Formed in 2020, EdgePoint Infrastructure (EdgePoint) has since become one of the largest multi-country telecommunications infrastructure companies in the ASEAN market. Backed by digital infrastructure asset investor DigitalBridge, EdgePoint has firmly established a presence in three of the region’s most commercially appealing markets – Malaysia, Indonesia and the Philippines, creating a site count of over 15,000 towers in the process.
Its journey, supported by inorganic growth in the early phases of the business, has attracted onlookers in Asia’s telecom tower scene, particularly while carrier consolidation is changing the mobile operator industry. In Indonesia, Indosat Ooredoo merged with Hutchison 2021. While in Malaysia the same year, the merger of Axiata’s Celcom and Telenor’s Digi created the largest MNO in the country, with Telenor also replicating another merger in nearby Thailand two years later.
Despite a period of seismic change being witnessed in the mobile connectivity market, EdgePoint scaled its business through strategic M&A activity, completing the acquisition of Centratama in Indonesia and acquiring more than 4,200 sites off Indosat Ooredoo within a year of its inception. By Q1 2022, through these transactions, EdgePoint had amassed over 9,000 towers.
It entered the Malaysian market in February 2021 with the acquisition of small local player GTP Network. EdgePoint bolstered their position in June that year with the acquisition of slightly larger towerco, Asiaspace, followed by acquiring 800 towers to support its tower presence in Malaysia.
In the Philippines, EdgePoint acquired an a little under 2,800 towers from MNO PLDT in 2022. It has grown its tower count incrementally across the three countries since, creating a solid foundation for its ASEAN digital infrastructure operation. EdgePoint has created a burgeoning digital infrastructure service portfolio, comprising of fibre to the tower, fibre right of way, DAS and power services that is expected to at least double in revenue over the next five years.
Collaborative thinking
Its strategic growth plans and forward-thinking approach is masterminded by CEO Suresh Sidhu. Sidhu, who was formerly a CEO of EDOTCO as well as having held other positions within the industry, including Celcom and Axiata, tells TowerXchange that carrier consolidation has led towards more collaborative thinking between the towerco and their MNO customer.
“These consolidations have involved one stronger player or in some cases two strong players like Celcom Digi coming together, making it an even better balance sheet. We see that these operators have gone into the mode of not just rationalizing and consolidating, but also investing and growing in several areas. So we've been able to come out of it with much stronger sets of customers, and there's an argument that, that's terrible for colocations but you’ll see customers that can invest a lot more. We have in fact seen that both celcom digi and IOH have been able to invest and grow. We believe that the net outcome is actually positive for us from the actual event of consolidation itself, stronger MNOs leading to better more long term investments. In term of collaboration, we have a closer partnership now including providing radio planning assurance, using crowd sourced data to work out where weak points in the network are and then work directly with the planning teams to say if it would be a fit or not.
Talks of a second 5G wholesale operator in Malaysia to work in parallel with Digital Nasional Berhad had dominated the conversation across the country’s mobile market since 2022. But earlier this month, the Malaysia Communications and Multimedia Commission (MCMC) awarded the opportunity to build the country’s second 5G network to Malaysia’s third largest operator, U Mobile, drawing to a close a two-year long process that saw a revamp of the government’s 5G model, fractured discussions between the previous government and the mobile operators, and an prolonged bidding process to secure the 5G network rollout project.
Malaysia’s 5G centric vision
MCMC has instructed U Mobile to work with the nation’s other mobile operators, including those involved in bidding for the network rollout opportunity, CelcomDigi and Maxis, to deliver 5G-Advanced services to consumers. The MCMC will oversee the delivery of the rollout. Sidhu believes that the country’s towercos could secure sale and leaseback transactions off the back of the second 5G operator being confirmed in the next 12-24 months once rollout gains momentum. Sidhu adds “We discovered that there was a lot of 4G infill required for the MNOs. 4G isn’t going away although it is more infill focus for the MNOs that are not providing 5G services directly.”
The 5G news comes at a point when DigitalBridge is rumoured to be working with financial advisers on a strategic review that may lead to a full or partial sale of EdgePoint and is said to be seeking for a valuation for up to US$4bn for the company under any transaction, according to a Bloomberg report in September. Sidhu was not prepared to comment. EdgePoint is jointly backed by DigitalBridge, the Abu Dhabi Investment Authority and the International Finance Corporation.
“What is more important is that they [DigitalBridge] are really focused in helping us to create a sustainable long-term business that can operate on its own balance sheet,” said Sidhu. “We have got to the stage, without DigitalBridge, where we are almost self-funding from an organic point of view. Investors are always thinking about when they are moving in and out of investments. But what we have built is a very strong business with lasting foundations.”
Sidhu notes of a general interest in Asia’s digital infrastructure market. In Japan, DigitalBridge completed its buyout of the independent towerco JTOWER last October. Earlier this summer Rakuten also announced a sell-off of part of their mobile network to Macquarie Asset Management. Sidhu says much of the digital sectors investment demand has been driven by the region’s data centre market, adding that the level of investment appetite there means investors should now also factor in the tower and fibre space opportunities.
EdgePoint tower operations
Given EdgePoint’s position as a powerful towerco in three data hungry and geographically large ASEAN markets, it’s easy to see why the company might be well sought after. With an established site count in Indonesia (10,700 towers), Malaysia (1,500 towers) and Philippines (2,800 towers), EdgePoint is delivering stronger co-location in both Indonesia and Malaysia, as well as connecting more remote locations in the Philippines.
In Malaysia Sidhu said “It may seem like tenancies have slowed, but its just the tenancy ratio that has declined. Site exits are rare as sites are multi tenanted, and 4G infill is continuing. We're probably seeing slight growth even in tenancies over this year at a market level. And we think with the second 5G, market growth will go back to being on par with historic trends as well”.
Sidhu adds that cConnecting the peninsula has been of predominate focus, but that the organisation has been growing its presence in Malaysian Borneo.
In Indonesia, Centratama have a portfolio spread out in the main islands including Java and Sumatara, with a growing reach in Sulawesi and other regions. Both of its Malaysian and Indonesian businesses provide tower, DAS, and fibre right of way services. It additionally has created a fibre-to-the-tower operation in Indonesia, with a fibre footprint that has stretched out to 2,000km.
EdgePoint has built a firm platform that today sees it as a leading digital infrastructure player in the ASEAN region. With 5G rollout plans in Malaysia and DigitalBridge’s position at the company still to be crystallised, its focus on fruitful MNO partnerships and product and service innovation could seek to stand them in good stead in the long term.
Power play
Centratama has also been running proof of concepts with customers to provide power solutions to them. Sidhu is expectant that there will be new sites and new co-locations in Indonesia next year whereby we’ll start to see power as a common requirement as an ancillary to a lease in Indonesia. Sidhu also projects, sooner rather later, that power will be firmly integrated in the towerco product proposition. Sidhu adds that today, power provision in Indonesia is limited to providing mobile generators when needed.
“In the immediate term, I think we will see power become a common bundle for the towerco proposition, especially for new build-to-suit and new co-locations by the time a new infrastructure entity is carved out or sold off, with towercos stepping in to run that on an end-to-end basis,” he says.
The country’s MNOs are generally responsible for power in Indonesia, but towercos are now looking into Energy-as-a-Service at MNOs’ request. MNOs usually outsource it to OEMs, and it is for the OEMs themselves to manage the procurement, design, planning, implementation and servicing. Due to the size of Indonesia’s market, even limited investments in cell site energy by towercos could turn it into one of the world’s major telco energy markets.
Power is also an important service proposition in the Philippines, whereby back up batteries and diesel gensets are installed to provide power backup to its sites. Due to the lack of ubiquitous grid access and the difficulties of getting power in some of the more rural areas, providing end-to-end services therefore comes into the equation. This is through augmenting diesel gensets with renewables in both the Philippines and Indonesia to best avoid power outages, whilst also making its sites greener in the long run.
In the Philippines, where its tenancy ratio is at 1.01x (EdgePoint in Malaysia, by comparison, is 2.22x), Sidhu believes there is significant uptick for colocation. However, for colocation strategies to succeed, towercos need to convince operators of the benefits to co-locate. “Most operators understand BTS because that has always traditionally been the historical approach. But colo requires a bit more planning and adjusting with the equipment that needs to go on the site.
“That process requires a bit more training and readiness for MNOs to embrace,” Sidhu adds. “We’ve seen the Philippines go past that, so we should expect to see a high degree of colos going forward.”
In response to the probability of potential S&LBs in the Philiipines, Sidhu shared “We will probably see a quiet year or two and when it does happen, we think the operators that will look at it will be PLDT and Globe. How things change will depend on the market structure and what the capital needs are.
EdgePoint has built a firm platform that today sees it as a leading digital infrastructure player in the ASEAN region. With 5G rollout plans in Malaysia and DigitalBridge’s position at the company still to be crystallised, its focus on fruitful MNO partnerships and product and service innovation could seek to stand them in good stead in the long term.
