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USD18k Fee Required to set up One Telco Tower in Malaysia for 3G/4G Services

At the International Infrastructure Summit in Malaysia recently, it was revealed that a staggering USD18,000 (estimated RM76k) fee is needed to set up a Telecommunication tower in one of the state in Malaysia.

edotco-GSMA-International Infrastructure Summit 2019

(L-R) Suresh Sidhu, Chief Executive Officer of edotco Group, Al-Ishsal Ishak, Chairman of Malaysian Communications and Multimedia Commission, Mahtab Uddin Ahmed, Chief Executive Officer of Robi Axiata Limited, Afzal Abdul Rahim, Chief Executive Officer of TIME dotCom Berhad, Vaishali Rastogi, Managing Director & Senior Partner, Head of BCG, Southeast Asia

A Telco Tower (also known as base station/Telco Site) is built to provide wireless communication and Internet services, including 3G, 4G and the upcoming 5G services.

Malaysian Communications and Multimedia Commission (MCMC) Chairman, Al-Ishsal Ishak said that only one state in Malaysia is charging the USD18k fee but on average it cost about RM6k-RM8k to set up a Telco tower in Malaysia. The MCMC Chairman did not name the state that is currently charging the USD18k fee.

Speaking to MalaysianWireless after a panel discussion, Al-Ishsal said “We have gone and discuss with the state and explain to them the value (of setting up the Telecommunication infrastructure),”

He said, “The state needs to attract investment, but it won’t grow due to lack of infrastructure… as Investors will only come if there’s infrastructure.”

He added that at the moment, the states and federal territories in Malaysia have high cost and high barriers (to set up a Telco tower), however all states have agreed that the current way is not sustainable, and the process needs to be improved.

Al-Ishsal was part of a panel discussion titled ‘5G: Is Infra Ready to Rumble?’ chaired by edotco Group Chief Executive Officer, Suresh Sidhu. Other panellist include TIME dotcom Chief Executive Officer, Afzal Abdul Rahim, Robi Axiata Limited Chief Executive Officer, Mahtab Uddin Ahmed and Boston Consulting Group Southeast Asia Managing Director & Senior Partner, Vaishali Rastogi.

Among topics discussed by these key players in the industry were regulatory views on licensing, spectrum and overall policies that will enable a seamless transition to 5G, the kind of infrastructure which will be required for a successful roll out and how industry players must come together to make this a reality.

Commenting on challenges faced by Telecommunication and Tower companies such as edotco, Wan Zainal Adileen, edotco Group Chief Regional Officer said that the USD18k referred by the MCMC Chairman could be related to the permitting fee imposed by the state Government.

Wan Zainal Adileen, edotco Group Chief Regional Officer tower company

Wan Zainal Adileen, edotco Group Chief Regional Officer

Permitting fee, charged by the local council is only one of the costs involved to set up a base station/tower. There are also number of forms that needs to be submitted, between 20-30 forms, depending on states. Wan said that approvals are required from the Fire and Rescue Department of Malaysia (Bomba), Civil Aviation Authority of Malaysia (CAAM), Tenaga Nasional Berhad (TNB), MCMC and others to set up the Telco Tower.

All these exclude the cost of setting up the Telco tower structure itself, which is said to be more than RM100,000.

According to Wan, while Permitting fee generally cost a few thousand Ringgit Malaysia, one of the states in East Coast charges as high as RM10,000 per year/site during renewal. He said that these fees need to be reasonable and it is one of the challenges faced by Telcos put up a tower for mobile coverage.

Among the challenges to set up a Telco tower for mobile coverage include finding the right location and negotiating a reasonable rental rate to use the land (to set up the tower). Wan noted that some countries have standardised the rental rate of a Telco Tower but not in Malaysia.

When asked to name some of the challenges faced by edotco Malaysia, Wan mentioned that the company had issues in setting up Telco towers in Kepong, Bangsar area and Penang. He pointed out there’s a high number of complaints from consumers in Penang making it difficult for Telcos to improve coverage.

For edotco to set a base station, it normally takes up between 2-3 months if the land is privately owned. For Government Land, the process takes longer.

For indoor coverage, such as in building, hotels, shopping malls, the process takes around 4-6 months. Wan said that not all Telcos are willing to invest on indoor coverage in all buildings due to concerns of ROI (Return of Investment). “For example, if it’s a shopping mall, its more straight forward for the Telco but if it’s a hotel, some may think that Wifi is already available in Hotels. If it’s an office building, Telcos may look at the number of corporate client or if there is a business case for it,“

As indoor coverage is normally a shared infrastructure, Wan said if all Telcos are willing to put up coverage inside buildings, cost may come down.

edotco Malaysia is building an average 200-300 sites a year in Malaysia. In comparison, Wan shared that edotco’s subsidiary in Bangladesh, at its peak, built 2,000 sites in a year. “Our complexities with regards to permitting is a key dominator between both countries. If local/state/federal Government and MCMC can come up with a solution whereby this process can be simplified, I think we can roll out much faster,”

According to the edotco Group, it is estimated some additional 15,000 more sites are required in Malaysia to cater for mobile services including 5G in the year 2025. If the towers are shared between the Telcos, this number will be lower at 7,000.

Wan said sharing is in edotco’s DNA. He added that edotco Malaysia tenancy ratio is currently at 1.9. “When we build towers, we will at least allow the tower to be used by 3-5 players (Telcos),”

Moving forward, Wan said he hope that the Telcos will build more sites next year to improve mobile coverage in the country.

About Kugan

Kugan is the founder of MalaysianWireless. He has been observing the mobile industry since 2003. Connect with him on Twitter: @scamboy