Towerco penetration across Asia is 78.9%, falling to 19.8% if one excludes China (100% penetration) and India (71.2%). From the positive moves towards infrastructure sharing in Bangladesh and the Philippines, to a new phase of deals and BTS activities in Myanmar, the region is ripe with changes and excitement. TowerXchange is once again offering its readers an exclusive and updated analysis of the dynamics of each key market across Asia, with enhanced coverage of up and coming ones such as Bangladesh, the Philippines, Myanmar and Vietnam, while keeping a close eye on maturing and yet evolving landscapes such as India and Indonesia.
Afghanistan: Afghanistan has five MNOs, Afghan Wireless (AWCC) which is the country’s fastest growing MNO, Roshan which is funded by the Aga Khan Development Fund and is the country’s largest MNO, multinational players MTN (which has hinted at exiting the market) and Etisalat, and newcomer Afghan Telecom which is part of the Ministry of Communications and Information Technology.
Telecommunications remains an important sector for the Afghan government, with Afghan Wireless understood to be the largest tax payer in the country. Each of the operators own pretty much of all of their sites, with the MNOs understood to have between 1000-1500 towers each. The Telecom Regulatory Authority of Afghanistan (ATRA) states that there are 7,191 base stations in the country, and with limited infrastructure sharing one can assume that a rough proxy for the number of towers.
Networks are better established in Northern and Central regions, although Afghan Wireless is still investing in Southern regions of the country. Since the MNOs entered the market in the early 2000s, the security situation has deteriorated significantly. The Taliban demanded the shutdown of a significant number of sites to avoid surveillance by national and international security forces; where these demands were not met many sites were blown up. MNOs have been reluctant to invest and so there has been little activity in terms of new tower build or co-location. Frontier Tower Solutions had operated in the market in the earlier days, building, operating and maintaining sites for Afghan Wireless but the towerco has since wound up operations in the country.
99% of sites run on gensets – even in cities – and the biggest challenge is getting fuel delivered to sites. Solar solutions had been examined but the payback period means that MNOs have been reluctant to invest. There are few major international contractors operating in the market outside of the military (with foreign troops also having massively reduced their presence, a factor which caused a drop in subscriber numbers) although TowerXchange has heard rumour about one multinational MSP offering ESCO-like services in the market.
In spite of the challenging conditions, coverage in the market has been described as “fairly okay”. There are 30.4mn subscribers with mobile penetration sitting at 89% (source: ATRA) and 4G coverage is available in major urban areas, where data usage continues to grow faster than expected. In early 2018, the ATRA agreed to provide US$32.1mn of funding to deploy 250 base stations in rural and remote areas. Roshan will deploy 137 sites, Afghan Wireless 84 sites and Afghan Telecom a total of 29.
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 before the end of 2018.
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
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 with both Grameenphone and Banglalink assessing potential tower divestments which could bring over 13,000 towers to market and completely reshape the tower landscape.
Tower divestment might be on the cards also in light of the recent award of four towerco licenses by the Bangladesh Telecommunications Regulatory Commission (BTRC) to edotco Bangladesh, iSON Tower (now renamed Kirtonkhola Tower), AB Hightech Consortium and TASC Summit Towers.
The goal is for licensed towercos to eventually own, rollout, manage and maintain most telecom towers across the country while also engaging in a nationwide rationalisation of the existing pool of 30,000 towers in Bangladesh. Decommissioning unutilised assets, strengthening old ones to make them apt for co-locations while densifying urban networks should be among the top priorities of Bangladesh’s towercos.
In the meantime, MNOs are required to roll back their existing co-location agreements by 2023. Bangladesh’s MNOs have shared towers extensively both on a swap and on a commercial basis, with over 6,500 tenancies on third party towers in the country, representing a prevailing tenancy ratio of over 1.2x. In terms of new builds, MNOs will be able to request the approval of the regulator to deploy sites only in the event of towercos refusing to take on the project.
More details about Bangladesh have been published in the recent editorial “Bangladesh opens up to towercos.”
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, Q3 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 is now called Vodafone Idea Limited. The merger also means that 6,300 co-located tenancies are set to 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.
The merger between the two entities is set to counteract the negative impact that the MNOs’ consolidation is having on towercos’ revenues, growth and tenancy ratios. In their Q318 results, both Bharti Infratel and Indus Towers reported a considerable decrease in their tenancy ratios, with Indus’ going from 2.43 to 1.84 and Bharti’s from 2.41 to 1.96 in the last year.
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. Moreover, Protelindo acquired around 300 km of fibre infrastructure on six islands that will improve the company’s FTTT capabilities.
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 understand several tower companies are trying to establish themselves in the Japanese market, but to date their penetration remains negligible.
Laos: China Tower Corporation (CTC) has announced a joint venture with the government of Laos in which CTC will own a controlling 70% share in a joint venture National tower company.
The move makes sense for all stakeholders: as CTC’s first overseas venture, the investment is in the ‘One Belt, One Road’ footprint; while the government has significant stakes in all four MNOs in Laos since their acquisition of VEON’s 78% stake in Beeline. Laos has around 8,000 towers, around half of which were built for market leader Unitel, itself a joint venture between a State Enterprise and Viettel. There had been no known towercos in CTC prior to the entrance of CTC.
Estimated tower count for Laos
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). 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 around 15,827 sites in Myanmar.
The new entrant MyTel sealed a build-to-suit deal with MNTI – one of the latest towercos to enter Myanmar – for 400 sites of which 371 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. IGT also overpassed 3,000 towers and is building 250 more sites before the ends of the year.
The country is definitely moving towards consolidation. TPG has finally announced the acquisition of Pan Asia Majestic Eagle (PAMEL). The American investor will add PAMEL’s 1,300 towers to its existing portfolio of 1,800 Apollo-owned sites, with an enterprise value of approximately US$1bn. Earlier this year, 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.
On average, most of the mature towers that are two-plus years old have a tenancy ratio around 2.0.
Grid power is still unreliable even in major cities and power remains the main issue for the industry, with towercos and MNOs relying on gensets and batteries while exploring the benefits of hybrid systems, renewables and lithium-ion batteries to power and cover their operations.
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.
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.
Myanmar market share (subscribers)
Breakdown of ownership of the 15,827 towers 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. It has also been suggested that the license fee for the proposed license may be prohibitive to many international investors’ participation.
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.
We will release a detailed Nepal market study in 2019.
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. However, the deal with scrapped this past September.
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.
There has been extensive infrastructure sharing between operators but 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. TowerXchange estimate the prevailing tenancy ratio (the average number of tenants across all towers in the country) to be around 1.25 in Pakistan, with a clear pathway to 1.5. Of around 10,000 co-locations in the country, most originate from barter arrangements, with some application of commercial lease rates, but more often offset against one another so no cash changes hands.
Pakistan’s MNOs cite power as the number one operational challenge in the market, followed by security and landlord issues. While Pakistan’s electricity grid remains unstable, and outages can last eight or more hours, the situation has improved notably in recent years. Backup diesel genset runtime is being reduced at sites on the country’s better grid connections, with DGs increasingly being removed from such sites. edotco will offer a full tower+power service in Pakistan, meaning they will lease tower and ground space as well as providing DC energy.
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. This was followed by a proposal for a common tower policy, opening the floodgates for international towercos to seek an entrance. Globe’s recent announcement on its interest to divest all or part of its tower assets further fuelled excitement.
After several delays, The Department of Information and Communications Technology (DICT) recently announced that a temporary third operator will be selected in November. Based on the latest Terms of Reference, the most important criteria is now national population coverage, which was weighed at 40%. The weighting for capex and opex commitments was decreased on the last draft to 35% with the weight for minimum average broadband speed increased to 25%. The expenses are definitely a major component and the third player will need to shell out between P140bn and P240bn over a five-year commitment period.
A total of eight companies have already bought the necessary bid documents. These include five local companies: PT&T, NOW Telecom, Udenna Corporation, LCS Group of Companies and TierOne Communications, and a fifth undisclosed local bidder. Prospective international players include China Telecom, Norway’s Telenor and Austria’s Mobiltel Holding GmbH. DICT will be accepting new contenders until November 7 and Converge ICT Solutions Inc. is expected participate in partnership with KT Corp. Locally, TransPacific Broadband Group International Inc. and Easy Call Communications Philippines are reportedly interested. Internationally, interested foreign investors include Surya Telecom (India), LG Uplus Corp. (South Korea), KDDI Corp. (Japan), Viettel Group (Vietnam) and Vodafone (UK).
Mobile penetration in the Philippines is 122% with 126.3mn subscribers (Smart-PLDT ~62.9mn; Globe ~63.4m). The Philippines has experienced a notable increase in mobile broadband penetration over the last few years and even though the market is quite mature, strong growth will continue at a low pace in the near term. Both Philippines operators are investing in 3G network improvements while preparing for the move from 4G to 5G.
With the third telco selection process imminently finishing, we can expect a third operator to launch services in late 2019 at the earliest. This third player irruption will generate a more aggressive price competition, drive down ARPUs in the short-term and potentially incentivise the creation of at least one big, independent infrastructure player. In July, DICT’s acting Secretary Eliseo Rio released the initial guidelines of the Common Tower and Pole policy, while Ramon P. Jacinto welcomed Globe’s initiative of selling-off their towers to a potential towerco.
Those guidelines stated that a maximum of two towercos would be accredited by the DICT, while NTC would be in charge of regulatory implementation. The agreed maximum rollout capacity of each towerco will be 25,000 sites for a seven-year period, and each infrastructure provider is projected to invest US$2bn.
As it stands, all towers remain in the hands of the operators and we estimate that Philippines has around 17,850 sites across the country. Globe is on the record as having over 8,000 towers to date and Smart-PLDT reported 9,850 sites, while industry experts estimate that the country requires a total of 70,000 sites.
Last August, Globe secured the approval from the Securities and Exchange Commission to establish a separate tower holding company, which will operationalize the divestment of all or part of its tower assets through a separate entity. The company has confirmed to TowerXchange that they are deeply involved in this process. Previously, business conglomerate Isoc Holdings Inc. submitted an unsolicited proposal to DITC to participate in the initiative, committing to invest P100bn in tower construction.
Operators are set to keep investing in 4G and 5G deployment as well as modernising existing 3G networks. The frequency that 5G requires will also drive the deployment of new antenna technologies and urban typologies. In order to deliver a better customer experience using 5G, Philippines MNOs will have to put up more cell towers, antennas, and base stations across the nation, especially in cities where line-of-sight transmissions are more difficult.
Moreover, fibre will present great opportunities for the industry. PDLT’s ongoing nationwide fibre-optic rollout program has already set up a number of so-called ‘PLDT Smart City’ areas. A consortium of Filipino-Chinese developers is working on an extensive smart city project that will give rise to a mixed-use development off the coast of Manila. By next year, Smart aims to double the number of LTE base stations to about 17,700 and raise the number of LTE-equipped cell sites to over 6,800.
The imminent entry of a third operator and the tower sharing mandate make the Philippines the must-watch Asian tower market of the moment. There is plenty of potential here, especially if the government is able to come through with significant improvements to permitting approvals.
South Korea: According to GSMA Intelligence, by the end of 2017 mobile broadband penetration reached 100% with SIM penetration at 116% among a population of 51.1mn. South Korea boasts one of the most sophisticated telecommunications infrastructures in the world, with fibre widely deployed.
South Korea is a three operator market featuring SK Telecom, KT and LG Uplus, all three of which emerged with 3.5GHz and 28GHz 5G spectrum in the June 2018 auction. All three are targeting a simultaneous launch on ‘5G Korea Day’, targeted for March 2019.
SK Telecom and Contela have announced a 5G small cell project, whileKT Corp has unveiled a US$20.4bn 5G investment plan, and inaugurated a 5G Open Lab to test and verify industrial applications of 5G. KT estimates that 5G will create US$26.9bn worth of socio-economic value in 2025, representing 1.5% of South Korea’s GDP.
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 ~3,375 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: With five operators and over 50,000 towers, Thailand could be the perfect tower market but to date, only one company (DIF) acts in the infrastructure industry as a fund with around 13,000 towers and over 1mn km of fibre.
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.
In August 2018, an auction of spectrum in the 4G-suitable 1800MHz band took place. However, in spite of much buzz around it, only two operators bid and were awarded just one block each.
#1 and #2 MNOs AIS and DTAC took part in the auction and only two of the nine available blocks were sold. Telecom regulator NBTC is planning an auction for the unsold blocks later this year with some critical amends to the auction’s terms.
Vietnam: According to the Ministry of Information and Communications (MIC), Vietnam has now 128mn mobile phone subscribers. Although the market is quite mature and saturated, its telecom industry still generated around US$16.8bn in 2017 (a 7.3% growth YoY) and the local Government is actively promoting the development of telecom technologies and IT initiatives to meet the objectives of sustainable economic growth and international integration.
Viettel undoubtedly dominates the game and has around 50% market share with 63mn subscribers. State-owned MobiFone serves approximately 34.8mn customers, followed by VNPT-Vinaphone with 20.5mn. Smaller players Gmobile, with 6mn and Vietnamobile with 3.7mn are trying to increase their piece of the pie and compete with the three giants
Currently there are an estimated 90,000 towers in Vietnam, and the majority of them remain in the hands of the operators. The towerco ecosystem is still fragmented and there are dozens of very small tower companies owning portfolios of less than 100 sites.
With ~2,000 towers, we can consider Malaysia-based OCK the market leader. OCK is not planning to build more assets due to mobile market constraints but they are very keen on consolidating their portfolio and TowerXchange has learned that they are currently negotiating some acquisitions.
Golden Towers and Nisco are the other known towercos of some scale with 350 and 300 towers respectively. The former is now building 100 more towers after closing a BTS deal with MobiFone.
Tenancy ratios are around 1.5 on occupied towers (although Vietnam has thousands of naked towers) and MNOs do not have plans to sell and leaseback any tower assets, but there is still much for growth and positive expectations. Lease rates, which are all denominated in local currency, have grown recently due to inflation and an increase in rental fees. The average cost is VND15mn per month (US$640 per month), notably lower than Myanmar (US$900-1500) but still higher than India (US$550) and China (US$350).
The market has almost reached its peak in terms of subscribers but everybody across the value chain can find a role in this challenging context. While the government still needs to grasp the benefits of infrastructure sharing, operators can improve their efficiency and relieve their balance sheets by modernising their networks and transferring some responsibilities to towercos. Infrastructure providers can find great opportunities in urban areas, where fibre, 4G and the future deployment of 5G will require significant network investment. Ultimately, vendors can also play a substantial role in this modernisation process by providing more sophisticated monitoring systems and helping both towercos and operators in optimising their assets.