edotco: Towering Ambitions In The Face Of Grounded Inhibitions

Telco tower firm edotco aims to become the world’s top five largest tower provider from its current 12th spot.

CEO Suresh Sidhu says acquisition remains a big part of its growth strategy despite the collapse of a RM4 billion deal to acquire 13,000 telecom towers in Pakistan recently - which would have made it the eighth largest tower company globally.

“The business will increasingly become about scale,” says Sidhu. “edotco wants to be in the global top five. We’ll want to make sure acquisition is still a big part of our future growth strategy.”

The Pakistan deal fell through after more than a year of negotiations - an unexpected turn of events for edotco, but the Axiata subsidiary is unfazed, with Sidhu maintaining the company is still in a good position for expansion.

“We are still looking (for opportunities) but our focus is on Indochina. We only have Cambodia at the moment but we hope to be in Laos and Vietnam too. As for the Philippines, we have started the process to acquire towers licensing there.”

“I don’t think we will spend much time outside of the South Asia and Southeast Asia footprint and we have no interest at this point to explore India.”

Edotco currently operates in six countries - Bangladesh, Cambodia, Malaysia, Myanmar, Pakistan and Sri Lanka. As at 3Q2018, it owns 17,800 towers (+8.5% YoY), and manages 11,000 sites (+4.3% YoY).

Here, Sidhu talks about the challenges in running operations spanning different countries.

Small Cells Powering 4G, 5G

The two countries that delivered more growth this year, according to Sidhu, are Myanmar and Malaysia.

“Myanmar is country without a lot of coverage. So, the coverage growth is still being driven by 2G, 3G and 4G deployment.”

“While in Malaysia, the growth is largely linked to the desire to grow 4G coverage considerably. Malaysia has very good availability of 4G but perhaps speed and density are still an issue,” says Sidhu.

To handle greater traffic and data speed, tower density needs to be better. But in mature cities like Kuala Lumpur, new telco tower sites are hard to come by, not to mention expensive to build too. (A new ground based tower in Malaysia costs around RM300,000 to build, according to TowerXchange).

So, towercos like edotco are increasingly look into small cell units that can be installed onto lamp posts, electric poles or bus stops to provide greater network coverage. “Our business here is moving into what we call street furniture,” says Sidhu.

On that front, edotco and Huawei Technologies have partnered to launch the world’s first multi-operator, multi-technology small cells solution in KL Sentral.

The in-building infrastructure, with the capability to improve data coverage and speed by up to four times for all mobile network operators in Malaysia, is expected to go live on Thursday.

Small cells are also key infrastructure to fuel next-generation 5G, which requires more and more cell sites.

Tower Sharing The Way Forward

Another area that will continue to drive edotco’s growth, according to Sidhu, is tenancy ratio. The towerco’s 3Q2018 tenancy ratio rose to 1.62x, compared to 1.50x in the corresponding period of 2017.

(Tenancy ratio refers to the number of tenants or operators who have put up their antennae and other active infrastructure on the towers)

“What that really means is that many people are coming to share,” says Sidhu.

In the past, mobile network operators owned, built and operated their towers. However, declining mobile revenue and hypercompetition have forced operators to focus on their core business.

“No one has the investment capacity, nor the time to build their own. So we are a professional firm, we provide assurance in a way we bankroll the infrastructure. They don’t have to do anything except for to pay per month and they don’t pay till the site is ready,” says Sidhu.

Sharing of passive infrastructures help improve cost efficiencies, not to mention less hassle for of mobile network operators.

Here, Sidhu talks about the helping its tenants improve efficiencies.

According to TowerXchange’s industry report, edotco owns 4,000 out of the 22,882 towers in Malaysia, representing an 18 percent market share.

Adding Value for Tower Tenants

Apart from building more tower and cell sites, towercos are increasingly undertaking initiatives in new areas beyond passive infrastructure sharing to drive growth.

This includes energy management solutions to help tower tenants reduce energy costs, capacity boosting through network planning (small cells, in-building solutions) as well as remote monitoring and disaster recovery management.

“edotco is a company build on steel and grass but you can’t live like that anymore. We have to adopt digital. For us, digital is not so much an external transformation; the real benefit of digital is internal.

The traditional towerco business manages just the real estate aspects of the site, known as the “steel and grass” model.

“One is process simplification - to have all the towers and its information converted into a monthly, fully automated bill.”

“Once you have that, you can go to next stage that is to put out location, operational and financial information. We already have access to all our sites in real time basis, that helps scheduling, transparency and reaction time.”

Here, Sidhu talks about using predictive analysis in towerco management.