Future Of Infracos In SE Asia: Conversation With Suresh Sidhu, CEO EdgePoint Infrastructure

• Published date: 23 November 2022
• Subject Matter: Media, Telecoms, IT, Entertainment, Mobile & Cable Communications
• Law Firm: AlixPartners
• Author: Mr Sai Tunuguntla

In the last three years, over 25,000 towers in SE Asia have changed hands from telcos to TowerCos. The telcos have been cash constrained and, as a result, have been trimming their tower and other asset portfolios. With substantial 5G Capex on the horizon combined with margin pressures, the offloading trend is expected to continue.

In parallel, there has been a sharp increase in Private Equity funding for tower acquisitions. The same assets under TowerCos have a 2-3x valuation compared to when they are under telcos. Hence, both demand and supply side drivers are fueling industry growth.

Unlike Europe and the US, the TowerCo / InfraCo industry is still in the early stages of maturity in SE Asia. While there is growth, there are also challenges around regulation/right of access, multi-country operations, and acquiring the right skillsets for the future.

I recently caught up with Suresh Sidhu, the energetic CEO of EdgePoint Infrastructure, over breakfast. Suresh is a highly regarded telco industry veteran, and prior to founding EdgePoint, Suresh was the CEO of edotco, Axiata Group's TowerCo and infra services business. He also held senior leadership roles at Celcom, Maxis, and Sime Darby. His new venture EdgePoint Infrastructure is making strides in acquiring and building tower assets, primarily in Indonesia and the Philippines. It counts DigitalBridge (NYSE: DBRG) as one of its early investors.

Suresh shared his views on 5 themes for the growing industry.

# 1 Recent spurt in the asset divestments by telcos in the SE Asia region

The TowerCo and infrastructure sharing has been a mature model in Europe and North America for many years, but it has taken time to be pervasive in our markets. A few operators here in APAC have tried bilateral network sharing, but it didn't gain much traction due to misaligned stakeholder objectives, lack of trust, footprint asymmetry, and other operational issues. With significant 5G investments on the horizon, telcos had limited choices to raise capital and had to consider divesting and monetizing their infrastructure assets. On the demand side, large global PEs and independent TowerCos have demonstrated a growing appetite and the means to acquire these assets.

#2 Value and growth drivers for independent TowerCos

There are four drivers through which the TowerCos grow and add value:

A) acquiring and building in existing markets

B) acquiring assets in new markets

C)...