Spotlights on the Asia tower industry

Transcription

1 Spotlights on the Asia tower industry TowerXchange Asia Dossier

2 Contents Selected Asian tower market size comparisons 3-62 TowerXchange analysis 3 TowerXchange s analysis of the independent tower market in Asia 24 TowerXchange s who s who in Asian towers 45 Asia 2016 equipment demand forecasts 54 History + towerco business models 62 TowerXchange upcoming Meetups Towerco perspectives 153 Ascend Telecom 156 Bharti Infratel 161 Cam Towerlink 164 edotco 175 Indus Towers 188 OCK TowerXchange Meetup Asia Latest agenda 66 Roundtables and technology working groups 71 Sponsors and exhibitors profiles Bangladesh 82 Cambodia 85 China 108 India 119 Indonesia 126 Laos Country-specific analyses 129 Malaysia 132 Myanmar 140 Pakistan 145 Singapore 149 Sri Lanka TowerXchange Meetup calendar < TowerXchange Meetup Asia, December 13-14, 2016 < TowerXchange Meetup Europe, April 5-6, 2017 < TowerXchange Meetup Americas, June 7-8, 2017 < TowerXchange Meetup Africa, October 3-4, Abloy 195 Acsys Technologies 200 Ascot Industrial 205 Elektroskandia 207 Enatel Energy 211 EnerSys 216 FG Wilson 219 Flexenclosure 222 GS Yuasa 225 Infozech TowerXchange Meetup Asia Exhibition Preview 229 Invendis Technologies 233 IPS 237 IPT Powertech 240 Miteno Communication Technology 243 Siterra 246 Tarantula 250 TOTAL 256 Vinson & Elkins 2 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

3 TowerXchange s analysis of the independent tower market in Asia Selected Asian tower market size comparisons, Q the need for MNOs raise capital to fund spectrum and rollout. The sale of Reliance Infratel to Brookfield Asset Management and the continued rumours of other companies looking to restructure their balance sheets suggests that MNOs may look to monetise their tower assets or restructure stakes in operator-led towercos. Nepal 6,000 Sri Lanka Afghanistan 7,000 5,897 Laos 7,374 Asian tower market with <5,000 assets New Zealand 4,000 Cambodia 9,250 Myanmar 10,750 PNG 1,500 Australia 15,000 Bangladesh Philippines 16,300 29,693 Malaysia 22,117 Singapore 1,000 South Korea 30,000 Brunei 500 Pakistan 40,704 Thailand 52,483 Rest of Oceania 400 Vietnam 70,000 Bhutan 100 Indonesia 85,537 Japan 220,000 India 455,521 China 1,750,000 Source: TowerXchange Last but not least, the Indonesian market continues to scale and mature; Protelindo s acquisition of 2,500 towers from XL earlier this year brings towerco penetration in this market to 64%, while the likes of Balitower and STP are driving the rollout of thousands of infill sites. The regulatory environment for towercos and infrastructure sharing varies from mature tower markets such as India and Indonesia where the regulatory regime is well established, to regulatory environments still drafting policy, where independent towercos are a relatively new business model. This will be explored in-depth at the regulatory workshop to be held after the TowerXchange Meetup Asia and hosted by the IFC. 2,183,800 of Asia s 2,842,851 towers are owned or operated by towercos, representing 77% of the total inventory of assets. The transition to the tower sharing model continues apace in Asia, from companies like edotco and OCK Group with their appetite for international expansion, to the towerco consolidation taking place in Myanmar. With the country s maiden sale and leaseback transaction rumoured to be imminent in Pakistan, Asia continues its transition to becoming a shared infrastructure market. The overall shape of the market is being driven in particular by China s continuing adoption of the towerco model; this will be covered in depth in our new dedicated coverage of the Chinese market. In the Indian market, the push towards 4G is driving Afghanistan: An average of 500 towers are added to the Afghan tower network every year, which totalled 5,897 towers in mid While Roshan, Etisalat and MTN all retain their towers, all have been linked with prospective tower divestitures / outsourcing in recent years, with AWCC going so far as to carve out ~1,500 towers into their subsidiary towerco, Frontier Tower Solutions. There are over 20mn subscribers and with upwards of XX TowerXchange Asia Dossier TowerXchange Asia Dossier

4 90% population coverage in Afghanistan. Most rural sites are off grid, and even many urban and suburban. Australia: Axicom (formerly Crown Castle), Broadcast Australia and a handful of smaller independent towercos own around 2,500 towers in the 15,000 tower Australian market. The majority of towers are owned by Telstra, with Optus and Vodafone playing catchup, particularly in rural areas. In urban areas Vodafone and Optus share RAN. A further 1,800 towers have been recently erected by nbn, the government owned new broadband network, while a handful of government agencies and small local wireless operators and ISPs represent a further 2,000 between them. Ground based towers, primarily used for rural coverage, are supplemented by around 20,000 rooftop sites, although not all of these are occupied. Bangladesh: edotco operates a network of 7,993 towers, the majority of which were transferred from Axiata s Bangladeshi opco Robi. The edotco portfolio is maturing fast with 11 different customers including six MNOs. Bangalink s ~6,000 towers are believed to be coming to market as part of VimpelCom s passive infrastructure monetisation process. There are approximately 29,693 towers in Bangladesh, with around 1,000 new towers going up each year. Afghanistan tower counts, Afghan calendar year Western calendar year Tower count Estimated tower count for Bangladesh 3,800 4,100 7, ,800 6, Grameenphone Banglalink edotco Airtel Teletalk, CityCell and non-traditional MNOs Sources: TowerXchange research, edotco, Hardiman Telecommunications Source: MCIT, Afghanistan The proposed merger between Bharti Airtel and 4 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

5 Empowering tomorrow s connected world effectively cost-efficient energizing communities empowering communication Connectivity is at the core of everything we do. Providing first-of-its-kind regional accessibility, our telecoms infrastructure reach enables us to touch communities and expand communication businesses across Southeast Asia. Enabling connectivity for the future

6 Tower deals in Asia (excluding carve-outs) Source: TowerXchange Year Country Seller Buyer Tower count Deal value US$ Cost per tower US$ Deal structure 2016 Myanmar SMI Shining Star 100 $12,707,000 $127,070 Company acquisition 2016 India Reliance Brookfield 43,379 $1,700,000,000 $76,842 Acquiring 51% controlling stake 2016 Vietnam VNI OCK Group 1,938 $50,000,000 $25,800 Company acquisition 2016 Indonesia XL Axiata Protelindo 2,500 $250,000,000 $100,000 SLB 2016 India Viom Networks American Tower 42,200 $1,180,000,000 $76,540 Acquiring 51% controlling stake 2015 Myanmar Digicel MTC edotco 1,250 $221,000,000 $235,733 Acquiring 75% controlling stake 2015* Australia Crown Castle MIRA-led consortium 1,772 $1,600,000,000 $902,934 Company acquisition 2015 India KEC International American Tower 381 $13,000,000 $34,121 Company acquisition 2014 Malaysia KJS YTL Power Int l 309 $15,000,000 $48,544 Company acquisition 2014 Indonesia XL Axiata STP 3500 $460,000,000 $131,429 SLB 2013 Indonesia Hutchison STP 300 $68,000,000 $226,667 SLB 2012 Indonesia Hutchison Protelindo 503 SLB 2012 Indonesia PT Central Investindo Protelindo 152 Company acquisition 2012 Indonesia Indosat Tower Bersama 2500 $519,000,000 $207,600 SLB 2011 Indonesia Infratel Tower Bersama 595 Company acquisition 2010 India Essar Telecom Infrastructure American Tower 4450 $432,000,000 $97,079 SLB 2010 Indonesia Hutchison Protelindo 1482 $165,900,000 $111,943 SLB 2010 India Aircel GTL Infrastructure $1,800,000,000 $102,857 SLB 2009 India Viom Networks QTIL $2,407,000,000 $133,722 Company acquisition 2009 India Transcend Infrastructure American Tower 327 $23,000,000 $70,336 Company acquisition 2009 India XCEL Telecom American Tower 1730 $170,000,000 $98,266 Company acquisition 2008 Indonesia Bakrie STP 543 $34,000,000 $62,615 SLB 2008 Indonesia Hutchison Protelindo 3692 $500,000,000 $135,428 SLB *Crown Castle Australia (now Axicom) transaction excluded from totals and averages as it not a natural comp for the other S and SE Asian transactions Totals / average 149,103 $15,377,607,000 $94,315 6 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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8 the Axiata Group has been approved by the Prime Minister, and once completed will create the second largest telco in this market. The merger is likely to see Airtel s Bangladesh towers managed by edotco in the near future. Robi has transferred its shares in edotco Bangladesh back to edotco Group, and edotco will seek a full tower management license. While the BTRC advocates infrastructure sharing, a draft law on infrastructure management prohibits licensed MNOs from operating tower sharing companies and may restrict options for Axiataowned edotco. In the meantime it was announced that two tower management licenses would be issued to independent towercos by the end of the year, and the BTRC said that it would found one of them. Cambodia: With a crowded operator market of seven operators serving a population of 15.5mn, and a regulator that supports infrastructure sharing, there is continued potential for the 9,250 site tower market in Cambodia to grow. There has been an influx of Chinese operators and vendors prepared to invest heavily in this market. Challenges still remain including 20% of sites being off-grid and the risk of landmines in the more remote areas. edotco operates a portfolio of 1,950 towers in Cambodia. Local tower builder Cam Towerlink Tower ownership in India in , ,000 5,000 8,000 9,600 14,421 25,000 65,000 5,200 8,400 27,839 38,642 is also in the process of setting up operations as a towerco, and has secured its first contract to build towers around the Angkor Wat temple UNESCO World Heritage complex. Some operators in this market, such as Mfone, have fallen victim to the intense competition and price wars leaving some infrastructure assets abandoned. China: Now covered in China FAQs 120,739 43,379 57,987 India: 66% of India s 454,521 towers are owned and operated by towercos, a figure which will rise to 82% when the BSNL towerco is inaugurated. Sources: TowerXchange Research, TAIPA, PwC Indus Towers American Tower RITL Bharti Infratel GTL Infrastructure Tower Vision Ascend BSNL Reliance Jio Reliance IDEA Cellular Vodafone India Bharti Airtel MTNL MTS Others Reliance Communications has signed a non-binding pact with Brookfield Infrastructure Group to sell a majority in the company s tower unit, Reliance Infratel for US$1.7bn. Brookfield will acquire a 51% share in the company which owns approximately 43,379 towers. There are indications that other transactions in the Indian market may be imminent: Idea Cellular is planning on monetising its tower assets to release capital for investment in 4G. Idea Cellular owns around 9,600 captive towers via a wholly owned arm Idea Cellular Infrastructure Services (ICISL). 8 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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10 It also has 16% stake in Indus Towers, Aditya Birla Telecom s telecom tower joint venture with Airtel and Vodafone. Idea and the other shareholders in Indus Towers are rumored to be considering inviting third party equity investors to participate in the 120,000+ venture. Meanwhile Bharti Airtel are reportedly considering releasing further equity in their towerco, Bharti Infratel. There are rumours that TowerVision, an independent towerco with 8,400 towers owned by a group of international investors, may be up for sale. Potential buyers could include Bharti Infratel, Brookfield, Tillman Global Holdings or American Tower, who have all indicated an appetite to acquire further assets in India. Ascend Telecom could also attract bids for their 5,200 towers. GTL Infrastructure has initiated a process to auction the company and its assets by as early as February The auction is to be led by EY, and will entail the conversion of debt into equity. Valuations in the Indian tower market were recalibrated last year and a new benchmark established by American Tower s acquisition of Viom Networks, their 42,200 towers and almost 100,000 tenancies, generating a valuation of US$3.3bn. American Tower has acquired a 51% controlling ownership interest with Tata Group and several private equity groups retaining a stake. American Tower now owns 57,987 towers in the country, and CEO James Taiclet has gone on record recently saying that the company would be interested in acquiring more towers in India. MNO consolidation has resumed with the recent merger between Aircel and Reliance Communications. Further rational consolidation is welcomed by towercos who would prefer to see spectrum holdings consolidated into four or five companies with the capital to rollout. With India s 3G overlay around half finished and expected to reach 95% coverage in the next months, the 4G rollout has already started in tier one and tier two cities. In the near term, the 4G rollout is expected to have a marginal impact on the profitability of Indian towercos, whilst the majority of BTS are added through loading - the addition of a second set of antenna by an existing tenant - but when 4G rollout progresses to adding infill sites for densification, expect to see a significant increase in tower cash flow. Bharti Infratel reported an increase in tower count by 4,813 towers over Q2 2016, including their stake in Indus Towers. Bharti Infratel s market cap was then Rs bn, and EBITDA for FY15-16 stood at Rs 5,403 Crore, an 8% YOY increase. BSNL has received in-principle approval to carve out its estimated 65,000 towers into a separate towerco which could be valued up to US$3bn. A government working group has been formed to develop a capital and organisational structure for the new entity, though the process may take some time. Analysts are excited by the potential of these towers coming to market as many are in prime locations with considerable tenancy ratio growth potential, having not been proactively marketed before. BSNL has leased out 6,505 of its towers to other telecom operators, suggesting a tenancy ratio around 1.1x. Out of the 6,505 spaces that it has rented out, Bharti Airtel accounted for 2,251 slots. It was followed by Reliance Jio with 1,440 slots and Idea and Vodafone with just above 900 towers each. Indonesia: Indonesia remains one of the most mature tower markets in the world, with solid tenancy ratios, excellent organic growth, and strong market caps boasted by three major towercos; Protelindo (15,167 towers), Tower Bersama (11,553) and STP (6,938). IBS Tower, KIN, Centratama (formerly known as Retower), Persada Sokka Tama and Balitower also have some scale in Indonesia. There have been rumours that IBS Tower, which has some ownership links with its number one tenant Smartfren, could be coming to market. Indonesia s towercos build 3,000-5,000 towers, rooftops and infill sites per year, tenancy ratio growth compares favorably to many other global tower markets, with around 0.13 tenants added per tower per year. XL Axiata has completed the sale of 2,500 telecommunication towers to Protelindo for 3.56 trillion rupiah (US$250mn) in cash. XL signed a deal to leaseback most of the towers for ten years. The future of Telkom-owned Mitratel and their ~8,000 towers remains uncertain with the cancellation of the proposed share-swap acquisition of Mitratel by Tower Bersama at the behest of the commissioner. Telkom still has a further 18, TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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12 towers on their balance sheet, of which 13,000 could potentially be sold at an unspecified point in the future. Protelindo and Tower Bersama are holding firm against downward pressure on lease rates, which are believed to average around US$1,200 in Indonesia. Meanwhile, the new battleground for competition between Indonesia s towercos seems to be microcells and fibre, as illustrated by Protelindo s acquisition of iforte. STP also has substantial fibre and microcell portfolios after its acquisition of fibre company Bit, while Balitower have also added substantial stock of smaller sites to their portfolio. Estimated tower count for Indonesia 15,167 6,938 2,638 1,000 1, , ,553 3,000 8,000 18,000 8,500 4,000 Towerco-owned Mitratel Tower Bersama Protelindo STP IBS Tower KIN Persadasokka Tama Centratama Menara Balitower Gihon Others Operator-captive Telkom + Telkomsel XL Indosat Source: TowerXchange Japan: Japan is one of the most sophisticated mobile markets in the world. Yet towers are still seen as a source of competitive differentiation, which perhaps explains why initial interest in carving out a towerco a few years ago seems to have tailed off, and why tower count data is so hard to find readers should consider our estimate a very rough guide. Japan is famous for having the fewest number of subscribers per tower in the world reportedly around 500 suggesting a staggering tower count of around 220,000 for a nation of 127mn people and a landmass of just 378,000 sq km. LTE was launched as long ago as 2011 by former State owned monopoly NTT DOCOMO and in 2012 by the nation s other MNOs, SoftBank and KDDI (au). DOCOMO has already started rolling out LTE-A. Japan s three leading MNOs are believed to have each added up to 30,000 microcells and small cells as infill sites. TowerXchange understand several tower companies are trying to establish themselves in the Japanese market, but that their penetration remains negligible. Laos: The 7,473 towers in Laos all remain operatorcaptive, but there are possible opportunities to acquire towers from all but the market leading MNO: Unitel has 4,000 towers, and is a 51-49% joint venture between the State and Viettel. The State also owns 51% of number two operator LTC, whose coinvestor Shenington Investments may seek an exit. 100% State owned MNO ETL is heavily indebted and needs cash for 4G rollout, while VimpelCom has long sought to exit Beeline Laos, whose towers could potentially be monetised by an acquirer. Malaysia: Towercos own 31% of Malaysia s towers, led by edotco s 3,717 towers carved out of Celcom / Axiata. A further 3,200 towers are owned by 14 different State-backed and other independent towercos, while turnkey infrastructure provider OCK Group which owns 133 sites in this market. There are around 22,117 towers now in Malaysia, representing almost exactly 2,000 mobile subscribers per tower. edotco aims to increase their Malaysian tower count by around 1,000 in 2016, although many new sites will be special structures such as lamp posts. A new ground based tower in Malaysia costs around RM300,000 (US$69,000).Around 1, TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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14 Estimated tower count for Laos 423 1,100 1,950 LTC Unitel ETL Beeline (VimpelCom) new towers went up in 2015, with Celcom building through edotco and Maxis and DiGi building their own although DiGi has since signed a collaboration agreement with edotco which includes co-location and new BTS sites. The State-backed towercos also continued to expand, including through over 2,000 rural sites supported by Malaysia s Universal Service Provision Fund. It has been estimated that an additional 8,000 structures may be needed in Malaysia for 4G, although much of that demand will be met by microcells, lamp-poles, DAS and IBS. 4,000 Estimated tower count for Malaysia Source: TowerXchange edotco DiGi Maxis 3,717 3,400 3,800 Telekom Malaysia 1,000 State backed towercos 3,200 YTL 5,000 OCK 133 Unaccounted for 1,876 1,000 2,000 3,000 4,000 5,000 Source: TowerXchange Myanmar: The rollout has seen Myanmar more than quadruple its tower stock since Telenor and Ooredoo launched two years ago. There are currently 10,750 towers in Myanmar, unequally spread across seven towercos and two operator stakeholders - MPT has around 2,600 towers, while fourth operator Viettel may utilise consortium partner Star Holdings Corporation s ~1,000 towers, which were previously utilised by MECtel. At this point build orders and volumes have slowed down compared to the initial launch period. TowerXchange would divide the Myanmar towerco ecosystem into three categories: existing towercos of scale IGT, Apollo and edotco; newer towercos competing on price EFT and OCK; and towercos seeking an exit PAMEL and MIG. In October, Hong- Kong based Shining Star International acquired MIG for US$12.7mn, making it the first transaction of the year and second overall in the Myanmar tower industry. This effectively leaves PAMEL alone in the third category. 14 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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16 Estimated total number of sites in each Myanmar MNOs network (inclusive of co-locations) Breakdown of ownership of the 10,750 towers TowerXchange estimates have been built to date in Myanmar ,200 4,300 6,800 Telenor Ooredoo MPT IGT Apollo edotco PAMEL EFT MIG OCK Viettel- MECtel Independent towerco towers MNO captive towers Source: TowerXchange 2600 MPT Source: TowerXchange Tenancy ratios are generally healthy, in the range, averaging around 1.5. Even in major cities, grid power is unreliable, and in rural areas often non-existent, so Myanmar s towers typically have robust backup power systems. Lithium batteries are now being tested and solar integration will also be explored. Ooredoo s dalliance with retaining power assets is now behind them, so all new towers are built on a tower+power business model. Nepal: Axiata Group has closed the acquisition of a majority stake in Nepalese market leader Ncell from TeliaSonera, in a deal believed to be worth US$1.365bn. There have been no tower deals in Nepal to date, but this move by the Axiata Group may pave the way for Axiata s towerco edotco to enter the market in the near future. New Zealand: There are early signs of a nascent tower industry emerging in New Zealand, where Spark and Vodafone New Zealand have substantial but ageing tower networks, newer entrants 2degrees have leveraged co-location where possible while building a few hundred towers. 2degrees may have an appetite to sell their towers and partner with a towerco on BTS. Parallel infrastructure is substantial, while the need for improved rural coverage, particularly on the South Island where tourist and agribusiness drive demand, has prompted the government s Rural Broadband Initiative to invest in over 100 towers. A total of around 4,000 ground based towers are supplemented by around 7,000 rooftop sites, primarily used in the larger cities. 16 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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18 Estimated tower count for The Philippines Pakistan: The merger between VimpelCom (Mobilink), Global Telecom Holdings, Warid Telecom Pakistan and Bank Alfalah is now complete, creating a new combined entity with around 14,500 towers serving 45 million customers. 7,300 Globe Smart 9,000 Towerco penetration in Asia now and forecast for Q Current penetration Forecast, Q % 82% 65% 100% 67% 66% 64% 34% 34% 34% 27% 23% China Myanmar India Indonesia Malaysia 31% 31% 30% 26% 26 % 21% 18% Sri Lanka Australia Thailand Bangladesh Cambodia Vietnam Source: TowerXchange 3% Pakistan An unnamed towerco is believed to be in exclusive negotiations for the newly combined tower portfolios of Mobilink and Warid which, after decommissioning overlapping sites, will consist of around 13,000 sites. Parent company VimpelCom is rumoured to be seeking close to US$1bn for the tower assets with the value boosted by the fact that Mobilink has been leasing out their towers at a commercial rate for the last five years, achieving a tenancy ratio of around Etisalat s Ufone are also believed to have commenced a process to monetise their Pakistani towers. The towercos currently active in active in Pakistan include edotco, which operates 13,000km of fibre in the country; Towershare, which has around 800 towers at present; and AWAL Telecom, which recently announced a BTS contract with Mobilink. #2 MNO Telenor has recently reached an agreement with China Mobile Pakistan (Zong) to share their fibre-optic network assets, and the two operators were engaged in a landmark RANsharing trial, the first in Pakistan. Philippines: There are currently no independent tower companies in The Philippines. The glass 18 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

19 Beijing Miteno Communication Technology Co.,Ltd Beijing Miteno Communication Technology Co., Ltd. was established in September 2004 and listed on Shenzhen Stock Exchange GEM, with the market value of about 2 billion US dollars (stock code: ) and about 2,000 existing employees. Miteno, focusing on two main industrial fields information infrastructure investment and operation and mobile Internet operation and service, provides highquality and high-efficiency products and services for its customers. Through years of rapid development, Miteno has realized strategic layout in such new-generation information technology fields as information infrastructure, Internet of Things, mobile Internet and big data. Integrated Base Station POI &Dual-channel Deployment Highlights: As a tower operator, Miteno s tower portfolio includes owned towers; As a tower designer and manufacturer, Miteno has provided over 25,000 communication towers and auxiliary products to major wireless carriers of China; DAS solution: POL and dual-channel DAS system ; Data Center: Integrated with the TIG -300, a self-developed intelligent tower monitoring system; Integrated Tower Base Station solution for limited ground space. Product Innovations

20 ceiling on tenancy ratios created by the market structure - a cosy duopoly between Globe and Smart, neither of which urgently needs to raise capital - means towercos are unlikely to prioritise the country, despite its scale (over 100mn subscribers). A reportedly burdensome tax regime, compounded by complex permitting processes, further disincentivises investment in The Philippines by international towercos. The prospective entry of SMC as a third MNO, in a joint venture with Aussie giants Telstra, recently faltered, although SMC are reportedly in dialogue with Telenor in a renewed attempt to enter the market. The new Philippine government may look more favorably on increasing competition than the previous incumbent. Operational costs in The Philippines are phenomenal, largely as a function of the geography of the country: a maintenance visit to a remote tower can require a flight, a boat and a donkey ride up a mountain! This has resulted in substantial outsourcing to managed services subcontractors. To counteract the opex challenge, both Globe (which has an estimated 7,300 towers) and Smart (9,000) are currently investing in substantial network modernisation programmes, including the upgrade of backup power solutions. South Korea: According to GSMA Intelligence, SIM penetration was at 113% among a population of 50.4mn in Q South Korea boasts one of the most sophisticated telecommunications Estimated tower ownership in Thailand 800 5,000 1,500 11,000 Proposed DTAC-CAT towerco DTAC towers built outside concession AIS disputed towers built under CAT concession 12,000 AIS disputed towers built under TOT concession AIS towers built outside concession 12,183 DIF (formerly TRUEIF) True disputed towers built under CAT concession 10,000 infrastructures in the world, cultivating an insatiable demand for high speed mobile broadband among its citizens. Mobile broadband penetration in South Korea is above 99% and fibre has been widely deployed. South Korea is a three operator market featuring SK Telecom, KT and LG Uplus, while the Ministry of Science, ICT and Future Planning (MSIP) has announced intention to license a fourth MNO. South Korea was the first market in the world to migrate the majority of users to LTE, with LTE-A rollout now well under way. TowerXchange are starting to pick up the first faint signals that towerco activity may be emerging in South Korea. Sri Lanka: edotco had a tenancy ratio of 2.13x at the end of Q116 on the 2,144 towers they manage for Dialog. High levels of bilateral sharing means Source: AEC Advisory and TowerXchange tenancy ratios are closer to two than one all over Sri Lanka. Sri Lanka is now mostly covered with 3G, and 4G is driving need for cell site densification. Dialog and Mobitel hold all of the 4G spectrum, and any other players that want to offer this will need to engage in RANsharing. There are around 7,500 towers in the country. Bharti Airtel had been rumored to be looking into selling its 2,500 towers, but seems to have cooled on the idea. Bharti Airtel had been rumored to be looking into selling its 2,500 towers, but seems to have cooled on the idea. Thailand: Thailand has a tower market unlike any other in the world! Ownership of towers is 20 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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22 in dispute as a function of BOT (Build-Operate- Transfer) concessions that are now expiring. Thailand s three commercial MNOs were due to transfer 2G infrastructure back to SOEs CAT and TOT. The 2G equipment has little value, but of course the towers do. CAT, which ran the concessions for the 850 and 1800MHz bands, failed to reach an agreement with majority stakeholder DTAC to create a 49-51% JV towerco, into which 11,000 disputed towers were to be injected. Negotiations to create a prospective 12,000 tower JV towerco between AIS and TOT, which ran the 900MHz concession, were called off late in 2015, but the process has resumed with the recent creation of a committee to pave the way for the creation of the joint venture. CAT and TOT have started to discuss an informal partnership without a merger, and may consolidate some of their similar core businesses to remain competitive in the post-concession era. At the same time, AIS and TOT are expected to sign a contract signalling the launch of a joint-trial commercial service on the state agency s 2.1GHz spectrum. TowerXchange estimate there are 52,483 towers in Thailand, of which 12,183 sit on the balance sheet of DIF, formerly TRUEGIF, a towerco created by True Corp and SCB Asset Management and successfully listed on the Thai stock exchange. DIF has little debt, a high leverage ceiling, and an appetite to consolidate more Thai towers especially if True reduces their shareholding to increase the perceived independence of the entity. A further 10,000 towers were built by AIS and 800 by DTAC outside the concession for 3G usage. True s non-concession towers sit on DIF s balance sheet It all gets very confusing! The steady lease-up of DIF s towers is a good sign, but there is little progress towards any joint ventures. With one auction for 900MHz spectrum cancelled after the successful bidder Jasmin failed to pay its first installment, a re-auction was held in which AIS was the only bidder. The Thai market continues to be complex and unpredictable; this and the 49% FDI limit may deter some investors. Vietnam: Vietnam s largest independent towerco SEATH, with 1,938 sites (mostly guyed mast towers) is to acquired by Malaysia s OCK Group for around US$50mn. OCK may seek to consolidate other members of a fragmented group of around 30 local towercos who between them own ~10,000 towers. Alcazar Capital and ASEAN Towers Vietnamese subsidiary Golden Towers has around 350 towers in the country, and may also be engaged in consolidating existing independently owned towers in Vietnam. Meanwhile the restructuring of Vietnam s Ministry owned #2 and #3 ranked MNOs MobiFone and VNPT seems as far off as ever, limited the chances that a decent sized sale and leaseback opportunity could come to market in the mid-term. 4G spectrum in the 2.3 and 2.6 GHz bands, together with refarmed 900MHz spectrum, is expected to be auctioned in To date, towers have not been widely shared in Vietnam, hence considerable parallel infrastructure with an estimated 70,000 towers in the country Meetup Asia December, Marina Bay Sands, Singapore A senior-level networking opportunity with 250 leaders of the Asian telecom tower industry Vistit 22 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

23 Asia heatmap MYANMAR Legend TowerXchange research has not revealed any infracos or towercos to date Towercos or infracos active in the market. No recent transactions have taken place and none rumoured to take place soon Towercos or infracos active in the market. No current transactions taking place but an attempted tower sale has taken place in the last 3 years or there are unconfirmed rumours of a deal in this market. Towercos or infracos active in the market. Rumours of deals confirmed in the market. Towercos or infracos active in the market. Deals of significant size have taken place in the last 5 years. Towercos or infracos active in the market. Deals have taken place in the last year and more imminent deals rumoured Note: Russia is covered under Europe; we estimate it to have a 5% towerco penetration and we expect it to be a growth market XX TowerXchange Asia Dossier TowerXchange Asia Dossier

24 TowerXchange s who s who in Asian towers TowerXchange presents an A to Z of MNOs, towercos, investors and advisors who are key stakeholders in the tower industry in Southern and Southeast Asia TowerXchange takes a deep dive into the Asian tower industry, providing the most comprehensive directory to date of the key MNOs, towercos, investors and advisory firms active in the market. Note that stakeholders in the Russian and Central Asian tower markets are covered in TowerXchange s European who s who. Keywords: Asia, South East Asia, North & East Asia, Southern Asia, India, Myanmar, Vietnam, Cambodia, Indonesia, Pakistan, Bangladesh, Nepal, Thailand, Malaysia, Singapore, Who s Who, Alcazar Capital, Altman Vilandrie & Co, American Tower Corporation, Analysys Mason, Apollo Towers, Ascend Telecom, Axiata Group, Axicom, Barclays, Balitower, Berkshire Partners, Bharti Airtel, Bharti Infratel, Broadcast Australia, BSNL, Carlyle Group, Cam Towerlink, CAT Telecom, Centratama, Citi, Common Tower, Delta Partners, Deutsche Bank, DIF, Eco-Friendly Towers (EFT), edotco, EY, FMO, Frontier Tower Solutions, Golden Towers, GTL Infrastructure, Hardiman Telecommunications, Hutchison, IBS Tower, IFC, IGT, Indus Towers, ING, Irrawaddy Green Towers, JP Morgan, Kazanah, KIN, KJS, KPR Consult, Macquarie Group, MIG, Mitratel, MPT Myanmar, New Silk Route, OCK Group, Ooredoo, PAMEL, Persada Sokka Tama, Protelindo, Providence Equity Asia Advisors, PT Wellington Capital Advisory, Reliance Communications, Reliance Infratel, SACOFA, Saurava Towers: SEATH, SREI Infrastructure Finance, STP, Tata DOCOMO, Telkomsel, Telenor, TOT, Tower Bersama, Towershare, Tower Vision, TrueMove, Ufone, Vimpelcom, Vodafone, Warid, XL Axiata, Yiked Bina Read this article to learn: < Who s who of the 33 top towercos active in Southern and Southeast Asia < The history of MNOs tower transactions across the region < An introduction to some of the most credible current and prospective investors into Asia towers < Profiles of the TMT advisory firms with experience of Asian tower transactions Alcazar Capital: Alcazar Capital Limited (ACL) is an Investments Advisory Firm based in Dubai International Financial Center and focussed on private investments advisory and asset management; Alcazar s current portfolio of investments and assets under management exceeds US$1bn. Alcazar s investments in the tower industry include Irrawaddy Green Towers in Myanmar and Golden Towers in Vietnam. Altman Vilandrie & Co: AV&Co. has extensive tower industry experience spanning tens of engagements (including Latin America, Africa, Asia, North America, Europe) over ten years, including tower operator strategies as well as tower transaction due diligences. Their recent work has addressed a number of relevant topics such as the impact of small cells, the future opportunity for DAS and the changing role of rooftops. American Tower Corporation: The world s largest independent commercial towerco, American Tower need no introduction within this publication. With its headquarters in the U.S., American Tower Corporation operates a Global Portfolio of over 147,000 sites composed of towers in advanced, evolving and developing wireless markets, in the U.S., South America, Africa, Europe, and Asia with its growing presence in India. American Tower Corporation has combined organic with selective inorganic growth in Asia, where to date they have focused on India. The company s M&A activity in India began with the acquisition of 1,730 towers from XCEL Telecom for US$170mnin 2009, continued with the acquisition of 4,450 towers 24 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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26 from Essar Telecom for US$432mn in 2010, and culminated in the acquisition of Viom Networks and their 42,200 towers, announced in October 2015, for US$1.17bn, taking a 51% stake in the company. The deal provided American Tower Corporation an all-india footprint and a portfolio of over 57,000 towers, and driving the company to scale in India, and enabling them to look for new investment opportunities in other markets across Asia. American Tower employs a three-pronged approach to evaluating potential international acquisitions: identifying relatively stable political and macroeconomic environments, seeking markets with robust wireless sectors, and finally pinpointing compelling transactions opportunities including a high quality counter-party, good location, sound assets, and an attractive valuation. Analysys Mason: Marco Cordoni and his team at Analysys Mason are among the go-to-guys for tower market analysis and due diligence on a global basis. provides a full service tower and power offering. Ascend Telecom: Incorporated in 2002, Ascend Telecom is an independent Indian towerco providing world class passive telecom infrastructure on a shared, multi tenancy basis for the mobile services and wireless sector. Ascend Telecom provides site location, design, execution and maintenance of infrastructure for telecom network operators, and is the first Indian company to offer sites with complete passive infrastructure to MNOs, on Build-Own- Lease model (BOL) basis. When Ascend Telecom last disclosed their tower count in 2015, it stood at 4,843. Axiata Group: Axiata is a leading telecommunications group in Asia and has controlling interests in six mobile operators under the brand names of Celcom in Malaysia, XL in Indonesia, Dialog in Sri Lanka, Robi in Bangladesh, Smart in Cambodia and Ncell in Nepal. Axiata also has strategic interests in Indian s Idea and M1 in Singapore. business for US$1.6bn to a consortium including Macquarie Infrastructure and Real Assets, UniSuper and UBS Global Asset Management. Barclays: Barclays global investment banking division offers a leading Technology, Media and Telecoms (TMT) franchise. The TMT team has significant experience representing leading tower operators as well as telecom service providers around the globe on buy and sell side assignments. In this capacity, Barclays has supported its clients in the valuation and/or marketing of tower portfolios as well as the negotiation of various agreements associated with these transactions. Balitower: Founded in 2006, PT Bali Towerindo Sentra Tbk is a telecommunication tower company active in the Indonesian province of Bali. Balitower was listed on the stock market in 2013, and in 2015 began to expand its footprint outside of Bali. Balitower claims to be the largest provider of microcell poles in Indonesia. Apollo Towers Myanmar: Apollo Towers built around 1,100 towers for Telenor in phases one and two and have since secured a contract to build a further 700 towers for Telenor in phase three. Apollo Towers is chaired by serial towerco entrepreneur Sanjiv Ahuja, who was the original Chairman of Eaton Towers in Africa and who is a former CEO of Orange. Ahuja s Tillman Global Holdings and Texas Pacific Group are the majority shareholders of Apollo Towers Myanmar, while OPIC (the Overseas Private Investment Corporation) recently undertook the single largest U.S. direct investment in Myanmar when they invested US$250mn in Apollo. Apollo Axiata also carved out the first pan-regional towerco, edotco, which operates in six countries to provide optimised, shared telecoms infrastructure, amassing a portfolio of 16,450 towers and 12,000 km of fibre. Axicom: Axicom is Australia s leading provider of independently owned wireless infrastructure. The company owns, operates and manages a portfolio of approximately 1,800 towers in Australia, substantially covering the Australian population. Crown Castle s Australian subsidiary was renamed Axicom following the U.S. towerco s sale of the Beijing Miteno Communication Technology: One of China s leading independent towercos with over 1,000 sites. Miteno also has international ambitious and is an active bidder on tower transactions in Southeast Asia. The company is also a leading tower designer and manufacturer. Berkshire Partners: Berkshire backed Crown Castle during their successful foray into European towers in the late nineties, and currently has active investments in Protelindo (largest towerco in Indonesia with a small footprint in the Netherlands), Torres Unidas (Andean region of CALA) and Tower 26 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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28 Development Corporation in the U.S. and Puerto Rico. Bharti Airtel: Bharti Airtel is an Indian mobile network operator, and ranks as one of the top four MNOs globally with operations across 20 countries in Africa and Asia. In India, Bharti Airtel carved out its own towerco, Bharti Infratel, and is a partner in the Indus Towers joint venture towerco. While Bharti Airtel initially followed a similar strategy in Africa, creating Africa Towers subsidiaries in several countries, before subsequently selling towers in the majority of countries to a variety of African towercos. There have been rumours that Bharti Airtel may look to reduce its footprint in two markets, Bangladesh and Sri Lanka where a merger with Dialog Axiata has been proposed. Bharti Infratel: One of the pioneers of shared telecoms infrastructure, Bharti Infratel was created in 2007 as an independent tower company to provide compelling capex saving opportunities to telecom service providers, while optimally utilising Bharti Airtel s large tower base in India. Infratel has 38,458 towers, across eighteen states, and eleven telecom circles, and is still growing. Bharti Infratel also has a 42% stake in Indus Towers which was created as a joint venture between Bharti Infratel, Vodafone and Aditya Birla Telecom to hive off the towers business in fifteen telecom circles. Bharti Infratel s goal is the disarmament of MNOs, the creation of end-to end tower solutions including fibre, small cells and active equipment, and supporting the continued development of telecoms across India, including the creation of smart cities. Broadcast Australia: Broadcast Australia owns and operates one of the most extensive terrestrial broadcast transmission networks in the world, and provides co-location for a variety of tenants, including telecoms service providers, on its 380+ sites across the country. International subsidiary BAI provides connectivity solutions in various metropolises in North and South America. BSNL: BSNL is the State-owned telecommunications provider in India. It is the largest provider of fixed telephony and broadband services with more than 60% market share and sixth largest mobile network operator in India. BSNL has begun the process of carving out its own towerco, and has received in-principle approval from the Department of Telecommunications which will establish an inter-ministerial group to work out the capital and organisational structure of the new company, once a market valuation of BSNL s 65,000+ tower assets is carried out. Carlyle Group: The Carlyle Group is a global alternative asset manager with US$178bn of assets under management across 125 funds and 164 fund of funds vehicles. The Carlyle Group s investments in the tower industry include PT Solusi Tunas Pratama TBK (STP) in Indonesia. Cam Towerlink: Established in 2013 in Cambodia by a group of three Malaysian shareholders, Cam Towerlink provides turnkey telecommunications infrastructure solutions for operators, including designing, constructing and operating telecoms towers and small cell sites. One of Cam Towerlink s first projects is to deploy telecoms coverage for the first time around the Angkor Wat temple complex. Upon completion of this project in mid the company plans to expand its footprint into neighbouring municipalities. CAT Telecom: CAT Telecom is a Thai MNO, and one of three state-backed companies operating a nationwide network. Cat Telecom and DTAC have been in ongoing discussions to create a joint venture towerco, and transfer 9,000 disputed concession towers into it. Centratama: PT Centratama Telecommunication Indonesia TBK is a listed towerco providing passive telecoms infrastructure for service providers, along with its subsidiary PT Centratama Menara Indonesia, formerly known at PT Retower Asia. The company made an operating loss of IDR12.4bn (just under US$1mn) in As of March , Centratama operated 659 telecom towers. China Tower Company: Formed two years ago, CTC is already the largest towerco in the world, with 1.55mn towers on their books. CTC is 94% owned by China s three MNOs. Citi: One of the world s leading tower transaction advisory groups can be found within the TMT team at Citi. 28 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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30 Common Tower: Common Tower Technologies Sdn. Bhd is an independent tower owner and operator in Malaysia, and is also one of the nation s largest providers of professional site development services to companies in the telecommunications industry. CTTSB owns, operates and manages 260 tower sites in Sabah following its appointment as the State Backed Company to undertake the TIME2 Project in Sabah since Delmec: The tower experts in consultation and engineering, providing global solutions to operators, towercos and regulators on standards, guidance and due diligence for portfolio management. Engaging audit, assessment and analysis for structural enhancement, capacity and maintenance as individual activities or by way of managed services. Delta Partners: Delta Partners expertise in tower transactions includes M&As, capital raising, due diligence and strategy support to towercos, telecom operators and investors on network sharing, tower monetisation, transaction execution, structuring and operational streamlining. Deutsche Bank: Deutsche Bank provides M&A advisory services as well as financing services in the tower space, including both equity and debt products. Deutsche Bank has been involved in the tower sector on a global basis, successfully executing transactions in North America, South America, Europe, Africa and Asia. DIF: DIF, formerly known as TRUEGIF or TRUEIF, is a towerco solution created by Thai MNO True. True has injected 6,000 of their own towers into the infrastructure fund/towerco which now owns over 12,138 towers, and which they subsequently listed. DIF includes concession and non-concession towers as well as considerable fibre assets in the fund and as such is a simpler vehicle for investors to evaluate than a newly formed joint venture. Eco-Friendly Towers (EFT): Eco-Friendly Towers (EFT), a subsidiary of diversified Myanmar conglomerate Young Investment Group, is a new entrant towerco. EFT secured an order for roughly 700 phase three towers from Telenor, although it remains unclear how many they have subsequently built. EFT were initially the only towerco able to deploy and manage towers in several Northern Myanmar States, where security can be challenging, but TowerXchange sources have confirmed that EFT s phase three contract is nationwide. edotco: edotco is the first pan-regional tower services provider in Asia, and is committed to deploying cost-efficient telecommunications infrastructure across the region by enabling competitive access for the industry and connectivity for communities. edotco is a wholly-owned subsidiary of Malaysia s Axiata Group. With a regional portfolio that includes 17,054 towers in Malaysia, Sri Lanka, Bangladesh, Cambodia, Pakistan and most recently Myanmar, edotco strives to deliver outstanding operational efficiency in telecommunications infrastructure services and solutions. edotco s tower portfolios in all six countries are managed in real-time at their headquarters in Kuala Lumpur by the state-of-theart echo monitoring service. edotco has been growing steadily since its founding in 2012, both organically through tower rollouts across its footprint, and inorganically through acquisitions, and continues to evaluate new opportunities for growth in Asia based on their merits. Etisalat: World s 14th largest MNO has three opcos in Asia. Pakistani subsidiary Ufone is reportedly closing in on a tower sale; Etisalat may also have an appetite to monetise, carve out or outsource their towers in Afghanistan. Etisalat s Sri Lankan subsidiary retains their towers. EY: TMT strategy and corporate finance advisory team with extensive experience of advising on tower transactions. FMO: Dutch development bank 51% government owned, 49% by commercial banks and financial institutions. FMO arranged a subordinated loan of US$13mn to Irrawaddy Green Towers in Myanmar via its Infrastructure Development Fund. Frontier Tower Solutions: Founded as an independent tower company by the corporate parent of Afghan Wireless Communications Company (AWCC) in 2012, Frontier Tower Solutions operates 1,500 towers in Afghanistan, and also has operations in Iraq. Golden Towers: Golden Towers is an independent tower company incorporated in Vietnam focused on acquiring existing telecommunications tower assets in the Vietnamese market. As of December 2015 Golden Towers owned and operated 30 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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32 approximately 340 towers. The company is now raising financing to cover its capital expenditure program for for the acquisition and construction of up to 5,800 telecom towers in Vietnam. Golden Towers plans to build its telecommunications tower portfolio mostly through acquisition of existing towers and limited construction of new towers is envisaged, not exceeding 10% of the total portfolio. GTL Infrastructure: GTL Infrastructure is a publicly-listed tower company in India with a portfolio of over 29,000 towers across the country, serving all major telecoms service providers. Founded in 2004 and listed in 2006, GTL Infrastructure began expanding its portfolio in 2008 and acquired 17,500 towers from Aircel. However, the cancellation of 122 operator licenses by the government, slow uptake of 3G and price wars between service providers have left GTL Infrastructure with a heavy debt burden. Guodong: The largest independent towerco TowerXchange has yet discovered in China, with around 6,000 towers concentrated mainly in coastal regions. Hardiman Telecommunications: A unique consultancy equally capable advising on engineering and operational issues as they are on commercial strategy and corporate finance. Extensive experience advising on both the buy-side and sell-side in tower transactions. Hutchison: Hutchison 3G is an MNO with a presence in multiple countries across Europe and Asia. It has most recently been involved in tower transactions in Australia where some of its assets were sold to Crown Castle Australia (now Axicom), and in Indonesia where it negotiated a sale and leaseback deal of 3,692 towers with Protelindo. IBS Tower: Founded in 2006 and listed in August 2012, PT Inti Bangun Sejahtera Tbk (IBS) is one of Indonesia s big four publicly traded independent tower companies. Starting as an in-building system solution provider, IBS has since focussed its resources on passive infrastructure, earning it a significant presence in the market. In 2015, IBS Tower had 3,465 tenants on 2,638 towers, generating EBITDA of IDR341.8bn (~US$26mnm). International Finance Corporation (IFC): The IFC is a member of the World Bank Group, the world s leading DFI. The IFC has invested around half a billion dollars in debt and equity into eight towercos across emerging markets, with an objective to double that total investment by Irrawaddy Green Towers (IGT): Irrawaddy Green Towers (IGT), built 1,500 of 2,000 towers in phases one and two for Telenor in Myanmar, and have reportedly secured an order for a further 1,000 phase three towers, this time from Ooredoo. IGT was initially established as a partnership between Alcazar Capital Limited and Viom Quippo, whose former Group President Arun Kapur continues to serve as Executive Chairman. Today IGT s sponsors still include Alcazar Capital, plus EPC Investors, M1 Group and Barons Telelink (a local Myanmar company). IGT provides a full service tower+power offering. Indus Towers: Incorporated in 2007, Indus Towers is a joint venture towerco founded by Bharti Infratel, Vodafone India, Aditya Birla Telecom (Idea) with a portfolio of 119,881 sites across India on March Its mission is to provide passive infrastructure services to telecom service providers in India on a non-discriminatory basis, delivering best-of-class operational efficiency and opex reduction. Indus Towers has won awards for its approach to supply-chain management and operational excellence, it s drive to reduce the carbon footprint of its tower portfolio, and is also playing a part in helping the government reach its goals for nationwide coverage, small cell deployment, and the creation of smart cities in India. ING: Leading Dutch bank with considerable experience of providing debt finance to the tower industry. JP Morgan: Leading TMT advisory team with extensive experience in towers, including some of the landmark transactions. Kazanah: Khazanah Nasional Berhad is the strategic investment fund of the Government of Malaysia. Khazanah holds and manages selected commercial assets of the Government and undertakes strategic investments on behalf of the nation. It is involved in sectors such as power, telecommunications, finance, healthcare, aviation, infrastructure, leisure and tourism, and property, and its portfolio 32 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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34 includes the Axiata Group and its subsidiary edotco. Komet Infra Nusantara (KIN): PT Komet Infra Nusantara is essentially a rollup towerco trading solely in Indonesia, having consolidated the assets of Tara, Komet, Corona, Telematika, and Ida Lombok since As of Q4 2015, KIN possessed a portfolio of towers, a product of both organic and inorganic growth. KIN is owned by Indonesian infrastructure giant PT Nusantara Infrastructure and management, with IDR460bn debt provided by Providence Equity. In Q1 2015, KIN generated revenues of IDR38.7bn, 86% of which came from Indonesia s Big Four MNOs: Telkomsel, XL, Indosat and Hutchison. KJS: KJS is a State-backed towerco created in partnership with the Malaysian state of Selangor. KJS processes all applications related to telecoms in Selangor, and builds and leases telecoms infrastructure to service providers. KJS has built towers, monopoles and lamp poles on private and state agency land in Selangor and owned and operated over 300 structures as of Q KPR Consult: Renowned tower doctors go-to guys for structural and technical due diligence, improvement capex planning, decommissioning and just about anything to do with tower design and maintenance. Macquarie Group: Serial towerco investors, with capital at work in Europe within Arqiva and Russian Towers, and farther afield with Axicom (formerly Crown Castle Australia), Mexico Tower Partners and Viom Networks (being integrated into ATC India). Macquarie Capital also has an excellent TMT advisory practice with experience of advising on tower transactions. MIG: Myanmar Infrastructure Group (MIG) is a joint venture between majority shareholder Singapore Myanmar Investco (SMI) and Golden Infrastructure Group (GIG. MIG had proved themselves building rooftops and poles in for both Telenor and Ooredoo in Yangon, as well as executing a substantial DAS project within Yangon s airport, off the back of which they have secured a contract to build 503 towers in phase three of Ooredoo s rollout. MIG has access to the capital markets via SMI s Singapore stock exchange listing. MIG provides a full service tower+power proposition. MIG are widely believed to be a consolidation target. Mitratel: Founded in 1995, PT. Dayamitra Telecommunications (Mitratel) has been providing telecommunication towers to fulfil the need of cellular telecommunication operators in Indonesia. Mitratel is a wholly-owned subsidiary of PT. Telekomunikasi Indonesia, Tbk (Telkom). The company was to be transferred to Tower Bersama Group under an innovative share-swap structure, but the deal was overruled by the Indonesian government in Q MPT Myanmar: Myanmar Post and Telecommunications (MPT) is the State-backed incumbent operator in Myanmar, and is now also backed by the KDDI-Sumitomo joint venture KGSM. MPT remains the market leader, although their market share declined from 66.6% to 46% between Q and Q New Silk Route: New Silk Route ( NSR or New Silk Route Partners LLC) is a US$1.4bn private equity firm that invests in private companies in India, Asia, and the Middle East. Its investments in the telecommunications infrastructure industry include Ascend Telecom in India. OCK Group: Founded in 2000 in Malaysia, OCK Group s telecommunication network service provides end-to-end full-turnkey service that includes the designing, building and maintenance of telecommunications infrastructure. Since 2013 OCK Group has expanded its footprint to new markets including Singapore, Cambodia, and most recently Myanmar with a contract to deploy 920 towers for Telenor. Ooredoo: Ooredoo, formerly known as Qtel, is the incumbent mobile network operator in Qatar, and also has extensive international operations in Indonesia (Indosat), and Myanmar, where it was one of the original two international operators to receive a license to build telecommunications infrastructure. Ooredoo had 6.9mn subscribers in Myanmar at the end of Q1 2016, good for 16.5% market share, and a tower count of around 3,500. PAMEL: Pan Asia Majestic Eagle Limited (PAMEL, sometimes referred to as Pan Asia Towers or PAT) built 1,250 towers for Ooredoo in Myanmar in phases one and two. Along with Michael Gearon, PAMEL has management DNA in common with Indonesia s Protelindo, but remains a distinct entity. In 2014 PAMEL secured US$85mn in financing from a consortium of five banks: DBS, ING, OCBC, Standard Chartered and Sumitomo Mitsui. 34 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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36 PAMEL has not built any towers in phase three of the Myanmar rollout, and has been subject to consolidation speculation. Persada Sokka Tama: Established in 2006, PT. Persada Sokka Tama started off with build to suit activities before becoming a tower provider in 2008 and offering co-locations for telecoms service providers in Indonesia. The company has over 1,000 towers mostly concentrated in Java and Nusa Tenggara. Protelindo: Brainchild of Michael Gearon and his loyal management team, Protelindo is the largest towerco in Indonesia where they own over 14,700 towers after the recent acquisition of 2,500 towers from XL Axiata in Q Over the last two years, Protelindo has significantly improved its scale and credit profile. Its leverage has strengthened through EBITDA growth, supported by a significant increase in the number of tenancies on its towers. Protelindo has also begun to expand its microcell assets and fibre footprint to support the continued organic and inorganic growth of its portfolio. The company acquired iforte in June 2015 along with its 450 microcell towers, seven hotel BTS and 700km of fibre with over 180 PoPs in the city centre and business districts in Jakarta and Surabaya. Providence Equity: Communications and media investment specialists with capital at work in Indus Towers (India), Grupo TorreSur (Brazil) and KIN (Indonesia). PT Wellington Capital Advisory: PT Wellington Capital Advisory (WCA) is a privately-held, fullyindependent professional services firm, with offices in Jakarta and Singapore. They assist clients to develop and leverage significant investments in the TMT space within Indonesia and throughout Southeast Asia, with particular emphasis on opportunities in the rapidly-evolving tower industry. Q Towers: Independent towerco with ~120 towers and an impressive tenancy ratio of 2.8 in China. Reliance Communications: Reliance Communications is the fourth largest telecommunications provider in India, and part of the Reliance Anil Dhirubhai Ambani Group. RComm created its own towerco, Reliance Infratel, which it has been trying to sell since late 2015; the latest period of exclusive negotiations fell through due to a dispute over the valuation of assets. Reliance Communications is now in talks to merge with Aircel, India s fifth largest mobile network operator. Reliance Infratel: Reliance Infratel Limited is a subsidiary of Reliance Communications (RCOM) incorporated in 2001; RCOM s tower assets were transferred to Reliance Infratel, with the deal being completed in mid-2007, creating India s latest tower carve-out. Reliance Infratel operates over 43,000 sites as an independent towerco, investing in its assets and providing passive infrastructure for its tenants. RCOM began the process of selling Reliance Infratel in late 2015 to decrease its debt and free capital to support its bids for spectrum and its rollout of 4G services. The non-binding deal with TPG Capital and Tillman Global Holdings (TGH) stalled in early 2016 due to valuation issues. Most recently, in June 2016 RCOM and Aircel entered into talks to create a new 50:50 joint venture. This is set to have a major impact on Reliance Infratel s tenancies, and many overlapping towers will need to be decommissioned. SACOFA: SACOFA is a State-backed towerco providing BTS services and is based in the Malaysian state of Sarawak. Sacofa has over 700 towers across Sarawak, and recently signed an agreement with Malaysian MNO U Mobile to expand their network coverage in this state. In addition to its tower portfolio, SACOFA also operates a 950km submarine cable between Sarawak and West Malaysia, and a 4,000km fibre optic trunk network between Kuching and Lawas in Sarawak. Saurava Towers: Saurava Towers is an Indian towerco founded in 2008, providing managed services and passive infrastructure for telecoms service providers. Services include site acquisition, tower deployments, and site operation and maintenance. At the end of Q2 2016, Saurava had 55 towers. SEATH: The largest towerco in Vietnam is currently Southeast Asia Telecommunications Holdings (SEATH), itself the product of rolling up three smaller towercos with a reported book value of US$58.7mn in Q SEATH is a holding company owned by VNI (VinaCapital s Vietnam Infrastructure Limited). According to the company s report from Q1 2015, they had 1,924 towers in Vietnam with a 36 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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38 tenancy ratio of 1.2, an EBITDA margin of 54.1% and net margin of 15.2%. SREI Infrastructure Finance: Srei Infrastructure Finance Limited is a leading infrastructure financing conglomerate in India, and one of the first companies to lay the groundwork for telecoms infrastructure sharing. Prior to the recent sale to American Tower, SREI was the managing shareholder in Viom Networks, and merged with associate company Quippo in Founded by the Kanoria family, Quippo provides construction equipment rental, energy rental, oil and gas equipment rental and telecom tower infrastructure rentals. Quippo is currently exploring tower and telecom infrastructure opportunities outside India. STP: Listed on the Indonesian stock exchange in 2011, Solusi Tunas Pratama s (STP) consolidated its position as the third largest independent towerco in Indonesia with its acquisition of 3,500 towers from XL in December This followed the acquisition of existing portfolios from other local operators such as Axis, Bakrie and Hutchison. STP started building its own towers in December 2012 to achieve organic growth in addition to acquiring existing portfolios and now owns and operate approximately 8,000 sites. Tata DOCOMO: Tata DOCOMO is an Indian cellular service provider and product of a strategic joint venture between Tata Teleservices and NTT Docomo in November Telkomsel: PT Telekomunikasi Indonesia is the incumbent telecommunications provider in Indonesia, and holds the largest share of the market. Telkomsel owns the towerco Mitratel, and explored the transfer of this company and its assets to Tower Bersama Group in a unique share-swap deal which was ultimately refused by the government in mid Telenor: Telenor is the incumbent telecommunications provider in Norway, and owns networks in twelve countries and has operations in 29 countries including India, Bangladesh, Pakistan, Thailand and Myanmar. Historically, Telenor has tended to partner with towercos rather than sell and leaseback towers. In Thailand, Telenor s subsidiary DTAC is in the process of negotiating a joint venture towerco with State-backed Thai operator CAT Telecom. In Myanmar Telenor was one of the first foreign operators to obtain a license to build and operate telecommunications infrastructure in this greenfield market, and launched 4G services in the nation s capital Nay Pyi Taw in July At the end of Q Telenor Myanmar had 5,831 towers serving 16.9mn subscribers, with a market share rapidly closing on incumbent market leader MPT Tillman Global Holdings (TGH): Multinational tower and infrastructure investment and operations firm led by Sanjiv Ahuja, former Chairman and cofounder of Eaton Towers and ex-ceo of Orange. TGH has a substantial stake in Apollo Towers Myanmar, which Ahuja chairs, and a joint venture partnership with JC Decaux, giving them the opportunity locate points of service, particularly small cells, on over 1mn prime locations worldwide. TGH recently made headlines by securing an exclusive period of negotiation to acquire Reliance s towerco RTIL, although the two parties could not agree on valuation. TOT: TOT is a State-backed Thai MNO which has entered into discussions with other Thai operator AIS to create a joint venture towerco, but to date no major announcements have been made. Tower Bersama: Based in Indonesia, the Tower Bersama Group comprises several rolled up towercos including PT Tower Bersama, PT United Towerindo, PT Telenet Internusa, PT Batavia Towerindo, PT Bali Telekom, PT Prima Media Selaras and PT Triaka Bersama, all operated seamlessly under one management team. The group s infrastructure extends to Java, Bali, Sumatera and Batam and is currently being expanded into Kalimantan and Sulawesi. Tower Bersama has steadily grown its tower portfolio with acquisitions of smaller towercos, towers purchased from operators. As of December , Tower Bersama had 19,796 tenants and 12,389 telecommunication sites, of which 11,389 were telecommunication towers, 936 shelter-only sites, and 64 DAS networks. A share-swap to gain control of Telkom subsidiary Mitratel was planned, but was overruled by the government in Q Tower Bersama currently plans to roll out 1,500-2,000 new towers by the end of TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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40 Towershare: Towershare is a leading independent owner and operator of wireless communications infrastructure focusing primarily in the Middle East, North Africa and Southern Asina, or MENASA markets. Towershare generates revenue from three primary businesses: Build to Suit, Sale Leaseback and Value Added Services. Towershare expanded its footprint into Pakistan in 2015, where they currently have around 800 towers, and is an active bidder on several opportunities across the region. Tower Vision: Tower Vision is an Indian towerco specialising in the provision of passive infrastructure to the wireless telecommunications industry with expertise in tower roll outs, operation and maintenance. Tower Vision owns and operates more than 8,000 sites and offers greenfield towers, rooftops, and in-building distributed antenna systems to MNOs across India. Tower Vision has been rumoured to be a consolidation target for several years. TrueMove: TrueMove is a State-backed Thai MNO which has created a separate entity for its tower assets in DIF, an infrastructure fund. To date True hasn t engaged in negotiations with other operators to create a joint venture towerco. Ufone: Ufone is the mobile arm of the incumbent telecoms provider in Pakistan, PTCL, and is the fourth largest operator in the country by subscribers. Ufone entered in an agreement with Towershare to have 39 sites built in the Federally Administered Tribal Areas (FATA) in Pakistan. Ufone are believed to be in the later sales of a tower sale process. Viettel: Vietnamese military-controlled Viettel is one of the world s most expansive MNOs, having recently secured a prominent role in the consortium behind Myanmar s soon-to-belaunched 4th MNO. Viettel seems to be warming to the idea of partnering with towercos but to date retains all their towers in their other Asian opcos; Cambodia and their home market of Vietnam. VimpelCom: VimpelCom Ltd. is a global provider of telecommunication services incorporated in Bermuda and headquartered in Amsterdam. It is the sixth largest mobile network operator in the world by subscribers and has operations in countries including Russia and the CIS, Ukraine, Greece, Italy, Algeria, Pakistan and Bangladesh. There have been continued rumours that VimpelCom is looking to sell its tower assets, including in Pakistan and Bangladesh. With the merger between Vimpelcom s Mobilink and Warid now complete, the next step may be a tower transaction. Vinson & Elkins: Vinson & Elkins is one of the oldest and largest international law firms, with approximately 700 lawyers located in 15 offices around the world. Their global telecommunications team has extensive experience advising on international telecoms and telecoms infrastructure transactions in numerous countries. Vodafone: Vodafone Group plc is an international telecommunications company, with headquarters in London, UK. Vodafone owns and operates networks in 26 countries and has partner networks in over 50 additional countries. Vodafone India is one of the partners in Indus Towers, the world s second largest joint venture towerco. Vodafone also has an opco in Australia, which sold part of their tower portfolio several years ago. Warid: Warid Pakistan is owned by Warid Telecom International, an Abu Dhabi based mobile telecommunication investment firm. Warid Pakistan reportedly entered into a sale and leaseback agreement with Towershare for ~4,500 towers in Q2 2015, although the deal was never closed. Most recently Warid has merged with Mobilink, a subsidiary of Vimpelcom. XL Axiata: XL is a mobile operator in Indonesia, and a fully owned subsidiary of the Axiata Group. XL has sought to reduce its tower footprint over the past few years, selling 3,500 towers to STP in 2014, and more recently 2,500 towers to Protelindo in XL retains a few thousand strategic sites. Yiked Bina: Yiked Bina Sdn Bhd is a State-backed towerco in the Malaysian state of Kedah. To date Yiked Bina owns and operates over 200 towers in Kedah, and clients include telecommunications service providers such as Telekom Malaysia, Celcom Axiata, Maxis, DiGi Telecommunication, U-Mobile, Sapura and Wi-MAX operators such as Packet One and YTL Communications. Ahmad Kamal Zakaria, CEO of Yiked Bina, currently serves as President of Malaysia s Statebacked towerco Association, Persatuan Penyedia Infrastruktur Telekomunikasi Malaysia (PPIT) 40 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

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42 Matrix of Asian MNO tower strategies Source: TowerXchange research Afghanistan Australia Bangladesh Cambodia China India Indonesia Japan Malaysia Myanmar Pakistan Philippines South Korea Sri Lanka Taiwan Thailand Vietnam Airtel AIS Axiata Group Bakrie Bharti Airtel BSNL CAT Telecom China Mobile China Telecom China Unicom Chunghwa Etisalat FarEasTone Globe Hutchison Idea Cellular KDDI KT Corporation LG Uplus Maxis Mobifone Mobilink Mobitel MPT Legend: Present but haven't sold Potential tower deal Partnering with towerco Carved out towerco Sold to towerco 42 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

43 Matrix of Asian MNO tower strategies (cont) Source: TowerXchange research Afghanistan Australia Bangladesh Cambodia China India Indonesia Japan Malaysia Myanmar Pakistan Philippines South Korea Sri Lanka Taiwan Thailand Vietnam MTN NTT Docomo Ooredoo Reliance Comms Singtel SK Telecom Smart (PLDT) Softbank Taiwan Mobile TATA Docomo Telenor Teletalk Telkomsel Telstra TOT True Corporation Ufone Vietnamobile Viettel Vimpelcom Vinaphone Vodafone Legend: Present but haven't sold Potential tower deal Partnering with towerco Carved out towerco Sold to towerco XX TowerXchange Asia Dossier TowerXchange Asia Dossier

44 Asian towerco league table Rank Towerco Count Source: TowerXchange research Countries Rank Towerco Count Countries 21 Sinonetstone 1,800 China 1 China Tower Company 1,700,000 China 22 Axicom 1,772 Australia 2 American Tower 145,404 USA, Brazil, Chile, Colombia, Peru, Mexico, Costa Rica, Germany, India, Ghana, South Africa, Uganda, Nigeria, Tanzania Frontier Tower Solutions Pan Asia Majestic Eagle Apollo Towers 1,500 1,250 1,100 Afghanistan Myanmar Myanmar 3 Indus Towers 120,739 India 26 Persada Sokka Tama 1,000 Indonesia 4 Reliance Infratel 43,379 India 27 Komet Infra Nusantara (KIN) 1,000 Indonesia 5 Bharti Infratel* 38,642 India 28 Towershare 800 Pakistan 6 GTL Infrastructure 29,432 India 29 Sacofa 765 Malaysia 7 edotco 17,054 Malaysia, Sri Lanka, Bangladesh, Cambodia, Pakistan, Myanmar 30 Centratama Menara Indonesia (formerly Retower) 620 Indonesia 8 Protelindo 15,167 Indonesia, Netherlands 31 Touch Matrix 460 Malaysia 9 Guodong 15,000 China 32 D harmoni 346 Malaysia 10 DIF 12,138 Thailand 33 KJS 309 Malaysia 11 Tower Bersama 11,553 Indonesia 34 Common Tower 260 Malaysia 12 Tower Vision 8,400 India 35 Infraquest 201 Malaysia 13 Mitratel 8,000 Indonesia 36 Senno Telecom 200 China 14 STP 6,938 Indonesia 37 Yidebina 200 Malaysia 15 Ascend Telecom 5,200 India 38 Perak Integrated Networks 150 Malaysia 16 Balitower 4,510 Indonesia 39 Asia Space 137 Malaysia 17 Miteno 4,500 China 40 Q Towers 120 China 18 IBS Tower 2,638 Indonesia 41 Desabina 118 Malaysia 19 ASEAN Towers (IGT + Golden Towers) 2,072 Myanmar, Vietnam 42 Saurava Towers 55 India 20 SEATH (VinaCapital / VNI) 1,930 Vietnam 43 Sanyuan Tec 50 China 44 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

45 Demand forecasts for passive infrastructure equipment and services in Asia update TowerXchange checks in on demand across six different categories of equipment and services in the fifteen most active Asian tower markets New Delhi India Asia remains the fastest growing region in the world both for investment in telecom tower networks, and for the expansion of the independent towerco business model. This article is TowerXchange s second annual market by market review, focusing specifically on opportunities for equipment and service providers, as well as updating the current tower and MNO markets in each of 15 countries. Keywords: Access Control, Afghanistan, Asia, Asset Lifecycle Platform, Australia, Bangladesh, Batteries, Best of TowerXchange, Build-to-Suit, Cambodia, Capex, China, Construction, DAS, Decommissioning, Energy, Energy Storage, Fixed Price, Hybrid Power, IBS, India, Indonesia, Laos, Lawyers & Advisors, MNOs, Malaysia, Managed Services, Market Forecasts, Market Overview, Masts & Towers, Meetup Preview, Monitoring & Management, Myanmar, O&M, On-Grid, Pakistan, Pass-Through, Passive Equipment, Procurement, RMS, Sale & Leaseback, Singapore, Site Management System, Small Cells, Sri Lanka, Steelwork, Strategic Consultancy, Thailand, TowerXchange Research, Towercos, Unreliable Grid, Vietnam, Who s Who, Off-Grid Read this article to learn: < In which Asian countries are a substantial volume of new towers being installed? < What equipment is being installed on those towers in terms of energy, RMS and access control solutions? < What has been the progress of small cell, microcell and DAS deployments? < Who are the leading MNOs and towercos, and what are the prospects for transactions between them? With the third annual TowerXchange Meetup Asia coming up on December 13 and 14, featuring allnew technology evaluation working groups, giving participants a chance to download the requirements and experiences of towerco and MNO procurement leaders, we thought it would be a good time to update TowerXchange s renowned matrix of vendor demand in Asia. As well as updating the state of the markets in our original 12 markets (Australia, Bangladesh, Cambodia, China, India, Indonesia, Malaysia, Myanmar, Pakistan, Thailand, Sri Lanka and Vietnam), TowerXchange has added snapshots of equipment and service demand in Afghanistan, Laos and Singapore. We re keeping the categories we re reviewing the same as last year, so you can make a like for like comparison, so we re examining: < Energy: our focus in this category is on backup power solutions, energy storage and alternate energy solutions for unreliable grid and off grid. < RMS, ILM and access control: is there need for remote monitoring and access control systems on most towers? Are they connecting to a NOC and to a Site Management or Infrastructure Lifecycle Management platform such as those provided by Accruent, Tarantula or Nexsysone? < As a function of the volume of new build, is there much requirement for towers and accessories? Or demand for the services of turnkey infrastructure XX TowerXchange Asia Dossier TowerXchange Asia Dossier

46 providers in building new towers, decommissioning parallel infrastructure or upgrading existing sites? < How much demand is there to date for small cells, microcells, DAS and IBS? < And finally, is there much prospect for sale and leaseback or towerco consolidation to keep the consultants, lawyers and other advisors busy? TowerXchange examines the 15 most active Asian tower markets, predicts demand for passive infrastructure equipment and services, and lists the largest towercos and MNOs active in each country. The following matrix is compiled based on hundreds of research calls and meetings with Asia s leading towercos and MNOs in which we ve diagnosed their procurement and capex priorities Brief commentary on Asia s less active tower markets: < East Timor: Too small to provide the necessary economies of scale to towercos, therefore TowerXchange has yet to study the market in detail. < Japan: We are starting to pick up the first faint signals of interest in the towerco business model from Japan, which has less subscribers per tower than anywhere else in the world. However, until the market opens up, TowerXchange has no impetus to study the market in detail. < Mongolia: No immediate opportunities for tower industry growth, therefore TowerXchange has yet to study the market in detail. < Nepal: Axiata s acquisition of Ncell from TeliaSonera may herald the entry of edotco into Nepal, but until they do, TowerXchange has no impetus to study the market in detail. < North Korea: Impenetrable to a Western research firm like TowerXchange, and probably impenetrable to foreign investors! < Philippines: Substantial network investments are in progress in the Philippines. Moves from SMC Corporation to create a third operator appear to have faltered, so towers remain operator-captive and seldom shared, hence the lack of dedicated study of this market by TowerXchange. < PNG: Digicel seem disinclined to share attractive urban locations, restricting sharing to rural sites in PNG. With no towercos present, there is no impetus for TowerXchangeto study the market in detail. < South Korea: No immediate opportunities for tower industry growth, therefore TowerXchange has yet to study the market in detail. Meet the key stakeholders at this year s TowerXchange Meetup Asia, taking place on December 13 and 14 at the Marina Bay Sands, Singapore! If you have passive infrastructure equipment or services, or small cell solutions, to sell to Asia, then don t miss the new technology evaluation working groups led by the region s leading towercos and MNOs and hosted at the 3rd Annual TowerXchange Meetup Asia on December at the Marina Bay Sands, Singapore! 46 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

47 Vendor opportunity matrix Energy RMS, ILM and access control Tower manufacture Turnkey infrastructure Small cells, microcells, DAS and IBS Advisors Towercos MNOs Afghanistan High High High High Low Medium Afghanistan s four principal MNOs and single towerco continue to build around 500 towers per annum, with a total of 5,897 towers live in While the MCIT has not yet released their tower count, local stakeholders report solid ongoing growth of the network. The vast majority of Afghanistan s rural towers are FTS AWCC Etisalat MTN Roshan off-grid, with 50-75% of urban and sub-urban sites on unreliable grid connections, with DGs relied upon for backup. RMS and site security are widely used. Very little small cell or DAS deployments, even in stadia. While AWCC has already carved out their ~1,500 towers into subsidiary Frontier Tower Solutions, Etisalat, MTN and Roshan have all been contemplating their own tower carve-out/monetisation strategies. Australia Low Medium Medium Medium Medium Medium There are two larger towercos in the Australian market; the first is Axicom with a total of 1,772 towers (formerly Crown Castle Australia), while Broadcast Australia is the other towerco of scale they have some MNO tenants Axicom Broadcast Australia Telstra Optus Vodafone on their ~600 towers. A few smaller tower transactions are anticipated to rollup small towercos, but it seems unlikely that market leaders Telstra would sell their tower assets. There are around 9,000 towers in Australia, but many more may be required by the rollout of the National Broadband Network (NBN), a shared LTE network, which means it s a good time for tower manufacturers and builders. RMS adoption will evolve over time. With grid power widely available and backup power sources not often used, Australia is not a priority for towerpower vendors. Power is typically a pass through so MNOs retain responsibility for power. Bangladesh High High High High Unknown High The planned merger between Robi and Airtel has been approved by the PM, and Robi is transferring some of its shares in edotco Bangladesh back to edotco Group. The government will issue two tower management licenses by the end of the year, and edotco is one of the applicants, although there are still regulatory issues around foreign and operator ownership. There are ongoing rumours that VimpelCom may be selling the edotco Planned state-backed towerco Grameenphone Bangalink Robi+Airtel Teletalk Citycell ~6,000 Bangalink towers. Potential deals make Bangladesh a priority for tower transaction advisors and strategic consultants ,000 new towers are going up per year, making Bangladesh attractive for tower manufacturers and turnkey infrastructure (TI) firms. The rainy season demands exceptional cell site autonomy which makes Bangladesh a key market for energy, particularly energy storage. Edotco has connected over 2,000 of its Bangladeshi sites with its echo monitoring service. XX TowerXchange Asia Dossier TowerXchange Asia Dossier

48 Vendor opportunity matrix Energy RMS, ILM and access control Tower manufacture Turnkey infrastructure Small cells, microcells, DAS and IBS Advisors Towercos MNOs Cambodia Medium Medium Low Low Medium Low edotco MobiTel edotco operates 1,500 towers in Cambodia, where CamGSM and MobiTel have both been rumored to be considering tower sales in the past but not recently. RMS is not yet widely deployed in Cambodia, but edotco plans to invest in a remote tower operations centre in Cam Towerlink is a new towerco in this market, and its first project is to build towers in and around Angkor Wat. 20% of sites Cam Towerlink Viettel Axiata SEATEL CADCOMMS are off grid in Cambodia. The grid sites are provided both by SOE Electricité du Cambodge and by a range of private microgrids and distributed generation projects. Battery backups are on all sites, with DG on off-grid, MSC, BSC and hub sites. Power is a pass through, so MNOs not towercos remain the buyers of energy equipment. IBS are starting to be deployed in airports, malls, hotels and condos. With the top three MNOs boasting 90%+ coverage and new entrants increasingly co-locating rather than building, there is limited demand for tower manufacturers and TI firms. China Medium Medium High High High High Around 150,000 new towers were added to China s telecoms infrastructure in 2015, the majority of which were built and are owned by China Tower Company (CTC) and its provincial subsidiaries. Around 1.55mn of China s 1.6mn towers now sit on CTC s balance sheet, with the balance made up from a fragmented ecosystem of over 200 local, private towercos, the largest of which, Guodong, Miteno and Sino Netstone, span several provinces. Consolidation among independent towercos and CTC Guodong Sino Netstone Miteno Q Towers 200+ other independents China Mobile China Unicom China Telecom China Broadcasting Network preparation of CTC for an IPO anticipated in late 2017 should keep advisory firms busy. While grid power is ubiquitous and abundant, TowerXchange have started to see some green powered sites in China, but probably nowhere near the 30,000 the GSMA Green Power for Mobile once suggested were in the country. RMS is widely deployed in China, with ZNV Technology being the market leader. Small cells, DAS and IBS are increasingly used to supplement the macro network. 48 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

49 Vendor opportunity matrix Energy RMS, ILM and access control Tower manufacture Turnkey infrastructure Small cells, microcells, DAS and IBS Advisors Towercos MNOs India High High High High High High Indus Towers Bharti Airtel Indian towercos have almost completed Akhil Gupta s mission to disarm the MNOs of their passive infrastructure with around two thirds of the country s ,000 towers on towerco balance sheets. Whenever BSNL finally carves out their own 65,000 site towerco, towerco penetration will exceed 80%. Consolidation among towercos continues, led by American Tower s integration of Viom Networks, with ongoing talks about the Bharti Infratel Reliance Infratel American Vodafone Reliance+Aircel IDEA BSNL sale of Reliance Infratel and potentially Tower Vision. India s towercos are on a mission to reduce their carbon footprint, for example Indus Towers converted their landmark 50,000th green site in Investment in energy efficiency has been largely confined to lead acid and lithium-ion batteries, plus free cooling and the conversion of indoor to outdoor sites; deployment of renewables and partnerships with ESCOs remain at an early stage, but the sheer scale of India still makes the country #1 in the world for both segments. RMS is widely used in India, as are ILM systems. The rollout of 4G is proceeding apace, driving new tower build and new tenancies; Reliance Jio built around 25,000 new sites in the last year alone, and added tens of thousands more sites through co-location. Tower GTL Infrastructure Tower Vision Ascend Saurava Towers Tata Reliance Jio Several small players with <4% Meanwhile, the first two tenders for Smart Cities projects have been issued, with dozens more in the pipeline, the fulfillment of which will driven demand for thousands of small cell, IBS and microcell solutions. Indonesia Medium Medium High Towercos own 61% of Indonesia s ~77,739 towers, making it one of the most mature tower markets in the world. XL Axiata (~4,000) recently sold 2,500 of its towers to Protelindo, but the real question concerns the future of Telkom s towers who have about 13,000 sellable assets in their 18,000 tower portfolio, but no apparent incentive to sell. That said, Telkom did create its own towerco, Mitratel, which owns a reported 5,500 towers. Mitratel was to be transferred to Tower Bersama under an innovative share swap agreement which in the end did not receive government approval. Indosat has deepened its cooperation with XL Axiata, and there is a possibility the two may look into creating a joint venture towerco. With the last operator towers to be bought and towerco consolidation continuing, Indonesia is a fertile market for advisors. The reliability of the grid in the dense urban areas means the opportunity for energy equipment vendors is finite, but there are remote sites requiring good autonomy. Note that power is a pass through in Indonesia, so MNOs are the buyers of energy equipment. We ve spoken to RMS and access control vendors with substantial Indonesian contracts. Protelindo, STP and Balitower are leading substantial rollouts of microcells and other street furniture. Organic growth slowed somewhat in 2015; Fitch estimated that the main three towercos will build 2,000 towers in 2016, down from the peak of 3,000 in 2014, but with Balitower and IBS raising capital to build, and Mitratel adding assets regularly, TowerXchange estimate a further 4-5,000 towers will be built in High High High Protelindo Tower Bersama STP Mitratel IBS Tower KIN Centratama Persada Sokka Tama Balitower Others Telkomsel Indosat XL (Axiata) Smartfren Hutchison Bolt XX TowerXchange Asia Dossier TowerXchange Asia Dossier

50 Vendor opportunity matrix Energy RMS, ILM and access control Tower manufacture Turnkey infrastructure Small cells, microcells, DAS and IBS Advisors Towercos MNOs Laos Low Unknown Low Low Low Low The State has 51% stakes in both mobile market leaders LTC and Unitel, which are both listed, with heavily-indebted #3 MNO ETL, itself controlled by the Ministry of Defence, also potentially headed for an IPO. With VimpelCom contemplating an exit from Beeline and Laos and sub US$5 ARPU, there is finite None LTC Unitel ETL Beeline Sky Telecom capital available for network investment, with most capital going into the 4G overlay rather than new site build. Laos has a surplus of power generation which they export, so grid availability is good in the country, and new sites can be connected to the grid quickly and efficiently. There are still unannounced outages, so backbone sites have DG and battery backup: 4-6 hours battery backup is standard. Malaysia Medium Medium High High High Medium Towercos own around a third of Malaysia s 21,000 towers. edotco has a portfolio of over 3,600 towers, 3,500 of which were carved out from from Celcom, and plans to build 200 to 300 towers in Malaysia in edotco also has a collaboration agreement with DiGi to expand its network coverage. A further 3,200 towers are owned and operated by a diverse group of State-backed independent towercos. There is plenty of demand for new structures for 4G, but much of the work is undertaken by the aforementioned state backed towercos who have a dominant position in terms of permitting in half the States, so TI firms and tower manufacturers need to develop relationships with Malaysia s towercos. While only 5% of Malaysia s cell sites are off grid, data demand has driven the load on some sites beyond capacity, so battery banks are widely used. Demand for infill sites makes Malaysia ripe for street furniture, with DAS and IBS starting to be deployed by edotco and MNOs. edotco has already selected its RMS and edotco YTL Sacofa Touch Matrix D harmoni KJS Common Tower Infra Quest Yikedbina Perak Asia Space Desabina Others Celcom (Axiata) DiGi Maxis site management system, consolidated in their echo service, which is provided to over 3,000 of their Malaysian sites. 50 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

51 Vendor opportunity matrix Energy RMS, ILM and access control Tower manufacture Turnkey infrastructure Small cells, microcells, DAS and IBS Advisors Towercos MNOs Myanmar High High High Almost 10,000 of the 17,300 towers forecast by the GSMA to be required in Myanmar have now been built. While the build may start to slow, a healthy quadruple digit count of new towers will still be built in 2016 and again in 2017, maintaining the flow of steel imports from India and China. Myanmar s towerco ecosystem is settling into two tiers; three towercos charging a lease rate that enables them to attract investment and scale rapidly, led by IGT with 2,400 towers, Apollo with 1,800, and edotco which acquired MTC and their 1,250 towers from Digicel. The next tier includes Eco Friendly Towers (EFT) and OCK, who each offer discounted lease rates and have around 300 and 50 towers respectively, although OCK has a contract for 920. MIG, with around 100 towers, and PAMEL with 1,250 are both for sale, symptomatic of continuing consolidation in the Myanmar tower market which should keep the consultants and lawyers happy! Ooredoo s initial foray into retaining power asset ownership is behind them, so the towercos will provide power at all future sites for both Telenor and Ooredoo. As the tenancy ratios and cash flows improve, so towercos are slowly becoming less dependent on vendor finance, but preferred suppliers have been selected for power equipment, RMS, civil works and O&M. MPT continue to outsource new tower build to Huawei, but they re continuing to co-locate on independent towers, while new fourth MNO Viettel has entered preliminary discussions with the towercos about leveraging their assets to accelerate their imminent rollout. High Medium High IGT Apollo edotco PAMEL EFT MIG OCK MPT Telenor Ooredoo Viettel Pakistan High High Medium While the majority of Pakistan s ~40,000 towers remain operator-captive, that is about to change with the sale of the newly combined Mobilink and Warid portfolios to either Towershare, which already has 800 towers in Pakistan, or edotco, which operates 13,000km of fibre in the country. With Ufone s towers also for sale and with local towerco AWAL Telecom having secured a build-to-suit contract with Mobilink, expect towercos to play a prominent role in the future of Pakistan s telecom infrastructure. That future is likely to see local contractors kept busy more with decommissioning than with new build as the country s parallel infrastructure is gradually consolidated. Whichever towerco or towercos acquires Mobilink and Ufone s towers, expect them to invest in hybridisation to mitigate the effects of Pakistan s unreliable grid. Security and theft concerns mean RMS is a priority in Pakistan. It s early days for in-building coverage, with a handful of over 100 sites suited to IBS already having covered. High Medium High Towershare edotco AWAL Telecom Mobilink Telenor CMPak / Zong Ufone XX TowerXchange Asia Dossier TowerXchange Asia Dossier

52 Vendor opportunity matrix Energy RMS, ILM and access control Tower manufacture Turnkey infrastructure Small cells, microcells, DAS and IBS Advisors Towercos MNOs Thailand Medium Medium Medium Medium Medium High Most of Thailand s 52,483 towers remain operator-captive, but the tower market is hampered by longrunning ownership disputes which relate to lapsing build-operate-transfer (BOT) regimes. True created and successfully IPO ed TRUEGIF, later renamed DIF, in late 2013, a fund in which 12,138 towers and over a million kilometres of fibre have been transferred. Discussions to resolve BOT disputes by DIF AIS DTAC (Telenor) True CAT TOT creating a joint venture towerco between DTAC and CAT have been unsuccessful; the same is true of the similar venture planned by AIS and TOT which was cancelled in late AIS and TOT have entered into a trial to provide 3G on TOT s 2.1 GHz spectrum. 10,000 AIS and 800 DTAC towers built outside the BOT concession are set to remain operator-captive. Thailand has a degree of parallel infrastructure, suggesting a few decommissioning opportunities, but delayed spectrum auctions for a 4G rollout are limiting demand for co-locations and new builds. Once the concession and spectrum issues are resolved, anticipate Thailand s tower stock increasing 50% in the next ten years with 3G and 4G demand increasing. While grid power is widely available, electricity continues to become more expensive, fueling appetite for renewables and energy efficiency. If the mooted joint venture towercos are ever created, energy assets are likely to be owned by the towercos, but utility costs will be a pass through. Singapore Low Unknown Low Medium High Medium There are no towercos and there is hardly any infrastructure sharing in the mature Singaporean mobile market, but the imminent entry of a fourth MNO may change that and create opportunities for some, None SingTel StaHub M1 although not all, vendor segments. Grid power is reliable in Singapore so energy equipment is limited to simple battery backups. Most of the new sites in Singapore will be IBS, DAS and small cells for infill and indoor coverage. If the fourth MNO is not permitted to share the incumbents ~1,000 GBTs and ~5,750 rooftop sites, then expect some new build, but more likely the new entrant will stimulate infrastructure sharing, and perhaps an opportunity for an independent infraco. 52 TowerXchange Asia Dossier TowerXchange Asia Dossier 2016 XX

53 Vendor opportunity matrix Energy RMS, ILM and access control Tower manufacture Turnkey infrastructure Small cells, microcells, DAS and IBS Advisors Towercos MNOs Sri Lanka Medium Medium Low Medium Medium Low edotco owns and operates 2,000 towers, representing a little over 26% of the country s 7,500-8,000 towers. edotco monitors selected Sri Lankan sites with its echo RMS service. Sri Lanka is reaching the saturation point for the number of towers required to provide coverage. 4G spectrum is available only edotco Airtel Dialog (Axiata) Etisalat Hutchison Mobitel to Dialog and Mobitel; the remaining operators will need to engage in RANsharing to provide these services. An estimated 1,500-2,000 towers or special structures will be required for infill. Grid is at acceptable levels and improving. Vietnam Low Medium Medium High Medium Medium OCK recently announced the acquisition of the largest of Vietnam s independent towercos, SEATH with their 1,938 sites (mostly guyed-mayed mast towers), for US$50mn. Current owners VNI will retain SEATH s small IBS business. OCK will join Alcazar Capital-backed Golden Towers and a host of smaller local towercos who between them own around 10,000 towers in this 80,000+ tower market. While OCK Group Golden Towers Dozens of small local towercos Viettel MobiFone VinaPhone Vietnamobile GTel Mobile towerco consolidation may continue, the prospects of buy and leaseback deals with Vietnam s crowded MNO market looks as far away as ever, with GTEL struggling, Hutchison embroiled in an ownership battle with Hanoi Telecom for Vietnamobile, and MobiFone s mooted IPO stalled. Organic growth is limited by the degree of parallel infrastructure, but 4G rollout should ensure some new sites are added, but construction firms may get as much decommissioning as new build work. Grid power is reliable and widespread, so Vietnam is a low priority for distributed generation. MNOs remain the targets for battery manufacturers with power passed through. XX TowerXchange Asia Dossier TowerXchange Asia Dossier

54 The history of the tower industry, and a comparison of towerco business models Contrasting the business models of 42 of the world s leading towercos By Kieron Osmotherly, CEO, TowerXchange A developed market towerco which owns and operates just steel and grass is a fundamentally different entity from an emerging market towerco that might manage towers, real estate and power. Towercos also grow in different ways; some focus on organic growth, others on inorganic growth; buying and leasing back towers from MNOs, or rolling up existing towercos. Then you have different assets on towerco balance sheets; some focus purely on macro telecom towers, others also make a significant proportion of their revenue from broadcast clients, while some are diversifying beyond macro towers into microcells, small cells, DAS and fibre. How did these business models evolve? Keywords: Africa, American Tower, Americas, Bharti Infratel, Business Model, Carve Out, Cellnex, China, China Tower Company, Crown Castle, Deal Structure, Decommissioning, Eaton Towers, Europe, Helios Towers Africa, IHS, India, Indus Towers, Lease Rates, Market Overview, Multi-Region, Operator-Led JV, Research, SBA Communications, Sale & Leaseback, Small Cells, Tower Count, TowerXchange Research, Towercos, USA, Who s Who Read this article to learn: < A comparison of towerco business models against 11 variants < A brief history of towerco evolution in the US, CALA, Africa, India, Europe and China < Trends in public, private and MNO ownership < Towercos with a total market cap in excess of US$50bn progressing toward IPO Whether you want to invest in a towerco, partner with a towerco, or sell to a towerco, it s useful to know what breed of towerco you are dealing with. Three fundamental towerco business models evolved in parallel build, buy and carve-out and spawned a number of variants designed to meet specific local market needs. The US independent towerco model evolved as tower builders, media and real estate entrepreneurs anticipated the investibility of long term recurring cash flows from leasing telecom structures, and started buying, building and retaining towers. When the US model was exported to SSA the model was refined to relieve African MNOs of their principal operational headache: power. Meanwhile, in Asia a third parallel carve out model evolved where MNOs retained a significant stake in the towercos. The towerco business model has mutated once again to integrate Europe s broadcast assets, and to incorporate the decommissioning of the continent s parallel infrastructure. Then just last year, China implemented it s own brand of coconstruction and infrastructure sharing, with the creation of State-owned, 1.55mn site giant China Tower Company. How it all started in the US The tower industry as we know it started in the mid nineties in the United States when, almost simultaneously, Steve Bernstein Associates (now SBA Communications), Castle Towers (now Crown Castle) and American Radio (now American Tower) 54 TowerXchange Asia Dossier TowerXchange Asia Dossier

55 all came up with the idea of unlocking the value of towers by selling space to multiple tenants. Steve Bernstein Associates transitioned from tower builder to tower owner you can learn more about their story in TowerXchange s interview with SBA President and CEO Jeff Stoops. American Radio, as the name suggests, originated in a deal to acquire a radio station that had multiple tenants on their tower: Steve Dodge and Jimmy Eisenstein recognised the tower represented an investible, scalable source of long term recurring lease revenue. By 1998 American Tower was IPO ed and spun out of American Radio, scaling to over 15,000 towers by Meanwhile, Ted Miller was playing golf at Castle Pines when the notion of moving from commercial real estate into telecom real estate first crystalised with the words Castle Towers written on the back of a napkin! Ted, later joined by David Ivey and Chuck Green among others, raised capital from the likes of Centennial Ventures and Berkshire Partners, and started buying towers in the US and UK, including a portfolio of several hundred towers from Crown Communications, from which would come the Crown Castle moniker of today. Crown Castle announced the first large tower transaction in December 1998 when they acquired over 1,400 towers from Bell Atlantic, the operator smartly retaining a stake in the joint venture, in a deal valued at US$650mn. Other U.S. operators figured if it s good enough for Verizon, it s good enough for us, and four further tower transactions quickly followed. Crown Castle listed in 1998 and, until the technology bubble burst, the birth of a new infrastructure asset class proceeded without undue complications. Only the US tower market has been through a technology stock devaluation like the carnage of Frankly, the markets misdiagnosed towercos as a technology play rather than an infrastructure play, but many over-leveraged tower companies would not survive the downturn. Even Crown Castle, American Tower and SBA lost well over 90% of their value. How did they survive? We ll leave SBA CEO Jeffrey Stoops to tell the rest of the story: We knew that Rollup, rollup... because each tower is a business in its own right, we could hive off towers as necessary to raise enough money to pay off enough of our debt and avoid bankruptcy... We sold off 800 towers west of the Mississippi and used the proceedings to pay off our bank debt, which was the most troubled portion of our capital structure. Then we began a long and steady climb to reposition ourselves. We traded debt for equity, saw the market slowly improving, refinanced our business and grew our cash flow day after day. And we learned a valuable lesson! One of the reasons why this business is so attractive is that it s very leverageable but too much debt is simply not sustainable, no matter which industry you are in Oh, and three years later to the day we bought back all of those 800 towers! There s another U.S. story which starts up a little later; Marc Ganzi at Global Tower Partners and his backers at Blackstone, led by Ben Jenkins, concentrated on what we now know as the rollup business model. Rollup towercos concentrate on consolidating the fragmented ecosystem of privately owned towers, from Mom and Pop landlord driven businesses to smaller build-to-suit centric towercos. While most towercos of scale rollup opportunistically, the rollup specialists will spend countless long hours on hundreds of small transactions per year, and will often have the unenviable task of cleaning up these assets to build a portfolio with a consistent high standard. Does rolling up work? GTP was certainly a success story; they rolled up 15,700 mostly North American towers and sold them to American Tower for US$4.8bn in This inspired not just one but two sequels: Ganzi and Jenkins latest rollup venture Digital Bridge now has over 5,000 towers across the Americas, while members of GTP s hard grafting M&A team, led by Dagan Kasavana and Natalya Kashirina, have rolled up over 2,000 towers, also in the Americas, within Phoenix Tower International, which has attracted Blackstone to once again back the venture 50 TowerXchange Asia Dossier TowerXchange Asia Dossier

56 Few towers transacted in the US between 2002 and 2007, but fast forward to today, and the US is home to the world s most valuable, most leased up towers. Over 80% of towers are owned by towercos, the majority consolidated into the portfolios of Crown Castle, American Tower and SBA Communications, with a handful of mid-tier consolidators led by Vertical Bridge, and a long tail of over 100 independent developers. The American independent tower model is credited with accelerating wireless connectivity and adoption; where once the US lagged other markets, it is now a leader. Refining and exporting the business model to Central and Latin America and Sub Saharan Africa The US towercos crossed the border into Latin America, where in some countries they are able to use a very similar business model, using their US MSAs as a template in some countries; because we were the first to enter in the region, we were able to shape contracts the same way we did in the U.S., which obviously was a benefit, said SBA CEO Jeffrey Stoops in an interview later in this TowerXchange Journal. There were some first movers, but the deal flow crescendoed between 2010 and 2014, culminating in today s situation where around half of the towers in CALA are owned by independent towercos, including the majority of towers in Brazil and Mexico. But when pioneers brought it to SSA, the towerco business model had to be fundamentally refined: the towerco would become a powerco. As much as 50% of MNOs opex in SSA is derived from energy and energy logistics if Africa s MNOs were to turn over their prized network assets to towercos, those towercos would have to take on the complex (and leaky!) diesel supply chain. Led by former Crown Castle CFO Chuck Green at the helm of Helios Towers Africa; former Orange and Celtel CEOs Sanjiv Ahuja and Terry Rhodes with Eaton Towers; and a footprint extension of American Tower under the leadership of Hal Hess, Stephen Harris and Pieter Nel; the colonisation of Africa would also give rise to IHS, the most recent in a long tradition of tower build and service companies to make the successful transition to asset ownership and, in the case of IHS, market leadership. Under the guidance of Issam Darwish and his team, IHS s portfolio now consists of more than 22,900 towers, including the majority of towers in Cameroon, Cote d Ivoire, Rwanda, Zambia and Nigeria Africa s largest mobile market. Evangelising the independent tower ownership business model to MNOs and investors was a painstaking process but, like in the US, when the first tower transactions were announced in 2010 (Helios Tower Africa in Ghana, DRC and Tanzania; HTN, IHS and SWAP in Nigeria; American Tower C in South Africa and Ghana; Eaton also in Ghana), the floodgates opened and over the subsequent six years Africa s towercos have deployed around US$5bn rolling up almost 50,000 towers, representing 42% of the stock in SSA. Like CALA, tower transaction deal flow is slowing in SSA as most of the investible towers have been acquired. Meanwhile in India The Indian tower model evolved along two axes: a commercial, pureplay independent tower model exemplified by American Tower and Tower Vision, and an MNO-led model, exemplified by Indus Towers and a host of MNO-captive carve-outs. The strength of the latter community, and of the influence of MNOs, means many MLAs in India are structured to incentivise co-location by sharing savings. The Indian market also has remarkably consistent lease prices (~Rs 32,000, around US$500). Tower sharing in India had been limited to limited barter arrangements until , when Quippo SREI (which became Viom Networks) led India s first commercial tower leaseup between Spice Telecom and Hutchison, while in parallel Ashmore Group got together with some Israeli partners to form Tower Vision. Also in 2006, Indus Towers was conceived: a joint venture between Airtel, Hutchison (now Vodafone) and IDEA Cellular which became the world s largest towerco at launch, with over 70,000 towers. Reliance Communications and Tata Teleservices 56 TowerXchange Asia Dossier TowerXchange Asia Dossier

57 carved out their own towercos, Reliance Infratel and WTTL respectively, while Bharti Airtel hived off a proportion of their towers commensurate with their larger scale in the market than their partners in Indus Towers, creating Bharti Infratel. Tata would latter sell WTTL to Viom Networks, but the trend toward MNO-led towercos shifted the balance of power in India, ensuring the towerco business model evolved to optimally serve the MNO was a gold rush era in Indian telecoms; operators sprung up by the dozen, and towercos added towers and tenants in their thousands. The restructuring of the MNO market, and cancellation of 122 operator licenses, in 2012 brought an abrupt end to this era of growth, and some towercos lost thousands of tenancies overnight. While new tower builds and technology rollouts would continue to be largely funneled through the towercos, tower transaction deal flow ground to a halt in India until this year, when the landmark acquisitions of Viom Networks by American Tower and of Reliance Infratel by Brookfield signal a new wave of tower transactions. The Indian tower market today is a rational, sustainable, efficient business model, supporting the emergence of Digital India and accelerating the rollout of 3G and 4G. The new European brand of towerco Europe s telecom networks matured with minimal input from independent towercos, to the point that many countries tower networks featured significant parallel infrastructure. In the meantime, Europe s broadcast tower assets were increasingly being privatised and shared with the telecom sector. Thus the European brand of towerco has very different characteristics than its international parents: synergies with broadcast asset management and the decommissioning of parallel infrastructure feature large on many European towerco roadmaps. Europe is a uniquely localised tower market, with over 60 single country towercos and just a couple of multi-country towercos of scale: Cellnex and Telefónica s newly carved out Telxius. Cellnex is a significant catalyst of change in Europe: for years international towercos were reluctant to make the offer MNOs couldn t refuse for their towers, and the valuation gap stalled the market. Embolded and enriched by a successful IPO, Cellnex is riding a healthy share price to close that valuation gap and consolidate towers across Europe. Having started in their domestic market of Spain and rapidly expanded into Italy, Cellnex is marching North with preliminary acquisitions in The Netherlands and France being just the start of their journey. The aforementioned Telxius is an exemplar of another characteristic of the European market: the prevalence of MNO-captive towercos and joint ventures. Some of these carve outs are bona fide independent towercos, others function as operators of pooled network resources, sometimes managing active as well as passive equipment, with assets remaining on MNO balance sheets. Europe remains an early stage tower market, with 64% of assets remaining operator captive, rising to 87% if you count the JVs and operator-captive towercos. But tower transaction deal flow is increasing, captive towercos may come to market as IPOs or for sale to a strategic, so TowerXchange forecast that independent tower ownership in Europe will rise to 49% by the end of 2020 comparable to CALA and SSA today. China embraces co-construction and infrastructure sharing China Tower Company (CTC) forecast scaling to a total of over 1.7mn towers on their balance sheet by the end of FY16, in a Chinese market supplemented by a fragmented ecosystem of 200+ local independent towercos which will own around 45,000 towers between them by the same dateline. A collaborative approach to co-construction and infrastructure sharing was mandated by the MIIT and SASAC, culminating in the creation of CTC, into which the infrastructure assets of all three Chinese MNOs were injected, with the operators retaining a 94% stake in the venture. Like India, the Chinese tower market seems to be calibrated to share significant efficiencies with MNOs, illustrated by the lease pricing structure recently released by CTC which shares increasing 52 TowerXchange Asia Dossier TowerXchange Asia Dossier

58 Seven prospective tower company IPOs in the next two years Unsurprisingly, all 13 of the world s publicly listed towercos are among the world s top 50 tower companies by tower count, but some very substantial entities remain unlisted, pointing to the potential for some substantial IPOs in the future. 1. The world s largest towerco China Tower Company are widely believed to be planning an IPO in late 2017, either as an A-share or on the Hong Kong Stock exchange. 2. Deutsche Telekom could seek a listing of Deutsche Funkturm, which owns just under 40% of the towers and rooftops in Germany. 3. Turkcell recently postponed but still plans to IPO Global Tower, which owns and operates just under 10,000 towers. discounts with anchor and co-locating tenants as more equipment is added to a site, further enhanced through shared energy savings. With an average lease rate thought to be around CNY$2,500pcm (US$375), leasing a tower in China is 30% cheaper than anywhere else in the world. The strength of State influence makes the Chinese tower market unique, as a function of the Party s agenda to improve the efficiency of deploying CNY tens of billions of capex into China s tower network for 4G and 5G rollout, and their enthusiasm to improve the efficiency of real estate usage. These agendas are playing out successfully through CTC which claims to have already saved CNY50bn in investment and 13,000 acres of land as a result of coconstruction and infrastructure sharing. 4. Axiata may list their towerco edotco on the Bursa Malaysia within the next couple of years. edotco has 16,450 towers across six Asian countires. 5. Telefónica carved out over 16,000 towers into Telxius; while their initial efforts to IPO were unsuccessful, the MNO still plans to monetise the assets. 6. The restructuring of Arqiva s balance sheet could see a partial listing on the London stock exchange for Britain s 10,550 tower hybrid broadcast-telecom towerco. 7. The sheer scale of the company means African giant IHS looks increasingly likely to IPO rather than be sold to a strategic investor. No wonder institutional investor interest in the asset class is at an all-time high; towercos with a prospective market cap in excess US$50bn could be coming to market in the coming two years! Enough history lesson let s compare business models! TowerXchange have created 11 business model variants into which we have categorised 42 towercos with 800 or more towers. We have excluded a handful of towercos whose business model we don t know well enough to categorise in this exercise. The other two towerco business model variants TowerXchange also classifies some towercos as operating a build to flip business model. Focused on build to suit opportunities, high quality build to flip towercos build safe, high capacity structures underpinned by a full set of permits and a good MLA / MSA. There can be a temptation for tower entrepreneurs operating this business model to cut 58 TowerXchange Asia Dossier TowerXchange Asia Dossier

59 corners on permitting and to deeply discount lease prices these practices generally have an adverse impact on valuation at exit. There are no build to flip towercos in our matrix of towercos with 800 or more towers as by their nature, build-to-flip tower entrepreneurs have usually sold and restarted their business before reaching this scale. TowerXchange also recognises small Mom and Pop towercos; typically family-owned, these companies seldom have more than 50 towers, and the owners are often keen to retain them as pensionable assets. The critical role of independent developers While our matrix focuses on larger tower companies with 800+ sites, readers should note that in many markets independent developers are grabbing the lion s share of the new build. For example American Tower built nine towers in South Africa between Q115 and Q116, while independent developers Atlas Towers and Eaton Towers South Africa each built around 100. Over the same period in Brazil, independent developers built 1,430 towers, while the three largest towercos in Brazil, American Tower, SBA and GTS, added just a few hundred towers. The gap between the new build of large towercos isn t always as pronounced, but they are seldom the #1 builder in a market; even in a priority market like Mexico, American Tower added 440 towers between Q215 and Q216, whilst privately owned Mexico Tower Partners (MTP) added 571 TowerXchange s towerco business model definitions Pureplay steel and grass: manages only the real estate and tower structure, power is a pass through which means it is a cost which remains the responsibility of the tenant. Full service powerco: lease rate includes power and O&M, so the towerco is responsible for distributed generation, energy storage and managed services. Decommissioning: towerco which at least in part specialises in acquiring and consolidating parallel infrastructure in over-built markets. Organic growth: builds new towers in response to MNO search rings, often supplemented by the speculative acquisition of land usage rights at sites which may be of future interest to mobile network planners. Buyer: derives, or aspires to derive, a significant level of inorganic growth through large scale sale and leasebacks or participation in joint ventures with MNOs. Seller: towerco believed to be for sale or heading toward IPO. Rollup: drives inorganic growth through a series of small acquisitions, often consolidating the assets of build to flip or Mom and Pop towercos. Broadcast hybrid: makes significant proportion of lease revenue from broadcast tenants; broadcast towers height and dispersed locations make them ideal for MNOs rural coverage and microwave backhaul, so many broadcast towercos are diversifying into telecom. Beyond macro: some towercos include a significant amount of DAS, microcells, small cells, fibre, data centres and/or sub-sea cable in their portfolios. Finally, we have added the last known tower count for each company, their geographical footprint, and fields indicating ownership: private, public or MNO-led. These fields are not mutually exclusive, e.g. a towerco can be listed on the stock market but significant equity can be retained by an MNO or private company 54 TowerXchange Asia Dossier TowerXchange Asia Dossier

60 Pureplay steel & grass Full service powerco Decommissioning Organic growth Buyer Seller Rollup Broadcast hybrid Private Beyond macro Public MNO-led Estimated tower count Q216 Footprint China Tower Company American Tower Americas, Europe, South Africa American Tower India, Ghana, Uganda, Nigeria, Tanzania Indus Towers Reliance Infratel Crown Castle Bharti Infratel GTL Infrastructure Deutsche Funkturm SBA Communications IHS Towers edotco Telxius Cellnex Protelindo Telesites CTIL MBNL Tower Bersama INWIT Arqiva 1,550, , ,739 43,379 40,085 38,642 29,432 27,000 26,522 22,918 16,450 16,233 16,100 14,737 14,043 12,000 12,000 11,389 11,200 10,550 China USA, Brazil, Chile, Colombia, Peru, Mexico, Costa Rica, Germany, India, Ghana, South Africa, Uganda, Nigeria, Tanzania India India USA India India Germany USA, Canada, Brazil, Panama, Costa Rica, Nicaragua, Guatemala, El Salvador, Ecuador, Colombia Nigeria, Cameroon, Ivory Coast, Rwanda, Zambia Malaysia, Sri Lanka, Bangladesh, Cambodia, Pakistan, Myanmar Spain, Germany, Brazil, Peru, Chile Spain, Italy, Netherlands, France Indonesia, Netherlands Mexico, Costa Rica UK UK Indonesia Italy UK 60 TowerXchange Asia Dossier TowerXchange Asia Dossier

61 Pureplay steel & grass Full service powerco Decommissioning Organic growth Buyer Seller Rollup Broadcast hybrid Private Beyond macro Public MNO-led Estimated tower count Q216 Footprint STP 7,770 Indonesia TDF 7,398 France Helios Towers Africa 6,556 Tanzania, DRC, Congo B, Ghana Grupo TorreSur 6,500 Brazil Guodong 6,000 China Eaton Towers 5,070 Ghana, Kenya, Uganda, South Africa, Niger, Burkina Faso CETIN 4,800 Czech Republic Vertical Bridge 3,700 USA EI Towers 3,200 Italy ASEAN Towers: Irrawaddy Green Towers ASEAN Towers: Golden Towers 2,750 Myanmar, Vietnam FPS Towers 2,482 France Phoenix Tower International 2,215 Brazil, Dominican Republic, Costa Rica, Panama, USA, Colombia OCK Group: Myanmar OCK Group: Vietnam and Malaysia Wireless Infrastucture Group 2,121 2,000 Vietnam, Malaysia, Myanmar UK, Ireland, Netherlands Apollo Towers Myanmar 1,800 Myanmar Russian Towers 1,800 Russia Vertical 1,600 Russia Mexico Tower Partners 1,531 Mexico Pan Asia Majestic Eagle 1,250 Myanmar Komet Infra Nusantara (KIN) 1,000 Indonesia Towershare 800 Pakistan 56 TowerXchange Asia Dossier TowerXchange Asia Dossier

62 Tower Xchange TowerXchange brings the tower industry to you! Connect with us today and discuss available opportunities for our Meetups across Africa, Asia, Europe, Americas and China! Exhibiting or sponsoring at TowerXchange Meetups is the best investment you can make to showcase your products and expertise in front of the global telecom tower industry. Annabelle Mayhew, CCO, at today to find out more. TowerXchange Meetup calendar TowerXchange Meetup Europe 2017, April 4-5, Business Design Centre, London TowerXchange Meetup Americas 2017, June 7-8, Boca Raton Resort & Club, Florida TowerXchange Meetup Africa 2017, October 3-4, Sandton Convention Centre, Johannesburg TowerXchange Meetup Asia 2017, December 12-13, Marina Bay Sands, Singapore Visit our website at

63 13-14 December, Marina Bay Sands, Singapore Meetup Asia 2016 A senior-level networking opportunity with 250 leaders of the Asian telecom tower industry Speakers confirmed to date include: edotco, Bharti Infratel, Protelindo, Indus Towers, Towershare, STP, Indosat, Teletalk, Common Towers, Macquarie Group, Hardiman Telecoms, IFC. Visit Diamond Sponsor: GOLD SPONSOR: Silver Sponsors: Bronze Sponsors:

64 TowerXchange Meetup Asia - Draft agenda Marina Bay Sands, Singapore December 2016 Monday 12 December 15:00-18:00 Pre-conference vendor briefing hosted by edotco < Oliver Coughlan, COO, edotco < Ir Nalini Subramaniam, Director of Engineering, edotco Day One Tuesday 13 December Tuesday 13 December 8:00 Registration and coffee 9:00 TowerXchange introduction to the Asian tower market what has changed since our last Meetup? Kieron Osmotherly, CEO, TowerXchange 9:15 Keynote presentation - Suresh Sidhu, CEO, edotco 9:40 TowerXchange baseline data on Indonesia and Malaysia 9:55 CXO Panel - India, Indonesia, Malaysia < Akhil Gupta, Chairman Bharti Infratel < Steve Weiss, CFO, Protelindo < Suresh Sidhu, CEO, edotco < Dr. Kamal Zakaria, President, PPIT < Bimal Dayal, CEO, Indus Towers < Tomy Sudiwiyono, Division Head, Tower Planning & Engineering, Indosat 10:55 Coffee and networking 11:10 Best practices for site management 11:30 Roundtable session 1 Technology Working Group: Energy - Hybrid Power < Oliver Coughlan, COO, edotco < Ir Roger Wong, AVP, Head of Energy Management, edotco < Senior representative, Vodafone Procurement Company < More panellists announced shortly 12:30 Networking lunch 13:30 Keynote address 13:55 Roundtable session 2 Technology Working Group: Site monitoring, management and optimisation < Ir Nalini Subramaniam, Director of Engineering, edotco < Manzoorul Islam, Director Operations, edotco Bangladesh < Kompella Srinivas, National Head, Infrastructure Quality Technology, Indus Towers < More panellists announced shortly 14:55 Coffee and networking 15:10 Achieving operational excellence at cell sites 15:30 TowerXchange baseline data on India CXO Panel The future of the Indian tower market < Manish Kasliwal, VP & Chief Business Development Officer, American Tower < Sushil Kumar Chaturvedi, CEO, Ascend Telecom < Rupinder Ahluwalia, President, Business Development Head, GTL Infrastructure < Umang Das, Vice Chairman, TAIPA 16:45 End of day one and networking drinks 19:30 TowerXchange networking dinner (optional) 17:30 Close of TowerXchange Meetup Asia TowerXchange Asia Dossier TowerXchange Asia Dossier

65 TowerXchange Meetup Asia - Draft agenda Marina Bay Sands, Singapore December 2016 Day Two Wednesday 14 December 8:30 Welcome coffee and breakfast 9:00 Keynote Address - Bimal Dayal, CEO, Indus Towers 9:25 TowerXchange baseline data on Myanmar 9:40 CXO Panel - Myanmar: the next phase of development < Moderator: Mohamad T. Chowdhury, TMT Consulting Leader, Australia, SE Asia & NZ, PwC Indonesia < Oliver Coughlan, COO, edotco < Philippe Luxcey, CEO, Apollo Towers < Tony Pretorius, COO, Myanmar Infrastructure Group < Senior representative, MPT 10:30 The evolution of energy management in the Asian tower industry 10:50 Coffee and networking 11:00 TowerXchange baseline data on developing Asian tower markets 11:30 CXO Panel - Developing tower markets in Asia: Pakistan, Bangladesh, Thailand, Vietnam < Rehan Hassan, CEO, Towershare < Darryll Sinnappa, Managing Director Bangladesh, edotco < Sam Ooi, Managing Director, Founder, OCK Group < Mohamad Rizvi, Manager of Network Planning & System Engineering, Teletalk 12:10 Roundtable session 3 Technology Working Group: Civil works and O&M < Ir Nalini Subramaniam, Director of Engineering, edotco < Muhamad Raza Qureshi, Director Operations, edotco < Ricky Steyn, Director of Engineering, edotco Myanmar < Tejinder Kalra, COO, Indus Towers < More panellists announced shortly Technology Working Group: Energy storage More panellists announced shortly 13:10 Networking lunch 14:00 Roundtable session 4 Technology Working Group: Small Cells and DAS < Ir Nalini Subramaniam, Director of Engineering, edotco < Nobel Tanihaha, President Director, STP < Senior representative, Vodafone Procurement Company < More panellists announced shortly 15:10 Coffee and networking 15:25 CXO Panel - Fibre, small cells, network evolution - What s next for the tower industry? < Nobel Tanihaha, President Director, STP < Peter Egbertsen, Director, Corporate Finance, Protelindo < Ir Nalini Subramaniam, Director of Engineering, edotco < Tomy Sudiwiyono, Division Head, Tower Planning & Engineering, Indosat 16:15 TowerXchange baseline data on China 16:30 CXO Panel Understanding the Chinese tower market 17:30 Close of TowerXchange Meetup Asia TowerXchange Asia Dossier TowerXchange Asia Dossier

66 TowerXchange Roundtables Country focus < India < Myanmar < Indonesia < Malaysia < China < Thailand < Vietnam < Pakistan < Bangladesh < Cambodia < India - The impact of 4G < Australia < Myanmar - Energy Roundtable leaders confirmed to date: < Dr. Mahadi Harris-Murshidi, CEO, Common Tower < Eric Crabtree, Chief Investment Officer, IFC < Carlos Katsuya, Head of Asia, TMT, IFC < Lim Chuan Wei, Partner, Analysys Mason < Enda Hardiman, Managing Partner, Hardiman Telecom < Gulfraz Qayyum, Managing Director Asia TMT, Citigroup < Patrick Tangney, Partner, Alcazar Towers < Krishna Suryanarayanan, Managing Director, Structured Finance, ING < Thivanka Rangala, CFO, edotco < Wan Zainal, CSMO, edotco Functional focus < CTO forum: Developing a new technology strategy to support changing towerco business models < CFO forum: New strategies for raising equity and debt finance < CFO forum: Identifying new M&A opportunities < CSMO forum < COO forum < General Counsel forum Operational focus < Opportunities for renewables and ESCOs in Asia < Microcells, small cells and DAS < Carson Wolfer, M&A Advisor, edotco < Rema Nair, Regulatory Advisor, edotco < Gayan Koralage, Director, Strategy & Commercial, edotco < Phillip Wong, Managing Director Cambodia, edotco < Arif Hussein, Managing Director Pakistan, edotco < Mohan Villavarayan, Managing Director Sri Lanka, edotco < Tucker Grinnan, Executive Director, Asian TMT, J.P. Morgan < Pankaj Agrawal, Specialist Advisor, Asian TMT, Capitel Partners < Tucker Grinnan, Executive Director, Asian TMT, J.P. Morgan < Accelerating build-to-suit, construction and colocation < How to build towers with maximum future sale value < How to minimise the total cost of evaluating and strengthening towers < How towercos and their subcontractors can ensure adherence with SLAs < Beyond passive infrastructure: end to end models < Workforce and vendor performance management < Redefining the way we manage SLAs and KPIs < Impact of spectrum regulation and technology policy on towerco tenancies < Project management best practices: from site acquisition to licensing < Sushil Kumar Chaturvedi, CEO, Ascend Telecom < Pankaj Agrawal, Specialist Advisor, Asian TMT, Capitel Partners < Brandon Amber, Managing Director, Palladium Partners < Yusoff Zamri, CEO, Cam Towerlink < Sachit Ahuja, Vice President, TGH < Ted Zhong, CEO, Q Towers < Vincent Wang, GM & Co-Founder, Sanyuan Tech Shanghai < Lu Jie, Chairman & CEO, Guodong < Hu Gang, GM of Finance & Administration, Guodong < Speaker TBA, Miteno 66 TowerXchange Asia Dossier TowerXchange Asia Dossier

67 Technology working groups Working groups A new initiative for 2016, working groups differ from traditional roundtable sessions at a TowerXchange Meetup. Designed to enable peer-led evaluation of technologies and services by tower owners themselves, seats at the central table are strictly reserved for executives from MNOs and towercos or invited event sponsors and exhibitors. Our priority for these sessions is to elicit the requirements and experiences of MNOs and towercos - to learn from their challenges and successes. If you are an MNO or towerco in attendance we invite you to take part in these highly constructive debates as we map out product limitations, requirements and trials and act as a focussed industry task force. Similarly, if you are in the process of evaluating different suppliers prior to making a procurement decision, the working groups will equip you with vital information and key questions to ask when assessing different vendors. After information gathering from the MNOs and towercos, we invite selected vendors to enter the discussion, succinctly sharing their perspectives and tailored solutions/ product developments to address some of the issues raised. All vendors have been notified prior to the event as to their eligibility to join this session. If you have not been notified, you will be unable to actively participate in the discussion but we invite you to take a seat around the edge of the room to listen to the session. Due to the popularity of these sessions, we request that only one person per company join each working group. Day One 11:30 Technology Working Group: Energy - Hybrid Power < Oliver Coughlan, COO, edotco < Ir Roger Wong, AVP, Head of Energy Management, edotco < Senior representative, Vodafone Procurement Company < More panellists announced shortly 13:55 Technology Working Group: Site monitoring, management and optimisation < Ir Nalini Subramaniam, Director of Engineering, edotco < Manzoorul Islam, Director Operations, edotco Bangladesh < Kompella Srinivas, National Head, Infrastructure Quality Technology, Indus Towers < More panellists announced shortly Day Two 12:10 Technology Working Group: Site design and improvement < Ir Nalini Subramaniam, Director of Engineering, edotco < Muhamad Raza Qureshi, Director Operations, edotco < Ricky Steyn, Director of Engineering, edotco Myanmar < Tejinder Kalra, COO, Indus Towers < More panellists announced shortly 12:10 Technology Working Group: Energy storage < Oliver Coughlan, COO, edotco < Ir Roger Wong, AVP, Head of Energy Management, edotco < Senior representative, Vodafone Procurement Company < More panellists announced shortly 14:00 Technology Working Group: Small Cells and DAS < Ir Nalini Subramaniam, Director of Engineering, edotco < Nobel Tanihaha, President Director, STP < Senior representative, Vodafone Procurement Company < More panellists announced shortly 62 TowerXchange Asia Dossier TowerXchange Asia Dossier

68 IFC regulatory workshop and TowerXchange networking dinner Thursday 15 December TowerXchange Meetup Asia telecom tower regulatory conference co-sponsored by IFC This conference initiative has been designed to facilitate dissemination of knowledge as well as better understanding of the tower industry and infrastructure sharing regulatory policies in several Asian countries, and to support industry and government objectives related to the tower industry and regulations. The expertise of governments and industry participants would be essential during this first conference opportunity to network, to discuss common challenges, and to have a successful event. Some of the officials and tower industry attendees that will be present will be from the following countries: Afghanistan, Bangladesh, India, Sri Lanka, Myanmar, Indonesia, Vietnam, Thailand, Cambodia, Malaysia, and Mongolia. Time Activity 9:00 9:30 Opening: Introductions and presentations TowerXchange, The IFC, delegations 9:30 10:30 Open discussion and Q&A 10:30 10:45 Coffee break 11:00 12:30 Simultaneous panels and Q&A 1. South Asia Panel 2. East Asia Panel 12:00 12:30 Summary and Q&A Networking dinner The networking dinner will be held at the Bull Run Restaurant (20 Maude Street), a short walk from the Sandton Convention Centre. Those who have pre-registered will have received a wristband during with their name badge. Please bring this wristband with you to obtain entrance to the dinner which will commence at 7.30pm. Please note that no walk-ins will be allowed. At the time of going to press the dinner was almost at full capacity (100 people). To ask about availability, please enquire at the registration desk. Please note, there will be a charge of 50 plus VAT for the dinner. How can I join? Early booking is strongly recommended All previous Meetups have SOLD OUT and with the scope of eligible attendees expanding for 2016, and pre-registrations being taken prior to the official event launch this year s Meetup is set to sell out earlier than ever. Register today to guarantee your involvement 12:30 1:30 Lunch 1:30 2:30 Breakout groups: 1. Regulatory framework for towers 2. Streamlining, site acquisition and permits 3. Taxation 4. Evolution of tower model and regulatory implications 2:30 2:45 Coffee break 2:45 5:00 Breakout: Roundtable meetings amayhew@towerxchange.com +44 (0) TowerXchange Asia Dossier TowerXchange Asia Dossier

69 TowerXchange Meetup Asia - Delegate list as of 8 November 2016 Abloy, Business Development Manager Abloy, General Manager, Abloy Asia Abloy, Managing Director, Abloy South East Asia & China Acsys Technologies, Senior representative Acsys Technologies, Senior representative Acsys Technologies, VP Sales Asia, Business Development Global Accounts Acsys Technologies, VP Sales India, Business Development Global Accounts Aerolens Group, CEO AIO Systems, EVP Sales & Marketing AIO Systems, Senior representative Alcazar Capital, Director, IGT and Chairman, Golden Towers American Tower, VP and CBDO; Member of the Board and Director Analysys Mason, Senior representative Apollo Towers Myanmar, CEO Aquion Energy, Director of Sales, Asia Ascend Telecom Infrastructure, Director and CEO ASPN Enterprise, Managing Director Bharti Airtel, Deputy Group CEO and Managing Director Camusat International, Vice President Middle East & Asia Capitel Partners, Director Citigroup, MD and Head of Telecoms MEA Common Tower, CEO Credit Agricole CIB, Head of Telecom, Media & Technology Finance, Asia Dreamline, CEO Dreamline, Director edotco, CEO edotco, CFO edotco, Chief Sales & Marketing Officer edotco, COO edotco, Country Managing Director edotco, Country Managing Director edotco, Country Managing Director edotco, Director - Strategy and Commercial edotco, Head of Infrastructure Planning and Design (Regional) edotco, M&A Advisor to the CEO edotco, Regulatory Advisor to CEO edotco Pakistan, Managing Director EI Towers SPA, CFO EI Towers SPA, COO Eltek Power, Regional President - APAC Eltek Power, Sales Director Enatel Energy, Senior representative Enatel Energy, Senior representative Energize the Chain, COO Energize the Chain, Director EnerSys, Senior representative Ericsson, Director & Senior Advisor FG Wilson, Business Development Manager FG Wilson, Power Generation Global Director FG Wilson, Regional Sales Manager FG Wilson, Sales Manager Flexenclosure, Senior representative Flexenclosure, Senior representative Flexenclosure, Senior representative Flexenclosure, Vice President, Sales & Marketing GS Yuasa, Regional Manager - ASEAN GS Yuasa, Regional Manager - South Asia GTL Infrastructure, President - Business Development Guodong, Chairman & CEO Guodong, Assistant to CEO - GM of Finance & Administration Hardiman Telecommunications, Managing Consultant Hardiman Telecommunications, Managing Partner Heliocentris, Senior representative Hetrogenous, Senior representative Hetrogenous, Senior representative Hetrogenous, Senior representative Hetrogenous, Director, Telecoms, Media and Technology Investment Banking HSBC, Managing Director Huawei, Senior representative Huawei, Senior representative Indosat Ooredoo, Division Head Tower Planning & Engineering Indus Towers, CEO Indus Towers, COO Indus Towers, Circle CEO Indus Towers, National Head, Infrastructure Quality - Technology Infozech, CEO Infozech, Business Development Manager Infozech, Head of Products ING Bank, Managing Director - Structured Finance Invendis Technologies, Senior representative Invendis Technologies, Senior representative 64 TowerXchange Asia Dossier TowerXchange Asia Dossier

70 TowerXchange Meetup Asia - Delegate list as of 8 November 2016 Invendis Technologies, Senior representative ip.access, CTO & Head of PLM ip.access, SVP Global Sales IPS, Business Development Manager IPS, Research Analyst at PostScriptum and IPS IPS, VP Business Development IPT Powertech Group, COO IPT Powertech Group, Senior representative JP Morgan, Senior representative KPR consultants, Group President KPR India, Partner Leoch Battery, Senior representative Linfra Limited Myanmar, CEO Mahindra & Mahindra - Powerol Business, Head of Business Development-SAARC, Asian & Middle East Mahindra & Mahindra - Powerol Business, Senior GM - Telecom Sales, Engines and Tele-Infra Management Metallwarenfabrik, Director Group Sales & New Business Development Metallwarenfabrik, Sales Director International Miteno Communication Technology, Senior representative Miteno Communication Technology, Senior representative Miteno Communication Technology, Senior representative Miteno Communication Technology, Senior representative Mubadala Infrastructure Partners, General Counsel Myanmar Infrastructure Group (MIG), COO NANHUA Electronics, Vice-Director of Sales NANHUA Electronics, Sales Representative NorthStar, Vice President MEAPAC Reserve Power Division NorthStar, Technical and Marketing Director Asia Pacific NorthStar, Senior representative Palladium Partners, Managing Director Perkins Engines, Senior representative Protelindo, CFO Protelindo, Corporate Finance PT. Fluidic Indonesia, Director PwC Indonesia, TMT Consulting Leader, Australia, SE Asia and NZ Q Towers International, CEO Qowisio, Asia Sales Manager Redflow, General Manager - Sales APAC Redflow, Sales Director Reliance Industries Limited, Senior Vice President - Project Engineering Reliance Industries Limited, Senior Vice President - Wireless Infra Projects Reliance Jio Infocomm Limited, Assistant Vice President - Procurement Reliance Jio Infocomm Limited, Senior Vice President - Project Procurement SACOFA, CEO SACOFA, Managing Director SACOFA, Head of Marketing Salasar Techno Engg., President Sanyuan Tec, CEO Siterra - An Accruent Product, Director, APAC Channel Sales Siterra - An Accruent Product, Industry Product Manager, Product Management Telecom Siterra - An Accruent Product, Senior representative Sojitz Corporation, Deputy Manager Sojitz Corporation, Manager SONEPAR & MAFI, Senior representative SONEPAR & MAFI, Senior representative STP, President Director T.C.C. Industry and Engineering, Managing Director Tarantula, Senior representative Tarantula, Senior representative Tarantula, Senior representative Tarantula, Senior representative Telenor Pakistan, Director Infrastructure Deployment Telenor Pakistan, Manager Network Roll Out & Sharing Teletalk, Manager of Network Planning and System Engineering Tillman Global Holdings, Vice President - Business Development TOTAL, Senior representative TOTAL, Senior representative Tower Vision India, Director Towershare, CEO Vinson & Elkins, Senior representative Vinson & Elkins, Senior representative Xynteo, Senior Analyst Yiked Bina, CEO 70 TowerXchange Asia Dossier TowerXchange Asia Dossier

71 Floorplan DIAMOND SPONSOR: Breakout/Sponsor rooms Main entrance & access to main Meetup room edotco Group Sdn Bhd Established in 2012, edotco is the first regional and integrated telecommunications infrastructure services company in Asia, providing end-to-end solutions in the tower services sector from tower leasing, co-locations, build-to-suit, energy, transmission and operations and maintenance (O&M) With a regional portfolio that includes over 16,000 towers across edotco s core markets of Malaysia, Sri Lanka, Bangladesh, Cambodia, Pakistan and Myanmar, edotco strives to deliver outstanding performance in telecommunications infrastructure services and solutions. edotco s value-added services are supported by state-of-the-art real time monitoring service, echo, which has improved field operations while maximizing operational efficiencies in terms of battery, energy and fuel consumption for telecoms infrastructure Through its operations in developing Asian economies, edotco has established a strong track record in nation building. edotco has progressively invested in industry best practices, providing a broad portfolio of infrastructure solutions and offering value-added services to enhance efficiencies and connectivity for communities. edotco is committed to conducting its business in a responsible and sustainable manner for the benefit of its customers, employees, communities and developing nations. For more information on edotco, kindly visit 66 TowerXchange Asia Dossier TowerXchange Asia Dossier

72 Our sponsors GOLD SPONSOR: IPS International Power Supply is 27 years experienced high-tech company specialized in the R&D and manufacturing of power electronics and energy conversion technologies. equipment. The Exeron features stringent modular design, easy-to- maintain hot plug technology, advanced battery management as well as the increased availability thanks to excellent system redundancy. In Germany, 2014, EXERON won the Intersolar ees Award (ees: electrical energy storage). SILVER SPONSOR: European-rooted with the benefits of China-based production and a highly-specialised and diverse team from around the world, Acsys pushes the boundaries of how technology can be embraced within complex industrial environments for better security and staff management. With a customer-centric, customised approach Acsys follows the belief to think outside the box to deliver easy-to-deploy, highly durable and cost effective solutions for the most challenging scenarios. SILVER SPONSOR: IPS offers high-tech products and integrated solutions for the area of Renewable Energy and Off- Grid Electricity (mini-grids, off-grid power systems, OPEX and fuel safe optimization), Telecommunications, Utilities, Defense. Company offices are located in the US, Australia, South Africa, Indonesia, Nigeria, UAE. IPS s products are operated currently in 54 countries on 7 continents and used by clients such as NATO, large telecom groups, mini grid operators, utilities, the armed forces of various countries, international system integrators and many others. IPS has developed an optimal system for both grid connected and off-grid use in the form of our EXERON range. The EXERON technology can offer power independence for areas with limited or no grid power and can provide cost savings for grid connected objects through on-demand use for any kind of power Acsys Technologies Ltd Acsys is the global leader in cell site access control solutions. Our patented, military-grade technology is utilised by leading tower companies, telecom operators, and vendors throughout the globe to better manage their O&M and eliminate unauthorised access. Acsys designs simple, yet powerful solutions, with a focus on power-independent locking systems and workforce management software and applications. These technologies are combined to reduce theft, better manage vendors, create fairer and stronger SLAs, and simplify operational workflows. Our solutions equate to increased uptime. Invendis Technologies Founded in 2007, Invendis Technologies India Private Ltd. is an M2M/IOT company based out of Bangalore. Invendis designs and delivers IOT technology-enabled business solutions for Telcos & Towercos to provide seamless services to their clients. Our core products and services include front end equipment, sensors, transducers, business applications, systems integration, product engineering, installation, maintenance and 24X7 Global Monitoring & IT infrastructure services. Invendis also specialises in deploying complete range of Remote Monitoring & Energy Optimization services for the data sensitive infrastructures. 72 TowerXchange Asia Dossier TowerXchange Asia Dossier

73 Our sponsors Invendis pioneered customizable IOT enabled Front End Monitoring & Controlling equipment, which empowered Towercos with access to real-time Monitoring & Energy optimization solutions in shortest possible time. In a span of 8 years, Invendis has set a global footprint with over 1 hundred thousand remote assets across Asia, Middle-East, Africa & Europe. SILVER SPONSOR: Siterra, An Accruent Product Siterra, an Accruent Product, addresses the software needs of tower companies to sell co-locations, upgrade capacity, build-to-suit, maintain accurate asset registers, manage maintenance, and collaborate with vendors operationally as well as consolidate and integrate towerrelated software technically. Sixteen of the towercos and infracos that TowerXchange tracks are current Siterra customers, spanning 18 countries and five continents. The first version of the Siterra site management platform was released in ,000 users later, Siterra has become the industry standard, must-have operating software for tower companies today. Accruent works with its leading towerco customers to jointly develop new features that are deployed regularly through the SaaS platform to constantly improve customer value. Accruent has developed global process standards with local flexibility to pair with best-in-class software functionality. Accruent s telecommunications division serves some of the world s largest mobile network operators and service providers in addition to tower companies, helping link employees from different organizations in the industry to collaborate to projects. Accruent is the largest independent provider of commercial property management software, serving the telecom, retail, education, healthcare, and corporate markets with over 5,400 customers in 120 countries. SILVER SPONSOR: Tarantula Tarantula is a world leader in telecom site management software and a trusted partner of leading telecom infrastructure operators in 13 countries. Through its specialized site management toolset, Tarantula is a fundamental pillar of support behind the management of more than 350,000 mobile towers and assets worth US$25 billion around the world. Red Cube Enterprise is Tarantula s flagship product for smart and efficient telecom site management, with modular design and configurable workflows. The platform is the worldwide industry standard for co-location and tower lifecycle management. The tool also offers additional capabilities such as location management, asset and lease management, operations and maintenance, invoice management, mobile field-force solutions, and comprehensive dashboard reporting. Bronze Sponsor: Vinson & Elkins RLLP Vinson & Elkins is one of the oldest and largest international law firms, with approximately 700 lawyers located in 16 offices around the world. Our global telecommunications team has extensive experience advising on international telecoms and telecoms infrastructure transactions. We have significant industry experience, advising on telecoms transactions in numerous countries, including across Africa and the Middle East. Our telecommunications advice includes acquisitions and disposals, debt and equity financing, infrastructure development, operational arrangements, regulatory matters and dispute resolution. We also have significant experience in the negotiation and drafting of sale and purchase, debt and equity financing, master lease, build-to-suit, site management and service level arrangements; and have played a prominent role in complex fibre transactions TowerXchange Asia Dossier TowerXchange Asia Dossier

74 Our sponsors and exhibitors Bronze Sponsor: Miteno Communication Technology Co. Ltd. Miteno ( SZ), is a leading non-state-owned independent owner, operator and developer of wireless communication towers, and a tower designer and manufacturer. In addition to leasing tower spaces, Miteno provides customized DAS, smart cities solutions and smart power poles which consolidates illumination, base station, Wi-Fi, monitoring, advertising, environmental surveillance and charging pile services. Headquartered in Beijing, China, founded in 2004, Miteno has business operation across China. In 2015, Miteno made strategic move to expand its tower leasing business into global market. Bronze Sponsor: IPT PowerTech IPT PowerTech Group delivers specialized solutions to the power, industrial and telecom sectors in Africa, Middle East and Asia. Combining power expertise with telecom infrastructure specialization, we are market leaders in providing energy solutions, telecom services, and managed maintenance services, and we are the most qualified to provide both models of Guaranteed Savings and ESCO. Our self-manufactured enclosures allow us to create customized energy efficient/hybrid and renewable energy solutions, and to implement new concepts in site renovation. With offices in 11 countries, our solutions are delivered to more than 80 operators, tower companies and vendors in more than 50 countries. Exhibitor: Flexenclosure Flexenclosure is a designer and manufacturer of intelligent power management systems and prefabricated data centre buildings for the ICT industry. The company provides systems that are fully integrated, modular, factory tested for reliability, adaptable to local conditions and quick to install. esite is a hybrid power system for off-grid and bad-grid cell sites that cuts diesel costs by up to 90%. esite is an integrated single cabinet system for maximum reliability and speed of installation. emanager, an all-in-one toolbox for remote management, site power optimisation and KPI reporting, is an integral part of esite. Exhibitor: Infozech Infozech is a leading provider of technology-led and data analytical solutions to Telecom Infrastructure providers, Operators and Communication service providers. Infozech has been delivering cost optimization and revenue management solutions for past 17 years to 80 customers across 25 countries. Infozech s innovative offering itower (Infozech Tower Product Suite) provides an end to end solution for managing and reducing operational costs through tracking real time tower operations, meaningful analytics and helping take smarter decisions. itower won the prestigious Aegis Graham Bell Award 2015 for being most Innovative solution for telecom tower infrastructure. itower enables tower companies to drive 99% uptime with minimum operational cost. Exhibitor: Heliocentris Heliocentris is a German technology company that provides Managed Power Solutions and Services for commercial stationary applications for global Telecommunication Operators and Tower Companies. Services reach from energy optimization and solution engineering to implementation of customized turnkey power solutions and smart operations. The flagship product the Energy Manager enables smart connectivity between different components in hybrid energy supply clusters, such as batteries, solar panels, conventional diesel generators or fuel cells, thereby substantially decreasing the ecological footprint at much lower operating cost. The company is headquartered in Berlin with branch offices in Munich, Dubai, Vancouver and representations in Johannesburg and Yangon TowerXchange Asia Dossier TowerXchange Asia Dossier

75 Our exhibitors Exhibitor: GS Yuasa GS Yuasa is a Japanese company formed in 2004 by the merger of two large 100 year old battery manufacturers, Japan Storage Battery and Yuasa. At US$3.5B in sales, GS Yuasa is one of the worlds largest battery manufacturers. GS Yuasa manufactures a full line of technologies including lithium, lead acid, nickel metal hydride, and nickel cadmium for the automotive, industrial, and specialty battery markets. Especially for Telecom market, we have developed a 48V lithium ion battery module that has outstanding cyclic life and charge acceptance that can reduce the runtime of generators and the total cost of ownership of telecom base stations. With 37 affiliates in 17 countries, GS Yuasa has a worldwide presence operating under the GS Yuasa, GS, and Yuasa brands. Exhibitor: Abloy ABLOY is one of the leading manufacturers of locks, locking systems and architectural hardware and the world s leading developer of products in the field of electromechanical locking technology. We develop safe, aesthetic and easy-to-use locking solutions which satisfy the needs of end-users and our construction industry partners for security, safety and ease-ofaccess. ABLOY protects people, property, and business operations on land, at sea, and in the air in all circumstances. Solutions created for users individual need extend from locking of homes to sites of operations requiring professionally provided high security. Both the trust users place in us and our pioneering position are based on long-term endeavours continuously developing new and innovative locking solutions and door-opening technologies that facilitate smooth entry and exit. The position of ABLOY as one of the four global brands of ASSA ABLOY Group supports our internationalization process and empowers us to strengthen our business in existing markets and to expand into new areas. Exhibitor: NANHUA Electronics Co., Ltd. NANHUA is an independent enterprise with modern management which is located in Shanghai. We design, manufacture and sell world leading signal, lighting and control products which be applied in industrial areas since 1990, and focusing on aviation obstruction light system for telecom towers from 2007, has full experience in the complete line of cost-effective obstruction lighting and control solutions. NANHUA products have been proven to be professionally designed and highly reliable. NANHUA will continue to maintain reliable, safety and simple R&D concepts, combine with the latest technology, commit to developing new products to help customer solve problems and enhance customer value. Exhibitor: EnerSys EnerSys is the global leader in stored energy solutions for industrial applications. We complement our extensive line of motive power, reserve power and specialty products with a full range of integrated services and systems. With sales and service locations throughout the world. Headquartered in the United States, with regional headquarters in Europe and Asia, EnerSys employs over nine thousand people and operates 32 manufacturing and assembly facilities world-wide. This vast infrastructure and over 100 years of battery experience positions EnerSys at the forefront of both manufacturing capabilities and new product development. Exhibitor: NorthStar NorthStar is an industry leader in designing and manufacturing high performance lead-acid batteries and high efficiency site solutions. The company has state-of-theart facilities in the USA, and their products are used in more than 120 countries worldwide. NorthStar premium thin plate AGM batteries deliver long life at elevated temperatures, with faster recharge and superior PSOC cyclic performance. NSB Blue+ Batteries can reduce diesel generator run time by 85% in offgrid telecom applications. SiteStar Cabinets can maintain batteries at optimal operating temperatures, using less power than a household lightbulb. If you need the best, you need NorthStar. Exhibitor: Redflow Redflow Limited is an energy storage specialist that has developed the world s smallest flow batteries. Redflow s unique flow batteries are designed for stationary energy storage applications ranging from its ZCell home battery to its 70 TowerXchange Asia Dossier TowerXchange Asia Dossier

76 Our exhibitors ZBM battery range for commercial, telecommunications and grid-scale deployment. Redflow is a publicly-listed company (ASX: RFX) that operates R&D facilities in Australia, as well as offices in the US and Europe. Produced in North America by Flex, one of the world s largest supply chain solution companies, Redflow s high energy density batteries are sold, installed and maintained by a global network of system integrators. Redflow batteries connect directly to the telco bus, experience no damage from regular power outages, are 100% depth of discharge and their full capacity is usable over lifetime. Exhibitor: SONEPAR & MAFI ELEKTROSKANDIA CHINA is a division of Sonepar Group based in France. We started operation in Shanghai in 1999, now is the leading professional in the market of Telecom Network Installation Materials and Sustainable Energy Business, and serving our customers globally through our vertical network of sister companies throughout the Sonepar Group of companies. MAFI is an engineering company that creates, develops, designs, sells and delivers steel structure products to telecom equipment supports for towers and city sites MAFI is certified according to SS EN ISO 9001, SS EN ISO 14001, OHSAS and IE EN :2009+A1:2011. SONEPAR in association with MAFI at TowerXchange, together we can make it possible and better. Exhibitor: Enatel Energy Enatel Energy delivers an expansive portfolio of configurable systems designed to meet every telecommunication network power requirement. Solutions offer flexibility and scalability, by way of hot pluggable combinations of modular Rectifiers, Inverters, Converters, Solar/Wind Chargers and encompass advanced energy management. Enatel s SYNERGi hybrid solutions include unique patented generator control capabilities allowing dynamic optimisation to accommodate off-grid site variables so ensure the highest levels of network uptime, ease of deployment and OPEX savings. Renewable energy inputs can be integrated simply and blended intelligently. Enatel Energy offers renowned support, reliability, and system efficiencies. Solutions are New Zealand made to guarantee design, manufacture and process integrity. Exhibitor: TOTAL Total is the world s fourth-ranked oil and gas company and a global leader in solar energy through our affiliate SunPower. With operations in more than 130 countries, we have 100,000 employees who are committed to better energy. Supplying affordable energy to a growing population, addressing climate change and meeting new customer expectations are the three main challenges Total must meet as an energy major. Exhibitor: Cisco With the rise of Internet of Things, people and things are being connected at scales that were once not possible. Large scale management of unmanned remote sites is now a reality with the possibilities provided by Connected Assets, giving operators the visibility and controls to all aspects of remote site management such as environmental, operational health and surveillance and security. It can connect to everything onsite from generators and batteries over fuel tanks to the HVAC or doors, helping to detect critical events like theft or malfunction of equipment. Business intelligence can be automated with rule based policies for each site to harvest operational and productivity efficiency. Exhibitor: GENPOWER ASIA Genpower was founded in Turkey in The business took off soon after and became a huge success in it s Region including Middle East, Russia, Turkic Republics The company decided to make its move to Asia & Pacific and established Genpower Asia in Singapore. The easy access and financial stability in Singapore gave Genpower the opportunities to expand in the region. 2012, Genpower made the decision to move it s production to India to address better the needs of the region with Cost effective products and quick deliveries. Having supplied Gensets to many Telecom operators in the world, we know the needs of Tower companies best and come up with Unique Power solutions TowerXchange Asia Dossier TowerXchange Asia Dossier

77 Our exhibitors Exhibitor: AIO Systems AIO Systems is a next generation solution provider of management systems for remote unmanned sites. AIO s management platform and enhanced Premium EyeSite controller are incorporated with site hardware and telemetry systems enabling companies to control, secure, predict, track and remediate their remote site operations in a timely and pro-efficient manner. energy management, and grid-scale applications. Aquion s high-performance, safe, sustainable and cost-effective batteries deliver reliability and value for customers. The company s battery systems provide flexible, modular energy storage that enables broad adoption of renewable energy technologies such as wind and solar, reduced reliance on fossil fuels, and optimization of existing grid-tied generation assets. For more information, visit our website. Exhibitor: of leading banks, and telecommunications carriers. We are particularly active in end-to-end support of mergers, acquisitions and divestitures. All of our staff have held profit-accountable positions with global telecommunications carriers, manufacturers and systems integration houses prior to joining us. This allows full support of clients across the continuum from technology through to market effectiveness, spanning engineering, commercial strategy, financial structuring and proven operating methodologies. We specialize in advanced 24/7 Security solutions and Hybrid/ Energy Resource Management. Furthermore, we address multi-tenant infrastructure complexities, reduce OPEX, increase profitability, assure access to BI services, and deliver effective Asset/Inventory control. AIO s numerous business models propose alternative operational structures that guarantee ROI. When combined with our added value Services, such as Site Installation Simulations, System Integrations, Technicians mobile application, companies can rest assured AIO will address all their RMS needs from A-Z. Exhibitor: FG Wilson For 50 years, FG Wilson has been a leading manufacturer of diesel and gas generator sets from 6.8 to 2,500 kva and beyond. Since 1990 alone, we have installed 600,000 generator sets, supported by over 300 distributors, offering world-class levels of service from product selection to installation and lifetime support. With products specifically designed to meet the needs of the telecoms sector and backed by out expert local dealer support, FG Wilson is the brand providers all over the world have been turning to for trusted and reliable remote power supply, even in the most remote and harsh environments. Meetup Asia December, Marina Bay Sands, Singapore Aquion Energy Hardiman Telecommunications Aquion Energy is the manufacturer of proprietary Aqueous Hybrid Ion (AHI ) batteries and battery systems for longduration stationary energy storage applications. Aquion s Aspen line of batteries are optimized for daily deep cycling for residential solar, green architecture, off-grid and microgrid, Hardiman Telecommunications Ltd. was established in We are a boutique consultancy specialised in strategy development, due diligence assessment and valuation support. Our clients include major TowerCos, private equity funds, corporate finance / advisory and investment functions A senior-level networking opportunity with 250 leaders of the Asian telecom tower industry 72 TowerXchange Asia Dossier TowerXchange Asia Dossier

78 Country-specific analysis Over the past twelve months, TowerXchange continued to deepen its understanding of the Asian telecom tower market and we are glad to offer our readers highly relevant, updated content on several local markets. Find out all the details behind the creation and evolution of the Indian tower industry and delve deep into the reality of doing business in China, while catching up with the latest news from thriving Myanmar and Pakistan. Interested in other markets? Don t miss priceless insights into Bangladesh, Cambodia, Indonesia, Malaysia, Singapore and Sri Lanka Don t miss: 79 Bangladesh 82 Cambodia 85 China 108 India 119 Indonesia 126 Laos 129 Malaysia 132 Myanmar 140 Pakistan 145 Singapore 149 Sri Lanka

79 Bangladeshi regulator licenses two towercos, permits MNO consolidation What does the restructuring of the Bangladeshi market mean for edotco, and for the prospective sale of the Bangalink towers? Keywords: 3G, 4G, Asia, Asia Insights, Axiata Group, Bangladesh, Banglalink, Bharti Airtel, BTRC, Co-locations, edotco, Grameenphone, Infrastructure Sharing, Leasing & Permitting, NTT DoCoMo, Regulation, Robi, Sale & Leaseback, Spectrum Read this article to learn: < The terms of the merger between Airtel and Robi < The transfer of shares between Robi and edotco Bangladesh < The awarding of tower management licenses by the BTRC < What to expect next in the Bangladeshi tower market The telecoms market in Bangladesh has seen a burst of activity recently after months of announcements and rumours from the market s regulator and main stakeholders. The Bangladeshi regulator, the BTRC, seems to be committed to improving the efficiency of telecoms through the adoption of infrastructure sharing. The merger between between Robi and Airtel has been approved, and the government plans to award two tower management licenses to independent companies by the end of the year. This represents strong progress towards the adoption of the independent tower ownership model, as Bangladesh seeks to address its main challenges: a combination of dense population centres and remote rural populations, unstable grid during the monsoon season, and overlapping MNO-captive towers that are ripe for consolidation. MNO consolidation First announced in January 2016, the long-awaited merger between Airtel and Robi has been approved by the Bangladeshi Prime Minister. In the merged entity, Axiata, the parent company of Robi, will hold a 68.7% stake, Bharti Airtel 25% and NTT DoCoMo of Japan 6.%. Currently, Axiata has a 91.59% share and NTT DoCoMo 8.41% in Robi. The government of Bangladesh has agreed to a plan to charge Robi BDT5.07bn (US$63.5mn) to use Airtel s 1.8GHz spectrum, as well as a BDT1bn merger fee. The spectrum fee (BDT338mn per megahertz) is aimed at making up the difference between the price Robi paid for spectrum in 2011 and the lower price Airtel paid in NTT DoCoMo entered the market in June 2008 by taking 30% from then Aktel of AK Khan and Company at a price of US$350mn. In May 2013, NTT DoCoMo reduced its stake to 8.41% from 30%. Airtel 74 TowerXchange Asia Dossier TowerXchange Asia Dossier

80 entered the market in 2010 by buying a 70% share of Warid s Bangladeshi opco, after which Airtel also bought the remaining 30% share from Warid in 2013 at a price of US$85mn. Breakdown of shares in the new entity 6.3% The newly combined entity will have 37.3mn subscribers and a 28.5% market share, making it larger than current number two operator Banglalink with its 24% share. Airtel has less than a 7% market share in Bangladesh and is the fourth largest among eight operators. The remaining four operators have a combined share of less than 5%t. The leading operator, Grameenphone, has a 43% share, according to GSMA Intelligence. 25% 68.7% Axiata Group Airtel DoCoMo The Bangladeshi tower market To date Axiata s edotco Bangladesh is the only towerco operating at scale in this market after taking over the management of 5,300 tower assets from Robi, also part of the Axiata Group. edotco Bangladesh was created in response to the draft tower company guidelines in Bangladesh which state that an entity having a relation with a mobile phone or WiMAX operator is ineligible to apply for a full licence. The draft guideline also said foreign tower management companies must have a local partner and would not be allowed to operate on their own. At present, edotco Bangladesh manages over 7,500 towers of the six mobile companies operating in Bangladesh, trading on the basis of certificate of no-objection from the BTRC. Robi is now planning to transfer 31.01% of edotco Bangladesh s shares back to edotco Group as the Malaysian tower management company looks to get a full licence to run its operations in the country. Before the share transfer, Robi held 51% of edotco Bangladesh s shares. Now with the share transfer, edotco Group will hold 80.01% equity in edotco Bangladesh and Robi the remaining 19.99%. The government of Bangladesh has announced plans to award two tower management licenses to independent companies through an open tender by the end of the year. According to the current draft tower company guidelines, with Robi holding a percent share in edotco Bangladesh, it will be ineligible to apply for the tower licence, unless Source: TowerXchange changes are made to the draft guidelines prior to the transaction. At the same time, the BTRC reportedly said that the watchdog would form a new tower company to manage the tower sharing initiative. According to the BTRC, 36,000 mobile towers have been installed so far in the country, whereas only 24,000 are needed. With the edotco Bangladesh application for one of the two tower management licences up in the air it remains to be seen who the other candidate or candidates may be. There may be some other international companies that are interested in entering this market; at one point Bharti Infratel seemed interested, but that interest may have cooled with the consolidation of Bharti Airtel s 80 TowerXchange Asia Dossier TowerXchange Asia Dossier

81 Estimated tower count for Bangladesh Bangladeshi regulator warms to international towerco investment 4,100 It is not unusual for tower companies to trade under 7,800 a certificate of non-objection for a period whilst regulatory regimes are drafted to accommodate 3,800 Grameenphone Banglalink Axiata / edotco Airtel the still new phenomenon of independent tower ownership. The challenge for the BTRC has been that the towerco interested in creating efficiencies in their market, and ultimately investing in critical 6,000 5,300 Teletalk, CityCell and non-traditional MNOs Sources: TowerXchange research, edotco, Hardiman Telecommunications national infrastructure, was a foreign direct investor owned by Axiata, the parent company of one of Bangladesh s MNOs, Robi. The fact that Robi was also proposing in-market consolidation further muddied the waters for the regulator, but this latest set of developments provides a degree of clarification. Bangladeshi opco. We have also seen Towershare and Tower Bersama exploring investment opportunities in other Southern Asia markets. Another possibility is that the tower management companies will originate from the domestic market; one of the local MNOs may be considering creating its own tower company, or two or more operators may be planning to create a joint venture towerco. These developments mark a new stage for the telecoms market and tower market in Bangladesh, and there could be more MNO consolidation and tower transactions in the near future. There are rumours that VimpelCom may look to divest the tower assets in Bangladesh belonging to its subsidiary Banglalink. At ~6,000 towers this is the third largest portfolio in Bangladesh and a tempting target for a company aiming to reach scale. There is definitely room for growth in the Bangladeshi market; as of Q the GSMA estimated that mobile broadband penetration was at 13%. At least three of Bangladesh s MNOs are keen to focus their investment on 3G and 4G rather than on passive infrastructure, creating an ideal environment in which towercos can acquire and build towers, enabling MNOs to concentrate on QoS and selling minutes and megabytes It feels like we re still missing one piece of the puzzle in the Bangladeshi tower market - if edotco Bangladesh is to be permitted to own and operate Robi s towers, perhaps overseeing the consolidation of the Airtel network, who is the second mooted towerco license for? One would imagine VimpelCom sought assurances that, if a party other than edotco where to acquire the Bangalink towers, that party could be accommodated within the new licensing framework? One thing is for sure: the trading environment in which edotco operates and in which the Vimplecom / Bangalink process will take place, just got a bit more welcoming 76 TowerXchange Asia Dossier TowerXchange Asia Dossier

82 Market update on Cambodia A summary of the discussion from the Cambodia roundtable, and the tale of 1,000 orphaned towers The 2015 TowerXchange Meetup Asia featured a host of insightful panels and roundtables providing in-depth insights into tower markets across the region. We took the opportunity to sit in on the Cambodia roundtable, led by Phillip Wong, Managing Director of edotco to find out more detail on a Cambodian market that we have recently started to cover. We found out that Cambodia has its challenges including some difficult conditions on the ground and limited profitability, but has a regulator that is willing to encourage foreign investment to promote telecoms development. TowerXchange has also been tracking a portfolio of towers formerly owned by Mfone which went bankrupt in 2013 to learn about the fate of orphaned towers. Keywords: 3G, 4G, ARPU, Asia, Asia Insights, Cambodia, Camtower Link, Cootel, edotco, Energy Storage, First Mover Advantage, Grid, Hybrid Power, IFC, Investment, Khmer Unicom, Leasing & Permitting, Malaysia, Market Overview, Mfone, Network Rollout, Off-Grid, Regulation, Roaming, Singapore, Site Level Profitability, Solar, Unreliable Grid, Urban, Vietnam, Xinwei Beijing Read this article to learn: < On the ground conditions in Cambodia including grid and environmental risks < The regulatory conditions for foreign investors in Cambodia < Comparing the cost of tower rentals in urban and rural areas < What happens to towers that are left idle due to bankruptcy? Highlights from the Cambodia Round Table Cambodia has seen a lot of consolidation over the past few years; the market went from nine operators down to five due to intense competition and price wars. The latest trend is the emergence of Chinese operators in the Cambodian market; in fact Cambodia has the most Chinese operators outside of China itself. Cambodia has a population of 14.5mn, much smaller than many neighboring markets, and the ARPU is quite low at around US$3 which has meant that it hasn t attracted too much interest from foreign investors. In terms of on the ground conditions the energy situation in Cambodia is challenging; about 25% of the country is off-grid. Of course this means that there are opportunities for energy solution providers offering hybrid and renewable off-grid solutions. Even connected to the grid, power is unstable and is can be unavailable for a couple of hours per day even in the capital Phnom Penh with is a drop off in power once or twice a day necessitating batteries for backup. Some companies are looking into solar solutions. To deal with the grid issues, some companies are looking into solar energy systems. Hybrid solutions need to be scalable and capable of powering at least two tenants. With the strong Chinese presence in Cambodia it s no surprise that Huawei dominates this market and its energy solutions. Deployment can also be challenging due to 82 TowerXchange Asia Dossier TowerXchange Asia Dossier

83 environmental conditions; during the rainy season flooding can cause a water level increase of up to three metres. Other challenges in Cambodia include landmines, although this situation seems to be improving everywhere except the most remote areas and incidents are becoming fewer and farther between. There are also some issues with older towers that have never been assessed and have been poorly maintained that eventually are at risk of collapsing. Some of the MNOs have historically not maintained their tower assets adequately, and there was a tower collapse as recently as six months ago. Increasingly the towercos have been given a directive to ensure the safety of towers. The regulatory regime is relatively advanced; not every country in Asia has towerco licenses. A new local telecoms law is expected to be put into place in Q1 2016; this was in the draft stage a year ago but no-one has seen the final version and the regulator has kept it quiet. However in general regulations for MNOs, towercos and infrastructure providers are moving in the right direction. Foreign investment in Cambodia is encouraged and there are no restrictions on foreign ownership. This is different from other markets in the region such as Vietnam where foreign investors are limited to 49% ownership of companies. There is still no regulation on green energy or carbon reduction, but this is a work in progress. With new operators from China appearing in this market, there have been some slow rollouts and the regulator takes a progressive view towards commercialisation so this is an advantage for towercos. Currently there are two towercos: edotco and Camtower Link. edotco is encouraging MNOs to hand over tower and power management to them. The incumbents have been offering services for over five years and have taken responsibility for power themselves, but the new Chinese operators and investors entering in 2016 should be open to infrastructure sharing and a hybrid power sharing solution as it will help them get up and running quicker at a lower cost. The IFC has been involved in financing MNOs in Cambodia, while local banks have been providing increasingly competitive local financing. Previously operators have suffered from the cost local financing; the interest rates are lower than before but still at 8-12%. Cambodia is that does not require business to be undertaken in the local currency, and US dollars are widely used. Cambodia never suffered from currency protections, and the cost of tower rentals vary from US$ per month for rooftops in Phnom Penh all the way down to less than US$100 the further outside of the capital you go. This is even cheaper than the US$600 average in India. The challenge for towercos is to make these assets profitable to achieve some ROI; towercos need to decide whether to choose a pure tower model or a service including energy. Ground rentals are a key component in the construction of a tower, and ground rent varies significantly in different areas of the country. edotco are prepared to pay a sensible premium to have the first site in a given area as this confers a big advantage as it can be challenging to find another site. Regulations make Cambodia open to any foreign investment, not only Chinese, but the Chinese have definitely gained a foothold. Xinwei Beijing (Cootel) is a Chinese MNO founded in 2013 in Cambodia that brought in their own equipment and have leapfrogged to 4G to provide more data-centric services. The spectrum for their particular service is in the lower 400MHz range and the license is free to apply for. It remains to be seen exactly what the strategy and objectives of these companies are in this small and not overly profitable market. Perhaps they have been attracted by the open regulations and have come in full force with more money than other countries to capture first mover advantage in 4G. A tale of 1,000 towers Due to a history of poor maintenance in some cases, the challenges associated with small, low revenue telecoms markets and the resulting financial woes, there have been cases of telecoms infrastructure sitting idle in Cambodia, as in other markets across Asia, as a result of MNO bankruptcies. Take for example the portfolio of 1,000 towers in Cambodia that were originally owned by Cambodia Shinawatra or Camshin. Camshin was a joint venture between Shin Satellite of Thailand and the Ministry of Post and Telecommunication of Cambodia founded in Camshin had its license extended from 15 years to 35 years in 1997, and was also given a license to provide mobile services under the brand Mfone the same year. By the time it launched 3G services in 2007, Mfone was already 78 TowerXchange Asia Dossier TowerXchange Asia Dossier

84 struggling due to the intense competition and low ARPUs in the Cambodian market. Price wars became so intense that the government intervened in Q with a minimum tariff edict, but the damage was done and Mfone continued to lose subscribers. By Q Mfone was starting to have legal troubles over unpaid bills. Eltek Valere won a court injunction against Mfone that year over failure to pay US$3.73mn in service charges. Mfone was required to provide an assessment of its inventory and was banned from selling off any assets until the situation was resolved. Mfone was also threatened with legal action by Hello Axiata and Smart Mobile over unpaid interconnection fees. Thaicom attempted to sell Mfone to a local investor, INT Management Service, but the deal fell through and in January 2013 Mfone filed for insolvency. Mfone signed an agreement with Mobitel to migrate its subscribers on to their network with a roaming agreement. This agreement was then disputed by Huawei claiming it was in violation of an injunction to freeze Mfone s assets. This injunction was lifted by April of 2013 so that the sale of Mfone s assets could commence. Telecoms towers can prove to be a hard sell unless conditions are just right. In this case interest in the Mfone towers was low with 30% of them located in urban areas where competitors already had their own assets and tower coverage was overlapping. The remaining 70% of the towers in rural areas could be a different story as some may be located In the end Mfone s remaining assets were sold to Khmer Unified Network Communication (Khmer Unicom) for US$10mn, less than 11% of their estimated value in areas with patchy coverage. In addition to this many sites came with unfavourable leases with local landowners, some of which were renegotiated at higher rates in latter years as Mfone came under increased financial pressure. In the end Mfone s remaining assets were sold to Khmer Unified Network Communication (Khmer Unicom) for US$10mn, less than 11% of their estimated value. Khmer Unicom, owned by Chinese businessman Khao Yun Dy s Khmer Holding Group. was another potential entrant into the already crowded Cambodian telecoms market. Unfortunately, the Mfone assets then sat idle for another three years as Khmer Unicom attempted unsuccessfully to obtain a telecoms license. Three years of disuse have had an impact on these assets; according to a local source the power equipment on the Mfone base stations is now defunct. Only the Phase 9 and Phase 10 power supplies can still be used, and will probably need upgrading or replacing. Orphaned towers can also pose a safety risk for local communities; in April 2015 a former Mfone tower in Battambang collapsed during a storm causing extensive damage to the surrounding buildings. Unable to obtain an operator license, Khmer Unicom sold the former Mfone assets in January 2016 to Xinwei Telecom Cambodia (Cootel), owned by Chinese internet mogul Wang Jing. Cootel is the newest entrant into the Cambodian wireless market, starting operations in Q and offering exclusively 4G services over its multi-carrier wireless in the local loop network. It remains to be seen how long it will take for the Mfone towers and power equipment to be repaired and upgraded given this long period of inactivity; but the story of Mfone s 1,000 towers raises several questions: how many other tower portfolios are there like this in other markets around Asia with similar conditions? Are there other neglected assets that could represent an opportunity? Does there come a point when towers should just be decommissioned and dismantled for the safety of the local community? Perhaps there is a role for towercos to play in preventing similar cases like this in the future in Cambodia and other markets across Asia 84 TowerXchange Asia Dossier TowerXchange Asia Dossier

85 China tower market FAQs Up to 275,000 new towers built in 2016 as China races to meet 4G coverage and drive its infrastructure-sharing mandate Market context What are current levels of mobile / SIM penetration and ARPU? Christie Liu, Head of China & Myanmar China is home to the world s largest towerco China Tower Corporation (CTC), as well as a fragmented but good-sized ecosystem of 200+ independent towercos. The State-owned enterprise and towerco giant has kicked into high gear in the past months, tackling significant build demands from the three MNOs, streamlining operations, and driving supply chain transparency through its unique procurement platform. CTC remains eager and committed to IPO in Q Read on for your one-stop shop on the shape of the exciting Chinese tower marketplace. According to data released by the Ministry of Industry and Information (MIIT), as of the end of August 2016, there are 1.309bn mobile phone subscribers in China. This represents 95% SIM penetration. Blended ARPU figures from the three operators range from CNY What is the status of China s 4G rollout? Keywords: 4G, Air Conditioning, ARPU, Asia, Asset Register, Bankability, Batteries, Best of TowerXchange, Build-to-Suit, Carve Out, China, China Mobile, China Telecom, China Tower Corporation, CTC, China Unicom, Construction, Country Risk, Debt Finance, Exit Strategy, General Office of the State Council, Guodong, IBS, Infrastructure Sharing, Lease Rates, Leasing & Permitting, Liu Aili, Market Forecasts, Market Overview, Masts & Towers, Ministry of Industry and Information Technology, MIIT, Miteno, Myanmar Infrastructure Group, MIG, New Market Entrant, O&M, On-grid, Operator-led JV, Outdoor Equipment, Pass-Through, Procurement, Regulation, Research, RMS, Rooftop, State-owned Assets Supervision and Administration Commission of the State Council, SASAC, State Administration for Industry and Commerce of the People s Republic of China, SAIC, Shelters, Shining Star International Holdings Limited, Stakeholder Buy-in, Sun Kanmin, Tax, Tenancy Ratios, Tong Jilu, Tower Count, Towercos, TowerXchange Research, Transfer Assets, Valuation In the first half of 2016, China Mobile added over 200,000 4G base stations, increasing its total to 1.32mn. During the same period, China Unicom grew its network by 216,000, for a total of 600,000 4G base stations. China Telecom s basic 4G coverage is expected to be complete by year-end, with a target of 340,000 for 2016, growing its total to 850,000. All in all, China has a network of over 2mn 4G base stations. Read this article to learn: < What is China Tower Corporation, how does it operate, and what does it own? < Lease rates for China Tower and independent towercos < Growth opportunities and regulatory landscape < Valuation benchmarks, tenancy ratios, and investibility What is the number of 4G customers in China? As of 30 September 2016, China Mobile reported 481mn 4G customers, while China Unicom has approximately 89mn 4G subscribers and China Telecom at approximately 107mn. 80 TowerXchange Asia Dossier TowerXchange Asia Dossier

86 How many new towers were built in China in 2016? For context, prior to CTC, there were approximately 1.38mn towers built by the three operators over 30 years between 1985 to ARPU for China s three MNOs (CNY/user/month) China Mobile China Unicom China Telecom 1 January to 30 September, It was reported that asset transfers of roughly 1.5mn towers happened around the end of 2015 and beginning of Approximate tower ownership in China by operator 2014E By September 2016, CTC was quoting roughly 1.63mn towers, with estimates to get up to mn by year-end. 388,000 China Mobile As such, CTC build volume for the year would be between ,000 towers. In terms of independent towerco output, estimates 246, ,000 China Telecom China Unicom Total = 1,386,000 would be in the range of 20-30,000. How many towers are in China and who owns them? China Tower Corporation tower counts by year China Tower Corporation will own between mn towers by the end of mn The roughly 200+ third-party towercos will own approximately 40-50,000. We now know of one towerco with towers in the five-digit count, with at least three others in the four-digit count. What is the future growth of in China? mn 1.75mn (est) 1.9mn (est) CTC still has a lot of building to do, including plans to 0.5mn 1.0mn 1.5mn 2.0mn 86 TowerXchange Asia Dossier TowerXchange Asia Dossier

87 China Tower Corporation coverage of subway and high speed lines acres of land and CNY 50bn of investment. As of September 2016 Subway High speed Completed Under construction Total 195km 631km 3,800km 1,208km 5,653 15,000km One of the goals of CTC is to improve the customer experience from, in some cases, a few hundred KB per second, to as much as 20MB per second once 4G is fully deployed. provide coverage on the 56 subway lines and 59 of the high-speed train lines within the next three years. CTC has also developed strategic partnerships with 22 provinces and autonomous regions to better integrate network planning and construction into local planning, as many are keen to drive economic development through enhanced mobile and broadband coverage. Reportedly the new arrangements have been better compared to what operators were dealing with in the past. This theoretically paves the way for faster and more build out. There is some speculation that within three year s time tower construction could slow down in China. The standards for 5G are yet to be defined and many commentators have indicated that 4G is more than enough for the general mobile consumer. Generally 5G would mean higher site density and smaller equipment mounted at lower heights. On the independent side, one source estimates that there could still be 50,000 to 100,000 towers available to build given the size of the country. The need for macro towers will decrease over time as major coverage projects get completed. Ultimately, tower growth will be dependent upon the operators demands. Major cities will need more infill sites to provide the density needed for heavy data need. More light-pole integrated tower designs that are sleeker, smaller, and faster to deploy will likely play a role, as well as microcell and small cell. What is the vision behind creating China Tower Corporation? With the approval of the General Office of the State Council ( 国务院 ) and led by State-owned Assets Supervision and Administration Commission of the State Council (SASAC, 国资委 ) and the Ministry of Industry and Information Technology (MIIT, 工信部 ), the joint venture was formed to promote a culture of infrastructure sharing in China. Also referred to as co-build, co-share. CTC was formally created on 15 July, 2014 to consolidate and share existing towers, to construct shared additional towers, and to save land and tower resources. In 2015 alone, compared to MNOs own build, CTC was able to realise savings of 265,000 sites, 13,000 CTC is also seen as a mechanism for reducing the gap between competing MNOs by providing China Unicom and China Telecom with access to China Mobile s vast tower network, enabling them to accelerate and catch up their 4G rollout. If 4G coverage were complete, using VoLTE could enable refarming of valuable spectrum. The formation of CTC not only allows China to accelerate 4G rollout, but also enable the implementation of the country s mobile broadband network strategy. The creation of CTC is also a reform of sorts, to drive efficiency and inject new energy into the industry. Opportunities to diversify CTC into other shared infrastructure, and the sheer scale of the business, means the vision is less to create the world s largest and most valuable towerco, but to create one of the world s largest and most valuable infrastructure companies. Does CTC also own assets beyond the macro network, such as rooftops, IBS, DAS and transmission infrastructure? CTC has absorbed most, if not all, China s legacy 82 TowerXchange Asia Dossier TowerXchange Asia Dossier

88 towers, monopoles, and rooftops. There is an appreciation at CTC that the co-construction and sharing model can extend beyond towers to transmission infrastructure, but that does not seem to have been incorporated yet. IBS are widely deployed in China, but there are not many DAS. We did hear of one towerco with a substantial streetlamp project in one of China s major cities they called them information poles and spoke of how they were supporting the Smart City vision. Does China Tower Corporation only own and lease up the towers, or do they undertake O&M too? CTC is responsible for the construction, operation, and maintenance of towers. Having said this, given engineering design, construction, and the likes are also included as service categories on the online procurement platform, it would be reasonable to expect a certain level of sub-contracting of O&M. Who are the principal stakeholders in China Tower Corporation who are they answerable to? China Mobile is the largest stakeholder of CTC at 38%, while China Unicom and China Telecom own 28.1% and 27.9% respectively. China Reform Corporation, likened to a sovereign wealth fund with a particular focus on reforming State-owned Enterprises, owns the remaining 6%. Shareholders in China Tower Company China Telecom 27.9% China Reform Corporation 6% China Unicom 28.1% China Mobile 38% While the Ministry of Industry and Information Technology (MIIT) defines policy, CTC is effectively answerable to SASAC, the State-owned Assets Supervision and Administration Commission. What is the governance structure of CTC? There are currently nine members total on the board. Mr. Liu Aili ( 刘爱力 ) is the Chairman of the board. He is also the Executive Director and Vice President of China Mobile, principally in charge of planning and construction, network operation, and business support. Mr. Tong Jilu ( 佟吉禄 ) is the General Manager of CTC and the only board member formally employed within the organisation. China Mobile China Unicom China Telecom China Reform Corporation We ve been able to identify one other board member Sun Kanmin ( 孙康敏 ) who is an executive with China Telecom. CTC does not wish to disclose the identities of the rest of its board members at this time. This governance structure is unlike the past, where more company members would also be part of the board, and was created specifically to avoid inefficiency and abuse of power. What is the organisational structure of CTC? There are 15 business units/departments within CTC, including management, construction and maintenance, finance, human resources, business partnerships, operations and development, audit, telecommunications technology research institute, information technology research institute, and more. 88 TowerXchange Asia Dossier TowerXchange Asia Dossier

89 There are three levels of CTC management: Headquarters in Beijing, provincial branches, and city/municipal offices. In total, there are 377 branch offices across the country. How is the financial performance of CTC? For the first half of 2016, CTC owed CNY 150bn (US$22bn), with a negative profit margin of 4.6%. Revenue for 2016 is estimated to be in the range of CNY 60-64bn (US$ bn). How and what does CTC buy? The Tower Online Platform officially launched in the summer of 2015, one year after the creation of CTC. As of 5 September, 2016, there are 723 suppliers officially registered in the system, with 74% having been shortlisted and 58% having successfully received purchase orders; spending also reached CNY 26bn. The platform was created to increase supply chain transparency and efficiency, allowing CTC staff to see who made a purchase, from which manufacturer, at what costs, plus comments and ratings on product quality, delivery, service, et cetera. It hosts 27 major supplier and five service categories, including the likes of tower, air conditioning, shelter, battery, idas, engineering design, construction, and more. Suppliers can register on the platform for free, as long as they hold a valid manufacturing license in China (for product providers), are registered with the State Administration for Industry and Commerce of the People s Republic of China (SAIC), and meets successful third-party audit. A lot of smaller players are not on the platform for one reason or another, but instead work through those that are and act as sub-contractors; this type of partnership arrangement could provide a point of access into CTC as well for international vendors. For further details, please refer to our article What and how China Tower Corporate buys. Does CTC have some kind of right of first refusal to build new towers for the three State-owned MNOs? Some sources told us that all build to suit (BTS) processes were supposed to be open. Other sources told us that the official structure of the Chinese tower market is that the MNOs are no longer building their own towers, and all the work is being undertaken by CTC. While MNO builds have more or less halted, the reality is that CTC currently lacks the capacity to meet 100% of MNO demand, which in a practical sense means in some cases third parties are contracted to build sites which are then are transferred to CTC s balance sheet. In other instances it seems that the independent towerco steps in as a fallback option if CTC lacks the capacity, or gets too bogged down in process, to meet MNO demands on time. China s private tower companies are often more energised and faster to market, said one interviewee. In other instances it seems the independent towercos simply undercut CTC, as a function of lower management costs. On still other occasions it seems that independent tower companies might have better local site hunters, and are able to leverage relationships with MNO network planners at provincial or municipality level to secure direct orders. CTC has a scale advantage from the legacy towers, but no significant advantage when competing for new BTS contracts, said one interviewee. In some provinces the carriers are more open to new entrants as they don t feel it s in their interests to have a monopolistic towerco, whereas in other provinces CTC are more entrenched, said another interviewee. A Right of First Refusal type arrangement isn t necessarily the primary risk to the independent sector s organic growth potential. Rather it s the relationships and economics that may affect a towerco s ability to survive and thrive. Towercos with good connections to local government and/ or operators will continue to secure projects and tenants. From there it s having the cash flow to maintain day-to-day operations and financing to continue building. New builds are now subject to the lease rate benchmarks set out by CTC, resulting in a more challenging environment compared to the past. 84 TowerXchange Asia Dossier TowerXchange Asia Dossier

90 Is it easy to get a new tower built? While China s citizens once welcomed towers and coverage, radiophobia and NIMBYism (not in my back yard) now exist in China. To combat the former, CTC has relied on a more concerted and integrated effort from the government, operators, and media to propagate educational messaging around radiation, comparing tower emissions to common household appliances. One supplier has also mentioned having to move fast in getting a tower up and/or disguising the tower as some other unrelated light pole or billboard. Towercos who have good local government relations can often circumvent the issue also, as they are building with their approval and support. In general though the environment in China is conducive and favourable to tower building: there is a mature steel and metal processing industry; the grid is reliable and stable so downtime is insignificant, reducing opex; and the vendor network is strong having supplied 1mn+ base stations already. Fibre is also used for backhaul so there is seldom need to accommodate microwave dishes. What is the mix of GBTs versus rooftops in China, and how has CTC affected tower design? CTC has standardised tower designs, reportedly from 1,000 down to 155 (each design at different heights would represent one). CTC also made an effort to introduce designs of different aesthetics, functions, and heights to suit various environments. For example, the Urban Flower sits at 25m, can be integrated with lightning for the city and incorporate CTC s logo and branding. It also has a 40m tower suited for stadiums, large public spaces, et cetera, that can be a landmark structure with LED lights at the top. There is also a more simple and sleek multi-purpose tower meant to be integrated with street lighting, sensors, data, and analysis. Around two thirds of China s sites are GBTs (Ground Based Towers mostly monopoles), the other third are rooftops. Approximately how many of China s towers are currently shared? What are the tenancy ratios? It is likely that not all tower assets in the CTC portfolio are currently shared. CTC was reported having shared 265,000 stock towers during 2015, achieving a sharing rate of 75%. Through September 2016, this increased to 502,000 towers, representing a growth of 1.8x, and 81% sharing rate. However, these are not conventional tenancy ratios as over two-thirds of CTC s asset register are not included in these stock towers. Back in July, our sources suggest average tenancy ratio for CTC by year-end 2016 could be in the range of 1.15 to 1.35, given a lot of the legacy parallel infrastructure, thus reducing the need for colocation, plus not all new build has been completed. One recent industry report suggested a tenancy ratio of 1.29 in 2015, with projection to rise to 1.39 by 2016 year-end. In the independent sector, average tenancy ratio for towers are around 1.2 to 1.5. What is the typical capital outlay for a new tower in China? Of course much depends on the nature of the structure, but the average seems to be in a CNY ,000 (US$37-51,800) range. What would be the impact of consolidation from three to two MNOs? Consolidation from three MNOs to two would certainly lower the glass ceiling on prospective tenancy ratios in China, and would be value destructive to both CTC and independent towercos. While there has been rumor of MNO consolidation, the government s current strategy appears to be to accelerate China Unicom and China Telecom s 4G rollout by providing access to China Mobile s towers, and in doing so start to even out the competitive imbalance. If the creation of CTC does not have the desired effect in terms of competitive rebalancing, only then would the issue of MNO consolidation return to the agenda. The scope of a China Unicom-China Telecom merger would likely be limited to their wireless businesses, given that a combined entity would have 80-90% share of the wireline market. 90 TowerXchange Asia Dossier TowerXchange Asia Dossier

91 Are there any significant non-traditional tenants on China s telecom towers? The usual mix of MVNO, enterprise industrial communications equipment, traffic monitoring, first responder networks and Wi-Fi equipment are all prospective additional tenants. CTC has made repeated mentions of business diversification and innovation to include the likes of billboard ads, sensors, weather monitoring, et cetera, so the opportunities are there given the size of its network. Is there any prospect of active infrastructure sharing in China? The only infrastructure sharing agreement of scale in China before CTC was China Telecom and China Unicom s deep collaboration to improve economics in low utilisation, remote areas. To date, the two operators are said to be actively sharing 600,000 4G base stations and 14,500km of fibre transmission network. Regulation Are China s independent towercos licensed? No, there is no licensing regime for towercos in China, and no immediate prospect of a licensing regime being introduced. One towerco recently confirmed this again based on notification from and communications with MIIT. Does the Ministry of Industry and Information Technology (MIIT), regulator or National Telecommunications Infrastructure Coconstruction and Sharing Office have the right to define the pricing of lease rates? No. In July 2016 CTC finalised its leasing and pricing agreements with China Mobile, China Telecom, and China Unicom, which essentially set the marketplace benchmark. The formula offers deeps discounts for co-location and covers acquired towers, newly constructed towers, indoor distribution systems, transmission products, and service products. This has put pressure on the independent towercos who can t charge more than what CTC is charging, especially for new towers, unless they are in highly coveted locations. All pricing on previously signed contracts are still being honoured. So while no government body or agency per se has defined lease rates, CTC has markedly influenced industry pricing. What is the pricing formula used by CTC? The formula to be used for newly-added telecommunications towers is: Product price = base price (1 co-sharing discount rate 1) + (site cost + electricity input cost) (1 cosharing discount rate 2) Base price = (standardised construction cost (1 + impairment rate) + maintenance expense) (1 + cost markup rate) useful lives of depreciation It was also confirmed there is an escalator, an inflation adjustment factor which is common in tower agreement contracts. What type of co-sharing discounts are available for operators through CTC? On new towers, a 20% discount will be applied for sites shared by two lessees and a 30% discount for those shared among three lessees, with the first sole occupier ( anchor tenant ) benefitting from a further 5% discount. When it comes to site cost and electricity, a co-sharing discount of 40% will be applied for two lessees and 50% for three lessees. Again, the anchor tenant would enjoy an additional 5% discount. For further details, please see our article The implications of China Tower Corporation pricing. What is the status of rural coverage in China? Despite the huge land area, rural coverage in China may be better even than the US; even in low population density areas of Tibet you will see coverage signs. How are tower companies taxed? There was no reported special tax status for tower companies in China. China fully implemented its VAT reform on 1 May 2016 and replaced all business tax with the valueadded tax (VAT). 86 TowerXchange Asia Dossier TowerXchange Asia Dossier

92 The construction services sector s new applicable VAT is 11% (general) and 3% (small-scale). In terms of the sale and importation of goods, logistic services, modern services, transportation, repair and processing services, asset leasing, the standard applicable rate is 17%, and 13% for some products. State-owned enterprises have sometimes been affording special tax treatment, enabling them to consolidate. There was no clear indication yet whether this might apply to CTC. Is document number 586 (2014) the latest regulation governing co-construction and sharing? Is it now fully enforced? This is the most recent document, and it has been fully implemented. But document 586 is an agreement not a regulation. It was proposed by the MIIT and agreed with China s three MNOs to improve resource utilisation; reducing occupation of land and improving the appearance of the landscape. A couple of excerpts from document 586 (please forgive any translation imperfections): From January 1, 2015, in principle, the three basic telecom carriers shall no longer build towers and other base facilities themselves, as well as IBS in subways, railways, highways, airports, railway stations and other public transportation key sites and large venues and multi-owner commercial buildings, government office buildings and other key sites. The MIIT, SASAC or the province telecommunication authorities will severely punish the three basic telecom carriers, if the following behaviors were found. Basing on severity such punishment could be recommended to upper level unit to fire the related management. Such dismissed staff shall not be engaged within three years. i. Without the approval of the provincial coordination agencies, construct towers and other ancillary facilities, as well as IBS in public transport and construction of buildings and other key areas ii. Without the consent of the provincial coordination agencies, refuse to open sharing when the existing telecommunications infrastructure is suitable for sharing iii. Without the approval of the provincial coordination agencies, build parallel infrastructure iv. Independently build new infrastructure when joint construction should be carried out v. Violation of requirement of infrastructure sharing in key areas (key areas including key public transportation sites, key buildings, scenic parks and other places identified by local communications administration, and inter-province key fiber cable construction, and the domestic extension of international transmission) vi. Violate national standards on optical fiber To- Home construction vii. Sign exclusivity agreement with the third parties in the construction of telecommunications infrastructure (including leasing) Clause vii. above calls attention to the fact that MNOs would appear to not have permission to sign exclusive agreements with third parties (towercos), suggesting a degree of limitation on deep build to suit partnerships. Who owns the land under Chinese towers and on what basis is tenure granted to infrastructure firms to build towers on that land? All land in China belongs to the government, but Land Use Rights can be secured for a 15-year term for industrial use, usually at a reasonable cost. As renewal fees cannot be defined up front, there is some exposure to risk of lease escalations when renewing after 15 years, but in general it was felt that escalations would be fair in a market where a State-owned Entity was dominant. Above ground level, the telecom structures themselves belonged to China s MNOs and now belong to CTC, or they belong to the independent towerco. Land lease fees could also differ from region to region, project by project. One towerco mentioned not having to pay land fees in one city but paying by usage square footage in another. But this could be more the case for street/highway projects, where lighting is incorporated into the tower. 92 TowerXchange Asia Dossier TowerXchange Asia Dossier

93 China tower market end FY15 20, % China tower market end FY16 45, % China tower market forecast end FY17 80,000 4% 1,500, % 1,750, % 1,900, % CTC Independent Source: TowerXchange How complete is the paperwork on China s towers? It was widely acknowledged that not all the towers in China, whether CTC or independently owned, had a complete set of licensing, permitting and leasing paperwork. It appears to vary depending on the local government and project. We know of one region where the towerco has a full set of papers stamped by the authorities, from meeting minutes with city planning officials outlining project requirements, to construction permit, construction plan, et cetera. This was described as a tower s most complete legal process and best protection. This also means should the government for whatever reason takes down a tower, the towerco would be compensated. In this particular case, the land belongs to the government, for public use. The permit follows, No. 40 of the Urban and Rural Planning Act, which grants construction rights. Independent tower market Who are the independent tower companies in China? How much market share do they have? How fast are they growing and what is the top end for their potential market share? With the exception of four or five towercos with quadruple digit tower counts, China s independent towerco market is highly fragmented and localised, with five to ten towercos in each of China s 31 Provinces. There are currently 200+ towercos in China. A lot of the independent towercos thrive on having strong local government and/or operator relations, enabling them to build quicker than State-owned CTC. At the end of 2014, China may have had as few as independent towercos owning ~5,000 towers. By the end of 2015, those numbers had increased to ~20,000 towers among as many as 200 towercos. Independent towercos built ~10% of China s new towers in 2015, a proportion which bullish commentators feel could reach 30% within a year. It is axiomatic to say, but readers must be reminded 88 TowerXchange Asia Dossier TowerXchange Asia Dossier

94 of the sheer scale of China; an independent tower sector can still thrive even with less than 2% market share. At the beginning of 2016 TowerXchange have spoken to a few bullish tower industry leaders who feel the glass ceiling on the scale of the independent tower sector in China could be as high as 20% within five years that could represent 400,000 towers, the equivalent scale of the entire tower market in the European Union! While there are independent towercos active in China s largest cities, Shanghai, Beijing, Tianjin, Guangzhou and Shenzhen, perhaps the highest penetration of independent towers can be found in Provincial capitals, tier two and tier three cities in some of which TowerXchange has heard unconfirmed reports that independent towercos have a market share significantly in excess of 50%. However, a reality check is required now that CTC is in the full swing of tower building and leasing (it s only really been operational since 2015), and perhaps flexing its muscle a bit. There are some reports of negative consequences for MNO staff that gave contracts to independent towercos, and reports of delays in payments to towercos. But there are still opportunities for smart and strategic towercos. While major coverage projects will likely be concluded in the next three to five years and less new macro towers will be needed, difficult sites will always exist and the independents have the flexibility to get the job done. Are there any valuation benchmarks set by towerco financing or tower sales? One source suggested that Chinese towers with an average tenancy ratio of 1.5 were changing hands for an average of CNY ,000 each (US$65-70,000 each). Another source put the figure at CNY 700,000 (US$100,000) with a tenancy ratio of 2.0. A third source suggested a 51% stake in a portfolio of several hundred towers with a tenancy ratio above 2.0 had been acquired at a valuation again of CNY 700,000 (US$100,000) per tower. Guodong, which is probably China s largest independent tower company secured a CNY 700mn (US$100mn) investment reportedly at a high teens valuation they were very proud of. The transfer of China Mobile, China Unicom and China Telecom s towers to CTC reportedly yielded an average of just US$22,000 per site, significantly below replacement cost. But an asset transfer between entities all fundamentally State-owned (and owned by each other) is a poor valuation benchmark. The low acquisition cost reflects the depreciation of an inventory of ten plus year old towers, towers which were built to gain market share and with less of a view toward longevity and structural capacity, so significant improvement capex will be required. The low price point also reflects the mixed bag of assets being transferred, inclusive of everything from substantial ground based towers, a great many monopoles, rooftops, and even small Wi-Fi offload sites. What s important to note also is that China Telecom received only equity as part of the deal, while China Mobile and China Unicom received both equity and a combined CNY 91.9bn (US$13.5bn) in cash. At this phase, valuations were thought to be around CNY bn (US$32-34bn). In 2015 when China Reform Corporation injected cash for 6% share, this was valued around CNY 203bn (US$30bn). And now CTC is driving towards an IPO by the end of 2017, reportedly with hopes to be valued at above CNY 270bn (US$40bn). All in all, while it may appear that the MNOs were under-compensated for their towers, they also got equity in CTC that can then be cashed in when the world s largest towerco IPOs. Is China Tower Corporation a potential buyer of independent tower companies towers? At one point CTC were believed to have made an offer to acquire Chinese towers at ~US$80,000 each. Whether that valuation is still current remains unclear, and whether such a valuation may be attractive to current owners depends on tenancy ratio, TCF, and uniqueness of location. At this point however, multiple sources have confirmed CTC has not acquired any independent towercos or their assets. There has been much talk of monopoly since the creation of CTC, though our sources believe the Party is keen to encourage competition, and currently CTC and the independent sector co-exist to serve the market place. Chairman of the Board at CTC, and China Mobile 94 TowerXchange Asia Dossier TowerXchange Asia Dossier

95 executive, Liu Aili has also publicly acknowledged the presence of independent towercos. CTC is not the exclusive provider of towers in China, there are 200+ third-party companies building and operating towers. Therefore CTC will be rejected by the market if it doesn t deliver on low costs, good service, and competitive rental prices, he said. While tower acquisitions are not completely out of the picture, at this time, CTC is wholly focused on integrating assets and new builds to meet the operator s demands and prepare itself for an IPO in Is there a risk of State Nationalisation of independent towers? Some sort of compulsory purchase order of independently owned towers, at an unfavorable valuation, or independent towercos simply finding CTC building towers adjacent to theirs, is the Armageddon scenario for Chinese tower entrepreneurs and their investors. It must be acknowledged that nationalisation of assets is a risk hanging over several thriving independent tower markets in other nations. Is that risk present in China? Yes. Did it seem like that was a concern whilst the independent sector had a single digit market share? No. The impression TowerXchange got from the MIIT was that, while their initial vision for CTC was to create a State-owned natural monopoly to maximise efficiency, a pragmatic view was now being taken on the independent tower sector, appreciating the positive role of market forces in setting a fair lease price, and appreciating that the supplementary capacity and hunger of an independent tower sector could accelerate the achievement of the Ministry s ultimate goals: to support efficient sharing of resources, and to accelerate the rollout and adoption of 4G. China is progressing and promoting entrepreneurship, said one interviewee, with reference to the risk of asset seizure. The China Dream as proposed by President Xi is built on an open, competitive market. Again, there has been public acknowledgement of the 200+ independent towercos and their role in building and operating towers, and providing value to the marketplace overall. Our sources also indicate that operators in some regions are quite friendly and favourable towards independent towercos, as they are perceived to be more efficient, provide faster service, and more nimble in negotiating with local stakeholders. Do China s tower companies have much appetite for International opportunities? China s tower sector seems largely pre-occupied with their huge and changing domestic market. However, for the handful of Chinese towercos with appetite for opportunities overseas, capital may be accessed for opportunities within the One Belt, One Road footprint through associated investment firms such as the Silk Road Fund and the Asian Infrastructure Investment Bank. We know of two independent Chinese towercos that have been actively exploring the overseas market. For example, in October 2016, it was announced Hong Kong-based Shining Star International Holdings Limited acquired Myanmar Infrastructure Group (MIG) for US$12.7mn. Shining Star s business spans real estate, hotel, tourism, education, property management, and more. What are typical lease rates and terms in China? Lease rates are a complicated formula based on height and weight of equipment, desirability of location et cetera. At the beginning of year, most interviewees agreed that a range of CNY 4,500-6,000 pcm was common (US$ ). The lowest we heard was CNY 3,500 pcm (US$515) in less developed cities, rising to CNY 11,000 pcm in (US$1,625) on high rental cost sites in major cities. However, the creation of CTC and the finalisation of the pricing formula in July 2016 have put downward pressing pressure on the market. On the independent side, rates are now between CNY 2,300 pcm (US$340) to CNY 5,400 pcm (US$800). Again, desirable and highly coveted sites can still yield good rates. We were also told that the rate could also sometimes be higher if no one responds to an RFP. CTC lease rates are significantly lower than 90 TowerXchange Asia Dossier TowerXchange Asia Dossier

96 anywhere else in the world, with estimates around CNY 26,000 per tower on an annual basis or CNY 2,166 pcm (US$320). This figure is surprisingly low and suggests a business model calibrated in favour of the MNOs. Since the summer, another industry report came out suggesting per tower leasing fee of around CNY 3,900 pcm (US$575) for CTC in 2015, and CNY 3,000 pcm (US$445) for Like India, when additional tenants are added to Chinese towers, existing tenants leases are discounted. Lease terms are typically years. Down payments for new sites have been reduced to a single year since the advent of CTC, adversely affecting independent towerco cash flows. How do the economics of a single tower in China compare to the USA? See U.S. versus China macro tower build economics. Note that when an additional tenant is added, lease rates are discounted for both the new and original tenant in China. This is not the case in the US. We must emphasise that you must treat this table with a pinch of sale China data is averaged based on multiple sources but all sources are subjective. Who owns China s broadcast towers are MNOs colocating on them too? China Broadcasting and Media Group has the 700 U.S. versus China macro tower build economics Construction costs Tenant revenue Opex Gross margin Gross margin % ROI MHz license and owns most of China s broadcast towers. TowerXchange have not yet been able to ascertain if these towers are offered for co-location by China s MNOs. Investment How can early stage towercos in China access capital? One tenant US Two tenants US One tenant China Two tenants China $275,000 $20,000 $12,000 $8,000 40% 3% Source: US illustration drawn from an American Tower presentation, June 2015; does not reflect any American Tower financial data. China data from TowerXchange, based on our own research and reviewing the models of Goldman Sachs and others China offers a challenging path to scale for local tower entrepreneurs. Raising debt from Provincial financial institutions is complex, time consuming, and expensive. While private, domestic investment is gradually becoming more available to debtfunded infrastructure firms with contracted long term cash flows, like towercos, Chinese capital markets have historically been predisposed to invest only in profitable companies, at the expense of business models like telecom towers that naturally lend themselves to a degree of leverage. Small tower - $50,000 $13,000 $37,000 74% 13% $44,000 $4,500 $2,600 $1,900 42% 4.3% companies in particular struggle with the fact that towers are not securable. State and provincial level investment funds may not be inclined to invest in entities which compete with State-owned CTC. Please explain the latest rules regarding foreign ownership of, or investment in, communications infrastructure? TowerXchange understand, but have been unable to confirm, that passive infrastructure is not considered a sensitive asset class, so FDI may be possible into Chinese joint ventures, particularly those in free trade areas, or through VIEs. We have heard unconfirmed reports of one foreign investor acquiring a 51% stake in a towerco. An interested investor called attention to the VIE (Variable Interest Equity) structure, which - $7,200 $3,000 $4,200 58% 9.5% 96 TowerXchange Asia Dossier TowerXchange Asia Dossier

97 enables foreign investors to invest in sensitive infrastructure, do investors still need to use this or is more direct investment now permitted given the recognition that passive infrastructure is less sensitive? One TowerXchange source defined VIE as a mechanism for foreign direct investment in China via an international holding company, a WOFE (Wholly Owned Foreign Enterprise), in which USD, EUR or other currency could be invested, which could be registered in the Caymans, Delaware et cetera, and which could be listed on the NASDAQ or other international stock exchange. The VIE structure was apparently first used in this sector over 20 years ago to facilitate investment in China Unicom, with subsequent VIE investments in Alibaba, Tencent and Baidu. A critical question when leveraging a WOFE to invest in China is where the IP sits, at holding company or local subsidiary level? If the latter, international investors could be exposed to risk. A VIE would be a viable but suboptimal route to investing in a Chinese tower company, said one interviewee. Yes you can do it, but it may adversely affect valuation. What would foreign investors options be to repatriate capital? In the event a foreign investor was seeking exit from a listing entity, they might seek to sell their equity to the domestically listed entity, releasing capital at an agreed exchange rate. What are the potential exit strategies for investors in Chinese towers? As in any market, exit strategies tend to focus on potential IPO or trade sale. CTC may be a prospective trade sale counterpart, although management is very much focused on new builds and improving operations in its bid to IPO in Q At least one of the Indonesian tower companies is believed to have an appetite to invest in China, while TowerXchange has learned of two domestic rollup plays. Could a major international strategic investor be interested in acquiring Chinese towers? Probably not at the current scale of the independent market, where the largest independent towerco just hit fivedigits tower count this year. But if an independent towerco could build or rollup 30-50,000 towers, they may attract interest from some of the more acquisitive international towercos. When considering exit through IPO, the perception remains that Chinese companies need three years of profitable trading history to list as an A-share on the Shanghai Stock Exchange. There was some suggestion that unprofitable companies might soon be allowed to list, but apparently that potential reform will not take place imminently. Some sources suggested that entities listed on that stock exchange can only accept investment in CNY, meaning foreign investors would have to exit at the time of listing, or setup a new entity. More recently it seems that qualified international investors can invest in companies listed on the Shanghai Stock Exchange. There is one listed tower company on the Shenzhen Stock Exchange, Beijing Miteno Communication Technology Company Limited (300038), with at least one planning to list in Shanghai in It should be noted that there is approximately a two-year wait to list on the Shanghai Stock Exchange. While the Shanghai Stock Exchange opens access primarily to domestic investors, a listing, or dual listing, on the Hong Kong Stock Exchange offers more exposure to international liquidity and an increased level of transparency with which international investors are more comfortable. Most of China s large infrastructure entities are listed in Hong Kong. Most stakeholders TowerXchange spoke to assumed a better valuation would be achieved on the Shanghai Stock Exchange ( the P/E multiple in Shanghai might be 30-50x compared to 10x in Hong Kong ), but there are precedents where higher valuations were realised in Hong Kong (e.g. in the insurance industry), while the current appetite of international investors for towers as an asset class, and the valuation of natural comps, may also contribute to a potential healthy valuation of a tower company on the Hong Kong stock. 92 TowerXchange Asia Dossier TowerXchange Asia Dossier

98 Will it be possible to invest in CTC? Is there a plan to list China Tower Corporation on the stock market in future? It s been made clear that CTC is driving towards an IPO by the end of 2017 as a means of repaying China s three MNOs the full value of injected legacy assets. Speculation continues as to whether CTC will list domestically as an A-share or open up to international investment through a Hong Kong listing. The lease and pricing formula announcement in July and subsequent estimates on lease rates that are much lower than expected may suggest a leaning towards the A-share option. However at this time, it remains inconclusive. One analyst suggested around 30% of the equity in CTC could be floated. Power Are power costs passed through from China Tower Corporation to the MNOs? China has one of the world s most reliable electicity grids. Unlike most countries, its supply exceeds demand. What backup power solutions are typically on cell sites? Are towercos or MNOs responsible for them? Towercos provide backup battery banks, typically with 4-8 hours float. Most batteries are lead-acid. There are very few backup DGs. Source: China Tower Corporation RMS is deployed on some, not all cell sites. CTC is considering making RMS a National standard. Who is responsible for site modernisation and air conditioning, towercos or MNOs? CTC is responsible for shelters and air conditioning. While most new sites are built with outdoor equipment, few legacy sites have been modernised with, for example, free cooling. According to the finalised pricing formula in July 2016, electricity input cost is part of the product price, aka lease rate to the operators. It is to be priced on a lump sum or itemised basis. What proportion of the cell sites are on-grid, on unreliable grids or off grid? Almost all sites are on-grid. Multiple sources confirm CTC is also recycling the battery from electric vehicles for site usage. Compared to lead-acid batteries, they are described as withstanding up to 60 degrees Celsius versus 35 degrees, is half the size and weight, and rechargeable up to no less than 500 times versus 300 times. Are remote monitoring systems typically deployed on cell sites? Is there distributed renewal energy in China? In September 2016 CTC reported having 10,177 solar and wind generation sites across the country, with annual capacity of 120mn kwh. There is also news that CTC has plans to deploy solar on a large scale in line with the government s objectives in reducing carbon emissions 98 TowerXchange Asia Dossier TowerXchange Asia Dossier

99 The implications of China Tower Corporation pricing Scale of discounts offered to incentivise co-location makes the Chinese tower market unique Read this article to learn: < Details of CTC s leasing agreement with operators < Pricing formula and specific discounts offered for new build towers < Implications for China s mobile operators < Implications for China s independent towercos < Estimated range of baseline pricing per tower On 8 July, 2016, the world s largest towerco, China Tower Corporation (CTC) finalised its leasing and pricing agreements with China Mobile, China Telecom, and China Unicom. The agreement outlined a pricing formula that offers deep discounts for co-locations. We dive into the details of the agreement plus offer a look at what the pricing formula means to the operators and the other independent towercos. (Yes, there are independent towercos in China!) Keywords: Business Model, China, China Mobile, China Telecom, China Tower Corporation, China Unicom, Co-locations, Infrastructure Sharing, Lease Rates, Market Overview, Tower Count Lease agreement details The terms of the lease agreement are for a five-year term covering: 1) Acquired towers 2) Newly constructed towers 3) Indoor distribution systems 4) Transmission products 5) Service products Pricing formula The pricing formula takes into account factors such as standardised construction costs, depreciation, maintenance expense, cost markup, and co-sharing discounts. The formula to be used for newly-added telecommunications towers is: Product price = base price (1 co-sharing discount rate 1) + (site cost + electricity input cost) (1 cosharing discount rate 2) Base price = (standardised construction cost (1 + impairment rate) + maintenance expense) (1 + cost markup rate) useful lives of depreciation Due to the variance in construction costs across different geographical areas in China, the 31 provinces are divided into four categories with a different adjustment rate for each. The impairment rate and cost mark up rate are fixed at 2% and 15% respectively. The maintenance expense is to be adjusted based on the final actual price. The site cost and electricity input cost are either priced on a lump sum or itemised basis. 94 TowerXchange Asia Dossier TowerXchange Asia Dossier

100 Co-sharing discount rates On new towers, a 20% discount will be applied for sites shared by two lessees and a 30% discount for those shared among three lessees, with the first sole occupier ( anchor tenant ) benefitting from a further 5% discount. When it comes to site cost and electricity, a co-sharing discount of 40% will be applied for two lessees and 50% for three lessees. Again, the anchor tenant would enjoy an additional 5% discount. What does this mean for the operators? On the one hand operators benefit by paying less rental fees as CTC takes in less revenue, but at the end of the day China Mobile, China Unicom, and China Telecom all have stakes in CTC, at 38%, 28.1%, and 27.9% respectively. Back in March 2016, the Chairman of China Mobile, Shang Bing disclosed that during November to December 2015, China Mobile paid rental fees of CNY 5.6 bn to CTC. He also indicated then that early estimates of 2016 fees would be approximately CNY 35 bn. Local news media Sina also quoted Xue Taohai, the company s Vice President and Chief Financial Officer as saying that while initial rental fees are similar to opex, as tower ratios increase, the costs are expected to decrease. Compared to the last iteration, this new, finalised agreement allows all three operators to enjoy reduced rental costs when the newly engendered culture of infrastructure sharing encourages widespread co-location, with an estimated 10% cut in costs for China Telecom and 5-10% for China Unicom, according to a report by Nomura International. With lower rental fees from the operators, this agreement means CTC would need to improve operational efficiency and drive down opex as it aims for an IPO in We expect China Mobile, China Unicom, and China Telecom will enjoy CNY 2.4 bn, 1.9 bn, and 1.8 bn leasing cost savings, which will boost their FY16F EBITDA by 1%, 2%, and 2% respectively, said Leping Huang, Executive Director of China Telecom and Technology Research at Nomura. Also, as this agreement is retroactive, the leasing fees and losses from last year would need to be adjusted, though this is not expected to have much impact on the three operators 2015 earnings, said Huang. What can we deduce from pricing figures? Previously, none of the operators nor CTC have disclosed the actual number of towers in existence in China, possibly because they didn t yet know as huge asset registers are still being reconciled and networks integrated. However, on 22 July, to celebrate its twoyear anniversary, CTC released figures stating that up to the end of April 2016, it was responsible for operating 1.55mn sites, which we believe includes macro towers, rooftops, and IBS. Nomura estimates there were just under 2mn towers leased at the end of 2015 by all three operators. Though note this is just a proxy for total tenancies, not for the actual number of towers. CTC also revealed that it delivered on 485,000 out of 584,000 tower-related requests from the three operators in As of June 2016, CTC fulfilled 885,000 of 1mn requests overall. Our sources suggest average tenancy ratio for CTC by year-end 2016 could be in the range of 1.15 to 1.35, given a lot of the old infrastructure was overlapping thus reducing the need for co-location, plus not all new build has been completed. In the independent sector, average tenancy ratios are around 1.4 to 1.5. Prior to CTC pricing being released, average lease rates were roughly CNY 4166pcm (US$625) per lessee, based on two MNOs co-locating. CTC lease rates are significantly lower than anywhere else in the world, with estimates around CNY 26,000 per tower on an annual basis or CNY 2166 pcm (US$325). This figure is surprisingly low and suggests a business model calibrated in favour of the MNOs, leading one to question the impact on its future valuation as CTC gears up for an IPO. Speculation continues as to whether CTC will list domestically as an A-share or open up to international investment through a Hong Kong listing. This latest pricing announcement suggests a leaning towards the A-share option, but no final decision has yet been reached. No doubt international investors are keeping an 100 TowerXchange Asia Dossier TowerXchange Asia Dossier

101 CTC by the numbers 1.55mn sites As of 30 April, 2016 Shareholders % China Mobile China Unicom China Telecom China Reform Corporation 2 6% 28.1% 38% Years in CNY 2,166 pcm Estimated lease rate operation Estimated tenancy ratio year end 2016 CNY15bn Estimated total lease revenue in Q Compared to MNOs own-build, infrastructure sharing savings in 2015: CNY50bn of investment 265,000 sites 13,000 acres of land ~US$25bn Valuation during last funding round eye on the space, but the latest pricing formula and lease rate estimates are raising eyebrows: will CTC be a profit centre or a cost centre? Is this simply a balance sheet re-engineering exercise, to take the costs off the MNOs? Or can CTC generate value through efficiencies? While it s too early to reach any conclusions, the government seems keen to expand the scope of CTC in the future. The latest news mentioned potentially having sensors on the towers to help provide traffic and environmental data; adding and monetising LED billboards through advertising sales; and playing a role in electric vehicle charging stations. What does this mean for the other independent towercos? The word on the street is that the three operators are still keen to engage with other independent towercos, especially as CTC cannot currently keep up with demand for new build in all provinces. The formation of CTC means the operators are not allowed to build their own towers anymore. China being such a large country, it has a lot of local tower builders serving various regional areas. Their existing contracts with the operators largely remain intact. However, there is a sense of pricing pressure moving forward now the biggest player has set a downwardly revised marketplace benchmark, apparently after a review of what the other independent towercos were charging. But China s myriad of ~200 independent towercos can still play a role as long as their pricing is kept just below what CTC is offering 96 TowerXchange Asia Dossier TowerXchange Asia Dossier

102 What and how China Tower Corporation buys China Tower spends CNY 24.8bn in 13 months with 417 suppliers through innovative online procurement platform, increasing transparency and efficiency The Tower Online Platform officially launched in the summer of 2015, one year after the creation of China Tower Corporation (CTC). As of 5 September, 2016, there are 723 suppliers officially registered in the system, with 74% having been shortlisted and 58% having successfully received purchase orders; spending reached CNY 26bn. With 27 major product and five major service categories, and continued demand for new sites from three operators, efficient, streamlined procurement will continue to play a major role. Read on for a comprehensive guide on this unique procurement model, created by the world s largest towerco to drive supply chain efficiency. Keywords: Asia Insights, Batteries, CTC, Capex, China, China Tower Corporation, Editorial, Energy, Insights, Lithium,Masts & Towers, Passive Equipment, Procurement, Spare Parts, Tower Online Platform Platform overview CTC was created under the philosophy of change, innovation, and open cooperation. In keeping with this focus and recent e-commerce trends, and motivated by the drive to maximise the benefits of shared economics, CTC built a new procurement model known as the Tower Online Platform. By hosting all required operational resources and services on the platform, it allows for centralised control, layered implementation, frontline ordering, unified payment processing, increased speed and efficiency, and transparency to drive the health of the industry. In a presentation in 2015, CTC highlighted seven mechanisms for the success of the online platform: 1. Platform operation and protection ( 平台运作和保障机制 ) 2. Supplier evaluation ( 供应商评价机制 ) 3. Dynamic, interactive operation ( 动态运营机制 ) 4. Price control ( 价格管控机制 ) 5. Quality assurance ( 质量保障机制 ) 6. Supplier and/or product exit ( 淘汰退出机制 ) 7. Information security ( 信息安全机制 ) Read this article to learn: < How China Tower s online procurement platform works < How a supplier can be registered on the platform < China Tower s procurement spend < Product and service categories in the system < How suppliers are evaluated and rated By bringing procurement online, CTC created a platform that it describes as business-to-business (B2B) and online to offline (O2O). Pilot testing of the platform began in June 2015 across seven provinces. After user and partner feedback, it became fully operational in August. According to a letter addressed to partners in July 102 TowerXchange Asia Dossier TowerXchange Asia Dossier

103 Tower Online Platform transactions by month July August September October November December January February March April May June July ,168 42,969 21,425 85, ,572 99, , , , , , ,711 Source: TowerXchange Total of 13 months: 24.8bn CNY (10,000s) 100, , , , ,000 Registered suppliers Shortlisted Recieved orders 31st August th September , CTC noted the platform to be generally well received by its 377 branch offices across the country during its first year of operation. It also disclosed having eight procurement management staff at headquarters and just under 500 full-time and parttime procurement personnel across the country. Transactions to date The first transaction through the Tower Online Platform was recorded on 15 July, As of 18 September, 2015, within the first few months of operation, the site processed 2,292 orders, resulting in 7,434 product items purchased at a value of CNY 170mn. This initial round of procurement involved 396 suppliers. Registered suppliers at this point totaled 644. One year later, orders executed on the platform have been reported at 2mn, with over CNY 26bn in transaction value. While from the perspective of the three operators this number wouldn t be considered significant since they were used to spending CNY 200bn annually, for a towerco it was still quite substantial, said CTC vice president Dong Xiao Zhuang at a presentation in Beijing in September. Spending in the first few months of the platform going live climbed steadily, followed by a noticeable drop in the first two months of This downturn in activities was attributed to the Chinese New Year holiday and operators being preoccupied with yearend reviews, and therefore a drop in tower-related requests. Procurement picked up in March again, hitting a peak in May. In total, purchases made through the Tower Online 98 TowerXchange Asia Dossier TowerXchange Asia Dossier

104 Platform represent 60% of CTC s total spend. Dong stressed this is cumulative since the platform launched, however, if tracking just from January 2016, 80% of total spend is undertaken through the online procurement platform. He accounts the slower uptake at the beginning due to doubts by some provincial offices and inability to keep up with some of the urgent operator build demand last year. Product and service categories The first group of products to be procured online were monopoles ( 单管塔 ), non-monopoles ( 非单管塔 ), and integrated cabinets ( 配套综合柜 ). The next phase brought on 13 more product categories, with more following since. Today the platform boasts 27 major supplier and five major service categories including: < Tower ( 铁塔 ) < Integrated cabinet ( 配套综合柜 ) < Battery ( 蓄电池 ) < Air conditioning ( 空调 ) < idas antenna ( 室分天线 ) < Power cable ( 电力电缆 ) < Distribution cabinet ( 配电箱柜 ) < Generator ( 油机 ) < Point of Interface (POI) < Passive devices ( 无源器件 ) < Leaky coaxial cable ( 漏缆 ) < Switching power supply ( 开关电源 ) < Field survey unit (FSU) < Feeders ( 馈线 ) < Fiber jumper ( 光缆跳纤 ) < Shelter ( 基站机房 ) < Cable/fiber ( 光缆 ) < idas ( 室分产品 ) < Engineering design and supervision ( 工程设计和监理 ) < Construction ( 施工 ) < Other ancillary equipment ( 其他配套设备 ) Editorial note: What s listed in bracket is sourced straight from CTC. There are said to be over 2,400 product types in the system right now. CTC believes the online procurement platform can close the gap between supply and demand, tighten the trading chain, reduce process costs, and ultimately bring greater economic and social benefits to the industry supply chain. Supplier certification and registration As of 5 September, 2016, there are 723 suppliers in the system, with 534 having been shortlisted by CTC provincial offices, and 417 having successfully received purchase orders. Over 95% of the registered suppliers are said to be private enterprises. Registration on the CTC platform is free, as long as the supplier meets the following criteria: 1) Hold valid manufacturing license in China (for product providers) 2) Registration with the State Administration for Industry and Commerce of the People s Republic of China (SAIC) 3) Successful third-party audit, such as by the Ministry of Industry and Information Technology of the People s Republic of China (MIIT) One source we spoke to mentioned increasing pressure on the supplier side as CTC is now the main and only client compared to the past with the three operators. A lot of smaller players for one reason or another are not on the platform and instead, work through those that are and act as subcontractors. Platform operations Breaking through boundaries of information, marketplace, and time, the online platform allows direct interaction between supply and demand. CTC describes the procurement process as a closedloop: 1. Centralised quality assurance: After certification, product and service suppliers set up a virtual store on the platform, publishing key information related to qualification, product information, pricing, service, and more. 2. Layered process of ordering: Provincial offices can leverage the information provided on the platform, then take into account any local factors to select their desired suppliers. 104 TowerXchange Asia Dossier TowerXchange Asia Dossier

105 3. Frontline staff participation: In consultation with city offices, frontline staff are directly involved with procurement; everything is on-demand and in realtime. 4. Material distribution to site: Products are delivered directly to point of installation. 5. Unified payment system: All purchases on the platform are paid out through head office. 6. Full transparency: All information related to suppliers, product pricing, sales volume, supply, post-evaluation, et cetera are all available on the platform, allowing for full monitoring, disclosure, and feedback of the various units, procurement process, and results. The system allows frontline staff to do real-time comparisons across the whole of the market place. Through the platform, for any given tower, any staff at CTC would be able to see who made the purchase, from which manufacturer, at what cost, plus comments and ratings on product quality, delivery, service, et cetera. This level of transparency is said to decrease the risk of corruption. It also means there is greater clarity on purchasing decisions made across different business units and offices across the country. Also, unlike before, frontline staff can now make purchase orders. Once the order is placed by the technical staff, it represents a contract, whereby the signing of paperwork is no longer required. This was described as akin to buying on Taobao, the Chinese online shopping website similar to ebay and Amazon, where once you place the order, there is mutual trust between the buyer and the seller on the legitimacy and activation of the order. Supplier evaluation and exit The platform fully embraces a key feature of online buying platforms, which is the star-rating and commenting system. Within the context of local environmental factors and service capabilities, suppliers are rated against pricing, product, and service. In a presentation last year, CTC outlined some of its evaluation factors. All three categories are rated against five stars. Pricing < Five stars = preferred ( 优选 ) < Four stars = should choose ( 宜选 ) < Three stars = optional ( 可选 ) < Two stars = alternative ( 备选 ) < One star = limited ( 限选 ) Product < Raw material inspection ( 原材料进厂检测 ) < Factory inspection ( 成品出厂检测 ) < Selection test ( 选型检测 ) < Unannounced inspection ( 飞行检测 ) < Arrival quality evaluation ( 到货质量评价 ) < Post-product quality evaluation ( 产品质量后评价 ) Service < Post-sale service channels ( 售后服务机构设置 ) < Delivery cycle commitment ( 供货周期承诺 ) < Engineering service capability ( 工程服务能力 ) < Fault response system ( 故障响应体系 ) < Spare product and parts inventory ( 备品备件库设置 ) < Logistics capabilities ( 物流能力 ) < Timeliness of delivery evaluation ( 到货及时性评价 ) < Post-engineering service evaluation ( 工程服务后评价 ) As of the beginning of September 2016, a total of 407 suppliers have delivered on their orders, receiving average ratings of 4.72 stars out of five. Tied to the concept of supplier evaluation is the notion of survival of the fittest and healthy competition, which in theory could lead to the exit of a supplier and/or product at a certain point in time. CTC identifies three ways as part of its elimination/exit framework. 1) Product removal: This is defined as a product not meeting new technology and/or business requirements or product quality testing not meeting technology and/or business requirements. 2) Self-removal: This is when a registered supplier is no longer offering products and/or services for its own reasons. 3) Forced removal: This is defined as a registered supplier committing acts against the law and/or fraud; breach of contract in relation to quality, supply, service, et cetera resulting in serious consequences; continued and long-term poor evaluation ratings on the platform. 100 TowerXchange Asia Dossier TowerXchange Asia Dossier

106 citing the cost to manufacture has been very competitive in the past year, given the price of steel had been on the decline since October 2015, going as low as 1,840 per ton. In December, prices clearly went back up, potentially due to governmental influence. Nonetheless, supplier prices increased accordingly, but still lower than the rate of increase for raw materials. Given this, CTC feels the prices inputted by suppliers into its platform have been very reasonable. Out of the 700+ suppliers registered with CTC, one of our sources approximates over 200 to be tower manufacturers. Pricing for non-monopole and lithium batteries continue to come down gradually. Though this is not believed to be the result of suppliers negatively bidding like in an RFP situation where the baseline is not always known. CTC believes the online platform allows for natural price adjustment based on market dynamics. Accounts payable Pricing All product pricing on the platform is visible to internal and external parties through searches. Suppliers are free to list prices as they wish and CTC does not ask for pricing discounts. This level of transparency enables suppliers to act in a reasonable manner. Online platform To illustrate the marketplace nature of the platform, CTC shared a few charts on the pricing movement for monopole, non-monopole, switching power supply, and lithium batteries over the course of seven to ten months. Unfortunately, no actual or relative pricing figures were given on the y-axis. Nonetheless, CTC uses monopoles as an example, The first year of the platform inevitably brought some hiccups. In its partner letter in July 2016, one year after the platform going live, CTC acknowledged issues regarding payments, which it took seriously and acted swiftly with measures to address the matter. This includes the integration of the online procurement platform with a financial system 106 TowerXchange Asia Dossier TowerXchange Asia Dossier

107 which simplified the overall process and therefore increased efficiency. CTC also introduced another first, where once the order arrives and is inspected and accounted for, it automatically enters into the payment cycle, reducing human intervention and expediting payment. This negates the partial payment cycles of the past where collection is still needed post order completion. In addition, CTC has increased payments from once a month to twice a month. In theory, most accounts are paid within two months of order fulfillment. See you at our future events! Meetup Europe April, London Meetup Americas June, Boca Raton When it comes to long-term funded projects with longer payment cycles, the provincial unit would coordinate with China Development Bank to manage the process. Future It s clear CTC is keen to drive as much procurement as possible through its Tower Online Platform. What would be interesting moving forward is to 1) see what new product categories will get added, particularly as CTC has repeatedly made mentions of business model diversification and innovation to include things like billboard ads, sensors, weather and environmental monitoring, et cetera, 2) the number of suppliers that get registered, shortlisted, and awarded orders, and 3) product pricing patterns give the transparent nature of the platform Meetup Africa October, Johannesburg Meetup Asia Decemeber, Singapore TowerXchange Asia Dossier TowerXchange Asia Dossier

108 The history of the Indian tower industry An examination of the growth of infrastructure sharing in India and its role in providing connectivity in the world s second largest telecoms market By Ian Ferguson, Head of TowerXchange Asia In 2007, India s first mobile networks were hosted on around 100,000 telecom towers, considerably less than the current tower count of over 450,000. Over the past nine years, operators and independent tower companies have built an average of almost 40,000 new towers per year and, as a result, telecom coverage now extends to 90% of India s geography. India is one of the few countries in the world with an average of two tenants per telecom tower - and the efficient sharing of towers, facilitated by neutral, non-discriminatory tower companies who now own 69% of India s towers, has been critical to the growth of telecommunications and the associated positive impact on economic growth. India s first mobile phone call was made in July 1995, but the growth of the Indian telecoms market was initially slow due to high license fees. The pace of rollout dramatically accelerated in 1999 when the government made a forward-looking shift from fixed license fees to a revenue share regime. With the fixed license fee frozen and thereafter a percentage of revenue shared with the government, operators were able to pay license fees from their revenues. The next challenge faced by the operators was building enough infrastructure to achieve all- India coverage. Due to India s vast geography, this required a portfolio of at least 45,000 towers, and a huge capital outlay. At this time an individual site cost US$200,00, and towers represented 70% of network costs. As a result, no operators had all India coverage. Keywords: 3G, 4G, American Tower, Ascend Telecom, Asia, Asia Research, Bharti Infratel, Brookfield Asset Management, Capex, Construction, Hutchison, IDEA Cellular, India, Indus Towers, Investors, M&A, Market Overview, MNOs, Opex Reduction, Quippo, Regulation, Reliance Communications, Reliance Infratel, Research, SREI, TAIPA, Tata, Tillman Global Holdings, Towercos, Tower Vision, TowerXchange Research, Viom Networks, Vodafone India Read this article to learn: < The role of the tower industry in expanding Indian telecoms infrastructure from 100,000 to 450,000 towers in nine years < Tracking the growth of each of India s top six tower companies < The prevalence of operator-led towercos in the Indian market < The current status of the Indian tower market and predictions for the future growth India s Telecom Infrastructure Industry came into existence when the Department of Telecommunications invited applications for IP-I and IP-II registrations in the year The registration certificate of IP-I states: Registered IP-I to establish and maintain assets such as dark fibre, Right of Way, Duct Space and Towers for the purpose to grant on lease/rent/sale basis to the Licensees of Telecom Services licensed under section 4 of Indian Telegraph Act, 1885 The first infrastructure sharing agreements took place in after the formation of the COAI (Cellular Operators Association of India), but were 108 TowerXchange Asia Dossier TowerXchange Asia Dossier

109 limited to carefully controlled, tower-for-tower exchanges known as barters or swaps, with each operator sharing the same number of assets, and no money changing hands. With cellular operators cautious of trusting one another sufficiently to embrace deep tower sharing partnerships, the limited scope of these barters meant they generated negligible efficiencies. Indian towerco tower counts , , ,000 The first tower sharing breakthrough happened in 2005 when operator Spice approached Quippo, the equipment leasing firm of SREI, to start building the first independent infrastructure: 50 towers in Punjab, to be paid for by a rental fee for tenants, the first of which would be Spice. The rental fee was to be lowered by adding more tenants, and before long the second and third tenants, Hutchison and Bharti Airtel were on board. Quippo SREI benefitted from increased rental fees from multiple tenants, and the operators benefitted from lower rental fees, and most importantly access to towers without having to build and maintain them. The success of this first venture led to the creation of Project MOST (Multi Operator Shared Towers) in cooperation with the Union Ministry of Urban Affairs and Ministry of Communications, Government of India, Meanwhile UK private equity investors the Ashmore Group and some partners from Israel started Tower Vision, India s second independent towerco, which had sites in Karnataka. Tower Vision also engaged in tower sharing with Spice. 100,000 50, Q Q Indus Towers Reliance Infratel Quippo-WTTIL / Viom Networks Bharti Infratel GTL Infrastructure American Tower Tower Vision ITIL Ascend Telecom *The Reliance Infratel tower count is not consistently disclosed Sources: TowerXchange Research, TAIPA, Company Reports Indus Towers Reliance Infratel Bharti Infratel Quippo-WTTIL / Viom Networks American Tower GTL Infrastructure Tower Vision Q ,154 48,000 27,548 36,000 2,600 9,411 3,000 Q ,938 49,300 30,568 37,250* 7,700 12,456 4,550* Q ,586 50,000 32,792 38,500 8,801 32,650 6,102 Q ,325 50,000 33,147 39,250* 9,301 32,578 8,275 Q ,819 50,000 35,119 41,000* 10,690 29,432 8,400 Q ,008 43,379 35,905 41,600* 11,956 27,839 8,400 Q ,942 43,379* 37,196 42,200* 13,289 27,839* 8,400 Q ,881 43,379* 38,458 42,200 15,361 27,839* 8,400 ITIL 1,686 2,160 2,542 2,574 Merged with Ascend Ascend Telecom ,021 1,290 4,083 4,173 4,366 4,873 * Estimate Q ,739 43,379* 38,642 Sold to AMT 58,130 27,839* 8,400 5,200 Source: TowerXchange Research, TAIPA, Company Reports 104 TowerXchange Asia Dossier TowerXchange Asia Dossier

110 Tower ownership in India in 2008 Tower ownership in India in 2016 Source: Frost & Sullivan Research 2008, TAIPA 61,500 70,000 2, ,000 6,010 23,500 3,330 3,100 Indus Towers Essar Quippo RITL Bharti Infratel GTL Infrastructure Tower Vision Other independent towercos Operator captive 15,000 10, ,000 8,000 9,600 25,000 5,200 8,400 14,421 65,000 27,839 Sources: TowerXchange Research, TAIPA, PwC 38,642 43, ,739 58,130 Indus Towers American Tower RITL Bharti Infratel GTL Infrastructure Tower Vision Ascend BSNL Reliance Jio Reliance IDEA Cellular Vodafone India Bharti Airtel MTNL MTS Others By now the concept of infrastructure sharing had really caught on: We realised that operators were fundamentally ill-suited to manage passive infrastructure efficiently, said Akhil Gupta, Chairman of Bharti Infratel. The other reason of course was that we felt that this infrastructure would need to be shared extensively amongst operators to reduce cost, especially in low tariff countries like India, which was possible only with independent towercos. Bharti Airtel carved its own towerco, Bharti Infratel in late Bharti Airtel also partnered with Hutchison and Idea to set up their own towerco by pooling their existing tower assets. Indus Towers, the world s first joint venture towerco was conceived in 2006, and had a major impact from , with 70,000 towers from day one. As a 100% shareholder-owned entity, it was quite distinct from Quippo, which was 100% nonoperator owned. While Indus was larger in volume, almost all their initial tenants were internal and there was limited external marketing of the towers for three or four years, allowing them to focus on managing the portfolio and decommissioning overlapping sites. Between 2006 and 2008, Quippo grew from those initial 50 towers to 5,000 towers through acquisitions and organic growth, and achieved a tenancy ratio of over 2.5. After the partners in Indus Towers brought to market their 70,000 towers, Reliance and Tata followed suit. Reliance hived off assets into their own 100% owned towerco, while Tata Teleservices hived off their assets into 100% owned WTTIL. However, WTTIL invited the participation of 110 TowerXchange Asia Dossier TowerXchange Asia Dossier

111 Timeline of the Indian tower industry The Indian The COAI (Cellular Quippo-SREI Bharti Infratel GTL Infrastructure Indus Towers, a joint RCom and Tata hive TAIPA (Tower and government lays down Operator s becomes the first is established IPO venture between Bharti off their towers into Infrastructure the framework for Association of independent Airtel, Hutchison (now separate towercos Provider s infrastructure sharing India) is formed towerco Vodafone) and Idea is Association) is with the creation of founded founded IP-I registrations Viom Networks American Tower Having completed GTL American ITIL and Government Bharti Infratel A total of over 440 Deal flow builds 16,000 Corporation integration Infrastructure Tower buys Ascend restructures IPO values the MHz of spectrum is resumes with towers in a enters the Indian with WTTL and buys 17,500 Essar Telecom Telecom the telecom company at auctioned, stimulating acquisition of single year, a market, buys Tata s tower towers from Infrastructure merger industry US$7.6bn (which 3G and later 4G network Viom Networks record for the XCEL Telecom business, Quippo- Aircel for and their and cancels has risen to over overlays, adding by American tower industry, and Transcend WTTL becomes US$1.8bn 4,450 towers 122 MNO US$10bn today) considerable loading to Tower primarily for Infrastructure Viom Networks for US$432mn licenses India s towers Uninor Source: TowerXchange another towerco to manage and run the entity; Quippo bid for and won the rights to merge their 13,000 towers. The Tata-Quippo joint venture portfolio grew to 18,000 towers, and would later become Viom Networks. To further promote tower sharing, TAIPA, the Tower and Infrastructure Providers Association was formed in 2008 to promote tower and energy management used to support cellular communication. TAIPA works through five committees: Energy including renewable sources, Finance, Legal issues, Regulatory and Operations which includes interactions with the telecom service providers, incumbents as well as new operators. TAIPA draws on the expertise of its members to identify key common issues facing towercos, and works with the government to address them. Another independent player in the Indian market, Ascend Telecom, formerly known as Aster Infrastructure, is backed by private equity company New Silk Route and was incorporated in Ascend merged with India Telecom Infra (ITIL), a joint venture between TVS Interconnect Systems (TVSICS) and Infrastructure Leasing and Financing Services (ILFS) in The first international and independent towerco, American Tower Corporation, entered the Indian market in 2009 with the acquisition of XCEL Telecom with its 1,730 towers, and Transcend 106 TowerXchange Asia Dossier TowerXchange Asia Dossier

112 The cautionary tale of GTL Infrastructure GTL Infrastructure are continuing to do a great job managing 27,839 important towers with a tenancy ratio of 1.7; some very talented people work at GTL Infrastructure, and the company continues to play an important role in the Indian telecoms infrastructure ecosystem. But it would be remiss if we were to neglect to share some lessons which GTL and their shareholders have learned the hard way. Founded in 2004, GTL Infrastructure listed on the stock market in 2006, debuting at a share price of Rs 39.95, with a market cap of US3.1bn. In the heyday of the Indian MNO goldrush, GTL s stock was trading at just under Rs 100. The company had raised US$1.8bn to rollout a portfolio of 23,700 towers, which they supplemented with the acquisition of 17,500 Aircel towers, with 21,000 tenants, for a further US$1.8bn. At the time, GTL was the largest independent tower company in the world. However, much of the value in the Aircel deal was derived from future cash flows derived from a planned further 20,000 tenancies. The 2012 MNO market restructuring meant Aircel was unable to honour its commitments. The timing was disastrous for GTL, who had placed orders and paid advances for towers and other equipment, and had to short close their commitment to vendors. The company ran up substantial debts, and the net worth of GTL was fully eroded: you can buy a share today for a couple of rupees. The company still turns over in excess of US$500mn per annum, and has assets worth around US$3bn, but GTL Infrastructure;s market cap is currently around US$80mn. GTL has implemented a turnaround plan. 3G and 4G overlays and bringing welcome loading revenue, and the company has struck an innovative deal with Intelligent Energy to take over the power equipment on their sites Infrastructure with its 327 towers. This was followed by the acquisition of Essar Telecom s 4,450 towers in 2010, which gave American Tower a considerable footprint in India which it has continued to expand through organic and inorganic growth. We ll let former Viom Networks President Umang Das take up the narrative: Another seven or eight operators entered the Indian market in 2008, and several decided that the only way for faster rollout was to launch through independent towercos who would provide them with an existing platform and due focus as customer clients. In particular, Uninor, Telenor s Indian opco, became the only company to proudly proclaim that they didn t invest a dime in building their own towers. (Quippo, later known as Viom Networks) were able to share the roll-out between Uninor and Tata Teleservices and provided them with a pan-india footprint. By sharing with each other, Tata Teleservices and Uninor were able to become all-india operators. Our work with Uninor gave Quippo the opportunity to rollout 16,000 towers in a single year a world record in its own right for the sheer scale of deployment across a massive geography like India. Despite this unprecedented rollout,fierce competition among carriers, often relying on cut-throat offers to attract subscribers, created considerable instability in the Indian market. All of this changed in 2012 when the Indian government restructured the telecoms industry and revisited a large number of licenses that had been previously awarded, resulting in the cancellation of over a hundred operator licenses. The number of licensed mobile network operators in each Circle dropped from an average of eleven to the five that currently hold 85% market share, which had a direct impact on the towercos. While the cancellation of 122 licenses had put the telecom industry in India on a stand-still mode with lot of uncertainty, the tower industry also faced a huge brunt with companies like us facing a setback of close to 15,000 tenancies, Former Viom Networks President Umang Das told TowerXchange. As a company, we decide to sit back and restrategize the way business should be done and resultantly, we managed to record our maiden profit in one of the most difficult periods in the year The loss of all those tenancies helped us focus on cash flow, on reducing opex, and on consolidating our relationships with the incumbent 112 TowerXchange Asia Dossier TowerXchange Asia Dossier

113 market leading operators. Our profit margins have increased year on year ever since. It became critical that we could still make healthy IRR. Our idea is to exceed 20% IRR even with a single tenant on a tower. The 2012 restructuring resulted in an extended hiatus on the M&A activity that took place between 2007 and The tower transaction pipeline was further slowed by repeated spectrum auction delays, but when a total of over 440 MHz of spectrum was finally auctioned between 2014 and 2015, the floodgates were opened on network investment. The new allocation of spectrum also requires the redesign of India s mobile networks. The 1,800 MHz band will require twice as many towers as the 900 MHz band, TAIPA DG TR Dua told TowerXchange. The latest auction saw the shift of some operators from 1,800 to 900, some from 900 to 2,100 and some from 900 to 1,800; this will lead to changing tenancies and incremental changes in the numbers of towers. The new spectrum, network redesign and rollout has re-energised the tower transaction pipeline in India. American Tower landed the first punch with the acquisition of 381 towers from KEC International, but that was the prelude to the main event: the conclusion of a drawn out negotiation to acquire Viom Network, for an enterprise value of US$3.3bn, bringing American Tower s tower count to 58,130, and adding Tata to its customer base. And Lease pricing in India Lease pricing is fairly consistent at around Rs 32,000pcm (approximately US$500) for a single tenant on a ground based tower, with an additional energy charge at a rate depending on grid availability. We designed a Master Service Agreement (MSA) whereby with the addition of a second or third tenant, it would result in a lower charge for everyone, said Bharti Infratel s Gupta. Towercos make a lot more money with a second tenant, but the anchor tenant also gets approximately 20% relief on their lease rate and energy charge. This made it a true win-win situation for both and resulted in a unique situation where a company makes more money when its existing customers start paying less than before. Bharti Infratel and Indus Towers subsequently amended their MSA so that from 1 April 2016 the rate card is increased 2.5% each year, and any new tenants come in at that rate to compensate those who came earlier. This will ensure pricing parity between anchor and co-locating tenants giving American Tower genuine all-india coverage. The next major deal may involve Reliance Communication s sale of Reliance Infratel, which has been on the market since mid A potential deal with Tillman Global Holdings and TPG fell through in early 2016 due to a disagreement over the valuation of the assets. Brookfield Asset Management has subsequently been mentioned as a prospective acquirer, while American Tower are believed to be targeting 100,000 towers in India - at the right price, Reliance Infratel could represent one of the last acquirable portfolios of scale. BSNL is in the process of carving out of its ~65,000 towers into a new towerco subsidiary; the company is evaluating assets but the process could take some time. While substantial improvement capex would doubtless have to be invested into BSNL s towers to make them suitable for co-location, many of BSNL s towers are in uniquely desirable, otherwise inaccessible locations - there is likely to be pent up demand for such sites. With a tenancy ratio of around 1.1, BSNL s towers could see the fastest tenancy ratio growth in India if and when they come to market. There is still a long way to go to provide full telecoms coverage in India; in terms of tenancies 3G is on about 50% of the towers. Over the next months it is anticipated that 3G will replicate 2G s 95% coverage of India s geography. The 4G rollout is already spreading to second tier cities - Bharti Infratel Chairman Akhil Gupta told TowerXchange he felt that the 4G overlay was already 20% complete. 108 TowerXchange Asia Dossier TowerXchange Asia Dossier

114 Growth trajectory for total Indian tower count through FY15 FY16 FY17 FY18 FY19 FY20 Towers Data standalone towers Growth trajectory for site tenancies FY Tower Figures in Thousands ,115 1,237 1,359 1, FY16 FY17 FY18 FY19 FY20 Total sites (thousands) Tenancy ratio Source: Deloitte analysis courtesy of TAIPA The impact of these new rollouts on India s towercos will be tremendous - Deloitte forecast tenancy ratios will rise to almost 2.5 by The effects are already being seen: Indus Towers does a lot of what we call projects : ranging from as little as one antenna being added or removed, to fibre being brought into a site, Indus Towers CEO Bimal Dayal told TowerXchange in an interview which you can read in full in this edition. In 2014, a busy year, we did 133,000 projects. In 2015 we did 216,000 projects including everything from 2G, 3G and 4G to microgrids. Growth is increasing year on year and, with another spectrum auction coming up, more network realignment will be required. The operator market is currently being restructured again in India, although this time it s better news for towercos! The merger of Aircel, MTS and Reliance Communications headlines the current phase of consolidation. To quote Gupta again: it is not healthy for the industry to have say ten operators, including five or six sitting on spectrum without the wherewithal and means to rollout. Consolidation remains a work in progress, but it will leave spectrum in the hands of companies that have the resources for rollouts. In the meantime some Indian towercos are already in the process of evolving from a pure passive infrastructure sharing model to a full multi-service model providing end-to-end support of both passive and active network elements. In the next five years I see the Indian tower industry growing thanks to the ongoing spectrum auctions and new revenue 114 TowerXchange Asia Dossier TowerXchange Asia Dossier

115 streams including white label Wi-Fi and CCTV, said TR Dua. Towercos are looking for new ways to help operators minimise opex and capex and become their key partners for managed services including customised site planning, energy efficiency, access to fibre networks and white label Wi-Fi services for end users. India s towercos have been pioneers of small cell deployment, and are also keen to play a key role in the development of Smart Cities; the first tenders have already taken place. The future certainly looks bright for the Indian tower industry. What can we learn from the success of India s towercos? A year ago Akhil Gupta told TowerXchange We re on a mission of operator disarmament to disarm their manpower and make it economically unfeasible for them to build their own towers. I m pleased to say that today virtually no operator in India builds its own towers. If there s one lesson the Indian tower industry has to share with the rest of the world it is that MNOs should focus on their core business; delivering minutes and megabytes and ensuring a great customer experience. Leave building, maintaining and operating towers to specialist tower companies. Towers should be leased up on a non-discriminate, commercial basis, and the industry needs a regulatory environment that encourages tower companies to invest in ICT infrastructure, to invest in their specialist, highly skilled workforce, and to invest in the environment. In March 2016 Indus Towers converted their 50,000th cell site to run diesel free. Bharti Infratel now has over 31,000 towers that consume less than a litre of diesel a day. Crucially, the progress of energy efficiency initiatives in India is now extending to two and even three tenant towers, which have higher energy requirements. The energy conservation possibilities run into billions of rupees. The roadmap to efficient connectivity which has been drawn in India is an important benchmark for the rest of the world because it proves this can all be done at scale. Another lesson from India: the business model is more robust if a single tenant tower is profitable. As a result of focusing on quality, innovation and cost reduction, towers which once cost US$200,000 to roll out each were brought to down to US$50,000, and today below US$25,000, Umang Das told TowerXchange. India has the lowest cost tower rollouts in the world. Lighter, modular structures do not have to be built with capacity for multiple tenants at the outset, but can readily be upgraded. Of course, whether a single tenant tower can be profitable without India s abundant local steel remains to be seen! India also has some unique lessons to be learned and applied in operator-led tower markets. For example, in the American tower market, discounting lease rates as new tenants are added is considered value destructive. In India, it s been at the heart of the business model since inception. Some stakeholders in India would go further than advocating shared savings, they suggest MNOs create their own towercos: Our model is a good one, and we re proud of Indus Towers; we recommend that MNOs don t make their own towercos, but that they consolidate resources with other MNOs in one portfolio, said Akhil Gupta. It is interesting that China, the only tower market in the world of comparable, indeed greater, scale than India, the MNO-owned China Tower Company has consolidated the resources of the three operators in a single portfolio, and adopted a similar lease pricing model. Comparable business models can also be found in the UK (CTIL and MBNL), Greece (VICTUS Networks), and Poland (NetWorkS!) - it will be interesting to see whether STC and Mobily come up with a comparable joint venture model in Saudi Arabia, or whether ultimately they sell their towers The governance of MNO-owned towercos must be carefully managed to ensure independence. We must give credit to our operator shareholders who brought together their operating teams and, also enabled the Indus Board to be distinct from the people who run operations within each MNO, said Indus Towers CEO Bimal Dayal. These Chinese Walls are important without them, Indus wouldn t have reached where it stands today. 110 TowerXchange Asia Dossier TowerXchange Asia Dossier

116 Evaluating tower transactions and deal flow in India A report from the TowerXchange Meetup Asia 2015 roundtable, hosted by Nomura s Pankaj Suri New Delhi, India Read this article to learn: < How to measure the value of a tower < New benchmarks for the value of an Indian telecom tower < Are there many zero tenant towers in India? < Value drivers for BSNL s towers < Potential tower transaction deal flow in India Five of Asia s leading tower transaction analysts were joined by another dozen interested stakeholders at the India tower valuations and deal flow roundtable held at the 2nd annual TowerXchange Meetup Asia on November in Singapore. The conversation started with a debate about the relative merits of different valuation metrics, before contrasting the valuations of Indian towers with similar assets in international markets, before focusing on recent and future transactions involving American Tower and Viom, Reliance Infratel, and the potential carve out of a towerco bringing to market BSNL s ~65,000 towers. Keywords: American Tower, Ascend Telecom, Asia, Asia Insights, BSNL, Carve Out, DAS, EBITDA, Exit Strategy, IBS, Idea Cellular, India, Insights, KPIs, Lease Rates, Market Forecasts, Market Overview, Nomura, Reliance Infratel, Sale & Leaseback, Single RAN, Southern Asia, Tenancy Ratios, Tillman Group, Tower Vision, Towercos, Valuation, Viom Networks, Vodafone American Tower s acquisition of Viom Networks, a strong portfolio of 42,200 towers with a tenancy ratio of 2.4, at an enterprise value of US$3.23bn, may soon be followed by the acquisition of Reliance Infratel by Tillman Global Holdings and TPG for a reported US$3.3bn. Viom Networks realised a valuation of US$76,540 per tower. While Reliance Infratel s tower count and final valuation remains unclear, the cost per tower will be comparable to the new benchmark established by the AMT-Viom deal. Why have recent Indian tower M&A apparently attracted lower valuations than recent global comparisons, with towers changing hands in Indonesia for US$300,000+ and the recent sale of Verizon towers in the U.S. coming in at over US$400,000 per tower? One explanation is that the replacement cost of an Indian tower (as low as US$25,000) is significantly lower than a tower in, for example, Indonesia at around US$100,000 or in the U.S. where a tower can cost upwards of US$250,000. Similarly, lease revenues in India are lower, typically around US$600pcm compared to approximately US$1,150 in Indonesia, and around US$1,800 in the U.S. The proportion of opex spent on year ground leases (currently around 50%) is increasing in India. Compared to their international counterparts, many Indian towercos have a limited capacity to generate amendment revenue from the exchange of conventional antennae for multi-band antennae. Indian towercos, and their investors and analysts, called for pricing based on radio signals not on numbers of antennae. 116 TowerXchange Asia Dossier TowerXchange Asia Dossier

117 A hypothetical perfect evaluation of a tower portfolio or tower transaction would require an understanding of the structural capacity and demand for capacity of each tower in the portfolio. What excess wind load capacity is available on a given tower? How readily and cost efficiently could the structure be updated? More importantly, is there demand for additional space on the tower? A proactively marketed tower portfolio like Viom should BSNL s portfolio of 65,000 towers come to market, the current tenancy ratio of around 1.1 to 1.2 suggests there could be pent up demand for their many towers in sought-after locations. Towers with low tenancy ratios are more marketable provided they re in right location, concluded one analyst How to measure the value of a towerco or a tower transaction The financial analysts at the India tower valuations and deal flow roundtable used a variety of tools to value towercos and to evaluate tower transactions. The oft quoted, oft critiqued cost per tower, or valuation per tower, was recognised as a flawed metric given the dynamic relationship between the price paid and rental fees: some sellers seek to maximise revenue from the sale, others seek to minimise opex. Conventional financial performance valuations, such as P/E (price to earnings ratio), leverage ratios and EBITDA margins; or financial performance valuations adapted to basic tower industry metrics, such as EBITDA per tower or EV (Enterprise Value) per tower, were felt to be more informative. Tenancy ratios remain a critical and relatively stable performance indicator, although analysts warned that different towercos have different definitions of a tenancy, particularly affected by their ability to generate amendment revenue (revenues from existing tenants adding supplementary technologies). Multi technology BTS and multiband antennas make it difficult to understand whether the tenant concerned is running 2G, 3G or 4G and, while contractual language in markets like the U.S. often defines the cost of amendments, in markets like India it has proved more difficult to monetise an existing MNO tenant running a supplementary technology Networks with India s highest tenancy ratio at 2.4 might have already leased up space to the most obvious tenants, whereas should BSNL s portfolio of 65,000 towers come to market, the current tenancy ratio of around 1.1 to 1.2 suggests there could be pent up demand for their many towers in soughtafter locations. Towers with low tenancy ratios are more marketable provided they re in right location, concluded one analyst. Data growth in India is currently focused on urban areas, with a second stage to come in semi-urban and suburban India. With currently around 800,000 BTS and 400,000 towers in India, and a BTS needed approximately every 500m in a high data usage environment, some analysts have suggested India needs 50% more BTSs in the coming years. Many of those BTSs need to be smaller. The height and weight of towers in India is coming down, making structures easier to relocate. The spectrum now being acquired demands antenna located lower on structures, shifting market dynamics from a coverage to a capacity play. Analysts estimated 30% of India s 400,000 new BTS would be IBS and idas, 35% being tenancies on existing towers, 35% requiring new towers. Deal flow in India Deal flow returned to the Indian tower market with 112 TowerXchange Asia Dossier TowerXchange Asia Dossier

118 India has few remaining zero tenant towers With the restructuring of the Indian MNO market in 2012, and the associated cancellation of 122 MNO licenses, a significant number of telecom towers were left with no tenants. However, according to analysts at the recent roundtable, as few as 1% of India s 400,000 towers, and a maximum of 4%, currently have no tenants. Most zero tenant towers have now been leased up, dismantled or relocated a vengeance in H With the acquisition of Viom Networks by American Tower announced but not yet closed, and with Tillman and TPG having entered exclusive, non-binding negotiations to acquire Reliance Infratel, two of India s largest tower portfolios may soon be off the table. Ascend Telecom, the last of India s big little towercos, with 4,843 towers and a tenancy ratio of 1.8, is being restructured with an investment by ROI Acquisition Corp creating an enterprise value of US$308mn (10.8x projected 2016 EBITDA or US$63,597 per tower). What s left? GTL has sold many assets to alleviate debts, but retains almost 30,000 towers a potential acquisition target for anyone with appetite for a turnaround play. Tower Vision and their 8,600 towers have been rumored to be on the block in the past. Tower transaction deal flow in India, or in any market, is ultimately driven by MNOs appetite to monetise their towers. This in turn is a function of pressure to restructure balance sheets from investors, from bond rating agencies, and from the debt market. With substantial capital being spent on spectrum and 4G rollout in India, many MNOs are increasingly inclined toward a view that they would rather have cash in hand to focus on their core business, rather than the steady flow of cash that comes from retaining their towers or a captive towerco. Professionalising towers frees up the towerco to strengthen and increase the shareability of towers, thus maximising their value. Tens of thousands of towers remain operator captive in India: Vodafone are believed to have around 10,000 outside of Indus Towers, while Idea Cellular has a captive portfolio of 8,600 towers with a tenancy ratio over 1.6 which could be monetised. However, analysts were most excited about the prospects of BSNL s ~65,000 towers coming to market. With many of their POSs on high quality towers in fantastic locations, and with very little lease up to date, the Telecom Ministry has increased pressure on BSNL to hive off the towers, perhaps as a 100%-owned subsidiary, perhaps with a tender for a third party towerco to market the towers and manage operations. However, the cancelled sale of Mitratel in Indonesia (initially structured as an equity swap with Tower Bersama) represents a cautionary tale when it comes to monetising public assets: political risk is substantial with these kinds of transactions. As a result, the prevailing opinion was that a potential phase of third party management of the BSNL towers might be brief, with a spin off and IPO the most likely outcome. Participants all agreed that the scale and attractiveness of locations in the prospective BSNL towerco would make it a formidible competitor for new tenants with the likes of Indus, Bharti Infratel, the new owners of Reliance Infratel and the combined ATC India + Viom Networks. Conclusions There is no standard metric for the evaluation of towers and tower transactions, but the most widely quoted metric, cost per tower, is fundamentally flawed. When comparing Indian towers and Indian tower transactions with international deals, one must be cognizant of the wide variation in cost structures and lease prices. With deal flow returning to the Indian market, with almost 100,000 towers worth almost US$7bn in the process of changing hands, attention remains focused on the world s second largest tower market, with analyst interest particularly piqued by the future of BSNL s highly desirable ~65,000 towers 118 TowerXchange Asia Dossier TowerXchange Asia Dossier

119 TowerXchange s history of the Indonesian tower industry An examination of the Indonesian tower market and how the country s towercos enabled telecoms growth in one of Asia s most populous countries By Ian Ferguson, Head of TowerXchange Asia Read this article to learn: < The origins of the Indonesian tower industry and and early deals < An overview of the main towercos in the Indonesian market < Financial overview of the Indonesian tower industry < The development of small cells and infill sites in urban centres Indonesia s tower industry is one of the world s most mature and strongest, combining efficient organic growth, strong MNO partnerships yielding substantial sale and leasebacks, and towerco-on-towerco consolidation. Towercos own almost two thirds of Indonesia s towers, and other than China, there are no other tower markets that build 3,000 to 5,000 towers, rooftops and infill sites per year while delivering solid tenancy ratio and TCF (tower cash flow) growth. Keywords: 3G, 4G, Active Infrasharing, Asia, Asia Research, Balitower, BIT Teknologi Nusantara, DAS, Editorial, Fibre, IBS, Indonesia, Indosat, Infrastructure Sharing, KIN, Market Overview, Mitratel, Persadasokka Tama, Protelindo, RANsharing, Research, Rooftops, STP, Sinar Mas Group, Small Cells, Smartfren, Southeast Asia, Telkom, Tower Bersama, TowerXchange Research, Towercos, Valuation, XL Axiata, iforte The Indonesian tower market has come a long way; in the early 2000s, Indonesia was overpopulated with MNOs sub-optimally deploying capex to build parallel infrastructure. However, all of that was about to change. A 2006 regulatory policy change enforced tower sharing and laid the foundation for the Indonesian tower industry. Now Indonesia is the world s #4 mobile market, with a thriving tower industry. Indonesian towercos own 64% of the country s 85,537 towers, which serve a more sustainably structured operator market led by four tier one MNOs and three further challengers. While the mobile market in Indonesia has experienced tremendous growth for several years, it is becoming more and more competitive and margins have been shrinking. MNOs have been bracing for change as growth rates have levelled off and tariff wars have intensified. The market is still dominated by Telkomsel with a 45% market share, but the landscape has changed with the addition of a number of newer operators backed by foreign partners: Indosat, XL Axiata, and Hutchison 3G. The market is rounded out by several other local players: Internux, Sampoerna Telekomunikasi and Smartfren, making a total of seven MNOs. Telkomsel was the first to launch 4G in December 2014, followed shortly by XL Axiata s launch in three cities later the same month. Indosat received a 4G concession in the 800MHz, 900MHz and 1800MHz bands in early Indonesia s GDP per capita has surpassed the US$3,000 threshold, indicating the emergence of a fast-growing middle class. A healthy 60% of GDP 114 TowerXchange Asia Dossier TowerXchange Asia Dossier

120 Tracking the inorganic and organic growth of selected Indonesian towercos 60,000 50,000 40,000 30,000 20,000 10, Protelindo Tower Bersama STP IBS Tower Mitratel* Balitower Persadasokka Tama Centratama Menara** Subtotal Change YTD Protelindo Tower Bersama STP IBS Tower Mitratel Balitower Persadasokka Tama Centratama Menara (Formerly Retower) ,363 4,868 1,428 1,989 2, ,661 6, ,460 7,055 2,246 1,992 3, ,834 5, ,766 8,866 2,798 1,992 4, ,369 9,854 Notes: Protelindo 2016 figure is inclusive of recently acquired towers from XL * Mitratel 2016 figure is an estimate ** Centratama Menara (Formerly Retower) ,595 10,825 6,651 2,114 5, ,223 4, ,237 11,389 6,674 2,638 6,792 2, ,604 6, YTD 15,167 11,553 6,938 2,638 8,000 4,510 1, ,537 Source: TowerXchange Research, Company Reports goes on local consumption Indonesia has relatively little dependence on imports. During the 2008 global financial crisis, Indonesia was one of a handful of countries whose GDP growth remained positive. Indonesia is home to very diverse telecom infrastructure requirements, comprising dense metropolitan environments and very remote rural areas. There is a population of 28 million in the Greater Jakarta metropolitan area alone at peak, and mobile data demand is accelerating, which in turn is fuelling demand for infill capacity sites. Indonesia has a young population that moved straight to mobile and has embraced data services; mobile broadband penetration is at 37% and climbing, and handheld devices are the preferred method of accessing the Internet. Indonesia is still predominantly a 2.5G market, and leapfrogging from there to 4G is a huge task that will require substantial investment in infrastructure and equipment. Indonesia s main players Protelindo is the largest towerco in Indonesia where they own over 15,000 towers after the recent acquisition of 2,500 towers from XL Axiata in Q Protelindo had a big impact on the market with its landmark sale and leaseback of towers from Hutchison. Over the last two years, Protelindo has significantly improved its scale and credit profile. Its leverage has improved through EBITDA growth, supported by a significant increase in the number of tenancies on its towers. 120 TowerXchange Asia Dossier TowerXchange Asia Dossier

121 Tower deals in Indonesia Year Seller XL Axiata XL Axiata Hutchison PT Central Investindo Indosat Infratel Hutchison Bakrie Hutchison Buyer Protelindo STP Protelindo Protelindo Tower Bersama Tower Bersama Protelindo STP Protelindo Protelindo has also begun to expand its microcell assets and fibre footprint to support the continued organic and inorganic growth of its portfolio. The company acquired iforte in June 2015 along with its 450 microcell towers, seven hotel BTS and 700km of fibre with over 180 PoPs in the city centre and business districts in Jakarta and Surabaya. Based in Indonesia, the Tower Bersama Group comprises PT Tower Bersama, PT United Towerindo, PT Telenet Internusa, PT Batavia Towerindo, PT Bali Telekom, PT Prima Media Selaras and PT Triaka Bersama, all operated seamlessly under one management team. The group s infrastructure extends to Java, Bali, Sumatra and Batam and is currently being expanded into Kalimantan and Sulawesi. Tower Bersama has steadily grown its tower portfolio with acquisitions of smaller towercos, US$/Tower $100k $131.4k N/A N/A $207.6k N/A $112k $64.4k $135.4k Towers/Sites 2, Source: TowerXchange Value US$ $250mn $460mn N/A N/A $519mn N/A $165.9mn $136mn $500mn towers purchased from operators, and tower builds, and was the first towerco to achieve scale with its early acquisition of passive infrastructure assets from Telenet Internusa, Bali Telekom, Mobile-8, Prima Media Selaras and SKP. A share-swap to gain control of Telkom subsidiary Mitratel was announced, but was overruled by the government in Q STP is the third largest tower company of scale in Indonesia, owning and operating 6,938 telecommunication sites with a tower tenancy ratio of approximately 1.7x. STP has seen steady growth thanks to the acquisition of existing portfolios from local operators such as Axis, Bakrie and Hutchison Telecom, and also acquired tower portfolios from a few small tower companies over the past years: Nurama Tower (176 towers, 182 shelters and 100km of fibre), HCPT (200 towers) and ISP Group (493 towers and 287 shelters). STP has also started building towers as of December 2012 creating organic growth in addition to its inorganic growth; their revenue and EBITDA are growing at a CAGR of around 40%, and EBITDA margins remain over 80%. Founded in 1995, PT. Dayamitra Telecommunications (Mitratel) is the fourth largest towerco in Indonesia. Mitratel is a wholly-owned subsidiary of PT. Telekomunikasi Indonesia, Tbk (Telkom). PT Komet Infra Nusantara (KIN) is a towerco renowned for their entrepreneurial flair. The company started operating in Indonesia in 1995 and was created on the basis of the simple notion of introducing infrastructure sharing in a relatively virgin market by its (former) CEO, David Burke, who was then employed by Telkom (David was also credited as being one of the architects of Mitratel). David was one of the few expats to work for the state-owned company, to whom the whole concept of tower sharing was very new. To date, KIN enjoys a portfolio of 1,000 towers built thanks to both organic and inorganic growth and is run by CEO and COO, Mohamad Iwan. PT Inti Bangun Sejahtera Tbk (IBS) is one of Indonesia s big four publicly traded independent tower companies, founded in 2006 and listed in August IBS is a fully-owned subsidiary of the Sinar Mas Group, which also includes MNO Smartfren among its telecoms assets. Starting as an 116 TowerXchange Asia Dossier TowerXchange Asia Dossier

122 in-building system solution provider, IBS has since focussed its resources on passive infrastructure, earning it a significant presence in the market. Founded in Bali in 2006, and a relative newcomer to the Jakarta telecoms market, Balitower has been making waves with its unique business model for infrastructure sharing. After its role in the decommissioning of parallel infrastructure in Bali, Balitower set its sights on Jakarta, entering this market in 2015, and rolling out a large number of new light towers and poles as part of a deal with the local government to install CCTV on its towers and poles in exchange for access to land. Established in 2006, PT. Persada Sokka Tama started off constructing BTS towers before becoming a tower provider in 2008 and providing co-locations for telecoms service providers in Indonesia. The company has over 1,000 towers mostly concentrated in Java and Nusa Tenggara. Estimated tower count for Indonesia 11,553 8,000 15,167 8,500 4,000 6,938 2,638 1,000 1, ,000 4,510 3, Towerco-owned Mitratel Tower Bersama Protelindo STP IBS Tower KIN Persadasokka Tama Centratama Menara Balitower Gihon Others Operator-captive Telkom + Telkomsel XL Indosat Growth Story for Indonesia s big four: tenancy ratios 2.0 Source: TowerXchange Tenancy ratio: Source: Quarterly and annual company reports, TowerXchange research Financial overview of the Indonesian tower industry 1.5 At the outset, the Indonesian tower industry looked closely at the Indian model and used it as a benchmark. However, the two countries ended up taking very different paths with Indonesia being able to allocate risks and rewards more evenly between towercos and MNOs and more closely replicating the North American tower industry model. And the profitability of the Indonesian tower industry is one very obvious measure of its success Protelindo Tower Bersama STP IBS Tower TowerXchange Asia Dossier TowerXchange Asia Dossier

123 New Street Research single tower model details excluding pass-through expenses). New Street Research estimated prevailing lease rates in Indonesia to be around US$1,200pcm at the end of Tower Bersama and Mitratel Indonesian towercos, particularly Protelindo, Tower Bersama and STP, quickly drew the attention of the investment community. Debt was made available and capital flowed, enabling further organic and inorganic growth. Successful bond issuances and IPOs followed. There are five towercos of scale in Indonesia and over forty mom and pop shops and middle market towercos in Indonesia, ranging from local community managed assets to substantial regional entities, owning anything from a handful to 1,000 towers each. Source: New Street Research, Company data 2015 In a recent TowerXchange article New Street Research referred to a Single Tower Model the research firm built to compare colocation growth, economics, and returns of towers in different markets around the globe. The model analysed base station density, smartphone penetration, leasing rates, escalators, pass-through expenses, construction costs and regulatory risk, and they concluded that Indonesia was the most attractive tower market for investors, and generated one of the highest day one cash flow yields (at 15%, One of the largest proposed tower deals in the history of the Indonesian tower market was the acquisition of Mitratel from Telkom by Tower Bersama. First announced in late 2014, the initial phase of the swap deal was to see TBIG receive 49% of the shares in Mitratel in return for 290mn TBIG shares (approximately a 5.7% stake). No cash was to change hands in the first phase of the deal, although TBIG would assume ~US$234mn of debt. The second phase could follow anytime in the following two years, during which time PT Telkom Indonesia had the right to swap its remaining 51% stake in Mitratel for an additional 473mn TBIG shares a further 8%. This would value the deal at the equivalent of around US$904mn, including ~US$142.5mn in cash as a deferred consideration if certain performance milestones were achieved. In the end this deal was cancelled in mid-2015 as it failed to gain the approval of the Indonesian government, and to date the future of Mitratel and its ~8,000 towers remains uncertain. Continuing growth and acquisitions The ebb and flow of sale and leaseback deals since 2008 has led to Tower Bersama, Protelindo and STP deploying around US$2bn to acquire 12,220 towers from Indonesia s operators, and they ve built 118 TowerXchange Asia Dossier TowerXchange Asia Dossier

124 New Street Research global market ranking by tower returns %, IRR less WACC Axiata would be the creation of a joint venture towerco to pool and optimise their tower assets. At this stage, however, these planned partnerships have been limited by the government, and it appears that they won t advance anytime soon, raising concerns about the level of competition in the MNO market, and rumours of MNO consolidation and sales are starting to emerge. a similar number of build-to-suit and build-to-fill sites over that period. For Indonesia s Big Three towercos, the prized assets are Telkom/Telkomsel s 17,615 remaining operator-captive towers, the most pervasive network in the country, of which the operator has admitted as many as 13,000 could be sold, although they have no financial imperative to divest. With the cancellation of the Mitratel deal, it is unclear whether these assets can still be acquired or whether Mitratel is destined to continue as a captive towerco, in which case it could be a vehicle for the management of the aforementioned 13,000 Telkom towers. Source: New Street Research, Company data 2015 In addition to the active tower market, operators are also continuing to partner with each other to remain competitive, especially the smaller market players. Indosat and XL Axiata have been engaged in RANsharing for some time, and this has also been extended to include co-operation on the rollout of some LTE sites. Partnerships like this can greatly reduce opex and help smaller operators to remain competitive, and keep shareholders happy. The model is so successful that Indosat and XL Axiata have proposed creating a separate entity to manage their networks outside of Java. Another possible step in terms of partnership for Indosat and XL There is significant cell site densification occurring in Indonesia driven by consumer demand for mobile data services, and the tower industry is starting to grasp the heterogeneous networks ( HetNet ) opportunity. Rooftop installations make up a significant chunk of the assets of Indonesia s Big 3 towercos, namely Protelindo, Tower Bersama and STP. The other major factor in the future of Indonesia will be diversification of product offerings to adapt to LTE. STP and Protelindo appear to be on the front foot in this regard with their diversification into fibre, microcells and DAS. As of September 2015, STP had a 2,454km fibre network and 384 microcell poles, thanks to their purchase of BIT Teknologi Nusantara, and their earlier acquisition in 2012 of PT Platinum Teknologi. Protelindo recently acquired iforte and their 450 micro cell towers, seven Hotel BTS and 700km of fibre. Meanwhile, Balitower have installed fibre and added over 2,000 micropoles in Jakarta. Conclusion The Indonesian tower market is elegant and investible because of its simplicity. A deep culture of 124 TowerXchange Asia Dossier TowerXchange Asia Dossier

125 infrastructure sharing has been rapidly developed: Indonesia s towercos build 3,000-5,000 towers, rooftops and infill sites per year, tenancy ratio growth compares favorably to many other global tower markets, with around 0.13 tenants added per tower per year. Indonesia may be the most comparable tower market in the world to the USA, with MSAs and economics closely resembling the world s oldest independent tower market, perhaps not surprising given the prominent role played by one of the US tower market s forefathers, Michael Gearon, in the creation of Protelindo. Indonesia s towercos are not encumbered by significant engagement in energy logistics - power is a pass through on almost all their sites, yet many are expanding their business model by investing in fibre and small cells. TowerXchange are a little surprised by the relatively low valuations ascribed to Indonesian towercos, although STP and Protelindo have such a low float as to make poor benchmarks. Tower Bersama s share price reached such an attractive point that the company recently instigated a substantial share buyback programme. TowerXchange think there is still value to be found in the simple, stable, mature Indonesian tower market, and there are many best practices to learn from the Indonesian market leaders attending the TowerXchange Meetup Asia in Singapore on December 13-14! Visit the TowerXchange.com website < Access to the Internet of People in the global tower industry a trust web of over 35,000 decision makers in telecom and broadcast infrastructure < Independent analysis and commentaries on the prospects for tower transactions in selected countries < The latest industry emerging market tower industry news BEFORE it s published in the TowerXchange Journal, accessible 24/7 from desktop, tablet or mobile < A comprehensive archive of TowerXchange s interviews and analyses, searchable by topic, country, company or grouped by category (e.g. interviews or how to guides) < The latest news and registration information about TowerXchange s Meetups. Tower Xchange 120 TowerXchange Asia Dossier TowerXchange Asia Dossier

126 TowerXchange market study: Laos 4G is being rolled out and more than one MNO has incentive to monetise towers, but government involvement and slow growth disincentivise investment By Kieron Osmotherly, CEO, TowerXchange Read this article to learn: < The mobile market in Laos and impact of government stakeholdings < The prospects for tower divestitures in Laos < The culture of infrastructure sharing in Laos < Current status of 4G rollout < Power generation and cell site energy in Laos The mountainous, landlocked country of Laos is has the lowest population density in the ASEAN region, with a population of just under 7mn spread across 238,800 sq km. There are just under 7,500 towers in the market, all remaining MNO-captive. Four MNOs, three of which are majority Stateowned, participate in a relatively slow growing market. However, 4G deployment has begun, and 3G coverage is already widespread. With possible windows of opportunity to invest in the #2, #3 or #4 operator s towers, its time for TowerXchange to examine the tower market in Laos. Keywords: 4G, ARPU, Asia, Asia Research, Batteries, Beeline, Country Risk, Decommissioning, ETL, Infrastructure Sharing, Investment, LTC, Laos, Market Overview, Masts & Towers, On-Grid, QoS, Regulation, Research, Skilled Workforces, Tower Count, TowerXchange Research, TowerXchange Research Asia, Unitel, Viettel, VimpelCom Mobile market in Laos The mobile market growth in Laos had been slowing, but SIM penetration climbed 11.3% between Q and Q to 78%, according to GSMA Intelligence. The two clear market leaders are LTC, 51% State owned, which has money from Shenington Investments, and Unitel, also 51% State owned, which has money from Viettel. Unitel invested heavily in tower building and has by far the country s largest network. ETL is controlled by Ministry of Defence and have been in financial difficulties for some time, with the government increasingly seeking to arrest the bleed of money. Interest from China in acquiring ETL reportedly floundered on concerns about payroll and pensions. Subsequent management changes and allocation of spectrum for 4G has put ETL on a path toward IPO. LTC and Unitel are already listed. Number four MNO Beeline, from which VimpelCom have been seeking to exit, recently successfully arrested a decline in subscriber base. Having sold their opcos in Cambodia and Vietnam, Laos remains an anomaly on the VimpelCom balance sheet. The Russian parent company has been through at least three rounds of trying to divest Beeline Laos, but no party has so far met their valuation. Beeline is cash flow positive, so the company is under no pressure to accept a low bid. A fifth MNO Sky Telecom, also owned by the military, own spectrum but don t have a network. 126 TowerXchange Asia Dossier TowerXchange Asia Dossier

127 With a population of around 7mn and GDP per capita of US$5,400 (Source: CIA Factbook, 2015), by most metrics Laos should be a three MNO market, and a merger between Beeline and Unitel or ETL might be one way of creating a more rational market. Prospects for tower divestiture Unitel don t need cash with Viettel behind them, and their 4,000 towers give them a genuine coverage differentiator. LTC seem similarly disinclined to monetise towers, although rumours that Shenington Investments may be seeking an exit could create a window of opportunity. ETL s IPO could slip further in the future, and the company is heavily indebted, so may be receptive to an offer to buy their towers. An approach may be best directed to the government, with the incentive that the cash from monetising towers could be reinvested in upgrading networks. Beeline currently has 711 sites, 423 sites for which Beeline holds the lease, plus 288 sites co-located on shared towers. At the end of 2014 Beeline owned 444 sites, but they removed BTSs from 21 non revenue generating tower sites in 2015, as the operator only had a handful of towers in these areas so not enough coverage to generate customer demand. VimpelCom is in the process of monetising towers worldwide, but may prefer a full sale of their Beeline opco in Laos. Much depends on who the new owners of Beeline might be moentising their towers could provide a nice cash injection to enable a 4G How many towers are there in Laos and who owns them? 1, ,000 1,950 launch, and the Beeline towers are generally in good condition. Infrastructure sharing to date There are currently no independent towercos in Laos, although TowerXchange are tracking at least one interested party. There are third party TV and radio towers, and the Ministry of Defence own a few, but most tower structures remain operator-captive. There is quite an active market for bi-lateral infrastructure sharing swaps with no money changing hands. One MNO reportedly tried to instigate a lease price of US$150 per month, but other operators were reluctant to pay. LTC share quite extensively, ETL and Unitel also share. As the smallest network, 40% of Beeline s base stations are co-located on third party towers. Coverage and profitability Laotian MNOs make most of their margin in Vientiane (the commercial capital with a population of 760,000), Savannakhet (population around 120,000, the second city and manufacturing hub), Pakse (population 88,000, where there are tea and coffee plantations), and in Luang Probang in the Northeast (population 55,000, a cultural and tourist centre). It is difficult to find enough ARPU to provide economic coverage outside these areas. 4G LTC Unitel ETL Beeline (VimpelCom) Source: TowerXchange LTC has launched 4G, primarily in the largest city Vientiane, while Unitel also rolled out 4G in Savannakhet. ETL has a loan to roll out 4G, while Beeline seem inclined to focus on provision of high quality 3G in Vientiane. With ARPU is just under 122 TowerXchange Asia Dossier TowerXchange Asia Dossier

128 US$5, and not much disposable income, there is little demand for premium 4G handsets, so the business case to invest US$100mns in 4G is weak for the challenger MNO. Regulatory environment There is a risk of conflicts of interest given government majority stakes in three MNOs: ETL are 100% State owned, Unitel and LTC are 51% Stateowned the government even owns 22% of Beeline. This was exemplified in 2011 when a price floor was introduced in response to a disruptive new market entrant (Millicom, whose majority stake was later acquired by VimpelCom) undercutting the tariffs of government owned incumbents. After a stand-off on pricing and promotions, Beeline s interconnect with the other three MNOs was denied for several months, with the government supporting the incumbents. The so-called Beeline Crisis ( ) slowed mobile growth and continues to cast a shadow over the investibility of the Laotian telecom market. must be done in-house. There are few proven infrastructure companies to provide support. Similarly it can be challenging to motivate and retain staff; one MNO reported staff turnover as high as 30% annually, and head hunting can be a problem. There is a shortage of experienced, well educated prospective employees, and salary expectations can be high. The opening of the ASEAN employment market should help, making it easier for foreign workers to take jobs in Laos. Chinese investment Chinese investment in Laotian infrastructure is widespread. Laos is known as the battery of Asia, and there are hundreds of hydropower schemes planned, many Chinese backed, with some increase in Thai investment. Huawei is by far the biggest telecom investor in Laos, with a substantial team on the ground supported by good warehouse infrastructure. be poor in Laos. Most network investments are in the upgrading of sites for 4G; there are very few new sites in Laos, and most of those are urban infill concrete poles. Beeline built just six sites last year, less than a fifth of the total they were building back in What do towers cost in Laos? Cost per site depends on what you are building of course, but for example a 60m guyed mast tower with capacity for two operators and four microwave dishes would cost approximately US$24,000, including foundations, tower, and electrical equipment. O&M works out at around US$900 per site per year, inclusive of the maintenance of both passive and active equipment. Given the deficiency of high-rise structures in Laos, it is perhaps unsurprising that less than 5% of urban sites are rooftops. Most sites are guyed mast towers, a few are free standing. Access to the Ministry and other government stakeholders in Laos is reportedly good, and there have been signals of intent to take a more liberal approach to the regulation of telecommunications. Ease of doing business Doing business in Laos is difficult. Laotians are a friendly, incredibly laid back people, but projects require close supervision to keep on time. In a telecoms context this means it can be difficult to get high quality I&C work done on time, and much Power Laos has a surplus of power generation which they export, so grid availability is good in the country, and new sites can be connected to the grid quickly and efficiently. There are still unannounced outages, so backbone sites have DG and battery backup: 4-6 hours battery backup is standard. Network investments Network performance is generally acknowledged to Conclusions on the investibility of Laotian towers While there may be an opportunity for a tower company to invest in Laos, they would have to be comfortable with the level of government involvement in telecoms in the country. The deficiency of local steel may also be an issue, with towers having to be imported from Vietnam or China. China may indeed be the most likely source of investment in Laotian towers, with the country being eligible for One Belt, One Road funding 128 TowerXchange Asia Dossier TowerXchange Asia Dossier

129 The unique structure of the Malaysian tower market 4G rollout accelerates migration to shared infrastructure in Malaysia Kuala Lumpur, Malaysia Read this article to learn: 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, one stop agencies to permit and build towers in their respective States. Fast forward to 2014, after the consolidation of Malaysia s MNOs from five the three, and Malaysia was host to the first carve out within Axiata s edotco empire. edotco now operates 3,600 of Malaysia s 22,000 towers, while the State-backed towercos operate a further 3,200. Drawing on insights gleaned from the Malaysia roundtable at the TowerXchange Meetup Asia 2015, let s take a closer look at the unique structure of Malaysia s tower and mobile market. Keywords: 4G, Active Infrasharing, Asia, Asia Space, Axiata, Build-to-Suit, Carve Out, Celcom, Common Tower, DAS, Decommissioning, Densification, Desabina, DiGi, D harmoni, edotco, Hybrid Power, Infra Quest, Infrastructure Sharing, KJS, LTE, Leasing & Permitting, Lithium, Malaysia, Market Overview, Maxis, Melaka ICT, Network Rollout, OCK, Off-Grid, PDC Telecommunications, Pass-Through, Perak Integrated Networks, Perlis Comm, Premium Radius, RMS, Rangkaian Minang, Sacofa, Solar, Special Structures, State-Backed Towerco, Telekom Malaysia, The Naza Group, Touch Matrix, Towercos, U Mobile, YTL, Yikedbina < Who owns the towers in Malaysia s competitive, mature mobile market? < How many new towers are being built in Malaysia and by whom? < The increasing role of special structures, DAS and BTS hotels in fulfilling demand for urban infill sites < Are Malaysia s State-backed towercos acquirable? < The status of fibre and LTE rollouts and forecast demand for new towers needed for 4G Malaysia s mobile market Malaysia is home to a mature, fiercely competitive mobile market led by listed entities Celcom, Maxis and DiGi each with between 11.5 and 12.5mn subscribers, with fourth operator U Mobile claiming around 4mn subscribers. Eight LTE operators have been newly licensed. Among a population of 30.49mn, mobile penetration declined to 144.8% in Q from 145.8% a year earlier (Source: MCMC Pocket Book of Statistics), indicating the maturity of the mobile market. The battle among Malaysia s operators is now concentrated on capturing 4G customers. Malaysia s tower market There are around 22,000 towers now in Malaysia, representing almost exactly 2,000 mobile subscribers per tower. Around 1,000 new towers were erected in Malaysia in 2015, where a new ground based tower (GBT) can cost in excess of RM300,000 (US$69,000). All of Celcom s new build went through edotco, while Maxis and DiGi continued to build their own towers in 2015 that may change in the latter s case in Much of Malaysia s growth has come not from new GBTs but from special structures like lamp posts, billboards, flagpoles, clock towers, minarets and water tanks which are easier to permit and harmonise with the skyline in dense urban areas where there is substantial demand for infill sites. The problem with permitting is particularly acute in 124 TowerXchange Asia Dossier TowerXchange Asia Dossier

130 Figure one: Malaysia s mature, competitive mobile market: subscriber numbers (in 000s) 15,000 14,000 13,000 12,000 11,000 10,000 Q314 Q414 Malaysia s administrative capital Putrajaya, where it is reportedly almost impossible to permit a macro tower. In response to such challenges, edotco are soon to erect Asia s first space-saving carbon fibre tower. There are a substantial number of multi-tenant DAS Celcom Maxis DiGi Q115 Q215 Q315 Note: Other operators, including U Mobile with around 4mn, account for a further ~7mn subscribers. Source: MNO quarterly reports, MCMC Figure two: Estimated tower counts for Malaysia edotco DiGi Maxis Telekom Malaysia State backed towercos YTL Unaccounted for 1,000 2,000 1,000 3,600 3,400 3,800 3,200 5,000 Source: TowerXchange, Q ,000 3,000 4,000 5,000 solutions in Malaysia, including several hundred in edotco s portfolio. edotco is also working on the first of several BTS hotels for the Malaysian market, wherein each site in a cluster would be equipped with a neutral antenna, with MNOs equipment hosted in a centralised equipment room. An estimated 30-40% of Malaysia s GBTs are in overlapping locations, but to date we ve seen relatively little decommissioning. DiGi and Maxis each have a similar sized tower network (an estimated 3,400 and 3,800 respectively), while Telekom Malaysia retained around 1,000 towers. There is substantial bi-lateral sharing of MNO-captive towers in Malaysia, although there are less tenants on the 5,000 towers owned by YTL, a Malaysian integrated infrastructure developer with investments in communications, utilities, construction, property, hospitality and IT. U Mobile owns a negligible number of towers, and has Figure three: Estimated tower counts for Malaysia s State-backed and other independent towercos Sacofa 765 Touch Matrix 460 D harmoni 346 KJS 309 Common Tower 260 Infra Quest 201 Yikedbina 200 Asia Space 154 Perak Integrated Networks 150 Desabina 118 Melaka ICT 95 Rangkaian Minang 90 PDC Telecommunications 43 Perlis Comm 23 Source: TowerXchange, Q TowerXchange Asia Dossier TowerXchange Asia Dossier

131 leveraged co-location to accelerate time to market. Towercos own 31% of Malaysia s towers, led by edotco s 3,600 towers carved out of Celcom / Axiata. edotco aims to increase their Malaysian tower count by around 1,000 in A further 3,200 towers are owned by 14 different State-backed and other independent towercos. State backed towercos have a monopoly on new builds in four or five States as One Stop Agencies (they do the permitting as well as the building), but edotco has been able to negotiate rights to build in most other States. YTL acquired KJS, a state-backed towerco which then owned 309 towers, for US$15mn in Multiple parties have appetite to acquire further State backed towercos, although it may not be an easy process given political and personal vested interests. Another potential stakeholder in Malaysian towers is OCK, a leading turnkey service provider operating across Asia with a strong presence in Malaysia, where they received a Network Facilities Provider license in In December 2014 OCK incorporated a wholly owned subsidiary in Singapore, OCK Telco Infra Pte. Ltd. to act as their platform in invest in the tower leasing business. OCK has since secured a contract to build 900 towers for Telenor Myanmar. While the company has unsuccessfully bid to build and operate some of the MCMC s rural towers, OCK do not appear to have yet commenced operation as a towerco in Malaysia. The Naza Group, a diversified engineering business, also has a registered Network Facilities Provider known as Premium Radius, which is Kedah state s exclusive partner for telecom structures. Premium Radius claims to have an order book for 235 telestructures and an exclusive contract for microcell coverage with Kuala Lumpur City Hall. Universal Service Provision fund deploying rural towers As in many telecom markets, Malaysia s MNOs are required to contribute 6% of their earnings toward a Universal Service Provision Fund. This fund has been active deploying RM3bn (US$700mn) to commission rural towers based on a RAN sharing business model. According to Malaysian publication The Star, 699 towers had been built by 2013 by the so-called Time 3 Phase 3 (T3E) project, while a tender for a further 400 towers was released in April 2014, with a further 1,000 being commissioned in Progress of LTE and fibre rollouts Around 3,000-4,000 LTE nodes have been deployed by each of Malaysia s three leading MNOs, totalling around 13,000 LTE nodes to date. As usual, these are concentrated mostly in the major cities, but rollout is moving to secondary cities and is primarily using existing sites. At the Malaysia roundtable at the TowerXchange Meetup Asia 2015, it was estimated than an additional 8,000 towers could be needed for 4G. However with local authorities reluctant to permit macro sites, most of that demand will be met by microcells, lamp-poles, DAS and IBS. Malaysia s eight newly licensed LTE operators are subject to license conditions requiring 10% coverage within the first year, and few have the time or capital to build their own towers. Some of their demand for points of service will be fulfilled by colocation, some by active infrastructure sharing. Fibre availability is reasonably widespread in Malaysia and, although there are several fibrecos, it still sometimes feels like Telekom Malaysia has monopoly status. Their nearest competitor is City. Power and RMS on Malaysian cell sites There aren t a lot of off grid sites in Malaysia, but edotco are looking at various off-grid power solutions including lithium-ion battery and solar hybrids. Power is a pass through at almost all Malaysia s cell sites. RMS is not widely used by MNOs but is being considered by some State backed towercos. At time of press edotco s Echo RMS solution was deployed on 2,800 of edotco s 3,600 Malaysian sites. Conclusion The innovation and acquisitiveness of edotco makes Axiata s carve-out towerco the most influential change agent in the mature Malaysian mobile and tower market. In 2016 and beyond, we expect the majority of new towers and special structures in the country to be built by edotco, which could also join YTL in a drive to rollup selected State-backed and independent towercos 126 TowerXchange Asia Dossier TowerXchange Asia Dossier

132 Two tiered towerco market emerges in Myanmar Imminent entry of fourth MNO will accelerate tenancy ratio growth By Kieron Osmotherly & Christie Liu, Towerxchange Read this article to learn: With the reduction in uncertainty in the Myanmar tower market comes a reduction in risk, and a commensurate increase in investibility. Towerco consolidation has only recently begun, but the structure of the Myanmar tower market is increasingly clear, and TowerXchange expect three towercos of scale to emerge. Likewise, the structure of the mobile market is becoming clear; MPT has stood its ground; Telenor has grabbed impressive market share; Ooredoo has continued to differentiate as a first mover in next generation technologies; and now Viettel has been selected as the joint venture partner for the fourth operator. Keywords: 4G, Apollo Towers Myanmar, Asia, Asia Research, Bankability, Best of TowerXchange, Country Risk, Debt Finance, Densification, Digicel MTC, EFT, Eco Friendly Towers, edotco, Exit Strategy, Hybrid Power, IGT, Investment, Irrawaddy Green Towers, Lease Rates, MECtel, MLA, MNOs, MPT, Market Forecasts, Market Overview, Network Rollout, New Market Entrant, OCK Group, Ooredoo, PAMEL, Private Equity, Regulation, Telenor, Tenancy Ratios, Tower Count, TowerXchange Research, Towerco Consolidation, Towercos, Valuation, Viettel < Contrasting the rollout strategy of MPT, Telenor and Ooredoo; what approach might Viettel take? < How many towers are there now in Myanmar, who built them and how were they financed? < The structure of Myanmar s towerco market: scale players, discount players, and those seeking to exit < Pressure on lease rates and implications for valuation < The reducing risks of investing in Myanmar towers Estimates suggested 17,300 towers would be needed to achieve the Myanmar MCIT s coverage targets by the end of Myanmar s tower stock had grown to ~10,750 towers at time of press. There is organic growth for Myanmar s towercos, but there is also tenancy ratio growth; the tenancy ratio of mature portfolios ranges from 1.35 to 1.9, suggesting a healthy culture of infrastructure sharing and a growing need for capacity as subscriber numbers continue to grow impressively. The Myanmar tower rollout seems broadly on track, but let s take a closer look at the structure of that market. Who are Myanmar s operators and what has been their tower strategy? Few commentators would have predicted that State-backed incumbent MPT (Myanmar Post and Telecommunications) would have retained their market leadership two years after the licensing of two international competitors but, backed by KDDI and Sumitomo, MPT has a 45% share of subscribers with over 20mn. Investors KDDI and Sumitomo intend to invest a total of US$2bn in their Myanmar joint venture partner MPT, with a US$1.6bn network infrastructure investment announced this time last year, which was to drive their base transceiver station count from 2,000 to 5,000. While MPT are not believed to have dramatically increased their captive tower count, which continues to be rolled out by Huawei, most of the Myanmar towercos report healthy lease up, which we estimate totals over 1,500 co-locations from MPT, suggesting MPT is closing in on their target. 132 TowerXchange Asia Dossier TowerXchange Asia Dossier

133 Myanmar mobile subscriber growth by MNO over the last year Subscribers per MNO (mns) MPT Telenor Ooredoo Total subscribers 0 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Of the two international license holders, Telenor has achieved the fastest subscriber growth in Myanmar, racing to just under 17mn subscribers in two years. Telenor has maintained their reputation as a tough, disciplined and single-minded negotiator with towercos, playing off Apollo and IGT as their goto towercos of scale, while driving deep discounts with Eco Friendly Towers and recent entrants OCK. Telenor remains broadly on track with their rollout plan, having lit 5,831 towers by the end of Q216 all independently owned with a target to reach 7,000 by year end 2016, and as many as 13,000 sites to achieve solid nationwide voice and data coverage. Having launched a month ahead of Telenor in August 2014, Ooredoo has fared less well in the battle for subscribers, achieving 8.2mn subscribers Source: TowerXchange research by the end of Q216. While it initially appeared that Ooredoo was courting the higher value customer with Myanmar s first 3G then first 4G service, ARPU fell 35% between Q215 and Q216, while management changes and a slow down in new tower build in the first half of 2016 suggest the operator is changing strategic direction. Ooredoo currently has ~3,800 sites. Like Telenor, Ooredoo has used third party towercos for their rollout, but changed strategy in 2015, reverting from an initial preference to retain power assets to now requiring that towercos provide tower+power. While they have yet to break ground, soon-to-be licensed fourth MNO Viettel has pledged to invest US$1.5bn in the construction of a 3G network, with the aim of achieving 95% population coverage within three years. Viettel has a creative approach to making more marginal locations economically viable for the provision of mobile coverage. Viettel successfully and rapidly deployed low cost networks focusing on underserved rural areas in Mozambique, Cameroon and more recently Tanzania. The Vietnamese military-backed operator has formed successively deeper partnerships with towercos, and has already been using the test sites of Myanmar s towercos, who will be hopeful that Viettel accelerate their rollout and achieve volume Estimated total number of sites in each MNOs network (inclusive of co-locations) 3,800 4,000 5,831 Telenor MPT Ooredoo Source: TowerXchange research 128 TowerXchange Asia Dossier TowerXchange Asia Dossier

134 and capacity at launch by substantially leveraging co-location. Viettel owns a 49% controlling stake in Myanmar s fourth MNO, with the balance shared among a consortium of local stakeholders which includes Star High Public Company, itself owned by Myanmar Economic Corporation (MEC), which also owns MECtel. Viettel will reportedly have access to assets including 1,000 towers and 13,000km of fibre, as well as whatever remains of a reported subscriber base of 3.8mn before MECtel s MNO play was discontinued. Who are Myanmar s towercos and how are they financed? We would divide Myanmar s seven towercos into three groups; towercos of scale (IGT, Apollo and edotco), towercos competing on price (EFT and OCK), and towercos seeking an exit (PAMEL and MIG with Digicel MTC already departed). Between them, these seven towercos have built over 7,000 towers to date, with only MPT building their own sites through Huawei. Currently Myanmar s largest towerco with around 2,400 towers, Irrawaddy Green Towers (IGT) has the distinction of being Myanmar s only towerco to date to have secured substantial build contracts from both Ooredoo and Telenor. Ayad Chammas serves as CEO. IGT has declared intent to build 5,000 towers in Myanmar, spending ~US$490mn. IGT is part of ASEAN Towers, which also owns Golden Towers with 350 sites in Vietnam. IGT has investment Breakdown of ownership of the 10,750 towers TowerXchange estimates have been built to date in Myanmar IGT Apollo edotco PAMEL EFT MIG OCK Viettel- MECtel Independent towerco towers MNO captive towers from by Alcazar Capital, EPC Investors, M1 Group and local Myanmar company Barons Telelink. In December 2015, Dutch DFI FMO arranged a US$122mn syndicated loan for IGT. Apollo Towers Myanmar, which has around 1,800 completed towers, also recently raised development finance, having started to draw down a US$250mn loan from OPIC. Apollo s Chairman is former Eaton Towers Founder and Orange CEO Sanjiv Ahuja, and is a joint venture between Ahuja s Tillman Global Holdings, TPG and MIL (Myanmar Investments International Limited). Philippe Luxcey is CEO. edotco is the third of three Myanmar towercos of 2600 MPT Source: TowerXchange scale, having spent US$221mn acquiring Myanmar Tower Company (MTC) from Digicel. MTC built 1,250 towers for Ooredoo in phases one and two of the rollout. While MTC did not own the power assets at the sites, which were retained by Ooredoo, edotco will provide a full tower+power service. Digicel MTC CEO Oliver Coughlan stayed on to become edotco s Country Managing Director for Myanmar, although he is currently transitioning to a Group COO role with Vijendran Watson taking the helm in Myanmar. edotco has a footprint of 16,450 towers across six Asian countries, and is currently 100% owned by Axiata, although their stake may be diluted by third 134 TowerXchange Asia Dossier TowerXchange Asia Dossier

135 party investors or IPO in the medium term. edotco CEO Suresh Sidhu has stated intent to build or buy 5,000 towers in Myanmar, and the company s balance sheet makes them a strong contender to acquire further tower portfolios that match their investment thesis. edotco s next acquisition target may be Pan Asia Majestic Eagle Limited (PAMEL, sometimes referred to as Pan Asia Towers or PAT), whose 1,250 towers were built for Ooredoo in phases one and two. The portfolio is almost a mirror image of the Digicel MTC towers. PAMEL has management DNA in common with Indonesia s Protelindo, but remains a distinct entity. In 2014 PAMEL secured US$85mn in financing from a consortium of five banks: DBS, ING, OCBC, Standard Chartered and Sumitomo Mitsui. PAMEL remains the last towerco in Myanmar operating the steel and grass business model, but that may change with the change in ownership. Vendor finance was critical in the early days when international investors were cautious to invest in Myanmar, but climbing tenancy ratios, healthier cash flow, and an influx of capital means Myanmar s towercos of scale are now less dependent on vendor finance. A subsidiary of diversified Myanmar conglomerate Young Investment Group, Eco- Friendly Towers (EFT) has built over 300 towers, most in the Northern States, from a contract for 700 from Telenor. Young Investment Group Chairman Thiha Aung has represented EFT at a past TowerXchange Meetup Asia, while his wife is believed to be responsible for day to day management of EFT. Myanmar Infrastructure Group (MIG) is backed by Singapore Windsor Holdings. MIG has been hard-hit by Ooredoo s slow down in build, having built around 100 of an originally contracted 500 towers. With the Group exploring opportunities in rental cars and other markets in Myanmar, they are believed to be open to offers for their tower portfolio. Mark Bedingham is CEO of MIG. OCK is the newest entrant to the Myanmar tower market. The company boasts impressive credentials as a listed telecom turnkey solution provider in Malaysia, and has ambitious plans to form a pan- Asian towerco, including targeting 3,000 towers in Myanmar. Telenor downwardly negotiated OCK s lease rate, believed to be sub-us$1,000, and awarded a contract for 920 towers, of which around 50 are believed to be complete at time of press. OCK s Myanmar subsidiary raised a syndicated loan of US$40mn from OCBC Bank, Malayan Banking, United Overseas Bank and Bangkok Bank s Yangon branches. Terence Lee runs OCK s operation in Myanmar, while Sam Ooi is Group Managing Director. Pressure on prices There has been little uniformity in lease rates in Myanmar since the outset. Whilst there was significant variation in pricing initially, the country s original four towercos have coalesced within a fairly narrow range of lease rates. However, the aggressive price negotiations of Telenor has created a tier of discount towercos. OCK say they will invest US$75mn to build the 920 towers Telenor has contracted; that works out a little over US$80,000 per tower. That s a little below the current average build cost of a tower in Myanmar (around US$100,000), but build cost is gradually coming down as a function of volume, and much depends on the cost of energy equipment. With OCK reportedly charging a lease rate as little as US$900 or US$920pcm, inclusive of power, some competitors had suggested OCK would have to deploy low cost DGs and batteries to minimise capex. However, OCK s recent order for 80 premium, integrated DG+battery hybrid esites from Flexenclosure suggests OCK intend to deploy equipment of a similar standard to other towercos on at least some sites. There are already over 1,200 esites deployed in Myanmar. In an exclusive interview featured within this Journal, TowerXchange asked OCK Group Managing Director Sam Ooi how they planned to sustain their competitive price point. OCK is a full turnkey solutions provider, said the MD, and we are able to leverage our expertise from other countries into Myanmar, resulting in a lower cost to build and maintain towers. These benefits are passed on to our valued customers. Whether it s OCK, EFT or any other towerco offering towers at a discounted lease rate, their greatest challenge will be creating a scalable tower business in Myanmar. Coming in 30%+ cheaper than the competition might drive volume, but in order to meet Telenor and Ooredoo s exacting 130 TowerXchange Asia Dossier TowerXchange Asia Dossier

136 The reducing risks of investing in Myanmar towercos Risk At lauch After two years Source: TowerXchange Country risk Regulatory Operational Currency When the rollout commenced, Myanmar was coming out of a period of military rule and unrest, with continuing instability particularly in the Northern States. International sanctions remained in place. Two years ago, Telenor and Ooredoo, plus their towerco partners, had to work within an accommodating yet immature regulatory environment. For example, there was no policy defining the licensing regime for towercos, and Myanmar s first four towercos had to trade, and raise capital, with only letters of non-objection for over a year. Given the under-developed existing telecom infrastructure in Myanmar, there was a lack of experienced telecoms subcontractors with the know how to acquire, construct and maintain sites. When the towercos entered Myanmar they needed to send 980 Myanmar Kyat (or MMK) to get US$1. The FX situation quickly worsened, peaking at a little over MMK1,300 to the dollar in the second half of Formerly imprisoned opposition leader and Nobel peace prize winner Aung San Suu Kyi s NLD party achieved a landslide victory in the 2015 election. While most International sanctions remain in place, and many personalities from the old military junta remain influential, Myanmar is becoming more open to international investment. All four towercos (Apollo, IGT, MTC and PAMEL) who rolled out towers in phases one and two received Network Facilities Service (Class) or NFS(C) licenses on 3 February 2015, just over a year after Ooredoo and Telenor were granted their licenses. However, proving title within incomplete land registries remains a challenge. Proven international telecoms contractors have opened offices in Myanmar, such as ATM Towers, Camusat, GSM TP, GTL, ieng, LCC / Leadcom, LeBlanc, Mer Group, Quanta TowerGen, RS Infra, Sagemcom, Salasar Techno and Zamil. Those contractors, and their towerco partners, have invested substantially in training, growing a substantial local skills base which now forms a significant majority of the workforce. FX is probably the number one risk which has not gone in the towerco s favour, with the MMK devaluing 18% versus the U.S. dollar over the last two years. However, the current rate of around MMK1,180 to the dollar seems to have stabilised. Pricing Commercial Apollo initially entered the Myanmar market at a disruptive lease rate around 30% below that charged by the most expensive of their competitors. Apollo s lease rates have since normalised. The reality is that a significant amount of parallel infrastructure was built in phase one. When Project Optima, an effort to rollout 1,105 shared phase two towers stalled, in part because of differing approaches to power asset ownership, it was looking like the supposed culture of infrastructure sharing in Myanmar was a thin veneer. The lease rate price war shows no signs of abating, with new entrants OCK reportedly accepting a disruptive sub-us$1,000pcm lease rate from Telenor. To date, Myanmar s towercos of scale are holding firm on pricing in the US$1,200-1,800 range. The prevailing tenancy ratio in Myanmar is around 1.5 about as high as could be expected given the number of new towers being built. While co-construction never materialised, Myanmar s three active MNOs seem to prefer to buy rather than build, and Viettel may be inclined to co-locate to accelerate time to market. The extent to which there is parallel infrastructure in Myanmar s major cities may prove useful as networks are already crowded, with infill sites sought both for offload and for 4G. Exit strategy A gold rush of relatively under-capitalised towercos pursued contracts in Myanmar, and for the first few months there was no clear sense of a strategic buyer who could facilitate successful exits. Axiata s edotco, which has ready access to capital and a pathway to IPO, has already completed one transaction and has an appetite for more. American Tower took a long look at the Digicel MTC assets that edotco ultimately acquired it was too soon for them in 2015, but has the Myanmar tower market now been sufficiently de-risked? 136 TowerXchange Asia Dossier TowerXchange Asia Dossier

137 quality standards and SLAs, the cost of a tower is the cost of a tower. At such a low lease rate, discount towercos will have to drive to a healthy tenancy ratio quickly to create the necessary cashflow. Will the entry of Viettel, and resultant urgency generated among incumbent operators, drive tenancy ratios close to two within the next months? What are Myanmar s towers worth? With the PAMEL and MIG portfolios reportedly coming to market, it should be noted that not all towers and towercos are created equal in Myanmar; just because edotco paid US$176,800 per tower for Digicel MTC s 1,250 towers does not mean all Myanmar towers will change hands for a premium of that magnitude. The usual valuation rules apply: the value of a tower is as much to do with the paperwork (particularly the permits and the commercial terms defined in the MLA - Master Lease Agreement) as it is to do with the attractiveness of the location and the quality / capacity of the structure. The value of a tower is not just about Tower Cash Flow (TCF) today, itself a product of lease rate, tenancy ratio and opex costs; it s more about potential future TCF. The first and much of the second phase of the Myanmar tower rollout were naturally concentrated in the country s three most densely populated cities: Yangon, Naypyidaw and Mandalay, as well as the transport routes between them. For example, PAMEL have built 1,250 robust, phase one towers and leased them up to a tenancy ratio reported to be around 1.8, with a healthy lease rate in excess of US$1,700pcm. These towers are likely to be sought-after by Viettel when they begin their rollout. Expect PAMEL s towers to attract a healthy premium when they come to market. As the rollout extends deeper into rural areas, often beyond the reach of Myanmar s finite paved road network, search rings call for towers to be built in less accessible locations, often well beyond the reach of the grid. Mature towercos will sometimes reject sites in such remote areas, wary of the cost of site acquisition, the complexity of the build, elevated opex costs as a function of energy logistics, and reduced co-location potential. However, towercos coming later to market may be under more pressure to accept such locations as they seek scale. The near-term and potential future TCF from those sites may not match that of Myanmar s phase one and two towers, indeed if the MLA is not drafted smartly and the location is undesirable, some towers may barely be worth the capital deployed to build them. As we said at the outset; not every tower in Myanmar is worth the US$176,800 per tower edotco paid for a portfolio which now has a tenancy ratio of 1.9; towercos and their investors must be wary of building towers with a much lower glass ceiling on tenancy ratio, which may be worth less than US$100,000. Forecasting the future of Myanmar s tower market By the end of 2017, Myanmar will have the targeted 17,300 towers, around 4,000 of which will remain MNO-captive on MPT and Viettel s balance sheets. The remainder will be concentrated primarily in three large towerco portfolios around 5,000 towers built and rolled up by edotco, plus a further 8,000 towers built by OCK, IGT and Apollo, at least one of which will have received an offer they can t refuse by then and exited. Who are potential buyers? edotco of course, while American Tower are known to have considered entering the Myanmar market in 2015, but the level of risk may now be more attractive to their investment palette. Newest entrants OCK have been bullish about their plans to rollup a pan-asian portfolio of towers indeed they recently announced the acquisition of 1,938 towers in Vietnam for US$50mn. OCK are the wildcard in our forecast; if they can build at speed and drive to their targeted 3,000 Myanmar towers at their discount price point, they are going to prove popular with all four Myanmar MNOs. TowerXchange think there is room for two to three towercos of scale in Myanmar in the long term, perhaps fed by one or two localised or discount towercos that may ultimately become build to flip plays. The Myanmar tower market today looks dramatically different from a year ago. Many risks have receded and, while there remains some pressure on lease prices from aggressive buyers and discounters, Myanmar s three towercos of scale are holding firm at a price point that enables them to attract international investment, and to build quality assets in a timely manner, fulfilling the ambitious visions of Myanmar s three-going-onfour operators, and meeting the insatiable appetite of Myanmar s citizens for mobile services 132 TowerXchange Asia Dossier TowerXchange Asia Dossier

138 Myanmar migrates to the 4G era Ooredoo and Telenor commence 4G overlay, Viettel may follow suit when launched History was made in Myanmar last May when Ooredoo Myanmar launched the first 4G services in the country, followed shortly by rival operator Telenor Myanmar. The speed of the 4G launches are unprecedented considering Myanmar s 2G and 3G mobile subscriber penetration increased from 10% in 2014 to above 80%, or 45mn users, as of June 2016 after the country opened to international service providers. Nearly 95% of the population is expected to have connectivity by the end of the 2017, and this rapid rollout stands out as an examplar of the merits of shared infrastructure. In comparison, Thailand and Indonesia took seven to eight years to go from 10% to 95%+, while Vietnam took four years to rollout coverage. Keywords: 2G, 3G, 4G, Asia, Asia Insights, Market Overview, Market Share, MECTel, Myanmar, Ooredoo, Regulation, Spectrum, Telenor Read this article to learn: < The progress of the Ooredoo and Telenor 4G launches in Myanmar < The performance of Ooredoo Myanmar and Telenor Myanmar < The government of Myanmar s roadmap for spectrum < Where 4G figures in the plans of Viettel and the consortium which won the fourth license < How and where Myanmar s towercos stand to benefit from the 4G rollout Ooredoo Myanmar was the first operator to launch fourth-generation services last May in Myanmar s three largest cities. The operator aims to cover onehalf of Yangon s townships, all of Mandalay and about 90% of Nay Pyi Taw s townships. The company announced recently that 85% of its users go on the internet every day, and that average monthly data usage per user was nearly on par with customers in Europe. Ooredoo s network consists of more than 3,800 sites, about one-quarter of which will have a 4G by the time this article is released in August Ooredoo has stated that its customer base in Myanmar had increased by 108% year-on-year and reported that its data network now covers more than 85% of the population. In an announcement to investors, Ooredoo stated that it continued to be the data leader in its markets, including Myanmar and Algeria. The company now has around 200,000 4G subscribers across its user base. Ooredoo Myanmar has rolled out 4G services on two frequencies: 900MHz and 2100MHz; Ooredoo s licence allows the company to buy additional spectrum for a fee, and the telco successfully applied to purchase more a few months ago. The company announced in a recent press release that it was ready to invest more in spectrum pending a government auction. The government of Myanmar released a new version of its spectrum roadmap in April 2016, which indicates that the Posts and Telecommunications Department (PTD) could make unallocated portions 138 TowerXchange Asia Dossier TowerXchange Asia Dossier

139 of the 850/900MHz and 2,100MHz frequency bands available, in addition to the 700MHz, 1,800MHz, 2,300MHz and 2,600MHz bands. The new Ministry of Transport and Communications announced in February 2016 that it would make spectrum on the 2,600MHz band available to telecommunications sector players in an auction, which was postponed in March The auction was delayed again in July due to objections from Ooredoo and Telenor who composed a joint letter to the Myanmar Investment Commission and stated that the proposed spectrum prices would not give an acceptable level of return. The tender will be called again for local and foreign firms in August, according to Ministry of Transport and Communications. 1,800MHz spectrum may be up for auction in the first quarter of Telenor was second to market with 4G services in the capital of Myanmar, Naypyidaw, starting in July Former Telenor Myanmar CEO Petter Furberg stated after the launch that in addition to rollout in the capital, the company is continuing to test 4G in other cities including Yangon, Mandalay, Myawady and Muse, and will progressively roll out the technology nationwide. Telenor s 4G coverage in Naypyidaw is supported by 5MHz of spectrum on the 2,100MHz band. Furberg also stated that Telenor is looking forward to participating in the spectrum auctions planned by the government later this year and that due to the explosive growth of data and increasing data demand by the Myanmar people we believe it is urgently required to expand our services to Implications of 4G for Myanmar s MNOs and towercos Ooredoo were struggling to gain market share so were compelled to be first movers in next generation networks. Telenor, as they typically are worldwide, were fast followers so there will be negligible competitive differentiation between the two through 4G. However Ooredoo and Telenor s introduction of 4G this early does give them a head start in the battle for the QoSsensitive high value customer in advance of fourth operator Viettel s launch, which could take until 2017 before any meaningful coverage is achieved. Viettel, which owns 49% of the venture alongside a consortium of 11 Myanmar companies, has already stated intent to launch 4G on 1,800MHz spectrum, but that may take considerable time as they don t yet have the license. The launch of 4G is particularly good news for the towercos who built towers in the first two phases of rollout, which were concentrated in Myanmar s three largest cities; Yangon, Naypyidaw and Mandalay. While there was a degree of parallel infrastructure built in high population density areas, the demand for infill sites for 4G will further increase demand for space on these already coveted towers. With 4G amendment revenue kicking in just two years into the rollout, and a fourth MNO launch imminent, 2017 is going to be a good year for some of Myanmar s towercos 4G all over Myanmar. According to the company more than 60% of its subscribers use data, and this percentage is set to increase. Telenor, Myanmar s second largest operator with 16.9mn connections and a 37% market share, has more than 5,800 towers across the country. Due to the company s continuing strong performance in Myanmar, Telenor s investments in this market will remain high to secure service quality to 17mn customers and pave the way for further expansion and growth. The strong EBITDA in Myanmar has already achieved positive cash flow, according to Telenor s Q2 report. At the same time, Telenor added 1.4mn new subscribers over the three months to June a slower growth in customers than it has seen in the past. New Telenor CEO Sigve Brekke attributed the slowdown in subscriber growth to increasing competition in the market. Competition in Myanmar will only continue to intensify with a fourth operator license set to be awarded. The fourth operator is to be run by Vietnamese MNO Viettel in cooperation with a government stakeholder, Star High Public Company Limited, and a local consortium, Myanmar National Telecom Holding Public Limited. N Star High Public Company Ltd. is owned by by the military-controlled Myanmar Economic Corporation (MEC) which also owns MECtel. MECtel reportedly started offering mobile services in 2013, but was deemed ineligible to apply for the fourth operator license. Once the fourth license is awarded, MECtel s assets, which reportedly include approximately 1,000 towers and over 13,000km of fibre, will be incorporated into the new entity, along with its remaining subscriber base which numbered 3.8mn as of Q Viettel has stated intent to add 4G to its 3G rollout 134 TowerXchange Asia Dossier TowerXchange Asia Dossier

140 Mobilink-Warid merger clears the way for Pakistan s first tower transaction With the sale of 13,000+ towers imminent, and another deal in the pipeline, TowerXchange examines the opportunities and threats for towercos in Pakistan The merger between Mobilink and Warid will put some competitive distance between VimpelCom s Pakistani subsidiary and their nearest challenges Telenor. Fierce competition has driven ARPUs in Pakistan below US$2, putting pressure on the country s MNOs to create efficiencies through infrastructure sharing. The sale of Mobilink and Warid s combined tower portfolio is imminent, with Ufone s towers also on the market. By Kieron Osmotherly, CEO, TowerXchange The acquisition and integration of Warid by Mobilink is set to be accompanied by the spinning off of the combined operator s towers. TowerXchange understands that one tower company has secured a period of exclusive negotiations to close the deal to acquire 13,000-13,700 towers (after the elimination of overlapping sites). A further 8,318 towers are coming to market as Ufone seeks to monetise their assets, which could increase the total level of decommissioning to around 10%. Besides parallel infrastructure, what other challenges will be faced by the towerco acquiring these assets? How many towers are there in Pakistan, who owns them now, and what is for sale? While the PTA suggest there were 40,704 cell sites between Pakistan s then five MNOs in 2015, it is not clear whether shared sites are counted twice. TowerXchange has also learned that there are at least 800 independently owned towers in Pakistan, owned by Towershare. Keywords: 3G, 4G, AWAL Telecom, Asia, Asia Research, CMPak, DG Runtime, Decommissioning, edotco, Etisalat, IBS, Infrastructure Sharing, Lease Rates, MNOs, Market Overview, Mobilink, PTA, Pakistan, RANsharing, Regulation, Renewables, Research, Sale & Leaseback, Tax, Telenor, Tenancy Ratios, Tower Bersama, Tower Count, TowerXchange Research, Towercos, Towershare, Ufone, Unreliable Grid, Uptime, Valuation, VimpelCom, Warid, Zong Read this article to learn: < How many towers are there in Pakistan, who owns them now, and what is for sale? < Infrastructure sharing and parallel infrastructure in Pakistan < The progress and potential impact of RANsharing in Pakistan < The 4G spectrum and 4G rollout plans of Pakistan s MNOs < The emerging market for in-building solutions in Pakistan As the first MNO in the market, Mobilink has Pakistan s oldest and largest tower portfolio. All our sources agreed that Mobilink has almost exactly 10,000 sites, which sounds like a plausible increase in the six months since the last PTA annual report. In 2005 when Telenor and Ufone entered the market, followed later by Zong, the new entrants lobbied for mandatory infrastructure sharing, but the market leaders were opposed as Mobilink considered their towers a competitive differentiator. During this period there were only limited scope barter agreements between MNOs. Mobilink s position changed in as they 140 TowerXchange Asia Dossier TowerXchange Asia Dossier

141 came to see the potential cost efficiencies and QoS improvement benefits of infrastructure sharing. Mobilink now leases out their towers on a commercial basis, and has around 2,500 co-locating tenants, representing a tenancy ratio of Mobilink s internal towerco contributes around 3% of the MNO s total revenue (and doubtless a much higher proportion of the profit!) Mobile subscriber market share 8.6% 29.2% 15.5% Mobilink (VimpelCom) Telenor It is therefore perhaps unsurprising that Mobilink s towers are expected to fetch a significant valuation when they are sold, probably before the year end. With Mobilink s merger with Warid now approved, both tower portfolios will be sold together: post decommissioning of ~5-8% overlapping sites, the integrated Mobilink and Warid tower portfolio is 19.3% 27.5% Zong (CMPak) Ufone (Etisalat) Warid Source: PTA, 2015 Mobilink now leases out their towers on a commercial basis, and has around 2,500 co-locating tenants, representing a tenancy ratio of Mobilink s internal towerco contributes around 3% of the MNO s total revenue Breakdown of MNO site counts in Pakistan 8,318 9,902 Mobilink (VimpelCom) Warid Zong (CMPak) 8,321 5,512 Telenor Ufone (Etisalat) 8,651 Source: PTA, TowerXchange Asia Dossier TowerXchange Asia Dossier

142 expected to consist of around 13,000-13,700 micro and macro towers. Mobilink are thought to value the portfolio at a little under US$1bn, suggesting a cost per tower of US$73-76,900, which would be consistent with the valuation comp provided by American Tower s recent acquisition of Viom Networks in India. Mobilink s parent VimpelCom has initiated a global tower monetisation programme, and has reportedly entered into exclusive negotiations with a preferred bidder from a shortlist believed to have included Axiata s pan-asian towerco edotco, which operates 13,000km of fibre in Pakistan; Dubai headquartered Towershare, which had already built or rolled up some 800 towers in Pakistan; local towerco AWAL Telecom, which recently secured a build-to-suit contract with Mobilink; and Tower Bersama from Indonesia. Ufone are believed to have also commenced a process to monetise their 8,318 towers. Ufone is the struggling mobile subsidiary of PTC (Pakistan Telemmunications Company), whose profit after tax plummeted 52.9% between FY14 and FY15. Ufone became part of Etisalat when PTC was privatised in Prior to the imminent sale and leasebacks, which may establish a new pricing benchmark, lease rates in Pakistan were believed to be around the US$800-1,000 per month mark. Non-traditional MNOs may represent more than the usual level of potential upside in Pakistan, The emerging market for inbuilding solutions in Pakistan There are around 100 sites suitable for the installation of in-building solutions (IBS) in Pakistan. To date, the first four or five IBS have been built by MNOs, but with a preference for a neutral host model, so expect towercos to take a larger role in IBS in the future exemplified by Wi-Fi Broadband service BurQ, which plans 2,500 tenancies over the next three to four years. The 4G spectrum auction and 4G rollout plans of Pakistan s MNOs Pakistan s MNOs spent nearly US$1.2bn acquiring 3G and 4G spectrum in A further 850MHz spectrum was recently sold to Telenor Pakistan, which was the sole bidder, paying US$395mn. 3G was only launched in late 2014, but GSMA Intelligence reveals that mobile broadband penetration almost doubled year on year to 19% by Q415. Warid launched 4G in January 2015, with Zong launching in September 2015, and aiming to rollout over 5,000 4G sites by year end Telenor only launched 4G in August 2016, but it is not atypical of Telenor to be a fast follower rather than a first mover in new technologies. The overlay of 4G creates an obvious opportunity for Pakistani towercos to drive tenancy ratio growth, with network planners anticipating significant densification. The merger of Mobilink and Warid creates a similar impetus: Mobilink will have a clear spectrum advantage on all bands, said a network planner at a competitive MNO. We can only mitigate this through M&A or deep network sharing. Infrastructure sharing and parallel infrastructure in Pakistan While you wouldn t suggest Pakistan has a mature, deeply embedded culture of infrastructure sharing, there are believed to be over 4,000 third party tenants on the country s towers. For example, Telenor has over 1,500 tenancies on third party sites in their Pakistani network. One network planner told TowerXchange: 100% of our future rollout will probably be on shared networks either shared bilaterally, or leveraging towerco towers. However, new entrant Wi-Fi broadband operators report experiencing slow and bureaucratic processes to co-locate on MNOs towers, and have renewed calls on the Pakistani regulator to mandate infrastructure sharing. There is significant parallel infrastructure in Pakistan it is not usual to see four or even five towers and rooftop structures all clustered together within 20-50m in urban areas, and there is significant network overlap in rural areas as well. The sale of the combined Mobilink and Warid towers could lead to the decommissioning of 5-8% of towers. If the Ufone towers were acquired and pooled by 142 TowerXchange Asia Dossier TowerXchange Asia Dossier

143 the same towerco, the proportion could rise above 10%. Network planners suggest around 20,000 sites are required to have full economic coverage in Pakistan. Tower licensees in Pakistan Licensee Communicator s Globe Date licensed June 2006 Location National Known activity Source: TowerXchange Research, PTA Laying fibre and other turnkey services. No towerco activity Pakistan is in the early stages of fiberisation. While edotco has 13,000km of readily shareable fibre, most Pakistani MNOs are rolling out their own fibre. To date only Telenor and Zong have signed a fibre sharing agreement. Specialist Group Modaraba Al Mali Towershare July 2006 August 2006 April 2009 Punjab National National None Sold mobile tower business to Tower Share for Rs 835,000 in 2013 Rolled up selected other licensees, built 800 towers, contracted to build 39 sites in the FATAs for Ufone, one of the front-runners to acquire 13,000+ towers from Mobilink+Warid Telenor and Zong have also undertaken Pakistan s first RANsharing trials, across approximately 30 sites, using the MORAN model (Multi Operator RAN), where there is no spectrum sharing. While Mobilink and Warid are not currently prioritising RANsharing, the governance of RANsharing will be an important negotiating point in their tower sale. Wincom DHAI-Telecom AWAL Telecom edotco MKZ Networks June 2009 July 2010 November 2014 July 2015 March 2015 Punjab Punjab National National National Infrastructure development and maintenance partner of Warid None Secured BTS contract with Mobilink, outsiders to acquire 13,000+ towers from Mobilink+Warid Operates 13,000km of fibre, building 200 towers, one of the frontrunners to acquire 13,000+ towers from Mobilink+Warid None A progressive regulatory environment, yet local permitting and taxation challenges remain The Pakistan Telecommunications Authority (PTA) is renowned to be a progressive regulator, exemplified by their granting permission for RANsharing trials before policy governing the practice had been drafted. The PTA was also quick to recognise the potential value independent tower companies could bring ICT in the country, licensing domestic towercos as long ago as 2006 although only two of those licensees appear to be trading as towercos today. Associated Technologies Ltd March 2015 National The PTA released an MOU setting an unofficial target to increase the infrastructure sharing ratio in Pakistan. Towercos in Pakistan will experience a frustration common to many markets worldwide; the lack of a joined up approach to site permitting and taxation in Pakistan, with different policies from region to region, and multiple layers of taxation, including Federal and regional sales taxes, capital gains and withholding tax. Turnkey contractor primarily to Telenor and, via Huawei, CMPak Coverage, security and power While territorial coverage is in excess of 92%, gaps in the network remain, particularly in the Federally Administrated Tribal Areas (FATAs) which can be unstable, and which require a high degree of local knowledge and connections to operate in. In April 2015, Ufone appointed Towershare to build 39 new sites in the FATAs. While occasional security challenges within 138 TowerXchange Asia Dossier TowerXchange Asia Dossier

144 Pakistan s tower network make telecom industry news, network managers report few security problems outside the FATAs. Although 93.6% of Pakistanis have access to electricity (Source: World Bank, 2012), many cell sites are on unreliable grid connections, with outages of eight plus hours. Uptime remains a challenge for MNOs and towercos alike; investment in, and maintenance of, backup power solutions remains critical. Most cell sites have at least one backup DG, while both Towershare and edotco have expressed intent to build more energy efficient sites by leveraging deep cycle batteries and renewables. Conclusions Pakistan is a unique tower market; from energy logistics challenges not unlike Africa, to decommissioning challenges of a magnitude seldom seen outside Europe. The mindset of Pakistan s MNO seems to have evolved toward a recognition that the construction and maintenance of towers is not their core business. Balance sheet pressures, declining ARPU and the cost of 4G rollout will combine to see up to 22,000 of the country s towers transferred in the coming 6-12 months. Given the need for consolidation of those networks, TowerXchange feel the most likely outcome is that a single, pan- Pakistan towerco emerges, generating considerable efficiencies and releasing over US$1bn of capital into the Pakistan ICT ecosystem in the process Baseline data on Pakistan Urbanisation: 38.8% Population: 199,085,847 Mobile coverage (territorial) 92% 1 Area: 796,095 sq km 1 1 GDP per capita (PPP): 1 US$5,000 Mobile broadband penetration: 2 19% up from 10% last year Connections: 127.9mn Sources: CIA Factbook1, GSMA Intelligence, Q TowerXchange Asia Dossier TowerXchange Asia Dossier

145 A snapshot of the mobile and tower markets of Singapore New entrant operator may force infrastructure sharing Pankaj Agrawal, Partner and Puja Goyal, Consultant, Capitel Experienced mobile and tower industry advisors Capitel turn their analytical lens upon Singapore, providing an insight into the shifting competitive landscape for operators and the potential for future infrastructure sharing, or even independent infracos, in one of Asia s most mature and sophisticated mobile markets. Keywords: ARPU, Asia, Capex, Capitel, IBS, Infrastructure Sharing, LTE, Lawyers & Advisors, M1, Market Overview, New License, New Market Entrant, Regulation, Research, Rooftop, Singapore, Singtel, Starhub, Third Party Reports, Tower Count TowerXchange: Please introduce Capitel Partners. Pankaj Agrawal, Partner and Puja Goyal, Consultant, Capitel: Capitel is a leading advisor on complex investment decisions by service providers, global institutional investors and policy makers in Telecoms, Media and Internet. We have advised on multi-billion dollar transactions and investments plans. We are based in Singapore and India, and serve a client base located in the U.S., Asia and Europe. TowerXchange: Please introduce us to the Singaporean mobile market. Who are the operators? At what level is ARPU now and where is it trending? Pankaj Agrawal, Partner and Puja Goyal, Consultant, Capitel: Singapore is a mature mobile and fixed telecoms market, with mobile penetration close to 150%, and fixed broadband penetration in almost all households. There are mobile only offerings, triple play services and high-speed FTTH broadband services. Read this article to learn: < The potential for a new entrant into Singapore s competitive mobile market < The spectrum holdings used for Singapore s mature 3G and LTE networks < How many cell sites there are in Singapore, the split between GBTs and rooftops, and the status of indoor coverage < Forecasting the capex requirement for a new entrant MNO < Why the Singaporean market may open up to infrastructure sharing and infracos There are three incumbent operators, namely Singtel, Starhub and M1, with mobile market shares of 49%, 27% and 24% respectively. The regulator has considered entry of a new entrant operator in mobile to offer innovative services and also to promote competition. The planned auctions in this year will allow new entrants to purchase spectrum and roll out mobile services. Consistel, 140 TowerXchange Asia Dossier TowerXchange Asia Dossier

146 Table one: Spectrum availability and pricing for auctions Spectrum band Quantum Lot size Reserve price per lot 700MHz 900MHz 2300MHz 2500MHz 2*45MHz 2*30MHz 40MHz 45MHz and MyRepublic are reportedly interested in the mobile license. 2*5MHz 2*5MHz 5MHz 5MHz SGD20mn SGD20mn SGD3mn SGD3mn Note: 2*10 MHz of 900MHz and 40MHz of 2300MHz is reserved at S$35mn for new operator and 2*5MHz of 900MHz to be reserved for each incumbent Source: IDA launched SIM only plans, and have also reduced tariffs for existing plans. The average throughput received by consumers is in the range of 4Mbps 5Mbps. Incumbents are using 900MHz for GSM as well as 3G and 4G deployments. Operators plan to shut down GSM services from 2017, and their spectrum roadmap for 900MHz will also depend on their spectrum holdings after the 900MHz auctions. In addition to 900MHz, operators are using 1,800MHz, 2,100MHz and 2,500MHz spectrum bands. 3G is deployed on 2,100MHz, and LTE deployments are on 1,800MHz and 2,500MHz. The regulator is also offering 700MHz and 2,300MHz in the Singapore mobile market share The fixed broadband market has witnessed significant price competition with the entry of new providers such as MyRepublic that are offering FTTx services at a fraction of the incumbent prices. The model is to leverage the NGNBN (Next Generation Nationwide Broadband Network) to offer low priced, high-speed fiber broadband access to households and businesses. ARPU for mobile only services offered by M1 is at SGD30 per month (US$22.39). For other operators offering bundled services, the ARPU is in the range of SGD42-SGD48 per month (US$ ). With the entry of new mobile operator, the mobile-only ARPU may witness some pressure, as new entrants are reportedly planning to offer 2GB data for SGD8 (US$5.76) for a prepaid model. Incumbents have Handset subsidies remain a source of concern for operators, and are impacting their profitability due to high subscriber acquisition costs. TowerXchange: How mature is the rollout of mobile broadband? What spectrum has been acquired, at what cost and what spectrum is coming to market? What levels of data usage are we seeing? How fast is data usage growing, and does the network have adequate capacity? Pankaj Agrawal, Partner and Puja Goyal, Consultant, Capitel: Incumbents have been rolling out LTE networks, and have achieved close to 99% geographic coverage with LTE. The LTE subscriber penetration has now reached 70% of the base. 24% 49% 27% Singtel Starhub M1 Source: TowerXchange 146 TowerXchange Asia Dossier TowerXchange Asia Dossier

147 Capitel estimate 4,500 macro BTS and 9,000 small cells for 55 planning areas in Singapore REQUIRED NUMBER OF BASE STATIONS BY FREQUENCY BAND AND PLANNING AREAS Cumulative sites, nos. 15,000 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - ommercial in confidence HIGH DENSITY AREAS 1 MEDIUM DENSITY AREAS 2 LOW DENSITY AREAS 3 P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 P12 P13 P14 P15 P16 P17 P18 P19 P20 P21 P22 P23 P24 P25 P26 P27 P28 P29 P30 P31 P32 P33 P34 P35 P36 P37 P38 P39 P40 P41 P42 P43 P44 P45 P46 P47 P48 P49 P50 P51 P52 P53 P54 P55 Note: 1. Areas with population density of 15,000/sq km and above 2. Areas with population density between 1,000/sq. km and 15,000/sq. km 3. Areas with population density below 1,000/sq km Source: Capitel network model, 4. Department of Statistics, Singapore upcoming auctions, and we expect LTE deployments to also start moving to these bands. Table one provides details of spectrum available in upcoming auctions. Data usage on mobile is reportedly in the range of 3GB to 4GB per month. The total petabyte traffic on the mobile network is growing, although there is also support from high penetration of fixed broadband and Wi-Fi. With the entry of new operators, increase in offered speeds and affordable 900MHz 2300MHz Small cells SMALL CELLS, 2300MHz + WiFi METRO CELLS, 2300MHz MACRO CELLS, 900MHz 13,961 4,704 1,605 Source: Capitel network model prices, the mobile data usage is expected to increase from the current levels. TowerXchange: Roughly how many cell sites are there in Singapore? How is indoor coverage achieved? Is fiber ubiquitously available? Pankaj Agrawal, Partner and Puja Goyal, Consultant, Capitel: Incumbent operators do not share the number of sites deployed by them. Independent estimates from industry analysts suggest sites deployed per operator for macro coverage. Indoor coverage is via building coverage using IBS and other solutions incumbents have not deployed a large number of small cells as their spectrum holdings on sub-ghz bands are good. It is estimated that incumbents are covering buildings with indoor coverage solutions. Next generation fibre backhaul is widely available in Singapore, and will be needed for high density small cell deployments. TowerXchange: Appreciating the incumbents do not share counts, what would you estimate is the total site count for Singapore? And how does that divide between ground based towers (GBTs) and rooftops? Pankaj Agrawal, Partner and Puja Goyal, Consultant, Capitel: We would estimate there to be a total of 6,000-7,500 sites in Singapore. Given the urban density, 85-90% of those sites are rooftop structures, with most of the rest being monopoles, primarily located on the outskirts of the city. TowerXchange: Is there a lot of parallel infrastructure, or is there a culture of infrastructure sharing? Is sharing limited to passive infrastructure or is there RANsharing in Singapore? Pankaj Agrawal, Partner and Puja Goyal, Consultant, Capitel: The regulator, IDA has provided a Code of Practice for Info-communication Facilities in buildings (COPIF) that details the requirement of 142 TowerXchange Asia Dossier TowerXchange Asia Dossier

148 There are competitive considerations currently that prevent infrastructure sharing, however, with increasing competition and stretched balance sheets we may begin to see bilateral and finally independent infraco led infrastructure sharing building owners and developers to provide space and facilities for deployment of mobile services in residential and non-residential buildings. There is no mandatory sharing of infrastructure, and incumbent operators have parallel deployments rather than shared infrastructure. The new entrant has requested the regulator to mandate sharing of infrastructure especially for indoor areas and locations such as MRT tunnels and transport networks. As per the current policy, such a mandatory sharing requirement has not been approved. TowerXchange: What would a new entrant MNO have to invest to build a network in Singapore? What are the prospects for a new entrant sharing existing infrastructure? Pankaj Agrawal, Partner and Puja Goyal, Consultant, Capitel: There are varying estimates for new entrant capex in the range of SGD250mn to 400mn+ (US$ mn). Our estimates based on network coverage and capacity modeling for each of the fifty five planning areas in Singapore suggests a capex of close to SGD400mn. This capex consists of investment in procuring spectrum and deploying active infrastructure for macro, street and small cell networks, in addition to transmission and other miscellaneous capex. The new entrant has requested mandatory infrastructure sharing, as they believe it will take them three years and more to match the coverage requirement of incumbent operators especially in indoor locations such as basements. However, the policy guidelines do not mandate sharing for now there can be a potential commercial model for bilateral sharing among telecom operators which will be market-led rather than regulation led. TowerXchange: Are there any independent infracos, particularly towercos, in Singapore? If not, is there an opportunity for one or more? Pankaj Agrawal, Partner and Puja Goyal, Consultant, Capitel: There are no shared infrastructure providers for macro and street coverage. With the increase in price-led competition, and increasing impact of acquisition cost and falling broadband prices, there is a clear argument for infrastructure sharing. If incumbent operators can develop a commercial model that allows entrants and potentially other incumbents access to their network infrastructure, it can be a win-win arrangement. TowerXchange: How would you sum up your vision for the future of the mobile and tower markets of Singapore? Pankaj Agrawal, Partner and Puja Goyal, Consultant, Capitel: We are very positive on the mobile broadband and tower market in Singapore. We expect new entrants to drive innovative M2M services and other areas leveraging cloud based services, increasing data usage among retail users, and improving service experience. All these demand and supply factors will require network densification that will drive the need for more sites on streets, retail locations, transport networks and CBDs. There are competitive considerations currently that prevent infrastructure sharing, however, with increasing competition and stretched balance sheets we may begin to see bilateral and finally independent infraco led infrastructure sharing 148 TowerXchange Asia Dossier TowerXchange Asia Dossier

149 edotco 360: Our first look at the tower market in Sri Lanka Mohan Villavarayan, MD of edotco Sri Lanka shares detailed insight into the country s rapid telecoms growth Mohan Villavarayan, MD, edotco Sri Lanka Sri Lanka is one of the smaller telecoms markets in Asia, but one where the tower sharing business model has been in play for several years already. We spoke with Mohan Villavarayan, Managing Director of edotco Services Sri Lanka Ltd. to hear about the steady ongoing development taking place there. Mohan has spent the last twenty years in senior positions within the telecommunications industry. Since 2010 he has led the passive infrastructure business for Dialog Axiata PLC and was responsible for establishing strong relationships with all operators and broadcasters within the country and for achieving a tenancy ratio of two plus. In February 2016 he assumed the position of Country Managing Director of edotco Services Lanka (Pvt) Ltd. Keywords: 3G, 4G, Airtel, Asia, Asia Insights, Axiata Group, Dialog, edotco, Etisalat, Hutchison Whampoa, Lanka Bell, Licensing, Market Overview, Mobitel, Off-Grid, Power, Regulation, Tower Count, TRCSL, Sri Lanka, Insights TowerXchange: This is our first interview with edotco focussed on your operations in Sri Lanka; can you give us an overview of this market and your recent projects? Mohan Villavarayan, MD, edotco Sri Lanka: The telecom market consists of seven operators; the two large constellations are Sri Lanka Telecom, which owns Mobitel, and Dialog. Both players are essentially into quad-play. In terms of market share Dialog is number one at the moment. Additionally, we have Etisalat, Airtel, Hutchison and Lanka Bell who have relatively lower market share in terms of subscribers and revenue. The tower sharing market largely consists of these seven operators, broadcasters and the armed forces. Tower counts are generally estimated as we don t have access to accurate information. In our estimation Dialog has the largest base at approximately 2,100 towers (excluding IBS) followed by Mobitel, Airtel, Etisalat, Hutch and Lanka Bell. Dialog started sharing towers six years ago, and have engaged in unrestricted sharing. Most of the smaller operators have now stopped building their own towers, it s only the two market leaders that build out new sites, and if the smaller operators want to increase their coverage they share with one of them. Read this article to learn: < An overview of the Sri Lankan telecoms market < A history of infrastructure sharing in Sri Lanka < Tower counts and projected tower builds in Sri Lanka < The regulatory situation in Sri Lanka Sri Lanka still has no specific license for towercos and at present we have established edotco Services Lanka (Private) Limited which can provide all towerco specific services with the exclusion of owning a tower (for which a license is required). ESLL also manages Dialog Towers, which is the business unit within the Dialog Group that 144 TowerXchange Asia Dossier TowerXchange Asia Dossier

150 houses the tower portfolio. We report into the edotco headquarters in Kuala Lumpur, and have commercial independence to provide services within this market. TowerXchange: We have an estimate that you have around 4,000+ tenants on approximately 2,000 towers. Is this the case? Are there plans to build or acquire more? Mohan Villavarayan, MD, edotco Sri Lanka: At present, we have 2,100 towers in Sri Lanka, and the tenancy ratio is approximately M&A will be a major part of edotco s strategy, but naturally we will be selective; it all depends on which towers become available in this market and what the terms are. TowerXchange: Roughly how many towers are there in the country in total? Mohan Villavarayan, MD, edotco Sri Lanka: Our estimate is that there are total of approximately 7,500 8,000 towers in Sri Lanka. Most operators don t share these numbers, but this estimate is based on our knowledge of the market and reports submitted to the regulator. TowerXchange: What are conditions on the ground like in Sri Lanka compared to other markets that edotco operates in? What are the main challenges and risks? Mohan Villavarayan, MD, edotco Sri Lanka: Sri Lanka is an island with a relatively small land mass with 95% of the territory already covered. Compared to other markets in the edotco footprint, Fundamental infrastructure is critical to nation building; and we the geographical and environmental conditions are not a problem. The biggest challenge for Sri Lanka at present is that the country is reaching saturation where new tower requirements are concerned. All the operators have completed their 2G and 3G roll-outs and 4G spectrum is available only with Dialog and Mobitel; any of the operators that want to provide 4G services will need to engage in RAN sharing with them. There will be further requirement for new towers for in-fills et cetera, but this number is estimated at a further 1,500 2,000 towers or special structures. TowerXchange: What are the grid conditions, and what proportion of sites are on/off grid? Mohan Villavarayan, MD, edotco Sri Lanka: The grid conditions in Sri Lanka are not as good as Malaysia, but better than those in Bangladesh by comparison, and they are improving every year. At present, we have fewer than 75 sites off grid. Overall grid is at acceptable levels and as improvements to grid have to participate and invest in this and become a true partner to the country, not just a foreign investor uptime continue they will result in reduced use of DGs. TowerXchange: There have been some recent regulatory developments in Sri Lanka; can you share your perspective? Is the government mandating infrastructure sharing or network development? Mohan Villavarayan, MD, edotco Sri Lanka: As of now the regulators interpretation does not recognise tower companies and licenses to build and manage towers are only issued to operators. Several lobbies have been made to the regulator and key decision makers to enable the issue of a tower specific license. Fundamental infrastructure is critical to nation building; and we have to participate and invest in this and become a true partner to the country, not just a foreign investor. In the past, tower model has been perceived as just a good deal, but now customer demand is shifting and governments are asking what we re doing for the country. 150 TowerXchange Asia Dossier TowerXchange Asia Dossier

151 TowerXchange: Will the regulator interfere in market pricing of lease rates? Sri Lankan tower market Mohan Villavarayan, MD, edotco Sri Lanka: When licenses are issued there will most probably be terms included where the regulator could make determinations on lease rates like they do in the case of operators. The regulator lets the market play out but reserves the right to step in and make determinations. TowerXchange: Is there some form of protection against towers being built too close to each other? Mohan Villavarayan, MD, edotco Sri Lanka: At present there is a process in place but no strict mandate. However, the approval process to erect towers involves applying to the TRCSL (Telecommunications Regulatory Commission of Sri Lanka) and there are multiple layers of approval. The database of sites is checked, the requested position is compared to the location of other sites, and in some cases tower sharing may be mandated. However, if these particular towers are over loaded or if the operator concerned does not permit sharing, approval is granted for the construction of a new tower. Ten to fifteen years ago it was common to see towers within a few metres; now there are far fewer. There aren t strict regulations on tower locations, but in some cases the regulator will listen to objections. Some of the local concerns include radiation, proximity to population centres and the potential for lightning strikes. 7,500-8,000 towers Population 21mn 38% Mobile broadband penetration 2 TowerXchange: Is foreign direct investment in telecom infrastructure / real estate permitted or capped? Mohan Villavarayan, MD, edotco Sri Lanka: At present there are no regulations preventing FDI s in telecom infrastructure. Non-national s are not permitted to purchase of real estate but can lease to the required extent; in general foreign investment is permitted and encouraged. TowerXchange: Are taxation regimes fair 125% 95% SIM penetration Challenger MNOs Coverage 2 market leaders with 4G spectrum: Dialog, Mobitel edotco: 2,100 towers with a tenancy ratio of 2.13 and <75 off grid Etisalat, Airtel, Hutchison & Lanka Bell Further 1,500-2,000 towers needed regarding tower transfers, lease sales and equipment import? Mohan Villavarayan, MD, edotco Sri Lanka: At present there are no taxes that are specific to the tower sector. At the point of transferring towers VAT would be payable on the purchase consideration. Most operators have duty free exemptions when importing tower and energy equipment. Within the telecommunications sector the present regime exempts VAT when operators invoice each other for services including passive infrastructure sharing 146 TowerXchange Asia Dossier TowerXchange Asia Dossier

152 Towerco perspectives TowerXchange s mission is to support the expansion of the independent towerco model on a global basis and to do so, we constantly speak with towerco leaders to improve our understanding of the governing dynamics of the industry. In this section, TowerXchange gathered top interviews conducted during the past few months with top experts from Asian towercos including edotco, Indus Towers, Bharti Infratel, OCK, Ascend Telecom and Cam Towerlink, with insights spanning from India all the way to Indonesia. Don t miss: 153 Ascend Telecom 156 Bharti Infratel 161 Cam Towerlink 164 edotco 175 Indus Towers 188 OCK

153 Ascend Telecom leverages innovative technologies to optimise its 5,200 tower pan-indian footprint CEO Sushil Kumar Chaturvedi talks about the origins of Ascend telecom and their approach to achieving operational excellence Sushil Kumar Chaturvedi, CEO, Ascend Telecom Read this article to learn: < The origins of Ascend Telecom and its pan-indian footprint < The structure of NSR s funding and its plans for growth < Ascend Telecom s innovative approach to energy efficiency < New approaches to small cells and the Smart Cities initiative The Indian tower market is mature and diverse, with a variety of infrastructure providers meeting the needs of MNOs across the country's expansive geography. Founded in 2002, Ascend Telecom has been offering coverage for 10,000 tenants, with 42% of them in growth circles. We recently spoke with Sushil Kumar Chaturvedi, CEO of Ascend Telecom to learn about his vision for the future of the Indian tower market. Keywords: Air Conditioning, Ascend Telecom, Asia, Asia Insights, Batteries, Construction, Energy Efficiency, Energy Storage, IL&FS, India, Investment, M&A, Network Rollout, New Silk Route, O&M, Opex Reduction, Small Cells, Tenancy Ratios TowerXchange: Please tell us about your company and your personal background in telecoms. Sushil Kumar Chaturvedi, CEO, Ascend Telecom: Ascend Telecom Infrastructure Pvt. Ltd. is an ISO Company, incorporated in 2002, with an Infrastructure Provider (IP-I) registered with the Department of Telecommunications, Government of India. During the financial year , Ascend acquired India Telecom Infra Ltd., a company engaged in a similar business which had a portfolio of around 2,500 telecom towers with 4,000 tenants. Ascend is a professionally owned and managed company, and is backed by NSR (New Silk Route) which holds a majority share, and Infrastructure Leasing & Financial Services (IL&FS). Having a pan-india presence with 5,200 towers and 10,000 tenants, with 42% concentrated in growth telecom circles, Ascend Telecom is a preferred business partner of all major telcos, and is recognised as the lowest cost operator with the fastest turn around delivery, offering operational excellence in diverse geographies. Ascend Telecom has been a pioneer in green energy deployment, providing green energy solutions in over 50% of our towers. Ascend Telecom operates from its corporate headquarters in Bangalore, and has a state-of-the-art NOC in Hyderabad and field offices in all of the state capitals. 148 TowerXchange Asia Dossier TowerXchange Asia Dossier

154 Ascend has consciously engaged in strategic green energy initiatives to address the pain point of the industry and align with government/trai directives full service inclusive of power? What are some of your strategies to lower opex? Sushil Kumar Chaturvedi, CEO, Ascend Telecom: Ascend is a turnkey passive infrastructure provider, and is recognised as the lowest-cost towerco. We have made extensive use of new technology to excel in operations. TowerXchange: What is your appetite to deploy your own capex into energy efficiency programmes versus partner with ESCOs? Ascend Telecom is managed by a team of professionals with a combined total of 250+ years of industry experience in operating large defence, telecom, PSU, and private telecoms networks in India and abroad with an illustrious track record. I took over the reins of Ascend in I have 34+ years of industry experience in key management and leadership positions, managing telecoms PSU and private telecoms enterprises across the globe. I was awarded the President s medal for distinguished telecoms services in 2001, anad in 2008 I was recognised as CEO of the Year for the fastest growing company in Asia Pacific by Deloitte & Touche. My other telecoms experience includes my role as Group CEO for managed telecom and satellite services at ORG Informatics, Vice President of GDSS Inc. where I pioneered and deployed triple play services across Africa and Southeast Asia. I was also responsible for the development of telecoms in Southern African Development Countries (SADC) at the ITU/TCIL, and was the Director of Indian telecoms services at BSNL. TowerXchange: How is Ascend Telecom financed and how has this evolved over time? Sushil Kumar Chaturvedi, CEO, Ascend Telecom: Ascend is backed by marquee investors New Silk Route ( NSR ), the majority shareholder and IL&FS, the minority shareholder. NSR is a leading Indian subcontinent-focused growth capital firm founded in 2006 with more than US$1bn under management. NSR has a strong and experienced team of investment professionals, who utilise their domain expertise and leverage their broad network of relationships to create value and contribute substantially to the future growth and success of their portfolio companies. TowerXchange: Does Ascend Telecom provide a Sushil Kumar Chaturvedi, CEO, Ascend Telecom: Ascend has consciously engaged in strategic green energy initiatives to address the pain point of the industry and align with government/trai directives. These investments have paid dividends with a realised margin of 12-15%, and the gains from power and fuel have been increasing over the years. These initiatives include energy efficiency improvement programmes, analytics-driven energy assets, optimal performance, green initiatives and achieving a higher number of tenancies under fixed opex plans to provide for higher gains. So far Ascend Telecom has internally funded its energy program and all deployments have been done by in-house teams. Armed with trained manpower and credible results, Ascend Telecom is planning energy management for other infrastructure providers and telcos on a capexsharing basis. TowerXchange: Is Ascend Telecom engaged in 154 TowerXchange Asia Dossier TowerXchange Asia Dossier

155 Ascend Telecom is forging Smart partnerships to provide an innovative bouquet of services to address small cells, inbuilding solutions, and smart poles with value-added services organic growth and/or looking for potential acquisitions? Sushil Kumar Chaturvedi, CEO, Ascend Telecom: Ascend has had a proven track record of M&A, and is pursuing a growth strategy of organic and inorganic growth, with accretive acquisitions, offering innovative solutions and creating avenues for value-added services. TowerXchange: What is your procurement model and process is it in-house? Who are the key stakeholders? How do you buy and what are your current priorities? Sushil Kumar Chaturvedi, CEO, Ascend Telecom: Ascend Telecom s in-house procurement model is based on constant innovation, extensive analytics and operations feedback. Technology and supply chain teams continuously strive to identify the most effective and costoptimised solutions for their infrastructure, both on new builds as well as upgrading their current sites. Ascend Telecom recognises effectiveness of management through multiple suppliers and service contractors spread across all regions in order to ensure sustainability of supplies and services at all times. Technology teams, the operations team, the supply chain management team, suppliers and service contractors and the quality assurance teams are key stakeholders. The equipment includes fabricated towers which are SERC/IIT pre-approved, silent and super-silent diesel generator types which are certified by CICB and Pollution Control Boards. Other technology includes VRLA, tubular flooded and lithium-ion battery banks, prefab shelters, electrical equipment, air conditioners, safety equipment, wind chimneys, and solar PV systems selected from ISO certified suppliers, complying to national and international standards. TowerXchange: Please outline your vision for the future of Ascend Telecom. Sushil Kumar Chaturvedi, CEO, Ascend Telecom: Focused on profitable build and successful M&A, we will continue to pursue our growth strategy with organic and inorganic expansion through accretive acquisitions. Ascend Telecom is forging smart partnerships to provide an innovative bouquet of services to address small cells, in-building solutions, and smart poles with value-added services. Ascend Telecom will be a key player in the Smart City program and is supporting the Digital India initiative. We will continue to provide cost-effective energy management through our green energy initiative. We will strive to continue being the preferred business partner of telcos. With planned organic and inorganic growth, and expanded energy management, Ascend Telecom is in discussions with strategic investors 150 TowerXchange Asia Dossier TowerXchange Asia Dossier

156 How Bharti Infratel and Indus Towers are refining infrastructure sharing so everybody wins Akhil Gupta s annual strategic perspective on the Indian tower market, including recommended best practices to be adopted by the global tower industry Akhil Gupta, Chairman, Bharti Infratel Akhil Gupta is Bharti Infratel and Airtel s tower Tsar. His unique perspective spans not only Infratel, Indus and Airtel but the entire tower industry in India as Chairman - TAIPA, and almost a decade of evolution of India s unique tower industry. This year, Gupta reflects on the impact of MNO and towerco consolidation on the Indian tower market, quantifying the current state of 3G, 4G and small cell rollouts, and sharing his vision of the finer points of crafting a tower industry where towercos and MNOs share efficiencies equitably. Keywords: 2G, 3G, 4G, Acquisition, Asia, Asia Insights, Batteries, Bharti Airtel, Bharti Infratel, Carve Out, Co-locations, Deal Structure, Energy Storage, ESCOs, India, Indus Towers, Infrastructure Sharing, Investment, Lease Rates, Lithium, RANSharing TowerXchange: What would you say have been the biggest developments in the Indian tower market over the past year? Akhil Gupta, Chairman, Bharti Infratel: There have been four major developments: One; 4G rollouts have started while 3G rollouts have picked up pace. Two, the acquisition of Viom Networks by American Tower Corporation with further consolidation to come in the Indian tower market. Three, in a more recent development there have been some tenders for Smart Cities and four, the ongoing consolidation of MNOs in India. TowerXchange: What has changed within Bharti Infratel over the past year? Akhil Gupta, Chairman, Bharti Infratel: Internally within Bharti Infratel there haven t been many changes. One of the defining characteristics of the tower industry and its business model is that it s fairly stable and one shouldn t expect dramatic change. Telecom network rollouts are the bread and butter of towercos. We also participated in a tender for Bhopal Smart City, and you can expect many more of these to take place. Read this article to learn: < The impact of recent MNO consolidation and 4G rollout on the Indian tower business < The changing competitive landscape among towercos in India < MSA refinements and the drive toward lease price parity between new and anchor tenants < How loading (aka amendment revenue ) is managed by Indian towercos < The merits of operator-captive, joint venture towercos TowerXchange: What has been the impact of recent MNO consolidation and 4G rollout? Akhil Gupta, Chairman, Bharti Infratel: The merger between Reliance Communications, Aircel and MTS, as well as Videocon shutting down, have been healthy developments. It is not healthy for the 156 TowerXchange Asia Dossier TowerXchange Asia Dossier

157 industry to have say ten operators, including five or six sitting on spectrum without the wherewithal and means to rollout. Consolidation remains a work in progress, but it will leave spectrum in the hands of companies that have the resources for rollouts. So Indus Towers and Bharti Infratel and the entire tower industry in India will benefit from each of these developments. With regards to 4G, Airtel has been a leader, and Vodafone and IDEA are catching up and are likely to bid for more spectrum in the next auctions. Reliance Jio was the only company to launch 4G only. Every other player will have to offer 3G and 4G, and demand should keep increasing. There is still a long way to go to provide full coverage; in terms of tenancies 3G equipment is on less than 50% of the existing towers. Over the next months we anticipate that 3G will replicate 2G s 90% coverage of India s geography. Over the next two to two and a half years virtually every tower should have 3G. Digital India can t happen without Internet connectivity; this can only be achieved in this country through wireless connectivity, and 3G is currently the most cost effective. 4G has been rolled out in tier one cities and the rollouts have started in tier two cities with another wave to follow. We estimate that current 4G coverage is less than 20%. TowerXchange: What can you tell us about the recent refinements of your MSA and the drive toward parity of lease rates between anchor and new tenants? There is still a long way to go to provide full coverage; in terms of tenancies 3G equipment is on about 50% of the towers. Over the next months we anticipate that 3G will replicate 2G s 90% coverage of India s geography Akhil Gupta, Chairman, Bharti Infratel: I believe that this is a transformational move for the tower industry worldwide. While there has to be a provision for yearly escalation, but clearly the construct under existing MSA was structurally defective. When a new tenant comes on a tower the lower applicable rent becomes applicable uniformly to all tenants on that site, including the existing tenants. However, the customers which came earlier continued to pay escalation charges as applicable till that date. This gave rise to an anomaly whereby the customer who came first ended up paying higher charges vis-à-vis customers who came later on the same site. This was fundamentally wrong since this could result in a disincentive for a customer to be the anchor/first tenant on a tower and thus needed to be corrected. The other uncertainty facing the industry was that the renewal price at the end of the term of contract was a big question mark. It was debated that since a new tenant is charged at the base rate i.e. without escalation, the renewals would be at that base rate, which would have caused huge revenue dip for towercos. On the other hand, it was being suggested that after ten to fifteen years the tenants would be so dependent on towercos that towercos could charge anything. Either way the uncertainty was immense causing concern to customers as well as investors as several renewals will come 152 TowerXchange Asia Dossier TowerXchange Asia Dossier

158 up in the next few years. To ensure a smooth renewal process, we needed to reduce the scope of negotiation. We have accordingly amended our MSA whereby instead of 2.5% each year, the rate card itself would increase by 2.5% as on 1st April each year. As a result, the rate chargeable to existing and new tenants would become common over time, thereby removing the anomaly that existed. In addition, the entire uncertainty regarding renewal price is removed since all renewals will be treated at par with any new tenancy with price as per prevailing rate card at time of renewal. TowerXchange: How does lease pricing, particularly loading (known as amendment revenue in the West) work in India? Akhil Gupta, Chairman, Bharti Infratel: When an existing tenant adds equipment or takes more space on a tower or on the ground, we charge an additional amount, which we call loading. This is what is called Amendment in some other markets. We believe it would be unfair to our customers if adding 3G equipment to an existing 2G tenancy required payment of another tenancy fee. Towercos are technology agnostic - our prices are defined by the space used on the ground and on the tower, the weight added (or wind load ), the power load factor addition, etc. For each of these areas the MSA specifies a rate for any increases, so there is a very fair balance between the interests of the towerco and those of the MNOs. TowerXchange: Are clauses governing RANsharing typically included in Indian towerco MSAs? Akhil Gupta, Chairman, Bharti Infratel: Our MSAs do not contain restrictions on RAN-sharing. Since we are committed to a win-win situation between us and our customers, I feel that there should not be any such restriction. After all, if we can share our infrastructure with various operators, we must also grant them the same privilege to share their resources in a manner which suits them the most. In any event, I do not think that in India RAN-sharing is bad because it improves the capital efficiency and that would result in the rollouts happening faster and deeper into the country. In the long run, the tower companies will gain if the operators go deep into the Indian market as soon as possible. TowerXchange: There has been some restructuring of the Indian tower market: What are your thoughts on the scaling of American Tower? And are there any updates on the development of BSNL s proposed towerco? Akhil Gupta, Chairman, Bharti Infratel: American Tower s acquisition of Viom Networks is a healthy development for the tower industry. It is good to have strong, not weak competitors as this improves overall quality, investments, and innovations, while poor competitors can merely discount and damage the market. Competition makes the market players stable and responsible and encourages great service to the customers. BSNL s proposed towerco is a sensible step; they have been looking into this and have sent out RFPs seeking third party maintenance. BSNL have a lot of towers at strategic locations which other towercos cannot get to. Having access to those would be good for the operators. TowerXchange: Given the potential for further consolidation in the Indian tower market, will Bharti Infratel participate? Akhil Gupta, Chairman, Bharti Infratel: Our coverage is so well spread out that most consolidation proposals could result in a lot of overlap. However, we would evaluate specific proposals, if any, and decide based on their merits. TowerXchange: Could you give us an update on Bharti Infratel s Green Towers P7 programme, and the Indian government s green energy targets for 2020? Akhil Gupta, Chairman, Bharti Infratel: The government has not set any official targets, but the tower industry is working on these initiatives on our own volition. Our aim is to reduce diesel consumption, not just from an environmental perspective but from a business perspective. 158 TowerXchange Asia Dossier TowerXchange Asia Dossier

159 Refuelling sites with diesel is a painful exercise for towercos with possibilities of manipulation, fraud & security concerns. We are significantly investing in energy saving equipment such as Lithium-Ion and VRLA batteries and solar power. We re also investing in connecting off-grid sites to the grid; currently there are approximately 8-10,000 off grid sites between Indus Towers and Bharti Infratel. About 38% of our towers are now green, which means they consume less than a litre of diesel a day. Total energy conservation capex invested at the end of the financial year was in excess of Rs. 3,200mn on a consolidated basis. This is a huge priority for us. Once all sites are connected to the grid, our aim is to have a 90-95% diesel free portfolio. This will take some time, but we hope to achieve it by TowerXchange: Could you update us on how ESCOs are progressing in India? Akhil Gupta, Chairman, Bharti Infratel: There hasn t been much news recently. We have been doing some pilots with them but it hasn t really taken off in a big way to date. TowerXchange: What is holding back Indian towercos from forming deep partnerships with ESCOs? Akhil Gupta, Chairman, Bharti Infratel: The model doesn t make good sense at this point. If we could, we would be happy to have someone else manage our power equipment so we could concentrate on our core business. ESCOs propose to put up power plants and serve several towers in a specific area. But the need for ESCOs is greatest in rural areas where towers are very spread out; Indus and Infratel s networks extend deepest into the rural areas, so we could certainly benefit. But it is difficult to find many locations suiting their business model, which requires four to five towers in close proximity the network is seldom that dense in rural areas. Selling excess generation capacity to households is challenging because of the high cost of wiring up the houses. I do hope that over time they become economically viable. TowerXchange: What have been the latest developments in small cells and IoT? Akhil Gupta, Chairman, Bharti Infratel: There haven t been many developments in IoT as yet; this falls more into the operators domain as it s a function of putting SIM cards into machines. We are, however, starting to see a need for small cells and new lighter towers and poles. We are following the requirements of MNOs and are introducing new products. However we will endeavor that small cells are designed to be shared by at least two MNOs to make them cost effective. TowerXchange: Would you bring small cells under the umbrella of your mission to disarm MNOs of their passive infrastructure? Should towercos rollout small cells in India or should it be a shared responsibility? Akhil Gupta, Chairman, Bharti Infratel: The tower industry must lead small cell deployment, so this mission of disarmament must also apply to them! When we build a small cell, we spend a little extra capex so we can accommodate two tenants.however, that would enable us to impose a much lower charge to each operator as compared to their overall cost on individual basis. Small cells are at a nascent stage in India at this point, but you can expect to see more over the coming year. TowerXchange: How is the development of Smart Cities progressing in India? What role is Bharti Infratel playing in this? Akhil Gupta, Chairman, Bharti Infratel: Some tenders are now coming out, including Bhopal, and the DMIC in Delhi. The terms for the DMIC project were unfavourable and as a result there were no bidders; we have won the contract for Bhopal. It seems that Smart City implementations would evolve over the next few years. TowerXchange: What makes some smart cities projects more investible than others? Akhil Gupta, Chairman, Bharti Infratel: Financial 154 TowerXchange Asia Dossier TowerXchange Asia Dossier

160 feasibility and clarity of terms & conditions. TowerXchange: There is a Global trend toward carve out towercos owned by MNOs; what lessons would you share with companies like China Tower Company, Telesites and Telxius as you reflect on your journey and experiences during the founding of Indus Towers? What would you do differently if you were stating on that journey today? Akhil Gupta, Chairman, Bharti Infratel: The only thing I would change from the start would be the MSA amendments which we ve just made. To my mind, what the other global operators need to do is create an Indus Towers equivalent in their market: pool resources with other MNOs, make it independent, cater to all clients with no discrimination, provide a common MSA, and a volume discount incentive. Our model is a good one, and we re proud of Indus Towers as a concept. We recommend that MNOs don t make their own towercos, but that they either sell their towers to specialized tower companies or consolidate them with other MNOs in one portfolio. We would love to see towercos like China Tower Company this is a must-happen and we would be delighted to share our experience. TowerXchange: How satisfied are you with the outcome of your African tower divestiture, and are there a handful of towers yet to be sold, or will those be retained? Towers are not the MNOs cup of tea; they have a different mindset and low level engineering projects don t fit with a marketing mentality they re chalk and cheese Akhil Gupta, Chairman, Bharti Infratel: There are just a few countries left, the major ones are done. It s been a satisfying experience we ve raised about US$2.5bn to pay down debt, and passed towers into specialist hands and have started seeing good results in uptime and energy efficiency. Towers are not the MNOs cup of tea; they have a different mindset and low level engineering projects don t fit with a marketing mentality they re chalk and cheese. We didn t do it ourselves under Infratel because we realised an operator-led towerco model would not have been accepted by many stakeholders in Africa. TowerXchange: We re looking forward to welcoming you back to the 3rd Annual TowerXchange Meetup Asia - how useful did you find last year s event, and what do you hope we can deliver this year? Akhil Gupta, Chairman, Bharti Infratel: I must compliment you TowerXchange is doing a tremendous job, and making this recognised as a proper, solid industry. You are to the tower industry what the GSMA is to the telecom industry! The Asia Meetup is organised really well, and Singapore is a good venue for our annual symposium. You re providing great service to the towercos as an independent body and highlighting issues surrounding the industry. There is so much more to be done in the tower industry. We ll see a lot of developments in the coming years, such as diversification into transmission and Wi-Fi provisioning. I look forward to participating in the third edition 160 TowerXchange Asia Dossier TowerXchange Asia Dossier

161 Cam Towerlink: Increasing connectivity in Cambodia Yusoff Zamri discusses Cam Towerlink s ground-breaking project to connect Angkor Wat Yusoff Zamri, CEO, Cam Towerlink Read this article to learn: < Cam Towerlink s project to provide connectivity at Angkor Wat < Cam Towerlink s future plans for expansion in Cambodia < The impact of the recent telecoms law passed in Cambodia < The next opportunities in the Cambodian tower market Continuing our coverage of the Cambodian tower market, we recently caught up with Yusoff Zamri, CEO of Cam Towerlink, a new entrant to the Cambodian tower market, and discussed their first project providing wireless connectivity to the Angkor Wat temple grounds, a UNESCO World Heritage site, for the first time. With over 23 years of telecoms experience covering both the operator side with Celcom, Hello Axiata and Uzmacom, and the vendor side with Lucent Technologies, Schlumberger Network Solutions and ZTE, Yusoff is now responsible for launching Cam Towerlink s services in this competitive telecoms market. Keywords: Asia, Asia Insights, Build-to-Suit, BTS Hotel, Cambodia, Cam Towerlink, Cootel, edotco, Emaxx, Fibre, Market Overview, Qb, RAN sharing, Regulation, Seatel TowerXchange: Please tell us about Cam Towerlink and its background. Yusoff Zamri, CEO, Cam Towerlink: We came to Cambodia in 2014, focusing on the tower business, providing services including tower rollouts, power solutions, IBS, COW (Cellular on Wheels) and BTS hotels. We have a staff of ten all based in Cambodia, and we are founded by a group of three shareholders in Malaysia, which also created an IT company called Mutiara Teknologi, which was responsible for rolling out the 999 emergency service in Malaysia. After the success of this large project the shareholders wanted to explore other opportunities outside of IT and in other markets, and decided to invest in the tower industry. TowerXchange: What can you tell us about your recent project to provide connectivity at Angkor Wat? Yusoff Zamri, CEO, Cam Towerlink: Companies have been trying to provide coverage within the restricted area of Angkor Wat since 2007, and noone has succeeded until now. I know this as I was the CEO of Hello Axiata from and I was not successful back then. For Angkor Wat we are rolling out camouflaged tower structures around the temple site to provide a good signal for visitors. We have approval to deploy six towers to start with on the temple grounds, and then our plan is to expand into the surrounding area and provide coverage within the temple itself. More than likely, this will require a camouflaged BTS hotel solution. We ve started the initial deployment now and this 156 TowerXchange Asia Dossier TowerXchange Asia Dossier

162 should be up and running by June. The project also includes 30km of fibre, which will connect all of the sites into a ring. We re talking to six potential tenants, and we expect to have an average of four tenants per tower once the expansion takes place. We plan to add a common antenna for all tenants on the towers; this would be the ideal scenario but it would depend on all operators agreeing to have the antennae pointing in the same directions. We expect to have this finalised and operational by June as all of the operators are keen to start providing coverage on this new site. I believe this is a good start for Cam Towerlink. We re talking to six potential tenants, and we expect to have an average of four tenants per tower once the expansion takes place. We plan to add a common antenna for all tenants TowerXchange: What will be the next project for Cam Towerlink? Yusoff Zamri, CEO, Cam Towerlink: We have started initial surveys into the surrounding Angkor Wat area; we re looking at over twenty potential sites which are spread over a wide area, but we need approval from the authorities managing the temple. We re engaged in ongoing discussions with the authorities, and with the operators Angkor Wat, April 2008, pre-coverage! that are interested. We are of course looking at areas covering the whole of Cambodia as well. Concurrently we are looking into acquiring any tower assets we can in Cambodia, and there are assets available around the country. TowerXchange: What can you tell us about the telecoms regulation that was passed in Cambodia recently? What has the impact on the market been so far? 162 TowerXchange Asia Dossier TowerXchange Asia Dossier

163 step forward that it has finally been implemented. TowerXchange: How is the tower market in Cambodia? Do you see demand increasing? Yusoff Zamri, CEO, Cam Towerlink: edotco and Cam Towerlink are the only towercos in Cambodia at this point; edotco is the leader with over one thousand towers. Cam Towerlink is just getting into the market with the Angkor Wat project, and the plan is to expand into other areas soon, and also to acquire assets. We have been in talks with Viettel who have some assets to dispose of, as a result of their takeover of Beeline last year. There are also three new Chinese operators in Cambodia, Seatel, Cootel and Emaxx, that are all in expansion mode. Some of them are building towers and we are in discussions with them about potential partnerships. We are of course talking to the rest of mobile operators (Viettel, Mobitel, Smart and Qb) to see how we can support them in Cambodia. Yusoff Zamri, CEO, Cam Towerlink: The new telecoms law was passed in January of It s generally perceived as good news, and it gives the government guidelines for managing telecoms in Cambodia. Now the government can properly regulate this industry and can levy fines or jail terms for non-compliance, so it s being taken quite seriously. Coverage Angkor Wat style! The Cambodian government is actively promoting tower sharing and wants to see it implemented like in Malaysia, and to have the collaboration of the operators and towercos. There is a lot of legacy infrastructure in urban areas, and the government is pushing with this new law to have this updated or replaced and to reduce overlaps. The New Telecom Law had been discussed since 2007, so it s a major TowerXchange: What do you expect to happen next in the Cambodian market? Yusoff Zamri, CEO, Cam Towerlink: It depends how the implementation of the new law progresses and remains to be seen how the regulator wants to proceed. It will take time but the regulator is definitely more gung-ho since the law was passed. It s not perfect, but now they have a real platform to regulate the telecoms industry in Cambodia which can only be an improvement 158 TowerXchange Asia Dossier TowerXchange Asia Dossier

164 Lessons learned from yesterday for the Asian towerco of tomorrow Highlights from edotco, Bharti Infratel and American Tower s keynotes at the TowerXchange Meetup Asia 2016 Suresh Sidhu, CEO, edotco The 2015 TowerXchange Meetup Asia featured three visionary keynote presentations on the tower industry, it s origins, the challenges we face today, and opportunities to expand the scope of the towerco business model in partnership with customers. Here are the highlights from the presentations made by Suresh Sidhu, CEO, edotco; Akhil Gupta, Chairman, Bharti Infratel and Amit Sharma, Executive Vice President, President - Asia, American Tower Corporation. Keywords: 3G, 4G, ARPU, Active Equipment, Active Infrastructure, American Tower, Asia, Asia Insights, Backhaul & FTTT, Bankability, Bharti Infratel, CAGR, Co-location, Co-locations, Core Network, Deal Structure, Densification, EBITDA, Energy, IBS, India, Indonesia, Indus Towers, Infrastructure Sharing, MLAs, MNOs, Malaysia, Managed Services, O&M, Opex Reduction, Passive Equipment, QoS, RANsharing, RMS, ROI, Regulation, Small Cells, Smart Cities, Towercos, edotco Read this article to learn: < Positioning towercos as Nation Builders < Enhancing services and adding value for our tenants < The 123,000 towers for sale across Asia < Beyond BTS and co-location: energy, monitoring, fibre, IBS, small cells and smart cities < The Indian towerco model: sharing towers, sharing savings Suresh Sidhu, CEO, edotco Suresh Sidhu, visionary CEO of edotco, was once again the opening keynote speaker at the second TowerXchange Meetup Asia, hosted at the prestigious Marina Bay Sands Hotel on November 24 and 25, Sidhu emphasised that the mobile industry was being shaped by multiple forces: < Infrastructure: tower asset divestitures and shared networks < Technology: spectrum scarcity and the rise of unlicensed spectrum; as well as data growth driving demand for cell site densification and infill sites across Asia < Commercial pressures: declining operator profitability compounded by the need to invest in network expansion to meet demand < Regulatory: increased scrutiny on QoS, with telecoms seen as a critical source of revenue MNOs are up against major challenges. Long term growth in demand for mobile data has surpassed the capacity traditionally available from spectrum in many markets. MNOs are reusing spectrum at smaller and more targeted sites to mitigate the shortage. Key challenges with deploying smaller sites include access to locations (which have very specific requirements), power and backhaul each of which can be addressed by sharing. MNO s subscribers are seemingly more loyal to OTT providers like Google and Facebook than to their carrier. Meanwhile, regulations continue to shape 164 TowerXchange Asia Dossier TowerXchange Asia Dossier

165 the industry: the old approach to providing access is essentially gone and operators face challenging QoS issues targets. At the same time many developing countries need access to funds and the mobile industry is often the single biggest industrial contributor the GDP; tax revenue expectations are high. There are even some markets where the regulator has revenue targets. 1 Over 100,000 towers are coming to market in Asia and the Middle East Kazakhstan 3.9 # total towers for sale (current or imminent) ('000) # total towers sold/carved out to date ('000) 1 x # towers for sale ('000) x # towers sold/carved out ('000) 1 China How can the MNOs respond to this pressure? One answer lies in the financial re-engineering offered by partnerships with the tower industry. Kuwait 1.5 Jordan 2.1 Bangladesh The tower industry also faces new challenges including consolidation of MNOs and regulatory hurdles in their newer markets. Towercos need to redefine what makes them successful. Increasingly To date there have been over 400,000 towers transferred from MNOs to towercos around Asia, and there may be as many as another 100,000 for sale as the towerco model is established in new countries Suresh Sidhu Iraq 4.1 KSA 14.7 Bahrain 0.4 India Sri Lanka 2.2 Afghanistan 2.0 Pakistan 18.7 Note: 1 Publicly announced tower transactions/carve outs since 2005 Note: 1 Publicly announced tower transac1ons/carve outs since 2005 Source: SP SP Capital Capital IQ, Mergermarket, IQ, Mergemarket, TowerXchange TowerXchange the discussion at a customer level is moving from pure economics to instead focus on the real value delivered to clients and their end-users this is becoming a significant part of sale and leaseback discussions. The towerco business appears to be extremely stable but it pays to be a little paranoid in spite of this, said edotco s Sidhu. Forward-thinking CXOs at towercos worry about sustainability of the existing Indonesia 17.3 Myanmar Malaysia build to suit and colocation focused tower model and increasingly consider a range of potential enhanced services, from energy solutions, tower monitoring, fibre resale, and passive and active O&M, to developing new solutions such as IBS, small cells and BTS hotels. To date there have been over 400,000 towers transferred from MNOs to towercos around Asia, and there may be as many as another 100,000 for 1.3 Thailand 15.0 Cambodia TowerXchange Asia Dossier TowerXchange Asia Dossier

166 sale as the towerco model is established in new countries. As this process continues there will be a sea change in how the industry operates as operators embrace the model and start focussing resources away from infrastructure management. Towercos will take on this role and structure the focus on infrastructure to provide the best end-user experience. The requirements of infrastructure sharing are huge, and demand for solutions is increasing faster than the capability to meet it. The industry needs to respond; MNOs that have divested their assets will be happy to start building their own towers again if they feel that we aren t keeping up with market demand. While some towerco executives are preoccupied with delivering 85% margins, others are more focused on meeting their clients desire for end-to-end solutions; our tenants want the most efficient assets possible and are more interested in solutions for the specific challenges they face. Increasingly MNOs don t feel the need to own the towers. There will be continued consolidation, and edotco also predicts increasing involvement in active infrastructure sharing. RAN sharing is prevalent in Europe, where some towercos have seen their share of tenancies fall by 20-35% as a result of network sharing. RAN sharing is coming to Asia and has been launched in Malaysia and Indonesia. Meanwhile, what role could innovations like Google Loon and Facebook Aquila play in extending rural connectivity? Innovations often start by addressing opportunities nobody else appears to want to address, like marginal rural markets, but if successful these solutions could extend from rural to core network coverage. In the traditional model, towercos are more inwardly focused on assets as opposed to services, on the conversion of capex to opex, and tend to focus of rental of space on traditional ground based towers. Suresh suggested eight refinements to make towercos successful in tomorrow s world: 1. Scale within country but also scale across multiple footprints 2. Delivery of operational improvements made transparent through uptime, SLA and low TCO metrics 3. The ability the structure strategic deals, leveraging balance sheets beyond a pure focus on co-locations 4. Embracing new technologies such as small cells, BTS hotels and camouflage sites 5. Enhancing the scope of towerco services to include RMS, O&M and power where appropriate 6. Standardising processes to propagate best practice 7. Engaging regulators and other national stakeholders to position towercos as a true partner to the country, and to position telecom infrastructure as fundamental to Nation Building 8. And finally to drive the development of human resources across the region, building capabilities and enhancing skill sets Akhil Gupta, Chairman, Bharti Infratel Renowned tower tsar of Bharti Enterprises, Akhil Akhil Gupta, Chairman, Bharti Infratel Gupta s keynote began with an examination of the origins and the future of the tower industry, reminding the audience that it is still young, and the concept is still controversial to many MNOs who consider their towers a source of tremendous competitive advantage. It is interesting to note that zoning restrictions played a part in the birth of the towerco model as they forced some of the initial cases of infrastructure sharing. After this came the development of monetisation and financial engineering for tower portfolio management, and the first instances of the sale and leaseback model. The real tower industry had its birth in Asia in India between 2007 and 2008; when astonishingly the three largest competitor MNOs agreed to cooperate and create Indus Towers, still the world s largest 166 TowerXchange Asia Dossier TowerXchange Asia Dossier

167 towerco outside China. Operators found that while they competed on the front end they could work together on the back end. The tower business model started to win over major stakeholders and many MNOs were convinced that it was the right thing for their business to transfer towers their towers into this emerging new class of infrastructure company. Operators are mainly focussed on sales and marketing and developing new services for their end users; however maintaining uptime is the main focus of towercos and it is a thankless, low tech, time consuming, 24x7x365 job. In some cases there were huge problems with MNO captive towers in a huge mess, poorly maintained, with band-aid solutions being used. India had and still has low ARPUs, and the MNOs and realised that the opex savings could be immense when adopting the towerco model. Indian telecoms was and is experiencing huge growth, and before the advent of the towercos two thirds of capex went into passive infrastructure. Faced with all of these factors, MNOs found that the easiest solution was to relieve themselves of the capex requirement, and focus their time and resources on what they do best. In spite of their objections the operators could not continue to oppose this shift and in the end only delayed the inevitable. There was a great need for improvement considering it was common to see four towers in one 50 square foot plot; the tower industry emerged from this. If the operators were going How many industries can say they make money when an existing customer pays less? But that s how it works; the success of Indian tower companies depends on clients paying less and not more Akhil Gupta to spend millions of dollars why not spend it on batteries and generators instead of towers and give the money to towercos? Instead of spending US$20,000+ to get a new tower up and running why not just lease a spot on an existing tower? This was the main idea behind the leap of faith that was taken; it became imperative to come up with a solution that was win-win-win for the incumbent, the towerco and the new tenants, and this is the basis of the Indian towerco model. Incumbents could have an automatic reduction of 20-22% on energy charge and rental for every new tenant that joined the tower. For the towerco a tower becomes profitable as soon as the second tenant is added, and their speed to market is the same as the incumbent; there is no discrimination. How many industries can say they make money when an existing customer pays less? But that s how it works; the success of Indian tower companies depends on clients paying less and not more. Towercos have two main objectives; first they are focused in the disarmament of operators seeking to disarm their manpower and make it economically unfeasible for them to build their own towers. Secondly, towercos need to promote non-discriminatory sharing so that all tenants feel comfortable. Towercos can t have single tenant sites as they are unprofitable, and every time operators perform a cost benefit analysis of build versus lease, building a new tower is never justified, and the same with loading new equipment on towers themselves. The towerco MSA is the same for all tenants, except if they are a large customer with larger tower portfolios they receive a larger discount. The result of this model in India is that practically no operators build their own towers and many towercos have all of the operators on their towers. Over the last six years our co-locations have increased at a CAGR of 8%, revenues at a CAGR of 11%. EBITDA margins have been increased to 42.9% 162 TowerXchange Asia Dossier TowerXchange Asia Dossier

168 and profit after tax has grown at a CAGR over 50%. The beauty of the model is that it doesn t require more towers, it requires more tenants. There is a lot of discussion about what the future holds for the tower industry; the demand for data is great while there will continue to be a strong need for more coverage. Towercos are definitely benefiting from technology; every time a base station gets loaded with traffic the radius changes; the moment traffic comes this starts shrinking and it makes network planning go haywire. Towercos allow clients to install 3G equipment and then 4G equipment; it s like opium and the speed to market we provide encourages them to rollout quickly. The increase in traffic determines when they will be forced to put up new towers, and, as long as they maintain the number of tenancies, the industry will continue to grow. Towercos need to keep the operators disarmed of all things tower related, and need to do this as our clients requirements change. We are seeing an increase in the number of indoor DAS sites; it was Gupta s view that some towercos may start deploying their own infrastructure to enter this market, but this could cause a problem for the tower industry. It is important for towercos to remember that they should not compete with their own customers on Wi-Fi or DAS; whatever they do it should be based on the model of open sharing, and on a white label basis. Transmission is also critical, and with the growth of data more towers will require a fibre connection, Towers Co-locations 73,921 FY ,819 FY 10 78,442 FY 11 FY 11 FY 12 FY 12 and once they can be connected to a transport network the most efficient service can be delivered. Long distance fibre like towers is part of the infrastructure and the MNOs should not concern themselves with it. High capacity microwave links are another possibility, and at some stage submarine cables for international connectivity; all of these should become a focus of towercos. The government of India is also promoting the creation of smart cities and these come with substantial capacity requirements which will need shared infrastructure. This will be a huge project and towercos are in a great position to play a part. It represents a great opportunity to get involved in managed services that are agnostic to operators. There will be a new market for infrastructure and this is a wonderful opportunity for towercos. Towercos do, however, need to avoid irrational Stable tower growth FY 13 FY 13 FY 14...coupled with an increase in co-locations 142,086 79, ,908 82, ,608 83, ,202 FY 14 85,892 FY ,294 FY 15 CAGR 3.05% Closing share factor CAGR 7.87% pricing wars like those that have happened between operators, citing regulations and the government s involvement. Towercos can t get too greedy and try to make profit at the cost of customers. It is positive to have many operators, but it s good to have a few that are strong and financially stable and can respond quickly to market changes and adopt innovative new technologies. The tower industry is stable compared with other technology-related industries with more unpredictable revenue models, falling margins, irrational pricing, currency fluctuations, and the risk of technological obsolescence. Infrastructure management may not be as exciting as founding or investing in a dotcom, but it s good to be in an industry that has solid, profitable cash flows. The tower industry has an important role to play and 168 TowerXchange Asia Dossier TowerXchange Asia Dossier

169 Strong financial performance (Consol.) Revenue (INR Mn) EBITDA (INR Mn) EBITDA (INR Mn) 70,297 FY 10 24, % FY 10 2,530 FY 10 85,081 FY 11 31,288 35,269 38, % FY 11 5,515 FY 11 94,521 FY % FY 12 7,491 FY 12 a potentially bright future, but success or failure depends on our behaviour. Towercos can t afford to get involved in wasteful competition, or become too greedy; if operators were to suffer while towercos make money it would be disastrous; there is a need to resist temptation and work together on this going forward. Amit Sharma, Executive Vice President, President - Asia, American Tower Corporation According to Amit Sharma, the growth rate of the Indian market is now arriving at the sweet spot; 3G hasn t really taken off, 4G is being 102,720 FY % FY 13 10,025 FY ,267 FY 14 44, % FY 14 15,179 FY ,683 FY 15 50, % FY 15 19,924 FY 15 (1) Revenue and EBITDA are excluding Other Income (2) EBITDA margin % has been calculated on Sharing revenue launched, and the entrance of a greenfield operator (Reliance Jio) is prompting incumbent operators to significantly upgrade their networks. Capex is expected to increase between 30-50%, but MNOs don t want to invest most of that in steel and cement and that s where towercos can help. At the same time ARPUs remain quite low in this market; this is somewhat offset by rural mobile penetration which is at 20% currently and is expected to treble over the next five years. With smartphones using five to ten times more data than non-smartphones it s plain to see where the increase in demand will come from. MNOs across India are putting EBITDA Margin CAGR 10.6% CAGR 15.7% CAGR 51.1% US$15bn into network upgrades and spectrum auctions. Currently the prevailing tenancy ratio in India is around two, and this is expected to increase to 2.5 in the next five years; meaning there will be approximately 225,000 new tenancies, representing huge room for growth. Amit Sharma predicts that this period of growth should last between three and five years. However the tower industry also faces challenges, not least of which being regulation. To date it seems that some regulators want us one day, and don t want towercos the next day; regulators are of two minds about the role of the tower industry. Regulations can put restrictions on what towercos can and can t do, limiting the amount and flavour of equity available, and sometimes limiting the scope of their business. In the long term this is not sustainable, but in the short term it doesn t seem that regulatory restrictions are going away. Licensing, license fees and royalties are another aspect; many countries treat the tower sector as a goose that lays golden eggs, but they don t apply much creativity into promoting its growth; instead they focus on how they can wring more out of the industry, as we have seen in markets where they are attempting to introduce licensing for towercos. This is happening both in Africa and Asia. In some cases every municipality wants a piece of the towerco pie and this can lead to one time fees for tower deployments, and in some cases ongoing fees which can add 10, 15 or even 20% on to the cost 164 TowerXchange Asia Dossier TowerXchange Asia Dossier

170 The tower industry needs to act together to achieve enhanced industry-wide best practices; no towerco is a standalone business Amit Sharma of a tower which is passed on to the towerco and its clients. Regulators don t see this as an issue as they are charging a proportion but this goes against the grain in some countries where the regulators are also trying to develop and make connectivity ubiquitous. As operator margins are increasingly getting squeezed, MNOs are looking at every element of the ecosystem and seeking more efficiency. In many cases the cost of capital is very high, which puts the tower industry between a rock and a hard place: the customer expects their lease costs and opex to decline but the towerco model needs escalators to absorb these additional levies and taxes.the towerco model works: financial investors gravitate toward the predictable returns we generate, so we need to find a solution to these additional costs before the model is compromised.. To address this, the tower industry needs to think about its role in the ecosystem in three, five, and ten years from now. MNOs are becoming consumer facing, service delivery focused organisations. This leaves the tower industry to run both passive and perhaps active infrastructure on a massive scale, and we must evolve further and become an even more efficient minutes factory; the cost per megabyte needs to decrease. The dividing line between MNOs and towerco needs to go. It makes no sense for the MNO to send a technician to visit a site to confidure the base station, then three days later for the towerco to send a technician to service the diesel genset: these jobs can be done much more efficiently by one or other stakeholder. There are still efficiencies to be achieved and redundancies to be eliminated, and towercos are often better at identifying and acting on these than MNOs. Towercos need to widen their scope; provide maintenance of backhaul and active infrastructure; they need to identify opportunities to offer white label services such as Wi-Fi. Services like this can be deployed by operators, but they will require more DAS small cells; again the neutral host, sharing model will work best to achieve this. Finally, we have to run our operations even more efficiently. There is still room for improvement. Choosing the right energy solutions can make a difference; there are challenges such as pilferage that need to be overcome, and above all issues related to uptime and operational efficiency that escalate customers costs need to be eliminated. Towercos should extend the scope of what we do, but do so in partnership with our customers, not as a land grab. The tower industry needs to act together to achieve enhanced industry-wide best practices; no towerco is a standalone business, and events like the TowerXchange Meetup can play a critical role in facilitating this. India and Southeast Asia are on a roll and many are making the move from voice to data; we have to work together on robust network quality and coverage, increase the number of tenancies to deal with the challenges presented by cost pressures, regulatory limitations and license fees 170 TowerXchange Asia Dossier TowerXchange Asia Dossier

171 edotco 360: An update on edotco s operations in Myanmar Oliver Coughlin shares insight the development plans of edotco Myanmar Oliver Coughlin, MD, edotco Myanmar Read this article to learn: < How the acquisition of MTC has progressed since December < Which services edotco plans to offer in Myanmar < edotco Myanmar s plans for organic and inorganic growth < When to expect further consolidation in the Myanmar tower market edotco has been busy consolidating its new footprint in Myanmar since the acquisition of MTC last December. We caught up with Oliver Coughlin, MD of edotco Myanmar for an update on how the merger was progressing, and what new developments we can expect to see over the next few months. Keywords: Asia, Asia Insights, Build-to-Suit, Co-location, Digicel, Digicel MTC, edotco, Energy, M&A, MTC, Myanmar, New License, RMS, Telenor, Tenancy Ratios, Towercos, Viettel, Who s Who TowerXchange: How have things progressed since the acquisition of MTC in December? Oliver Coughlin, MD, edotco Myanmar: By virtue of the detailed planning that took place pre the acquisition the transition has been very smooth, professional and very positive. The dynamics have changed somewhat due to the fact that Digicel was more of an operator and edotco is a pure towerco. I think that Digicel spotted a great opportunity in Myanmar, and edotco spotted a great company in MTC. The acquisition has been extremely positive for our customers, staff and the future of company. edotco is investing in this market for the long haul with the goal of being the largest towerco and we re happy to be a part of it. edotco also brings a lot of value including the capacity to monitor sites with echo; their methods are very useful and well proven in other markets. TowerXchange: Do you have any further updates on whether edotco will be providing co-locations, build-to-suit, transmission, fibre and operations and maintenance in Myanmar? Oliver Coughlin, MD, edotco Myanmar: All operators in Myanmar are aggressively seeking co-location due to both the speed of rollout and the savings gained. From a co-location perspective edotco Myanmar continues to have the highest tenancy ratios in Myanmar, currently at 1.84 and heading for 2. This is mainly due to the quality and location of our 1,250 tower portfolio, and 98% of our infrastructure is 166 TowerXchange Asia Dossier TowerXchange Asia Dossier

172 specifically designed for multi-tenant occupancy; we have successfully co-located all of the operators. We can give each client immediate access to approximately 34% of the population as we have built towers in all of the main cities and large towns in Myanmar, and we have also built on the main transit routes between the commercial centres across the country. With regards to build to suit, we are in discussions with a number of operators with a view to providing BTS solutions. edotco Myanmar has a great track record of building quality infrastructure in Myanmar, therefore we have the capability, the resources, expertise and the financial backing to expand our portfolio and this is our absolute intention. The time-frame will depend on successful conclusion of contract negotiations in the coming weeks. edotco also has a proven track record of providing services such as transmission fibre and O&M in a number of markets in Asia and it is our intention to offer these services across Myanmar in the coming months as well. TowerXchange: How is edotco adapting its power provision model for the Myanmar market? Oliver Coughlin, MD, edotco Myanmar: edotco Myanmar clearly understands that the provision of power is a pre-requisite to receiving an order for BTS in Myanmar; accordingly we are at the advanced stages of discussions with power providers and system integrators and should finalise these within the coming weeks. It is important to note that edotco provides power to operators as standard practice in a number of existing markets such as Bangladesh and Malaysia, therefore we in will benefit hugely in Myanmar from our colleagues experience in these other markets. TowerXchange: Telenor continues to build new sites at a steady pace; how will this affect demand among towercos? Oliver Coughlin, MD, edotco Myanmar: Telenor have been very successful in Myanmar and I am pleased to say that we have a very successful co-location agreement in place with Telenor. We obviously hope to expand the services we provide Telenor and indeed all operators in Myanmar in the coming months. TowerXchange: How will the arrival of the fourth operator impact the market in Myanmar? Oliver Coughlin, MD, edotco Myanmar: From a consumer point of view, competition is good. edotco Myanmar is ideally suited to provide any new entrant with rapid access to approximately 34% of the population by virtue of the location and quality of our existing portfolio; considering our proven track record in building high volume rollout across the Union of Myanmar we look forward to any future opportunities with new entrants, although we understand this is a major undertaking for the regulators and the applicants and will take time to finalise. edotco has clearly stated that its intention is to aggressively increase its portfolio in Myanmar, and this will be achieved by organic and inorganic growth opportunities TowerXchange: We predict that there will be at least one towerco acquisition by the end of 2016; what are your thoughts on this? Are there some opportunities for inorganic growth? Oliver Coughlin, MD, edotco Myanmar: edotco has clearly stated that its intention is to aggressively increase its portfolio in Myanmar, and this will be achieved by organic and inorganic growth opportunities. We do expect the towerco landscape to change in the coming years and we will evaluate every opportunity on its merit. Myanmar is a tough market and requires a lot of capability, resources and financial backing from those that would like to remain competitive. I have seen other companies enter this market with high aspirations, but the realities on the ground dictate that some will be looking for exit strategies in the short to mid term 172 TowerXchange Asia Dossier TowerXchange Asia Dossier

173 edotco 360: the deployment of the first carbon fibre tower in Asia edotco Group s newly appointed COO Oliver Coughlan talks about his new role TowerXchange recently caught up with Oliver Coughlan, COO, edotco Group, to learn about his new role in the group, and to hear about edotco pioneering the first carbon fibre tower in Asia; a light weight yet high tensile strength solution whichis 40-50% faster to install while offering a 20% reduction in TCO. TowerXchange: Congratulations on your recent appointment; could you tell us about your new role? Oliver Coughlan, COO, edotco: I ve moved on from the role of Managing Director, edotco Myanmar which I held since the acquisition of MTC last year. My new role is now as the Chief Operations Officer of edotco Group, reporting directly to the Group CEO. The role is based in edotco headquarters in Kuala Lumpur, Malaysia; and I share responsibility for Cambodia, Malaysia and also Myanmar. This new role offers the best of both worlds - I ll have the opportunity to get involved in the development of other markets, and at the same time maintain my involvement in the Myanmar market, which is great as I ve enjoyed my time there. Oliver Coughlan, COO, edotco Keywords: Asia, Asia Insights, Bangladesh, Cambodia, Carbon Fibre Towers, Colocation, CXO, edotco, Interview, Malaysia, MTC, Myanmar, Opex, Pakistan, Sri Lanka As the company continues its growth and expansion of our footprint across the region, the management team needs additional support. The role will also cover the integration of new technologies, combining the responsibilities of a COO and CTO, inasmuch as a towerco requires a CTO. Read this article to learn: < The scope of edotco s new COO role < edotco s plans for organic and inorganic growth across the region < The benefits of carbon fibre towers for new rollouts < edotco s plans for deploying carbon fibre towers in its markets I ve held the role of CEO and CTO for other companies in different markets, including Myanmar. I have over twenty years of experience in telecoms and the tower industry, during which I ve had the opportunity to learn about different countries and its cultures. I will draw upon this 168 TowerXchange Asia Dossier TowerXchange Asia Dossier

174 We are pioneering the use of carbon fibre structures in Asia, to provide a solution that addresses requirements and concerns of the telecommunications ecosystem from MNOs, governments, regulators, landlords, end-users and communities experience to achieve my main objectives - the expansion of edotco s footprint, and supporting our customers with timely and cost-effective service. TowerXchange: Could you tell us about your new project on the deployment of carbon fibre towers? Oliver Coughlan, COO, edotco: At edotco, we are always experimenting with materials and innovative solutions to address the challenges of the telecommunications infrastructure industry. We are pioneering the use of carbon fibre structures in Asia to provide a solution that addresses requirements and concerns of the telecommunications ecosystem from MNOs, governments, regulators, landlords, end-users and communities. The ground-based carbon fibre tower installed in Puchong, Malaysia is the first such tower in Asia, by edotco. Carbon fibre structures harness the inherent properties of the material to offer unrivalled benefits: < 70% less weight than conventional steel structures, reducing foundation requirements by half while providing a high strength to weight ratio. A smaller footprint also requires less materials; < High rigidity with tensile strength ten times greater than steel, allowing load bearing with the structure able to better withstand harsher forces of nature especially wind conditions; < Reduced installation time; overall it is 40-50% faster to install a carbon fibre structure; < High durability as it is highly corrosive resistant, contributing towards lower maintenance costs over the lifespan of the structure. These features will result in a 20% lower total cost of ownership (TCO). As edotco gains more experience in the deployment of carbon fibre towers, customisation requirements will lessen, bringing the company closer to its target of a 40% TCO reduction. TowerXchange: Which markets are you looking at next for deployment? Oliver Coughlan, COO, edotco: The next carbon fibre tower to be installed will be a rooftop structure in Bangladesh, where it will provide a solution to building constraints. This is the next deployment we have planned, but the carbon fibre tower is truly an ideal solution that will be made available for new builds across our footprint as one of our core products. The aesthetically pleasing carbon fibre tower is also a green solution as it emits less carbon dioxide during its production process. This solution affirms our commitment to enable connectivity in our countries of operation by establishing high quality shareable telecommunications infrastructure for network operators 174 TowerXchange Asia Dossier TowerXchange Asia Dossier

175 How Indus Towers is enabling a digital workforce and a Digital India New CEO Bimal Dayal discusses innovation, towerco consolidation, green towers, and the progress toward Smart Cities Read this article to learn: Bimal Dayal, CEO, Indus Towers Renowned joint-venture towerco Indus Towers, a partnership between Bharti Airtel, Vodafone and Idea, continues to set the standard for operational excellence and innovation in the tower industry. We spoke with recently appointed CEO, and TowerXchange advisory board member, Bimal Dayal to learn about the company s approach to workforce digitalisation, continuing green tower initiatives, and the role of towercos in the race to 4G and Smart Cities in India. Keywords: 3G, 4G, Asia, Asia Insights, Capex, Colocations, Energy, Hybrid Power, India, Indus Towers, Infrastructure Sharing, Market Overview, O&M, Opex Reduction, Towercos, Batteries Lithium, VRLA, Outdoor Equipment, Health & Safety, Network Rollout, Energy Efficiency, ESCOs, Renewables, Skilled Workforces < How Indus Towers enables and empowers their and their partners workforce < The progress of Indus Towers green towers initiative and collaboration with RESCOs < How towercos are supporting the rollout of 4G < The impact of petroleum products currently being excluded from the GST framework < Driving the development of Smart Cities as part of the Digital India project TowerXchange: Congratulations on your new role; what is your vision for the future of Indus Towers? Bimal Dayal, CEO, Indus Towers: Let me start by saying where we are at Indus Towers and how I view our current situation, then we can talk about where we are heading. I ve been asked many times since my appointment as CEO what changes I have planned. I have been part and parcel of setting the course of this company along with BS Shantharaju. We have set ourselves on a great course already, and the plan remains the same. We re calibrating the course naturally, but the direction we re heading is fine. If anything, I d like to speed up our progress; we re on course but we d like to get there faster. I would like to guide the organisation and foster innovation in each department of the company and with every step we take. We continue to drive business growth, strengthen our commitment to green towers, foster a culture of safety among our employees and the entire ecosystem, and we re achieving robust financial growth. We have introduced a lot of innovative new ideas, sometimes as a matter of survival, sometimes simply because there was no-one else prepared to do it. For example, our fixed-cost energy model has become a de facto standard within the Indian tower industry, and we have achieved a large scale conversion from indoor to outdoor equipment on our towers. 170 TowerXchange Asia Dossier TowerXchange Asia Dossier

176 One of our lesser known achievements was the digital enhancement of our workforce. We have provided smartphones for all employees, including our field technicians, and can now receive realtime updates on their location, confirmation of completion of preventive maintenance tasks, and further reinforce health and safety best practices. We have a large workforce, including our partners, and we have enabled the staff responsible for site acquisition, deployment and O&M who are continually on the move and in touch with landlords; we ensure that their safety is paramount. For a company involved in a business which many might not think of as glamourous, we have managed to do a lot of important soft work with our workforce and partners. This was the third year that Indus Towers has been awarded the Great Workplace award by Gallup, and we rank number 41 on the list of Great Places to Work in India; this is an improvement from a position in the midsixties in the last ranking, which is a significant achievement for a company that s only 8 years old. Handling equipment is a people business, and people are our most important asset. One aspect I m personally very passionate about is the role of towercos in Smart Cities. When the first cities came to the table, Indus Towers played a prominent role, and what we envisaged will soon come to pass. Towercos are getting more clarity around Smart Cities, we ve had some initial successes, and the latest tenders confirm that we re on the right track - there is a lot in the pipeline regarding smart cities. This was the third year that Indus Towers has been awarded the Great Workplace award by Gallup TowerXchange: What are some of the main changes in the Indian tower market in the year since we last spoke? Bimal Dayal, CEO, Indus Towers: We have been observing a theme of consolidation, with ATC and Viom coming together and creating a good new monolith. We are seeing increasing regulatory engagement; considering the tower industry can do more to bring down the cost of telecoms development. We hope the regulatory environment will continue to become more conducive to investment. Digital India and its proposed Smart Cities represent a large opportunity for towercos. Rural connectivity is becoming more meaningful for IP-Is (IP-Is are companies licensed in India as infrastructure providers), provided the regulators clear the decks for us to participate. IP-Is and their partners have taken a collaborative approach toward problem solving, and have supported the rollout of successive generations of technology on existing infrastructure, while also building more. There is no parallel situation where so much reorganisation of networks and spectrum has happened, as has taken place in India. The capability of IP-Is gives confidence to a lot of our operators to acquire spectrum: we re taking a collaborative approach to reduce time to market and accelerate return on investment in spectrum, and we re integrating the new product innovations our customers demand. We re even starting to improve the skyline, with the emergence of lighter towers in India, supporting both the macro and small cell network layers. TowerXchange: Congratulations on passing the 50,000 green site landmark! How are India s towercos progressing towards the government s target to lower carbon footprints? Bimal Dayal, CEO, Indus Towers: At the end of March 2016, Indus had converted 50,641 sites to run diesel free. Crossing the 50,000 green site landmark is a big deal because as our tenancy profile grows, conversion to green towers becomes more difficult as power consumption goes up; green sites require larger energy storage capacity, for example. I see this as Indus Towers agenda, more than the government s, although we will comply with or even 176 TowerXchange Asia Dossier TowerXchange Asia Dossier

177 surpass any requirements. Going diesel-free will be a certainty at some point but the timeline remains unknown. Whether it takes three, five or more years, we aim to stop handling diesel completely. We will look at converting more sites to renewables as an alternate substitution agent, but the business case remains marginal for many sites at present. TowerXchange: What has been your specific progress in converting multi-tenant sites to green sites? Going diesel-free will be a certainty at some point but the timeline remains unknown. Whether it takes three, five or more years, we aim to stop handling diesel completely Bimal Dayal, CEO, Indus Towers: We have converted many single and dual tenant sites, and are even starting to convert three-tenant sites. We evaluate the case for upgrading each site on its own merits, focussing on three dimensions. First the uptime cannot be compromised by the conversion; second, the energy solution needs to be sustainable; and third, it must lower the operating cost of the site. I m confident that we will be able to not only maintain the pace of our green programme, but also add renewables into the mix. TowerXchange: To what extent has Indus Towers partnered with RESCOs, and what needs to change for RESCOs to play a larger role in Indian telecoms? Bimal Dayal, CEO, Indus Towers: Our engagements with RESCOs have been limited and have not increased, which is somewhat disappointing. The energy control regime is opening up - net metering and open access are critical - which will open avenues to partner with RESCOs or makes it possible for Indus to become a provider ourselves. So far the RESCO proposition hasn t worked well, but with the changing regulatory environment I see scope for deeper partnerships between IP-Is and RESCOs to take big steps in the next two years. TowerXchange: It has been suggested that India will need to double the number of cellular PoS for the 4G era. How is the development of 4G progressing in India, and what are the opportunities for towercos? Bimal Dayal, CEO, Indus Towers: 4G is progressing faster than what may be visible or discussed in India. The device base grew nine times from 5mn to 45mn in The entry level price for 4G handsets has dropped by almost 50%. The new 4G operator will be a major catalyst and driver; all the major operators are accelerating their 4G rollouts in deeper territories than initially planned. There is a huge amount of capacity building underway to make sure that when the battle for the 4G customer occurs between operators, then there is enough capacity to provide good end user experience. Wellconnected backhaul is critical for good 4G service. Indus Towers does a lot of what we call projects : ranging from as little as one antenna being added or removed, to fibre being brought into a site. In 2014, a busy year, we did 133,000 projects. In 2015 we did 216,000 projects including everything from 2G, 3G and 4G to microgrids. Growth is increasing year on year and, with another spectrum auction coming up, more network realignment will be required. The 4G acceleration is having a big impact; to sustain each 4G node a great deal of activity is required at the backend, which IP-Is are providing. The rollout of 4G has been at a breakneck speed it may be an unprecedented scale and speed of rollout and it has necessitated effective co-operation between the MNOs and IP-Is. 172 TowerXchange Asia Dossier TowerXchange Asia Dossier

178 The consolidation of IP-Is will mimic MNO consolidation; there will always be a handful of small, independent niche players, but eventually the Indian market will be consolidated into maybe four larger towercos TowerXchange: The Economic Times recently suggested Indus Towers may be a prospective buyer in the current round of Indian tower industry consolidation what criteria would you use to evaluate prospective acquisitions, and how do you see the structure of the Indian tower market being redefined by M&A? Bimal Dayal, CEO, Indus Towers: In the Indian tower market, much of the large scale consolidation has taken place with the acquisition of Viom Networks by American Tower. There are a few smaller players left in the market, with 10,000 towers or less, which will increasingly become targets for consolidation. With any investment one must examine the potential payback, the health of the sites, and their future potential. M&A is a game of synergies given the scale of our footprint. Any potential acquisitions must have a good fit with our rollout strategy; there must be a need from our clients for those locations. The consolidation of IP-Is will mimic MNO consolidation; there will always be a handful of small, independent niche players, but eventually the Indian market will be consolidated into maybe four larger towercos. TowerXchange: How does the cascading effect of multiple layers of taxation including the recent decision to keep diesel outside the GST framework affect the economics of tower industry investment in India s ICT infrastructure? Bimal Dayal, CEO, Indus Towers: GST is a principle to relieve multiple taxes levied at each stage of consumption; from import to consumption. GST is a carefully planned, great initiative with positive intentions; a great reform. For the next step we need to look at the fine print when central GST is passed. The taxes paid on diesel by industrial consumers such as the railway, aviation and telecoms is very high. Petrol and diesel are excluded from the GST, which will dampen the positive impact of this taxation reform. Electrical equipment and the partner ecosystem will see their tax burden reduced under GST; the movement of goods will improve. I feel we are seeing some initial bumps in the road from GST which will make the cost of operations go up in the near term, but personally I have faith that within two years IP-Is overall tax burden will go down. TowerXchange: Indus Towers has been very innovative in its approach to developing Smart Cities; what are the new developments in this area? Bimal Dayal, CEO, Indus Towers: We have been articulating it very clearly: we have the capability to provide the passive infrastructure for any Digital Backbone in the planned smart cities, and support all service branches on the digital highway. Indus Towers is present in 17 of the 22 proposed smart cities and we are engaging to define what can be done jointly, and what role Indus can play Smart Cities are not only about doing it yourself, but about striking partnerships to provide services such as waste management, parking management and surveillance. Led by IP-Is, many consortia will be formed to setup and service Smart Cities; and it s not just about setup, but running and sustaining Smart Cities over a long period. We are keeping our fingers crossed; the progress has been satisfying so far and we can take a big step forwards in the Digital India agenda in the next months 178 TowerXchange Asia Dossier TowerXchange Asia Dossier

179 Indus Towers on supply chain management and operational excellence Supply Chain VP Deepak Sharma shares some insights into how his company improved business partner satisfaction and set new industry standards for efficiency Deepak Sharma, Vice President Supply Chain, Indus Towers The world s largest and most renowned joint-venture towerco, Indus Towers has been hard at work efficiently providing passive infrastructure on a non-discriminatory basis to Indian telecom operators and wireless broadband service providers since its founding in The company has consistently achieved high rankings among other industry leaders in India for the efficiency of its operations. We spoke with Deepak Sharma, VP Supply Chain to learn some of the methodology driving these achievements. With over 23 years of experience managing end to end supply chain & logistics including sourcing and operations for companies including GE, Schneider and Aditya Birla Group, Deepak now handles services sourcing, business partner relationship management, demand and supply planning, warehouse & logistics, SCM process design and pan India SCM operations at Indus Towers. Keywords: Asia, Asia Insights, Energy Efficiency, India, Indus Towers, KPIs, Opex Reduction, Spectrum, Supply Chain Management, Towercos Read this article to learn: < The roadmap that Indus Towers developed for supply chain management < The importance of working with clients and vendors as partners < How Indus Towers achieved highest ever score of 4.33 out of 5 in Partner s ( vendor s ) Satisfaction survey < How Indus Towers optimised the operation of its warehouses TowerXchange: Since you joined Indus Towers in 2012 the company has achieved some of the highest standards for efficiency in the industry; can you share some detail on how you achieved this? Deepak Sharma, Vice President Supply Chain, Indus Towers: Shortly into my new role at Indus Towers, management conveyed to me that I had to take my team through a complete transformation to keep pace with the breakneck speed with which India s telecom industry has been moving. Thanks to the support and guidance of the Management Committee of Indus Towers, we have carried out all that we set out to do. In early-2013, we embarked on a three-year transformation journey with the team. We met at an offsite location in Goa to chalk out the vision, the mission, and the journey roadmap. The goal was to achieve global-best KPI benchmarks, and to meet all internal and external stakeholder needs and expectations by providing effective, flexible, proactive, cost-effective and extended supplychain and logistics models through technology, innovations, value-added services and collaborative efforts, all within a period of three years. Team SCM coined the slogan One Team One Dream for the first year, , Go Beyond for and Go Global for A slogan is a great communication and accountability tool which reminds you of your target and the heights to be achieved. 174 TowerXchange Asia Dossier TowerXchange Asia Dossier

180 As part of its roadmap, the SCM team designed a programme that it termed as 5P People, Partner, Process, Price, and Performance. The team decided that thereafter, everyone would only use the term Partner for all vendors and suppliers in all the communications. We strongly believe in People First and hence we prioritised People over Performance, as great performance can be achieved only when people are happy. Satisfied people will be encouraged to improve partner satisfaction and together they will work to deliver customer satisfaction. The team decided on the following as parameters of success. For People: in two years the company would work on the issues of the SCM departments employee satisfaction survey (ESAT) results and ensure that it is the highest in the telecom industry. For Partner: the partner (vendor) satisfaction results should be the highest in the telecom industry. For Price: substantial capex savings, implementation of innovative sourcing processes. For Process the team would generate value through Process Excellence and undertake an overall warehousing and logistics transformation. And for Performance, they would win global awards for the company. As part of Mission People, the team set for itself the target of becoming the number one in the industry by achieving the following bold targets of: < Employee Satisfaction Survey (Achieving >4.5 out of 5) < Partner Satisfaction Survey (Achieving 100th percentile in telecom) < Improve the Function s KRA to L5 (Outstanding) level, and < Contribute to Customer Satisfaction Survey (Achieving 100th percentile in telecom) To enhance people s performance a 4D-virtuous cycle was initiated with the following goals. < Set a Direction < Skill Development (including professional, interpersonal and excellence training through collaboration) < Performance-based Delivery < Distinguish Direction: Together we crafted a Vision for themselves as Excellence thru Collaboration. The entire SCM Value stream was studied, and necessary improvement projects were undertaken to set the right direction of movement. The team also digitally documented the complete work process, guidelines, and job description; and urged everyone to study and follow the steps as recorded in the document. Development: We facilitated many in-house and external training programs along with the Process Excellence team. Another initiative called Coffee with Boss was launched which gave an opportunity to all the managers to meet one-to-one with their subordinates and discuss everything which the subordinate wanted to share, whether personal or professional. The aim was to meet each subordinate every quarter and ensure that every single concern raised by the subordinate was addressed within that quarter. Another major objective of the programme was to create a gender-balanced team. The ratio of women in the SCM team was very low to begin with, so concerted effort was made to hire more women into the department. A Women s Forum was also formed for women employees across the county where they could connect over video conference and discuss the challenges faced by them at work. The Circle SCM Heads took the responsibility of addressing these challenges. All such initiatives led to creating a productive and happy workforce across the ranks. Delivery: We started conducting monthly and quarterly reviews and started giving constructive feedback. Team was tracked against clearly defined parameters and KPIs. Distinguish: Drawing from my past experience where I had organised cultural shows to connect the workforce, I along with my team initiated a pan-india SCM Meet in April 2014, where rewards and recognitions were introduced for all subsequent years. Now all the supply-chain team members get together once in a year to celebrate their success. They organise shows like stage plays, fashion shows, and dance performances that bring out the fun and creative side of all the team members. For one particular mega event, the team invited members of the top management they were 180 TowerXchange Asia Dossier TowerXchange Asia Dossier

181 Critical to quality Critical partner requirement Partner issues Voice of partner Structured communication on platform with partners Standard / formalised review mechanism Clarity of business requirements & update contact Delays in issue resolution No structured mechanism No structured platform to discuss issues No future visibility / contract review On-time payment Higher TAT and payment delays Payment irregularies Voice of business Business issues Critical business requirements Critical for processes Simplification / standardisation of processes Circle to circle variation Process standardisation across circles Improve partner performance Low performance on Indus KPIs Meet Indus KPI requirements Design and implement contract governamce Improve partners agility Higher TAT for change implementation Quick in adapting the change amazed to see all the company s employees participating with much aplomb in all such funfilled and creative events such as fashion shows and stage plays. The spirit of the team was infectious. The idea behind such initiatives is that when people are happy, they will focus on their jobs and will keep the partners and customers happy. We saw a complete turnaround in their approach to customer service and they took care that there were no integrity issues. With all these initiatives as part of Mission People, the team has been able to achieve an SCM Employees E SAT Survey Score of 4.54 which is the highest ever in the history of the organisation for SCM. TowerXchange: You emphasise the importance of working with vendors as partners; can you explain some of the benefits of this approach? Deepak Sharma, Vice President Supply Chain, Indus Towers: A healthy partnership is key to the success of not just a project, but of the entire business. The partner relationship needs to go beyond being just 176 TowerXchange Asia Dossier TowerXchange Asia Dossier

182 Monthly Quarterly Biannual Apex level contract governance Yearly Corperate contract governance Circle contract governance Basic - performance & administration (KPI review) transactional to become a long-term relationship. The partner relationship also has to include making their resources available to you to expedite a critical path project effort or to help test out a strategic concept. Becoming a trusted partner means that one of the best calls of the week from an organisation is unexpected and begins with the words, Do you have a minute? I d like to bounce something off you and get your reaction. It s when an organisation invites the partner to the office or dinner and wants CEO CSCMO & Corporate SCM Head Department Head, Fucntional Vertical Heads Circle CEO, Circle Function and SCM Head, Buyer + user group User group < Top level relationship governance < New business initiatives < Process governance < Senior relationship governance < Setting strategic direction, buinsess objectives, timeframes < Innovation < Partner liaison, problem resolution, continuity < Partner development - improving performance and capability < Negotiation of changes, new terms, new services < Risk assesment & managment < Performance reviews (service delivery, SLA, KPI, people < Feedback and communication < Capturing change and reqmt < Contact administration < Payments, incentives/penalties to get their reaction to a new growth strategy. At Indus Towers our major work is outsourced and dealing with over one hundred major infrastructure equipment partners and more than five hundred and fifty managed services partners. Our KPIs are delivered through all of these critical partners. Our customers evaluate our services on the following key parameters: the quality of implementation (FTR, first time right), the build time of sites, and the network uptime. In when these key parameters were evaluated, we found the scenario to be gloomy and unexciting. Not living upto the customer s expectations lead to low customer satisfaction. To overcome the challenges, brainstorming sessions and gap analysis were conducted in a CFT (including Partners). Here we kept the Low Customer Satisfaction (C-SAT) score against the Partner Satisfaction (P-SAT) Survey Report. We realised that for the last 3 years the P-SAT score had been almost stagnant. Further study of the voice of the partner highlighted following set of concerns: there was no platform for dispute resolution, KPI sign offs were delayed, payments were late, POs were delayed, and issue resolution was slow. The voice of the partner was studied and compared with the voice of the business which clearly identified the missing communication between the partners and Indus. As the outcome it was decided to devise an Effective Contract Management Programme to ensure effective contract delivery and to monitor its effectiveness through a scorecard to increase partner satisfaction and improve our KPIs. An elaborate platform was formulated and implemented a Four Tier Contract Governance across India. Contract Governance was rolled out to the majority 182 TowerXchange Asia Dossier TowerXchange Asia Dossier

183 of the partner categories, and for each category of partner detailed key focus areas were identified. Partner issues were clearly identified and prioritised based on the risk exposure. Necessary course corrections and procedural changes were implemented to sustain the benefits of the actions taken and avoid repetition. Over three years a total of 4,000 meetings were conducted with over 10,000 concerns raised and resolved; partners were happy as their concerns were being noted and monitored for resolution Historial jump Best in Telecom industry 4.1 Best in B2B industry These meetings have helped to identify major and long pending areas of improvement which were directly linked to organisation performance. Some of the concerns having a major impact include: On-time payment to partner < Concern: Delayed payment to a partner was leading to dissatisfaction in that partner due to difficulties in the management of working capital and constraints on business expansion. < Our action: A focus group was formed to achieve on-time payment. Today s we are paying our partners on-time on ~95% of occasions, a considerable improvement over 53% in To ensure its sustainability we pay interest on delayed payments. < Our action: Clear guidelines to partner and team were circulated not to work without a PO. Complete value stream analysis of the P2P (Procure to Pay) cycle was put in place, formulated to ensure the availability of the PO on time. Delayed KPI sign off < Concern: Huge gap and delay in KPI sign off leading to partner payment deduction and delay in the payment. The major reason identified for the delay was lack of clarity on the field and asset tracking. < Our action: System automation implemented through i-map and WMS and improved TOC which clearly provided the field data leading to a reduction of KPI sign off pendency. Significant improvement in Indus Towers KPI s helped us to achieve a historic Customer Satisfaction score of 91% For P-SAT Indus Towers is at the 100th percentile in the Indian telecom industry ( IMRB Surveyed ) and the 100th percentile in the B2B Segment in India (IMRB Surveyed). Our transformed partners have not only made us best in the telecom industry but among the best companies in B2B industry; I appreciate them and thank them on behalf of Team SCM! TowerXchange: You encourage high levels of teamwork in your company; what are some of the ways you support this? PO delays < Concern: Delay in providing the PO to partners even after work completion which clearly impacts their payments and work reconciliation. Through the Contract Governance Platform we eliminated transformed vendors into partners. This not only lead to a turnaround in partner satisfaction but also defined deliverables to map performance. Deepak Sharma, Vice President Supply Chain, Indus Towers: I am deeply connected to Indus values and believe that these values have helped us realise all the goals that we had set for ourselves. We have a 178 TowerXchange Asia Dossier TowerXchange Asia Dossier

184 catchy acronym, EXCITE, for the company s value system. These values are: Excellence - Ensure best-in-class processes and a continuous improvement culture that provide scalability and the highest quality at an optimum cost. Customer - Be the preferred partner to our customers with the highest levels of responsiveness and agreed services, consistently. Integrity - Maintain and promote the highest standards of professional conduct by being fair, honest and transparent in all actions and decisions. Teamwork - Think and work together beyond self, functional boundaries, hierarchies, businesses and geographies. Actively encourage mutual respect, sharing and collaboration. Environment - Be responsible and sensitive toward the environment and the communities where we work. Uphold the highest standards of health and safety at all times. I strongly believe in teamwork, and the achievements of Team SCM would not have been possible without it. We are spread across fifteen circles covering fifteen states of India which brings huge diversification from state to state and culture to culture. Other than the corporate office which consists of around 27 team members, every circle team consists of six FY FY Go beyond One team, one dream team members. This team is headed by CSCMO of Indus Towers. In year , there was a lack of interconnectivity between the team members, leading to work being done in the isolation. Other demotivating factors included low performance, no rewards or FY Go global Be a global face. Win global recognitions and become a benchmark for the rest of the world. Dream big, set big targets beyond the industry and prove that even sky is not the limit for One team. Formation of team rather than working as individuals. Dream as one team, understand pain areas of internal and external customers and set relative targets and roadmap with Milestones. Work together and achieve the same. Create credibility and respect. recognition, and a lack of consideration for team SCM s constraints within the organisation. These were indications of a lack of teamwork; we also realised that while all other functions used to meet to communicate with their team members and set the work in the right direction, it was unheard 184 TowerXchange Asia Dossier TowerXchange Asia Dossier

185 of in Team SCM. There was a clear need to set the right direction for the team and communicate the expectations clearly with them. It was in the year 2012 that the SCM heads of all the circles met together for the first time. All of us decided to set directions for the team and plan the strategy to work together. The India SCM Head meet was planned where inputs were given by all the team to formulate the strategy by setting the vision for Team SCM Considering the four major stakeholders of SCM function (employees, internal customers, external suppliers and internal suppliers), the team came up with Excellence through Collaboration as the team s vision. In addition, we set three annual slogans to communicate to the teams. We completed the value stream mapping of our function and identified several areas of improvement. Multiple initiatives and projects were rolled out to improve the efficiency of the teams working on: < Relevant and innovative product development < New material requirement forecast process rollout < Purchase requisition automation < Material requirement planning process roll out < Warehousing process manual < Site return process locking in the ERP < Scrap disposal process Furthermore, other programmes were initiated and implemented for people development and team building in which I was directly involved to ensure the team was connected together: Forum For Female (F3) < Induct Female team members to have gender balance < Providing an open, safe, healthy and growthdriven atmosphere < Launched Forum For Female where people can listen every Quarter Coffee with Boss < One to one structured but informal discussion with reporting heads < Resolution of professional hurdles at the office and if possible personal < Giving and getting constructive feedback on a quarterly basis < Indicating training requirements Individual and Team Development < Quarterly individual performance / KRA review < Monthly Circle SCM Heads review < Weekly team reviews and knowledge sharing sessions Support and Training < Identification of individual training needs and arranging with the help of HR. Job skill and soft skill related training programmes < Development of refresher and handy training modules Collaborate and Celebrate Success as One Team < Team and family get-togethers. Team building exercises < Bouquet and chocolates to each employee spouse on individual and team success. Birthday and wedding anniversary wishes to family members We started organising the pan-india SCM Meet which was never conducted in the organisation where we focus on team building and the review of our initiatives and our mission. Today we proudly say that we are part of Team SCM and happy to work together, win together and celebrate together. TowerXchange: Can you share any specific success stories to share some detail on the process? Deepak Sharma, Vice President Supply Chain, Indus Towers: In we had 55 warehouses where major concerns were identified in operations including non standard processes, compliance issues, multiple service providers, reverse logistics, inventory in-accuracy, security issues, conflicting ownership, redundant transporters, resource capability issues, and poor environmental standards. To transform these warehouses we initiated a new mission and commitment specifically focussed on warehouse operations called World Class Warehousing and Logistics. We committed to creating safe, automated, process driven, productive, cost effective and green warehouses with the highest 180 TowerXchange Asia Dossier TowerXchange Asia Dossier

186 ESH < Fire safety training for all partners and the team < Security briefing to all visitors and employees < Mock fire drills < Medical check-ups for the team < Other various safety related training < CCTV implementation for surveillance and theft control < Sensitive location protection < Initiatives towards vehicle transaction in the warehouses uses carbon neutral vehicles < MBRC discharge energy used for office and repair centre electricity < Use of natural light/ Solar energy / LEDs Process < Warehouse layout using ergonomics < Pallet standardisation < Site return material management < Scrap disposal People levels of standardisation and innovation to serve our customers with best in class experience. It was agreed that the key features would include full automation, a best-in-class distribution network to provide on time delivery in forward and reverse logistics, optimal inventory management, accessibility and security of stock, and value added services for our clients. < Team building < Skill development < Individual review < Reward and recognition < Recreation < Retention Partner < Partner management < Compliances management < Partner changeover To initiate transformation we gave the project the success mantra of: We implemented our 5P approach for warehouse transformation keeping EHS (Environment, Safety and Health) first. We identified missing processes and other requirements for mapping business and quality. Results Our seven warehouses were certified, licensed, and awarded the industry s first and highest warehouse certification, by CII for WAREX The Warehouse Excellence Certification. Indus Towers is a part of the first highest number platinum certification in a first attempt in India. This certification exemplifies our value of excellence. It is an honour for us to be recognised as above, not only as the first in the telecom industry, but also a first amongst all industrial sectors! As part of our transformation journey, we had applied for seven warehouses which were audited by the CII Team. Out of seven warehouses audited by CII, four have achieved platinum and three gold. The certification proves our robust, core warehousing functions, facility and processes. We competed with industry leaders, including TAFE, Lucas TVS, Aditya Birla and Tata Steel amongst many others. Other companies that have applied for WAREX and are under assessment are Maruti Suzuki Spare Part Division at Bangalore and Mahindra Logistics. Also our Warehouses are awarded as Green warehouse of the Year in ELSC Leadership award. I would like to give a special thanks to the following people who helped make these achievments possible: Mr Shantha Raju- Ex CEO; Mr Bimal Dayal CEO; Mr Mandeep Sachdeva- 186 TowerXchange Asia Dossier TowerXchange Asia Dossier

187 Description Before transformation March 2016 Reduction Warehouses (in No s) % Areas in lakhs (Sq ft) % Meetup Europe April, London Cost (INR Crores) XX XX 28% CSCMO ; Mr Vivek Kumar CHRO; All CCEOs, RDs, Functional Heads and each member of Team SCM. TowerXchange: How are you and your team keeping up with the pace for telecoms development set by the Indian government? Deepak Sharma, Vice President Supply Chain, Indus Towers: As India s leading telecom infrastructure company, it is our responsibility to service the community we work in with utmost perseverance. We believe that a robust telecommunications infrastructure is a precursor to a country s sustained socioeconomic growth, with benefits permeating across sectors, citizens and geographies. Therefore, our efforts are always backed by directions set by the Indian government, be it allocation of spectrum resources for residential and enterprise intra-telecommunication requirements or recommendations on improving telecom services in underdeveloped or developing regions. TowerXchange: The tower industry has changed a lot over the past few years; what are some of the next changes that you anticipate? Deepak Sharma, Vice President Supply Chain, Indus Towers: There has been a conspicuous growth and enhancement of the telecom infrastructure in the recent past. For instance, there has been a change in profile of consumers characterised by a large young population and rising middle class with increasing spending capability and higher adaptability to technology. Additionally, in a recent, International Telecommunication Union (ITU) forum, there were discussions around building a case for four new spectrum bands as part of its 2025 vision. With the recent push by government of India for renewable energy, more specifically solar power, the ecosystem is likely to get a stronger impetus. The telecom industry is looking at solar power becoming more viable as a result and there is likely to be more adoption of such sources by the industry Meetup Americas June, Boca Raton Meetup Africa & ME October, Johannesburg Meetup Asia December, Singapore TowerXchange Asia Dossier TowerXchange Asia Dossier

188 OCK Group s vision to build a pan-asian tower company Founder Sam Ooi shares insight into their footprint in Malaysia, entry into Vietnam, and contract with Telenor Myanmar Ooi Chin Khoon, MD, OCK Group Having drawn considerable attention by securing a contract to build 920 towers for Telenor Myanmar late last year, Malaysia s OCK Group has shaken up the Asian tower market once again with its acquisition of Southeast Asia Telecommunications Holdings Pte Ltd (SEATH) and their 1,938 towers for US$50mn. This is the largest tower transaction to date in the Vietnamese market, and we caught up with Sam Ooi, MD of OCK Group to find out more about his company, this exciting new deal, their activities in Myanmar and their pan-asian vision. Keywords: 4G, Acquisition, Asia, Asia Insights, Cambodia, China, Consolidation, Construction, Indonesia, Lease Rates, LTE, M&A, Managed Services, Market Entry, Malaysia, Myanmar, Mobifone, Multi-Country Partner, New License, New Market Entrant, O&M, OCK Group, Rooftop, SEATH, Towercos, Vietnamobile, Vinaphone, VNI, Who s Who Read this article to learn: < OCK Group s credentials as a listed full turnkey service provider < The business case for OCK s acquisition of SEATH and their 1,938 towers in Vietnam < How OCK Group proposes to sustain a competitive lease rate in Myanmar < OCK Group s plans for future growth in Vietnam, Myanmar, Malaysia and beyond TowerXchange: As this is our first interview with OCK Group, could you share some background on your company - how the business is financed, your credentials in Malaysia, your vision to form a tower company across multiple Asian countries? Sam Ooi, MD, OCK Group: OCK Group Berhad is Malaysia s foremost telecommunications network service provider, listed on the Main Market of Bursa Malaysia Securities Berhad. Since its incorporation in 2000, the Group has evolved from a maintenance and engineering ( M&E ) company to a full turnkey solutions provider with four key business divisions covering telecommunication network services, green energy and power solutions, M&E engineering services and trading of telecommunication and network products. With more than 2,600 employees, OCK remains dedicated to its vision of becoming the service partner of choice for telecommunication services across Southeast Asia. We serve the majority of the telecom companies in Malaysia. The Group has been strategically expanding its presence across Southeast Asia and continues to position itself in key emerging economies such as Myanmar, Cambodia, Indonesia and China. TowerXchange: Please tell us about your role at OCK and the experience you bring the team. Sam Ooi, MD, OCK Group: I founded OCK in 2000, 188 TowerXchange Asia Dossier TowerXchange Asia Dossier

189 drove it towards listing on the Main Board of Bursa Malaysia, and led its development into the foremost telecommunications service provider in Malaysia. Our Group CEO Yap Wai Khee joined OCK in early Wai Khee has over 21 years of experience in strategy and commercials, with 16 years in the telecommunications industry. He has acted in senior management roles for several telecom companies within this region. At OCK, we have a highly experienced management team with many years of experience in the telecoms industry that has contributed to the company s success. TowerXchange: How does the tower construction and leasing business fit into your business model? Sam Ooi, MD, OCK Group: Our telecommunications network services business is the largest contributor to OCK Group s revenue, and it our intention to grow this business further by expanding our construction and/or leasing of telecommunication towers. We were granted with a Network Facilities Provider (Class) license by the Malaysian regulator, and own 133 sites in Malaysia. We started to expand overseas by securing a master lease agreement for the construction and lease of up to 920 towers in Myanmar last year and were granted a Network Facilities Services (Class) license by the Myanmar government. And just last week we announced our entry into Vietnam. 184 TowerXchange Asia Dossier TowerXchange Asia Dossier

190 TowerXchange: Congratulations on the announcement of OCK Group s acquisition of SEATH. What attracted your company to invest in this portfolio and in the Vietnamese market? Sam Ooi, MD, OCK Group: We have been evaluating the telecom tower industry in Vietnam, as this country is expected to have one of the greatest mobile broadband growth rates within the next few years, coupled with the rollout of 4G/LTE network later this year/next year. SEATH is the largest independent tower company in Vietnam, and it is a profitable business; it will immediately contribute financially to OCK Group, and allows us to tap into the Vietnamese market. TowerXchange: Can you share some insights into the portfolio you are acquiring from Vietnam Infrastructure Ltd (VNI)? We understand they have 1,938 sites - what is the mix of ground based towers to rooftops and any DAS or microcell poles? Who are the principal tenants on those sites? Sam Ooi, MD, OCK Group: Most of the towers are guyed mast towers which may be ground based or on rooftops. The key tenants are Mobifone, Vinaphone and Vietnamobile. TowerXchange: Could you share some insight into OCK Group s plans for further acquisitions or new builds in Vietnam? Sam Ooi, MD, OCK Group: We are open to explore SEATH is the largest independent tower company in Vietnam, and it is a profitable business; it will immediately contribute financially to OCK Group, and allows us to tap into the Vietnamese market discussions with existing tower companies in Vietnam as we feel the tower industry is highly fragmented. In addition, the upcoming launch of 4G in Vietnam will also increase demand for new towers in Vietnam. TowerXchange: OCK has come to market at a very competitive lease rate in Myanmar - what innovations will you use to ensure you can build and maintain towers at this price point? Sam Ooi, MD, OCK Group: OCK is a full turnkey solutions provider, and we are able to leverage our expertise from other countries into Myanmar, resulting in a lower cost to build and maintain towers. These benefits are passed on to our valued customers. TowerXchange: We understand that towercos in Vietnam provide just the structure and land ( steel and grass ) whereas in Myanmar a full service ( tower and power ) is the norm. Which business model are OCK most comfortable with? And will you source and maintain your own power equipment in Myanmar or outsource to third parties? Sam Ooi, MD, OCK Group: We are capable of providing a complete suite of services to our customers, and we are comfortable with any arrangements which may be unique to a particular country. OCK performs network operations maintenance and/or managed services to approximately 25,000 towers in this region, and we are assessing the market in Myanmar too. TowerXchange: Considering OCK Group s presence in Myanmar and now Vietnam, are there plans for further expansion in the region? Which other markets are being evaluated? Sam Ooi, MD, OCK Group: We own tower assets in Malaysia and Myanmar, and with SEATH, we will own tower assets in Vietnam too. OCK is a full turnkey contractor in Cambodia, where we are involved in tower construction and fibre rollout. In Indonesia we focus mainly on managing active and passive infrastructure for telecom networks. We will continuously evaluate opportunities within the ASEAN region 190 TowerXchange Asia Dossier TowerXchange Asia Dossier

191 Exhibition preview TowerXchange is not just about towercos and tower strategists. One of our top priorities is to provide a platform for proven passive infrastructure equipment and solutions providers to introduce themselves and their activity. From static asset manufacturers to RMS and turnkey solutions providers to hybrid energy solutions, these companies play a critical role in ensuring the profitability of towercos and MNOs and the safety of their employees. In this section we gather interviews with the top service, solution and equipment manufacturers who will gather at the TowerXchange Meetup in Singapore this December. 192 Abloy 195 Acsys Technologies 200 Ascot Industrial 205 Elektroskandia 207 Enatel Energy 211 EnerSys 216 FG Wilson 219 Flexenclosure 222 GS Yuasa 225 Infozech 229 Invendis Technologies 233 IPS 237 IPT Powertech 240 Miteno Communication Technology 243 Siterra 246 Tarantula 250 TOTAL 256 Vinson & Elkins

192 An integrated approach to telecom site security ABLOY s expansion in the telecom tower industry Alan Goh, Business Development Manager, Abloy OY (Finland) Read this article to learn: ABLOY is one of the leading manufacturers of locks, locking systems and architectural hardware in the world. They are also a leading developer in the field of electromechanical locking technology. The company has been providing security locking solutions to telecom companies globally since the early 1970s, with increased presence in the Southeast Asian market since With the evolution of the telecommunication industry, the company has also streamlined its product offering and developed new locking solutions using the latest technology available to meet the challenging demands of providing telecommunication services to end users. In this interview, Edward Lee, Business Development Manager for Abloy South East Asia and Alan Goh, Business Development Manager for Abloy OY (Finland) introduce the company, its footprint, products and strategy in relation to their security solutions and services in the telecom tower industry. Keywords: Abloy, Southeast Asia, Interview, Access Control, Urban vs Rural, Fuel Security, Site Visits, Shelters, Fencing, Batteries, Diesel Generators, MNOs, China, Singapore, Bangladesh, India, Philippines, Thailand < Abloy s footprint and client base < Key security issues in remote telecom sites and how to solve them < Abloy s cutting edge solutions integrating mechanical and electronic technology < The need for a change in mindset: a joint approach to site security TowerXchange: Could you introduce us to Abloy? Which countries are you active in? Edward Lee, Business Development Manager, Abloy South East Asia: We are a Finnish company, and we are a leading manufacturer of electric locking systems and architectural hardware. We develop easy to use locking solutions to satisfy the needs of end users. Abloy has a global presence spanning over 90 countries in all continents. Our presence in Asia is represented by our direct sales offices in China, India and Singapore where Singapore is the regional co-ordinating office for the Southeast Asian market. TowerXchange: Who are your main clients? Edward Lee, Business Development Manager, Abloy South East Asia: Our main clients are in the high security and infrastructure segment where we provide solutions to professional end users such as banks, government institutions, transport and logistic companies. Essentially, we supply to installations with a wide network of applications including utilities and telecommunications companies. In the telecoms industry we work primarily with the operators. Telecom tower companies is a relatively new concept in Asia for us, although securing telecommunication equipment has been one of our major strengths. The route to market has changed and we look forward to grow as a partner of choice with all telecom tower companies, as we believe we have the technology, know-how and capability to service them. 192 TowerXchange Asia Dossier TowerXchange Asia Dossier

193 solutions differ between Asian countries? And between Asia and other regions Abloy serves? Edward Lee, Business Development Manager, Abloy South East Asia: Currently, our primary business clients are telecom companies located in India and Bangladesh. Other countries, where our locks have been deployed in traditional landline installations, such as Philippines, Thailand and Singapore are exploring and starting to move towards the independent towerco model. We understand very well, that every country has their own culture and management processes, and hence we know that it is very important to customise our products and solutions according to our customers specific requirements, and not roll out a standardised model across the region. TowerXchange: What kind of security issues is the region exposed to? And how can Abloy help solving them? Alan Goh, Business Development Manager, Abloy OY (Finland): Security issues that our telecom clients usually encounter are related to the size of their operational sites; managing the various groups of people and individuals with access to them. They need to integrate an efficient locking mechanism into their current processes. Often many of these sites are in remote areas and they are subjected to harsh environmental conditions and they need to ensure that these sites are well secured and also when they need to be accessed, they have to be certain that the locks will work when access rights are granted. Over the years, our clients have continued to choose and recommend Abloy as their preferred security locking solution partner. With regards to remote sites, these are high risk areas and most of these sites hold very expensive and important equipment and consumables that are required to keep the site itself operational. Hence, they are subjected to theft and pilferages with most incidents resulting in loss of fuel, cables, generators and batteries, often rendering the sites non-functional, resulting in performance downtime for the clients. A reliable locking solution, enhanced with technology and process management which Abloy offers, creates a stronger barrier and resistance for intruders and saboteurs. TowerXchange: How does the demand for security Most of the sites we serve in Bangladesh are located in remote areas, although we do operate in urban areas as well. In the city there are many options for protecting expensive equipment. For instance, some telecom companies store their equipment in residential areas near the site rather than on it. Remote sites have limited options. In India, our focus has been on mobile network operators rather than tower companies. A tower company runs a site with two or three network operators, and each of the them contracts us individually to provide a locking solution for their equipment. We are working towards getting tower companies to understand the importance of a consolidated security system, taking into consideration that each tower is likely to have 188 TowerXchange Asia Dossier TowerXchange Asia Dossier

194 multiple vendors. We are also learning how we can work and collaborate more effectively with tower companies in this region. The opportunity to network with key players in the tower industry through TowerXchange Meetups is extremely useful to us. TowerXchange: Why have tower companies been slower to adopt your solutions? Alan Goh, Business Development Manager, Abloy OY (Finland): There are probably a couple of reasons. One would be that tower companies are unaware of our solutions, as our brand has traditionally been associated with mechanical locking, although they are highly reliable and secure. We welcome the towercos to experience our high-tech electronic locking solutions. Secondly, towercos currently rely on operators to each adopt a locking solution for their own equipment, whereas we firmly believe that there are many advantages to be enjoyed with a joint approach to site security. We are most willing to discuss further with the towercos and deploy pilot trials with them to understand how they can save on operational costs over a specific period of time and the possibility of monetising their investment in our solutions. TowerXchange: What are telecom companies typical requirements for site security? Alan Goh, Business Development Manager, Abloy OY (Finland): We offer many different security products for telecom companies, and these are usually tailored to fit the needs of each individual customer. Most of our clients in the telecommunications industry have been purchasing our master key solutions and some are using electronic locking solutions. Mechanically, Abloy s patented and controlled key profile with detainer discs technology is bump proof and virtually pick-proof. Our high product quality and reliability is also ideal for harsh environmental conditions. Not forgetting the endless masterkeying capabilities from our comprehensive range of locking products that include padlocks, door cylinders, cam-locks, cabinet locks and key deposits. To further enhance the mechanical solution, our electronic technology known as CLIQ provides more flexibility in key control for infrastructure projects which are geographically dispersed. CLIQ technology allows for audit trails so you can see events and times of occurrence from all locations. Easy-to-change access rights are based on time and calendar; e.g. enabling cleaners to be automatically granted access only at predetermined times. CLIQ technology provides unique identification for every opening through encrypted communication. The integration of mechanical and electronic technology is double-checked and secured with Abloy Protec2 CLIQ wherein the CLIQ technology is further tested on top of the mechanical durability and resistance force of our product. However, if our client wishes to have an immediate communication with various sites, Abloy s electromechanical locking solution can offer a variety of monitoring signals to inform the security system of the status of the site. Setting the lock to fail secure is a plus point in terms of power consumption. With this setting, the lock does not consume any power at all unless an authorised user presents his or her card to gain access. As such, our electromechanical lock is greener for the environment, creating savings in power consumption versus other locking devices that require constant power supply to them. Testing standards have been raised and Abloy electromechanical locks are tested not only for their mechanical durability and resistance. The individual electrical components encased in our electromechanical locks are tested as a complete unit under the new EN14846 standard, where a complete test is done instead of testing the component parts separately, thus ensuring the best product life cycle of our electromechanical locks to our customers. TowerXchange: Did the entrance of towercos in the telecom industry change the way Abloy works? And if so, how? Alan Goh, Business Development Manager, Abloy OY (Finland): We understand that telecom companies are divesting their assets to tower companies and we have to adapt our business approach to reach out to attract new clients; namely the towercos. There is likely to be exponential growth and we are quite excited about this. Abloy is ready to ride on the wave of opportunities in this fast developing sector, by partnering closely with towercos to implement the best possible high-tech electronic security locking solution for them 194 TowerXchange Asia Dossier TowerXchange Asia Dossier

195 How to improve cell site productivity and workforce management Data is the key to productivity Michael Sothan, Business Development Global Accounts, Acsys To date, monitoring of workforce activity on cell sites has been reliant on the use of disparate systems, paper records and word of mouth. Acsys, best known in the telecoms sector for their access control systems, is now expanding their focus to develop a platform which integrates access data with data points from multiple third party systems, offering infracos the opportunity to better track activity and productivity on site. TowerXchange spoke to Acsys Michael Sothan to understand the platform, what data it can capture and how it is set to revolutionise productivity at telecom cell sites. Keywords: ARPU, Access Control, Acsys, Brazil, Business Case, Capex, Change Management, Energy Efficiency, How to Guide, Installation, Investment, Job Ticketing, KPIs, Managed Services, Monitoring & Management, O&M, Opex Reduction, QoS, RMS, ROI, Rooftop, SLA, Site Level Profitability, Site Management System, Site Surveys, Site Visits, Skilled Workforces, South America, Uptime Read this article to learn: < How Acsys is expanding their focus outside of security to better monitor workforce patterns at cell sites < Which third party systems and metrics can be integrated to develop a holistic picture of cell site operations < How data can be used to develop job based KPIs and SLA clauses to monitor and improve productivity < What trends are starting to be observed on optimal completion times for key maintenance tasks < How Acsys system is being adopted and customised by infracos TowerXchange: Please can you provide an introduction to Acsys and why they are now looking to expand beyond access control? Michael Sothan, Vice President, Americas, Acsys: Acsys was originally a general access control and workforce management solution provider. In the company s early days we did a lot of work with the government and military sectors but after seeing a strong fit in the telecom infrastructure space, we developed a telecom-centric access control and workforce management system specifically for the sector which has now become well recognised by the industry. Whilst security is always a concern for tower owners, and we are aware of very high rates of vandalism in some Latin American countries like Brazil, the market is shifting towards an increased focus on efficiency and opex reduction. With customers demanding ever more data at lower costs, ARPU is being driven down and capex on the increase operators are putting more focus on their bottom line, looking at ways to make savings. In order to improve efficiency on site one must first understand what is happening on site; to date it has been hard to get a clear picture on this. There has been a real lack of data detailing what is going on even to the extent of knowing for certain whether a job has actually been done! If a job is being done, it is useful to know factors and metrics such as when it was done, who did it, how long it took, did it take longer than it has in the past? When you start to obtain and interpret this data you start to develop a 190 TowerXchange Asia Dossier TowerXchange Asia Dossier

196 increasing visibility and control of their operations. Infracos have been putting in place processes to oversee what is happening but where a lot of inefficiencies have been coming in is that these separate processes are not integrated. There have been a lot of gaps in the data and as such guess work has had to take place. This has made enforcing their processes a real challenge. Putting in place the Acsys system means that each time a job is being done there is real time data correlated with that job which can then be integrated with further data points. This not only allows for the creation of more effective processes but, perhaps even more importantly, allows for their enforcement. meaningful picture of site operations. Operators deploy lots of different pieces of software such as OSS systems, trouble ticketing systems, billing systems and remote site management software systems to monitor what is happening on site, but these systems don t talk to each other. Acsys solution, while focused on managing physical activity on-site, is to provide an open platform which can integrate with one or all of these third party systems to give a more holistic view of site operations. This fills in the vacuums of data that have existed and presents a complete picture of what is happening at your cell site. TowerXchange: How long have Acsys been working on this software? Michael Sothan, Vice President, Americas, Acsys: It has been very much an ongoing evolving process but something which we have begun to shift our focus more heavily towards in the past year. TowerXchange: Prior to such a platform being developed by Acsys, how have tower owners been able to monitor operations? Michael Sothan, Vice President, Americas, Acsys: What we ve realised is that whilst the telecom industry is a very high tech industry, when it comes to O&M they have relied on a very piecemeal and low tech approach. Infracos have been amalgamating multiple types and sources of data from digital records to paper based reports right through to word of mouth all with the aim of TowerXchange: How have you worked with clients to develop the solution and what has been their reaction to the system? Michael Sothan, Vice President, Americas, Acsys: As we work with clients they give feedback on what data they would like to capture to enable us to create them a tailored system. Generally what most of the clients really want is an increase in the data generated about their O&M and an increase in the efficiency of their O&M. Key questions they re looking to answer include the obvious; who is on site and what asset are they accessing? This is critical for tenants who want to monitor their active infrastructure, to the less evident; which vendor is doing the job more efficiently? What is the average time spent on site? How many sites can be serviced a day under routine or preventative maintenance? 196 TowerXchange Asia Dossier TowerXchange Asia Dossier

197 In terms of the appetite for such a system, we have realised that companies are much more willing to budget for and buy a solution that increases productivity in their operations. Security is an essential component to a towerco business but it is not something that people are excited to purchase. When we can provide a solution that saves people money by reducing their opex, it becomes much more interesting for the client to invest in it. TowerXchange: Have you developed the solution in partnership with third party software providers? Can most main systems be integrated into Acsys solution? Michael Sothan, Vice President, Americas, Acsys: With a lot of work still under development, I can t name all the vendors that we are working with but what I can tell you is that we are working with a number of major remote monitoring system providers from across the U.S., Europe and Asia. With several of them we have already completed integrations and a few have already been deployed in the field. We ve also been working with some of the major ticketing providers and are now beginning to look at specific billing softwares and larger scale ERP platforms. The idea is to keep our system as open as possible, using open APIs and web services which allow for integration. The challenge is that we cannot simply make a pre-made system, because every client is using a different mix of softwares and vendors. Instead, on a per project basis, we work with each individual client to see where they are finding gaps Clients are interested in a number of factors. The most critical, but possibly the most overlooked, is very simple - a hard verification of if a vendor visited a site. Without this, how does the infraco, or MNO, know that an assigned task was completed? It all links back to SLA adherence if you can t verify whether the visit was even made it makes it impossible to enforce the SLA clauses you put in place in data and look to create a customized solution to fill in those gaps. The strategy is not to create a pre-made system but to be able to discuss on a project by project basis what each client is using and which gaps they are finding, so that we can create something customised. TowerXchange: What kind of metrics are clients looking to obtain through using Acsys system? Michael Sothan, Vice President, Americas, Acsys: Clients are interested in a number of factors. The most critical, but possibly the most overlooked, is very simple - a hard verification of if a vendor visited a site. Without this, how does the infraco, or MNO, know that an assigned task was completed? It all links back to SLA adherence if you can t verify whether the visit was even made it makes it impossible to enforce the SLA clauses you put in place. Next would be vendor time to site and time on site. They want to gain a hard verification of how long it takes a given vendor to reach a site, especially in the case of emergency maintenance, and also how long a given supplier or contractor spends on site. Even if the client is not paying on an hourly basis, they need to have a clear picture of this. If you are putting in place service level agreements you need to be able to monitor this in order to be able to enforce the clauses you put in place. Vendors also need to know they are being monitored. This creates a greater sense of accountability which naturally increases quality. Another useful feature of this is that you can develop job based KPIs, working out how long it should take, on average, to complete a specified task. This allows you to better plan your routine maintenance and also enables you to budget more accurately, setting aside a set amount of time for a contractor to do a job, and avoiding overtime payments when they go outside of this. 192 TowerXchange Asia Dossier TowerXchange Asia Dossier

198 As well as assessing response and service times or vendors you can also use this to benchmark the equipment itself. For example, if you take a diesel genset you can look at the number of call-outs that it needs on an annual basis and compare the MTTR following a fault. This enables you to make more informed decision making when it comes to equipment procurement. TowerXchange: From deployment of your systems to date, has Acsys started to observe benchmarks for given tasks and is there anything that you can share? Michael Sothan, Vice President, Americas, Acsys: We try to be as consultative as possible in working with our clients but the amount of data that we have access to depends on how independent our client wants to be. In some instances they prefer to keep everything in-house whilst in others we work very closely with them in analysing their data. At the moment the amount of information that we can share is dependent on NDAs that are in place, but we are ultimately very happy to help the client analyse and interpret the data they obtain. We have however started to see certain trends in different regions. For example, in India we ve noticed that because of traffic, especially when it rains, there was a certain client which couldn t get more than one site serviced per day as they were driving back and forth to collect keys. This problem could be rectified by installing our mechatronic locks, taking the number of sites that could be serviced up to as many as four! As such, this also gives us an indication of the number of sites that a client should be able to have serviced in a day. Another example I can give is in Africa where we did a study on three different vendors carrying out oil filter changes. One vendor was taking 20 minutes to do the change, a second took an hour and a third took two hours. When the client inspected the sites it became clear that the vendor that was doing the job in twenty minutes was frequently not changing the filter at all, whereas the vendor taking one hour was doing a good job. From this we could elucidate that the required time to do an oil filter change was one hour, much less and the job wasn t being done properly and any longer and the vendor should be more efficient. TowerXchange: How much analysis is required to extrapolate meaningful findings from the data? Is there a degree of automation? Michael Sothan, Vice President, Americas, Acsys: There are certain elements which can be automated, for example with our system you can pre-set alarms if, for example, people are on site too long or are requesting access outside of their normal zone. The system can go as far as automatically blocking access until the vendor s geo-location is at the correct site. For certain clients we have even built custom reports and automated alarms based off of what they find critical. FRONT GATE Manufacture Resource Plan HRM MRP BILLING SMART PHONE WITH APP & SMS OR ERP Enterprise Resource Planning CODE? CELL TOWER BTS SHELTER GENERATOR Cloud OR BATTERIES OSS Trouble Ticketing Software DATA THE KEY TO PRODUCTIVITY! ANY PHONE WITH SMS Remot site monitoring FUEL TANK TTS RSM LTE CABINET If you want to break down findings and connect them to other data points, some of this is still being done manually. Importantly, all of our different reports can be automatically exported in an Excelready format, which means clients can utilize all of Excel s built-in analysis tools to also analyze our data. Acsys can offer a service whereby our engineers run analysis every week and send a report back to the client and we are always working to add in more ways to further automate the process. 198 TowerXchange Asia Dossier TowerXchange Asia Dossier

199 being done you can enforce SLA clauses, with a data trail in place vendors know that their activities are being monitored. Knowing this means vendors are now required to follow processes established by management which they may have previously ignored. TowerXchange: Do any other companies have a similar offering to Acsys? TowerXchange: Why is it so important to improve the way in which infracos can better understand workforce patterns on cell sites? Michael Sothan, Vice President, Americas, Acsys: From a very general perspective if you look at the advent of management science you have all these innovative concepts that were developed like systems theory, value based management and lean manufacturing which have been adopted by various industries and are being taught in the world s top management schools. The approach to managing operations in telecoms infrastructure shouldn t be any different. We are trying to equip infracos with the skills to adopt lean O&M in the same way you hear about lean manufacturing working to achieve more with less, reducing costs and acting more efficiently. Companies that can use tools like ours to identify patterns in workforce behaviour can than weed out the inefficiencies, create optimised processes and obtain a competitive advantage, resulting in them becoming leaders in their field. A more specific answer to the question is that understanding workforce patterns enables you to better manage staff and subcontractors on site, not only verifying that work is being done in timely and accurate fashion but also enabling you to better plan and forecast work that needs to be done. When you have an indication of how long a job should take you can put in place job based KPIs planning the amount of time and cost required for a given job, avoiding overtime payments. Similarly by having a definitive answer on whether a job is Michael Sothan, Vice President, Americas, Acsys: There are companies offering wired or Wi- Fi dependent solutions which require a lot of hardware to be installed on site. These companies are generating a lot of data which has the potential to be integrated but the issue is they don t have the reach to be able to install it on the majority of sites. A high level of expense and time is required to install these systems and as such, the solutions are usually only being installed on a few critical backbone sites. Such systems lose much of their value as they can t correlate what is happening on those handful of sites with what is happening on the other 90% of the network. No other vendors have the ability to not only install a solution on every single site from critical backbone sites, to rooftop sites to remote sites out in the middle of nowhere but also on every asset on the site. When it comes to other mechatronic lock providers, we don t see any other companies going the extra mile to utilise or exploit the data that is being generated by the system. They focus exclusively on the security aspect but to us that is just the foundation. Pulling out as much data as possible and making that data work for you! 194 TowerXchange Asia Dossier TowerXchange Asia Dossier

200 Ascot: All in one, plug & play hybrid generator with solar and AC/DC generators for mobile telecom sites Ascot s Flying Doctors ensure successful installation and integration With eight years of experience and thousands of installations in critical markets throughout Europe, the Middle East and Africa, the Ascot hybrid energy solution for telecom is considered one of the most reliable and proven hybrid solutions on the market. Ascot has been active in the South American market for many years and recently entered the U.S. off-grid and backup power market, with innovations from different continents driving technology innovations. Approved and widely used by the Vodafone Group, Helios Towers Africa, IHS Tower, STC Saudi Telecom, Ooredoo, Zain and Sudatel in their critical operations, Ascot s technology has been proven as the right product for harsh environments such as in Saudi Arabia, Iraq and Sudan as well as mountain top sites in Nevada. Ascot s certified performance has been proven over a decade of accumulated system data thanks to a sophisticated and efficient remote control system embedded in the Ascot Hybrid Power Unit (HPU). Keywords: Americas, South America, Peru, Haiti, Caribbean, Ascot, Energy, How To, Opex Reduction, Power, Renewables, Site Visits, Solar, Unreliable Grid, Off Grid, Who s Who, Wind, Opex, Capex, Fuel Security, Batteries, Energy Efficiency, Hybrid Power, Solar, LPG, Wind, Logistics Read this article to learn: < How to meet the changing energy requirements of multi-tenant tower operators < Tailoring solutions to meet the power needs of sites with varying climactic conditions and grid availability < Deploying a significant number of hybrid solutions across African and American portfolios < How the business case for solar and wind power is justified by logistics and the criticality of coverage < What it will take for demand for hybrid energy to reach the tipping point TowerXchange: Please introduce where Ascot Industrial fits into the telecoms infrastructure ecosystem. Dr Michele Greca, CEO, Ascot Industrial: Choosing Ascot today means trusting an organisation with twenty-seven years of international market experience with a brand name that means quality and reliability. Our typical products include hybrid generators: AC and DC generators designed by a team of in-house, highly skilled engineers in accordance with our customers specifications, which work with advanced controls and energy storage, often incorporating renewable energy sources. Telecommunication companies historically recognise Ascot as a leader in the sector thanks to its innovative products and technologies for generators and for the family of hybrid solutions deployed globally in thirty-eight countries. This is the true know-how of Ascot competence and flexibility. It s only by visiting remote sites and looking at how they are configured that we can apply our knowledge to optimise hybrid systems to benefit both the operator and ourselves! TowerXchange: How did Ascot Industrial get into the hybrid energy for telecoms market? Dr Michele Greca, CEO, Ascot Industrial: From the inception of Ascot Industrial from 1986 until 2000, our core business was developing generators for the military, oil and gas, power plant and marine sectors. The defence sector has been for us like 200 TowerXchange Asia Dossier TowerXchange Asia Dossier

201 location is like a forward communication base in war reliability is critical and maintenance visits must be kept to an absolute minimum. As competition becomes more aggressive in telecoms, battles will be won by whoever can provide the best service at the lowest opex, so it s critical to improve energy efficiency. TowerXchange: Why do telecom operators need to reduce opex? Dr Michele Greca, CEO, Ascot Industrial: The role of the operators is to provide subscribers with an always-on service, grow usage and reduce customer churn. In order to gain more market share than their competitors they need to have a reliable network operating at the lowest possible operating expense. Formula One is to Ferrari a cutting-edge R&D function we ve applied to the telecoms sector. For example, back in 1997 we developed an application to charge the huge batteries on submarines while in port. Ten years later I was speaking with a manager at Zain who challenged me to produce an engine with low fuel consumption to power his cell sites. At first I thought it was impossible, but from his words came the idea to apply the same technology we used to charge submarine batteries to charge cell site battery banks, even when the generator is switched off. Having proven our application in large scale projects such as the submarine one, it was relatively simple to adapt it to charge the amp hour batteries at cell sites, and we quickly developed and sold our first hybrid solution in 2008, which was installed in very harsh physical and maintenance conditions in Sudan. Between 2008 and 2009, we installed fifteen units in as many countries for various telecom operators, so we tested the solution in different temperatures, humidity and altitude scenarios it was a good challenge that pushed us to invest in the project. When we were working with the operators in the field, Ascot was fixing the problems of today and of tomorrow. Ascot is well established to meet the specific needs of telecoms. A cell site in a remote A decade ago when the competition was minimal, operators expanded rapidly and the cost of phone calls was high. At that time operators did not pay very much attention to opex, concentrating on building their infrastructure rather than finding an optimised power solution. Very inefficient energy solutions, based on standard and often disposable diesel generators as the primary energy source, were installed with very high servicing costs especially for off-grid and weak grid sites. That era is now over. To be and remain competitive in the future, operators and tower companies have to find and implement new strategic energy solutions to enable lower opex than their competitors. 196 TowerXchange Asia Dossier TowerXchange Asia Dossier

202 Subscriber revenue generated by telecom operators has a direct impact on opex. In fact, only with lower expenditure and reliable service can the operator decrease call tariffs, acquire more subscribers and generate more revenue. TowerXchange: Can you tell us more about the hybrid solutions already in the market? Dr Michele Greca, CEO, Ascot Industrial: As hybrid technology is relatively new, today s market offers different solutions made by combining different brands of products to form a hybrid package: ie. X Controller and Y Batteries combined with Z generator et cetera. The result of that mix is the manufacturer of each single part guarantees their part as a stand alone item, not associated with other components, hence the controllers available on the market are not specifically designed for the scope and the integration of the parts to combine into a hybrid package - resulting in cell site energy being very expensive and inefficient, and with no single point of accountability. The innovative Ascot patented DC-HPU is an integrated plug & play power solution designed to supply energy to telecommunication sites using up to 68% less fuel than the current diesel generating sets running 24 hours a day and using up to 98% less fuel when integrated with solar solutions. Subscriber revenue generated by telecom operators has a direct impact on opex. In fact, only with lower expenditure and reliable service can the operator decrease call tariffs, acquire more subscribers and generate more revenue We have recently deployed our first fleet of U.S. hybrid sites including generator, solar and battery storage for remote locations. These unique offgrid sites can include a non-penetrating tower foundation, rapid deployment multi-tenant monopole tower and our hybrid power system. It can be constructed and commissioned in less than one week but run autonomously for six months a design necessity for mountain top cell sites which are inaccessible for many months throughout the year. Minimal site disruption achieves speed and environmental goals; no power lines are necessary where they do not exist and are terribly expensive, and the optimum RF site coverage objectives were achieved in one case with one off-grid site rather than four sites that were located near existing power. The opex and capex savings are compelling and our solution is applicable for difficult sites throughout the Americas. We are active in Haiti, Peru, and other Latin American and Caribbean networks. TowerXchange: How has your offering evolved as the off-grid tower market changes? Dr Michele Greca, CEO, Ascot Industrial: In the last couple of years, hybridisation has attracted the increasing interest of the telecom operators. They have pushed the market to propose hybrid solutions to power their sites. However it s not easy to replace a traditional generator with a hybrid solution because most of the current hybrid solutions on the market are new and also the local maintenance teams are not prepared to manage these sophisticated systems. Operators want hybrid power solutions but once installed, they can face a lot of problems if they don t fully understand how the system works. To overcome that resistance, Ascot offers a plug & play hybrid solution, which utilises the same interface as standard generators - typically a DeepSea Control System - that can dialogue with the internal logic of the hybrid component. In addition, today we include a service called Flying Doctors which means that once our clients have purchased the technology we can offer installation, training and operational support along with the package (for example we used this on the 1,500 sites we recently upgraded for Vodacom). We also offer a package where our team and local partner will go side by side installing the machines and doing 202 TowerXchange Asia Dossier TowerXchange Asia Dossier

203 onsite training in order to guarantee the machines installation and performance. We use this team to identify the main difficulties faced in the field by our clients. Our Flying Doctors team report back this information immediately allowing us to continually improve the difficulties faced in operations. For example, if they don t like the control panel we can change it to work better for them. This helps us to provide our clients with the solutions they need. For tower operators, we created and integrated a distribution box which just didn t exist before, meaning the client had to supply it. Now it s integrated into the system so the output of the machines matches the output for the tenants so you can have one, two or more different tenants. It s a market-proven product especially in Africa; network owners like Helios Towers Africa and Vodacom are using our hybrid systems and are making referrals and giving references to use Ascot products as they are so easy to install, manage and maintain. Our solution easily integrates with PV or wind power so these energy sources can plug and play with our machine. We re also offering a remote monitoring and control system so our clients can remotely manage the performance of our machines. Ascot is a manufacturing company so originally, our business model was just to supply the equipment and leave the client to organise other details namely financing packages. Now some clients want a capex-based model and some want an opex model with integration in a financial package. We can now offer both and have the flexibility to provide what our clients desire. TowerXchange: How do hybrid solutions compare to running diesel generators 24/7? Dr Michele Greca, CEO, Ascot Industrial: The magic number of fuel savings is 68%, achievable with the Ascot Hybrid. You can reach 98% in combination with a Solar PV System. Operators were only using diesel generators offgrid because there were no other financially viable solutions until recently. When a consumer goes out to buy a hybrid car, those cars are not competing with normal cars. They are serving different needs and there is simply no comparison in terms of fuel consumption. The telecom sector is just like the automotive industry in the future no-one will use diesel (or petrol) engines hybrid power is the future. Why don t people use hybrid now? Price, performance and availability and Ascot is at the forefront of improving all three. Telecoms operators want hybrid power already, but like consumers changing their normal car for an electric car, they want to know how the change will affect their operations. Once telecom operators are sure hybrid power works, it will only be a matter of time before all off-grid and weak grid cell sites are upgraded to hybrids. Essentially hybrid solutions are big battery chargers. Their role is to produce, store and reuse energy. As the price comes down and the performance and reliability is proven, the business case for hybrid energy becomes more compelling at more and more cell sites. There will be a tipping point where demand for hybrid power rises very quickly. At the moment, innovators are still finding competitive advantages, which they don t want to share, but when innovations are collated, everyone will want it and it will stimulate that big jump in demand. Investors 198 TowerXchange Asia Dossier TowerXchange Asia Dossier

204 solutions Ascot is bringing to the market? Dr Michele Greca, CEO, Ascot Industrial: Our innovations are always driven by market demand. Today the main challenges are fuel theft and the possibility to deliver our systems to remote and difficult areas. To overcome these challenges we have developed a range of Liquefied Petroleum Gas (LPG) hybrids we now offer LPG powered engines. In markets like Nigeria, LPG is cheap and easily available, and it s also far more complicated to steal. The LPG hybrid project was developed for the United States market and now we re making it available for the African market where we foresee a lot of uses. aren t afraid of those consolidated technologies. TowerXchange: How do the power requirements differ between single and multi-tenant cell sites? Dr Michele Greca, CEO, Ascot Industrial: Towercos often have to invest in power solutions before they know how many tenants will be on the tower and before they know their total power requirements. So energy systems for shared sites need to be modular, with a low initial capex investment for single tenant sites, and a small increase in investment for each additional tenant. Towercos don t want to deploy the capex to support multiple tenants right away, they need scalable modules with a few small extra parts for additional tenants. Ascot s tested and proven power solution for towercos, our modular DC-HPU for one to three BTS of up to two kw, has an engine capable of supplying power to three banks of batteries, so the main change to accommodate multiple tenants is just to add extra battery stacks. We also enable metering to bill tenants for their own energy consumption. We allow customers to right-size their power systems and then stack on new systems only when needed. This drives fuel efficiency and sequences capex properly. TowerXchange: Tell us about the innovative LPG In terms of delivering the system to remote areas, today we offer two solutions: a semi-knock down product that can be hand carried and then easy reassembled on site and a containerised cargo package which is a complete and mobile telecom site; both are effective and very popular solutions. Other advantages of LPG include eliminating fuel degradation and associated damage to diesel generators (LPG does not degrade over time) and more acceptable environmental aspects we are deploying these systems into sensitive ecosystems such as U.S. Government public lands. We continue to evolve and expand our portfolio by quickly learning and adapting to the most difficult site requirements, based on both the most rough and remote conditions as well as sites with the most difficult environmental and government approval processes 204 TowerXchange Asia Dossier TowerXchange Asia Dossier

205 Elektroskandia China on the importance of supply chain management for operational efficiency Robert Lindell discusses how to work with customers for mutual success Robert Lindell, Director, Sales & Business Development, Elektroskandia China Read this article to learn: < The background of Elektroskandia China and its offerings < Elektroskandia China s experience as a telecoms supplier < Achieving on time delivery and managing high and low seasons < Increasing supply chain efficiency to remain competitive With competition in the telecoms market continuing to increase, towercos and MNOs are looking for every possible edge to reduce time to market, and increase overall opex while limiting capex. We spoke with Robert Lindell at Elektroskandia China to discuss their background in telecoms and learn how they are partnering with telecoms companies and more recently towercos to increase their operational efficiency. Keywords: Alcatel Lucent, Capex Reduction, Elektroskandia, Ericsson, Fibre, Nokia, Opex Reduction, Solar Power, Supply Chain Management TowerXchange: Please introduce yourself and tell us about your role and background in telecoms. Robert Lindell, Director, Sales & Business Development, Elektroskandia China: My name is Robert Lindell and I m from Sweden, but have been working outside Sweden since 1997 in different regional and global roles within telecom at Ericsson, Ascom, Dingli Communications and since 2014 at Elektroskandia China. I m now the Director of Sales and Business Development at Elektroskandia China and I m based in Shanghai. TowerXchange: Please introduce your company where do you fit in the telecoms infrastructure ecosystem? Robert Lindell, Director, Sales & Business Development, Elektroskandia China: Elektroskandia AB was founded in 1904 in Sweden and was a part of ABB under the name Asea Skandia until In 1999, Elektroskandia AB extended its footprint to China, Elektroskandia China has established its leading position in integrated supply of telecommunication installation materials, key components and materials related to new energy ever since its startup in Shanghai in Since 2008, Elektroskandia China is part of the French privately held Sonepar Group, a leading global industrial distributor. 200 TowerXchange Asia Dossier TowerXchange Asia Dossier

206 Being an industrial distributor and supply chain specialist, the products we distribute can be divided into the following areas: telecom network site material solutions & supply chain management, wind power installation material solutions and solar panel installation material solutions. Within telecom we distribute site material, cables, fibre solutions, antennas and towers. TowerXchange: The first question our readers will want to know is how proven is the solution in the field please tell us about the performance of your solution in the field who is using it and what results have been achieved? Robert Lindell, Director, Sales & Business Development, Elektroskandia China: Elektroskandia has more than 30 years experience working with customers like for example Ericsson, Nokia, Alcatel among others and has throughout the years developed to one of their most important partners in supplying site material and other equipment. During the last few years we have also been working in the tower industry with a lot more new customers which are one of the reasons why we are participating at the Towerxchange event in Singapore. TowerXchange: How can supply chain management be integrated with tower portfolio management to support towercos and MNOs? Robert Lindell, Director, Sales & Business Development, Elektroskandia China: The telecom industry has high pressure to deliver solutions that are cost effective with high capacity to fulfil the customers needs and working with companies such as Elektroskandia China can help them with the on-time delivery, high product quality, managing high and low seasons and most importantly we can help them to reduce the working capital. TowerXchange: How does your solution help manage different stakeholders within the tower supply chain, from tenants to subcontractors? Robert Lindell, Director, Sales & Business Development, Elektroskandia China: Elektroskandia China has a wide portfolio of telecom site installation materials, cables, antennas and towers and depending who the stakeholders are we can support with good quality products from China or other markets. TowerXchange: How can your solution be configured to adapt to different towerco s unique business processes and workflows? Robert Lindell, Director, Sales & Business Development, Elektroskandia China: We supply products all over the world from Elektroskandia China or through our sister companies within the Sonepar group. Each market and customer has different business processes and workflows and because we are part of the global Sonepar group we can easily adopt to the customer s needs. TowerXchange: How can a robust approach to supply chain management improve the valuation of tower assets? Robert Lindell, Director, Sales & Business Development, Elektroskandia China: In today s competitive landscape with high volume, but decreased margins, the companies with the most efficient supply chain will be the winners. Elektroskandia China has a long history in the telecom world and will continue supporting current and new customers for mutual success. TowerXchange: Please sum up how you would differentiate your solution from your competitors? Robert Lindell, Director, Sales & Business Development, Elektroskandia China: We have several competitors, but no one with the global presence as Elektroskandia and Sonepar. We have been working more than 30 years with the major telecom suppliers to provide our services all over the world with good quality, speed and price. The tower companies are our latest customer segment and we believe it will support our growth over the next couple of years 206 TowerXchange Asia Dossier TowerXchange Asia Dossier

207 Enatel s SYNERGi solution achieves 90% less genset runtime Opex and efficiency boosted with Enatel Energy s power solutions Murray Wyma, CTO DC Systems, Enatel Energy Read this article to learn: Enatel Energy offers an expansive portfolio of fully customizable DC power systems and industrial battery chargers, designed to meet every power conversion requirement. Solutions offer flexibility and scalability by way of rack-mount, hot-pluggable combinations of modular AC-DC rectifiers, DC-AC inverters and DC-DC converters with advanced monitoring and control. In this interview, Murray Wyma, CTO DC Systems, Enatel Energy, talks about the work that the business has done recently in Mexico, explains why MNOs are likely to see energy costs go down in the future, and gives an insight into what makes Enatel Energy s products so unique. Keywords: 3G, Africa, Americas, Asia, Australia, Batteries, Central America, Chile, Colombia, Enatel Energy, Energy, Haiti, Hybrid Power, Interview, Kenya, Madagascar, Mexico, Myanmar, New Zealand, Nigeria, North America, Off-Grid, Opex, Pacific Islands, Renewables, Solar, South Africa, South America, South Asia, Southeast Asia, Tanzania, Unreliable Grid < How Enatel Energy went about upgrading the Sinuoso site in Mexico < About Enatel Energy s installed global base at cell sites < Why energy costs are coming down for MNOs < How Enatel Energy provisions high 9s reliability in its products < How to handle power requirements on a site with multiple tenants TowerXchange: Please give us a brief overview of your company for our readers that aren t familiar with you. Murray Wyma, CTO DC Systems, Enatel Energy: Enatel Energy is a division of Enatel, which was founded 14 years ago by the same personnel that created Swichtec Power Systems, a company successful in designing and manufacturing switch-mode power solutions, primarily for the telecommunications industry. Based on over 30 years of experience, our core business is the design and manufacture of power conversion products for the telecommunications, IT, utility, materials handling and renewable energies sectors. Headquartered in Christchurch, more than 90% of everything we design and manufacture is exported internationally to over 70 countries throughout the world. Competing with the best in the world, our products include a range of high-efficiency rectifier and converter modules, hybrid power systems, and rack and compact power solutions, supported by embedded and GUI-based software, along with a range of ancillary products. We also participate in the renewable energies sector with a range of high-efficiency solar inverters and modular, high-efficiency battery chargers for the material handling equipment industry. At Enatel, our core focus of research and development is utilizing creative, cutting-edge technology so we can offer our customer s better products, performance efficiency and value 202 TowerXchange Asia Dossier TowerXchange Asia Dossier

208 for money. This approach ensures that we stay committed to the continual development and enhancement of our suite of AC and DC power systems, intelligent modular rectifiers, DC-DC converters, control and monitoring options as well as motive power and solar energy solutions. TowerXchange: Could you share some details of one of your more challenging projects since we last spoke? Murray Wyma, CTO DC Systems, Enatel Energy: The Sinuoso site, located in North-West Mexico, on the edge of the Sonora desert, is challenged by its environment and is a fully off-grid site with 2G (including air-conditioning) and 3G cellular loads in self-contained cabinets. A hybrid system had previously been deployed with a mix of DC rectifiers, solar converters and AC inverters, from a range of suppliers, with a third party PLC controller for supposed hybrid functionality. This was a good example of an attempt to pull together a hybrid system, including solar from a disparate array of different manufacturers equipment that never worked as intended. The decision was made to upgrade the site with our SYNERGi solution with five 2kW solar converters, nine 2kW rectifiers (phase-balanced) and six 1.2kW inverters, to provide the necessary efficiencies and cost savings. The SYNERGi hybrid power system cycles the batteries, saving diesel and maintenance expenses by operating the existing generator in its optimum we ve reduced the genset runtime hours by 90%, the usage of diesel and the CO2 emissions by 87% and the maintenance costs by 83%. This means annual CO2 savings of 56,052kg and monthly savings in excess of US$3,400 efficiency power range for longer periods. The solar optimization feature also ensures that the genset does not run if solar power is available. SYNERGi incorporates its own self-learning algorithm to track sunrise through the seasons, to give well-defined stop conditions to the generator to ensure it does not run unnecessarily during the solar day. It does not require connection to external date or time references, and does not require links to weather forecasting web pages. It operates autonomously. The SYNERGi solution is modular, requiring about a quarter of the space, and represented a harmonized, single-controller solution where all the power modules work in a unified, coordinated manner to optimize Opex. The battery is usually the crucial element in a hybrid system, but in this instance a reconditioned set of 1500Ahr AGM batteries was supplied to analyse cyclic performance over time before deciding on the best battery fit a lithium battery solution is currently being considered. Over the month of August 2016, SYNERGi delivered some remarkable results. In fact, we ve reduced the genset runtime hours by 90%, the usage of diesel and the CO2 emissions by 87% and the maintenance costs by 83%. This means annual CO2 savings of 56,052kg and monthly savings in excess of US$3,400. ROIs and paybacks are site dependant, but in most cases full payback on these sites can easily be achieved in less than twelve to eighteen months. TowerXchange: What is your installed base at cell sites worldwide, and what is the approximate energy mix within that installed base? Murray Wyma, CTO DC Systems, Enatel Energy: Enatel Energy systems have been installed within 208 TowerXchange Asia Dossier TowerXchange Asia Dossier

209 hundreds and thousands of cell sites globally, with numerous hybrid systems deployed through a network of integrators. These systems are located in Kenya, Madagascar, Chile, Tanzania, Colombia, South Africa, Myanmar, Nigeria, Mexico, Haiti, Australia, Pacific Islands and New Zealand. All conceivable climates and conditions are encountered in such diverse geographic locations, everything from integrated generator solutions and outdoor cabinets to walk-in shelters and buildings. We see energy mixes from the normal single cell/single tenant sites with average loads of approximately 1kW through to large sites (as in the Sinuoso example) and multi-tenant sites of 4 or 5kW. Lately, we are seeing requirements for off-grid solutions approaching 9kW load. In sites this size, the use of cyclic batteries becomes uneconomic, often forcing the owner to once again consider 24/7 operation of the generators unless large renewable energy sources are available. This could be a controversial statement, but as long as a genset is operating at maximum efficiency, then no amount of cyclic charge/discharge would deliver comparable fuel use in terms of overall litres per kwhr of energy. TowerXchange: Should cell site energy solutions be owned and operated by MNOs, towercos or ESCOs? Murray Wyma, CTO DC Systems, Enatel Energy: As an embedded power system provider, we are agnostic with respect to the energy solutions owner. As time progresses, we are obviously seeing more of a shift from MNOs towards towercos and ESCOs. This enables more efficient use of tower space, and energy as now many sites are multi-tenanted. Ultimately, this must lead to lower costs for the MNOs and consumers. However, for MNOs who already own the tower infrastructure, retaining ownership of the tower can ensure fixed levels of tower (and power) servicing cost, rather than be exposed to the risk of rent increases. We are also focussed on next generation power architectures for initiatives that migrate a towerco into a powerco, allowing monetization of those traditionally distributed stranded assets. This applies similarly for an MNO looking to diversify as some are. The other factor in the equation is the ease of deployment and monitoring of the power solution. This is where Enatel Energy differentiates itself by offering scalable solutions that monitor and report full energy logging of all system parameters (loads, battery, charge/discharge, genset kwhrs, solar kwhrs et cetera., hourly, daily, and monthly). We are seeing a big increase in solar power supplementation for remote sites and our easily integrated converters offer clever functionality such as solar optimization (minimizing genset run-time) as mentioned in the Sinuoso example. For us, it is all about making life easier for the energy solution owner, and of course, providing secure power with high 9s uptime to meet the most demanding SLAs. TowerXchange: SLAs often demand 99.5% or higher uptime tell us about the reliability and autonomy of your solution. Murray Wyma, CTO DC Systems, Enatel Energy: Our designers come from a long history of DC power in the telco space (since the mid 1980s). The telco uptimes typically required are greater than %. The best way to describe how we provide high 9s reliability is through the quality of design in our products, redundancy and plurality of supply. The other factor is fail-safe operation. No matter the state of any controller/monitor, the core power system operates autonomously. This is a cornerstone of telco DC power system design. We include patented features such as dynamic generator anti-stall in our products to ensure higher uptime. As a result we can raise alarms if the generator goes into a low power state, possibly due to poor fuel quality, blocked air filter et cetera. The other benefit of detecting the generator s peak power capability is that we can then programme the genset to operate at its peak efficiency during the battery recharge. Enatel Energy offers optimal dynamic phasebalancing where we can adjust rectifier output to ensure the phases on the generator are balanced (within the scope of the applied load/battery recharge). The intention of the SYNERGi hybrid solution is to ensure that the generator will run efficiently. 204 TowerXchange Asia Dossier TowerXchange Asia Dossier

210 A further line of defence to prevent the site collapsing is the ability to control load shedding. SYNERGi has the ability for the operator to shed their loads and maintain critical site and transmission capability. These features are unique to Enatel Energy and demonstrate Opex savings through optimized functional capabilities which maximize uptime and avoid unnecessary truck rolls. TowerXchange: How is your solution scalable to accommodate the increasing power requirements as multiple tenants are added to a site? Murray Wyma, CTO DC Systems, Enatel Energy: Allowing space for extra power modules and battery connections can be easily catered for at the time of design for minimal cost. When a site is first deployed, the system frame can be supplied with a minimal number of power modules. This can be done through modular configurations that support the use of wind turbines and expansion shelves. We are also currently addressing multi-tenant metering of up to six or more. TowerXchange: Should M2M technology be built into energy systems, or should third party remote monitoring be used to provide visibility into performance? Murray Wyma, CTO DC Systems, Enatel Energy: Certain levels of M2M technology are already built into Enatel Energy systems. We have built in full SNMP functionality through to SNMP V3. This includes a full suite of traps, gets and sets. This enables easy integration of third party SNMP managers. This is advantageous due to their well-proven legacy and in many cases SNMP managers are already in use by our clients and end-users. Further to this, we have built in UDP communications for use with our craft tool which enables set-up, log access and bootloading facilities across a narrow bandwidth (sometimes 2G) sites. Designing narrow band capable remote communications is essential to the developing nations market. It is vitally important to be able to maintain the communications channel to the device from the equipment manufacturer remote control facility. Monitoring solutions, where third party site control systems have been added to our monitoring, limited access to our equipment, blocking visibility, and the ability to change key system parameters. TowerXchange: Please sum up how you would differentiate your solution from your competitors? Murray Wyma, CTO DC Systems, Enatel Energy: Enatel Energy presents the most complete, comprehensive telco hybrid system on the market with the SYNERGi system. With SYNERGi, users can automatically generate maximum power tracking and anti-stall. They can automatically set their generator loads to a predefined optimum level and carry out dynamic phase balancing. Our solution also allows users to control two generators simultaneously and alternate their cycles to synchronise their services. Users can also seamlessly include green energy sources through solar and wind converters and take advantage of true plug-and-play power modules (rectifiers, solar and wind converters) with selfsetting addresses. The system also provides full kwhr logging of all energy sources (grid, gensets, solar and wind) on an hourly, daily and monthly basis. Just as importantly, the solution can be accessed remotely through via HTTP, SNMP (v2c and V3) and UDP scripting. SYNERGi features a one-step front-panel control that provides a battery initialization (commissioning) charge to enable installation technicians to set the system and walk away without the need to return to site. Generator start-up has adjustable settings that can be based on time of day (up to two periods per day), battery voltage, battery Ahrs (battery capacity) and periodic genset tests (independent of other settings). The start and stop functions can be enabled simultaneously to provide maximum security. If a battery is stolen, disconnected, lost, or found to be ineffective, the system will detect the problem and notify the user. Battery history can also be logged to enable battery warranty claims if necessary. As previously mentioned, the system can be optimized for solar use to ensure that the generator does not run unnecessarily by predicting the solar day and limiting the use of the system to ensure maximum possible solar harvest 210 TowerXchange Asia Dossier TowerXchange Asia Dossier

211 Pay it now or pay it later! Making advanced lead acid batteries the primary energy source Global stored energy leaders EnerSys present a case study comparing Diesel Genset (DG) battery hybrid with 24/7 DG Read this article to learn: Cheng Heng Hong and Robert Pounder, EnerSys In the quest to reduce DG runtime and OPEX, an increasing proportion of cell sites which previously ran dual Diesel Gensets (DGs) 24/7 are now combining Charge Discharge Cycle (CDC) batteries with a diesel genset in many cases with the battery bank becoming the primary source of power. In order to understand the economics of this transition, and the relative merits of different energy storage solutions, TowerXchange spoke to market leaders EnerSys. Keywords: Who s Who, Energy, Opex Reduction, Batteries, Energy Storage, Energy Efficiency, Off-Grid, Unreliable Grid, ROI, Hybrid Power, DG Runtime, Site Visits, Asia, Indonesia, Myanmar, EnerSys < EnerSys credibility and experience as a proven leader and innovator in energy storage < TCO comparisons of different energy storage solutions in a DG/battery hybrid context < The suitability of Thin Plate Pure Lead (TPPL) batteries for PSOC conditions < How EnerSys works with project partners to ensure that the requirements to fulfill warranty terms and conditions reflect the practical capabilities of the system and application < Installation examples from Indonesia and Myanmar TowerXchange: Please re-introduce EnerSys for any readers unfamiliar with your company. Cheng Heng Hong, Vice President Sales & Marketing, Asia and Robert Pounder Reserve Power Marketing Director, Asia, EnerSys : EnerSys is the global leader in stored energy solutions for industrial applications in reserve power, motive power, aerospace and defense. Our extensive range of quality products includes Premium Thin Plate Pure Lead, Tubular OPzV and OPzS, Ni-Cad, Li-Ion and outdoor cabinet enclosures. With over 125 years experience in battery manufacturing, EnerSys is the proven leader and innovator in reserve power batteries with customer-centric solutions. As mobile telephone networks evolve and continue to rapidly expand in emerging markets, there is great demand for reliable, improved power capacity solutions that can perform in harsh conditions. EnerSys works in close partnership with leading companies and offers complete answers to a diverse range of telecom applications requiring stored energy. As part of the offering of energy storage solutions we also provide online support tools such as the battery sizing program (BSP). BSP is an advanced battery sizing engine with a built in battery layout configuration tool for all critical applications such as telecom, data center, rail and utilities. It also includes advanced calculations for use with telecom including hybrid sites. Together with our customers we effect smart decisions which combine our expertise and service with leading products resulting in the most effective, powerful and 206 TowerXchange Asia Dossier TowerXchange Asia Dossier

212 reliable energy storage technology available. Case study example of DG/battery hybrid comparison with DG (24/7) TowerXchange: Please compare the TCO for a fairly typical off grid cell site running dual DGs with a similar site where deep cycle batteries have been installed. Cheng Heng Hong, and Robert Pounder, EnerSys : Compared to sites running on dual DGs, a site with single DG having cyclic batteries as back up generates savings if the batteries were actually used for longer duties. While a battery with cyclic capability is important, it is equally important to size the battery to maximise OPEX savings balanced with a calendar life that reflects the rate of cyclic usage and the charge acceptance capability of the battery. Typically a three year calendar life is desired before a battery is replaced, therefore based on one cycle per day the battery requirement is thus approximately 1,100 cycles life. For EnerSys TPPL SBS Eon technology this number of cycles equates to a percentage depth of discharge (DOD) of approximately 75%. Savings TPPL Gel Flooded Fuel savings/year Maintenance reduction/year Genset replacement avoidance/year Total savings/year Hybrid site TCO comparison Lead acid technologies This example gives a comparison of a site running 24/7 on diesel genset compared to a genset/battery hybrid. It also gives a comparison of different lead acid technologies with EnerSys TPPL (SBS Eon Technology) providing the greatest OPEX savings. The result is reduced OPEX cost through reduced generator runtime and therefore reduced fuel consumption, extended generator maintenance 212 TowerXchange Asia Dossier TowerXchange Asia Dossier

213 intervals, reduced storage space, reduced transport and installation costs. Even further reduction of TCO can be seen from a hybrid site that employs a second input of power, such as Solar PV. This significantly increases battery life. Often we offer pure lead battery solutions, which could more efficiently capture any additional surplus energy from the sun or DG by using a higher charge regime which will in turn increase the site efficiency, thus less DG run hours. TowerXchange: Where the battery bank has become the primary instead of the secondary energy source, what are the implications for DG runtime, and for battery replacement cycles? Cheng Heng Hong, and Robert Pounder, EnerSys : In the aforementioned TCO comparison, the battery has become the primary power source with for example, the TPPL SBS Eon Technology battery providing back up for 17.25hrs (72%) per day and genset 6.75hrs (28%) per day. In this scenario, the number of cycles provided by the battery is approx 2,700 with 2.16 cycles per day and a calendar life of approximately 3.4 years. The concept is therefore to use the battery in a cyclic operation instead of a standard float backup. The system would typically control the discharge of the battery every day during the night, and recharge using the DG during the day. Telecom cellular energy setup Significant fuel and maintenance costs are saved, and that payback would justify such an investment. 208 TowerXchange Asia Dossier TowerXchange Asia Dossier

214 reduced impedance allows the batteries to be charged in about half the time of conventional batteries, without sustaining damaging effects. Therefore TPPL batteries are suitable to use in a partial state of charge condition to ensure that the requirements to fulfill the warranty terms and conditions reflect the practical capabilities of the system and application, i.e. duty cycle control features, system monitoring, data recording. We are involved from design, implementation to a complete end to end solution. This ensures having the right products together with other peripheral equipment such as the enclosure, systems, distribution and controllers that suit the application and environment. How this can be made possible? This application of battery is classed as cyclic, used in partial state of charge, which means not each cycle will return the battery to 100% state of charge, thus enabling more diesel savings. The thin-plate grids in TPPL batteries offer greater plate surface area and shortened ionic pathways, resulting in an overall reduction in internal impedance. With lower impedance, the TPPL batteries sustain a higher average voltage on constant power discharge. Additionally, reduced impedance allows the batteries to be charged in about half the time of conventional batteries, without sustaining damaging effects. Therefore TPPL batteries are suitable to use in a partial state of charge condition. In summary, the following key advantages of TPPL batteries make EnerSys PowerSafe SBS an excellent choice for hybrid applications: < PSOC (Partial Stage of Charge) compliant < Up to 1,800 cycles (50% DOD) with operating temperature up to 50C < Recharge time < 2 hours (50% DOD, 2.4Vpc, 1.0C10 re-charge current) < Low self discharge 24 months shelf life < Up to 50% more capacity (in same foot print compared to tubular gel OPzV) < 15 years design life according to Eurobat < Wide operating temperature range (-40 C to +50 C) < Made in Europe and USA TowerXchange: Forgive my being rude, but it s often suggested that lead acid battery manufacturers warranties are meaningless as they require compliance with installation and usage guidelines that are not practical in an emerging market context. How does EnerSys ensure your warranty is more meaningful? Cheng Heng Hong, and Robert Pounder, EnerSys : EnerSys works very closely with project partners EnerSys has a flexible approach to the primary and secondary control features of the Charge/Discharge Cycle (CDC) that allow the tower owner to optimise the operating strategy to suit the limitations of the system and in addition, extensive testing allows EnerSys to provide the user with preferential warranty terms whilst minimising risk. For hybrid applications, we have separate manuals which are different from ones we use for normal float charge applications. We also educate our users on using the products, provide training and offer maintenance program. There must be a reason why EnerSys is a global leader in stored energy solutions, and remain strong after 125 years. We deliver what we promise. EnerSys manufactures and supplies the highest quality and most reliable products in our chosen markets and then consistently meet and strive to exceed our customers for service, technical support and value for money. Our warranty is backed up 214 TowerXchange Asia Dossier TowerXchange Asia Dossier

215 the SBS Eon Technology s characteristics. Another success story comes from our tireless effort in Myanmar whereby over 8,000 blocks of EnerSys batteries were supplied to over 600 sites with various on-grid and off-grid conditions, including hybrid applications. These are only the orders received from the first entry phase of installation in Myanmar, we are working toward upcoming projects too. Installation in Myanmar by sales and manufacturing locations in over 100 countries around the world. TowerXchange: Please share one or two examples of tower portfolios where EnerSys energy storage solutions have been installed. Cheng Heng Hong, and Robert Pounder, EnerSys : As we are unable to name our customers, I can only cite a few of these examples. We successfully supplied over 40,000 blocks of EnerSys PowerSafe SBS Eon Technology to several of Indonesia s largest telecommunication networks and services providers utilising the ruggedness of The mission was made possible through joint efforts between distributors and EnerSys. This demonstrates our commitment by working closely with users to understand and meet all technical requirements. EnerSys is now the preferred supplier for unstable grid applications to the operators and the installation base of EnerSys batteries has continued to grow. TowerXchange: Finally, please sum up how you would differentiate EnerSys from other energy storage solution providers Cheng Heng Hong, and Robert Pounder, EnerSys : EnerSys has a global and worldwide presence and coverage through its own subsidiaries in all continents Americas, Europe, Africa, Middle East and Asia-Pacific. In Asia, EnerSys has presence in seven countries and 18 local offices for sales and application support. We have a comprehensive product range and access Installation in Indonesia to all commonly used battery technologies and are therefore in a position to help end-users to the most cost-effective (TCO) solution technically and commercially. EnerSys has 17 research laboratories situated in the USA, Europe and Asia and are constantly looking for new chemistries, plastics, separators and advanced technologies. It is our mission to ensure these new technologies are able to work together to form a battery with an expected life. Process improvements, measuring consistency in the manufacturing cycle is also a major part of the engineering and research teams effort to maintain the higher standards that EnerSys sets for itself 210 TowerXchange Asia Dossier TowerXchange Asia Dossier

216 FG Wilson s customers define the requirements for a new opexbusting DG New telecoms product extends service intervals to 1,000 hours and can be controlled from the NOC Michael Milligan, FG Wilson FG Wilson is a leading global supplier of diesel generator sets with a strong heritage of quality, support and value. From 6.8 to over 2,500 kva, today FG Wilson offers a wide range of generator sets, all built in modern facilities. This interview focuses on FG Wilson s new telecoms product, a new packaged generator product designed to meet the requirements at distributed cell sites, where the new telecoms product s 1,000 hour service intervals and integrated remote communications can significantly reduce opex. Keywords: Caterpillar, Energy, Energy Efficiency, FG Wilson, Hybrid Power, NOC, Opex Reduction, RMS, Site Visits, Spare Parts, Who s Who TowerXchange: Can you introduce your company and tell us about FG Wilson? Michael Milligan, Account Manager, Global Accounts, FG Wilson: FG Wilson is a world leader in the generator set industry. We were founded in 1966 in Belfast which means that this year, we are celebrating 50 years in business. Our first products were mini power stations, mostly for the Middle East, and we still market large custom generator sets, but in many parts of the world we are probably better known for self-contained small power units which are relatively simple to buy and operate and require a minimum of installation work. These are supported by a global network of around 300 dealers. FG Wilson generator sets are trusted to provide emergency power in over 190 countries around the world. They provide essential standby power to critical applications such as hospitals, airports, data centres, telecommunication networks as well as residential properties and factories. FG Wilson generator sets are manufactured at Caterpillar facilities in the United Kingdom, United States of America, Brazil, India and China. Read this article to learn: < Defining the requirements for a new efficient DG in partnership with customers < How FG Wilson maximise reliability < DG-only or hybrid applications < Post sale service and warrantee support Since 1998 FG Wilson has been owned by Caterpillar Inc, one of the leading US corporations and a Fortune 500 company. The brand now sits within Caterpillar s Industrial Power Systems Division. TowerXchange: Tell us about FG Wilson s new telecoms product what makes it special? 216 TowerXchange Asia Dossier TowerXchange Asia Dossier

217 Michael Milligan, Account Manager, Global Accounts, FG Wilson: First and foremost, this is a very customer-defined product. We spent a great deal of time simply talking with our customers and dealers and working through issues together to understand what was important. There was a real focus on product operating costs and this has led to a packaged generator product which is ideal for telecoms users, or indeed for any customer who operates at sites which are fairly remote. And the product is perfect for either hybrid or generator only applications. To reduce operating costs, site visits for maintenance and fuel replenishment, the product offers 1,000 hours between service intervals, and comes with set-mounted fuel tanks of up to 2,000 litres. Being able to monitor the generator set from the telecom NOC maximises uptime and allows preparation for site visits minimising servicing costs and ensuring that site visits are effective. The product options list includes a flexible range of enclosures offering three levels of sound attenuation to help ensure that it meets local noise regulations. What makes this product special is that not only does it go further in offering much more value to customers with a specification strongly led by customers, but also we have been able to offer this for a significantly lower price. TowerXchange: Tell us about the reliability of your solution? We know from past experience that rigorous upfront design, testing and validation lead to superior reliability throughout a product s lifetime and that this can save customers a substantial amount of money over time Michael Milligan, Account Manager, Global Accounts, FG Wilson: We know from past experience that rigorous upfront design, testing and validation lead to superior reliability throughout a product s lifetime and that this can save customers a substantial amount of money over time. We are a volume manufacturer and we take reliability extremely seriously. We have made multi-million dollar investments in our industryleading Engineering Centre of Excellence where all our new products are given intense pre-launch testing which include vibration, engine/alternator cooling, electromagnetic compatibility, noise, water ingress and rating/transient performance. Our products operate in the toughest environments and are designed to perform exactly in the way our customers expect. Manufacturing quality is extremely important to us and our facilities operate with rigorous production quality controls, utilising the Caterpillar Production System and standard work processes. Then, once products are installed, we work together with our distributors through our Partners In Quality programme which provides on site product performance feedback back to our product engineering team. TowerXchange: Can you outline how FG Wilson integrates with hybrid providers? Michael Milligan, Account Manager, Global Accounts, FG Wilson: We have incorporated a great deal of product flexibility including control systems and remote communications to ensure that our generator set integrates seamlessly with any hybrid system. We are partnering with several established hybrid manufacturers to confirm compatibility and ensure efficient and fast deployment of our products on site. TowerXchange: What warrantee and after sales support do you offer FG Wilson customers? Michael Milligan, Account Manager, Global Accounts, FG Wilson: FG Wilson has a global 212 TowerXchange Asia Dossier TowerXchange Asia Dossier

218 Meetup Asia December, Marina Bay Sands, Singapore network of around 300 dealers who offer aftermarket and warranty support for the complete generator set package a one stop shop. Dealers are fully trained on all aspects of the generator package and are supported by the FG Wilson central technical helpdesk, technical libraries, on line systems and an extensive parts distribution centre which ships three million parts a year and carries 11,500 product line parts. Our dealers will be close at hand, fully equipped and trained, with quick access to parts in-territory to offer a fast and efficient service to solve any issues during initial visits, which minimises any product down time. The new telecoms product with optional fuel tank TowerXchange: Where have the generator sets been successfully installed? Michael Milligan, Account Manager, Global Accounts, FG Wilson: FG Wilson has installed over 600,000 generator sets since 1990 and we continue to develop new products based on tried and tested key components. In every continent there is a significant population of FG Wilson generator sets working at telecom sites, and there are many reference sites listed on our website. We re now building on that population with this new customer-led product A senior-level networking opportunity with 250 leaders of the Asian telecom tower industry Vistit TowerXchange Asia Dossier TowerXchange Asia Dossier

219 Batteries for hybrid off-grid power Five key questions you should ask By Tomas Rahkonen, Chief Technology Officer & Vice President ecentre In backup applications for telecom sites in developed markets with stable grids, battery operation is a wellunderstood topic with expected battery lifetime of more than ten years. However, for telecom sites in emerging markets with very unstable or no power grids at all, things are not quite so straightforward. Thomas Rahkonen, Flexenclosure s Chief Technology Officer and Vice President of their ecentre talks us through key criteria when selecting batteries for hybrid off-grid power applications. Keywords: Africa, Batteries, Energy, Energy Storage, Flexenclosure, Lithium, Masts & Towers, Monitoring & Management, O&M, Off-Grid, Operational Excellence, Regulation, Renewables, RMS, ROI, Site Visits, Towercos, Unreliable Grid, Uptime Read this article to learn: < The pros and cons of 12V and 2V lead acid batteries and lithium ion batteries in hybrid applications < Decision criteria in selecting a battery for a given site < How to ensure warranties aren t invalidated and the key role played by monitoring systems < Sizing considerations when deciding on a battery bank < The importance of standards and the importance of traceable test records For telecom sites in emerging markets with very unstable or no power grid at all, batteries are typically employed in a charge-discharge-charge (CDC) pattern in order to minimise the runtime of diesel gensets. It s a strategy that generally works, but with a couple of significant drawbacks. First, such active use can often reduce the service life of batteries to just two to four years even if special cyclic lead-acid batteries are used. And second, to keep diesel usage to a minimum during CDC operation, it s not effective to fully charge the batteries during each charging cycle, as battery power charge acceptance decreases rapidly as they fill up. The result is that gensets end up operating at low output power and therefore low diesel efficiency thus defeating the object of using the CDC strategy in the first place. So what s the answer? Well, let s first take a look at the two main battery technologies available today. Lead acid batteries Lead acid technology has been the mainstay for industrial battery applications for decades. They re available in 12V and 2V varieties, both of which have their pros and cons. 12V lead-acid batteries have relatively few mechanical constraints; are easy to charge and can be configured in parallel 12V strings in order to meet an exact Ah requirement. However, string imbalance may develop over time; they don t tolerate thermal abuse particularly well; and their 214 TowerXchange Asia Dossier TowerXchange Asia Dossier

220 cyclic life per cell is not the highest, especially not for front access blocks. Meanwhile their 2V cousins are extremely robust; very tolerant of electrical and mechanical abuse; are able to approach the VRLA theoretical maximum for cyclic life; and have built-in theft protection given that 2V power is useless for domestic applications. Further, they can be charged and discharged with exactly the same current at all times, with the result that the aging of all the cells in a bank will be uniform. But on the downside, 2V batteries require more rigid mechanical integration with the entire bank needing to be disconnected during maintenance or cell replacement. And they are also slightly heavier than their 12V rivals for any given Ah rating. Critically though for hybrid power applications, whether 12V or 2V it s important to select batteries designed for cyclic operation. Batteries designed for good power grids (which use float operation) are typically far cheaper but will fail fast in more challenging applications. Lithium technology In comparison to lead acid batteries, many people assume lithium must be the best battery type simply because it s the newest technology. However, it isn t as simple as that. Lithium batteries have a number of clear advantages. Their small size with respect to energy storage capability is one, as is their ability to harvest and transfer energy irrespective of their charge. They can also be charged extremely fast and can accept large fluctuations in charging current. However, the use of a battery management system is mandatory, as lithium cells always need balancing. Lithium technology is also costly at least three times more expensive per watt hour (Wh) as compared to VRLA. And lithium batteries can only be used where the ratio between energy storage and constant power to the load is small or moderate. Hybrid power system selection To further complicate the matter, any battery technology will only be as good as the hybrid power system using it. How precise is the system s battery control? Has the hybrid power system vendor conducted appropriate testing and development with the battery vendor to make sure performance will be maximised? It s important that batteries are kept within the allowed temperature range as specified in the supplier warranty. So a good hybrid system will monitor this temperature and proactively warn the operator before problems occur. And with batteries constituting a significant portion of the cost of installing and running a hybrid power system, it should also safely log all usage and charge cycle data for potential warranty claims if batteries fail prematurely. 220 TowerXchange Asia Dossier TowerXchange Asia Dossier

221 By example, Flexenclosure s esite hybrid power system uses a software-defined battery charging model and adaptive algorithms, which are finetuned with each battery supplier. In this way both the warranty period and battery performance are optimised, thus maximising battery investment regardless of which battery type or brand is selected. So which is the best battery? What soon becomes clear is that there isn t a one-size-fits-all answer to the question of which battery is best for hybrid power systems. Selection ultimately comes down to a number of different factors, including: < Which battery type best complies with the mode of operation you need? < Is the battery s operational temperature range adequate at your locations? < Can you remain inside the limits of the maximum cyclic life or energy throughput for the service life you need? < Is grid power available at each site and if so, how reliable is it? < And how long will it take to reach any given site in the event of a grid or genset failure? In an ideal world, you d choose the most appropriate batteries to install at each and every individual site, rather than making a generic decision at a network level. This may not be practical from purchasing or on-going maintenance perspectives, so a trade-off will always need to be made somewhere. Overall though, for lead acid, 2V is often the preferred choice versus 12V alternatives but with lithium technology evolving at a terrific pace in the automotive industry, it won t be long before it becomes a serious option for many hybrid power scenarios. Five Key Battery Questions You Should Ask 1. How do I choose the right battery for different site types? Critical data points at a site level are the duration and frequency of any power interruptions at each site each day. Also important is how long it takes for service personnel to reach the site in the event of a power failure when the site will need to run on batteries only, as this will determine required battery autonomy time. 2. Is there a solid business case for deploying lithium versus lead acid? Lithium technology is being increasingly adopted for sites with a reliable grid and limited power interruptions, but remains technically and financially challenging in pure off-grid applications where a larger battery bank is needed for battery autonomy. 3. How strict are extended battery warranties? Most (if not all) warranties will typically be conditional if the batteries are being used in scenarios that are more challenging than their factory tests when new. Therefore, the exact charging and cyclic operation scheme must be disclosed and agreed upon in advance if the battery manufacturer is to commit to cover longterm performance in the warranty. 4. How big should the battery bank be for a hybrid power system? The size of the battery bank at any given site is typically driven by the size of the site load and the minimum battery autonomy time required. In pure off grid applications, an additional factor to consider is that the number of daily charging cycles must be kept below a certain value typically four times per day in order to prolong battery life. So the larger the battery bank, the fewer the charge cycles required. 5. What is the role of standards when selecting a battery? International standards, IEC and others are very helpful, but only if a battery manufacturer s compliance statement is accompanied with traceable test records confirming that all the test criteria in each standard have been met. Partial compliance is misleading and prevents fair and objective comparisons between manufacturers 216 TowerXchange Asia Dossier TowerXchange Asia Dossier

222 Lithium ion batteries could eliminate the need for diesel generators Perspectives on a new generation of energy storage solutions GS Yuasa is a leading manufacturer and distributor of energy storage solutions which has been serving various industries for decades prior to its final merger back in The company has been supplying mobile network operators with its solutions and is now actively doing business with independent towercos and ESCOs. In this exclusive interview, GS Yuasa s General Manager, Mr Soichi Hanano, shares his views and insights on the dynamics of the energy business and how the company can support green targets as well as cost reduction initiatives. TowerXchange: Tell us about GS Yuasa and its footprint in Asia. Soichi Hanano, General Manager, Industrial Battery Department, Marketing Division, International Business Unit, GS Yuasa: GS Yuasa is a Japanese company formed in 2004 by the merger of two large, 100-year old battery manufacturers; Japan Storage Battery Co., Ltd., known as GS, and Yuasa Corporation. At US$3.5 billion in sales, GS Yuasa is currently one of the world s largest battery manufacturers. GS Yuasa manufactures a full line of technologies including lithium ion, lead acid, nickel metal hydride, and nickel cadmium for the automotive, industrial, telecommunications and specialty battery markets. With thirty-six affiliates in sixteen countries, GS Yuasa has a worldwide presence operating under the GS Yuasa, GS, and Yuasa brands. Soichi Hanano, General Manager, Industrial Battery, GS Yuasa Read this article to learn: Keywords: GS Yuasa, Southeast Asia, Japan, Southern Asia, East Asia, China, India, Bangladesh, Pakistan, Australia, Thailand, Hong Kong, Asia Pacific, Interview, Batteries, Opex Reduction, Energy Storage, Lithium, Off- Grid, Unreliable Grid, ESCOs < GS Yuasa s footprint, client base and evolution < Why lithium ion batteries are the right choice for off-grid sites < How the right battery can support green initiatives < The evolution of the industry business model and the arrival of towercos and ESCOs GS Yuasa s major achievement in terms of supplying long life VRLA and lithium ion batteries in the Asian telecommunication market come from our relationships with major MNOs in China, India, Bangladesh, Pakistan, Australia, Thailand, Hong Kong and Japan, where we have been supplying lead acid batteries for several decades and where lithium ion is rapidly gaining acceptance. TowerXchange: Who are your key clients and which products are they showing their interests the most? 222 TowerXchange Asia Dossier TowerXchange Asia Dossier

223 Soichi Hanano, General Manager, Industrial Battery Department, Marketing Division, International Business Unit, GS Yuasa: Our key clients in the telecommunications sector are mobile network operators who own telecom towers to whom we have been supplying batteries for many years. However towercos and ESCOs, who have started managing passive equipment including batteries, are becoming a very relevant part of our business. We are aware that the independent towerco model is widely accepted in developing countries, where the need for cell site densification and extension is urgent and capex intensive. In terms of customers requirements, we experience a variety of scenarios. Although our principle service is to supply batteries for site backup, the choice of product depends on a combination of factors, including peripheral devices, renewable generation, remote monitoring, electricity condition and grid stability. GS Yuasa is a well established battery manufacturer with exceptional experience of supporting new applications. It is our strength to have a wide lineup of products such as long life VRLA, advanced VRLA with superior cyclic life performance and lithium ion batteries. Our new lithium ion products have cutting edge performance, which allows us to offer new approaches to energy storage that were not previously feasible. The lithium ion battery has especially superior characteristics for cyclic life performance, quick charging and deep discharging and is attracting a huge amount of interest from MNOs as well as towercos, who use lithium ion batteries as a core power component for the telecom base stations in areas with poor electricity networks. TowerXchange: What is the percentage of your business coming from MNOs versus towercos? And how big of a change the entrance of towercos represented for your business? Soichi Hanano, General Manager, Industrial Battery Department, Marketing Division, International Business Unit, GS Yuasa: I d say to date 60% of our business comes from MNOs and 40% from towercos. However, the percentage of business coming from towercos has been increasing and we presume the trend will continue in the future, as the business One of GS Yuasa solutions model for managing telecom towers continues to change. Today towercos are focusing intensely on reducing opex as this is the primary way for them to increase profitability. GS Yuasa has had to provide much support to towercos in their pursuit of efficient operation as we have considerable project management experience in terms of recognising and analysing telecom base station load patterns by data logging and proposing the most suitable power system, depending on the site condition. We then follow up with a field trial and, eventually, with the commercial implementation. Our approach is particularly useful for MNOs and towercos who have experienced site instability due to poor power quality. 218 TowerXchange Asia Dossier TowerXchange Asia Dossier

224 GS Yuasa is working not only as a battery manufacturer and supplier but also proposing green power solutions that can contribute to reducing opex as well as CO2 in the long term. TowerXchange: How does GS Yuasa address the environmental issues in markets where green initiatives are flourishing? Soichi Hanano, General Manager, Industrial Battery Department, Marketing Division, International Business Unit, GS Yuasa: Our batteries are usually deployed as components of larger systems. Their use in the power delivery system of a telecom base station is a typical example. We believe that the environmental impact of our products should be evaluated as part of the whole assessment of a particular application, rather than a narrow definition of battery production and disposal impacts. In off-grid and unreliable grid scenarios, the choice of battery can strongly influence the selection of the primary energy source. Our lithium ion technology is allowing our clients to avoid utilising any fossil fuel based solution thanks to its high charge acceptance and long cycle life at elevated temperatures. In some sites we are able to avoid the deployment of diesel generators altogether by harnessing intermittent grid supplies or renewable power sourcess more effectively. Having an overall cost benefit, in addition to environmental advantages, generally helps promoting green initiatives. Luckily this isn t hard The lifecycle of lithium-ion batteries is five to ten times greater than currently utilised lead acid technology and their performance is not degraded, even if they never experience a full charge when diesel generators are involved! Local operating conditions can have an enormous impact in the choice of the appropriate green storage solution. The lead acid battery is often perceived as an environmental hazard because of its heavy metal content. In reality, lead is exceptionally recyclable, therefore we can easily demonstrate its advantages as long as a safe recycling infrastructure is locally accessible. Our company is unique in our range of traditional and new battery technologies, which allows us to provide an unbiased view of the most appropriate green solution to a particular application. TowerXchange: What performance and RoI can be achieved with lithium-ion batteries at unreliable or off-grid sites? How do life-cycles compare with lead acid batteries? Soichi Hanano, General Manager, Industrial Battery Department, Marketing Division, International Business Unit, GS Yuasa: Utilising lithium-ion batteries in unreliable or off-grid sites can deliver great opex savings and overall financial benefits. In fact, full charge can be obtained in less than two hours, which means that even in the case of frequent power outages, the need for diesel fuel purchases and delivery costs can be greatly reduced or eliminated altogether. For some sites we have shown that DG capex can also be avoided which allows companies to achieve the payback point within one or two years. The lifecycle of lithium-ion batteries is five to ten times greater than currently utilised lead acid technology and their performance is not degraded, even if they never experience a full charge. These characteristics greatly improve the flexibility of operation and reduce maintenance requirements of our products. Soon after the payback period, our clients start realising the advantageous opex savings which last for many years until replacements are required. Finally, the electronic state of health monitoring system is an integral component of our products. It allows remote monitoring to be applied throughout the life of a telecom base station to provide long term operating efficiencies. In particular it means that there is no need for local input from skilled technicians to maintain the operation of the battery. The optimum performance and replacement strategy can be applied to every site across a whole network 224 TowerXchange Asia Dossier TowerXchange Asia Dossier

225 Intelligent preparation and use of data for more proactive network management Infozech s itower suite tackles the huge volume of variable data being generated by diverse RMS systems Ankur Lal, Founder & CEO, Infozech Read this article to learn: The multiplicity of RMS systems, coupled with communication errors, presents a major challenge to MNOs and towercos looking to obtain a single source of truth regarding their operations. TowerXchange speak to Infozech Founder and CEO, Ankur Lal to discuss how the company is working with customers to better handle raw data and analyse it in a structured way to equips MNO and towercos with the tools to take action on their sites. Keywords: Africa, Capex, Data Room, Energy, Energy Efficiency, Fuel Security, Infozech, Job Ticketing, Monitoring & Management, NOC, O&M, Operational Excellence, QoS, RMS, Site Level Profitability, SLA, Uptime, Who s Who < Challenges that towercos and MNOs face in obtaining a single source of truth from their RMS systems < How Infozech are working with customers to improve the handling of raw data including the use of smoothing and fill-in algorithms and data verification against the norm < Key metrics Infozech recommend capturing to improve energy efficiency and cost savings < How Infozech s itower platform assists operators and towercos in capturing and analysing data in a structured way TowerXchange: An increasing number of RMS platforms, either as standalone systems or built into different equipment on cells sites gives towercos and operators a wealth of data with which to monitor operations. Can you explain some of the challenges that are presented to tower owners and operators by this? Ankur Lal, Founder & CEO, Infozech: RMS systems are increasingly being deployed by towercos and MNOs with a view to increase site visibility. This need is especially large with new sites (where RMS comes built in) or retrofitting existing sites. In the retrofit scenario, one emphasis is on gaining better visibility of source of power and visibility of fuel consumption. Towercos believe that once they have the necessary RMS deployed, they will get authentic information and achieve a single source of truth. On the ground there are multiple systems, some standalone and others which are integrated. Due to multiplicity of systems and on the ground realities, often the sought-after single source of truth through RMS deployments is not achieved. Each RMS system produces data in its proprietary protocol. There are multiple challenges being faced by the towercos with an increasing number of RMS platforms and collection of data from RMS. The communication between site and server consists of four steps: 220 TowerXchange Asia Dossier TowerXchange Asia Dossier

226 1. RMS controller capture and relay: RMS controller captures information at site and relays it. 2. SIM/ and mobile modem transfers information from site 3. Mobile network establishes connectivity between site and server, 4. Server: Set up to receive information from RMS controller and auto correct any transmission errors In the event that any of the above four steps fail to work, or do not work in tandem, the desired outcome of receiving data on server is not achieved. Whilst this seems simple and should always work, in reality, due to multiple choices for each of the above, getting all of them to work reliably needs focus and review. TowerXchange: Please can you explain a case where customers had experienced challenges in this area? Ankur Lal, Founder & CEO, Infozech: Our customer experienced a case where the RMS was configured to relay energy data every ten minutes, meaning six times an hour or 144 times a day, as such, the expected number of data packets for energy data was 144 per day. When we looked at this analysis across sites we found a large number of sites doing this, however for over 30% of the sites, the number of data packets received was under 135 (i.e. they were not 95% compliant). When we delved further we realised that this was happening due to one of the aforementioned reasons, ensuring you are getting all the data is absolutely critical. While looking at this we also saw sites which were sending 155 packets or more a day We found that some of the data is erroneous and did not provide a consistent trend, rather it led to confusion of the receiving system. We explained this phenomenon as noise which was due to unpredictable events at site or in transmission of data and as such it resulted in us building sophisticated proprietary solutions to parse the data in such a way that noise reduction happens. TowerXchange: Can you share the work that Infozech is doing to better prepare the raw data that is being received by towercos and MNOs on their sites? What further steps are required by different stakeholders to assist in this? Ankur Lal, Founder & CEO, Infozech: The raw data packets being received by the server may contain alarm information, data value or both. Some of the functionality which helps us in better handling of raw data are: 1. Handling alarm fluctuations: Alarms are configured for key events such as door open, low fuel, low voltage, fire et cetera. Some of them need immediate action while others are not so critical. At times, the information received may not be fully accurate, for instance an alarm fluctuation due to a malfunctioning of a sensor or controller can result in the central server starting to receive a flood of these alarm packets. If an alert is passed on every time such event occurs, the end user mailbox is flooded with messages and it becomes difficult for the user to handle. The Infozech itower (Tower Product suite) comes built in with intelligent filtering to assess if this event is due to malfunctioning at site, and sends only the relevant notifications to the user. 2. Fuel sensor calibration: Each site has different types of fuel tanks (of all sizes and shapes) and there are multiple types of fuel sensors which can be fitted. While some newer ones like Capacitive maybe more reliable, others are less so. RMS vendors need to calibrate the sensor with the tank and the equipment to ensure the readings are accurate. In the event that a sensor or tank is changed, recalibration is required. Besides recalibration we noticed that even the best of sensors have fluctuations due to external temperature and other factors. At times, this fluctuation is so significant that it may cause the receiving system to misinterpret the information; in case of fuel, such as a normal fluctuation may be misinterpreted as theft or vice versa. Infozech has developed a proprietary Smoothing Algorithm which helps normalise the data and show the correct trends without fluctuations. 3. Missing data correction: At times the data may be missing in a data stream. Infozech has a mechanism to identify and highlight any missing 226 TowerXchange Asia Dossier TowerXchange Asia Dossier

227 data parameters in the raw packet. Infozech has built proprietary algorithms to fill-in for missing data depending on the type of data missing and the number of instances in which it is missing. This helps autocorrect a data stream. 4. Business rule: When raw data is received, it needs to be verified against permissible ranges and likely values. Infozech s system validates every raw data packet and each value in the data packet against its defined type and permissible value and filters out any garbage value from the system. It is possible to configure multiple types of business rules to identify data and depict business scenarios. Based on these findings, towercos and the RMS vendors should acknowledge and rectify these data discrepancies highlighted by the system in a time bound activity; any loss of data packet due to rejection of garbage values will lead to loss of information and indirectly hamper other day to day processes linked with those data values. TowerXchange: In the instance where there are multiple images of the same data from the different systems, or where there is a gap in data, what are Infozech s recommendations on how to best manage this? Ankur Lal, Founder & CEO, Infozech: The ultimate objective is to treat RMS data as a single source. However, the challenges enumerated above while collecting and validating data leads to compromisation of the objective. This happens because towercos are collecting data from multiple sources. Infozech recommends the use of a standard platform which can reconcile data from any sources based on: < Type of data (instantaneous value or cumulative value) < Business rules applied on the data Infozech s platform has been precisely designed to achieve this objective for towercos. Infozech provides a platform where it reconciles data from any source or platform. The system automatically eliminates repetitive inflow of the same data, selecting the best value and capturing it. Users can then have an option to approve the best value based on their business requirement for future use. TowerXchange: With the number of parameters that can be measured on a cell site being seemingly endless, what metrics do Infozech think are particularly important for tower owners to measure that may not be widely monitored currently? Ankur Lal, Founder & CEO, Infozech: Key things which can be implemented as energy/cost saving measures include: 1. Where there is high genset run hours, battery backup hours should be monitored 2. Where there is high grid availability, generators can be removed by enhancing the battery bank 3. Second (spare) gensets can be removed from sites with lesser load by managing one genset with proper battery cyclic operation 4. Periodic analysis of runtime distribution across the grid, battery and genset based on load and battery capacity which can then lead to up gradation if required. 5. Maintenance results of battery (e.g. discharge test) periodically can suggest enhancement or replacement of battery bank. 6. CPH establishment based on site category based on load, temperature, colocation and other known/ unknown factors. This can be then improved based on a feedback from the system correcting variances between actual and theoretical values. Infozech s i-analytics solution helps customers carry out such analysis easily and repeatedly thus helping them take much more informed and optimal decisions. TowerXchange: Preparing the data into a manageable format is the first step but turning data into intelligence that can be used by the client is key. Where are we today in being able to consolidate and analyse all the different inputs into real intelligence? How do Infozech see this being built upon in the short, medium and long term? Ankur Lal, Founder & CEO, Infozech: Improving Profitability through Discipline of Action 222 TowerXchange Asia Dossier TowerXchange Asia Dossier

228 (TowerXchange Issue 17, August 2016), focuses on how to assist customers take action. Taking action is often associated with higher risk or effort. Infozech s itower platform assists operators capture and analyse information is a structured way. Once actions are taken, they are fed back in the system for further assessment of the quality of action. This helps assess action effectiveness. The analysis provides trends which can indicate short, medium and long term actions. One area which Infozech has started engaging in, is the optimal mix of capex opex. Often a large number of capex measures, such as long lasting batteries, need effective systems which can monitor and measure energy spend and battery life over multiple years to determine: 1. Whether the initiative itself was right (i.e. switching to long lasting batteries), or was it fraught with failures, site downtime issues or difficulty in maintenance. 2. In case the initiative was a success which battery provider gave the best service in which case was the yield the most this may not have been in the lowest cost one. In absence of such analysis companies lean towards the lowest cost alternative which at times could even be the highest cost one. TowerXchange: Can you share some examples where Infozech has worked with a client to get more out of the data that they are generating? What improved efficiencies, cost savings or timelines has this afforded the client? Ankur Lal, Founder & CEO, Infozech: Infozech has been working with one of our clients to help them to get more value from the data which they receive from RMS systems for cross functional consumption. One of the challenge faced by the client was the ability to obtain accurate and complete data for energy billing from the RMS system. Major challenges included: 1. Missing /Garbage data packets 2. Incomplete data packets Incomplete data packets: The Infozech System derives the possible value based on trends in the historic data. There are sites where the data is not available for the complete month, for instance, energy billing cannot be done for site where data is only available for 25 days. In such scenarios of incomplete data, Infozech help in determining those values based on Infozech s proprietary algorithm Fill in. After applying the above functionality, the customer is now able to bill the sites accurately based on the RMS data. We have also been providing solutions where data has been missing for 15 days or there is no data for the month. These functionalities can be reapplied to fuel sensor data, genset run hours and other data sets Meetup Europe April, London Meetup Americas June, Boca Raton Meetup Africa & ME October, Johannesburg Meetup Asia December, Singapore TowerXchange Asia Dossier TowerXchange Asia Dossier

229 Invendis: Expanding operations in Africa and Asia How Invendis is expanding its footprint and delivering increased opex reductions Satish Kulkarni, CEO, Invendis Read this article to learn: < The expansion of Invendis footprint in Africa and Asia < How Invendis reduces inventory cost by 20 to 25% < How Invendis is reducing fuel theft < The benefits of tracking individual batteries on sites TowerXchange recently caught up with Satish Kulkarni, CEO of Invendis to get an update on their latest projects, plans to expand their footprint, and successes in Africa and Asia. We discussed best practices for inventory reduction, fighting fuel theft, site monitoring and capturing data on energy usage. Keywords: Africa, Asia, Asia Insights, Batteries, edotco, Invendis, Logistics, Monitoring & Management, Operational Excellence, Off-Grid, Opex Reduction, RMS, Site Level Profitability, Site Management System, Site Visits, Unreliable Grid, Uptime TowerXchange: Please give us an update on some of your new projects and milestones since we last spoke. Satish Kulkarni, CEO, Invendis: Over the last two years we have moved into several new countries and territories. Two to three years back a lot of our business was from Africa in countries like Tanzania and Malawi. Over the past four to five years we ve installed systems in over 4,000 sites in Africa; we work with almost all of the towercos in Africa. We have some business from Helios Towers in Africa, and we re about to sign a contract in Ghana and Tanzania with them. We re still active in Africa and continue to grow there. In the Middle East we have a contract through Nokia as a primary contractor, and we re doing work for them on 275 sites increasing to 1,000 sites. In Asia we recently won a contract with edotco to install systems on 12,000 sites in Malaysia, Bangladesh, Sri Lanka and Cambodia. We are deploying 3,000 systems in Bangladesh and 3,000 in Malaysia, and then we will deploy another 6,000 by the end of There is also a lot of activity in India; we estimate that towercos are using RMS on close to 200,000 sites. We are installed on 3,400 of Ascend Telecom s sites and we also have an order from Intelligent Energy who are handling the energy assets on GTL s sites. There is a lot of consolidation happening now and new capex is being deployed including energy monitoring and optimisation. At one point 95% of our business was coming from outside India, and now over the past 224 TowerXchange Asia Dossier TowerXchange Asia Dossier

230 two to three years things have been changing. We are also deployed on 2,500 of American Tower s sites in India, and we manage another 5,000 towers for a power equipment company. Over the past five or six years we ve deployed on over 20,000 sites in all of our markets. There is consolidation happening across Africa and Asia and our business will grow there as a result. There are some huge potential opportunities in countries like Thailand, Indonesia, Myanmar and Singapore. Prices for connectivity have come down and a lot of companies and governments are switching to green energy, batteries and hybrid solutions. We feel that over the next three to four years there will be a lot of interest in replacing diesel generators with batteries, and our solutions will play a role in managing these. TowerXchange: Do you have any success stories to share? Satish Kulkarni, CEO, Invendis: In Ghana we were able to bring down the inventory cost for the towercos by 20-25%. There were some major issues with the grid there and the power was down about three hours per day once every four or five days. We installed our system and it greatly increased the efficiency of the sites. There are also difficult conditions in countries like Bangladesh that experience annual flooding. The sensors that we installed on the sites were able to detect when flooding of the equipment was imminent so that clients could be notified and measures could be taken. Our project in Iraq is challenging due to the security issues and political situation, not to mention the environmental conditions. However we had experience operating in desert conditions from a previous deployment in Oman for Omantel a couple of years back. We provided automated coverage of 300 remote exchanges; we re in talks to install on their towers as well to collect operational data which should happen later this year. We ve also handled extreme cold at -10 or -20 degrees in some of the more remote northern sites in India. Two or three years ago about 10-15% of our clients were MNOs but now it s mostly towercos. TowerXchange: We ve heard about markets where 30% or more of diesel has been stolen, 15% of batteries stolen. What can towercos and MNOs do to improve security at remote cell sites? Satish Kulkarni, CEO, Invendis: This is a major issue in a lot of countries, any market where the grid is unreliable; people can steal upwards of 160 litres of fuel and if the readings are not accurate it s hard for towercos to judge how much fuel has been used and whether any is missing. When you install highly accurate sensors they have the ability to interface with the site management system and update data on fuel levels in real time. Clients can do an end-to-end audit of fuel use and power generated to get an idea of how much the site requires in general, and any abnormal activity usually indicates theft. Most of our clients in Africa have said that pilferage has been reduced considerably and within eight to ten months they ve recouped the cost of the system. Our systems also protect expensive batteries by embedding sensors on them that trigger an alarm if they are moved out of the site, alerting clients that they have to go to the site to investigate. TowerXchange: Since a lot of fuel pilferage originates within the supply chain, is there a risk of remote monitoring sensors being damaged by staff or subcontractors? What can be done to prevent this? Satish Kulkarni, CEO, Invendis: This does happen and it can be difficult to manage. With remote management the sites don t need to be visited on a regular basis; workers can go when required to investigate an alarm or make occasional deliveries. The increased efficiency of RMS means that there is less work to be done and fewer hours are required which hits the ground crews financially. It s important to invest in the ground crews and involve them in the security of the site, and some companies offer rewards for reports about tampering. TowerXchange: How can data from site monitoring be integrated with maintenance workflows and job ticketing to reduce O&M costs? 230 TowerXchange Asia Dossier TowerXchange Asia Dossier

231 Satish Kulkarni, CEO, Invendis: Data from the site goes directly to the ground crews and they are notified via their phones or computers. This constant flow of actionable data has greatly decreased opex since clients know where and why they need to do site visits. Prior to this, an engineer could make a scheduled site visit, identify a problem, but not have the necessary equipment to fix it since they didn t know about it in advance. Now the multiple site visits have been greatly reduced and travel is always based on need. This has been especially valuable in Africa where the sites are more remote, the roads are difficult, and hours of travel in four-wheel drive vehicles is required. TowerXchange: CCTV is expensive to install and footage needs a lot of bandwidth under what circumstances is this investment worthwhile, and how can costs be contained? Satish Kulkarni, CEO, Invendis: The cameras that we install on sites are activated when they detect movement and grab images of what s going on in the tower. This has helped us overcome the challenge of expensive cameras that are on 24/7 and require constant power and bandwidth to transfer images when most remote sites don t have a data connection. Multiple cameras running constantly would be expensive and unnecessary when a small amount of footage can identify the perpetrators, or let you know that it s a false alarm caused by an animal or a branch. TowerXchange: How do you customise alarms to Data from the site goes directly to the ground crews and they are notified via their phones or computers. This constant flow of actionable data has greatly decreased opex since clients know where and why they need to do site visits ensure the customer isn t overwhelmed and can focus only on alarms which require action? Satish Kulkarni, CEO, Invendis: We provide complete end-to-end security including motion detectors on the doors, smoke detectors, water detectors and other combinations of sensors. These provide a wide variety of parameters but the clients don t require all of them so the granular data is collected and can be built into reports that can be used later. Some data are critical and some are less so; we categorise them based on the action needed to respond to them. Some are extremely critical like fire alarms, but they all have varying degrees of importance and escalations that go up the command chain. It s all differentiated by the action that is needed to be taken. TowerXchange: How do tower operators translate RMS data into actionable intelligence? Satish Kulkarni, CEO, Invendis: Here are two examples: with RMS a client can continuously monitor the charge and health of the batteries and identify any one that isn t performing. When a battery isn t performing it s a drain on resources; it draws more power and decreases the amount of power available. As soon as this situation is identified the battery can be replaced, saving resources by acting on the problem as early as possible. For the second example, all of the information on the tower is constantly available, and if the power goes off for 12 hours, the system will also remember that it went off for seven to eight hours the previous week. This can be extrapolated to all the towers in that region and the data can tell whether there is a trend of increasing power cuts requiring more fuel for backup generators. Many times the rolling power cuts in these places are not announced and it helps to have data on them to put into actionable intelligence like this. Clients can get a very detailed set of data on the grid situation, and once they have nationwide deployment of RMS on their sites they may even be able to share or monetise it 224 TowerXchange Asia Dossier TowerXchange Asia Dossier

232 Tower Xchange TowerXchange brings the tower industry to you! Connect with us today and discuss available opportunities for our Meetups across Africa, Asia, Europe, Americas and China! Exhibiting or sponsoring at TowerXchange Meetups is the best investment you can make to showcase your products and expertise in front of the global telecom tower industry. Annabelle Mayhew, CCO, at today to find out more. TowerXchange Meetup calendar TowerXchange Meetup Europe 2017, April 4-5, Business Design Centre, London TowerXchange Meetup Americas 2017, June 7-8, Boca Raton Resort & Club, Florida TowerXchange Meetup Africa 2017, October 3-4, Sandton Convention Centre, Johannesburg TowerXchange Meetup Asia 2017, December 12-13, Marina Bay Sands, Singapore Visit our website at

233 IPS unleashes the Off-Grid Beast! EXERON runs virtually maintenance free, and can reduce opex by 96%! Alexander Rangelov, CEO, IPS International Power Supply (IPS) has developed a robust, military-grade off-grid power solution, which has now been refined for virtually maintenance free operation in telecom applications. IPS s modular solution is readily upgradeable for the era of infrastructure sharing, and has the advantage of all the components having been developed and sourced from the same manufacturer. TowerXchange spoke to CEO Alexander Rangelov to learn more Keywords: Air Conditioning, Batteries, DG Runtime, Energy, Energy Efficiency, Hybrid Power, IPS, Infrastructure Sharing, International Power Supply, Lithium, Logistics, Microgeneration, Off-Grid, On-Grid, Opex Reduction, RMS, ROI, Rectifiers, SLA, Shelters, Site Visits, Spare Parts, Who s Who Read this article to learn: < How IPS developed and attracted investment into EXERON The Off-Grid Beast < Reducing telecom opex by 96% with a 16 month ROI on a 1.5 kw load site < How dynamic control of battery charging can extend battery life by 30% < How IPS simplify delivery, installation and maintenance < The importance of all the power systems, enclosures and A/C equipment coming from the same manufacturer TowerXchange: Please introduce International Power Supply to our readers where do you fit in the telecoms infrastructure ecosystem? Alexander Rangelov, CEO, IPS: IPS is a 26 year experienced high tech company specialised in the R&D and manufacturing of power electronics and energy conversion technologies for the areas of telecommunications, off-grid electricity, defense and railways. We are deeply specialised in the design and development of complete telecom indoor and outdoor power solutions for both grid connected and off-grid applications. Our portfolio includes all kinds of power components and solutions needed for telecom infrastructure, all of which are developed, designed and manufactured by us in Sofia, Bulgaria (EU). TowerrXchange: What has attracted PTIG, PostScriptum Ventures and BlackPeak Captial to invest in IPS and how are you going to deploy the capital? Alexander Rangelov, CEO, IPS: Our investors have been attracted from our unique and innovative product: EXERON The Off-Grid Beast. It was invented by IPS initially for military applications (powering communication infrastructure and desert camps) for providing reliable power in remote and hardly accessible areas with harsh ambient conditions. In the last seven years we developed the system to become a solution addressing the global electricity and environmental problem. The fast market penetration and international recognition we have achieved, the 228 TowerXchange Asia Dossier TowerXchange Asia Dossier

234 IPS team s passion and our enormous R&D ability made our investors keen on supporting our global expansion. The capital is invested in R&D, business and market development, new logistic hubs and offices around the world as well as manufacturing facilities. IPS has partners, distributors and operating systems in 51 countries. Offices, logistics hubs and service points are distributed worldwide at strategic locations. TowerXchange: How are your solutions proven in terms of their ability to reduce opex in distributed telecom networks? we achieved 96% telecom opex reduction and a 16 month return of investment period for a diesel generator powered off-grid site with 1.5 kw constant telecom load Alexander Rangelov, CEO, IPS: Regarding opex reduction, it is very important to find the optimum correlation between the opex reduction level and the return of investment (RoI) period. With one of our projects with a large telco group we achieved 96% telecom opex reduction and a 16 month return of investment period for a diesel generator powered off-grid site with 1.5 kw constant telecom load. This result is thanks to the highest integration level of the EXERON system components and the innovative process and battery management. IPS developed unique software for dynamic control of the battery charging process, leading to extending the battery life by approximately 30%. TowerXchange: What is the sweet spot in terms of the kw load on the site which EXERON is able to support? Alexander Rangelov, CEO, IPS: We are not limited to any output power. The whole EXERON system structure is based on power modules of 2 kw or 4 kw. So the minimum power step is practically 2 kw. The unique IPS communication protocol can address up to 16,300 modules simultaneously. So, this means 16,300 modules x 2 kw or 4 kw. A large number of modules are used in our mini grid applications, but for telecom applications typical numbers would be 2 kw, 4 kw, 6 kw, or up to 36 kw in some special cases. TowerXchange: Tell us about IPS s Exeron system and how it meets the needs of towercos who need to increase the power capacity at cell sites as additional tenants are added? Alexander Rangelov, CEO, IPS: The modular system structure offers great scalability and flexibility. There is only one unit (MCU Main Control Unit) that monitors and controls all system modules (rectifiers, solar charge controllers, inverters, DC-DC converters). All of them are hot pluggable. The power capacity extension for any power system component is easily done by simply adding new plug&play power modules. The advantage of having only one MCU for the whole system, and sourcing all modules from only one manufacturer, is great efficiency, redundancy and self-control. It is the base for the intelligent mini-grid systems. It is unique because the same EXERON technology with the same control unit that is used for telco towers can be deployed as a mini-grid electricity solution for villages controlling and monitoring over 16,300 power modules corresponding to 65 MW of power. That is why we call it EXERON The Off-Grid Beast! 234 TowerXchange Asia Dossier TowerXchange Asia Dossier

235 EXERON The Off-Grid Beast TowerXchange: Tower companies Service Level Agreements (SLAs) often demand % uptime tell us about the reliability and autonomy of your solution. Alexander Rangelov, CEO, IPS: IPS is developing and manufacturing all products under the NATO military standard for quality AQAP 2110, so every single component meets higher requirements than usual. As mentioned before the EXERON system has been developed initially for military applications in remote areas. A big advantage is that it can operate in very harsh ambient conditions with temperatures between -40 C and +80 C, heights above 4000m above sea level, high humidity and salinity, acid environments et cetera. These features are not always the case for civil applications but have high importance for the telco companies in some areas of Africa, Asia and South America. TowerXchange: How do you ensure ease of delivery, installation and maintenance of your solutions at remote cell sites? Alexander Rangelov, CEO, IPS: The ease of delivery is guaranteed with the new manufacturing facilities that we have built and the logistics hubs in Africa, Asia, Australia and America. The ease of installation is guaranteed in a few simple steps, since everything is included and pre-installed in the system. The EXERON runs basically maintenance free, however if some of the modules need to be exchanged it takes not more than ten seconds, because every single system module is hot pluggable (rectifiers, solar charge controllers, inverters, DC-DC converters, the MCU Main Control Unit, surge protection devices et cetera). Another big advantage is that an outage in one of the modules or more of them cannot lead to a full system stop. Even in case of main control unit failure, the system will continue its operation unchanged. Following the military standards for quality during the development phases and manufacturing, a high system availability and robustness is guaranteed. It is a clear advantage and of crucial importance for remote, hardly accessible and long-distance site locations, which leads directly to reduced opex costs. TowerXchange: Should remote monitoring capabilities be built in to energy systems or should third party RMS be used to monitor performance? Alexander Rangelov, CEO, IPS: Yes, the remote monitoring is built in to the EXERON. It offers three options for remote monitoring and signaling: there are potential free contacts for signaling (event relays), there is an SNMP monitoring, and the third one is the integrated web server in the MCU. It is accessible through HTTP. You can monitor, but also control the functions and parameters of the system. The MCU can also monitor and transfer the signals from different sensors that can be connected to the EXERON smoke, fire, humidity, temperature, et cetera: up to 16 sensors. TowerXchange: Do you see IPS being a pure solution provider, or do you have any appetite to explore energy services company (ESCO) business models? Alexander Rangelov, CEO, IPS: IPS is a R&D and 230 TowerXchange Asia Dossier TowerXchange Asia Dossier

236 better performance, faster RoI, robustness, advanced features manufacturing company, so in this aspect we are a pure solution provider. In 2016 together with our investors we started offering also the ESCO business model, but mainly for residential applications. TowerXchange: How would you differentiate IPS and EXERON from competitive modular hybrid energy solutions? Alexander Rangelov, CEO, IPS: In just a few words: better performance, faster RoI, robustness, advanced features and functionality, a global all-inone scalable solution, leading to outstanding opex savings. EXERON is a multi-talented beast! It can be used for grid connected sites in the way of a customised outdoor cabinet with a purely modular rectifier. At the same time EXERON can be deployed to control and functionality, a global all-in-one scalable solution, leading to outstanding opex savings and optimise hybrid diesel genset-battery sites, but also PV-diesel-battery sites. The good thing is that it can start as grid connected or hybrid configuration and then at anytime new power modules can be added solar charge controllers and/or inverters. All within the same architecture. And under the same MCU control unit. To mention it again, our clear advantage over other solutions is the fact that we develop and manufacture all the system modules. At the end they talk to each other in the system via a unique communication protocol, developed by IPS and delivering optimal performance and efficiency. In addition, we have the ability to scale our power modules. There are a lot good solutions and products on the market, but they have limitations. Still in 2014 in Germany, EXERON won the world innovation ees Award for innovative off-grid power systems with energy storage. We are continuously developing the system and believe that this is the only way to break limits and create innovative functionalities and features. IPS designs and manufactures not only the power systems, but also the proper environment - enclosures and outdoor cabinets with many options, heat exchange options, but also with our own developed air conditioning module. We have even built a redundant air conditioner for cooling and heating. It s virtually maintenance free! Sounds good?! TowerXchange: What s next for IPS and EXERON? Alexander Rangelov, CEO, IPS: We are ready to open a new chapter in IPS s successful history in the next couple of months, which will be a huge technological jump. In the beginning of 2017 we are planning to release a new storage technology integrated in the EXERON which will offer the long life and multicycle ability of Lithium-based batteries, but at the price levels of Lead-based batteries. Keep an eye on IPS and EXERON-The Off- Grid Beast! TowerXchange are delighted to announce IPS as the Gold Sponsors of the TowerXchange Meetup Asia 2016! Come and see EXERON The Off-Grid Beast on December at the Marina Bay Sands, Singapore! 236 TowerXchange Asia Dossier TowerXchange Asia Dossier

237 IPT Powertech on what it takes to offer guaranteed savings and T-ESCO Khaled Habbal discusses how a talented workforce, commitment to local communities and twenty years of experience combine to deliver guaranteed 30% opex reduction Khaled Habbal, VP & COO, IPT Powertech Over the last twenty years IPT PowerTech s business model has evolved as fast as their business has expanded geographically, and kept up with all of the latest technical and business model developments in power provision for telecoms infrastructure. We recently spoke with Khaled Habbal, VP & COO of IPT Powertech to hear about their continued expansion into new markets, and their continued investments into their workforce and commitment to community engagement. TowerXchange: Please share an update on some of your latest offerings, projects and developments since we last spoke. Khaled Habbal, VP & COO, IPT Powertech: This was an exceptional year across all our geographies, including Africa, Middle East and Asia. We engaged in two large projects for IHS in Nigeria, supplying energy efficient power solutions including management and long-term maintenance, and OPEX optimization exercise under a long-term contract. We also signed a long-term contract with Ooredoo in Myanmar, providing managed services for the power of their entire network. With offices in 11 countries, we serve top clients in the region, and it is with the dedication of our 2,500 experts that our portfolio encompasses thousands of implemented projects, delivered to more than 60 operators in more than 50 countries such as Ghana, Nigeria, Niger, Sierra Leone Algeria, Morocco, Iraq, Jordan, Afghanistan and many more. Keywords: Afghanistan, Africa, Algeria, Asia, Batteries, DGs, ESCO, Ghana, Hybrid Power, IHS, IPT Powertech, Investment, Managed Services, Myanmar, Nigeria, O&M, Off-Grid, Ooredoo, Opex Reduction, R&D, Solar, Who s Who While we have an operational presence in 11 countries in the MEA, Africa and South East Asia, we also have our own manufacturing facilities in Romania and Lebanon. Read this article to learn: < IPT Powertech s latest successes in Myanmar and Nigeria < The evolution of the energy as a service model < The importance of acquiring local talent and community engagement < IPT Powertech s vision for global expansion TowerXchange: How is the evolution of energy as a service business models progressing in developing markets? Khaled Habbal, VP & COO, IPT Powertech: The energy as a service business model is a very 232 TowerXchange Asia Dossier TowerXchange Asia Dossier

238 interesting one. Some markets have stable, widely available grid access, such as Europe, North America, the Gulf region and many parts of Asia and Australia. In these markets telecom infrastructure has 99% grid connectivity and there are only battery backups which are rarely used; there isn t much change in these areas in terms of energy requirements. In markets like Myanmar, West Africa, Central Africa, East Africa and Lebanon and others, grid stability is still a major challenge due to the quality of the grid and is undergoing a big evolution. Initially the majority of sites had two generators, and would run 24 hours a day in six hour shifts, requiring considerable focus on maintenance, extremely high level diesel consumption leading to high costs. Over the past few years, the price of diesel has increased a great deal, along with pressure to comply with carbon emissions standards. This has led to the introduction of batteries and hybrid systems to save on opex and reduce carbon footprints. Solar power is playing an increasing role in markets such as West Africa and the Middle East. DC generators, operating under variable speeds, solar panels, and different battery technologies have all been combined to reduce runtime and make systems more cost-efficient and more environmentally friendly. The most important element in this evolution is the provision of proper, timely and professional maintenance services to achieve a cost-efficient and optimal Total Cost of Ownership (TCO). TowerXchange: Could you give us an update on your activities in Myanmar? How are things changing on the ground and what impact do you expect the arrival of the fourth operator to have? Khaled Habbal, VP & COO, IPT Powertech: We established our business there 18 months ago, just before signing our first contract with Ooredoo. Myanmar has interesting potential for the future, and our growth there is stimulated by this region s need for energy-efficient products and infrastructure services coupled with managed services and a guaranteed savings model /T-ESCO, adapted to the local market s requirements. The overall performance of the network has progressed tremendously, reaching more than 99% over the past period, by providing tailor-made, reliable, energy efficient hybrid and renewable energy solutions for more than 3,000 sites for Ooredoo Myanmar coupled with rollout services, operation and maintenance, fueling services, power management and power sharing, all while reducing carbon emission and being environmentally conscious. We have established offices across Myanmar, with more than 280 professionals who joined our team. We are very keen not only on recruiting top notch people, but a lot of the best local talent. More than 85% of our Myanmar team members are locals, and we are planning to increase this to 99% over the next two years. We are recruiting locals and transferring knowledge whereby we ensure they are empowered with knowledge and experience to be leaders of the local organisation in the future. On the other hand, our group is keen on putting CSR (corporate social responsibility) initiatives at the heart of its business strategy within the community by helping the local authorities during the monsoon season, contributing to local communities including material and financial investments. Since more than 70% of sites in Myanmar are off grid, generators are used, creating noise and air pollution which are disturbing to local communities. Since we are conscious about this environmental challenge, we are investing in our solutions and maintenance cycles to ensure optimal reduction in generator runtime, making sites more efficient in terms of cost, pollution and noise reduction. We are working closely with operators and tower companies to provide power co-location wherever possible to reduce CO2 emissions; instead of two to three generators per tower, power colocation enables the allocation of the optimal number of generators on each site given the power needs of each operator. As for the arrival of the forth operator, we are still in primary stage of the discussion. We are keen on proposing eco-friendly power solutions to all existent operators by suggesting a new concept: power co-location, mentioned above. This concept focuses on sharing the same power solutions and 238 TowerXchange Asia Dossier TowerXchange Asia Dossier

239 infrastructure between the operators, guaranteeing reduced capex and opex, while ensuring optimal TCO. TowerXchange: And what can you tell us about the project in Nigeria? Khaled Habbal, VP & COO, IPT Powertech: Given IHS Nigeria s size as the largest tower company in Africa, we are working closely with the group in Nigeria and other African countries. We are engaged in Nigeria with IHS on the largest guaranteed savings project across the African continent. We are proud to be the one of the largest suppliers of power efficient solutions and one of the main contractors ensuring the guaranteed savings model. The guaranteed savings model is a combination of the design, manufacturing, supply and deployment of energy efficient solutions along with field maintenance service and continuous opex and capex optimisation. The guaranteed savings model is a riskfree approach ensuring the operators and towercos full economisation/savings while maximising the lifetime of the equipment. We guarantee the performance and savings of our own solutions while respecting the contractual KPIs and SLAs. The fact that our group is the only solution provider in the region offering and merging hybrid and renewable energy solutions with telecom infrastructure and field managed services and maintenance, and a pioneer in combining our product R&D to our assembly facilities, has made IPT Powertech Group well positioned to become a leader in the implementation of the guaranteed savings model in Nigeria. TowerXchange: Do you have any upcoming plans for expansion of your footprint? Khaled Habbal, VP & COO, IPT Powertech: Our presence in Myanmar and our success in the relatively short period of 18 months made us keen on expanding further in Asia. IPT PowerTech s team is always seeking new challenges where we can recreate new power solutions and add advanced features to our wide portfolio, and redefine new added services to guarantee optimal performance at lower cost possible in addition to adding value to our customers. As for the geographic footprint, we are always looking forward to expand geographically into new territories as long as that growth is aligned with our strategic direction of the business and makes us able to expand and build our unique strength of combining the power expertise in telecom, service expertise in telecom and managed service expertise to deliver significant cost savings for our customers across the world. Finally, our appetite for expansion and growth is driven by the hard work of our 2,500 specialists, the reason behind the strength, success and differentiation of the group Meetup Asia December, Marina Bay Sands, Singapore A senior-level networking opportunity with 250 leaders of the Asian telecom tower industry Vistit TowerXchange Asia Dossier TowerXchange Asia Dossier

240 Miteno: A market leader in the Chinese tower industry Miteno shares some insight into their plans for the Chinese tower market, and international expansion Zhiyong Zhang, Chairman & President, Miteno Read this article to learn: < Miteno s background, development and business model < The scale and structure of the Chinese tower ecosystem < Grid access and hybrid energy in the Chinese market < The impact of the creation of China Tower Company < Miteno s long-term growth strategy With the formation of the record-breaking China Tower Company fast approaching, international investors are watching closely to identify new opportunities for investment. As huge as China Tower Company may be, there are still independent tower portfolios in China, comprising an estimated 15-20,000 towers. We spoke with Zhiyong Zhang, Chairman and President of one of the leading independent towercos Miteno to learn about the independent tower market in China and its ecosystem. Keywords: Asia Insights, Insights, Interviews, North & East Asia, Towercos, Towercos, Who s Who 4G, Asia, Asia Insights, Asset Register, Bankability, Build-To-Suit, C-Level Perspective, China, China Mobile, China Telecom, China Tower Company, China Unicom, Debt Finance, Exit Strategy, Infrastructure Sharing, Insights, Investment, Lease Rates, Leasing & Permitting, Market Overview, Miteno, On-Grid, Operator-Led JV, Private Equity, Regulation, Tenancy Ratios, Towercos, Valuation, Who s Who TowerXchange: Could you introduce your company and give us an idea of your position in the tower ecosystem? Zhiyong Zhang, Chairman & President, Miteno: Miteno was founded in 2004 and formally came into operation in 2006 as a designer and manufacturer of communication towers. We gradually branched out into the operation and maintenance of communication infrastructure. Before the establishment of China Tower Co., Ltd., Miteno was a leading vendor for China Mobile s national central purchasing, the country s largest telecom carrier. It can be said that Miteno is a market leader in China in the design and manufacture field of communication towers. TowerXchange: Could you give us some insight into your business model evolution? Zhiyong Zhang, Chairman & President, Miteno: Miteno was listed on the domestic GEM as an A Stock only four years after we came into operation, a testament to the company s advanced business model. Though in theory Miteno is in a traditional manufacturing industry, we designed an innovative model for communication tower provisioning, which integrates all resources of this traditional manufacturing industry on one operational platform. Under this model, we highlight our brand value by enhancing our technological edge to focus on design. Under strict management, we outsourced most of our manufacturing, which would otherwise require heavy asset management. 240 TowerXchange Asia Dossier TowerXchange Asia Dossier

241 Our business focus has gradually shifted to communication tower operation, i.e. leasing communication infrastructure to telecom carriers. Miteno owns a network monitoring platform for tower operation, which not only tracks the status of the tower in real-time, but also gathers other data through extra interfaces, such as video monitoring and environment monitoring. When our towers reach a certain number, this platform will yield a huge network value. TowerXchange: Can you provide some specific detail on the scale and structure of the ecosystem of privately owned towers in China and how that segment of the market will be affected by the creation of China Tower Company? Zhiyong Zhang, Chairman & President, Miteno: Currently the number of privately-owned towers in China is around 20,000. Half of them belong to big players like Miteno, the rest of them are scattered and operated by hundreds of private companies throughout China. These independent companies will benefit from the creation of China Tower, because leasing towers from a third party is feasible for wireless carriers. For Miteno, we are participating as a tower consolidator, trying to lease self-owned towers to more tenants. Our strengths lie in tower design, manufacture and installation. TowerXchange: The tower industry varies considerably from country to country; can you give us an idea of how tower sharing and tower leasing work in the Chinese market? Currently the number of privately-owned towers in China is around 20,000. Half of them belong to big players like Miteno, the rest of them are scattered and operated by hundreds of private companies throughout China Zhiyong Zhang, Chairman & President, Miteno: A few years ago, the vast majority of communication towers in China were constructed by state-owned telecom carriers. These assets were later divested to the newly founded China Tower Company, allowing the carriers to co-construct and share the communication infrastructure through administrative means. Private owners across the county also have a small number of communication assets, offering equipment lease services to telecom carriers. TowerXchange: What is the cost of building new towers compared to the cost of leasing towers in the Chinese market? Zhiyong Zhang, Chairman & President, Miteno: The situation varies in different areas, and relevant statistics are not forthcoming as lease services have just begun. TowerXchange: What is the extent, quality and availability of the electricity grid in the Chinese market? Can you give an idea of what percentage of towers are off-grid? Who owns the power equipment when a site has multiple tenants? Zhiyong Zhang, Chairman & President, Miteno: It can be said that 99.9% of the communication towers in China rely on fiber-optic communication and on State Grid Corporation of China for power supply. Power supply is never a problem. TowerXchange: The GSMA has stated that there are 35,000 instances of hybrid and renewable power being used in China. Are these solutions used for off grid towers? Do Miteno s towers use hybrid and renewable energy solutions? Zhiyong Zhang, Chairman & President, Miteno: Hybrid and renewable energy are used in China only as backup power supply. Government owned mobile carriers have strict design requirements on towers; very few off grid towers exist. We are 236 TowerXchange Asia Dossier TowerXchange Asia Dossier

242 introducing new backup power solutions with better cost performance. TowerXchange: The transfer of over one million towers to China Tower Company is unprecedented in the global market. What impact do you think this will have on the Chinese tower market? Zhiyong Zhang, Chairman & President, Miteno: There are three major positive impacts. First, it changes the KPI assessment mechanism of telecom carriers so that they can fully focus on their core business. Second, it shifts infrastructure investment from capital expenditure to operating expenditure in recognition of the third party leasing model. Third, such recognition provides broad space for the development of private capital, thus creating a completely new industry chain in China. TowerXchange: What is Miteno s long-term strategy, both in the domestic market and internationally? Do you have plans for international growth? Zhiyong Zhang, Chairman & President, Miteno: As a listed company committed to meeting the needs of capital market, we have made going global one of our strategies. Miteno s strengths lie in the tower design, manufacture, installation, operation and maintenance of the communication tower, as well as in financing capacity. We will also receive the support of national policies in exploring the international market Visit the TowerXchange.com website < Access to the Internet of People in the global tower industry a trust web of over 35,000 decision makers in telecom and broadcast infrastructure < Independent analysis and commentaries on the prospects for tower transactions in selected countries < The latest industry emerging market tower industry news BEFORE it s published in the TowerXchange Journal, accessible 24/7 from desktop, tablet or mobile < A comprehensive archive of TowerXchange s interviews and analyses, searchable by topic, country, company or grouped by category (e.g. interviews or how to guides) < The latest news and registration information about TowerXchange s Meetups. Tower Xchange 242 TowerXchange Asia Dossier TowerXchange Asia Dossier

243 Accruent s SaaS site management solution delivers for towercos Siterra helps optimise key tower management tasks, and the service is constantly evolving to meet client needs Bill Glass, General Manager of Telecom, Accruent Keywords: Accruent, Americas, Asset Lifecycle Platform, Asset Register, Capacity Enhancements, Central America, Europe, Infrastructure Lifecycle Management, Infrastructure Sharing, Job Ticketing, KPIs, Monitoring & Management, Multi-country Partner, NOC, O&M, Operational Excellence, RMS, Site Level Profitability, Site Management System, Siterra, South America, Transfer Assets, Who s Who Read this article to learn: < Accruent s position in the telecom ecosystem and global footprint < How Siterra helps manage the full tower site life cycle < How Siterra enables working with subcontractors < The benefits of a SaaS site management platform Accruent s Siterra provides a platform much like a dedicated ERP for towercos and MNOs they are experts in helping clients clean up and organise their data, making the solution ideal as companies scale their operations across multiple regions and countries. In the latest of a series of interviews exploring the capabilities of Siterra, TowerXchange focuses on the merits of using a native SaaS platform, and on data accuracy and standardisation, critical to accelerating time to market for tenants, and critical to driving tenancy ratio and valuation growth for the towerco or MNO. TowerXchange: Please introduce your company where do you fit in the telecoms infrastructure ecosystem? Bill Glass, General Manager of Telecom, Accruent: We have developed an enterprise-class Software as a Service (SaaS) product for tower companies which encompasses the full site life cycle from site construction to co-location and the decommissioning of towers. Our software facilitates efficient operations and drives strong revenue growth for tower operators and managed service providers. Think of us as an Enterprise Resource Planning (ERP) provider for tower companies and MNOs. We have the capacity to manage the entire ecosystem that surrounds tower infrastructure. Co-location is one area we have a special focus on; most tower companies want to increase their cotenancy ratio. What makes our company unique is that it has the capacity to manage the entire process from marketing through to fulfilment and operational management. TowerXchange: The first question our readers will want to know is how proven is your solution in the field? Can you please tell us about the performance of your solution the field who is using it and what results have been achieved? Bill Glass, General Manager of Telecom, Accruent: Our solution has strong credibility in the market. Thirteen of the top 121 tower companies listed by TowerXchange are already current Accruent 238 TowerXchange Asia Dossier TowerXchange Asia Dossier

244 by handling data in a digestible manner, tower companies and MNOs can make towers available on the market faster and more cost efficiently, thereby increasing tenancy ratios customers. At present, we operate in twelve countries across five continents and have a particularly strong focus for 2016 on Europe and Central and Latin America. We are constantly adding new portfolios for our current customers and carrying out implementations in multiple countries. At first, many of our clients purchase our solution to use it in a particular territory. However, once they have the solution installed, they realise that they can achieve operational efficiencies by rolling it out across all of their countries and portfolios, and we can support them in this endeavour. If a company wants to roll out our solution to multiple countries, we can help them standardise processes including reporting, colocation, license management, project management, vendor management, and inspection management. One of the selling points of our solution is that it cleans up and standardises data. It puts data into a much more efficient site-centric format, which makes it easier for MNOs and tower companies to buy, integrate and market their assets. What s more, by handling data in a digestible manner, tower companies and MNOs can make towers available on the market faster and more cost efficiently, thereby increasing tenancy ratios. TowerXchange: How does your solution help manage different stakeholders within the tower supply chain from tenants to subcontractors? Bill Glass, General Manager of Telecom, Accruent: The solution can help tower companies handle leads and administration models. In addition, the asset register and customer portal integration that sits at the heart of Siterra s colocation solution can be used to provide up-to-date information on colocation. For example, a tower company may wish to inform an MNO of open towers that are available for rent. They will be able to do this through our portal. Our solution can also be used to support contract and service provider management. In fact, Siterra uses a permissions-based model. If an operator or tower company wants to give a contractor or service provider access to the system it can do so very easily. The contractor or service provider can then carry out a task and post a photo to provide proof that the project has been completed. Siterra offers sophisticated tools for project managers to efficiently review work submitted for accuracy and quality. What s more, the system has built in security features so that each contractor s access and visibility is limited to only the assets, tasks, and sites that are necessary for their work. TowerXchange: How can your SaaS platform be configured to adapt to different towercos unique business processes and workflows? Bill Glass, General Manager of Telecom, Accruent: We are constantly developing and upgrading our platform to suit the needs of tower companies. As things currently stand, Siterra provides for more than 90% of tower companies needs straight out of the box. The remaining 10% can be easily configured on the platform so customers can adapt it to meet their specific requirements. We come to the engagement with our customer with best practices available to immediately drive efficiency based on our knowledge of the industry. We ve also developed many feature requests in partnership with our clients. A client will typically come to us with a request for a particular feature. Once we have developed that feature we will incorporate it into later versions of our platform so that other customers can take advantage of it. Thanks to our focus on long term partnerships and successful product co-development, we ve been able to create a stable platform for tower portfolios. However, we notice that many companies in the market continue to invest in custom software. We feel that this is a failed strategy because, over the long term, companies end up wasting IT resources and limiting the potential to make long term efficiency gains. 244 TowerXchange Asia Dossier TowerXchange Asia Dossier

245 With some solutions on the market, users tend to become beholden to professional service teams after deployment. That s not the case with Siterra. Once a customer has bought the solution and implemented it, they re up and running. They don t need to constantly check in with our professional services department TowerXchange: How can a robust approach to asset registers and asset lifecycle management improve the valuation of tower assets? Bill Glass, General Manager of Telecom, Accruent: The main benefit comes in being able to understand the condition of the assets and the inventory associated to those assets. Being able to keep track of inventory is a benefit, particularly for large, international tower companies. Smaller companies, on the other hand, are looking to maximise their tower valuation for strategic buyers. That s exactly where the site-centric focus of our software comes into play. Our platform can provide complete access to maintenance records, site information and pictures of site equipment. This makes it extremely useful for strategic buyers and companies that are seeking to sell their assets. For example, it isn t really feasible for a strategic buyer to use manpower to inspect four thousand towers when purchasing a portfolio. By using Siterra, buyers and sellers can perform clean searches without digging through files and records to get access to the right information. We find that most buyers and sellers prefer to use Siterra to carry out the portfolio valuation process at the end of the day our system reduces acquisition risk for acquirers and improves return on investment for sellers. TowerXchange: Please sum up how you would differentiate your solution from your competitors? Bill Glass, General Manager of Telecom, Accruent: Our annual product investment is larger than most of our competitors revenues that in itself differentiates us from our competitors. On top of this, Siterra is a SaaS platform, so we have benefited from the shift towards cloud applications. Unlike many other solutions on the market, our SaaS application was not built from scratch based on an on-premises application all of our incremental investments have been to enhance its functionality. Total costs for the customer can escalate quickly if a solution needs to be re-built over time or requires extensive support. That s why it makes much more sense to purchase a proven SaaS solution like Siterra. With some solutions on the market, users tend to become beholden to professional service teams after deployment. That s not the case with Siterra. Once a customer has bought the solution and implemented it, they re up and running. They don t need to constantly check in with our professional services department. Of course, our professional services and customer teams are always available if needed, but we are strongly of the opinion that our customers should not be dependent on us for their daily business needs. There s also a huge amount of functionality built into Siterra that allows customer system administrators to modify workflows, create new reports and manipulate site data on a large scale within the administration console. Users don t need to receive any code or help from Accruent to make these changes. In summary, our market share, our investment, and our product functionality significantly outweigh our competitors products, and over the last fifteen years, we have successfully brought the best of the best when it comes to industry best practices and knowledge 240 TowerXchange Asia Dossier TowerXchange Asia Dossier

246 Tarantula provides the go-to product for all things shared infrastructure Felix Chan explains how Tarantula integrates all aspects of site management into one enterprise product Felix Chan, Director - Strategy, Tarantula Thanks to its highly flexible workflow platform and portfolio management system, Tarantula supports around 350,000 towers worldwide with a value of approximately US$25bn and tracks over 6mn assets. In this interview, Felix Chan, Tarantula s Director of Strategy, shares details about the company s latest projects and the successful utilisation of the Red Cube and Orange Cube solutions in the Asian telecom tower market. Keywords: Asset Register, Health & Safety, Interview, KPIs, Operational Excellence, QoS, ROI, Revenue Assurance, Security, Site Management System, South Asia, Southeast Asia, Tarantula, Valuation Read this article to learn: < Tarantula s latest projects and the evolution of their products < Adapting Red Cube and Orange Cube to the Asian tower market < The benefits of linking contractual obligations and commercials with site inventory < Managing multiple stakeholders onsite and adapting to different processes and workflows TowerXchange: Please introduce yourself and your background. Felix Chan, Director - Strategy, Tarantula: I have over fifteen years of direct experience with mobile operators and towercos, working primarily in strategy, commercial and finance roles over that time. I started off with Vodafone in Australia, then went on to co-found a towerco, Insight Infrastructure, in India where I worked until it was acquired by American Tower Corporation. I then returned to Australia and took on the role of General Manager of the Commercial Strategy group of NBN Co. Finally, I ve been with Tarantula for the past three years as Director - Strategy and CFO. TowerXchange: Could you give us an update on some of your recent activities in the Asian market? What have been the highlights of the past year? Felix Chan, Director - Strategy, Tarantula: At Tarantula, our mission is to help our customers succeed. The past year has been all about this working on supporting the goals of our towerco and telco clients. To do this, we leverage the experience of our team and their backgrounds in telecom companies and towercos and distil this knowledge into our products and relationships with our clients. We don t offer generic solutions, so we re always looking for the next opportunity to create value for our customers. This has been a pretty busy year for us; we engaged 246 TowerXchange Asia Dossier TowerXchange Asia Dossier

247 in a long-term integration project for two of our clients and combined two Tarantula systems into one merged solution. To do this, we consolidated reports and data and merged management of the sites together. This was a full-on project for the delivery team over a three-month period, during which the data from all the sites was scrubbed and made consistent so that it could operate across both systems. This requires a good knowledge of the customer s business and how they operate, and this is a key strength of ours. When launching a new process, there is always a risk of garbage in, garbage out if the wrong approach is taken. It requires detailed knowledge of how the client operates, and knowledge about the way the industry works that only comes with experience. After integration, users from both client companies were able to continue working with a consistent way of working with the same data sets. We also engaged in separate installations across six markets for one of our key clients so that their group headquarters could see what was happening across all of them. We rolled out country-level Red Cube systems that can operate as independent entities, and then on top of that we integrated a reporting system to oversee the activities of the six underlying businesses. Red Cube helps towercos balance the management of network uptime versus the management of individual sites. It s part of an overall vision that enables our clients do everything from managing lease services to ensuring backhaul connectivity for each site. The group-level reporting added immense value to the information maintained by the individual Red Cube systems. Orange Cube is another main product offering for telcos, and it enables monitoring of more assets, including active equipment; we can tailor this to the telco s specific requirements. The focus on active equipment can help telcos review the spectrum of options available and identify the best solution for a given area. It can determine whether a new piece of equipment can be added to an existing site, whether it would be better to lease a tenancy from a towerco or telco, or whether a new ground-based or rooftop BTS site is the way to go. We also undertook a client project to push data collection out into the field with our mobility tool to provide much more useful information to the engineers responsible for operations. This tool was used to complete over 21,000 actions in the field and made life easier for our customer by streamlining the collection of data into mobile devices. This data could then be synchronised with the system in a controlled manner to ensure that it is accurate and reliable at all times. Our clients received the immediate benefit of higher efficiency in field operations with accurate data being captured at all times. TowerXchange: We know that your products are continually evolving to meet the needs of the market; how has it changed since we last spoke? Felix Chan, Director - Strategy, Tarantula: We are constantly adding new innovations to our product capabilities, be it to cater to the dynamic industry changes, to create value for various types of markets and stakeholders, or to address specific problems. Asia is a very diverse region and the evolution of the industry varies from country to country. You have everything from very mature and stable tower markets in India to totally new and growing markets like Myanmar which is just a few years old now. There are big differences in operating and commercial environments across Asia, and Tarantula has the ability to cater to different requirements across a broad spectrum. We leverage our telecoms experience to learn from our clients and adapt our solutions to work around their roadmap to best support them. A big innovation this year involved the billing module and how it ties in with our clients contractual obligations and asset entitlement. This enables us to link commercial deals with a co-location process and the existing capacity on a given site. A lot of tools on the market keep a record of what assets are present on the tower, but we are able to manage the broader commercial relationships. When a new tenant is ready to be added, we can look at how to manage site access for multiple tenants, how much physical space there is on the site, and what adjustments are necessary. It also enables the integration of pricing from the MLA to the co-location and manages this all the way through. Our product is very flexible and can support companies with a big customer base and 242 TowerXchange Asia Dossier TowerXchange Asia Dossier

248 a lot of MLAs to manage. Again this is where we leverage our knowledge of different MLA scenarios; for example, I ve negotiated between fifteen to twenty of them and Udhay has negotiated even more. This feeds into the adaptability of the product for a wide range of commercial scenarios. Through our normal customer engagement process, we have received a lot of feedback and input in Asia and Europe into how the product works and this has contributed to its evolution. Our customers can see that we take the feedback from our discussions with them, and insights into how their businesses run, and these are integrated directly as features in our products. TowerXchange: How does your products help manage different stakeholders within the tower supply chain, from tenants to subcontractors? Felix Chan, Director - Strategy, Tarantula: There are a lot of different stakeholders in a site and many users that require site access. There can be many different protocols for this in different jurisdictions; for instance, in some cases health and safety documents must be received to permit site access, and this needs to be managed. Contractors need to be given time slots to access the site to avoid overlap and crowding. Our products can create different user groups to issue approvals in line with different processes, and provide electronic approval of requests to protect the integrity of the assets. This enables towercos to manage multiple tenants, allows them to know who is involved in what, and provides a project contact list with all stakeholders recorded so it is clear who is involved. Sometimes our clients find stakeholders that they weren t aware of and unauthorised equipment that has been installed. The product enables them to do a match-back with the asset register and identify any unauthorised equipment so they can decide the necessary action such as increasing the lease rate or moving the equipment elsewhere. The product also enables work orders such as site inspections, diesel checks, or asset counts to be allocated on the mobility app; this enables proactive management of subcontractor work and allows our clients to know that the work orders actually happened. Red Cube tracks milestones so that all stakeholders know what they need to do, what s next, and whether any changes are required. TowerXchange: How can your product be configured to adapt to different towercos unique business processes and workflows? Felix Chan, Director - Strategy, Tarantula: Red Cube has over thirty real-world processes included out of the box; a start-up towerco could take this and use it right away. Having these processes makes a good baseline to configure for different clients. They could split one process into two steps, creating a legal and financial component for example. They can configure processes into layers, change what different roles in the company do, split one task into two, or combine three into one depending on their requirements. They can slim down the processes, make them more complex, and then break them down again if necessary; since the core processes are available out of the box, it s easy to change them. The biggest complexity in tower portfolio management usually involves the different legal and commercial regulations in each country. Again, our experience in different markets has enabled us to create solutions that minimise problems for end-users and this is integrated with all the other elements such as billing, capacity on site, discounts for existing tenants, tax, et cetera. Any of these features can be dragged and dropped in or removed as necessary to create the necessary overview of the project. Our products integrate with the multiple systems that towercos use, including trouble ticketing, ERPs, remote monitoring systems, and document management tools; this full data integration across all these systems enables towercos to maintain a single source of truth. TowerXchange: How can a robust approach to asset registers and asset lifecycle management improve the valuation of tower assets? Felix Chan, Director - Strategy, Tarantula: I would say the question is how can it not? The more you know about your assets the better valuation you re going to get. The key parameters are tracking, managing assets on site, creating a matrix, knowing what s there and being able to create a direct link between these and the MLA and billing 248 TowerXchange Asia Dossier TowerXchange Asia Dossier

249 The more you know about your assets the better valuation you re going to get. The key parameters are tracking, managing assets system. One of the biggest elements in valuation is recurring cash flow, and this can integrate all of the necessary elements of site management and link them together: this asset belongs to that company, this is their lease, we bill them this and this is their interplay with the site. TowerXchange: What are your plans for growth and expansion, and what is your future vision for the company? Felix Chan, Director - Strategy, Tarantula: Our focus is purely on all aspects of shared infrastructure. We ve developed Red Cube, the go-to product for managing shared telecoms infrastructure. We re the market leaders in the towerco space and our aim is to get there in the telco space as well and provide coverage of both sides of the infrastructure sharing on site, creating a matrix, knowing what s there and being able to create a direct link between these and the MLA and billing system model, including towercos and telcos. To achieve this, we have rolled out Orange Cube, which is a product tailored to the needs of mobile network operators. We re driving project management and asset reporting to include commercial management functionality for MNOs to help them improve valuations and ROI. We have implemented partner and relationship management so that we empower our customers, and in turn, their customers to succeed. There is a lot of growth ahead on both sides of the infrastructure sharing model with the advent of 4G and later 5G. More sites will be required with more capacity, more small cell coverage and all operators and infrastructure providers need to start thinking about the new demands of this changing marketplace Meetup Europe April, London Meetup Americas June, Boca Raton Meetup Africa & ME October, Johannesburg Meetup Asia December, Singapore TowerXchange Asia Dossier TowerXchange Asia Dossier

250 Total Telecom Energy Solution Oil & Gas major uniquely combines diesel and solar into compelling Energy Solution for emerging market cell sites Ingrid Jaumain, Head of Energy Solutions, Total Marketing and Services Total are uniquely positioned to provide all four of the critical components of the ESCO proposition. They have obvious capacity and accountability for diesel logistics from a footprint of 15,000 refueling sites worldwide. And they have a global field workforce and a robust balance sheet. In addition, through SunPower, one of the world s top three leaders in the solar industry, they have renewable energy solutions proven at off-grid telecom sites. Keywords: Who s Who, Energy, O&M, Opex Reduction, Batteries, Energy Storage, Capacity Enhancements, Fuel Security, Loading, Energy Efficiency, SLA, Off-Grid, Unreliable Grid, ESCOs, Hybrid Power, Renewables, Solar, DG Runtime, Dimensioning, Skilled Workforces, Microgeneration, Community Power, RMS, Africa, Asia, Caribbean, SunPower, Total Read this article to learn: < Total s unique multiple energy source proposition, combining diesel, solar, and services < Total and SunPower s track record of success at over 3,000 cell sites worldwide < How can you judge which sites should retain DG backup, which should be hybridised and which should run solar-only? < Modular technology and flexible business models to make hybrid energy scalable to meet the changing needs of multi-tenant sites and community power TowerXchange: While Total needs no introduction, please could you introduce Total s Energy Solutions department and your relationship with SunPower where do you fit in the telecoms infrastructure ecosystem? Ingrid Jaumain, Head of Energy Solutions, Total Marketing and Services: Total is not only one of the world s leading oil and gas companies we provide many more amazing capabilities across more than 150 countries. In terms of where Total fits in the telecoms infrastructure ecosystem, of course we play a critical role in fuel supply, supplying tens of thousands of cell sites with diesel either directly or distributed from our 15,000 gas stations. Our assets also include SunPower, a leading solar company which has installed over 3,000 pure solar and solar hybrid telecom sites. This gives Total a unique synthesis; we can leverage a huge client portfolio and operational footprint in challenging countries across Africa, the Middle East, Asia-Pacific, the Americas and the Caribbean countries where MNOs and towercos have to tackle the challenge of generating energy far beyond the reach of the electricity grid. SunPower was one of only the actors worldwide able to provide robust solar power solutions; when they started in the 1980 s it was a small market. SunPower develops the key components of their solution in-house, including data loggers and remote monitoring, and provides a full O&M service for several clients. Total s Marketing & Services, one 250 TowerXchange Asia Dossier TowerXchange Asia Dossier

251 of the three branches of the Total Group, has a view to providing a complete set of multi-energy services to a customer base with diverse energy needs, from MW power plants, commercial buildings and homes to remote, distributed sites. Total has thousands of people in the field, which is critical to field operations in telecom. Given our responsibility both for fuel supply and service, customers can trust that our fuel deliveries are up to international standards both in terms of services and product quality. As an upstream and downstream major in African countries, for example, we can t afford not to provide high quality service we have to be reliable to keep the trust of our customers and stakeholders. Our customers The unique, global footprint of Total and SunPower, spanning deep knowledge of diesel and renewables, enables us to build a sustainable relationship with our clients, helping them to save money by showing them how to hybridise a site, and showing them which sites to hybridise are able to leverage Total s commitment to high standards, and our commitment to better energy our value proposition is all about reducing energy risk and optimising fuel operations, batteries and renewables from grid connected to unreliable and off grid environments. The unique, global footprint of Total and SunPower, spanning deep knowledge of diesel and renewables, enables us to build a sustainable relationship with our clients, helping them to save money by showing them how to hybridise a site, and showing them which sites to hybridise. Total has extensive experience of operating such multi-product projects for the mining industry, which faces similar challenges of providing capitally intensive equipment with different sources of energy in remote areas. We are able to leverage multiple energy sources, from diesel and lubricants to solar. TowerXchange: How proven are your solutions in the field? Ingrid Jaumain, Head of Energy Solutions, Total Marketing and Services: Total and SunPower are 246 TowerXchange Asia Dossier TowerXchange Asia Dossier

252 already managing over 3,000 cell sites, including thousands of sites for a really big MNO in Africa for whom we also do O&M and fuel supply. For some clients and some sites we supply just diesel, sometimes it s just solar. My role is a new position within a new entity created to provide optimised energy solutions for our B2B customers. The Telecom sector is a priority for us and we aim at providing the industry with a consolidated, worldwide energy operator offer, ultimately delivered through an opex / ESCO business model based on the aforementioned value proposition of optimising the full energy path. In the most integrated models, the idea is to offer ten to fifteen year operating contracts with zero capex across Africa, the Middle East, Americas and APAC. We have all the bricks we need to put this all together. TowerXchange: How can MNOs and towercos be certain that the optimal power source is running at any given time? How can you ensure that field technicians don t manually over-ride power source selection without good reason? Ingrid Jaumain, Head of Energy Solutions, Total Marketing and Services: I have two answers to this question, the first of which is from a site design perspective. It is critical to carefully design the energy system to achieve the correct balance of solar, energy storage and diesel on hybrid sites. Well designed hybrid sites rarely encounter problems with the selection of the optimal power source. The second part of the solution is monitoring. Our Most cell sites average loads of 1-3kW where hybrid solutions, with a balance of anywhere between 20-80% solar versus diesel, often deliver RoI data logger has been developed in-house, based on our extensive experience in managing the DG, solar and battery banks remotely. Data is pushed to our platform managed in France, which co-ordinates alerts and field operations. The combination of robust remote monitoring with local knowledge and the right local partners are key you ve got to know how they will react in the field. That s why we also have dedicated, robust and cost-effective energy GPRS monitoring, developed based on the O&M knowledge and experience in the group. Given the challenging conditions in field operations, our principle is to keep systems and processes simple and easy to operate in the field. TowerXchange: What is the addressable market for 100% solar and solar hybrid cell sites in terms of load and grid conditions? At what load does diesel simply make more sense? Ingrid Jaumain, Head of Energy Solutions, Total Marketing and Services: It s difficult to give one simple answer, because it always depends on the quality of power available, drive time to the site and a number of different variables. However, we ve seen some vendors install solar on big sites where the contribution will be very low. Based on the real data we ve gathered from over 3,000 solar and hybrid cell sites, we seldom see return on capital invested at sites with greater than a 3kW load, particularly on sites that are a short distance from a fuel depot. Small, remote cell sites are sometimes very difficult to supply with diesel at reasonable logistical costs. There is a business case for 100% solar (always with batteries) at small sites up to 1kW. Most cell sites average loads of 1-3kW where hybrid solutions, with a balance of anywhere between 20-80% solar versus diesel, often deliver RoI. What gives us our credibility is Total s commitment to lower energy opex no matter what energy source is used. TowerXchange: What is the difference between the cheapest solar panels on the market and 252 TowerXchange Asia Dossier TowerXchange Asia Dossier

253 carrier grade solutions in terms of energy density and longevity? Ingrid Jaumain, Head of Energy Solutions, Total Marketing and Services: Quality of product is key. The reputation of solar has been harmed by certain actors who damaged the market with unreliable solar panels and who didn t optimise site design they put poor quality solar products on large sites where renewables don t make economic sense. Total chose SunPower because of the quality of the technology. SunPower panels can provide 38% more energy from the equivalent surface areas compared to traditional solar modules. Given the space contraints on MNO and, particularly, towerco sites, this can be critical. MEDIUM SITE < 3 kw solar PV + diesel BIG SITES > 3 kw 100 % diesel Total qualifies our products and equipment by simply listening to our clients needs, designing a relevant solution, and bringing that to market through local channels, giving the customer someone to talk to in case of problems in the field. We already tackle complex and remote sites supply as we are for instance present in this market in mining, and have the intention to increase our market footprint in the telecom segment. SMALL SITES < 1 kw 100 % solar PV Governments are rightly prioritising QoS, so the stakeholders want to fall back to the strength and credibility of a partner like Total, a global company with a strong commitment to Corporate Social Responsibility. We are strongly differentiated from smaller ESCOs offering energy services, but who don t offer the same access to the same economies Copyright Total TowerXchange Asia Dossier TowerXchange Asia Dossier

254 of scale. As a worldwide big company, we are also building more complete partnerships with our clients, leveraging for instance on our existing Corporate Social Responsibilities programs, mainly dedicated to access to energy. Solar generation and electricity provision in general is highly dependent on the levelised cost of electricity. SunPower s technology is reliable, efficient and highly differentiated, enabling us to offer hybrid and renewable energy at a very competitive cost per kwh. This gives us an advantage within the ESCO / capex free model, where finance is critical. We re able to offer reliable technology guaranteed for 25 years, with a lower degradation of product. TowerXchange: Have you experienced any instances of solar panel theft? How can this risk be mitigated? Ingrid Jaumain, Head of Energy Solutions, Total Marketing and Services: Like every other supplier, we have experienced some solar panel theft, in response to which we have developed a concrete based racking system that is really safe. Monitoring fuel is also key and our datalogger includes a sensor for the diesel tank. TowerXchange: Quoting one of the towerco CEOs on TowerXchange s advisory board The problem is that there is a finite amount of GLA (Gross Leasable Area) at a site. A solar array already needs ~35sqm to supply a single tenant, add a second tenant and the space savings are modular technology, flexible business models, the right energy mix and energy optimisation are all important to scalability minimal you still need ~66sqm, 97sqm for a third. How can solar power be made scalable and space-efficient so that towercos can add multiple tenants? And how can you blend in a community power proposition with its own unpredictability of peak load? Ingrid Jaumain, Head of Energy Solutions, Total Marketing and Services: I d like to answer this question from both a technical and business model perspective. From a technical perspective, we have developed and standardised a modular approach in addition to the SunPower technology advantage: for a 9 kwp installed capacity you need ~50 sqm versus more than 65 sqm with competitor products. For a given load you have a given combination of diesel, solar, batteries and monitoring it s easy to add more power to create the scalability required for co-location and growing community power requirements. We ll always optimise site design and prioritise the telecom load, with backup power solutions with capacity to take on peak load our hybrid solutions are often so optimised for solar and batteries that a little extra DG runtime whilst the site s energy load is growing toward a modular upgrade can actually increase the lifetime of the genset. From a business model perspective, we previously ran a programme called SunCash, a pay-as-you-go system similar to using phone cards with credit used to regulate energy demand at mini-grid sites so we can anticipate the maximum load we provide per day in kwh. While community power is critical to sustainability, the priority will be given to telecom infrastructure that s the business imperative and SLAs need to be respected within those relationships. In summary, modular technology, flexible business models, the right energy mix and energy optimisation are all important to scalability. TowerXchange: What has changed which makes it time to stop talking about ESCOs and start deploying ESCOs? Ingrid Jaumain, Head of Energy Solutions, Total Marketing and Services: From my perspective, over the last months emerging market telecoms 254 TowerXchange Asia Dossier TowerXchange Asia Dossier

255 have matured toward a preference to partner with specialists in dedicated fields. As towercos are present in more markets, and as stakeholders want to reconsider their capital investments and lighten their balance sheets, the time is right to start deploying ESCOs. Now, according to what the client wants we also develop intermediary models, that s the strength of Total Marketing & Services, being the operational arm of the Group; we are flexible, we permanently listen to the market and always adapt to our client needs. Hybrid and renewable energy technology and solutions in general are more mature. For example, now everyone has an RMS, and data management is becoming more powerful. The tricky part of the ESCO proposition had been monitoring O&M to guarantee service, but we have both the field operations and technical skills to do this. Having a trusted ESCO partner helps prospective towercos get a contract in greenfield markets. I took Total s proposition to the TowerXchange Meetup Asia 2014 and spoke to several stakeholders in energy services in India, for example, where the energy services market remains fragmented with no actor with both the required financial and operational capabilities to scale the model. Taking a global picture; many oil majors have largely exited from any direct presence in African marketing activities whilst operating through distributors - we ve been able to purchase some of their assets. With 30-40% of opex coming from energy, you need to trust your ESCO partner, having direct affiliates with operations in the field is a competitive advantage. TowerXchange: Towercos, who already own one in four of the world s cell sites, are astute buyers whilst some simply demand energy at a kwh price ESCOs find difficult to deliver, others don t want to sign long term fixed price energy services agreements, they want to share in the energy efficiencies as technology improves. How do you think the ESCO business model will evolve to attract towercos to engage? Ingrid Jaumain, Head of Energy Solutions, Total Marketing and Services: Because of its size, Total s worldwide financial capacity and credibility, Total has some interesting assets for this market segment. In off-grid and unreliable grid markets, our long term contracts are based on formulas that provide flexibility as even we never know what the oil price will be tomorrow. We will often put in place the capability within a contract to revisit terms every two to three years we want to stay committed business partners we will find a way to structure a win-win agreement using innovative legal, business model and contract engineering. Of course any capex-free solution requires a minimum level of commitment, but I think there is a space for a kwh offer, and if clients want an optimised financial solution, combining a leasing component or similar, that is also fine with us. Total is a big company but we re also pragmatic. We understand that ESCO agreements typically start with a pilot phase with a few sites to start with, which represents an opportunity to reassure everyone and an opportunity to demonstrate our value proposition. TowerXchange: Finally, please sum up what differentiates Total from other companies aspiring to achieve scale in energy services for emerging market telecoms. Ingrid Jaumain, Head of Energy Solutions, Total Marketing and Services: We have local operations thousands of people in the field in different countries in Africa, the Middle East, APAC, the Americas and the Caribbean. We have a track record; we re already a supplier of diesel to thousands of sites for fuel and solar equipment, which means we have knowledge and proven technology in-house which we can leverage to build a worldwide telecom energy operator proposition. Total s unique positioning is our commitment to better energy we are the only worldwide multi-energy provider spanning solar, diesel and lubricants, owning directly the technology and products. Think global, act local could be a good summary: on an everyday basis we are people rooted in the field, putting operations at the core of all our business models and we are also committed to better energy, preparing the future! 250 TowerXchange Asia Dossier TowerXchange Asia Dossier

256 The Sale & Purchase Agreements & Master Lease Agreements that underpin tower transactions A closer look at two important parts of the contractual framework for infrastructure sharing Jeff Eldredge and Rob Dixon, Partners at Vinson & Elkins Keywords: SLA, MLA, Transfer of Assets, Regulations, Novation of Leases, Due Diligence, Anchor Tenant Privileges, Service Level Agreements, Infrastructure Sharing, Vinson & Elkins The devil is in the detail the detail of painstakingly constructed and hard negotiated Sale and Purchase Agreements (SPAs) and Master Lease Agreements (MLAs) that define the main terms in any tower transaction. Jeff Eldredge and Rob Dixon, Partners at Vinson & Elkins, have advised on over ten sale and leaseback transactions in the last couple of years in countries such as the DRC, Ghana, Nigeria, South Africa and Tanzania. Rob and Jeff kindly agreed to meet with TowerXchange and to provide us with an overview of tower sharing SPAs and MLAs. Read this article to learn: < How a minimum number of towers must be included for a deal to be viable < The conditions precedent that need to be fulfilled before assets are transferred < What happens to towers that aren t transferred in the first close < How the MLA defines the rights of the Anchor Tenant < How critical towers are sometimes treated differently TowerXchange: What are the key components of a Sale and Purchase Agreement (SPA) in a tower transaction? Rob Dixon: There are of course many components common to all SPAs, but let s concentrate on those components which are unique to towers deals. A key example is the structure and content of the conditions to closing. First, we ll typically have a set of transaction conditions precedents that need to be fulfilled before the deal can happen at all. These would include any over-arching regulatory requirements (for example an operating licence or a competition approval). Secondly, we ll typically have a set of conditions precedent that need to be fulfilled (or waived) before a specific tower can be transferred. These would normally include good title, satisfactory ground lease arrangements (for example, the right to sub-lease the tower to third party co-locators and to assign leasing arrangements in security) and compliance with regulatory requirements (for example, building permits and environmental consents) it s potentially a long list! The buyer will require a certain number of towers before the deal is economically viable. Typically, therefore, the deal will be structured so that closing does not happen unless and until a certain number of towers are ready to be transferred (i.e. the tower-specific conditions precedent are satisfied or waived). Jeff Eldredge: One key point in the process is 256 TowerXchange Asia Dossier TowerXchange Asia Dossier

257 Phased close It s common practice to have at least two phases of closing a sale and leaseback transaction, giving extra time to finalise documentation for troublesome towers. As Alan Harper, CEO of Eaton Towers explained With Warid, 90% of the towers were included in the first close, but we take over 100% of the towers whilst the last complicated paperwork is finalized. the extension of ground lease terms. Towers deals can involve thousands of different parcels of land. Different ground leases will expire at different times, giving uncertainty on future costs. The buyer will therefore seek to have the ground leases extended for a reasonable period. Rob Dixon: As a result of that and certain other conditions taking time to satisfy, there are typically a number of closings as the tower-specific conditions are gradually satisfied. In the interim, the buyer might take over the operation of the non-transferred towers on a managed services basis. Different deals are of course structured differently some deals go further to synthesise the buyer s ownership of non-transferring towers from first closing. TowerXchange: What happens to any towers for which the CPs cannot be satisfied? Rob Dixon: The treatment of stub sites depends on the deal. The operator is unlikely to have the ongoing capability (or desire) to maintain and operate the sites so the towerco may agree to manage the sites (with the operator retaining ownership). The buyer is likely to conduct legal diligence on a sample of sites before signing the SPA so it will have a reasonable idea of the position before signing the deal. The SPA is, of course, only one part of a sale and leaseback deal. It s relatively short-lived compared with the MLA which will often govern the parties relationship for many years. TowerXchange: So tell us about the critical consideration when drafting Master Lease Agreements. Jeff Eldredge: The MLA is where the real value is for the tower company and where most of the real complexity lies in a deal. It s a long term contract (perhaps years) and a large value contract. The operator needs sufficient flexibility to manage its needs to deploy and maintain equipment, while the towerco needs sufficient control to maximise the co-location opportunities that s how they build value. Thus, there s a natural tension that needs to be resolved to everyone s satisfaction. The MLA is where the real value is for the tower company and where most of the real complexity lies in a deal Capacity crunch Operators err on the side of caution when it comes to reserving capacity on towers for future upgrades. But every square meter the operator reserves is a square meter less for the towerco to sell, and that goes directly to the value of the tower. When it comes to the Master Lease Agreement, it s important to help operators avoid reserving more capacity than they really need for upgrades, to use the words of one senior towerco executive. The MLA is an umbrella agreement which defines the operator s rights as anchor tenant in terms of leasing space and capacity (windload) on the transferring towers and the towerco s obligations to the anchor tenant in terms of such space and capacity (including the service levels which apply). Different rights and obligations typically apply to different towers. For example, network planners can get very nervous about sharing particularly critical towers with other operators and therefore a small number of the towers might be identified as exclusive to the anchor tenant. The service levels for different classes of towers is also likely to vary and be closely negotiated. These will typically be set out in a service level agreement, which may form part of the MLA. Rob Dixon: There are of course other agreements which are important in most towers deals for example the Build to Suit Agreement but perhaps that s for another time! 252 TowerXchange Asia Dossier TowerXchange Asia Dossier

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259 Tower Xchange TowerXchange brings the tower industry to you! Connect with us today and discuss available opportunities for our Meetups across Africa, Asia, Europe and Americas! Exhibiting or sponsoring at TowerXchange Meetups is the best investment you can make to showcase your products and expertise in front of the global telecom tower industry. Annabelle Mayhew, CCO, at today to find out more.