info Service (AIS) as the two companies seek to settle their build-operate-transfer concession dispute under which TOT claims AIS’s 2G towers were due to be handed over last year. The mooted plan would reportedly put 5,000 TOT and 13,000 AIS towers into a joint venture newco, in which AIS would own a slightly larger stake.

Vietnam: OCK remain confident of closing delayed SEATH acquisition

Current owners VNI have delayed the US$50mn sale of 100% of Southeast Asia Telecommunications Holdings (SEATH) to OCK, a managed service provider-turned towerco. The three subsidiaries of SEATH own a combined 1,938 towers, making it Vietnam’s largest independent towerco. Originally targeted to close in October, regulatory complexities mean the acquisition is now expected to close in December.

OCK is targeting reaching a total of 3,000 towers across the ASEAN region by end of 2016, including the company’s presence in Malaysia, launch in Myanmar and acquisition in Vietnam. The acquisition will be funded by cash in hand and bank debt, OCK said.

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