The Southeast Asian telecom infrastructure landscape offers plenty of opportunities for towercos and telecom operators. Supportive government policies, high customer demand and the introduction of next generation technologies such as 5G have had a positive impact on telecom infrastructure growth across countries such as Vietnam, Indonesia, Cambodia, Myanmar, the Philippines and Malaysia. A look at how telecom infrastructure has evolved in some of the Southeast Asian markets and how it is expected to progress going forward…
Indonesia
Indonesia has one of the most mature tower markets in the world, with high tenancy ratios and strong market caps. At present, the tower market is dominated by three major tower companies, namely, Protelindo, Tower Bersama and STP, which own around 14,854 towers, 13,375 towers and 7,000 towers respectively. Further, other players such as IBS Tower, KIN, Balitower, Centratama Telekomunikasi and Persada Sokka Tama also own towers in the country. Telecom service providers Telkom, Telkomsel, Indosat and XL Axiata also have a significant tower footprint.
Increase in data demand and a populated mobile network operator (MNO) landscape have driven the growth in Indonesia’s tower market. New 4G roll outs planned by Indosat Ooredoo and Hutch are also driving the demand for new sites and co-locations.
As per industry estimates, Indonesian towercos add 3,000-5,000 towers, rooftops and infill sites and about 0.13 tenancies per tower during a year.
In recent years, MNOs have monetised their assets to release financial pressure as well as to gear up for 5G investments. Indosat Ooredoo sold 3,100 sites to Mitratel and Protelindo for a combined price of $452 million. Further, in February 2020, XL Axiata, a subsidiary of Malaysia-based Axiata Group, divested tower assets worth $296 million to local towercos Protelindo and Centratama Menara Indonesia (CMI), to help lower debt. Protelindo will acquire 1,728 of XL’s towers and CMI 1,050.
Myanmar
Myanmar is one of the most dynamic markets in Southeast Asia with 62 per cent of the assets owned by towercos in the country. Telecommunications in Myanmar has come a long way with favourable government reforms like the implementation of a modern telecom law and a transparent licensing process for both operators and tower companies, pushing the industry forward.
Earlier, in 2019, Telenor Myanmar had extended its 4G network to cover 307 of Myanmar’s 330 townships via more than 6,100 LTE sites nationwide. Further, the company also deployed 856 new LTE sites during the first quarter of 2019.
As of October 2019, there were 16,000 sites in Myanmar with the tenancy ratio in the country standing at around 2.
In November 2019, Myanmar Post and Telecommunications (MPT) signed an agreement with Japan’s Sojitz Corporation to upgrade its infrastructure, connecting the cities of Nay Pyi Taw, Yangon, Mandalay and the Thilawa special economic zone (SEZ). The leading operators in the country are currently testing 5G and, according to the regulator PTD, the country could be launching the technology in the next two to three years.
Philippines
After two years of regulatory disputes, in July 2019, the Philippines’ Mislatel finally received its mobile licence and has been rebranded to Dito Telecommunity. The operator committed to providing 37 per cent coverage at an average internet speed of 27 Mbps in its first year, with an initial investment of more than $2.5 billion. It aims to build around 3,000 sites in less than a year. Dito has also struck common tower sharing agreements with the Leo Technologies Infrastructure Corporation and Alt-Global-Solutions, Inc., as it seeks to accelerate the roll out of mobile services nationwide.
The Philippines’ Department of Information and Communications Technology (DICT) is soon expected to release the final terms of its common tower sharing policy, which will be crucial for the successful creation of a tower industry in the country. To this end, the regulator has already signed 22 memorandums of understanding (MoU) with local and international tower providers that aim to be involved in the construction of the 50,000 new sites that the Philippines needs over the next five years.
PLDT and Globe have been engaging and closing commercial roll-out agreements with international and local towercos. In December 2019, NOW Telecom signed an MoU with Aboitiz InfraCapital and Frontier Tower Associates to support the government’s common tower initiatives. Under the MoU, the parties agreed on the leasing of build-to-suit sites, towers and passive telecom infrastructure and facilities that will be made available for the installation of NOW’s equipment to provide telecom and internet services.
Globe Telecom also inked a deal with the American Tower Corporation subsidiary Transcend Towers Infrastructure to build new towers in the country. As per the deal, Transcend will initially construct 150 new sites for the Ayala-led Globe in North Luzon. Earlier in 2019, it had also entered into separate tower deals with infrastructure operators Aboitiz InfraCapital and Frontier Tower Associates Philippines (FTAP) to improve connectivity in the regions of Cebu, Davao and Olongapo. In the same year, PLDT’s mobile arm Smart Communications also picked Aboitiz InfraCapital and partner FTAP to drive nationwide connectivity through the construction of a “common” tower network.
Cambodia
Cambodia’s tower market is dominated by two players – edotco and Cam Towerlink. Cam Towerlink, in partnership with UNESCO, is currently building towers in and around Angkor Wat. As of October 2019, edotco, which recently acquired 325 sites from Seatel, owns around 2,680 towers and manages a further 1,000 MNO sites in Cambodia,.
The country’s leading operators Cellcard, Smart Axiata and Metfone have expanded the reach of their LTE and 4G services and are set to keep extending their networks. Furthermore, with the establishment of Chinese-backed MNOs Seatel, Kingtel and Cootel, competition has intensified, which is set to drive new deployments in the telecom infrastructure landscape. Market experts expect 200-300 new towers to be built in Cambodia per year until 2021.
Malaysia
Malaysia is one of the most advanced and innovative tower markets in Southeast Asia with towercos owning around 64 per cent of Malaysia’s towers. Currently, there are an estimated 22,800 towers in Malaysia, representing almost 2,000 mobile subscribers per tower.
At present, edotco owns over 11,000 towers in Malaysia, following the initial carve-out of 4,000 sites from Celcom (Axiata). The OCK Group owns around 400 sites. Further 3,200 towers are owned by 14 different state-backed and other independent towercos.
The Malaysian government is actively focusing on 5G deployment. It has even created a 5G task force to support the transition and help the industry with its roll-out. To push 5G deployment, MNOs are also building new sites and fiberising their towers. As per industry estimates, an additional 8,000 sites may be required in Malaysia to cater to the existing 4G network and future 5G deployment.
Both towercos and MNOs are also exploring hybrid solutions for their off-grid sites (around 10 per cent) and most telco players are gradually switching to lithium batteries in an effort to go greener.
Vietnam
At present, there are an estimated 90,000 towers in Vietnam, and the majority of them remain in the hands of the operators. In 2019, VNPT-Vinaphone increased its total number of 3G and 4G base stations to 60,000, after completing the deployment of 30,000 LTE base stations nationwide.
The towerco ecosystem is still fragmented and there are dozens of very small tower companies owning portfolios of less than 100 sites. As of October 2019, the market leader SEATH owned 2,000 sites and its main shareholder OCK has allocated around $5 million-$8 million for its expansion. The company aims to add 200-250 sites per year in the country.
Further, Golden Towers and Nisco are the other known towercos with 350 and 300 towers respectively. Golden Towers has a strong presence in rural areas, where tenancy ratios are lower; however, this is compensated by cheap land cost. The company is set for a big expansion as it aims to build 2,500 sites in the coming years and has recently closed a BTS deal with MobiFone for 100 towers.
The Vietnamese government is now preparing to auction spectrum in the 2600 MHz band. This will enhance LTE coverage and capacity across the country and drive demand for new sites and equipment.
Conclusion
There still exist plenty of opportunities for infrastructure growth when it comes to reaching higher levels of 4G coverage, especially across islands, rural areas and outside major cities in many of these countries. To exploit these opportunities, towercos and MNOs can build a resilient infrastructure space, aided by reforms in the telecom sector, considerable investment and collaboration across the telecom ecosystem.
