In September 2018 edotco announced the cancellation of their agreement to acquire Jazz’s 13,000 towers in Pakistan. While this was a blow for edotco’s growth plans in the country, TowerXchange caught up with Arif Hussin, country managing director at edotco Pakistan to discuss edotco’s continuing growth narrative in the country and why they’re as committed as ever to fibre, towers and their neutral host service offering in Pakistan.
TowerXchange: Can you give us an overview of your portfolio in Pakistan as it stands now? What % of your towers are urban vs rural? When you acquired the towers from Towershare their tenancy ratio was 1.6x. What’s edotco’s tenancy ratio in Pakistan now?
Arif Hussin, country managing director, edotco Pakistan:
Our portfolio of over 800 towers is 97% concentrated in urban areas. Currently, we count all four mobile operators of Pakistan as our customers, with nearly 1,200 tenancies. This translates to a co-location ratio of about of 1.4x, which is slightly below the tenancy ratio we acquired due to new build to suit tower additions in 2018 for one of the major mobile operators’ 4G coverage expansion programme. We have a strong pipeline with demand for both build to suit and colocation and expect to further improve our co-location ratio in the coming year.
TowerXchange: Can you share insights in to why the Jazz deal didn’t work out?
Arif Hussin, country managing director, edotco Pakistan:
Parties involved agreed to terminate the transaction due to the non-fulfilment of the conditions precedent to the SPA before expiry of the Long Stop Date, in particular regulatory approval for the resulting change of control contemplated under the SPA.
We will continue to engage the relevant authorities to seek a better understanding of the causes that resulted in the delay of approvals. Meanwhile, our focus is on organic growth, given the healthy demand.
TowerXchange: How does edotco view the Pakistan market now? Do you see further opportunity for significant growth?
Arif Hussin, country managing director, edotco Pakistan:
We remain positive about the country and its outlook as a key market for us. The opportunities for organic and inorganic growth in the country continue to be strong. Pakistan, with its high demand for sites driven by exponential 4G demand and adjacent opportunities such as energy solutions, remains an attractive market for edotco.
We have a long-term commitment to Pakistan. Our existing operations continue to progress well with securing substantial orders and rolling out sites for top tier customers. edotco will remain focused in Pakistan and we look forward to investing in further growth opportunities, both organically and inorganically.
TowerXchange: Your first moves into the Pakistani market were in fibre. Can you talk to us about how this helped your tower offering and how the two verticals are developing in Pakistan today?
Arif Hussin, country managing director, edotco Pakistan:
That was actually an entry by Axiata, our parent company, which to date they have diversed in full. We, as edotco, look to partner with fibre providers to connect our sites to allow for better back haul connectivity for our customers.
Today Pakistan has one of the lowest number of fiberized tower sites (industry estimates are <5%) which to us is a substantially underserved market and an opportunity. The last mile fibre market is quite fragmented and is one of the reasons for low penetration. We are actively working on partnering with multiple players to provide a unified offer that meets the demands for an enhanced user experience. For edotco, a site fully energized and fiberized for an operator to come in as a plug and play tenant is the ultimate goal and we continue to make progress towards that.
TowerXchange: When we spoke to Suresh last September, he said he anticipated high take-up of your complete service offering, given the security and power issues in Pakistan. Has this proved to be the case?
Arif Hussin, country managing director, edotco Pakistan:
We definitely see a high demand in terms of our full offerings – build to suits, O&M and energy. To date we provide complete end to end solutions which, when coupled with our regional experience, allows us to bring in best practices from across our footprint and enables us to meet the varying needs of our customers. Pakistan is investing in and rapidly developing its infrastructure and energy grid and our regionally experienced design teams are able to provide a level of flexibility as well as a set of choices which are able to meet needs of customers from all the regions across Pakistan.
We continue to focus on reducing the reliance on diesel gensets for backup power by deploying longer battery backups, which is also a more cost effective option for customers
TowerXchange: What power and site management solutions do you find are working best in Pakistan?
Arif Hussin, country managing director, edotco Pakistan:
Li-ion batteries which are deep-cycle batteries with a longer operational life as compared to the conventional VRLA batteries are an ideal fit for the operational environment of Pakistan. They are also environmentally friendly making them a good fit for our GOOD (Get out of Diesel) initiative. We continue to focus on reducing the reliance on diesel gensets for backup power by deploying longer battery backups, which is also a more cost effective option for customers.
As a company we embrace investing in automation to reduce cost and increase uptime. We are committed to echo, our comprehensive remote monitoring solution to deliver more efficient O&M, including power management and site security.
TowerXchange: In 2015 edotco told us that it was expecting the site count in Pakistan to double from ~28,000 over the next five to eight years. Is the market on track for this? Can you talk us through new build and decommissioning needs in Pakistan?
Arif Hussin, country managing director, edotco Pakistan:
The current number of sites has substantially grown since 2015 and currently stand at around 42,000 nationwide according to the PTA, providing about 92% geographical coverage. Data from Analysis Mason forecasts that 35,000 new towers will be built between now and end of 2022. Operators continue to aggressively plan new sites and we are seeing strong organic demand from them to fulfil extending 4G coverage and urban 4G densification needs.
The Pakistan tower market remains nascent with substantial overlapping coverage. There has been some proof of concept bilateral initiatives between operators in the last 18 months towards site consolidation, but these remain few and far between.
We still believe there are further requirements for decommissioning of overlapping infrastructure. Typically, the acquisition of tower assets by a neutral party towerco can help change the dynamics of consolidation resulting in increased sharing which translates into substantial economic benefits for operators.
