Asia News

A roundup of tower news across Asia

Bangladesh: Airtel and Axiata merge

Bharti Airtel Ltd and Malaysia-based Axiata Group Berhad have signed an agreement to merge their respective operations in Bangladesh—Airtel Bangladesh Ltd and Robi Axiata Ltd—to create the second largest telco in that country. Post-merger, the combined entity operating as Robi will serve approximately 40mn customers. The proposed transaction is subject to conditions precedent including receiving applicable approvals from relevant authorities and is expected to complete in the first half of 2016.

Axiata will hold a 68.3% controlling stake in the combined entity, Bharti Airtel 25% and the remaining 6.7% will be held by Japan-based NTT DoCoMo, an existing shareholder.

China: Towers, cash and equity changes hands

China Mobile, China Unicom and China Telecom have given an update on the transfer of their tower assets to China Tower Company. The three companies agreed in October 2015 to hand over their entire tower portfolios to China Tower in exchange for shares in the new company and, in the case of China Unicom and China Mobile, a cash consideration. The exact number of shares was to be decided at a later date, but it was agreed that the shareholding structure after the completion would be as follows: China Mobile 38.0%, China Unicom 28.1%, China Telecom 27.9% and China Reform Corporation 6.0%. The companies have now confirmed the value of the transferred assets, allowing them to finalise the remaining elements of the transaction. The consideration amount for the assets were CNY102.74 billion for China Mobile, CNY54.66 billion for China Unicom and China Telecom, CNY30.13 billion.

India: American Tower to invest a further US$2bn into India

American Tower announced that it will invest US$2bn in India, in addition to the US$879mn being spent to acquire a controlling stake in Viom Networks.

American Tower completed its acquisition of a 51% controlling ownership interest in Viom Networks in April 2016. The remaining 49% ownership stake will be controlled by the Tata Group and several private equity firms. American Tower paid INR 76 billion (approximately US$1.14 bn) in cash and assumed around INR 51 billion of INR-denominated debt. Viom Networks operates 42,200 towers, supporting nearly 100,000 tenancies, while American Tower already owned 15,361 towers in the country, with a tenancy ratio approaching two, prior to the acquisition of Viom’s towers.

India: Viom Networks CEO to depart

Syed Safawi, chief executive officer of Viom Networks, announced in a letter to the Board and employees that he will be resigning by the end of June. The move follows the recent completion of the acquisition of Viom Networks by American Tower Corporation. Safawi, an industry veteran with close to three decades of industry experience with leadership stints at Reliance Communication Ltd., Bharti Airtel Ltd. and Coca-Cola, and was brought in as CEO of Viom Networks in 2012.

India: SREI raises capital

SREI Infrastructure Finance announced that its board will consider a proposal to raise Rs 17,500 crore through issuances of securities, including bonds and commercial papers, next financial year. The company has proposed to raise money through public issue of secured redeemable non-convertible debentures (NCDs) aggregating up to Rs 2,500 crore in one or more tranches during 2016-17. SREI also proposed to issue secured and/or unsecured redeemable non-convertible debentures (including Bonds) aggregating up to Rs 10,000 crores outstanding at any point of time during 2016-17 on private placement basis.

India: Indus Towers connects Tamil Nadu

Indus Towers announced that it will provide telephony network across Tamil Nadu by connecting over 79.3 million wireless subscribers across Indus Towers’ second largest telecom circle. With more than 13,100 towers and over 28,700 tenancies in Tamil Nadu, comprising 2,800 towers and 6,500 tenancies in Chennai, Indus now offers its users continuous and uninterrupted connectivity across the state. Through the new measure, the company enables communication for more than 97% of the total addressable population of the state, and employs 4,000 people (directly and indirectly) in the state.

India: New CEO and CFO for Indus Towers

Bimal Dayal has taken on the role of CEO of Indus Towers, India’s largest telecom tower company, succeeding B.S. Shantharaju who retired on March 31. Dayal has been associated with Indus Towers since 2010 as the COO, and will now take up the full responsibilities of CEO. Bimal is a member of the TowerXchange ‘Inner Circle’ advisory board.

Hemant Kumar Ruia has been named CFO of Indus Towers. Ruia joins Indus Towers from Reliance Retail Ltd, where he was also CFO and played the role of business partner across various brands with Reliance Retail. Ruia has extensive experience in business partnering, funds management, information systems, legal and secretarial and other aspects of the finance function.

India: Dispute over permitting of Delhi towers comes to a head

The Municipal Corporation of Delhi (MCD) is no longer permitting operators to set up telecom towers in the capital following a notification from the Ministry of Urban Development banning the installation of such sites in residential areas, according to the Economic Time of India. Rajan Matthews, the director general of industry group the Cellular Operator Association of India (COAI) was quoted as saying that: ‘We have learnt that the authorities are in the process of issuing notices for pulling down the sites in residential areas.’ These plans, if implemented, are expected to lead to service outages in the capital, as an estimated 80%-90% of the city’s 18,000 sites could be affected by the order. Telecom Secretary JS Deepak wrote to the Ministry of Urban Development to request an amendment, and pointed out that the issue falls under the jurisdiction of the Department of Telecommunications (DoT). Municipal bodies in several cities have reportedly been sealing mobile towers, claiming that some had been installed illegally.

India: Active infrastructure sharing permitted

The department of telecommunications of India has allowed mobile operators to engage in active infrastructure sharing, a move that will help mobile operators reduce their capital expenditure by 30-35%. Operators will also be able to reduce their operating expenditure by around 5%. Active infrastructure sharing also operationalises spectrum sharing, which was allowed by the government in September last year. The move could also benefit towercos in India by opening another revenue stream for them.

India: Reliance Jio closes in on roaming deal with BSNL

Reliance Jio Infocomm (RJIL) is in advanced stage of talks with state-run telecom company Bharat Sanchar Nigam Limited (BSNL) to use latter’s network and infrastructure largely for voice operations across all 22 telecom circles under an intra-circle roaming arrangement. BSNL confirmed that while talks are on, the deal has not been finalised as yet. Apart from fixed charges at 25 paise per minute for voice, BSNL has fixed 25 paise per megabyte for data and 5 paise per SMS for any telecom operator to share its network.

India: BSNL has leased up ~10% of its towers

BSNL has leased out 6,505 of its towers to other telecom operators and leased in space on 15,113 third party towers. Out of the 6,505 spaces that it has rented out, Bharti Airtel accounted for 2,251 slots. It was followed by Reliance Jio with 1,440 slots and Idea and Vodafone with just above 900 towers each. The state-owned company had, for over a decade, refused to allow private companies to put up their antennas on its towers, fearing that doing so would make them lose their competitive edge, but now they are willing to do so for a fee. Many of BSNL’s towers are on its own property, including telephone exchanges, often in locations where others do not have any presence.

India: Bharti Airtel considers selling 5% stake in Bharti Infratel

The Indian press was awash with rumour in April 2016 that leading MNO Bharti Airtel was considering selling 5% of their 71.7% equity stake in Bharti Infratel to raise capital for spectrum and to pay down debts. Bharti Infratel reported an increase in tower count of almost 3,000 towers over Q1 2016, including their stake in Indus Towers, together with an uptick in tenancy ratios from 2.12 to 2.20. Bharti Infratel’s market cap was then Rs 724bn, down from Rs 729bn the previous quarter. EBITDA for FY15-16 stood at Rs 5,403 Crore, an 8% YOY increase.

India: Alternate energy requirements under negotiation

The Telecom Department of India (DoT) is urging the sector regulator to review the rules relating to running mobile towers on hybrid power amid financial and technical challenges faced by carriers. The green telecom policy was created four years ago and requires mobile carriers to migrate 50% and 20% of their cell towers in rural and urban areas to hybrid power respectively by December 2015, and as much as 75% and 33% by December 2020. Telecoms operators are citing difficulties that they are having in generating the large sums of capital required to generate alternate energy sources to meet the targets. With the Telecom Regulatory Authority of India (TRAI) re-examining the policy, indications are that these targets could be recalibrated significantly. The TRAI has so far declined to announce when the amended recommendations would be submitted.

India: New Silk Route seeks to exit Ascend Telecom  

Livemint reports that New Silk Route (NSR) are seeking to return US$500mn to investors during 2016 as they gear up to create a second fund. The e-paper speculates that this could mean the investor plans to exit Indian towerco Ascend Telecom, which owns just under 5,000 towers “We have returned $200 million to our investors this year. We are knocking on the door of 2016 and clearly we would like to liquefy these investments and realize them and that is certainly the biggest activity at NSR right now,” the paper quotes Parag Saxena, CEO of NSR as saying. NSR is also a minority investor in Reliance Infratel.

India: Reliance Infratel sale hits valuation snag

The planned sale of Indian Reliance Communications’ (RCOM’s) tower assets has reportedly been delayed by a disagreement over the valuation of the sites. TPG Capital and Tillman Global Holdings (TGH) submitted a non-binding offer for the towers in December last year, reportedly offering INR215 billion (US$3.2 billion) for the sites, which are currently held through RCOM subsidiary Reliance Infratel. Apparently many of the sites lack structural capacity for additional tenants, leading to TPG being reluctant to underwrite the initial offer, forcing TGH to begin looking for another partner with which to purchase the towers.

India: GTL Infrastructure net losses narrow 7%

GTL Infrastructure losses narrowed to Rs 92.75 crore in their Q1 2016 update. The company cited improving trading conditions since the MNO market was restructured, and claims to have secured a fair share of incremental tenancies following the 2015 spectrum auction. Unfortunately the news did not prompt a recovery in share price: GTLINFRA was trading at 2.00 INR at time of press, down from a high of 3.35 in January 2016, with the price of 34.8 INR prior to the MNO market restructuring now a distant memory.

Indonesia: XL Axiata slashes debt with sale of 2,500 towers to Protelindo

Telecommunications provider XL Axiata is set to halve its total loans this year through a share offering and a tower sale, a move expected to push the company back into profitability. XL is to hold a rights issue to repay shareholder loans amounting to US$500 million maturing in 2017, and has agreed to sell 2,500 telecommunication towers to local tower operator Profesional Telekomunikasi Indonesia, or Protelindo, for 3.56 trillion rupiah (US$250mn) in cash. XL has signed a deal to leaseback most of the towers for ten years. The move followed a sale of 3,500 towers to STP in late 2014.. Both of the transactions, as previously reported, are expected to conclude by the end of the first half this year.

Protelindo’s tower count is now 14,737.

Indonesia: Protelindo parent raises capital

Protelindo’s parent company Sarana Menara Nusantara (SMN) is looking to raise IDR4.18 trillion (US$316mn) through a rights shares offering to fund expansion and to strengthen capital structure. SMN intends to release 1.02 billion shares at a price of IDR4.105 per share and the company is expecting to get shareholder approval for the offering by 20 May. The proceeds from the sale will be invested in the group’s subsidiary Profesional Telekomunikasi Indonesia (Protelindo), which will use the funds to build new towers and invest in supporting services companies; a small portion will be used to repay Protelindo’s debts.

Indonesia: TBIG to build 1,500-2,000 towers in 2016

Tower Bersama Infrastructure Group (TBIG) is preparing up to Rp 2 trillion (US$145.72 mn) of capex this year to build between 1,500 and 2,000 new towers before year-end. With telco operators actively expanding into 4G networks, the company expects to add 2,000 new tenants by year end. As of Sept. 30 2015, TBI had 19,643 tenants and 12,292 telecommunication sites comprising 11,291 telecommunication towers, according to the company’s records.

Malaysia: edotco to build sites for DiGi

DiGi Telecommunications, Malaysia’s second largest operator by subscribers, has signed a collaboration agreement with infrastructure provider edotco Malaysia. DiGi will gain access to edotco’s more than 3,600 sites, as well as new built-to-suit sites, to accelerate its network expansion programme. The five-year agreement will also allow the pair maximise the deployment of shared sites, helping lower opex and lower their carbon footprint. edotco and DiGi have been collaborating since 2013, and they are both committed to achieving optimised network efficiencies through their partnership.

Malaysia: edotco could IPO

Axiata Group Bhd is considering a plan to list its telecommunication tower unit edotco Group Sdn Bhd on the local bourse. The Axiata Group’s head of investor relations, Clare Chin Kit Ching said the plan for an initial public offering (IPO) was subject to a final decision, which could happen over the next 12-18 months. Currently, edotco manages and owns 16,450 towers across South-East Asia and ASEAN, which generated an annual revenue of over US$2.97mn last year. Axiata is adding new units into the edotco group so the revenue figure is not comparable on a year-on-year basis, with edotco’s recent expansion into Myanmar.

Malaysia: U Mobile to use Sacofa infrastructure in Sarawak

U Mobile Sdn Bhd, has reached an agreement with Sacofa Sdn Bhd to assist with its network expansion in Sarawak. The partnership will enable U Mobile to leverage Sacofa’s telecommunication infrastructure footprint of over 700 sites across the state, and its fibre network to facilitate network expansion and increase QoS. Sacofa has exclusive rights to construct, own and manage communication infrastructure in Sarawak, and will deliver build-to-suit-sites and provide bandwidth leasing services to U Mobile over a period of 10 years as part of the agreement.

Myanmar: Viettel wins right to negotiate fourth operator consortium

Hanoi-based telecoms operator Viettel has been granted the right to negotiate with a local consortium. If the tie-up is approved, the company will join a local group of 11 public Myanmar firms and a subsidiary of military-run Myanmar Economic Corporation, Star High Public Company, to form a joint venture that should receive the market’s fourth licence for nationwide services. Star High Public Company offers access to 1,000 towers and more than 13,000 kilometres of fibre, among other telecoms assets, making the business case for the fourth operator viable. If negotiations are successful, Viettel will pay 49% of a US$300mn licence fee, equivalent to its prospective holding in the company, and the operator has promised to invest US$1.5bn into the country.

Myanmar: OCK enters towerco market, more consolidation imminent

Malaysian managed service provider OCK has secured a contract to build 920 towers for Telenor, marking the company’s debut as an independent towerco. TowerXchange sources suggest OCK are offering a disruptively discounted lease rate of US$900pcm, inclusive of power, compared to prevailing rates in the US$1,200-1,800 range.

The restructuring of the Myanmar tower market may continue with further towerco consolidation – at least one existing towercos is believed to be seeking an exit.

Myanmar: ADB and IFC loan US$300mn to Ooredoo

The Asian Development Bank (ADB) and the International Finance Corporation-IFC, a member of the World Bank Group-are providing a loan of $150 million each to Ooredoo Myanmar for the rollout of a mobile telecommunication network across Myanmar, which will help extend affordable telecom services across the country, boosting economic growth and job creation.

Nepal: Axiata closes acquisition of Ncell from TeliaSonera

Axiata Group has closed the acquisition of a majority stake in Nepalese market leader Ncell from TeliaSonera, in a deal believed to be worth US$1.365bn. Simon Perkins will be installed as Ncell’s new Managing Director. Axiata’s towerco edotco could follow its parent company into the country.

Pakistan: Telenor challenges Mobilink-Warid merger

Telenor Pakistan reportedly has raised concerns over the proposed Mobilink-Warid merger with the county’s Competition Commission, which is reviewing the deal for regulatory approval. Mobilink, and Warid Telecom filed a notification of proposed change in substantial ownership interest of Warid on 15 December 2015, and made the request for permission of merger between Mobilink and Warid before the Pakistan Telecommunication Authority (PTA). The closure of the transaction may be contingent upon one or both parties selling their towers to reduce debt. With upwards of 50% overlap between Mobilink and Warid’s networks (Mobilink has around 10,000 towers, Warid 5,000), the necessity of decommissioning suggests the same towerco may have to acquire both portfolios.

Etisalat are also rumoured to be interested in monetising their towers in Pakistan.

The Philippines: SMC and Telstra discontinue their partnership

Local conglomerate SMC still plans to shake up the Philippine market by launching a third MNO, but it won’t be in partnership with Australian MNO Telstra after talks about a prospective joint venture were discontinued in March 2016. Telenor have been mooted as alternate joint venture partners with SMC. Globe and Smart continue to split the Philippine mobile market, with infrastructure seldom shared and no tower companies active in the market.

Vietnam: IFC considers investment in Golden Towers

The IFC, which has around US$500mn invested in eight towercos worldwide, is considering an opportunity to invest US$20mn Alcazar Capital and ASEAN Towers’ Vietnamese subsidiary Golden Towers’ US$210mn project to roll up 5,800 towers by consolidating existing independently owned towers in Vietnam. There are around 55,000 towers in Vietnam, around 10,000 of which are in the hands of a fragmented ecosystem of local towercos, including Golden Towers itself, which owns around 340 towers.

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