A major trend in emerging markets is the transfer of tower assets from leading mobile operators to independent tower companies. TowerXchange’s Kieron Osmotherly explains how this will continue in 2016…
Which developing or emerging markets (regions / countries) do you cover? Briefly describe your activities in these markets.
TowerXchange undertake market studies and host invitation-only Meetups for the top 200 decision makers in the telecom tower industry in Africa, Asia, the Americas and Europe.
What are your main hardware and/or services focus areas?
Telecom towers, infrastructure sharing, tower transactions, managed services, green energy, RMS, I&C, O&M, access control, microcells, DAS.
What are the top market and customer trends that will drive change in your area during 2016, and why?
The transfer of telecom tower assets from MNO-captive to independent towercos is driving multi-billion dollar capital flows and creating a new, highly investible asset class of infrastructure management specialists: towercos. Towercos now own 2,044,286 of the world's 3.3mn towers. This change is also having a transformational effect on the supply chain as towercos are the new king buyers of passive infrastructure equipment and services.
The top market trends within this segment during 2016 will be an increasing trend for MNOs to carve out their own "captive" towercos, creating value by separating infrastructure from retail risk. The flow of pure sale and leaseback transactions will also continue, driving towerco penetration in India from 68% to 85%, in S and SE Asia (exc India) from 27% to 45%, and in MEA from 19% to 30%.
What are the solutions that will make the greatest impact in your area during 2016, and why?
The integration of microcells and DAS into networks and towerco portfolios commenced in 2014-15 but will reach an inflection point in 2016. We are already seeing tens of thousands of "special structures" being installed into Asian telecom networks to provide infill and capacity - as volume increases and the cost of multi band antennas comes down, we're going to see towercos increasingly diversifying into the provision and management of this and other semi-active infrastructure.
2016 will also see the drive for opex efficiencies continue, with an increasing volume of hybrid and renewable energy solutions being leveraged to reduce and ultimately eliminate diesel consumption from many cell sites on unreliable grids or off grid. The deployment of Remote Monitoring Systems coupled with access control and site management platforms will continue to create a new level of performance transparency within Network Operating Centres as towercos continue to optimise network management.
What changes need to be made to speed up developments and what can hold them back?
Regulators, ministries and other National stakeholders need to establish clear, fair licensing and taxation regimes to encourage domestic and international towercos in foster investment in telecom tower networks - critical infrastructure for Nation Building.
The minority of MNOs still retaining their towers need to recognise that their tower networks are no longer a source of competitive advantage - the era of parallel infrastructure is at an end, and the efficiency and time to market advantages of tower sharing are best facilitated by carve out or independent towercos. MNO retained, single tenant towers risk being trapped on balance sheets, depreciating assets, while shared towers represent a source of increasing and recurring cash flow. If MNOs haven't sold their towers already, 2016 may see peak valuations in many markets.
Which of the following will be the most important in emerging markets in 2016?
- Infrastructure Sharing
- Mergers & Consolidations
- Green Energy Solutions
- Outdoor Coverage
Kieron Osmotherly is the Founder and CEO of TowerXchange.