At the end of May, EdgePoint Infrastructure signed a deal to acquire Malaysian towerco, Asiaspace, adding 176 towers and a second key ASEAN market to its operations. The deal followed hot on the heels of EdgePoint’s deal in Indonesia, acquiring 4,200 towers from Indosat Ooredoo and securing a 44% stake in Centratama. TowerXchange looks at both deals, the tower markets in Malaysia and Indonesia and EdgePoint’s pan-Asian ambitions.
The Malaysia deal
On 25 May, DigitalBridge-backed EdgePoint Infrastructure added a second market to its operations with the news that it was to acquire Malaysia towerco, Asiaspace. Whilst the tower portfolio EdgePoint is acquiring is modest (at 179 sites), Asiaspace has a longstanding history in the Malaysian market (having secured a license back in 2001) and the company counts all the country’s key operators amongst its clients. The deal gives EdgePoint Infrastructure a foothold in the country from which to grow, and with not only the on the ground experience of Asiaspace but that of the EdgePoint team (EdgePoint being headed by Suresh Sidhu, the former CEO of Malaysia’s leading towerco, edotco), EdgePoint is well position to maximise any growth potential.
Speaking on the deal, EdgePoint founder and CEO, Suresh Sidhu said “Asiaspace is known as a trailblazer in the telco infrastructure industry and we are pleased to further build on this foundation through the acquisition,”
Abdul Ghani Abdullah, the founder of Asiaspace, added: “We are happy to see the legacy of Asiaspace’s work in Malaysia becoming part of EdgePoint’s dynamic vision for the future of telecommunications infrastructure.”
The shape of the Malaysian tower market
A culture of infrastructure sharing has existed in Malaysia since the turn of the millennium when the MCMC licensed over a dozen state-backed towercos; some of the state backed agencies have since been acquired by other towercos but the remaining entities are understood to collectively own around 3,500 towers in the market.
Axiata-owned edotco is Malaysia’s largest towerco, with Axiata’s opco in the country (Celcom) having carved out towers into the towerco unit back in 2013. Over the years, edotco’s tower portfolio has grown to 12,826 sites, of which 4,682 are owned and 8,144 managed. Other towercos active in the market include Sacofa, OCK Group, Naza Communications. Omnix, Touch Matrix, Inforient and KJS.
Operators Maxis and Telenor’s Digi are understood to own around 3,800 and 5,000 sites respectively in the market, whilst Telekom Malaysia and Umobile have just 1,000 each. YTL (the owners of operator, Yes) have 5,000 sites. Celcom’s towers are primarily owned or managed by edotco. Consolidation is expected in the Malaysian MNO market with Axiata and Telenor in advanced discussions to merge Celcom and Digi.
Whilst it is a mature industry, the tower market is still growing with about 1,000 to 2,000 new structures, including street level furniture, being put up every year. This is driven by operators needing to support current 4G requirements and to be 5G-ready, as well as meet the constantly growing demand for higher capacity and speed as data usage increases. More infill solutions will be required in order to meet all these requirements, providing organic growth opportunities for EdgePoint in the market.
Figure 1: Tower ownership in Malaysia
Closing of the Indosat Ooredoo deal in Indonesia
The acquisition of Indosat Ooredoo’s 4,200 towers in Indonesia which was announced on 30 March, closed in late May. For a deal value of US$750mn, the transaction marks one of Asia’s largest tower deals to date. In addition to acquiring 4,200 towers from Indosat Ooredoo, EdgePoint has secured a 44% stake in Indonesian towerco, Centratama, with Centratama owning a portfolio of 3,300 sites in the country.
With a population of over 275mn and five key MNOs, Indonesia is an attractive telecoms market for EdgePoint. Until recently, the country did not encourage foreign investment in the towerco sector, but its recent removal from the negative investment list means that new entrants can look to compete with the country’s established local players.
The deal welcomes a new sizeable competitor to Indonesia’s mature tower landscape where EdgePoint becomes the country’s fourth largest towerco behind Protelindo, Tower Bersama, Mitratel and STP. Consolidation of the country’s fragmented towerco market presents further inorganic growth opportunities for EdgePoint, whilst organic growth opportunities are abundant as MNOs look to expand their 4G networks outside of Java in a bid to compete with incumbent, Telkomsel.
Figure 2: Tower ownership in Indonesia
EdgePoint Infrastructure’s expansion plans
The formation of EdgePoint Infrastructure was announced back in late 2020, with former edotco Group CEO, Suresh Sidhu teaming up with Digital Colony (since rebranded to DigitalBridge) to create a towerco with ambitious pan-Asian ambitions. Whilst EdgePoint Infrastructure is yet to reveal much publicly about their plans (with TowerXchange looking forward to interviewing the towerco in the next couple of months), Bloomberg sources suggest that the company could amass in the region of 20,000-50,000 towers in the next 5-7 years.
Whilst a number of strong single market towercos have emerged in Asia, to date, edotco remains the sole towerco to have established a diverse geographical presence. In an interview with TowerXchange at the end of 2020, edotco CEO Mohamed Adlan Ahmad Tajudin spoke of edotco’s ambitions to scale their portfolio from around 24,000 sites to over 70,000 by 2025. With much of the EdgePoint team comprised of old edotco executives, and the strong financial backing and support of DigitalBridge, EdgePoint presents a strong competitor to these ambitions.
The Asian region has a diverse landscape in terms of towerco activity and towerco penetration but yields a lot of promise for an ambitious towerco with a strong management team and financial backing “ with both boxes being firmly ticked for EdgePoint. A significant number of towers remain trapped on MNO balance sheets and a fragmented ecosystem of towercos exists “ both of which present attractive M&A opportunities for EdgePoint. On top of this, 4G rollout is still ongoing across much of the region, with 5G rollout only taking place in a handful of markets, and data usage continues to grow “ all necessitating increased tenancies and new build and driving organic growth for EdgePoint.
TowerXchange looks forward to interview EdgePoint on their pan-Asian ambitions in the coming weeks.
