Tower firms race for mobile coverage

Tower firms race for mobile coverage

By Jeremy Mullins   |   Sunday, 25 May 2014

A massive rollout of telecoms infrastructure has begun ahead of the anticipated launch of mobile phone service by Ooredoo and Telenor later this year.

Labourers walk past a cell tower. Photo: Kaung Htet

Both foreign mobile operators agreed to coverage targets and timetables as part of the licensing process, and both have turned to independent companies to construct the towers that will hold their equipment and provide coverage.

Tower company representatives say that while much of the technology itself is not new, there are unique challenges from the scale of the build and working with Myanmar's regulatory process.

"The little difference here is we're trying to build more towers more quickly than any company has ever attempted," said William Pollack, a senior official at independent tower company Apollo Towers Myanmar.

Telenor has selected Apollo as one of its tower companies, with an initial agreement to build and operate 1001 separate towers. Apollo must secure property leases for the site, receive government approval for its construction, and then build the tower. While the operator puts and runs its own equipment on the structure, Apollo is also responsible for powering the site and its continued upkeep.

All of Apollo's towers are designed to hold more than one operator's equipment. Although the firm has signed an agreement with Telenor, it expects to host equipment from other operators as well as firms not providing cell coverage but using other technologies.

Constructing towers is not cheap. Apollo pegs one tower at about US$100,000, though this can be lower if it is hosted on top of a building. With thousands of towers to be built in Myanmar, costs add up quickly.

Mark Robinson, senior consultant at Herbert Smith Freehills legal firm, said that separating tower firms and operators allows them to concentrate on their strengths – tower companies can focus on securing leases and building towers, and mobile operators can focus on gaining subscribers.

Myanmar's operators have also promised tower sharing with their competitors. Industry insiders say there will likely be little sharing at first, but it will pick up as coverage expands.

Mr Robinson said that it is important for mobile operators to be the first providing coverage in a given area.

"Even if you're a bit behind your competitor on a rollout, you can be a mile behind in terms of business," he said. Mobile users are often reluctant to change to a new service provider, and it can take months or years to make up lost ground if a firm enters an area late.

Telenor Myanmar CEO Petter Furberg said earlier this month that Telenor's partners are investing in towers, with Telenor in turn paying monthly rental fees for the services.

"The model is changing from being heavy CAPEX [capital expenditure] up front to being long-term OPEX [operational expenditure] heavy," he said.

"That means that the overall profitability of a mobile investment doesn't necessarily change, but the profile of how cash flows are developing is different from the first time Telenor came to Asia in 1996."

In addition to Apollo, Telenor has also signed an agreement with Irrawaddy Green Technology.

Although tower rollouts have been completed in many countries around the world, Mr Pollack said there are some challenges in Myanmar.

Receiving local approval to construct the towers is currently a constraint. While Apollo has a national licence to operate, they also need local permissions for each individual tower, which can take time.

"Those boards are being very careful – as they should be – to make sure we've done all our homework," said Mr Pollock. "They need to know what we're putting on top of the building and that the building's not going to fall down."

"They're asking for lots and lots of information. It's not progressing, in some areas, quite as quickly as we'd hoped … but it is happening, and you're going to see steel going up. And it's happening with the proper permissions in place."

In an email to The Myanmar Times earlier this month, Ooredoo CEO Ross Cormack said land registration and obtaining permits are the "the biggest challenge" to building towers, though added the firm was receiving support and confident of reaching its goals.

The government has also moved to ensure the legal framework is in place to allow tower companies.

Myanmar's tower companies are able to get a separate Network Facility Service Class licence to operate under the October 2013 Telecoms Law, which is distinct from other types of licences granted to others in the industry, according to Mr Robinson. The rules governing the sector have also mostly been finalised.

Apollo's Mr Pollack said there is a lot riding on the construction of towers and the start of service. Not only will mobile service improve in Myanmar, but the country is also sending a signal that is a reasonable place for international companies to invest.

"This is a bellwether for the opening of the country," he said.

"It takes two to tango. This is both the country saying, 'We're open for business in a very tangible way,' and companies saying, 'Okay, we're willing to come here.'"

http://www.information.myanmaronlinecentre.com/tower-firms-race-for-mobile-coverage/