At the fourth annual TowerXchange Meetup Asia, edotco’s CEO Suresh Sidhu delivered a thoughtful keynote on how towercos can deal with and embrace the multiple forces currently shaping the Asian tower industry. And while edotco is one of the fastest growing towercos, the heart of the presentation was not on how to scale a towerco, but rather on the notion of skills and the concept of economies of skill; in Sidhu’s words “a key anchor to the new towerco value propositions, where manual operations become digitalised, limited services become increased, and a passive focus is replaced by semi-active.”
Sidhu opened his keynote with some statistics TowerXchange readers would be familiar with. Notably the rise of the towercos and infracos who currently own approximately 69% of the estimated 4.3mn towers worldwide. Granted, China Tower Corporation does represent a significant portion of the holdings (~1.9mn), however, even if CTC’s figures were removed, towerco ownership has been growing steadily over the past few years.
Forces shaping the Asian tower industry
Against the backdrop of increasing towerco holdings, Sidhu identified six forces as having an impact on the future of the industry:
1) Mobile customers: In five years, smartphone penetration will grow an estimated 29% up to 77% and mobile digital payments will reach 50%. Mobile web traffic and mobile digital media use time will both climb to 85%, with 35% and 8% growth respectively.
2) National interest: The creation and rise of towercos have been beneficial for the telecom industry, and also the countries they operate in and provide service to. Increasingly, as towercos seek entry into a new market, along with their investments, they are bestowed a role in contributing to urban aesthetics, driving universal access, and/or facing pressure to go green. There is also the case of evolving licensing regimes and more stringent local council requirements.
3) MNOs: While MNOs in Asia historically favoured retaining tower ownership, this is changing as they are facing challenging market dynamics and precarious financial positions. There is also a shift in the MNO business model to that of a digital service provider. The economics of the telecom industry are still a mix of the old and new, with carryover impact on the tower sector, most notably exemplified by India right now.
4) Technology: With large 4G rollouts and 5G and IoT on the horizon, the implications for towercos may not be adequately acknowledged. The next generation network (HetNets) could reshape what towercos do potentially, requiring different architectural designs. Plus the potential complexity of active equipment that has traditionally been part of the MNOs’ domain.
5) Climate change: As infrastructure players in the telecom industry, towercos will bear the brunt of costs associated with more frequent and unpredictable extreme weather, extended dry season drought, rising sea levels, and more. All countries will face climate-associated issues moving forward and towercos will be picking up the costs for refurbishments, assurance, servicing and maintenance.
6) Social media: The industry served by towercos is a social one, where social media penetration will reach 75% in five years, and data consumption per smartphone will grow ten-fold compared to now.
Value proposition enhancement
Given the various changes from climate change to shifting MNO business models to new technologies, 21st century towercos need to evolve to offer increased services, digitalised operations, and a semi-active focus.
On services, Sidhu cited the example of regularly hearing from MNOs who want SLAs linked to active quality, even though a towerco traditionally deals with passive assets only! To that MNOs say, “you can do active management.” So looking ahead, towercos will need to increase their services scope, not because they necessarily want to, but will instead be shaped into doing so by the forces active in the market.
Operations also need to be more digitalised, to drive changes in the fairly manual way of how the industry has typically worked.
In terms of the shift from passive to semi-active (Sidhu would still shy away from active), this can be welcomed. Towercos can provide small cell up to the shared antennae and/or provide fibre fronthaul for some of the small cell as well.
Economies of skill
Ultimately Sidhu believes towers will stay up and stand the test of time. However, what towercos assure and what towercos offer will change if they go down the path of semi-active. And what he believes is at the heart of the change, is the creation of economies of skills.
While economy of scale is crucial to a towerco, a best-in-class business needs to look at not just the people, but also the right tools, processes and analytics platform. It’s thinking more critically on what people are equipped with, so they can be agile and fluid in their responses. Processes need to be simplified, while analytics can guide sound decision-making. For example, the cyclones in Bangladesh forced edotco to dig into the analytics as it needed to plan upgrades for its energy investment.
edotco also invests time and money on employee engagement. The job is repetitive for a lot of people, so the company looks to make it interesting and fun; to let there be commitment in the final outcomes of what they do. Training programmes also play a role here.
Economies of skill include the fluidity of resources, which might mean allowing time on the ground to work out where to put a battery in dynamic real-time.
A high degree of standardisation is also part of the mix, but where enough room is left for natural innovation to flourish, such that how people do things country-by-country that may result in something interesting can be moved to another market.
Benefits by achieving economies of skill
At the end of the day, the multiple forces faced by the tower industry bring about more volatility. But by getting the skills right, towercos can reduce the amount of variation. As costs are driven by variation, when more stability is created, the more stable costs will be.
Again, as towercos shift to increase service offerings, digitalised operations and semi-active focus, the missing link to success is through economies of skill. Benefits include:
- More efficient processes
- Ease of scaling up operations
- Quick propagation of lessons learnt across footprint
- Near real-time management of operations
- Highly engaged workforce
- Faster reaction time to market demands and industry shifts
- Less variation across multi-country footprint
Structural + agile approaches
Sidhu drew inspiration from the Roman and British Empires, who demonstrated that despite being few in numbers, adaptive people can conquer the world.
As a towerco with an eye to operational excellence, edotco has a clear vision. However, part of the challenge in today’s environment is providing all the information available to the teams in such a way that they can be as nimble as the Roman Empire.
This led to the conclusion to marry the need for structure and standardisation of some processes, with the dynamic ability to respond to situations across markets.
Jobs titles and shared services are well served as standards. Even in a world of volatility, finance and procurement are best done one way, where the emotions are removed. Structure is an ally to mobility, to self-driven learning and empowerment. It’s real-time analytics and common KPIs that allow people to use structure, but also respond to situations as they see fit.
For example, when edotco secured assets in Cambodia, it needed to build 200 towers in the next six months, but there was no team locally to do it. The job scope is simple and the towerco had a great team in Bangladesh. It then regularly mobilised some of the team to Cambodia to help with the rollout; they knew what to do as the job scope is standardised. The benefit manifested as ease of resourcing.
Conclusion
Sidhu’s call to arms for the future is for towercos to move from “scale” to “skill,” and to enable it through a marriage of structural and agile approaches.
He believes there are many tailwinds that are positive for the industry in spite of MNO consolidation, technology changes, et cetera; the increasing shift by government for shared infrastructure and drive for quality connectivity bodes well for towercos.
At the same time, for the future relevancy of SLAs (and towercos), skills need to get into the equation (beyond scale for cost structures). Towercos are encouraged to think through the common elements that can be part of structures and standardisation and what can be put in place to give people the agility and mandate to respond.
The word “mandate” may seem like an old-fashioned word in changing times, yet it is befitting for towercos of the 21st century – where people have authority to do everything necessary, with authority to go beyond but within the mandate. It’s about how to marry the complexity of an asset-intensive business that can respond more nimbly to changing situations.
