During the fifth edition of the TowerXchange Meetup Asia in December 2018, we engaged the audience through a live poll to find out what executives in the room thought about the Asian market, its future expansion and upcoming trends. Between 55 and 75 respondents voted in the poll and, given that the majority of people in the room were senior management at towercos and MNOs, the results are based on a valid and substantial sample. In this article, TowerXchange offers its readers insights into the poll results.
Q1 Towercos currently own 58.3% (643,467 / 1,102,885) of the towers in Asia (excluding China, which is 100% towercos). What proportion of the region’s towers do you think towercos will own by next year’s event?
Over 54% of the respondents agreed that by next year, towercos will own between 60-62% of the regional towers. This growth could be fuelled by BTS in Myanmar, the divestiture of Globe’s towers in the Philippines, as well as possible sale and leaseback deals currently being negotiated in Indonesia, Bangladesh and Pakistan.
Q2 Do you anticipate the volume of new build towers increasing, decreasing or staying about the same in the markets in which you operate?
Projections suggest that BTS is still expected to grow across Asia, with 56% of respondents agreeing on a modest increase of new builds. While this modest growth is continuing in relatively mature tower markets such as Indonesia and Vietnam, cell site densification is still a trend in several Asian countries including Myanmar, Cambodia and Bangladesh.
Q3 What has been the % of macro towers versus other types of sites (e.g. urban poles, rooftops, billboards, DAS, BTS hotels) in your new build over the last two years?
Confirming how diverse and multifaceted Asian countries are when it comes to their tower markets, 45% of respondents were still focused on building macro-towers over the past couple of years but a solid 30% have been mostly engaging in alternate site typologies.
Q4 Similar question but this time what is the % of macro towers versus other types of sites (e.g. urban poles, rooftops, billboards, DAS, BTS hotels) you anticipate building in the next two years?
When it comes to future projections for new builds, the audience was again split with 38% agreeing they’ll mostly focus on alternate site typologies and 37% on macro towers but with a strong portion of innovative sites too. Interestingly, only 17% of respondents will focus on building prevalently (75%+) macro towers over the next couple of years - a testimony of the push towards network modernisation and urban densification happening even in emerging markets.
Q5 Is tenancy ratio growth accelerating, slowing, or are tenancy ratios falling in the markets in which you operate?
The majority of respondents (50%) is confirming a positive outlook in tenancy ratio growth, while 21% forecast a slow-down. TowerXchange assumes that the negative outlook mostly comes from Indian players, currently affected by the restructuring of the MNO market, causing tenancy churn for towercos between 15% and 46% in 2017-18.
Q7 Do you think we will see more operator-led carve-out towercos in Asia in the next year? Operator-led carve outs are new towercos where the parent MNOs still maintain a majority stake, e.g. Indus Towers, CTC, edotco)
The trend of operator-led entities has become an attractive alternative to MNOs historically not inclined to divest their tower portfolios. The likes of Telenor, Globe and Viettel are rumoured to be assessing potential carve outs, and 55% of respondents agreed that we’ll see more of these types of entities in the future.
Q8 If you had US$500mn to invest in any emerging Asian tower market today, and had to choose one of the following, where would you invest?
Unsurprisingly, the Philippines is currently being eyed as the most attractive potential new tower market, since the announcement of a third MNO and the strong regulatory push to create a more competitive telecom sector and promote infrastructure sharing. 66% of respondents agreed that, in December 2018, the Philippines looks like the most investible emerging tower market in Asia.
Q9 Which of these is an immediate concern for your business, or your clients business, today? (multiple choice)
Once again showing how diverse and eclectic the Asian tower scenario really is, 69% of respondents expressed their concerns towards ensuring energy efficiency and availability across their sites while 63% are currently focusing on diversifying their activities beyond macro towers. A clear indication of the existing gap between emerging markets where energy is still a major issue and modern markets trying to innovate and improve their networks.
Q10 What are the greatest threats to the Asian tower market and its growth?
MNO consolidation in India has forced the country’s towercos to redefine their business models, with commentators suggesting their reliance on traditional wireless operator revenues could fall to 50% within five years. Concerns about MNO consolidation in India and beyond are reflected in this answer, with 44% of respondents identifying it as their number one threat.
Q11 Which of the following statements most closely represents the readiness of the Asian tower industry for 5G?
Taking a look at 5G, the audience split with 42% already focusing on 5G but still strategising rather than having a final plan, and 32% of respondents agreeing that their attention is yet to shift to 5G, remaining very much on 3G/4G rollouts.
Q12 Which of these do you think will be significant inhibitors to 5G rollout? (multiple choice)
While a large majority of respondents (69%) agreed that 5G rollout might get inhibited by permitting and deployment challenges, 44% thinks that the limitations will derive by the MNOs’ financial capabilities and 42% by the increased power requirements caused by cell site densification. While only 17% were concerned about the size and weight of massive MIMO, this may simply reflect the fact that towercos could benefit from increased lease fees, rather than representing operators’ concerns about the affordability of that incremental spend.
Conclusions
Launched this past June in occasion of the TowerXchange Meetup Americas, live polls offer deeper insights into the key challenges and trends affecting tower markets across the globe.
In this edition of the poll, we’ve once again confirmed how diverse and complicated the Asian tower ecosystem really is. From the coming of age of Myanmar, whose BTS landscape has been refuelled by the entrance of Mytel, to the newly licensed towercos in Bangladesh, encompassing virgin markets on the brink of opening up (Nepal and the Philippines) and mature markets such as India and Indonesia, the challenges they face couldn’t be more different.
In spite of this complexity, we’ve identified a few key takeaways. Firstly, Asian towercos are still expected to acquire considerable volume of existing towers as well as grow organically. While the majority of players in attendance of the TowerXchange Meetup Asia have focused on building macro towers over the past couple of years, future new build is likely to include more ‘alternate site typologies’ (lampposts, small cells, IBS, BTS hotels) than traditional macro sites.
In terms of MNOs’ strategy, while they are still expected to do plenty of business with towercos, they could also opt to carve out their tower portfolios and create operator-led entities - a trend which is increasing in popularity in Asia and beyond.
Parts of Southern and Southeast Asia remain focused on 3G and 4G rollout, others are gearing up for 5G, where concerns about site permitting and affordability must be overcome to accelerate its deployment and the associated economic benefits.
Lastly, Asian towers remain a highly investible asset class, with markets such as Myanmar, Indonesia and the still virgin Philippine market at the top of the list. And the Indian market, despite fundamental restructuring, remains an attractive destination.
Asia is not a straight-forward market but a diverse conglomerate of multiple realities. Doing business in Asia can be challenging but Asian towers remain one of the most attractive and fastest growing infrastructure asset classes in the world. If you want to know more about the local industry, make sure you subscribe and join us next year for the sixth annual TowerXchange Meetup Asia!
