Edotco plans $200m investment in Myanmar telecoms

Telecoms tower firm Edotco has officially launched in Myanmar, with the company to give its name to Ooredoo tower provider Myanmar Tower Company.

A Yangon man sits in front of a billboard showing the logo of Qatari firm Ooredoo, Edotco’s main customer in Myanmar. Photo: EPAA Yangon man sits in front of a billboard showing the logo of Qatari firm Ooredoo, Edotco’s main customer in Myanmar. Photo: EPA

Last week’s launch revealed the company intends to invest US$200 million in the next few years, with half that figure potentially to be spent in the first year, according to Edotco Group CEO Suresh Sidhu.

The company’s primary customer in Myanmar is Ooredoo, one of two international operators to enter a newly liberalised local telecoms market in 2014. The sector, host to fierce competition between state-owned incumbent Myanma Posts and Telecommunications (MPT), Norway’s Telenor and the Qatari operator, is also expecting a fourth player to enter the fray.

Myanmar’s telecommunications industry has undergone a dramatic transformation in the past few years, with SIM cards and smartphones becoming far more affordable for consumers.

“Before the country embarked on the liberalisation of the telecoms sector in 2013, mobile penetration was about 7 percent. Within a short two-year time span, mobile penetration has increased to more than 50pc,” said Myanmar Investment Commission director Daw Myat Sandar. “With the increase in mobile penetration, the number of towers in Myanmar is also expected to rise from … [an] estimated 8000 towers to 17,000 towers by 2017.”

Mr Sidhu said Edotco saw “a hugely positive market outlook” for the towers sector in Myanmar, adding the company expected the country could require up to 30,000 towers in less than a decade.

“We plan to invest more than $200 million in growing the business here and building and owning more than 5000 towers in the coming years,” he said.

That target will mean quadrupling Myanmar Tower Company’s current portfolio. Mr Sidhu said the business had 1250 towers on which Ooredoo was the first customer, or anchor tenant. However, about half currently play host to at least one other operator, he added.

Edotco aims to share infrastructure on all its towers, according to Mr Sidhu.

“I think the way we like to do things, everything must have one [co-location] on them,” he said.

Though by no means a hard-and-fast rule, the industry targets a 1.7-2.0 tenant ratio for towers, he continued.

“You hope to have a tenant on every tower apart from the anchor tenant,” he said. “That’s a simple rule of thumb for being commercially viable.”

Meanwhile, Mr Sidhu said Edotco would welcome a future relationship with the long-awaited fourth telco.

“Tower companies are usually happier than operators when new entrants come in, so I think we’ll be very open to working with them,” he said.

Axiata subsidiary Edotco finished acquiring a three-quarters stake in Myanmar Tower Company through its holding company, Digicel Asian Holdings – a joint venture between Digicel Group and YSH Finance under Yoma Strategic Holdings – in December, as previously reported by The Myanmar Times.

Yoma Strategic Holdings has elected to hold on to its 25pc stake in Digicel Asian Holdings, but could change its mind and exit under a partnership deal with Edotco to the tune of $40.25 million or a future figure based on a multiple of earnings before interest, taxes, depreciation and amortisation, or EBITA, between 9.80x and 12.40x and MTC’s trailing 12-month actual performance, said a press release.

“I don’t think near-term we’ll consider an exit. We’re excited about the growth,” said Yoma Strategic Holdings CEO Melvyn Pun at the event last week. “I think within the five-year horizon we will be able to assess it again.”

Source: Myanmar Times

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