During the latest edition of the TowerXchange Meetup Asia, players from the Bangladesh telecom sector took centre stage to discuss the state of the market following the entrance of towercos in 2018. The past couple of years haven’t been easy for MNOs and towercos active in the market, due to the time it has taken to agree the terms of the master service agreement to govern the entire industry. In this editorial, TowerXchange takes a look at what’s happened over the past few months and whether the future looks any brighter for the year to come.
While Bangladesh formally opened up to towercos in 2018, licensed entities and MNOs have faced some crucial challenges that prevented towercos from becoming fully operational. Among them, the fact that it took the BTRC almost a year to have MNOs and towercos agree to an industry-wide master service agreement after it became clear that MNOs and towercos could not reach bi-lateral agreements and start any build-to-suit project. The intervention of the BTRC in early 2019 seems to have solved both issues.
Major trends in Bangladesh
Among the players active in the country, Grameenphone is dominating the MNO front with over 46% of market share. While on the towerco front, edotco has been operating for a few years and is the only towerco with a portfolio of scale. Other MNOs include Axiata’s Robi, VEON’s Banglalink and State-owned Teletalk while towercos licensed in 2018 are TASC Summit Tower, Kirtonkhola Tower Bangladesh and HighTech Consortium.
In spite of the tower-sharing licenses having been assigned on 1st November 2018, to date, towercos haven’t been able to start any BTS activity and MNOs haven’t divested any portfolio.
The relationship between MNOs and towercos is complex and still relatively new and towercos believe that many of the conditions and requirements set by the MNOs are simply not viable for them. Taxation is another element that is preventing MNOs from making a move and divesting their assets.
At the moment, there are around 33,000 towers in Bangladesh, owned by MNOs, while edotco owns 9,032 sites and manages an additional 1,136 (as of Q319). MNOs have enjoyed fairly healthy returns thanks to a huge population (163.9mn as of Q419 according to the GSMA Intelligence) and strong data growth and mobile penetration (163mn connections as of Q419 according to the GSMA Intelligence). Revenue streams are shifting – following a global trend – with data surpassing voice, and MNOs expect 5G to launch by 2021.
If and when the market really opens up to towercos, it could offer several opportunities not only for SLBs but also for decommissioning and rationalising network infrastructure as well as leasing-up. Local players estimate that the overall ratio of parallel infrastructure is around 25-30%.
Over its five years of operations in Bangladesh, edotco also managed to work with most MNOs and has deployed 34,000 BTS on 33,000 physical locations, with 12,000 of them owned by Grameenphone, over 9,000 by edotco, approximately 7,000 by Banglalink and around 3,500 by Teletalk.
Under a rational regulatory framework and with good contractual conditions, towercos could get very busy over the next few years as local players expect a lot of extra capacity needed and reckon that MNOs could require anything between 500 and 2,000 macro-towers per year.
Evolution of MNOs market share in Bangladesh 2009-2019
Telecom market and sharing conditions
Compared to mature markets, Bangladesh remains behind, with low tenancy ratios and nearly zero growth for towercos in 2019. In December, the BTRC agreed on the framework that should regulate and rationalise SLAs. A necessary move after months of unfruitful discussions between MNOs and towercos. The framework aims at facilitating bi-lateral agreements by setting SLAs and other key contractual clauses that MNOs and towercos weren’t able to agree previously.
In the meantime, the litigation over unpaid dues between MNOs Grameenphone and Robi and the BTRC is still underway, with the two MNOs unable to import equipment, which further contributes to the market stagnating over the past few months.
Even under favourable regulatory conditions, new entrant towercos wonder if they can compete against incumbent edotco, due to its presence and long-standing experience in the market. It’s no secret that newly licensed towercos have established their presence in the market around a year ago and to date, have received zero to little BTS orders.
In terms of diversification, Banglalink is one MNO open to working with more than one towerco. The MNO now runs approximately 4,000 4G sites but must catch up with competition. According to the MNO “they’ll work and invest with whoever gives us the best deal and both Kirtonkhola and Summit are coming up with promising activities in Bangladesh.”
Tower sharing among MNOs started over ten years ago, in 2008, but tenancy ratios shifted only slightly over the years, reaching approximately 1.29 in 2018 – showing that the market is still far from being really sharing-friendly. On the other hand, ARPU has been constantly declining over the years and is now set at US$2.8 – considerably below the Asia average of approximately US$10.4 and global US$14.6 (Source: GSMA).
A scenario which should entice MNOs to make a move and work with towercos while concentrating on rationalising their balance sheets and competing in a fierce market. Local players at the latest TowerXchange Meetup Asia highlighted how the latest regulatory intervention should create not only congruency but also a real sense of urgency in Bangladesh. So, expectations for 2020 are indeed quite high after a very stagnant 2018-2019.
Estimated tower count for Bangladesh
Will BTRC’s intervention push BTS?
MNOs set a series of terms in their original SLAs that were the major factor preventing any new rollout and BTS contracts from being assigned. In fact, while MNOs expected lower costs being granted by towercos in order to improve their own margins, towercos weren’t ready to come to terms and it took a strong intervention by the regulator to create an agreeable contractual framework.
Now MNOs have regulatory tools as well as commercial agreements in place that should allow quicker negotiations. Improving QoS across Bangladesh is a real priority on everyone’s agenda and MNOs have more than one towerco to negotiate with, offering a wider range of options for them to choose from.
MNOs have the option to select from a pool of towercos but they won’t be allowed to self-deploy anymore, as stipulated by the BTRC. In a market that has relatively good levels of coverage (95%), towercos can expect a relatively even ratio of decommissioning alongside new rollouts.
Where will growth come from? SLBs, BTS but also operational excellence and fibre
The major growth channel for towercos remains the potential for SLBs and BTS, as MNOs are still heavily involved in augmenting their 3G and 4G networks, and 5G is not too far down the line. Additional revenue streams for towercos over the next few years include fibre, which isn’t a major requirement yet but will definitely become more crucial in the near future, as well as anything related to reducing and optimising power consumption, which for MNOs remain a critical opex.
Fibre will become more important, especially as 4G rollouts intensify and MNOs are likely to require more than just towers to their infrastructure partners. While fibreisation efforts might not be high on the agenda of telecom players, Government plans such as Digital Bangladesh might force the industry to look at fibre deployments sooner than they think.
On the operational side, Bangladesh is prone to flooding and operational challenges in the country can be particularly tough during the monsoon season (March to September). We can foresee rebuilding and emergency efforts becoming a relevant component of towercos’ portfolios in the years to come.
The challenges faced by towercos and MNOs in Bangladesh relate to the peculiar market structure of the country but are also quite common for newly opened towerco regimes. While the active intervention of regulators should be seen as a last resort and commercial negotiations among relevant parties are to be preferred, in this case the BTRC has tried to remove a bottleneck after months of failed attempts.
The outcome isn’t clear yet but what is sure is that Bangladesh could become an exciting growth platform for towercos in the near future. MNOs are in desperate need of deploying new sites and densifying their networks after many slow months and with a regulatory framework to help get passed crucial conditions, TowerXchange is expecting to report on BTS activities soon.
Meet the panellists on stage at the 2019 edition of the TowerXchange Meetup Asia
The line-up of experts who shared their insights on Bangladesh included:
- Moderator: Nick Stevenson, Global Head of Communications, Media and Entertainment Group, RBC Capital Markets
- Md. Emdadul Haque, MD, Infrastructure Services, Technology, Banglalink Digital Communications Ltd.
- Salman Karim, CEO, Kirtonkhola Tower Bangladesh
- Marc Perusat, Managing Partner, TASC Towers
- Md. Serajus Saleheen, Director of Sales, edotco Bangladesh
- Md. Saifur Rahman Khan, Head of Corporate Sales & International Business, Teletalk Bangladesh Ltd.
