Rural rollout, densification, site upgrades and ESCO contracts

Leading turnkey infrastructure provider ieng Group has further expanded its capabilities in tower design, power system provision and tower services through the integration of GreenPole and Eki.Struct and formation of their new ESCO sister company, CREI. TowerXchange speak to ieng Group’s Co-CEO, Kadri Hakim to catch up on the company’s latest developments and how ieng Group is strengthening its position as an invaluable partner to the African and Asian telecom markets.

TowerXchange: It was a while since TowerXchange last interviewed ieng Group and the company has expanded and integrated new companies since then. Please can you introduce i-eng Group and its subsidiaries.

ieng Group is a leading turnkey infrastructure solution provider active in both the African and Asian market providing end-to-end engineering infrastructure solutions to the telecommunications and power industries. The company was founded in 2007, initially focused entirely on EPC (site build and refurbishment), and then in 2009-10 we moved into also providing O&M services to the telecom sector. We now have 11,000 sites under management with plans to increase this to 20,000 sites by 2020.  

ieng Group has recently integrated tower design and manufacturing business, Eki.Struct into our group. Eki-struct produces a broad array of different tower designs; from lattice, tubular and hybrid (a combination of angular and tubular towers) solutions to low cost, quick deployment towers and camouflage designs. With a fully-fledged design and engineering office in Croatia, adopting a customized approach to designing towers for our clients, Eki.Struct has acquired more than 120 tower structure certifications for various clients across the globe, from a library of more than 200 solutions.

In addition to Eki.Struct, ieng Group recently integrated power business, GreenPole into the group. GreenPole designs and co-manufactures intelligent hybrid power systems for telecom clients across the globe. Our system combines battery power cabinets with gensets and/or grid connection, with our smart controller allowing for remote monitoring, control and optimization of the system.

ieng Group is also expanding into the ESCO space through our new sister company, CREI which has entered into negotiations with telecom companies in multiple markets.

Headquartered in Lebanon, ieng Group has a presence in 17 countries (figure one), employing over 1,500 staff.  The integration of Eki.Struct and GreenPole and creation of CREI enables ieng Group to offer a more holistic service offering to the industry (figure two). 

TowerXchange: There is a major focus in Africa at present on improving rural coverage, something that ieng Group is heavily involved in. Please can you tell us more about this?

In Africa, all MNOs are focused on finding ways to access the 20-30% of the population that they are yet to connect, most of which live in rural and remote areas. With typical high sites costs being around US$80-100k to build with an annual opex of around $1500-2000 (depending on the country), the revenue that could be generated in such rural and remote areas would not be sufficient to cover costs.

We have developed the ieng low cost rural (iLCR) and ieng ultra low cost rural (iULCR) sites to address this area of the market. The solutions, combining both active and passive infrastructure as well as a power source (solar) can deliver coverage for dramatically lower capex and opex. Our iLCR sites, which cover a radius of approximately 15km cost US$50k to build, whilst our iULCR sites which cover a radius of around 3km cost US$35k, including passive and active material; both have an opex of around $400-500 per month. As simpler systems, deployment is rapid, with it taking around a week to build a site.

Different contractors are offering a range of different business models to operators to deploy low cost rural sites. A large number of players offer a revenue sharing model, others offer a pure capex model and others offer an opex model. ieng Group offers the capex model to MNOs, with some opcos opting for a capex model and others opting for opex and revenue sharing models.

With operators competing to cover rural areas in Africa, we are getting a huge amount of interest in our iLCR and iULCR solutions and we expect demand to continue to increase dramatically over the next 3-5 years. There is a big race between operators to be the first into a given market, capturing market share ahead of their competitors. 

TowerXchange: What about new build outside of ultra-rural areas, have you seen this picking up in Africa? What demands do you see from clients and how is ieng Group addressing these?

We have seen new build picking up across Africa; the market is turning a corner following the recession and 4G rollout is requiring an increased number of sites. 

In terms of requests from clients, the one constant is the need to push down prices. For this, you need to take into consideration both the tower structure and the foundations. Eki.struct tower designs are particularly efficient, being able to take the same load whilst using less steel. In terms of foundations we have explored different options including towers that are up to 55m high without conventional foundations. In this instance, boxes filled with stones at each of the corners are used in place of concrete foundations. The result is that the sites are much quicker to deploy with a lower TCO, such sites are useful in rural areas.

In urban areas we’re seeing increased rollout of sites to improve capacity for 4G and even for 3G. We see lots of demand for monopoles with a smaller footprint (although these are typically more expensive than angular towers), as well as for demand for alternative structures such as advertising boards and street lights. We are currently looking at the potential to develop a smart street pole solution.

TowerXchange: Ease of upgrade is an important feature in tower designs, particularly for Towercos whose business model is predicated on securing additional tenancies. Can you tell about Eki.Struct’s multi-tenant modular solution and the benefits this can offer?

Our Multi-Tenant modular, is a single tenant tower which is upgradable to a two, three or four-tenant tower in a single day. This allows Towercos to deploy towers with lower initial capex, safe in the knowledge that they are able to upgrade them to sites capable of hosting multiple tenants within just a few hours. It is a groundbreaking solution for Towercos, allowing them to deploy lower capex solutions without slowing their ability to add further tenants. Towercos save around 15-20% on capex by deploying a single tenant tower and only need to pay the additional amount when upgrading to multiple tenants. This generates considerable savings for the Towerco and changes the way that Towercos prepare for tower specifications. 

TowerXchange: And finally, looking more towards the power side, we have seen ESCO activity picking up considerably in the telecom sector at present with several contracts now signed and further RFPs live. Can you tell us more about ieng Group’s ambitions in the ESCO market?

ieng Group has formed our new ESCO sister company, CREI which stands for Communication and Renewable Energy Infrastructure. CREI has been involved in pilot projects in Afghanistan and Myanmar and we are also participating in a number of RFPs, hoping to be able to make some announcements this year. 

Whilst it is not a requirement, our expectation is that we will use GreenPole power equipment in our projects, whilst also leveraging ieng Group’s extensive field experience in operating sites. We offer both an ESCO model and a guaranteed savings model to the market, anticipating that Towercos will have a stronger appetite to invest the capex themselves and opt for the guaranteed savings model, whilst MNOs will lean more towards the ESCO model (although there are always exceptions!).