TowerXchange’s analysis of the independent tower market in Asia

Estimated Asian tower count comparisons

To date, towercos own or operate nearly 80% of the 3mn towers across Asia. However this statistic is distorted by the sheer scale of China Tower Corporation and the maturity of the Indian tower market – towerco penetration in the Southern and Southeast Asia (excluding India) stands at 32%. The regional tower industry is a fragmented reality made mostly of towercos focused on single countries, with the exception of companies like edotco and OCK.

Each country presents its own distinctive characteristics and TowerXchange has served the industry since 2014 with a wealth of data and information on their dynamics, players and opportunities. Here is an updated overview of the key facts of the top tower markets across Asia.

Afghanistan: TowerXchange hasn’t performed any extensive research on Afghanistan yet but we believe there are around 7,000 sites in the country. MNOs Roshan, Etisalat and MTN all retain their towers, although each has considered divesting towers, while AWCC did carve out approximately 1,500 sites into its own subsidiary, Frontier Tower Solutions.

Australia: The biggest news coming from down under is that Telstra, the operator that owns the majority of the country’s towers (approximately 8,000) has decided to carve-out all of its non-mobile-related assets including data centres, fibre, copper, subsea cables, poles and more into a separate infraco.

The decision is part of a restructuring plan called Telstra2022 that aims at streamlining the company’s operations and reduce its opex. The operator-led entity, which will be called Telstra InfraCo, will have an initial workforce of 3,000 employees and assets worth AU$11bn and, as explained by CEO Andy Penn in a recent strategy session, “…will not include the mobile network assets including spectrum, radio access equipment, towers, and some elements of fibre backhaul, because these will remain integrated to Telstra’s core customer-focused segments to enable us to effectively manage our strategic differentiation in the market.”

The plan will result in 8,000 net jobs being cut over the next three years, including 25% of executive and middle management roles.

The move is subsequent to the entrance of a fourth operator, TPG Telecom, in the Australian market and the planned 3.6GHz spectrum auction in anticipation of 5G service provisioning, which should take place in October.

The rest of the tower landscape remains pretty much unchanged with Axicom (formerly Crown Castle), Broadcast Australia and a handful of smaller independent towercos owning around 2,600 towers and a further 1,800 towers having been recently erected by nbn, the Government-owned new broadband network.

 

Estimated site count for Australia

Australia-towercount-Jan-2017

Bangladesh: Bangladesh, a market of 30,000 towers of which the large majority remain in the hands of MNOs, is expected to deliver exciting news over the next few months.

In fact, both Grameenphone and Banglalink are assessing potential tower divestments which could bring over 13,000 towers to market and completely reshape the tower landscape.

While to date only edotco operates in the country under a statement of non-objection, this could change soon as a result of the towerco licensing initiative currently underway in Bangladesh.

The Bangladesh Telecommunications Regulatory Commission (BTRC) is set to award four licenses in an attempt to create two separate industries, the network business and the infrastructure services one. In order to do so, on June 25, the BTRC has created a 15-member committee to analyse the applications and the report to the commission with the final evaluations is imminent at the time of writing (July 13).

The licenses will then be granted following the approval of the Ministry of Posts and Telecommunications as well as the fulfilment of any financial requirements by the applicants. To date, known entities who have applied for licenses are:

– edotco Bangladesh

– iSON ECT Tower, a subsidiary of Africa-based iSON Group’s subsidiary iSON Tower

– AB High Tech Consortium, an associate entity of Swedish High Tech AB

– State-owned Bangladesh Telecommunication Company Limited

– BD Tower Business Company Consortium

– FTA Bangladesh Limited

– Jamuna Tower

– TASC Summit Towers Limited

Despite the immaturity of the regulatory regime, infrastructure sharing is well established in Bangladesh, with a prevailing tenancy ratio of around 1.25 on the country’s 30,000 towers. Market leading MNO Grameenphone has been promoting co-location on its towers since 2010 and Robi has leased up its towers to third parties though parent company Axiata’s towerco edotco. Meanwhile VEON subsidiary Banglalink is making yet another attempt to monetize its towers, with greater potential for success under the new regulatory regime.

Estimated tower count for Bangladesh

Revenue market share of MNO in infra-sharing in Bangladesh

Cambodia: With a crowded mobile market consisting of six operators serving a population of 15.5mn, and a regulator that supports infrastructure sharing, there is continued potential for the 9,200 site tower market in Cambodia to grow.

There has been an influx of Chinese operators and vendors prepared to invest heavily in this ‘one belt, one road’ market. While on the operational front, challenges still remain including 20% of sites being off-grid and the risk of landmines in the more remote areas.

The country’s mobile penetration is over 110% to date and that is driving the Government to push for 100% coverage in urban areas and 70% in rural areas by 2020.

Of the 9,200 sites in the country, edotco operates more than 3,100 sites and provides managed services to an additional 1,000. The towerco has recently shared with TowerXchange its plans to build around 200-250 sites per year for the next three years as well as engaging in small cells, IBS and poles deployments.

Local tower builder Camtowerlink also has a modest footprint in Cambodia.

Selected Asian tower market size comparisons, Q1 2018

China: Now covered in China FAQs.

Tower deals in Asia 2008-2018 (excluding carve-outs)

India: M&A and consolidation keep dominating the news across India where MNOs are shaking the market up while towercos seek ways to remain competitive during these tumultuous times.

Vodafone and Idea Cellular are proceeding with their merger plans which should be formalised shortly. In the meantime, they have both divested their tower portfolios to American Tower and both transactions, which added a combined 20,000 sites to the towerco’s portfolio, are now finalised.

The combined entity resulting from Vodafone and Idea’s merger will be called Vodafone Idea Limited. The merger also means that 6,300 co-located tenancies will become single ones for American Tower, without exit penalties.  

Having reached various settlements with its creditors, Reliance Communications (RCom) is now closer to the sale of its assets to Reliance Jio (RJio). RCom will divest its 43,000 towers, fibre and spectrum rights to RJio while the sale of its real estate portfolio in New Delhi and Chennai to Brookfield is uncertain.

Last but not least, Bharti Infratel and Indus Towers have received the approval of the Competition Commission of India for their planned Q119 merger. The combined entity will run over 163,000 towers across India and will be controlled by Airtel and Vodafone.

In terms of the state-owned MNOs, BSNL has received the green light for the carve out of its 66,000 towers into a separate infrastructure unit while the other State-run MNO, MTNL, is considering divesting its 10,000 tower portfolio in an attempt to reduce its debts. BSNL’s carve out could be valued up to US$3bn and analysts are excited by the potential of these towers coming to market as many are in prime locations with considerable tenancy ratio growth potential, having not been proactively marketed before.

Rational MNO consolidation is welcomed by towercos who would prefer to see spectrum holdings consolidated into four or five companies with the capital and appetite to rollout. With India’s 3G overlay around half finished and expected to reach 95% coverage in the next 18-24 months, the 4G rollout has already started in tier one and tier two cities. In the near term, the 4G rollout is expected to have a marginal impact on the profitability of Indian towercos, whilst the majority of BTS are added through ‘loading’ – the addition of a second set of antenna by an existing tenant – but when 4G rollout progresses to adding infill sites for densification, expect to see a significant increase in tower cash flow.

Tower ownership in India today

Indonesia: Protelindo’s holding company, Sarana Menara Nusantara (SMN) has finalised the acquisition of Komet Infra Nusantara (KIN), which is adding 1,400 towers and 2,000 tenancies to the company’s portfolio and is contributing to further consolidating the towerco leading position in the country.

For now, there are no further news with regards to the planned sale of STP, with sources suggesting the process had stalled due to differences in valuation.

Indonesia’s towercos build 3,000-5,000 towers, rooftops and infill sites per year and tenancy ratio growth compares favourably to many other global tower markets, with around 0.13 tenants added per tower per year.

Being one of the most mature tower markets in the world, it comes as no surprise that towercos are gearing up to fiberise Indonesia, with both Protelindo and STP at the forefront of fibre and small cell projects.

Estimated tower count for Indonesia

Japan: Japan is one of the most sophisticated mobile markets in the world. Yet towers are still seen as a source of competitive differentiation, which perhaps explains why initial interest in carving out a towerco a few years ago seems to have tailed off, and why tower count data is so hard to find – readers should consider our estimate a very rough guide. Japan is famous for having the fewest number of subscribers per tower in the world – reportedly around 500 – suggesting a staggering tower count of around 220,000 for a nation of 127mn people and a landmass of just 378,000sq km. 

LTE was launched as early as 2011 by former State-owned monopoly NTT DOCOMO and in 2012 by the other MNOs, SoftBank and KDDI (au). DOCOMO has already started rolling out LTE-A. Japan’s three leading MNOs are believed to have each added up to 30,000 microcells and small cells as infill sites. TowerXchange understands several tower companies are trying to establish themselves in the Japanese market, but to date their penetration remains negligible.

Laos: Last studied by TowerXchange in 2016, The 7,473 towers in Laos all remained operator-captive, but there seemed to be possible opportunities to acquire towers from all but the market leading MNO Unitel, which owns 4,000 towers, and is a 51-49% joint venture between the State and Viettel. The State also owns 51% of number two operator LTC, whose co-investor Shenington Investments may seek an exit. 100% State owned MNO ETL is heavily indebted and needs cash for 4G rollout, while VEON has long sought to exit Beeline Laos, whose towers could potentially be monetised by an acquirer.

Estimated tower count for Laos

Laos-towercount-Jan-2017

Malaysia: Towercos own roughly 64% of Malaysia’s towers, led by edotco’s 4,000 towers carved out of Celcom/Axiata. A further 3,200 towers are owned by 14 different State-backed and other independent towercos, while turnkey infrastructure provider OCK Group owns ~200 sites in this market with plans to build an estimated 70 to 100 more sites in the country. Naza Communications and Omnix Malaysia are also active.

There are an estimated 22,682 towers now in Malaysia, representing almost 2,000 mobile subscribers per tower. A new ground based tower in Malaysia costs around RM300,000 (US$69K). 

Around 1,000 new towers went up in 2015, with Celcom building through edotco and Maxis and DiGi building their own – although DiGi has since signed a collaboration agreement with edotco which includes co-location and new BTS sites. The State-backed towercos also continued to expand, including through over 2,000 rural sites supported by Malaysia’s Universal Service Provision Fund.

It has been estimated that an additional 8,000 structures may be needed in Malaysia for 4G, although much of that demand will be met by microcells, lamp-poles, DAS and IBS. 

Estimated tower count for Malaysia

Mongolia: In 2013 the government separated telecom service providers from infrastructure providers in the challenging 3mn population, 1.5mn sq km Mongolian market. The infrastructure providers, including State¬-owned ICNC, Mobi Network and Sky Network, run towers, active equipment, fibre and microwave backhaul. More than half Mongolia’s ~1,000 towers are shared.

Myanmar: With around 62% of sites in the country owned by towercos, Myanmar remains an exciting market in which to do business for entrepreneurial towercos. To date, there are over 14,500 sites in Myanmar, unequally spread across seven towercos and four MNOs.

The new entrant MyTel sealed a build-to-suit deal with MNTI – one of the latest towercos to enter Myanmar – for 350 sites of which around half have already been built. The operator has already invested more than US$1bn in infrastructure, including the rollout of 30,000km of fibre-optic cable.

In the meantime, edotco has taken over the provision of energy services for 1,250 Ooredoo sites. The deal, which has been discussed in a separate interview in this Journal with Vijendran Watson, edotco Myanmar’s MD, marks a change in the way the towerco operates in the country offer a tower + power model.

Talks about a potential merger between Apollo Towers and PAMEL have been ongoing for several months. The deal would create the largest towerco in the country with a combined portfolio of over 3,000 sites.

In June 2018, KPR TOWERS announced the acquisition of Myanmar Infrastructure Group (MIG) and their 100 towers from majority owners Singapore Myanmar Investco for US$10.8mn.

Stimulated by the network investment commitments of MyTel, TowerXchange has learned of several new towercos now launching in the marketplace including New Tower Development (NTD), Myanmar Technology Gateway (MTG), MNTH, DLRE, CommBiz, ITMB, MAPCO, MNTI, along with potentially a handful more others. Out of the list, MTG was also a previous sub-contractor for Ooredoo and Telenor, building about 200 towers. KBZ Towers is operating as a rooftop-only player, offering space from KBZ Bank branches across the country.

On average, most of the mature towers that are two-plus years old have a tenancy ratio around 1.6, with some portfolios reportedly as high as the 1.8 to 1.9 range. By late 2019, the Myanmar market will certainly have some portfolio tenancy ratios growing t”beyond 2.0 once MyTel rolls out.

Grid power is still unreliable even in major cities and in rural areas often non-existent, so Myanmar’s towers typically have robust backup power systems.

In recent news, it was announced that Yoma Micro Power has raised US$28mn from the IFC, Norfund and Yoma Strategic Holdings for a micro-power plant and mini-grids project that should contribute to powering towers in rural areas through solar-based plants while the mini-grids will provide electricity to local communities.

Lithium batteries are now being tested and solar integration will also be explored. Ooredoo’s dalliance with retaining power assets is now behind them, so all new towers are built on a tower + power business model.

The first ESCO contract was signed in 2018, between new towerco MNTI and Voltalia, an international player in renewable energies. The agreement covers an initial batch of 171 telecom towers, of which 80% are not connected the national electricity grid. The contract is for 10 years, with Voltalia responsible for power supply to the sites at 2kW each, located in the Bao and Ayeyarwaddy regions of Myanmar.

 

Estimated total number of sites in each Myanmar MNOs network (inclusive of co-locations)

Breakdown of ownership of the 14,303 towers TowerXchange estimates have been built to date in Myanmar

Nepal: 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. There have been no tower deals in Nepal to date, but this move by the Axiata Group may pave the way for edotco to enter the market in the near future.

In fact, there is a draft Infrastructure Development and Sharing Regulation put together by the Nepal Telecommunications Authority (NTA) that is currently under review by the Ministry of Information and Communications (MoIC). It introduces a license for the provision of telecommunications infrastructure, though some concerns were raised as the draft appears to suggest that should such license be extended, it would not be available to another provider for five-years, effectively creating a monopoly.  

Some infrastructure sharing appears to be underway, as Nepal Telecom (NT) had indicated in June it will extend coverage to 175 locations within a year, with 138 with “base transceiver stations (BTS) or network extension platforms that will be shared with other phone companies.” The State-owned operator is said to be at the final stage of inviting bids for the procurement of equipment including BTS towers.

TowerXchange will be looking to undertake further market studies for a dedicated report on Nepal’s telecom infrastructure landscape.

New Zealand: There are early signs of a nascent tower industry emerging in New Zealand, where Spark and Vodafone New Zealand have substantial but ageing tower networks, newer entrants 2degrees have leveraged co-location where possible while building a few hundred towers. 2degrees may have an appetite to sell their towers and partner with a towerco on BTS. Parallel infrastructure is substantial, while the need for improved rural coverage, particularly on the South Island where tourist and agribusiness drive demand, has prompted the government’s Rural Broadband Initiative to invest in over 100 towers. A total of around 4,000 ground based towers are supplemented by around 7,000 rooftop sites, primarily used in the larger cities.

Pakistan: Pakistan has four MNOs; Jazz (formed through the acquisition of Warid by VEON’s Mobilink) leads the market, followed by Telenor, China Mobile’s Zong and Ufone (in which Etisalat has a stake). With a relatively low mobile penetration rate of ~73% and a data penetration rate of ~24%, there is significant opportunity for long-term growth in the market.

Towercos have been licensed in Pakistan since 2006 but MNO attitudes towards infrastructure sharing only started to thaw in 2011, initially seeing their networks as a source of competitive advantage.

Towershare-owned Tanzanite built a portfolio of 700 sites in the market, built largely from acquisitions, with the majority of towers coming from previous WiTribe assets. The Tanzanite portfolio, 40% of which were ground based towers, secured tenancies from all major operators, reaching a tenancy ratio of 1.6x before being acquired by pan-Asian towerco, edotco Group for US$88.9mn in 2017.

edotco subsequently joined forces with Dawood Hercules, a listed Pakistani holding company conglomerate to acquire the 13,000 Jazz towers which had been carved out into a subsidiary, Deodar. Dawood Hercules now owns a 45% stake in edotco Pakistan, with edotco Group having a controlling 55% stake.

Whilst several local companies are also licensed as towercos, only AWAL Telecom appears to be trading as such.

MNOs Telenor, Zong and Ufone each retain their tower portfolios. Ufone has been exploring the potential sale and leaseback of their towers in Pakistan for some time. The process was stalled by the de facto merger of PTCL and Ufone, and associated management changes, but Ufone could yet contribute over 6,000 further assets to the pool of commercially shared towers. China Mobile’s Pakistan opco, which trades under the brand name Zong, has around 9,100 sites, of which around 2,000 are co-locations. Telenor is a keen advocate of all forms of network sharing; towers (sharing primarily with Jazz), fibre (sharing with Zong), and has taken a lead role in exploring active infrastructure sharing. Telenor and Zong undertook Pakistan’s first RANsharing trials across around 30 sites, while the Norwegian-owned MNO has also shared IBS, both under the MORAN model where spectrum is not shared.

Significant parallel infrastructure exists, especially in urban areas, implying that decommissioning is likely to be a key part of edotco’s strategy in the future.

Estimated tower counts for Pakistan

 

Philippines: Formerly a sleeper market characterised by the cosy duopoly between Globe Telecom and Smart (PLDT), things became interesting in the Philippines in late 2017 when President Rodrigo Duterte decided to open up the country’s telecommunications sector by inviting foreign investors/players to challenge the dominance of the incumbents. This was followed by a proposal for a common tower policy, opening the floodgates for international towercos to seek an entrance, grow their footprint, and make a mark in this virgin tower market. Globe’s recent announcement on its interest to divest all or part of its tower assets further fuelled excitement.

Comprising of 7,000+ islands and an estimated population of 103mn+, the Philippines has experienced positive economic growth in the past few years, emerging as one of the fastest growing economies in the region. Buoyed by tax reforms, investments in infrastructure, market liberalisation, new foreign policy directions, and more, President Rodrigo Duterte is seeking to rewrite the country’s narrative domestically and internationally. Against this backdrop, perhaps it’s not surprising the telecommunications market is now under the spotlight.

Mobile penetration in the Philippines in 2016 was 122% with 125.6mn subscribers (Smart-PLDT ~62.8mn; Globe ~62.8m). For year-end 2017, subscribers totalled ~118.6mn, with the drop mostly due to a change in reporting methodology from the MNOs, where prepaid subscribers who do not reload within 90 days were excluded, compared to the previous cut off of 120 days. 

The Philippines has a mature mobile market that is not growing as aggressively as previous years, where the last of the non-subscribers are being captured, increasing unique numbers, and incorporating population growth.

The Philippines is also a market where feature phones dominate. Reports suggest phone ownership cycles are increasing, resulting in greater difficulty in persuading consumers to switch to smart phones and get hooked on data to drive growth. With low ARPUs in the country, and consumers wanting services but often not willing to paying for them, the MNOs have a tough road ahead. There is sensitivity around what people are currently paying and what they are willing to pay, and whether the pricing is on a per megabit basis versus a consumption basis.

When news first broke President Duterte was looking to increase telecoms competition and service in the country, it was through an invitation to the Chinese to become the third operator, as bilateral agreements were signed between the two countries in mid-November 2017. Out of the three MNOs in China, China Telecom emerged as the candidate.

Originally President Duterte had suggested aggressive timelines for the third telco being operational by Q1 2018, though prospective parties ran out of time to adequately prepare their bidding documents. Local media reports DICT official citing interest from China Telecom, Japan’s KDDI, South Korea’s LG Uplus, as well as one unnamed operator from Taiwan.

DICT has also indicted interest from three local firms, The Philippine Telegraph and Telephone (PT&T), Now Corporation, and Converge ICT. In this instance, partnerships with foreign entities could provide the technical expertise to run and manage the network and/or additional financial backing.

Currently, the Philippines’ constitution restricts foreign direct investment (FDI) to 40%.

Previously international towercos did not prioritise the Philippines as the duopoly market structure created a glass ceiling on the tenancy ratios. In addition, a reportedly burdensome tax regime, compounded by complex permitting processes further disincentivised investments.

There was no towerco appetite to speak of for the Philippines until President Duterte initiated the introduction of the third MNO in late 2017, and subsequently tasked Ramon P. Jacinto, his adviser on economic affairs and ICT, to implement a common tower policy.

While exact guidelines have yet to be released, what is currently being discussed are for all new builds to be undertaken through towercos, with mandated sharing amongst all MNOs. The towercos are to focus on unserved and underserved areas, while also having the ability to build in Metro Manila. Tower contract bidding and assignment would not be done through the government. There may also be minimum rollout commitments. The towerco would also be treated differently than a telco operator.

Jacinto was quoted by local media as saying: “We have heard the concerns of the telecom operators. We need a win­-win solution that takes away the biggest obstacle of telecom operators (and) removes the headache of obtaining permits and constructing and managing cellular towers away from the telecom operators so that they can concentrate on their core business, providing the proper service to the Philippine public.”

As it stands, all towers remain in the hands of the MNOs, with the government citing an estimated 17,000 across the country. Globe is on the record as having over 8,000 towers to date and Smart-PLDT is to have similar numbers, if not just a little more. Industry sources suggest a more realistic estimate may be around 16,500-16,600 towers overall. There is also likely anywhere from 30-40% overlapping sites as the MNOs have been building their own towers at strategic sites for coverage, especially in the metro cities.

According to Paul Carpenter, Asia Partner of Hardiman Telecommunications, in South East Asia, there are 2,600 subscribers per tower on average. In Japan and China, where 4G is extensively deployed, it is significantly lower. Increasing the total towers in the country to 40,000 would bring the subscribers per tower to below 3,000 and provide coverage and infill capacity at a level similar to that of regional peers in 2017. Therefore, at the very minimum, a doubling of the current totals in the country is required. However, the historical deficit in tower infrastructure in the Philippines (as result of the complicated permitting process and long build times) has resulted in Globe and Smart deploying high capacity configuration sites. As such densification to the levels of that of Japan and China will be unlikely.

Given the number of towers required (minimally up to 34,000 total), the Philippines could be well served by a handful of towercos in the country to take on rollouts, although the most investible sites remain those in dense metropolitan areas.

In recent news, Globe Telecom has confirmed its plans to carve out its tower assets into a newly established infraco. 

The company’s President and CEO Ernest Cu was quoted earlier in July stating that “As a major industry player, we understand what this country needs to improve the internet experience of our customers. Putting up more towers based on global standards within strategic areas will make spectrum use more efficient. We should work together and find all means to supplement the build for towers — either through telcos or tower companies. This in turn will bring us closer to first-world internet connectivity.” 

South Korea: According to GSMA Intelligence, SIM penetration was at 113% among a population of 50.4mn in Q4 2015. South Korea boasts one of the most sophisticated telecommunications infrastructures in the world, cultivating an insatiable demand for high speed mobile broadband among its citizens.

Mobile broadband penetration in South Korea is above 99% and fibre has been widely deployed. South Korea is a three operator market featuring SK Telecom, KT and LG Uplus. The Ministry of Science, ICT and Future Planning (MSIP) has tried multiple times over the years to license a fourth MNO, however, failed again in February 2017 as none of the three applicants (Sejong Telecom, K Mobile, and Quantum Mobile) met the criteria. 

South Korea was the first market in the world to migrate the majority of users to LTE, with LTE-A rollout now well under way. SK Telecom recently noted it will invest KRW 6tn in infrastructure for network leadership in 2017, while maintaining overall capex similar to 2016. Meanwhile, KT is looking to make the 5G experience available at the 2018 Winter Olympics. 

TowerXchange is starting to pick up the first faint signals that towerco activity may be emerging in South Korea.

Sri Lanka: As of the end of 2017, edotco managed 3,366 towers in the country. High levels of bilateral sharing means tenancy ratios are closer to two than one all over the country. Sri Lanka is now mostly covered with 3G, and 4G is driving need for cell site densification. Dialog and Mobitel hold all of the 4G spectrum, and any other players that want to offer this will need to engage in RANsharing. There are around 7,500 towers in the country. 

Bharti Airtel had been rumoured to be looking at selling its 2,500 towers, but seems to have cooled on the idea.

Thailand: TowerXchange last studied the Thai tower market in 2016.

Thailand has a tower market unlike any other in the world! Ownership of towers is in dispute as a function of BOT (Build-Operate-Transfer) concessions that are now expiring. Thailand’s three commercial MNOs were due to transfer 2G infrastructure back to SOEs CAT and TOT. The 2G equipment has little value, but of course the towers do. CAT, which ran the concessions for the 850 and 1800MHz bands, failed to reach an agreement with majority stakeholder DTAC to create a 49-51% JV towerco, into which 11,000 disputed towers were to be injected. Negotiations to create a prospective 12,000 tower JV towerco between AIS and TOT, which ran the 900MHz concession, were called off late in 2015, but the process has resumed with the recent creation of a committee to pave the way for the creation of the joint venture. 

CAT and TOT have started to discuss an informal partnership without a merger, and may consolidate some of their similar core businesses to remain competitive in the post-concession era. At the same time, AIS and TOT are expected to sign a contract signalling the launch of a joint-trial commercial service on the state agency’s 2.1GHz spectrum.

TowerXchange estimate there are 52,483 towers in Thailand, of which 12,183 sit on the balance sheet of DIF, formerly TRUEGIF, a towerco created by True Corp and SCB Asset Management and successfully listed on the Thai stock exchange. DIF has little debt, a high leverage ceiling, and an appetite to consolidate more Thai towers – especially if True reduces their shareholding to increase the perceived independence of the entity. 

A further 10,000 towers were built by AIS and 800 by DTAC outside the concession for 3G usage. True’s non-concession towers sit on DIF’s balance sheet… It all gets very confusing!

The steady lease-up of DIF’s towers is a good sign, but there is little progress towards any joint ventures. With one auction for 900MHz spectrum cancelled after the successful bidder Jasmin failed to pay its first instalment, a re-auction was held in which AIS was the only bidder. The Thai market continues to be complex and unpredictable; this and the 49% FDI limit may deter some investors.

Towards the end of 2016, TOT announced its intention to sign a partnership contract with Advanced Wireless Network (AWN) to help grow its existing 5,320 base stations in the 2.1GHz band. Under the agreement, AWN would roll out 11,000 new base stations for TOT, for which TOT would later purchase the total capacity of the network at the set budget of Bt10bn. AWN is also leasing towers from TOT at Bt3.6bn per year for 15 years, as well as TOT’s 2G-900MHz at Bt2bn per year for a duration of five years.

A September 2017 note by Daiwa Capital Markets suggested growth to the DIF portfolio as TRUE may add more telecom towers and optical fibre into the fund.

Vietnam: According to Vietnam’s Ministry of Information and Communications (MIC), the country had roughly 130mn phone subscribers, with 68.8mn as 2G, 54.2mn as 3G and 7.3mn as landline subscribers as of June 30, 2017.

MIC also noted SIM subscribers for 4G totaled 6.3mn in mid-2017, while a survey by IDG noted actual active 4G users to be 3.5mn, with 88% living in Hanoi and Ho Chi Minh city. Against a population of ~93mn, smartphone penetration has reached 55% at ~48mn devices.

When it comes to the MNO landscape, military-owned Viettel leads the pack; while state-owned MobiFone (Vietnam Mobile Telecom Services, subsidiary of VNPT) and Vinaphone (VNPT) occupy the number two and three spots. Both MobiFone and VNPT have been urged by the government to complete their equitisation by 2018 and 2019 respectively.

The market has two other significantly smaller players which are Vietnamobile, a joint venture of Hanoi Telecom and Hutchison Asia Telecom Group, and Gtel now owned by the Ministry of Public Services and formerly known as Beeline when it was owned by VEON.

Currently there are an estimated 70,000 towers/structures in the country, up from ~55,000 in June 2015.

The towerco ecosystem in Vietnam is truly fragmented, with tens of towercos owning portfolios made of anything between five and 100 towers. The majority of tower ownership remain in the hands of the MNOs.

Malaysia-based OCK is currently the market leader, with ~2,000 towers acquired from Southeast Asia Telecommunications Holdings Pte. Ltd. (SEATH) for US$50mn in January 2017. This portfolio had been built up over ten years by VinaCapital, who also sold its ~120 IBS portion to JTOWER of Japan for US$10.2mn the summer of the same year.

Golden Towers is the other known towerco of some scale, at 350 towers. And there is said to be another towerco with 600 to 700 towers, though TowerXchange has not yet been able to verify this.

Lease rates are all denominated in local currency and while amongst the lowest in the region, indicate ample room for growth. Due to inflation and advancements in the country, prices are surging and this include land rentals fees also.

Tenancy ratios are low, ranging between 1.2 and 1.3. With no official mandate for infrastructure sharing in the country, the MNOs still build the bulk of their towers. Sharing between MNOs also tend to be limited, and when they do it is on a barter basis rather than commercial.

Once operators start working with towercos, they tend to outsource every aspect of the deployment and this may very well represent one of the limitations in the advancement of towercos across Vietnam. In fact, MNOs employ a large workforce to deal with infrastructure and large-scale outsourcing could lead to the undesired effect of employment loss at the State-owned and military-owned entities.

In conclusion, growth opportunities remain in Vietnam, as the government has introduced more MNOs to increase competition and affordability of communications. With 4G rollout in place and 5G in the future, more sites will be needed for capacity and tower sharing should very much play a role<

Estimated tower ownership in Thailand

Thailand-towercount-Jan-2017

 

Towerco penetration in Asia now and forecast for Q418

Vietnam: For updated details on the Vietnam towerco market, please read “Vietnam: towerco and supplier opportunities in 2018”.

Asia heatmap

Comments (3)

It doesn’t seem to make sense that South Korea only has 30K towers as the country has one of the most extensive networks there. What do you think?

Kieronbackup

We haven’t studied South Korea in detail as there are no towercos.

Kieronbackup

Thanks to a recent tip we can attribute around 1,000 of those unidentified towers in Malaysia to UMobile.

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