Reshaping the Oman telecom towers market

Unlocking tower investment opportunity; Oman Tower Company at the forefront of regional change

Read this article to learn:

  • Drivers behind the initiation of Oman Tower Company
  • The dynamics of infrastructure sharing in Oman
  • Future BTS partnerships with the region’s current and new MNOs
  • Principal challenges of building and maintaining towers in the region
  • The future vision and strategic direction of Oman Tower Company

In February 2018, Oman 70 Holding Company, AktivCo (Camusat’s investment arm) and the Omani Government set up Oman Tower Company (OTC). The company plans to build approximately 600 towers in its first five years, and has an interest in acquiring or managing the existing portfolios of Oman’s MNOs.

There are approximately 5,000 ground based towers in Oman, roughly split between the two operators. In terms of rooftop sites there is some variation in the figures being reported to TowerXchange, with lower end estimates suggesting 5,000 rooftop sites and upper end estimates suggesting 10,000. Omantel are understood to be increasing their tower count by about 4-5% per annum, suggesting an average of around 100-120 new towers are built by the operator each year. For Ooredoo, similar numbers are forecast. Infrastructure sharing has been limited to date, with current estimates suggesting approximately 15% of towers are shared. Sharing has now started to increase as both MNOs aim to execute the rollout of 4G more cost-effectively.

A third MNO license was recently awarded to Oman Future Telecommunications, which is in a strategic partnership with Vodafone. This presents a further build-to-suit opportunity for OTC. Rumour has it that Omantel might sell up to 2,500 ground based towers. We take a closer look at the monetisation opportunities of this future sale together with infrastructure sharing, rollout of 4G in rural areas and more for Oman Tower Company.

Majid Al-Kharoosi, Managing Director, Oman Tower Company will be speaking at TowerXchange Meetup MENA in Dubai on the 28th and 29th January, Oman Tower Company will also be running a closed-door Buyer Briefing, see more details here.

Download TowerXchange Meetup MENA 2020 prospectus

TowerXchange: Please introduce Oman Tower Company to readers who may not have heard about your launch in Oman.

Majid Al-Kharoosi, Managing Director, Oman Tower Company:

Oman Tower Company was established in early 2018 by local investment entities and pension funds with an international strategic partner, for the purpose of building, operating and leasing telecommunication towers and associated infrastructure including rooftop towers, equipment shelters, distributed antenna systems and power systems.

TowerXchange: Why and how has the Omani government supported infrastructure sharing in the country?

Majid Al-Kharoosi, Managing Director, Oman Tower Company:

The Government of Oman, represented by the Ministry of Transport and Telecommunication and the Telecommunication Regulatory Authority, is concerned about the multiplication of telecom towers, often redundant, built by mobile operators or government agencies, with limited coordination and sharing. Towers are often built with capacity to serve only the needs of their owners. With a third MNO in its launch preparation phase and other ongoing telecom projects in the public sector, it has become critical to coordinate and rationalise tower construction, to avoid double investment, excess usage of land and visual pollution.

The Government has supported the creation of OTC, which is 70%-owned by various public entities, and has fostered negotiations with mobile operators for build-to-suit agreements. The Government has also supported OTC in entering into tower management agreements with owners of several public tower portfolios.

TowerXchange: What is the current status of Oman’s third MNO? How do you anticipate Vodafone’s partnership with Oman Future Telecommunications accelerating rollout? And how what role would Oman Tower Company like to play in supporting their rollout?

Majid Al-Kharoosi, Managing Director, Oman Tower Company:

The launch of a third mobile operator was officially announced in September 2019, with a commercial launch scheduled for mid-2020. OTC will provide the towers needed by the third mobile operator, both ground based and rooftop, under a build-to-suit agreement. This agreement may cover other infrastructure required for 5G like street light poles, micro-cell locations, DAS, et cetera. OTC will also play a role in the co-locations of the third MNO on other operator’s towers.

TowerXchange: Please introduce the tower market structure in Oman.

Majid Al-Kharoosi, Managing Director, Oman Tower Company:

There are more than 5,000 ground-based towers in Oman and a similar number of rooftop sites, mostly owned by MNOs, with the rest being owned by various governmental entities. To our knowledge, less than 1,000 of them are currently shared. OTC aims at building the majority of future towers in the country, mainly as build-to-suit, but also under other business models including capex/management and revenue sharing.

TowerXchange: Is it correct to characterise Oman’s 4G network rollout as mature and almost complete?

Majid Al-Kharoosi, Managing Director, Oman Tower Company:

4G rollout is mostly complete in urban areas, but the country has vast rural areas currently under 2G coverage, where 4G is still being rolled out progressively.

TowerXchange: Congratulations on the MOUs Oman Tower Company signed with the country’s two MNOs, Omantel and Ooredoo earlier this year. Can you share a little about what you will be building for them, and the vision for the partnership?

Majid Al-Kharoosi, Managing Director, Oman Tower Company:

Oman Tower Company has signed a full Master Lease Agreement with Omantel and Ooredoo, covering the build-to-suit of ground based and rooftop sites and collocation on managed sites. OTC will be building and leasing the majority of their future towers. OTC expects to extend this partnership to in-building solutions and off-grid power systems. OTC believes that such partnerships will add value to the Omani telecom market and make it easier for all MNOs to provide high quality services at an optimised cost, especially in rural areas.

TowerXchange:  What is the current extent, and future vision for, the fiberisation of your towers? And how does Oman Tower Company’s partnership with Oman Broadband feed into that vision?

Majid Al-Kharoosi, Managing Director, Oman Tower Company:

Oman Tower Company has signed a partnership agreement with Oman Broadband to accelerate the connection of existing and future towers to fibre optic, allowing fibre to be accessible to all operators under Oman Broadband’s equal-access terms. The dual objective is to increase transmission capacity and reliability, while freeing up tower space for future radio antennas.

Oman Broadband has a mandate similar to Oman Tower’s; rolling out telecom infrastructure and leasing it to all operators, in an open access, equitable and affordable manner. OTC and Oman Broadband’s interests are aligned and the collaboration is very close, especially in preparation of 5G rollout by MNOs.

TowerXchange: What are the principle operating challenges to building and maintaining towers in Oman?

Majid Al-Kharoosi, Managing Director, Oman Tower Company:

Oman has a very challenging geography and climate. It is a vast country with a relatively significant and scattered rural population, with a 700km long, 3000m high mountain range in the North, sand dunes in most of the South, exclaves (Madha and Musandam), islands and fjords accessible only by sea. It also has oil & gas fields spread across large areas which would otherwise be uninhabited and now require mobile coverage. The so-called “Empty Quarter” (which is empty only in name), is regularly shattered by sand storms. The coastline of more than 2,000 km is exposed to corrosive maritime air, tropical storms and the Salalah region receives a three month annual monsoon. For all these reasons, Oman faces a very high telecom infrastructure cost in relation to its population, which is also an opportunity to encourage infrastructure sharing.

TowerXchange:  Have you been able to use local partners to manufacture, install and maintain your towers? Has there been opportunity for international suppliers to participate in your rollout and in Omani towers in general?

Majid Al-Kharoosi, Managing Director, Oman Tower Company:

Oman Tower Company is working with local partners to build and maintain its towers, with focus on supporting small and medium enterprises. OTC is reviewing the options for local tower manufacturing, although limited volumes will be a challenge.

TowerXchange: How have you found the business model, operations and culture of your towerco has had to be adapted from towercos in the rest of the world to suit Omani requirements and culture?

Majid Al-Kharoosi, Managing Director, Oman Tower Company:

The Omani business culture values the ownership and control of fixed assets. It has required time and pedagogy to convince our partners of the benefits of the “towerco” model, similar to that of other countries. As a publicly-controlled entity, OTC pricing has to be cost based, with a higher pricing granularity than usually seen elsewhere. The OTC business model is also more collaborative than the typical build-to-suit model, with significant tenancy discounts.

Oman Tower Company proudly supports the Government’s objective of local employment and training of young graduates. OTC’s “omanisation” rate exceeds 95%. We also have a large number of fresh graduates under publicly sponsored training programmes.

TowerXchange:  There has been speculation that Omantel might sell up 2,500 ground based towers, and up to 5,000 rooftop sites. Would Oman Tower Company be interested to acquire such assets, if they did come to market?

Majid Al-Kharoosi, Managing Director, Oman Tower Company:

Oman Tower Company is working closely with MNOs to work out a solution that will optimise the value of their tower portfolios, while serving Oman as a country and generating savings to the telecom sector as a whole. OTC is ready for any tower monetisation options that would suit the portfolio owners and add value to the country.

TowerXchange: Finally, please sum up Oman Tower Company’s future vision of your role within, and the development of, the country’s mobile infrastructure.

Majid Al-Kharoosi, Managing Director, Oman Tower Company:

Oman Tower Company’s objective is to contribute to the development of the Sultanate by mutualising, optimising and consolidating the existing and future tower infrastructure in the country, thus freeing up investment capacity for telecom operators to accelerate the rollout of new wireless technologies, while reducing the cost to the end user.

Majid Al-Kharoosi, Managing Director, Oman Tower Company will be speaking at TowerXchange Meetup MENA in Dubai on the 28th and 29th January, Oman Tower Company will also be running a closed-door Buyer Briefing, see more details here.

Download TowerXchange Meetup MENA 2020 prospectus


Oman Telecoms Market

Oman has two MNOs, Omantel and Ooredoo as well as two mobile resellers, Renna Mobile and Friendi Mobile. The two key operators, Omantel with 42.7% market share, Ooredoo Oman with 44.7% and the two resellers with 12.6% (TRA Oman, Q2 2019). Oman remains behind its neighbours Kuwait and Bahrain in terms of internet usage as mobile broadband penetration of 89% of total population and fixed broadband of 72%. Broadband service is getting momentum in Oman with key investments in fibre and some internet of things trials.

ARPUs remain under pressure for both operators due to tough macro-economic conditions since the 2014 oil crisis and regulatory changes with OMR 6.6 (US$17) reported by TRA Oman in Q2 2019. With a Vodfone-linked third operator entering the market in Q1 of 2020 we expect to see more pressures on APRUs. Omantel and Ooredoo have also felt further pressures from an increase in MNO royalty fees from 7% to 12% and a tax increase from 12% to 15%.

The rollout of 4G into rural areas is underway and Oman Broadband’s mandate to allow fiberisation to all operators is significant to the success of 4G rollout. As part of the county’s 2040 strategic vision, Oman’s Telecommunications Regulatory Authority (TRA) granted Omantel and Ooredoo rights to use a 100MHz block of 5G spectrum to introduce a range of advanced and innovative services in the coming years.  It is expected that in the next five years, 4,400 base stations will be constructed by Omantel and Ooredoo and 1,000 new BTS will be deployed in 2019-2020.


 

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