Pinnacle BD Holdings, a Singaporean firm backed by Modern York-based mostly totally interior most fairness wide Kohlberg Kravis Roberts (KKR), has reversed its decision to make investments $300 million in Frontier Towers Bangladesh, undoubtedly one of many four mobile tower operators in the country.
Pinnacle cited a differ of financial dangers in Bangladesh, alongside side the downgrade in the country’s credit rating, rising curiosity rates, commerce rate volatility, and inflation, in step with firm officers.
They talked about these factors made the investment much less feasible in the present ambiance, dampening its self assurance in the country’s non permanent financial possibilities.
Which ability that, 20 shrimp contractors and suppliers had been left in limbo for months, unable to fetch dues totalling Tk140 crore from Frontier Towers where Pinnacle BD Holdings has 63% stakes. Three local companies backed by Chowdhury Nafeez Sarafat, Adnan Imam, and Asif Choudhury maintain the closing shares of the firm.
Despite an on a typical foundation earnings from its 934 tower operations, the firm’s earnings is being directed straight to banks to hide debt tasks, leaving shrimp for the unpaid contractors.
In a determined transfer, the contractors, beneath the banner of the Frontier Contractors Forum, agree with turned to the Bangladesh Telecommunication Regulatory Payment (BTRC), in the hunt for intervention to rep better their excellent funds.
The placement raises questions about how a firm supported by the realm’s 2d-largest interior most fairness investor KKR, which had at the foundation deliberate $300 million for prolonged-term investment, ended up in such a spot.
Per insiders, Pinnacle determined to urged on injecting capital for now. With costs surpassing revenues, the firm – Frontier Towers’ majority shareholder – has even floated the theorem that of offering the firm’s shares to contractors in preference to cash funds.
“We are shrimp contractors who constructed the towers for the firm by taking bank loans. Frontier is receiving monthly funds by leasing those towers to Grameenphone. What’s going to we end with shares of the firm? We desire to repay our bank loans and proceed our maintain enterprise,” talked about Harun or Rashid, the owner of an affected firm, HS Engineering.
At the end of September, right thru a internet assembly a Frontier director nominated by Pinnacle, threatened to liquidate the firm if their proposal of 39% shares against dues used to be no longer authorized, talked about the contractors.
Harun told TBS, “If we are in a position to no longer repay the bank loans, we may perchance well be ruined with virtually 2,000 of our employees. Their delay has confused us with over Tk10 crore in curiosity charges as our funds are caught for seven months, which used to be scheduled to be paid in a month.”
Pinnacle did no longer reply to TBS’ requests for a observation.
Frontier Towers Bangladesh’s CEO, Md Serajus Saleheen, unprejudiced recently told TBS, “The macroeconomic shocks – rising curiosity rates and the associated rate of the dollar – damage our cash waft, and we’re searching for to beat the disaster. We are searching for to pay our vendors as mighty as our cash waft permits. We are in talks with them and may perchance well soon agree with a idea in step with our board’s route.”
AB HighTech Consortium turns Frontier Towers
In 2018, BTRC awarded tower-sharing licences to four dedicated tower operators, stopping mobile operators from expanding their maintain tower networks.
Edotco, fragment of the Axiata Community, secured a tower-sharing licence with the highest rating of 91. Summit and the now-named Kirtonkhola Tower obtained licences with ratings of 88 and 85, respectively.
AB HighTech Consortium, securing a rating of 82 obtained the fourth licence and there had been various clashes amongst groups to maintain the consortium.
In 2022 Pinnacle and its local companions obtained the firm and its title used to be changed to Frontier Towers Bangladesh.
Pinnacle now owns 63% of Frontier’s shares with newly issued shares. Two entities backed by Chowdhury Nafeez Sarafat – Aroosa Janashakti Restricted, and Shining Equity Administration – set 20% of the shares.
Dunhill Products and services, a firm established by Genex Infosys and NRB Industrial Bank’s expatriate entrepreneur Adnan Imam, holds 10% of the shares.
Built-in Products and services Restricted, based mostly by the entrepreneurs of Banglalink’s predecessor Sheba Telecom, holds 7% of Frontier’s shares now.
Frontier’s monetary struggles
Loads of officers of the firm talked about Frontier Towers has bank loans of over Tk200 crore from two interior most business banks. Out of some Tk5 crore monthly earnings, banks rob more than Tk4 crore as mortgage instalments and the firm collected incurs over Tk1.5 crore losses after the costs for operations and upkeep alongside a regulatory rate of seven.38% of the earnings shared with the telecom regulator.
Claiming no involvement in the firm’s operations as a minority shareholder, Chowdhury Nafeez Sarafat told TBS that the monetary disaster arose due to the end of promised international investments.
Pinnacle had deliberate to set a solid space in the tower enterprise in Bangladesh, fancy its solid presence in the Philippines, with a prolonged-term investment of $300 million, he talked about, adding that there used to be an expectation of getting over 10% of the sum invested by now.
Alternatively, Pinnacle turned cautious about investing in Bangladesh first and principal of the 365 days, and no longer even half of of the expected non permanent investments agree with arrived so some distance.
A Pinnacle legit, speaking on anonymity, told TBS, “The investment is now not any longer feasible appropriate now. Cash is now not any longer our project; it’s about return on investment because the Country anguish has elevated right here.”
Harun or Rashid commented that Pinnacle do no longer need engaged the contractors to fabricate the towers if that they had determined to end investments that withheld their funds. The work orders had been issued at the end of 2023.
“We had no doubts concerning the monetary functionality of the KKR-controlled firm. We did now not quiz of that after ending the work, they’d assert, ‘Here is now not any longer a feasible investment now.'”
Pinnacle’s concerns
The Pinnacle legit from Singapore added that their analysts earlier this 365 days had raised warnings about Bangladesh’s political location and macroeconomic indicators earlier this 365 days.
One among the local investment analysts who had told Pinnacle confirmed the claim.
The uneven competition in Bangladesh’s tower-sharing enterprise moreover emerged as a project for them.
“Restructuring liabilities is unravel the disaster appropriate now,” talked about the Pinnacle legit.
A neighborhood executive at Frontier advised solutions corresponding to extending the mortgage repayment length from seven to 10 years, securing recent fairness and obtaining more bank loans to set out a bigger scale which is believed to be a must for profitability.
Per him, having some 4,000 towers may perchance well be necessary for the firm’s scale for profitability. As tower sharing companies must pay a fastened yearly licence renewal rate of Tk5 crore alongside Tk75 lakh brand-added tax on the quantity. Moreover, many fastened costs per unit would come down after scaling up.
Regulations let the mobile towers stride for 15 years and the final six to seven years are in total more winning after the loans are paid help. Without ample investments, the possibility may perchance well recede away.
After various meetings in the past two weeks, the telecommunications regulator is scheduled to meet with both parties again this week.
Tower enterprise location
Per the BTRC, there are 45,705 mobile towers in the country now. Having towercos in play, mobile operators had been selling portions of their community towers to towercos while towercos themselves are constructing recent towers.
Of the mobile operators, Grameenphone owns over 12,500 towers, Banglalink has 4,005, Teletalk owns 3321, and Robi has 2,276 towers owned and operated by themselves.
Of the towercos, Edotco owns 16,735, Summit Towers owns 4,624, Kirtonkhola owns 770 and Frontier Towers owns 934 towers appropriate now. Moreover, insist-owned BTCL has 514 towers.
Dedicated towercos can lease the community infrastructure to one or various mobile operators and manufacture prices.
The field wants around 12,000 recent towers in the following four years to hide the community inquire of, in step with TowerXchange and Ronald Berger Document.
“We desire to put off the uncomfortable quality of speak calls and mobile internet,” talked about Mohiuddin Ahmed, president of the Bangladesh Cell Phone Patrons Affiliation, adding that the BTRC beneath the recent management must be sure quality services and products at practical prices.
