Future of Tower Co’s in Pakistan & the Key Challenges

“Digital Pakistan” dream is no more a buzz word rather its gaining fast realization reflected through the Telecom industry statistics and a strong partnership between the Public & Private sector. Though that journey initially begins taking small steps but now it has potential to gain desired momentum required to leapfrog the technological evolution where world now speaks 5G language more frequently leaving behind the 4G era. Our tele-density increases by 5% in the last 12 months which now stands at 85% with 183 Million subscribers out of which 101 Million are Broadband users. And this number keeps on growing exponentially with the drastic increase in the data demand expected to grow from 2.8 GB/subs/month to around 15GB per Capita by 2025. And if we could expand telecom coverage to unserved & underserved areas where still we have 35 Million population without telecom coverage, the data growth is unimaginable. USF recent award of 781 MPKR project to Telenor for providing High Speed Mobile Broadband services to Swat district and establishment of 22,000 Sq.Ft Software Technology Park in Mingora through PSEB are steps in the right direction to extend Digital footprint in every corner of the country. And it’s very rightly said that it’s no more an opportunity rather an emergency particularly in pandemic period. The statistics speaks that there is an enormous opportunity for the Investor community in Pakistan Telecom space particularly the Tower Co’s to build the needed underlying Infrastructure which is an absolute must requirement to realize the dream of Digital Pakistan.

Tower Co is not a new concept and entire Telecom world is embracing this business model particularly the Opco’s to grow their coverage density by leasing space for their Telco equipment from the Tower Co’s while instead of putting their Capex in building their own tower infrastructure direct that investment in technology evolution as well as securing intangible assets like Spectrum to enhance their customer experience & reach. There is no denying fact that in order for Tower Co’s to grow in Pakistan telecom space, a strong collaboration would be required not only with the Opco’s but also with the Public entities like PTA & MoIT. There is no doubt that Tower Co’s will be playing a pivotal role in bridging the Digital divide and bringing the unserved & underserved within the Telecom coverage not only for telephony but broadband services as well.

In Pakistan the Tower Co’s are providing basic telecom needs to lit up Opco’s Telco equipment like power Infrastructure in the form of Commercial power, Lithium Ion Batteries & Diesel Generators (DG) and tower space for hosting telco equipment like antennas, microwave dishes & radio units which could be termed as basic business model or Generation 1.0 but as a next step it will transform into Digital InfraCo’s whereby the TowerCo business will expand towards fiber connectivity, small cells deployment & hosting edge data centers using O-RAN technology though in its embryonic stage being rolled out in developed countries to realize the 5G deployment but it’s more the matter of when and not if in our case. All these technology evolutions and services if need to be delivered at desired stable uptime, would require a strong support and partnership with the Public regime may it be PTA, the DISCO’s (Power Distribution Companies), Municipal Authorities or Law Enforcement agencies. If we have to realize the dream of Digital Pakistan that invariably develops Digital economy by adding its big share in the GDP growth rate which now stands at 2% ranked 8th among South Asian countries while Maldives & India stand at 13% and 11% respectively. A long journey but requires strong will & reshuffling the strategic priorities.        

We as Tower Co are facing tremendous challenges impeding the growth of this new Industry segment and would require a strong unwavering support from the Public Authorities to overcome the operational hurdles, some of these are mentioned below.

i.                We understand our country is facing immense power Infrastructure challenges standing at 3000 MW energy deficit primarily due to stalled distribution & transmission capacity but without this basic need, Tower Co industry besides Telco’s is dependent mostly on alternate energy sources like batteries, Diesel Generators and in some cases Solar. But the strong uptime commitment to enhance customer experience can only be fulfilled through the availability of an uninterrupted Commercial Power at each macro site and considering the 5G launch expected in 2023 that will require 10 time more towers, 2 times more energy consumption than existing 3G/4G technologies at macro site level, it will further deepen our reliance over Power infrastructure in order to thrive 5G use-cases to be built around ultra-low latency, massive concurrency & enhanced mobile broadband. The alternate energy sources though fill the power gap to some an extent but can’t replace fully with desired uptime the Commercial Power unavailability also considering the cost per KW produced through DG’s other than carbon emission challenges (1 liter of fuel burned produces 2.6 Kg of Carbon Dioxide in the environment) in particular because Solar production is not available full 24 hours while Li Ion being a rare commodity item gives limited time backup and also prone to theft, another major challenge being faced by the entire Telecom industry.

We request to the Power Authorities to support us in deploying the Commercial Power at least in the electrified areas and it takes 3-6 months sometimes years to get CP connected on the sites. Other challenges being faced by the Tower Co’s are high cost of DN issued by the DISCO’s to deploy the CP and the Right Of Way issues. Here DISCO’s need to play a big brother role and help Tower Co’s to energize the sites with Commercial Power and reduce carbon emission by reducing DG running hours. Industries flourish when there is ease of doing business as well as control over the cost of doing business promised by the Public sector.    

ii.               Another challenge being faced is the delay in getting jurisdictional approvals from the relevant Authorities like TMAs, EPA, Neighbor’s NOC & authorities like Defense forces / FAB (required in Cantonment jurisdiction) in order to expedite the sites deployment and in some cases the sites are sealed by any authority forcefully (as per law only PTA can seal the site). If there are issues in acquiring approvals, sites should not be shutdown, instead Tower Co’s should be given considerable time to produce the documentation. There are cases where the towers are sealed forcefully for longer duration and till the time final decisions are made by the authority sites remain powered off creating no service/disruption of service in the area. As per the laws / policies of regulator PTA the disruption of services is not permissible, and they impose penalties on MNOs.

It is pertinent to mention here that the uncontrolled escalation in NOC and other charges by the Cantonment Boards, DHAs and Civil Aviation Authority (CAA), civic bodies like CDA and PDA etc. has resulted in the Tower Cos/ Telcos being pushed into a position, where they have to pay abnormally high tariffs against their will. This results in increased cost of providing services. Tower Cos/Telco are dedicated to providing incomparable telecommunication services, however, the biggest obstacle remains to be the protection of ROW for the Towers and laying of Optical Fiber/Power cable, in absence of which the industry is handicapped in optimizing and upgrading their respective telecommunication infrastructure networks and provide support & services nation-wide, as mandated by the respective telecommunication licenses issued by the Pakistan Telecommunication Authority (“PTA”) to Tower Cos/Telcos.

In addition, it is recommended that Ministry of IT should support to get the RoW and we should be allowed to deploy the towers where required with the right to access 24/7 without any impediments as being practiced in the region.

iii.              Tower Co’s are spending a significant portion of their Opex under Site Security to secure the Telco & Energy assets like Li Ion batteries, DG’s, fuel, Copper & RF cables, Radio units etc. But every month we are facing a tremendous challenge particularly related to the Battery thefts amounting to Millions USD loss per annum. The Tower Co’s not only lose their equipment where normally Insurance companies also do not accept the claims made, but the site uptime is also severely compromised for longer duration because in case of Li Ion batteries, which is a rare commodity not manufactured in Pakistan and imported from China in most of the cases, the ordering takes almost 90 days. Though there is a buffer pool kept but the theft frequency is uncontrollable and abnormally higher. In such scenarios the Site Security Supplier lodges an FIR which again is a big challenge and not easy to get it registered thereby almost no recovery is made. In some of the instances the culprits are caught but recovery of the stolen assets is not that much encouraging.

Although we have been involving top management of the relevant agencies but need a sturdy attention & support from the Law Enforcement Agencies like Police Stations, FIA etc. to help Tower Co’s to investigate such cases because battery & other energy asset theft is no more an isolated incident rather has developed into an organized crime. Entire Telecom industry is affected and unable to stop this heinous criminal activity impacting business from capex as well as customer experience perspective.  

iv.              The Energy assets like Li Ion batteries are imported from outside which is not only a drain over foreign exchange reserves as we have to pay in USD but also takes around 3 months to arrive on ground after ordering. Such assets also have a shelf life, and it is recommended that Government should promote the manufacturing of Telecom grade Li Ion cells and similar energy technologies in Pakistan rather simply relying over the imports. It will not only reduce the cost but also accelerate the use as backup power and less dependency over the diesel generators. Supplier ecosystem must develop in this area.

v.               The real enablers of the Tower Co business are the existing players in the Telcom industry i.e., Cellular Operators and the new business model can only thrive with the support of the Opco’s like Jazz, Telenor, Zong & Ufone. The trust needs to be placed at Tower Co’s being the neutral player, the site sharing among the Opco’s should be discouraged and besides B2S ordering, collocation opportunities should be fully extended to the Tower Co’s and is the only way for this industry to survive otherwise deprioritizing Tower Co’s in business selection will not help in nurturing their growth in the market. It is the right time to start thinking over the tower acquisitions that will leapfrog this industry, an approach very popular in matured markets like South East Asia, Europe & North America where Operators are divesting their Infrastrcuture arm and re-investing over technology evolution to give the best customer experience. And once we have 5G a reality in Pakistan, it will be a win-win case between the Tower Co’s and the Cellular Operators as the underlying infrastructure need will be more robust including fiber connectivity & energy demand.  

Last but not the least, there is a dire need to break the silos and setup a consortium, an association of all the Tower Co’s in the country to have a strong and an effective collaboration, exchange of ideas and collectively watch the Tower Co industry interest and is the only way to achieve the desired progression in the Telecom space. In the race of competition at this embryonic stage, the Tower Co’s will not only suffer in terms of diluting their revenue & business profitability but also the scale required at the end to mark their contribution in the country GDP during the Digital Pakistan journey. In the recent past, one of the TowerCo took an initiative where all the industry players participated and shared their experiences & concerns around the challenges being faced and brainstormed the solution. But it needs to be formally created and chartered so it could be seriously heard at every forum.