Interview: Bangladesh's tower market since its political transformation

EDOTCO has been active in Bangladesh since 2013 and has the largest portfolio of towers in the country. Thanks to its long history in the country, the quality of its relationships in the market and the proactive approach of the new government EDOTCO sees much to be optimistic about in the country despite political disruption in 2024. TowerXchange sat down with country Managing Director, Sunil Isaac to find out more.

The tower industry in Bangladesh is bouncing back quite well, especially with the interim government taking charge after the political reset last August. They've been really supportive, focusing on keeping things stable and making infrastructure a priority, which has given us confidence to move forward with our projects and expand our network.

For example, the government has been great responding to a flood in the Feni area, a coastal district situated in the south-east of Bangladesh. They sent in the army to help us get to the hard-to-reach sites and made sure we had enough fuel to keep our generators running. This was crucial for maintaining network services in those areas.

The recent tax breaks on renewable energy sources like solar power are also a big deal. It makes it cheaper for us to switch to cleaner energy, showing the government's forward-thinking approach.

We've had excellent cooperation with regulatory bodies too, which has been key. Even with the political changes, local authorities have been really helpful, especially in remote and underserved areas. This partnership is strengthening Bangladesh’s digital backbone, ensuring continued connectivity and growth.

Overall, the tower industry in Bangladesh has been experiencing a steady rebound, encouraged by the interim government's supportive approach during this new phase. This period hasn’t just been about keeping things running; it's been about setting up for long-term success, working together with the government and local stakeholders.

Access to capital has been a bit tricky lately, mostly because investors and financial institutions are being more cautious in the current political climate. During the lockdowns we saw a drop in mobile operator’s revenue growth because there was less traffic, but things are recovering now in both traffic and data growth.

For tower companies, cash flow is pretty stable because of the long-term contracts we have with major players like Grameenphone, Robi Axiata, and Banglalink. This steady income means we can keep up with maintenance and operations, and also look at new investments when it makes sense.

Even though there have been some bumps in the road, the tower industry has shown it's resilient and adaptable. We're focusing on optimizing cash flow and being strategic with our investments to make sure we're staying strong and growing. With supportive policy changes and a focus on digital goals in Bangladesh, we're cautiously optimistic about the future.

The tower-sharing scene in Bangladesh has seen some solid progress since the Bangladesh Telecommunication Regulatory Commission handed out licenses back in 2018. According to the regulations, towercos gets the first crack at building new towers, so mobile network operators (MNOs) aren’t constructing new ones themselves. This has boosted the sharing ratio on sites built after 2018 and raised the overall tower-sharing ratio. Today, EDOTCO holds a steady 1.6x tenancy ratio.

This policy was designed to get MNOs to think strategically about selling their assets, gradually leading to more asset transfer models. However, the response has not taken traction. Out of the ~45,000 towers in the country, only ~22,000 are managed by tower companies, with MNOs still holding onto the rest. EDOTCO owns around ~17,000 towers. Many MNOs prefer to keep their towers because of the current policies, and this attitude can sometimes hinder industry collaboration. Larger MNOs not sharing their assets in strategic locations means tower companies have to build redundant infrastructure, which isn't efficient and costs more to operate.

While infrastructure sharing has been actively advocated, there’s still plenty of room for improvement. With the current political and regulatory environment focusing on digital expansion, we might see more collaborations. As Bangladesh gears up to roll out 5G across the country, operators will likely use shared infrastructure to manage the high costs. Looking ahead, we can expect more partnerships, especially for expanding rural connectivity and rolling out 5G, making sure more communities get access to reliable, high-speed networks.

Robi Axiata was the first to put their towers on the market to raise some capital. Then, last year, we saw Banglalink did something similar in a deal with Summit Towers for about 2,000 towers worth around US$100mn.

There are also a number of agreements between operators through tower companies for sharing infrastructure. With the ongoing new spectrum expansion of the 2300/2600 MHz bands, modernising power systems, and the planned rollouts of 5G, there's going to be a need for significant capital expenditure. Because of this, we can expect more sharing arrangements in the future. This is driven by the need to be cost-efficient and to improve service availability.

Overall, it looks like this trend will continue to strengthen the tower market, leading to a more robust and resilient telecom infrastructure across Bangladesh.

The latest BTRC report shows that out of 45,274 towers in Bangladesh, MNOs own 22,126 (49%). Grameenphone has 12,526 towers, Banglalink 4,004, Teletalk 3,320, and Robi 2,276.

Banglalink was the first to lease back towers under the 2018 Infrastructure Sharing Policy, leasing 2,000 towers for US$100mn. Selling Teletalk's government-owned assets may be complex. MNOs need attractive valuations to sell their assets, drawing more foreign investors, which requires policy reforms in taxation and business operations.

We anticipate that with new policy reforms and the introduction of 5G, other MNOs will make their assets available to raise capital for modernisation and investment in technologies like 5G.

Bangladesh has a relatively lower tenancy ratio at 1.2x compared to neighboring countries - Indonesia’s is 1.6x, Myanmar’s is 1.7x, and Thailand’s is 1.4x. This lower ratio is attributed to 49% of towers being owned by MNOs. As we anticipate MNOs will sell their towers to raise capital to raise capital for new technology investment as discussed earlier, the country's tenancy ratio is expected to increase.

From our inhouse tools like NaPA(Network and Planning Analytics), which used for data driven design techniques, we foresee the country requires an additional 10,000 towers for 4G expansion and more when we rollout 5G across the nation. If the industry work collaboratively together, we will witness significant increase in tenancy. Currently, EDOTCO operates with a tenancy ratio of 1.6x and we aim to achieve a 2.0 tenancy ratio in the next two years.

We've made great progress in fixing the rural electrification issues in Bangladesh by working with energy vendors on innovative solutions. For example, we’ve installed solar hybrid systems and lithium-ion batteries to ensure a steady power supply even in remote areas. Around 1,800 of our sites now have solar panels, producing about 450 MW each year, which has significantly cut down our carbon footprint.

We've also set up hybrid systems that combine solar power, battery storage, and efficient diesel generators for key sites, and use portable generators to keep things running smoothly. Our partnership with local power authorities has been essential, helping us connect about 250 off-grid sites to the commercial power grid over the past seven years, including crucial island locations.

Although Bangladesh’s power production is stable, the distribution can be tricky. To tackle this, we’ve been working with power authorities to create loop grid systems for redundancy and coordinating maintenance schedules to reduce disruptions. These efforts are crucial for maintaining a reliable power distribution system for our tower sites, ensuring uninterrupted connectivity, especially in areas that need it the most. Moving forward, these initiatives will continue to strengthen our ability to provide sustainable and reliable energy solutions.

We're also teaming up with Bangladesh’s top service platform app to create a cool crowdsourcing model for renting portable generators. This idea is all about boosting the gig economy by turning people into micro-entrepreneurs who can provide portable power generators during power outages. It’s a win-win: cost effective, faster response times for power issues and benefits for the local community. As the old saying goes, "Necessity is the mother of invention," and this collaboration is a testament to that principle, bringing innovative solutions to the forefront.

Our focus remains unchanged – We are here to help the government shape the future of digital infrastructure in the country. Firstly, our focus is to expand our networks, especially in rural and less-served areas, to help the government achieve digital inclusion. We plan to build more towers and improve the quality of our infrastructure, which will support 4G coverage and set the stage for 5G. This will help connect the unconnect / under-connected and meeting the growing demand for connectivity and boost economic growth.

Having said that, we will carefully consider new tower building projects, considering there are over 20,000 towers still belongs to the MNOs. We don't want to create duplicate towers, so we'll focus on sharing existing infrastructure to reduce costs for mobile operators and increase returns for investors. We'll aim for maximum sharing options rather than building new towers whenever possible.

Second, sustainability is a key part of our 2025 goals. In 2024, we were recognized as the SDG Champion for Innovative Infrastructure in Bangladesh, and all our sites now use Lithium-Ion Batteries. We will keep pushing green initiatives, like using more renewable energy and energy-efficient technology at our sites.

Another goal is to become a truly digital tower company. By using advanced data analytics and automation, we want to improve efficiency, reliability, and sustainability. We're integrating AI-driven monitoring systems to get real-time insights into site performance, which will reduce downtime and improve service quality. We've developed a proactive site-down predictor, a battery backup capacity predictor, a crowdsourced model for running portable generators, and a unique digital billing platform. Additionally, we're rolling out advanced digital energy management solutions to optimize power usage, cut costs, and support our carbon reduction goals.