Pakistan’s leading conglomerate Engro Corporation has announced that it would make an equity investment of Rs14 billion in the telecom infrastructure business, Engro Enfrashare, to expand the built-to-suit (BTS) tower business.
With this additional investment, the total equity investment in the tower sharing business will reach Rs21.5 bn. Engro had earlier invested Rs7.5 bn into the tower infrastructure vertical. Under the tower sharing model, Engro sets up towers that mobile telecom operators like Jazz or Telenor can lease and thereby reduce their capital and operating costs.
Commenting on the recent announcement, Engro Corporation President and Chief Executive Officer (CEO) Ghias Khan said, “We believe that robust connectivity initiatives and best-in-class telecom infrastructure are the need of the hour for the country as the world is now moving swiftly towards digitalization and infrastructure sharing. While being focused on Engro’s purpose of solving some of Pakistan’s most pressing issues, we would utilize our considerable balance sheet and quality human capital to support our Mobile Network Operators (MNOs) in their passive infrastructure requirements while creating an ecosystem for the deployment of the next generation networks.”
Last year, Ghias Khan had disclosed that Engro Corporation planned to invest between Rs50 bn to Rs150 bn to grow the tower sharing business.
With the new investment this year, Engro has also announced that it is forming a dedicated platform for connectivity and telecom infrastructure-related initiatives by the name of Engro Connect (Pvt.) Limited (EConnect). EConnect is going to be a wholly-owned subsidiary of Engro and will hold complete ownership of Engro Enfrashare (Pvt) Limited (Enfrashare), which Engro claims is now Pakistan’s largest independent telecom tower company in terms of operationalised and active towers.
According to a statement from Engro, the total equity injection of Rs21.5bn in EConnect will be mainly utilised to expand the build-to-suit (BTS) tower business. The capital will be invested in constructing new towers under Enfrashare, instead of acquiring existing towers.
The investment will also include, but will not be limited to, provision of efficient energy solutions, modernisation of operations, installation of state-of-the-art network monitoring solutions and exploration of other investment avenues within the connectivity value chain.
Engro’s expansion into the tower sharing business comes during stagnant revenues for telecom operators and steep costs which makes tower sharing a compelling proposition for telecom operators in face of necessary infrastructure expansion amid competitive pressures. Tower sharing helps telecom operators to rationalize capital and operational costs as the need for infrastructure expansion becomes more pressing as the cellular subscriber base and 3G/4G subscribers grow exponentially.
In today’s numbers, cellphone subscribers in Pakistan stand at 184 million whereas there are 100m 3G/4G subscribers, expanding at an annual growth of 28 per cent. Between the years 2018 to 2020, the number of data subscribers has doubled, making infrastructure expansion a necessity for telecom operators. On the back of strong growth numbers in subscriber base, infrastructure sharing will likely be critical for telecom operators for expansion.