Analysis: OCK’s foray into Laos a positive move with minimal risk

Analysis see OCK Group Bhd’s (OCK) foray into the Laos telecommunication (telco) market as a positive move with robust growth prospects and minimal risk.

To recap, OCK has signed a 15-year build-and-lease tower agreement with Laos’ Best telecom Co Ltd (Best Telecom) who was recently awarded the 5G spectrum in Laos and is actively planning to launch its nationwide 5G network by the end of 2024.

In a company update, says analysts at Kenanga Investment Bank Bhd’s research arm (Kenanga Research) guided that they are positive on OCK’s success in penetrating this emerging market with robust growth prospects and expects the agreement to add to OCK’s target to expand its tower portfolio in various markets.

OCK is currently targeting to expand its tower portfolio in Malaysia by 150 to 200 towers and Vietnam by circa 500 towers.

Additionally, they opine that the venture into the Laos telco market will have minimal counter party risk as Laos’ Ministry of Finance is one of the key shareholders in Best Telecom.

While the agreement is still in its preliminary stage, OCK has been awarded with several site clusters located within the metropolitan area of Vientiane and a few other major cities.

“We understand that the actual number of tower sites to be deployed has not been finalized. This is given the need to conduct site surveys and feasibility studies prior to actual roll-out,” said the research arm.

For now, Kenanga Research guides that they are maintaining their current forecasts on OCK pending finalisation of salient agreement terms with Best Telecom.

They continue to be optimistic on OCK’s outlook due to its position as a strong contender for JENDELA Phase 2 and 5G roll-out projects in ASEAN, its strong earnings visibility as 57 per cent of its top line emanates from recurring income from telco tower leasing and network management contracts, and potential earnings boost from new power management contracts for data centres.