Profit statements

TPL-TASC Consortium to Bid for Telecom Tower Infrastructure

ISLAMABAD: In a significant development in the growing field of telecom tower infrastructure in Pakistan, local company TPL Properties has formed a consortium with UAE-based mobile telecom tower operator TASC Towers, according to a notification to the PSX filed September 20.

Profit has learned that TPL, through its wholly owned subsidiary TPL REIT Management Company Limited (RMC), has formed the consortium to participate in the auction of a telecom tower infrastructure company, details of which were not shared.

TPL RMC was founded in 2019 to manage real estate investment funds which, according to the official website, “capitalize on the sustainable real estate development and management expertise of its parent company”.

On the other hand, founded in 2003, TASC Towers is an independent tower operating company that focuses on developing markets. According to the company’s official Linkedin page, “TASC Towers’ current business is to acquire portfolios of telecom towers from mobile carriers and lease them to those carriers on a long-term basis, investing equity or debt capital to accelerate the development of a tower operator growth prospects, for example on projects linked to acquisitions, potentially before an IPO and by investing equity in mandated tower operators on bespoke building programs.

Earlier this year, leading Saudi infrastructure company TAWAL initiated the acquisition of Islamabad-based independent passive telecom tower provider AWAL Telecom Private Limited.

What is tower sharing?

The emergence of companies specializing in the sharing of network towers, all marketed through a portfolio of properties on which they leased space from several telecommunications operators, is the result of mobile operators loosening their grip on their network infrastructure through ad hoc arrangements by operators to sublet space on their sites.

Pakistan has been slow to catch up with this trend. Initially, when the local telecommunications market opened up to foreign players in the early 2000s, the goal of all mobile network operators (MNOs) was to build infrastructure and compete on coverage. Therefore, much of the initial investment was spent on building tower sites and purchasing equipment.

“When we were building most of our sites in the period 2004-2008, there were no ride-sharing companies. Therefore, we had to build our own infrastructure, but now we share and we share quite large numbers, ”said the CEO of Telenor. Profit.

However, as the market has evolved, the focus has shifted to services and other offerings that require MNOs to free up capital (asset-light balance approach) to route it to segments that have a better return on investment (ROI).

While talking to Profit earlier this year, a Jazz official said that Jazz supports passive and active sharing because it reduces CAPEX and OPEX costs incurred by the company, allowing the company to provide quality services specifically to unserved areas. . “The current regulatory framework involves passive sharing, and we hope to have an update on active and spectrum sharing in the near future to optimize network spending, open secondary markets and create opportunities for ‘innovative network expansion.’

Meanwhile, TowerXchange research shows that Pakistan has around 36,187 towers serving four MNOs with 189 million subscribers, while around 30,000 to 40,000 more towers will be needed over the next five years.

The research further indicated that of the 36,1687 towers, 10,000 are co-located, meaning they serve multiple MNOs.

Source: TowerXchange

Note: The actual number of sites may differ from the infographic as the figures above were compiled at an earlier date. (e.g. Jazz in his recent communication to NEPRA claimed he had 14,558 towers. While sources tell Profit that Enfrashare has over 2900 tower sites)

The country’s largest tower holding company is Jazz, which created a special-purpose vehicle, Deodar, and transferred ownership of all of its tower sites to the company. The objective behind this move is to eventually sell all of the tower sites as an incorporated company when a suitable offer arrives.

Source: Deodar Financial Statements

Enfrashare (Private) Limited, the country’s largest independent third-party tower operator, was incorporated in 2018. In April 2019, the operator entered into separate purchase agreements with Jazz and Deodar for the purchase of 1,596 towers . The total consideration for the company in respect of the above-mentioned contracts was proposed at Rs 1,203 million, which was later adjusted to reflect a change in the number of sites transferred.

Tower companies like Enfrashare provide passive infrastructure to its customers i.e. mobile operators which can be used by cellular mobile operators to provide services to their own clients.

In order to provide this service, tower operators incur various costs, including site rental, authority rentals, site security, site maintenance, energy costs, operating personnel costs, on-site investment, etc. operators for the services under the respective contracts.

We can see here an example of trump light strategy used by the Indian telecom market. According to EY’s Evolution to Revolution report, India has 83% of sites with shared infrastructure, just behind China’s 100%.