Arif Hussain, Country Managing Director of edotco Pakistan has had a diverse and successful 20+ year track record in telecoms working with operators such as AT&T, Multi-Links and Multinet, and on the vendor side with Alcatel-Lucent in multiple global markets including the US, Europe, Africa and now Asia. Prior to assuming leadership of edotco Pakistan, Arif was the COO of Multinet, a subsidiary operating unit in the Axiata Group.
TowerXchange: When we last spoke to Group CEO Suresh Sidhu, edotco was managing 13,000km of fibre in Pakistan while awaiting receipt of a license to trade as a towerco, in anticipation of building ~200 towers for the local operators – what is the current state and focus of your Pakistani operation?
Arif Hussain, Country Managing Director, edotco Pakistan:
In Pakistan, our operations are more focused on building edotco’s brand attributes with our target MNO partners, leveraging on the strength that our regional 14,000 operational tower presence gives us.
We have a very experientially capable core team in place to establish our on-ground operational competency, while working closely with our MNO partners to expound edotco’s capability in delivering customised tower space hosting solutions. I am pleased with the progress we have made so far in terms of regulatory requirements and we are very encouraged by the prospect of soon securing our first build-to-suit deal. We are expecting licensing soon and currently are in an advanced stage of discussions with relevant MNOs on towers.
TowerXchange: What makes the Pakistani tower market unique compared to other markets?
Arif Hussain, Country Managing Director, edotco Pakistan:
Spurred on by the forward looking deregulation policy of 2004, Pakistan has established a vibrant telecommunications market as a whole where the clear success story is Mobile telephony, having grown from less than 10mn subscribers in 2005 to well over 100mn in the space of a mere decade.
Five well established mobile operators are present in an energetic and competitive market exceeding 70% penetration according to the regulator (PTA). The MNO space is exclusively the domain of international operators (Mobilink/VimpelCom, Telenor, Ufone/Etisalat, Zong/China Mobile and Wateen/Dhabi Group) which can be a very positive market dynamic for end users in terms of the latest services innovation (e.g. mobile banking).
With 3G and 4G licensing completed in 2014, we expect exponential growth prospects in consumer demand for mobile data which in turn will translate to an operator imperative to build denser network coverage, driving substantial demand for new tower sites in the coming years. These market dynamics continue to be overseen and helped ahead by one of the most forward-looking regulatory environments in the region.
TowerXchange: We estimate there are ~28,000 towers on the ground in Pakistan – are we right, and how complete is the coverage, and what is the status of the 3G overlay?
Arif Hussain, Country Managing Director, edotco Pakistan:
According to available market data and our internal estimates, there are around 28,000 unique mobile tower structures across Pakistan which, when including the impact of reciprocal operator sharing, equates to around 35,000 – 38,000 operational sites, primarily owned and operated by MNOs.
3G was first launched in Pakistan in the latter part of 2014 and coverage is now reported to exceed 50-60% in top population density markets while new cities are being announced daily. Zong (China Mobile) and Wateen (Dhabi Group) have also launched 4G LTE services with rapidly expanding coverage being reported. As MNOs reach for greater coverage with better network stability of their 3G/4G networks and consumers begin to demand increasingly faster mobile data speeds, we see a major competitive edge for edotco to play out with our leading edge energy efficient site designs augmented by our available nationwide fibre footprint. Globally, we have seen heavy data traffic sites must be on fibre to give users the real 3G experience and we expect a similar trend to play out in Pakistan in the coming months and years. edotco fully intends to leverage this advantage in our customer propositions where we are offering efficient sites ready for occupancy with fibre available from day one.
Teledensity in Pakistan, as of April 2015, which includes Fixed Line, WLL and Mobile currently stands at 73% and the country’s geographical coverage is greater than 92%. In terms of mobile penetration, the figure is now at 70.04 mobile connections per 100 people.
TowerXchange: What kind of volume of new tower build do you anticipate in the market?
Arif Hussain, Country Managing Director, edotco Pakistan:
In customised market studies we have conducted and through our own internal modelling, we see the number of sites in Pakistan more than doubling from present levels in the next five to eight years, driven primarily by demands of 3G and 4G network coverage. While there remains some opportunity to augment coverage through sharing of available sites owned by other MNOs, independent towercos are much more active in developing MNO clients and offer an attractive alternative by means of a customised build-to-suit offer. Therefore we see substantial opportunities for new site builds in the next few years.
We see the number of sites in Pakistan more than doubling from present levels in the next five to eight years, driven primarily by demands of 3G and 4G network coverage
TowerXchange: What is the regulator doing to support the tower industry and the development of telecoms?
Arif Hussain, Country Managing Director, edotco Pakistan:
The Pakistan Telecommunications Authority (PTA) is a globally recognised regulator by the industry. Most recently the PTA was honoured by being elected as a member of the ITU Council for a third four-year term. While the relationship between the licensees and the regulator have seen some ups and downs, overall the local industry perception of the regulator is progressive and positive with ample opportunity for constructive dialogue to hear differing perspectives.
Infrastructure sharing was considered and drafted into the present regulations several years back with two types of tower licenses available (a broad Infrastructure license or a simple tower license) designed for the licensee to provide telecommunications infrastructure to the industry on a shared basis. An update to the overall telecommunications policy is expected in the near future where we fully expect the regulator to further support the idea of infrastructure sharing which will ultimately benefit the consumer (faster rollout of services), the country (reduction in unsightly structures) and the operators (more economical rollouts).
TowerXchange: What are the main obstacles facing the growth of the tower industry in Pakistan?
Arif Hussain, Country Managing Director, edotco Pakistan:
While the tower operating company model has been studied in depth and there have even been attempted implementations in the last few years, no substantial foothold has been established in Pakistan in this regard. A number of factors contribute to this condition but I think the lack of an independent towerco with experience and means has been the primary detractor.
Of course Pakistan has had its share of significant challenges over the years, primarily around security and power shortages, which definitely play into investor/new entrant confidence and desire to pursue the available market opportunity. However, the Pakistan telecom market is worth taking a closer look; in spite of all the perceived negativity it successfully raised nearly U$1.2bn in 3G and 4G licensing fees for the government in 2014. All our discussions with prospective MNO partners convince us the towerco model is extremely well understood within the Pakistani telecoms industry; the winning combination of commercial terms and a long term contract are close to being established as a benchmark.
TowerXchange: What are your thoughts on the recent sale of 4,500 Warid towers to Towershare?
Arif Hussain, Country Managing Director, edotco Pakistan:
For the towerco model to be fully and successfully realised in Pakistan there will have to be portfolio sale and leaseback deals to help the market players achieve the necessary scale and size of operations. There are well-established global industry benchmarks that clearly show that successful towercos require significant size and scale, which then is the platform for creating greater efficiencies and higher co-location ratios to deliver target returns for investors. While this can be achieved in Pakistan through organic build-to-suit driven growth, I believe to truly achieve the desired returns at a meaningful scale against a given risk profile and within an investment window of five to eight years, the industry will be compelled to seek the acquisition of a significant portfolio of towers from an MNO by towercos. I think such deals will be an integral part of helping to establish and grow the tower and telecommunications infrastructure industry in Pakistan.
However, for a first-of-its-kind deal, the 400-pound gorilla in the room must be adequately addressed to ensure the seller and the buyer both get what they want. The operator must feel they are getting the kind of value that can meaningfully impact their business plans/balance sheet, while the acquiring towerco must ensure the valuation of the towers to be acquired is clearly supported by the revenue potential to be generated over the life of their investment.
TowerXchange: There has been talk of both Telenor and VimpelCom selling their Pakistani towers; what impact would this have on the market?
Arif Hussain, Country Managing Director, edotco Pakistan:
Again, sale and leaseback of entire operator portfolios will be key for the establishment and growth of the towerco model in Pakistan. Any such deals will strengthen the MNOs ability to compete and position the acquiring towerco to build adequately sized, scaled and efficient operations. In addition such deals will also be beneficial in optimising the tower portfolios by presenting greater opportunities to eliminate parallel capacity inefficiencies.
TowerXchange: How would you characterise the extent and quality of grid power in Pakistan? For example, are a significant proportion of sites off grid or on unreliable grid connections?
Arif Hussain, Country Managing Director, edotco Pakistan:
Like a majority of developing countries, Pakistan has its grid power challenges as a result of which most sites were built with at least one on-site generator. To counter this challenge we are building sites with the average design considerations to take into account a minimum of eight hours of grid unavailability up to the extreme of an off-grid site in the most remote areas.
With edotco Pakistan successfully integrating optimised energy and a fibre backhaul solution in their portfolio, I fully expect MNOs to exclusively rely on us as their towerco partner of choice to deliver on all their telecom infrastructure expansion needs
Our site designs are taking full advantage of the regional experience we have as edotco in developing intellectual property through investment in R&D to build more energy efficient sites leveraging technologies such as deep cycle batteries and solar energy.
TowerXchange: How do you think the Pakistani tower market will change over the next three to five years?
Arif Hussain, Country Managing Director, edotco Pakistan:
I believe from the current virtual ‘start-up’ that the Pakistan tower market will be much better established with defined players and market leaders in the next three to five years. Furthermore, while there remain some gaps in commercial understanding and what are initial trust issues between towercos and MNOs, I believe the market will be much better organised in the next few years.
With edotco Pakistan successfully integrating optimised energy and a fibre backhaul solution in their portfolio, I fully expect MNOs to exclusively rely on us as their towerco partner of choice to deliver on all their telecom infrastructure expansion needs.
Don’t miss the upcoming TowerXchange Meetup Asia being held on 13-14 December at the Marina Bay Sands,Singapore. For more information visit https://meetup.towerxchange.com/event/779b884f-2156-4a99-81e0-747a2f905382
