Singapore Windsor Holdings Limited said that its subsidiary has secured a build-and-lease contract of 500 telecommunication towers for Ooredoo Myanmar.
Based on the cost of construction, the contract is valued at $39 million over 18 months, the company said in a stock exchange filing.
The construction and lease agreement, which becomes effective on July 1, is for the SGX-listed firm to provide services relating to the construction and installation of the towers.
Subsequently, the group will lease and manage the 500 telecommunications tower units and associated power solutions to Ooredoo for a 15-year term, which may be extended for a further three terms of five years each at Ooredoo’s discretion.
Singapore Windsor said the telecommunications towers are specifically designed and configured to allow for further rentals to third party mobile network operators, who can be added as tower co-location lessees. There are three mobile network operators currently in Myanmar, and a fourth network consortium is expected to enter the market.
The company is required to give a total funding commitment of up to $45 million to Ooredoo. The firm said the funding commitment will be financed through a combination of bank loans and vendor financing, and private placement of shares.
The company said the contract is a “significant business milestone” and that it will provide a strong business foundation for the group in Myanmar.
Mark Bedingham, president and chief executive officer of Singapore Windsor, said: “Securing this contract marks a great starting point of our telecommunication services business in Myanmar…”
Since diversifying from its printed circuit board business activities, the SGX-listed firm has been pushing its Myanmar business as part of its long-term growth objectives.
Capitalising on the underlying strong growth trends within Myanmar, the company announced a joint venture partnership in May last year to pursue business opportunities in Myanmar’s telecommunication infrastructure sector.
“Telecommunications will be at the heart of the ongoing economic development in Myanmar and this is aligned with our long-term ambition of becoming one of the leading players in Myanmar’s telecommunication services business and our overall development in this rising market,” Bedingham said.
Having a population of about 52 million people in Myanmar, over 20 million of its population has a mobile-phone subscription at the end of 2014, according to industry estimates. According to the Groupe Speciale Mobile Association (GSMA), Myanmar is a telecommunications frontier with a mobile penetration still less than the 70 percent in Cambodia, 87 percent in Laos and more than 100 percent in Thailand.
In 2013, two new licences, valid for 15 years, were issued to Ooredoo and Telenor and part of the licence requirements is to meet population and geographical-coverage targets as well as offer low initial subscription fees. Accordingly to their announcements, both foreign telecommunication operators have successfully secured a customer base of more than 1 million within weeks of launching its services.
However, rolling out the networks is seen as one of the key challenges for existing and new telecommunication and mobile network operators as both fixed and wireless infrastructures (such as telecommunication towers) are very limited in Myanmar.
According to a report by the International Finance Corporation and the GSMA, it is estimated that more than 17,000 telecommunication towers will need to be set up by 2017 to cover 70 percent of the population. Currently, it is estimated that there are approximately 5,000 telecommunication towers that have been constructed in Myanmar.
Bedingham added, “The rapid growth of Myanmar’s telecommunication industry will accelerate more investments towards better networks and better services. And we are delighted to have reached an agreement with Ooredoo, the only full 3G operator in Myanmar.”