Telcos and their towers

You probably don’t get surprised when driving down a picturesque highway, suddenly five massive, proximous telecom BTS sites (aka towers) pop into your view. But next time, you must take notice. The five cellular co’s have about forty thousand towers among themselves. Yet, as of 2014, the tenancy ratio was just 1.3 – that is, on average, every fourth telecom tower is shared, between two operators.
But why it should bother you, you may ask. Well, the telco’s continued inability and/or unwillingness to share their tower infrastructure among themselves may result in data tariffs that don’t come down faster for you over time. When you don’t share, others have to buy.
For this industry, it results in higher industry capex, which eventually leads to stubborn tariffs.
Besides, these towers, which are mostly diesel-powered, end up harming the environment through carbon emissions.
That, one may add, is avoidable to some extent if widespread sharing takes place.
PTA has remained lax on infrastructure sharing since telecom deregulation rolled in mid-2000. It couldn’t even achieve the tenancy target of a modest 1.5 that it had set for 2013. However, the industry-wide deliberations reported from a session the watchdog organised earlier this month in Islamabad, in collaboration with the think-tank ICT Forum, seem encouraging.
Among the major challenges discussed at the session were unfavourable tax regime, local-level levies, lack of uniform SOPs across the country, legal questions surrounding tower sharing, forces inside telco’s impeding “sharing”, and the sheer amount of capex to be taken up by tower companies.
Telcos face serious capex financing; on account of continuing 3G/4G network implementations. It’s good that they are talking now and the regulator is listening to them.
Telcos compete with each other, so it’s natural if they hold back on collaborations. The solution lies in “independent tower companies”, which have now become the norm in the West, and are increasing even next-door in India where there are estimated half a million towers, and in China where over three million towers are kissing the sky.
By buying or leasing a sizable chunk of towers in a given geography, these independents help bridge the trust gap, as their establishments provide neutral service to all operators signed up with them.
Via operational excellence, the independents also help create value that travels across telecom supply-chain. As tower management specialist, they follow site-level profitability, focusing on strict efficiency KPIs concerning site construction, equipment management, monitoring, maintenance, and energy consumption.
As per a potential financier for one such independent tower company, if Pakistan goes down this route, about $400 million worth of FDI can make its way to the sector.
Moreover, it will also help reduce the sector’s power requirements by 200MW per annum, he told BR Research. Such firms have recently been registered in Pakistan, there are about nine of them, but change is amiss.
There is no reason why the federal government should waste more time in reducing the obstacles that saddle such critical investment.