OCK Yangon on Myanmar challenges, Mytel’s impact and power solutions for remote sites

Last week, TowerXchange visited OCK’s central office in Yangon to find out about the latest activities of the Malaysian infrastructure leader in one of the most promising, dynamic markets for towercos in ASEAN. OCK’s CEO in Yangon, Omer Chappelart, sat down with us and offered a detailed overview of the group’s initiatives in the country, where they aim to continue expanding their footprint and exploring new technologies.

TowerXchange: Back in 2013, OCK Group landed in Myanmar and founded OCK Yangon Private Ltd. Could you summarise the company’s activities and experience since you entered this market?

Since our entrance in 2013, the group has grown its portfolio to 820 telecom towers and we are continuously rolling out to increase our market share. We have established ourselves as a competent and respected player and we have successfully collaborated with all four national MNOs - MPT, Telenor, Ooredoo and latest entrant Mytel.

Apart from being an independent towerco, OCK is also a recognised full turnkey telecommunications network solutions provider. We have been able to leverage our expertise from other countries into Myanmar, which has helped us to optimise the construction and maintenance cost of our sites and extend those benefits to our valued customers.

Myanmar is a greenfield, dynamic market and we are expecting more towers to be rolled out to comply with the Government’s plans of geographical coverage, so we are excited about the many opportunities that the country holds.

TowerXchange: What are some of the key challenges and barriers that OCK is facing in its operations across Myanmar?

Operating in foreign markets presents its range of difficulties and we are exposed to financial, regulatory and operational risks. Myanmar is a highly competitive market and there is a constant demand for talents and skilled workforce. OCK aims to develop local competencies to fill in that gap and one of our main challenges is to identify, develop, retain and prevent turnover of trained resources.

The group is also exposed to a currency volatility risk, which we mitigate through natural hedges in the form of payables and borrowings, denominated in the respective functional currencies. Nevertheless, any movement in the Ringgit generates benefits or losses that are accounting in nature, non-recurring but do not affect our cash flow. OCK remains confident on the long-term stability of the currencies.

Finally, we face several operational risks but we have managed to successfully grow our business in this challenging context. Difficulties in sites accessibility, especially during long rainy season,  the lack of grid infrastructure as well as an insufficient fuel distribution network are the main operational barriers. However, OCK is confident that the infrastructure will progressively improve as the country continues its development. 

As part of our initiatives in Myanmar, we are proactively working with several local communities to explain the benefits that mobile network development can bring into their lives. As an example, the noise produced by diesel generators has created some issues with local communities but OCK has been able to address and solve this issue though an active dialogue with the community. 

TowerXchange: Myanmar has been experiencing an initial wave of strategic M&As on top of its exciting greenfield rollouts. Can we expect OCK to get involved in the consolidation game?

The group is continuously evaluating and seeking both greenfield and brownfield opportunities in the country. As part of the group’s overall towerco regional expansion plans, we aim to achieve a wider business footprint in the ASEAN region and we see a clear need to expand our tower portfolio in Myanmar.

TowerXchange: A few months ago, the market also welcomed a new operator. What has changed since Mytel’s entrance and how it has affected OCK?

Mytel’s irruption into the mobile and data market has undoubtedly changed the telco game in Myanmar. Firstly, the MNO is aggressively expanding its network coverage to previously unserved rural areas. The company has covered almost all townships in the Yangon region and it will keep expanding its footprint.

Mytel is driving a substantial growth in our portfolio tenancy ratios, which we estimate will be around 2.0 by late 2019. Moreover, Mytel’s presence is creating an even healthier competitive environment in the telecoms industry. 

TowerXchange: OCK has been one of the pioneers of introducing power into their services in the country. What are the main energy challenges that you face and what kind of solutions is OCK exploring? 

Since inception, tower+power has been our business model in Myanmar and with it come a few operational headaches. The lack of grid access is the main issue and around 75% of our sites are off-grid.

For those off-grid sites primarily powered by gensets, the lack of an efficient fuel distribution network is a real issue. That and the difficult accessibility to some remote sites complicate the refuelling process. In some cases, we need to transport fuel and materials across rivers and poorly developed roads, and heavy rain and floods make it even trickier during monsoon season. We normally have a fuel tank on site and batteries for energy storage and backup.

Then, even when you are close to the grid, you need to build the “last mile” for access, which increases your cost. The grid is not stable or reliable and we face continuous blackouts so we need to invest in backup solutions.

Now we are evaluating greener power solutions and we have recently designed and implemented a hybrid power model that incorporates solar energy. However, the rain and bad weather during monsoon season reduce the efficiency of the solar cells. Our gensets need to run longer and again, cost increases. Additionally, finding an area without shadow obstacles is challenging in Myanmar, where high trees and deep forest abound. 

TowerXchange: What are your plans and growth expectations for Myanmar in the upcoming years?

We are optimistic that our growth pattern in Myanmar will actually improve in the future. The telecom industry in the country is still a greenfield market and it is expected to continue growing aggressively for many years, especially with the upcoming demand of connectivity and data. This calls for more telecommunications towers both to cater for coverage and for capacity.

We will definitely keep evolving along with technology changes beyond ground-based towers and rooftops and the group will explore fibre and small cells to support the rollout of 5G in the near future.

TowerXchange: Having operations in Malaysia and Vietnam, the group is one of the very few multi-country towercos in Asia. Can you offer a brief overview of your operations, strategy and future plans in Malaysia and Vietnam?

As previously mentioned, OCK is not only an independent towerco but also a full turnkey telecommunication network solutions provider. The group’s expertise covers the entire deployment and operation aspects of network facilities for all operators and technology providers. In addition, the group designs and provides overall network maintenance, outsourcing services to support, maintain and troubleshoot all critical network elements by providing routine preventive and corrective maintenance services on a 24/7 basis, ensuring all networks are running at an optimal level.

To date, OCK is the largest telecommunications network services provider in Malaysia and we have 240 towers based on a build-and-leased basis, with plans to build an estimated 70 to 100 more sites in the country. 

In Vietnam, the group is currently the largest independent build-to-suit firm with 2,393 telecom towers geographically dispersed throughout the country. 

The group is optimistic on the future of the telecom industry with major telecommunications companies investing in assets to cater towards the demand for LTE and 4G coverage in Malaysia and Vietnam. OCK will continue to focus on expanding our regional operations via build-to-suit as well as inorganic growth in ASEAN. With OCK’s established presence in the region and vast experience in building telecommunication infrastructure and site maintenance, the group is poised to ride the wave of ASEAN’s telecommunication growth.

TowerXchange: Apart from those mentioned markets, is there any new country in Asia where you would consider an entrance?

Indeed, we have been strategically expanding our telecom service business across the ASEAN region and we seek to penetrate new, key emerging economies. As long as the expansion adds value to the group, we are open to explore.  

Specifically, we have been working with Filipino Company ISOC Infrastructures and discussing a partnership that aims to build 25,000 cell towers across the Philippines in the next seven years.