towerxchange europe dossier 2016 · towerxchange’s analysis of the independent tower market in...

TowerXchange Europe Dossier 2016

European tower industry achieves launch velocity www.towerchange.com

(Chairman) Daniel Lee Managing DirectorIntrepid Advisory Partners

Akhil GuptaChairmanBharti Infratel

Michel FaivreDirecteur Programme Partaged’Infrastructure AMEAOrange

Terry RhodesCEOEaton Towers

Marc GanziPresident, Digital Bridge &Mexico Tower Partners

Arun KapurExecutive ChairmanIrrawaddy Green Towers

James MaclaurinDirectorAxiata

Areef KassamDirector of InfrastructureGSMA Mobile for Development

Ayman Al AdlDirector - TMTStandard Chartered Bank

Dagan KasavanaCEOPhoenix Tower International

Malcolm CollinsChief ExecutiveCTIL

Hal HessEVP, International Operations andPresident, EMEA and Latin AmericaAmerican Tower

Chuck GreenExecutive ChairmanHelios Towers Africa

Suresh SidhuCEOedotco

Nobel TanihahaPresident DirectorPT SOLUSI TUNAS PRATAMA (STP)

Umang DasChief MentorViom Networks

Maria ScottiCEOTorrecom

David MeganckFounder and COOAcsys

Gary StauntonCEOLikusasa Group

Tilak Raj DuaDirector GeneralTAIPA

Nina TriantisManaging Director, Global, Head of Telecoms & MediaStandard Bank

Peter Owen EdmundsCo-founder and ChairmanRussian Towers

Riana DonaldsonManager: International Network Operations SupportVodacom

Bimal DayalCOOIndus Towers

Kurt BagwellPresident InternationalSBA Communications

Jim EisensteinChairman & CEOGrupo TorreSur

Inder BajajCEOHTN Towers

Tunde TitilayoVice ChairmanSWAP International

Thorsten SchaeferCEOazeti Networks

Jeffrey EldredgePartnerVinson & Elkins

Enda HardimanManaging PartnerHardiman Telecommunications Ltd.

Adeel BajwaSenior GM of Legal Affairs and ContractsWarid Telecom

Scott CoatesCEOWireless Infrastructure Group

Carlo RamellaChairmanTowertel & COO, EI Towers

With special thanks to the TowerXchange “Inner Circle”About TowerXchange

TowerXchange is your independent community for operators, towercos, investors and suppliers interested in EMEA, CALA and Asian towers. We’re a community of practitioners formed to promote and accelerate infrastructure sharing. TowerXchange don’t build, operate or invest in towers; we’re a neutral community host and commentator on telecoms infrastructure.

The TowerXchange Journal is free to qualifying recipients. We also provide webinars and regular meetups. TowerXchange monetizes this community through hosting annual Meetups and the sale of advertising, without compromising editorial integrity.

TowerXchange was founded by Kieron Osmotherly, a TMT community host and events organizer with 16 years’ experience, and is governed with the support and advice of the TowerXchange “Inner Circle” – an informal network of advisors

Our informal network of advisers:

© 2015 Site Seven Media Ltd. All rights reserved. Neither the whole nor any substantial part of this publication may be re-produced, stored in a retrieval system, or transmitted by any means without the prior permission of Site Seven Media Ltd. Short extracts may be quoted if TowerXchange is cited as the source. TowerXchange is a trading name of Site Seven Media Ltd, registered in the UK. Company number 8293930.

www.towerxchange.com/meetups/meetup-europe | TowerXchange Europe Dossier 2016 | XX| TowerXchange Europe Dossier 2016 | www.towerxchange.com/meetups/meetup-europe2

115 Abloy Oy

118 Acsys

124 Bladon Jets

129 EnerSys

134 Heliocentris

138 Invendis

142 Medipower

147 Northstar

153 Tarantula

158 Vinson & Elkins RLLP

Contents

40 - 89

114 - 161

27-39

90 - 1134 -26 Towercoperspectives

TowerXchange Meetup Europe exhibition preview

TowerXchange Meetup Europe

Country-specific analyses

European tower market analysis

27 Agenda28 Roundtables30 Investors Club31 Who you will meet34 What is a Meetup?36 Sponsors and exhibitors

91 Ireland96 Germany99 France104 Russia110 CIS

41 Frederic Zimer, CEO & Cedric Lepolard, CFO,

FPS Towers

46 Olivier Huart, CEO, TDF

49 Petr Slováček, CEO, CETIN

52 Gunther Stein, Senior Vice President, Sales &

Marketing, Deutsche Funkturm

55 Colin Cunningham, CEO & Donal O’Shaughnessy,

Chairman, Cignal

59 Ronnie Horan, Infrastructure Manager, ESB Telecoms

63 Giancarlo Benucci, Head of Investor Relations,

Rai Way

66 Sergey Plissak, Commercial Director, LogyCom

70 David Bernal Cantero, Business Development

Manager, Cellnex

73 Scott Coates, CEO, Wireless Infrastructure Group

79 Nicolas Ott, Managing Director, Telecoms, Arqiva

84 Peter Owen Edmunds, Co-founder & Chairman,

Russian Towers

87 Juha Pekka-Weckström, CEO, Digita

4 TowerXchange analysis of the independent tower market in Europe10 Who’s who in European towers?23 European mobile in flux

120

Deutsche Funkturm

RTRS

Cellnex

First Tower Company

Inwit

Telxius

Arqiva

Global Tower

TDF

CETIN

EI Towers

FPS Towers

Rai Way

American Tower

Wireless Infrastructure Group

Russian Towers

Vertical

UkrTower

5000 10000 15000 20000 25000 30000 35000

0

200

400

600

800

1000

Sher

e Gro

upCes

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unikace

Open Tower

Company

Axion

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HIGHPOIN

T (obeli

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2RN

Hiber

nian /

Britannia Tower

sCign

al

Cellco

m

Altico

m

Germany

Spain

Italy

UK

Turkey

Ukraine

France

Czech Republic

Germany

Ireland

Russia

Netherlands

Poland

Denmark

Slovakia

Finland

Kazakhstan

Serbia

Austria

CALA

27,000

7,7097,410

16,000

11,519

14,000

11,000

10,550

4,000

7,500

6,966

4,800

3,200

2,618

2,300

2,030

1,900

1,700

1,181

1,600

50 50

500

460

800684

Towerco

m A

S

700580

337

79

Share

d Acc

ess

420 400 377 377260 200 180 150 150 140 113

Highpoin

t

100

Logyco

m

100

CIE

100

Falck

75

Konsing G

roup

47

Serv

ice Tele

com

187

Digita

40

Österr

eichisc

her

Rundfunk

40 33

120

Deutsche Funkturm

RTRS

Cellnex

First Tower Company

Inwit

Telxius

Arqiva

Global Tower

TDF

CETIN

EI Towers

FPS Towers

Rai Way

American Tower


Russian Towers

Vertical

UkrTower

5000 10000 15000 20000 25000 30000 35000

0

200

400

600

800

1000

Sher

e Gro

upCes

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unikace

Open Tower

Company

Axion

ITAS T

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HIGHPOIN

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Hiber

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Britannia Tower

sCign

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Cellco

m

Altico

m

Germany

Spain

Italy

UK

Turkey

Ukraine

France

Czech Republic

Germany

Ireland

Russia

Netherlands

Poland

Denmark

Slovakia

Finland

Kazakhstan

Serbia

Austria

CALA

27,000

7,7097,410

16,000

11,519

14,000

11,000

10,550

4,000

7,500

6,966

4,800

3,200

2,618

2,300

2,030

1,900

1,700

1,181

1,600

50 50

500

460

800684

Towerco

m A

S

700580

337

79

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420 400 377 377260 200 180 150 150 140 113

Highpoin

t

100

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100

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100

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Konsing G

roup

47

Serv

ice Tele

com

187

Digita

40

Österr

eichisc

her

Rundfunk

40 33

120

Deutsche Funkturm

RTRS

Cellnex

First Tower Company

Inwit

Telxius

Arqiva

Global Tower

TDF

CETIN

EI Towers

FPS Towers

Rai Way

American Tower


Russian Towers

Vertical

UkrTower

5000 10000 15000 20000 25000 30000 35000

0

200

400

600

800

1000

Sher

e Gro

upCes

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unikace

Open Tower

Company

Axion

ITAS T

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Towerco

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HIGHPOIN

T (obeli

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Hiber

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Britannia Tower

sCign

al

Cellco

m

Altico

m

Germany

Spain

Italy

UK

Turkey

Ukraine

France

Czech Republic

Germany

Ireland

Russia

Netherlands

Poland

Denmark

Slovakia

Finland

Kazakhstan

Serbia

Austria

CALA

27,000

7,7097,410

16,000

11,519

14,000

11,000

10,550

4,000

7,500

6,966

4,800

3,200

2,618

2,300

2,030

1,900

1,700

1,181

1,600

50 50

500

460

800684

Towerco

m A

S

700580

337

79

Share

d Acc

ess

420 400 377 377260 200 180 150 150 140 113

Highpoin

t

100

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100

CIE

100

Falck

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roup

47

Serv

ice Tele

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187

Digita

40

Österr

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Rundfunk

40 33

www.towerxchange.com/meetups/meetup-europe | TowerXchange Europe Dossier 2016 | 3| TowerXchange Europe Dossier 2016 | www.towerxchange.com/meetups/meetup-europeXX

123456

TowerXchange’s analysis of the independent tower market in Europe

The past few of months have seen big news in the European market indicating a major shift is underway in attitudes toward tower ownership. Of Europe’s 600,000 towers (including Russia and the CIS), 78,211 (or 13%) sit in the hands of independent towercos; 43,684 of which are owned by companies who have a significant footprint in the broadcast sector. A further 72,570 towers (12%) are owned by operator captive towercos and 67,125 towers (11%) are managed by JV infracos - putting a total of 35% in the hands of infrastructure companies. TowerXchange forecasts that by the end of 2016 this number will increase to 40% with 18% being owned by independent towercos, 11% by operator-led towercos and 11% by JV infracos. By 2020, 65% of Europe’s towers are expected to sit in the hands of infracos (see figure two).

The most recent transaction comes from the Ukraine, where Lifecell transferred 811 towers to UkrTower for EUR47.8mn. Whilst both Lifecell and UkrTower are owned by Turkcell and therefore the transaction represents more of an internal restructure than a true tower sale, the news is in line with recent trends by companies such as Telecom Italia and O2 Czech Republic to carve out their infrastructure assets.

Following a similar strategy, the biggest news of 2016 so far comes from Spanish giant, Telefónica. After months of speculation surrounding a potential divestment of towers, February saw the carve out of their 11,000 Spanish sites (along with towers in Latin America and subsea cabling) into a newly formed infrastructure business – Telxius. The move

Figure 1(a): Europe’s 18 towercos with >1,000 assets

Source: TowerXchange

120

Deutsche Funkturm

RTRS

Cellnex

First Tower Company

Inwit

Telxius

Arqiva

Global Tower

TDF

CETIN

EI Towers

FPS Towers

Rai Way

American Tower


Russian Towers

Vertical

UkrTower

5000 10000 15000 20000 25000 30000 35000

0

200

400

600

800

1000

Sher

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Open Tower

Company

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Hiber

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Britannia Tower

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al

Cellco

m

Altico

m

Germany

Spain

Italy

UK

Turkey

Ukraine

France

Czech Republic

Ireland

Russia

Netherlands

Poland

Denmark

Slovakia

Finland

Kazakhstan

Serbia

Austria

CALA

27,000

7,7097,410

16,000

11,519

14,000

11,000

10,550

4,000

7,500

6,966

4,800

3,200

2,618

2,300

2,030

1,900

1,800

1,181

1,600

50 50

500

460

800684

Towerco

m A

S

700580

337

79

Share

d Acc

ess

420 400 377 377260 200 180 150 150 140 113

Highpoin

t

100

Logyco

m

100

CIE

100

Falck

75

Konsing G

roup

47

Serv

ice Tele

com

187

Digita

40

Österr

eichisc

her

Rundfunk

40 33

120

Deutsche Funkturm

RTRS

Cellnex

First Tower Company

Inwit

Telxius

Arqiva

Global Tower

TDF

CETIN

EI Towers

FPS Towers

Rai Way

American Tower


Russian Towers

Vertical

UkrTower

5000 10000 15000 20000 25000 30000 35000

0

200

400

600

800

1000

Sher

e Gro

upCes

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Open Tower

Company

Axion

ITAS T

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Towerco

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Britannia Tower

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Cellco

m

Altico

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Germany

Spain

Italy

UK

Turkey

Ukraine

France

Czech Republic

Ireland

Russia

Netherlands

Poland

Denmark

Slovakia

Finland

Kazakhstan

Serbia

Austria

CALA

27,000

7,7097,410

16,000

11,519

14,000

11,000

10,550

4,000

7,500

6,966

4,800

3,200

2,618

2,300

2,030

1,900

1,800

1,181

1,600

50 50

500

460

800684

Towerco

m A

S

700580

337

79

Share

d Acc

ess

420 400 377 377260 200 180 150 150 140 113

Highpoin

t

100

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100

CIE

100

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Konsing G

roup

47

Serv

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187

Digita

40

Österr

eichisc

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40 33

120

Deutsche Funkturm

RTRS

Cellnex

First Tower Company

Inwit

Telxius

Arqiva

Global Tower

TDF

CETIN

EI Towers

FPS Towers

Rai Way

American Tower


Russian Towers

Vertical

UkrTower

5000 10000 15000 20000 25000 30000 35000

0

200

400

600

800

1000

Sher

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upCes

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unikace

Open Tower

Company

Axion

ITAS T

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HIGHPOIN

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Hiber

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Britannia Tower

sCign

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Cellco

m

Altico

m

Germany

Spain

Italy

UK

Turkey

Ukraine

France

Czech Republic

Ireland

Russia

Netherlands

Poland

Denmark

Slovakia

Finland

Kazakhstan

Serbia

Austria

CALA

27,000

7,7097,410

16,000

11,519

14,000

11,000

10,550

4,000

7,500

6,966

4,800

3,200

2,618

2,300

2,030

1,900

1,800

1,181

1,600

50 50

500

460

800684

Towerco

m A

S

700580

337

79

Share

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420 400 377 377260 200 180 150 150 140 113

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100

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100

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187

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40 33


Figure 1(b): Europe’s telecom and broadcast towercos with <1,000 towers

comes as part of a strategy to reduce the company’s debt burden whilst optimising the return on capital deployed in such infrastructure - including increasing co-locations on sites. The company has also indicated that they will potentially look at the acquisition of towers from third parties – thus creating a sizeable towerco positioned to compete in major tower transactions in Europe. Many observers believe that Telefónica’s 13,968 German sites (mainly rooftops) may also be incorporated into Telxius in the near future and whilst the company has not stated their long term plans for the business - an IPO and eventual sale in the style of Telecom Italia’s Inwit could be a strategy that company may pursue.

Negotiations continue around the sale of a stake in Inwit, where decision is expected imminently. Three offers have been received – from American Tower (AMT), EI Towers and Cellnex in conjunction with infrastructure fund F2i. Mediaset-owned EI Towers are thought to have bid to acquire a lower stake of 25% in the company, with the deal also including a transfer of 1000 towers to Inwit. Cellnex and F2i who are rumoured to be bidding for a 45-49% stake in Inwit (which then would be followed with a takeover bid for the rest of the capital).

In Russia, the sale of Vimpelcom’s 10,400 towers is well underway, with three shortlisted bidders – Russian Towers, Vertical and the Russian Direct Investment Fund in the running for the portfolio. The deal is expected to close in Q2 2016, marking Russia’s first major tower transaction. Following the completion of the sale it is widely expected

that Vimpelcom will then turn their attention to potential divestitures across their CIS markets, in a bid to further reduce their current debt.Keeping our focus on the east, Russia’s Tele2 and Megafon are also rumoured to be re-evaluating their tower strategies – with Megafon looking into a potential sale of its infrastructure business, First Tower Company.

In Turkey, sources indicate that Turkcell are starting the IPO process for their infrastructure business, Global Towers (which owns 7870 towers in Turkey and a further 1180 under Ukrainian subsidiary UkrTower); in Germany Deutsche Telekom have

reportedly brought in advisors to look at an IPO of their infrastructure assets while American Tower Germany may be seeking third party investors, and in Poland, Orange are also rumoured to be looking into a tower sale.

TowerXchange are currently tracking 68 towercos, broadcast companies and JV infracos with tower portfolios in Europe. With the exception of Cellnex (active in Spain and Italy), Wireless Infrastructure Group (with assets in the UK, Ireland and the Netherlands), Shere Group (with towers in the UK and Netherlands) and Shared Access and Britannia/Hibernian (both with assets in both the UK and

Figure 2: Forecasted breakdown of ownership of Europe’s ~600,000 telecom tower and rooftop structures 2016-2020



MNO Captive

JV infraco

600,000

500,000

400,000

300,000

200,000

100,000

Q4’16Q1’16 Q4’17 Q4’18 Q4’19 Q4’20

382,094357,726

307,726275,226

237,226212,226

67,12567,125

49,12549,125

59,125 69,125

72,57065,968

51,96830,968

30,968 30,968

78,211109,181

191,181

244,681272,681 287,681

Nu

mbe

r of

tow

ers

Operator-ledinfraco

Independenttowerco

European tower deals since 2008

Year Country Seller Buyer Tower countCost per tower € Deal structureDeal value €


Ireland), all other companies have a presence in just one country.

Major tower transactions on the cards represent an opportunity for Europe’s towercos to expand into new geographies and also represent an opportunity for major international players to gain a footprint in Europe: #3 and #4 US towercos

SBA Communications and Digital Bridge both have an appetite for European towers, for example. What’s more, such transactions are leading to the creation of new domestic towercos. In such a fragmented market, with independent tower ownership in the hands of a number of mid-sized companies and with investors having a growing appetite to invest in European tower infrastructure,

it often seems that there is more capital seeking tower opportunities than there are opportunities. A domestic player with local expertise together with the backing of a financial investor and the presence of a strong management team could be well placed to make a significant play in upcoming transactions. TowerXchange are tracking a lot of towercos, infrastructure funds and PE firms with an

58,964

126,866

93,941

446,226

90,016

100,400

193,501

287,356

250,000

90,000

112,481

SLB

Portfolio acquisition

Asset Transfer

Portfolio acquisition

SLB with 10% equity

Company acquisition

SLB

SLB with 15% equity

SLB

SLB

SLB

SLB

SLB

SLB

47,820,000

17,000,000

693,000,000

94,600,000

385,000,000

185,000,000

393,000,000

75,000,000

115,000,000

45,000,000

2,050,420,000

811

113

7700

134

7377

212

4277

2166

2031

261

460

500

500

101

26,643

2016

2015

2015

2015

2015

2015

2014

2012

2012

2012

2012

2012

2010

2008

UkrTower

Cignal

Deutsche Telecom/ Omega Towers

EI Towers

Cellnex

Cellnex

Cellnex

FPS Towers

American Tower

Protelindo

Shere Group

Cellnex

Open Tower Company

Open Tower Company

Totals / average

Lifecell

Coillte

Telefonica

Tecnorad

Wind (Vimpelcom)

TowerCo

Telefonica/Yoigo

Bougyes Telecom

KPN

KPN

KPN

Telefonica

KPN

KPN

Ukraine

Ireland

Germany

Italy

Italy

Italy

Spain

France

Germany

Netherlands

Netherlands

Spain

Netherlands

Netherlands


heterogeneous networks. The uptake of venue-DAS is growing significantly and a number of city-wide outdoor small cell projects are being rolled out. The Small Cell Forum forecasts that by 2020 only 20% of small cell infrastructure will be solely managed by a single operator, the other 80% will be multi-operator small cells with a third party involved, whether that’s other operators or a towerco.

Further focus for Europe’s towercos resides in decommissioning as the impact of MNO consolidation (such as that of 3’s acquisition of O2 in Ireland and the proposed merger of 3 and O2 in the UK) starts to filter through to their infrastructure

appetite for smaller portfolios, from BTS startups to 100-2,000 towers. But the question remains: does anyone have the appetite and digestive capacity to compete with Cellnex for Europe’s largest sale and leasebacks? Telxius could be one such company.

Moving away from macro-structures, an increasing number of European towercos are tapping opportunities in the small cell and DAS markets. With European MNOs accustomed to infrastructure sharing, and urban infill to meet growing data demand sitting as a top priority, there exists significant potential for a third party infrastructure provider to deliver more cost effective, neutral host


Meetup Africa 2016

Meetup Asia 2016

Meetup Americas 2016

www.towerxchange.com

Meetup Europe 2017

19-20 October, Johannesburg

13-14 December, Singapore

16-17 June, Florida

5-6 April, London

Russia117,100

Germany69,635

UK53,000

Italy47,517

Spain45,052

Figure three: Estimated tower and rooftop counts for selected markets in Europe


France45,000

CzechRepublic10,200

Nether-lands15,204

Ireland4,000

Denmark4,500

Finland10,000

European tower activity - the headlines

Azerbaijan: Infraco Azerconnect active in the country.

CIS: Logycom forms first independent towerco in Kazakhstan, with an order to build just under 100 towers. Meanwhile, Vimpelcom’s towers could come to market across several CIS states.

Czech Republic: CETIN, infrastructure business carved out of O2 has 4,800 towers and 750 micro sites. Also in infrasharing venture with T-Mobile.

Denmark: Infrasharing mandated by the state – TT-Network formed by Telia and Telenor. MNO divestments expected in 2-4 years.

Finland: Digita sold by TDF to First State Investments in 2012.

France: Towerco FPS active after acquiring towers from Bougyes Telecom and 20,000 rooftop sites from Loxel. TDF lead the market, ITAS TIM and Towercast also active. Free Mobile’s entry disrupting the market, SFR-Numericable forced into merger; Bouygues Telecom looking to exit? Could more towers become available for sale and leaseback?

Germany: Towercos Deutsche Funkturm and American Tower active in the market, ATC’s towers bought from KPN. Potential for carve out of Telefónica’s 13,968 sites into the company’s infrastructure business Telxius. Deutsche Telekom rumoured to be looking at an IPO of their assets. ATC Germany rumoured to be seeking investors.

Greece: Infraco VICTUS Networks run by Vodafone Greece and Wind Hellas. Initial rumors of potential sale and leasebacks emerging.

Hungary: Antenna Hungaria acquired by the state from TDF in 2014.

Ireland: Towercom, ESB Telecoms, WIG, Hibernian, Shared Access, Cellcom and Highpoint active. Together with three state-owned entities, they own 40% of Ireland’s 4,000 towers. 3’s acquisition of O2 disrupted network sharing agreements and is leading to consolidation. Coillte sold 298 sites including 113 towers to InfraVia Capital Partners creating new towerco Cignal.

Italy: 45% stake in Inwit being sold following an IPO of 40% of the business. Cellnex/F2i, American Tower and EI Towers in the running. EI Towers acquisition of fellow broadcast towerco Rai Way initially halted but discussions re-opened. EI Towers continue to roll-up smaller towercos. Cellnex closed landmark sale and leaseback with Wind in 2015.

Latvia: Bite Group brought towers to market in 2013 but no agreement reached.

Netherlands: Protelindo, Shere Group and Open Tower Company acquired a total of 1,322 towers from KPN. Rumours that T-Mobile may be looking to sell its business.

Poland: Emitel (towerco) and NetWorkS! (infraco) active in the market. Rumours surrounding a potential tower sale by Orange.

Portugal: Portugal Telecom sold to Altice – tower sale rumour has gone quiet.

Romania: Orange and Vodafone sharing networks since 2013.

Russia: 10,400 Vimpelcom towers up for sale and rumoured divestments from Tele2 and Megafon. Active towercos include Russian Towers, Vertical, Link Development and Service Telecom.

Serbia: Managed service provider Konsing Group owns a portfolio of 47 sites.

Slovakia: Towercom, towerco acquired by Macquarie in 2013 with a portfolio of 700 sites.

Spain: Telefonica carved out 11,000 towers into new infrastructure business, Telxius. Towerco Cellnex active after acquiring towers from Telefonica/Yoigo. Axion towers rumoured to be on the market.

Sweden: Several infracos including Net4Mobility, 3GiS and SUNAB

Turkey: Turkcell’s Global Tower manages over 16,000 sites including 7,870 macro towers. Turkcell in talks with bankers regarding a potential IPO.

UK: Towercos active in the market include Arqiva, WIG, Shere Group and Shared Access, MBNL and CTIL sizable infracos. Sale of O2 to Hutchison still under review; implications for joint venture infracos unclear.

Ukraine: Towerco UKRTower active in the market, recent acquisition of 811 towers from parent company Lifecell.


123456

European heatmap

TowerXchange research has not revealed any infracos or

towercos to date

Towercos or infracos active in the market. No recent

transactions have taken place and none rumoured to take

place soon

Towercos or infracos active in the market. No current

transactions taking place but an attempted tower sale has

taken place in the last 3 years or there are unconfirmed

rumours of a deal in this market.

Towercos or infracos active in the market. Rumours of deals

confirmed in the market.

Towercos or infracos active in the market. Deals of significant

size have taken place in the last 5 years.

Towercos or infracos active in the market. Deals have taken

place in the last year and more imminent deals rumoured

Legend

Note: For the purposes of our European coverage, ‘Towerco’ describes an independent company which owns and operates passive infrastructure for commercial profit. ‘Infraco’ incorporates MNO joint venture organisations and carve outs which serve more than one entity or market their towers commercially



TowerXchange’s who’s who in European towersTowerXchange presents an A-Z of 122 MNOs, towercos, investors and advisors who could be key stakeholders in the emerging European tower industry

2rn: Irish broadcast towerco with around 150 towers, some of which are used by telecom clients. 3GIS: Operates a shared network between Telenor and 3 (Hi3G) in Sweden. Abertis Telecom: See Cellnex. Alinda Capital Partners: Acquired 100% equity in Polish broadcast towerco Emitel in 2013. Emitel has diversified into telecom co-location. Alinda are believed to have appetite for more investments in the tower industry. Altice: French billionaire Patrick Drahl’s Altice acquired French #2 MNO Numericable-SFR from Vivendi in 2014 and has been trying to merge this entity with third ranked MNO Bouygues Telecom, a transaction which may shake loose more of one or both entity’s towers. Altice also acquired Portugal Telecom in June 2015, and has been similarly acquisitive in the Americas. Altice is relatively highly leveraged and has advocated efficiencies that have not to date explicitly extended to divesting towers, but it seems plausible that either monetising network assets or divesting towers to reduce competitive concerns might be a plausible extension of their current strategies. Alticom: Dutch towerco with 24 towers and 9 masts primarily at high altitudes (by Dutch standards!) primarily used by broadcast tenants but also by telecom operators for microwave links. Services include provision of power and cooling.

Read this article to learn:< Who’s who of 68 towercos and joint venture infrastructure sharing firms in Europe

< Maps showing the footprints of Europe’s leading MNOs and commentaries on their history and

appetite to share towers

< An introduction to some of the most credible current and prospective investors into European towers

< An introduction to the TMT advisory firms with experience of tower transactions

The European telecom tower market may be opening up to the independent towerco business model. Held in stasis for many years whilst Europe’s MNOs didn’t need cash and towercos weren’t prepared to meet their valuations, tower carve outs and transactions are starting to gain momentum with new entities such as Telxius, Inwit, Cellnex and CETIN rekindling interest in Europe’s existing telecom and broadcast towercos.

Keywords: TowerXchange Research, Who’s Who, MNOs, Towercos, Investors, Europe, 2rn, 3GIS, Abertis Telecom, Alinda Capital Partners, Altice, Alticom, America Movil, American Tower, Analysys Mason, Antenna Hungaria, Antin, Arcus, Arqiva, Ashmore, Axion Azerconnect, Berkshire Partners, Blackstone, Bouygues Telecom, Britannia Towers, Brookfield, BuyIn, Capital Group, CEE Equity Partners, Cellnex, České Radiokomunikace, Česká Telekomunikační Infrastruktura, CETIN, Cignal, Citi, Communication Infrastructure Partners, Crown Castle, CTIL, Deutsche Funkturm, Digea, Digita, Digital Bridge, ECS, EE, EI Towers, Emitel, ESB Telecoms, ESN Group, ETB, European Wireless Infrastructure Association, EWIA, EuroTower, EY, F2i, FMO, FPS Towers, Galata, Global Tower, Goldman Sachs, Hardiman Telecommunications, Hibernian Towers, Highpoint, Hutchison, InfraVia, ING, IFC, Intrepid Advisory Partners, Inwit, ITAS TIM, J.P. Morgan, KPN, KPR Consult, Levira, Link Development, Logycom Group, Macquarie, MBNL, Media Broadcast, MegaFon, MOSAIC, Mott MacDonald, MTS, Net4Mobility, NetShare, NetWorkS!, Norkring, Obelisk, OIV, Open Tower Company, Orange, ORS, Portugal Telecom, PPF, Protelindo, Providence Equity, Quippo, Radicom, Rai Way, Rothschild, RTRS, Russian Towers, SBA Communications, Service Telecom, Shere Group, SUNAB, Swisscom, T-Mobile, TAP Advisors, TDF, Tele2, Tele2 Russia, Telefónica, Telemont, Telenor, Telekom Austria, TeliaSonera, Teracom, Three, Threefold, TOWERCAST, Towercom, TT-Network, Turkcell, UFG Asset Management, UkrTower, Vertical, VICTUS Networks, Vimpelcom, Vodafone, Vodafone Procurement, Wind, Wireless Infrastructure Group


America Movil: See Telekom Austria. American Tower: The world’s largest independent commercial towerco, American Tower need no introduction within this publication. Present in Europe to date only in Germany, where the company owns and operates a network of 2,031 sites, the majority acquired in 2012 for €393mn from KPN. “We liked the opportunity in Germany because of the size and economic stability of the market, the absence of other independent towercos, and an attractive valuation that allowed the portfolio to yield over 8% on day one,” said Hal Hess, President of EMEA and Latin America for American Tower in a August 2015 TowerXchange interview. “The acquisition made economic sense for us despite the acquisition of E-Plus by Telefónica – we knew this was a likely scenario, so when we structured the

transaction we made adjustments to be able to meet our objectives. Our German business continues to perform above the expectations we set out in our acquisition business case.” “We are very interested in further transaction opportunities in Germany, provided of course they meet our investment criteria,” continued Hess. “We feel it may make sense for an independent towerco to be involved in the consolidation and rationalisation of the other national tower portfolios.” Analysys Mason: Marco Cordoni and his team at Analysys Mason are among the ‘go-to-guys’ for tower market analysis and due diligence on a global basis, and Europe is no exception. Antenna Hungaria: Hungary’s recently re-Nationalised broadcast towerco also sells co-locations to and provides installation and maintenance services to telecom clients. Antin Infrastructure Partners: One of the first movers in the European telecom tower asset class, Antin are investors in FPS Towers which owns over 2,000 towers and the rights to 15,000 rooftops in France, and Axion the leading broadcast towerco in Andalucía, Spain. Antin has appetite for further European tower investments. Arcus Infrastructure Partners: Arcus has been an active investor in European towers for over 11 years with the predecessor of what is now UK and Dutch towerco Shere Group. More recently Arcus

manages their own and other consortium members’ investments in TDF, France’s largest towerco with 9,950 sites. Arcus has an interest in further opportunities in European towers which may or may not be addressed through their existing platforms, depending on scale and geo. Arqiva: The largest independent towerco in the UK with around 10,550 active towers with a tenancy ratio around 2.5 and a portfolio of 16,500 in total, of which less than 1,000 are pure broadcast sites. Acquired by a Macquarie-led consortium in 2005, into which was rollup up the NTL Broadcast and National Grid Wireless assets. Arqiva has over 2,000 employees and has deep I&C and O&M competencies and resources spanning broadcast and telecom. Arqiva is currently restructuring debt which could result in a change of strategic direction for the company. Ashmore: Another investment firm with an appetite for telecom towers. Axion: Operates 586 broadcast towers with some telecom co-location in Spain, 70% of which are in Andalucía. Owners Antin Infrastructure are believed to be seeking to sell some or all of their stake. Azerconnect: Infrasharing business in Azerbaijan. Berkshire Partners: Berkshire backed Crown Castle during their successful foray into European towers in the late nineties, and currently has active investments in Protelindo (largest towerco in Indonesia with a small footprint in the

Altice

Altice (France, Portugal)

Altice


Netherlands), Torres Unidas (Andean region of CALA) and Tower Development Corporation in the US and Puerto Rico. Blackstone: Another serial towerco investor currently working with Phoenix Tower International in CALA with at least one other investment in the asset class imminent, none of which is in Europe leaving a vacancy in their stable! Bouygues Telecom: Bouygues Telecom was one of Europe’s first MNOs to sell towers to an independent towerco, selling 2,166 of their estimated 17,000 towers to Antin’s FPS Towers in 2012 for €185mn. Potential acquisition by Orange could result in the divestment of more towers. Britannia Towers / Hibernian Towers: Privately owned towerco with 60 towers in the UK under the Britannia brand, 60 towers in Ireland under Hibernian and a further 20 towers in Northern Ireland under Ulstercom.

Broadcast Networks Europe: Association of 18 broadcast companies operating in 21 European countries whose remit includes ensuring the economic competitiveness of Europe’s broadcast networks, optimising platform developments and representing the industry with regards to policy developments and regulatory intervention.

Brookfield Infrastructure Partners: Participated in the consortium which acquired equity in TDF in 2014 and known to have an appetite for further

opportunities in European towers. BuyIn: A 50/50 procurement joint venture between Deutsche Telekom and Orange with an annual budget of €28bn across network technology and other telecom equipment categories. Capital Group: Another investor keen on the telecom tower asset class, Capital Group has or had capital at work in Russian Towers as well as Eaton Towers in Africa. CEE Equity Partners: Investor exploring opportunities in CEE towers. Cellnex: Catalysts for the opening of the European tower market, Cellnex (formerly Abertis Telecom) have to date deployed over €1.2bn rolling up a portfolio of 15,140 telecom and broadcast towers across Spain and Italy. To put that into context, the sum represents more than half the total capital spent on European towers in the last five years. Flush with capital and confidence from their successful IPO, Cellnex has a €multi-billion acquisition warchest. Although Cellnex dominates the European deal table, it still has plenty of room for growth in its existing markets: towercos own just 18% of towers in Spain and 48% of Italy’s towers. In conjunction with infrastructure fund F2i, Cellnex are one of the three short listed bidders for a stake in Telecom Italia’s Inwit. “Our model (in Europe) is not based on the idea of getting three or four tenants on a tower, it’s based around the idea you can dismantle the tenants on

an existing tower and transfer them to new sites,” said David Bernal Cantero, BDM at Cellnex in a recent TowerXchange interview. “Our plan in Europe is diversification,” continued Bernal Cantero. “Germany is an attractive market at the moment, reducing the number of operators from four to three will shake things up. The UK is also interesting but it’s a very competitive market with strong incumbent towercos. France is a strong market with some MNO transactions in the pipeline which might drive some changes in the market. We see some good short term opportunities in Europe, not only in the countries mentioned above but also in other European countries.” České Radiokomunikace: With 1,000 access points across the Czech Republic, České Radiokomunikace provides structures and services to broadcast and telecom clients. Owned by Macquarie. Česká Telekomunikační Infrastruktura (CETIN): When PPF acquired O2 Czech Republic from Telefónica in January 2014, they immediately set about separating the retail assets from the infrastructure, in the latter case creating CETIN which was briefly listed on the Prague stock exchange prior to a squeeze out of minority shareholders putting PPF as sole shareholders. CETIN owns 20,000,000 km of metallic cable pairs, 38,000km of fibre and 4,800 outdoor base stations plus 750 micro base stations, providing 99.6% population coverage. With O2 having set up a network sharing agreement with T-Mobile prior to


the carve out, CETIN have taken over O2’s role in managing the RAN sharing with T-Mobile Cignal: Owns 113 towers developed for Hutch in Ireland, plus the ground leases under a just under 300 other operator towers. Recently sold to InfraVia prior to which it was known as Coillte. Citi: One of the world’s leading tower transaction advisory groups can be found within the TMT team at Citi. Communication Infrastructure Partners: Owners of Open Tower Company, which acquired 601 towers from KPN in the Netherlands in two tranches in 2008 and 2010 for an undisclosed sum. Current tower count: 684. Crown Castle: Publicly listed U.S. towerco Crown Castle had a profitable foray into European towers between 1997 and 2003, acquiring a £75mn revenue tower business from the BBC and transforming it into a £233mn revenue tower business with a tenancy ratio of 2.9 by 2003, selling it to National Grid Wireless for £1.1bn (just over US$2bn). While Crown Castle has largely retrenched from their international strategy to deploy capital domestically diversifying into small cells and fibre, TowerXchange would not rule out the U.S. giant returning to Europe. CTIL: Joint venture between Vodafone and O2 (Telefónica) in the UK with around 18,000 sites. Predecessor Cornerstone established the passive infrastructure sharing business, the new CTIL

business now has around a £1bn of passive assets on its balance sheet whilst also leading the Beacon active infrastructure sharing project, again between Vodafone and O2. Status of the JV remains unclear if the O2-Three merger is approved.

Delmec: The tower experts in consultation and engineering, providing global solutions to Operators, Towercos and Regulators on standards, guidance and due diligence for portfolio management. Engaging audit, assessment and analysis for structural enhancement, capacity and maintenance as individual activities or by way of managed services.

Deutsche Funkturm (DFMG): Towerco carved out of Deutsche Telekom in 2002. Their parent company remains their lead client representing around a third of DFMG’s tenancies. Operates 27,000 sites, of which around half are rooftops. Deutsche Telekom has twice been rumored to be on the brink of divesting DFMG, but to date the assets are retained on their balance sheet. Digea: Greek broadcast towerco. Digita: Broadcast towerco from Finland owning 27 high masts and using an additional 450 lower masts, of which about a third are owned by the company. Digital Bridge: Serial tower entrepreneurs Mark Ganzi and Ben Jenkins are building another empire having sold their last venture, GTP, to American Tower for US$4.8bn. Digital Bridge is an investment vehicle through which stakes are invested in

towercos around the world. Digital Bridge recently appointed Phil Cooper as Managing Director EMEA, having previously kicked the tyres on the opportunity to invest in TDF. We expect Digital Bridge to have an active investment / platform in Europe by Q2 2016.

ECS: Polish tower builder with an appetite to move up the value chain.

EE: UK MNO joint venture between T-Mobile and Orange, recently taken over by BT. EI Towers: Broadcast towerco with a progressive management team and an appetite to diversify into telecoms – a strategy they are well under way in executing having acquired 900 telecom towers from various small independent towercos in Italy. Telecom now represents 8.9% of EI Towers’ revenues. EI Towers more recently made headlines for their aggressive but ultimately justifiable persuit of an acquisition of Italy’s other broadcast towerco Rai Way – the combination of the two entities could create tremendous efficiencies given the estimated 60% overlap in their networks. Emitel: Polish broadcast towerco diversifying into telecoms. Own 377 sites. Acquired by Alinda Capital Partners. ESB Telecoms: Subsidiary of Irish National power company ESB Networks developed to operate telecom sites. Most of their sites, which total around 400, are in substations.


ESN Group: Russian oil and gas, energy, engineering and infrastructure giant founded by Grigory Berezkin. Had been interested to bid for Vimpelcom’s Russian towers when the process started and stopped in the past – interest in the current process unknown.

ETB: Serbian broadcast towerco. European Wireless Infrastructure Association (EWIA): Trade association for independent towercos in Europe whose members included (at time of press): American Tower Germany, Arqiva, Axion, Cellnex, EI Towers, FPS Towers, Open Tower Company, PCIA, Protelindo Towers BV, Towercom and Wireless Infrastructure Group, whose CEO Scott Coates chairs the EWIA. EuroTower: Aspiring towerco for Europe with big vision and a willingness to evolve the business model to meet the needs of European MNOs. Yet to close their first deal. EY: TMT strategy and corporate finance advisory team with extensive experience of advising on tower transactions. F2i: One of the largest infrastructure funds in Europe, and owns a majority stake in Metroweb, which operates a fibre network in Milan and Lombardy. F2i was rumored to have bid for Wind’s towers ultimately acquired by Cellnex, and is now bidding in conjunction with the company for the 45% stake in Telecom Italia’s Inwit.

First Tower Company: Carved out of Megafon in November 2015, infrastructure subsidiary First Tower Company manages 14,000 towers. Megafon CEO Ivan Tavrin has hinted they plan to sell the unit to a strategic investor FMO: Dutch development bank 51% government owned, 49% by commercial banks and financial institutions. Have invested in African towercos, not yet in Europe, where Eastern Europe is a better fit than the West given their developing market remit. FPS Towers: FPS was formed in 2012 by Antin Infrastructure Partners to acquire and manage 2,618 towers acquired from Bouygues Telecom – the company now owns 2,051 towers, primarily in rural areas. FPS is currently focusing solely on the French market. “We aim to push our development programme in both our rural and urban rooftop portfolios. FPS now employs 70 people and we are expecting gross revenue of more than €45 million for this year, representing 30% growth in the last three years,” said Frederic Zimer, CEO of FPS Towers in a recent TowerXchange interview. “In terms of rooftop growth, we currently manage with exclusivity around 20,000 and expect to reach 30-35,000 in the next two years. Within this number we also aim to have more than 1,000 rooftop sites owned outright. In terms of value added, we seek to own the rooftops and every site we have in our portfolio. FPS is a towerco and a towerco is an infrastructure investor and manager – we invest to grow our assets and after that it’s a cash machine. That’s why we seek to

replicate our rural model in urban areas,” concluded Zimer.

Galata: Wind towerco acquired by Cellnex – see WIND Telecomunicazioni. Global Tower: Founded in 2006 as a subsidiary of Turkcell, Global Tower is the biggest infrastructure operator in Turkey with more than 23,000 points of service, of which 7,500 are towers, the rest being rooftops and IBS. Tenants include GSM and fixed-based operators, TV and radio broadcasters, public institutions and service providers. Global Tower also owns UkrTower in the Ukraine, which owns 1181 sites following the 2016 acquisition of 811 towers from Lifecell (Turkcell’s Ukrainian subsidiary). Global Tower are rumoured to be looking at an IPO. Goldman Sachs: Experienced advisors on tower transactions and lenders to towercos. Hardiman Telecommunications: A unique consultancy equally capable advising on engineering and operational issues as they are on commercial strategy and corporate finance. Extensive experience advising on both the buy-side and sell-side in tower transactions. Hibernian Towers: See Britannia Towers. Highpoint: See Obelisk Group.

Hutchison: MNO typically operating under the brand 3. Active in Europe in Italy, the UK, Sweden, Denmark, Austria and Ireland. Hutchison has sold


J.P. Morgan: Leading TMT advisory team with extensive experience in towers, including some of the landmark European transactions.

Konsing Group: Serbian managed service provider active in multiple European markets, also own and operate 47 towers in their home country. Planning to grow up in large towerco with ambition to be absolute leader in this business in the Balkans.

KPN: Leading telecom and IT service provider in The Netherlands. Sold a total of 1,322 Dutch towers in four tranches between 2008 and 2012 to Open Tower Company, Shere Group and Protelindo. Sold a further 2,031 towers in Germany to American Tower in 2012 before the sale of their German subsidiary, E-Plus, to Telefónica in October 2014. KPR Consult: Renowned ‘tower doctors’ – go-to guys for structural / technical due diligence, improvement capex planning, decommissioning and just about anything to do with tower design and maintenance. KPR also manage a significant proportion of the towers in Denmark through co-location management agreements. Levira: Estonian broadcast towerco, data centre, network, cloud and media service provider. 51% owned by the government, 49% by TDF. Owns 22 transmitter towers across Estonia and provides co-location services to MNOs. Link Development: Operates over 300 towers, primarily in Northwest Russia, supplemented by a growing fleet of smart poles.

four tranches of towers in Indonesia to Protelindo and STP, but has not yet completed any divestments in Europe, although they have participated in infrastructure sharing JVs such as MOSAIC in Ireland and MBNL in the UK. Speculation suggests that the merger of Vimpelcom’s Wind and Hutchison’s 3 Italia may result in the sale of Hutchison’s 8,000 towers in Italy, while the proposed merger of Three and O2 in the UK may also precipitate the separation of towers, either at the bequest of regulators, or to satisfy Three UK’s investors’ liquidity requirements. InfraVia Capital Partners: Acquired Coillte’s 300 sites in August 2015 for an undisclosed sum, renaming the company Cignal. ING Commercial Banking: Leading Dutch bank with considerable experience of providing debt finance to the tower industry.

International Finance Corporation (IFC): The IFC is a member of the World Bank Group, the world’s leading DFI. The IFC has invested around half a billion dollars in debt and equity into eight towercos across emerging markets, with an objective to double that total investment by 2018. IFC’s exposure in Europe to date is a US$20mn equity investment into Russian Towers. Intrepid Advisory Partners: Advisory firm established by Daniel Lee, the “Rainmaker” of the African tower industry – Dan advised on 11 of the first 13 deals to close in Africa. Inwit (Infrastrutture Wireless Italiane S.p.A.): Telecom Italia carved out Inwit as an independent towerco and listed 40% of the equity in the company in a successful IPO on the Milan stock exchange, raising €875.3mn. Telecom Italia has since commenced a process to sell a further 45% of the equity in the company to a third party, with EI Towers, American Tower and Cellnex in conjunction with F2i the shortlisted bidders. Inwit operates 11,519 towers in Italy, of which 7,400 are in suburban or rural areas, commanding a €1577 lease rate, and 4,100 in urban areas, with a €2297 lease rate. At the time of the IPO, Inwit’s tenancy ratio was 1.55, with Telecom Italia as their anchor tenant, Vodafone as their primary second tenant and around 1,500 Wind tenancies ITAS TIM: Family owned towerco which operates 420 towers in France with a combination of broadcast, radio, M2M, WiMAX and MNO tenants.


Hutchison / 3 Group

Hutchison / 3 Group

Logycom Group: The first independent towerco in Kazakhstan, with a contract for their first 100 BTS towers.

Macquarie Group: Serial towerco investors, with capital at work in Europe within Arqiva and Russian Towers, and farther afield with Axicom (formerly Crown Castle Australia), Mexico Tower Partners and Viom Networks (soon to be part of ATC India). Macquarie also has an excellent TMT advisory practice with experience of advising on tower transactions.

MBNL: Joint venture between EE and Three (Hutchison) in the UK with around 18,000 sites, although the assets remain on its shareholders’ balance sheets. The BT-EE merger has not affected the status of the JV, however it remains unclear how the O2-Three merger will affect the agreement.

Media Broadcast: Broadcast towerco operating over 300 transmitters across Germany. Media Broadcast was separated from TDF in April 2015. MegaFon: Number two MNO in Russia, carved out 14,000 towers into captive towerco, First Tower Company in November 2015. more recently Megafon CEO, Ivan Tavrin provided further hints as to the potential means and timelines for monetising MegaFon’s towerco: “We are not going to put our tower company on the bourse.” It seems that a partial or complete sale to a strategic investor may be the more likely outcome:” We believe that if we thoroughly prepare, we’ll manage to pocket a high-quality investor and win a high-quality future operating history.” MOSAIC: Vehicle for the infrastructure sharing partnership between Three and Eircom in Ireland. Assets remain on the balance sheets of the MNOs. Mott MacDonald: Digital Infrastructure team has extensive experience of advising on tower transactions and investments. MTS: Russian MNO currently with no appetite to divest their estimated 10,400 towers. Net4Mobility: Swedish joint venture infrastructure sharing firm founded in 2009 by Telenor and Tele2. NetShare: Former Vodafone-Three Ireland JV from which Three were compelled to exit under the terms of their merger with O2. NetShare continues to administer the Vodafone network.

NetWorkS! 50-50 Polish joint venture infrastructure sharing firm responsible for the management of T-Mobile and Orange’s networks. When launched in 2011, and prior to consolidation, NetWorkS! managed 10,000 base stations.

Norkring: Wholly owned subsidiary of Telenor which owns both the Norweigan and Belgian broadcast towercos. Norkring has 2,750 transmission stations across Norway, with space leased to broadcasters, MNOs, broadband and public service providers. Norkring Belgie is 25% owned by PMV, itself owned by the Flemish government. Obelisk Group: Obelisk Group is a diversified energy and telecoms EPC contractor which also owns Highpoint, a towerco which markets and manages more than 150 sites in Ireland. OIV: Croatian broadcast towerco which offers co-location to MNOs from 218 sites. Open Tower Company: See Communication Infrastructure Partners. Orange: One of Europe’s largest MNOs with a footprint across France, Spain, Belgium, Luxembourg, Germany, Poland, Slovakia, Moldova, Romania, Ireland and the UK, where they are a 50% shareholder in EE. Orange has agreed active infrastructure sharing deals in Spain, Poland and Romania, and has partnered with Three to create MBNL in the UK. While Orange has partnered with

MTS

MTS coverage


independent towercos in Africa, agreeing ‘manage with license to lease’ deals with IHS in Cameroon and Cote d’Ivoire and selling towers to Eaton Towers in Uganda and Egypt, the MNO has not yet extended their passive infrastructure monetisation strategy to Europe. That may change in 2016, with rumors of Orange being interested to sell their towers in Spain and Poland. ORS: Austrian broadcast towerco carved out of national broadcaster ORF in 2005. ORF still owns 60%, with Medicur Sendeanlagen, part of Raiffeisen group, owning the balance. ORS’s 450 transmitter sites are offered for co-location by MNOs.

PA Consulting: Consulting, technology and innovation firm, advising operators, infrastructure owners and investors on strategic decisions. Have extensive experience in tower transactions; acting as

advisors to both buy and sell-side.

Portugal Telecom: Largest telecom service provider in Portugal. Acquired by Altice for €7.4bn in June 2015. Rumors circulated in 2014 and again in 2015 that Portugal Telecom might be interested in selling 2-3,000 towers, but no deal crystalised. PPF: Investment fund founded by the richest man in the Czech Republic Petr Kellner. PPF acquired O2 Czech Republic and spun off it’s infrastructure as CETIN. Protelindo: Brainchild of Michael Gearon and his loyal management team, Protelindo is the largest towerco in Indonesia where they own over 11,500 towers. Protelindo acquired 261 towers from KPN in the Netherlands in 2012 for €75mn. Providence Equity: Communications and media investment specialists with capital at work in Indus Towers (India), Grupo Torresur (Brazil) and KIN (Indonesia). Expect Providence to have considerable interest in European towers. Quippo International: The ownership team behind Viom Networks in India, now seeking new international opportunities following their successful exit and sale to American Tower. Believed to have an appetite for opportunities in Russia, among other markets. Radicom: Broadcast towerco from Romania. Rai Way: Listed Italian broadcast towerco with

2,300 towers delivering 99% coverage. Manages both active and passive infrastructure for their broadcast clients. Since Q4 2014 Rai Way have dedicated resources to leasing up their existing towers, and report having MNO tenants on ~700 of their sites, as well as towerco’s usual “non-traditional MNO” tenants: emergency services and fixed wireless access operators. Rai Way has been the subject of much consolidation speculation. EI Towers’ initial interest in acquiring Rai Way earlier in 2015 was met with a distinctly negative response by government stakeholders, but talks have reportedly re-opened. Rothschild: Investment and advisory firm with a strong pedigree in European towers. RTRS: State-owned Russian television and broadcasting network with some MNO tenants on their towers, but they don’t seem to be proactively promoting co-location. Russian Towers: Leading independent towerco in Russia with around 1,800 towers. Russian Towers have a unique partnership with the Russian Railway enabling them to build along the railway infrastructure, while more recently they have deployed a number of multi-tenant light poles, electricity poles and develop other city infrastructure. Auspicious roster of backers includes UFG, EBRD, IFC, Macquarie, ADM Capital and Sumitomo Corporation. Understood to be one of the three shortlisted bidders for Vimpelcom’s 10,400 towers inRussia. Russian Towers could extend

Orange

Orange coverage

Orange branded as ‘Orange’ across Europe, and as EE (company owned 50% with T-Mobile) in the UK


their footprint into the CIS if the right opportunity presents itself.

SBA Communications: Publicly listed US towerco with over 25,000 towers in North and South America. No presence in Europe. Yet.

Shared Access: Towerco with 377 sites in Ireland and 79 in the UK. Current build to take the Irish count to 420 and the UK count to 120 by the year end.

Service Telecom: Towerco with over 100 towers and microsites in Moscow.

Shere Group: Independent towerco owned by Arcus Infrastructure with 960 towers across the UK and the Netherlands.

SUNAB: Active infrastructure sharing joint venture between Tele2 and TeliaSonera in Sweden. Swisscom: Swiss broadcast towerco.

T-Mobile: Leading European MNO which has been involved in network sharing JVs in Poland, the Netherlands, the Czech Republic and the UK (through their 50% stake in EE). T-Mobile has not yet sold any towers in Europe but has done in the US, where they also operate their own towerco T-Mobile Towers. TAP Advisors: Boutique M&A and investment advisory firm with long history of advising on tower deals, including advising Inwit on their IPO. TDF: Leading French towerco with 6,966 sites and over 2,000 employees. Refinanced in March 2015 with Brookfield, APG, PSP, Arcus Infrastructure and Credit Agricole becoming shareholders. In recent years TDF has refocused on their domestic French market and has less appetite for international opportunities, selling broadcast towercos Axion (Spain), Alticom (Netherlands), Digita (Finland), Antenna Hungaria (Hungary) and separating Media Broadcast (Germany). In 2014-15 41.2% of TDF’s revenues came from telecom, 30.3% from TV and 18.3% from radio broadcast.

Tele2: Tele2 has undertaken active infrastructure

sharing with Telenor in Sweden and passive infrastructure sharing with T-Mobile in The Netherlands, but has not to date sold any towers. Tele2 exited the Russian operator of the same name in 2013, the latest in a series of divestments. Tele2 Russia: Joint venture between Rostelcom (45%), VTB Group and a consortium of investors, which owns 55%. Tele2 Russia is driving network investments in Russia as it expands from a regional to a nationwide player. Tele2 Russia is building around 1,000 towers per year itself and leveraging co-location to accelerate time to market. Tele2’s network investments are driving Russian towerco expansion, for example Russian Towers derives 37.6% of its revenue from Tele2 Russia compared to 19% from Vimpelcom, 17.7% from MTS and 13.1% from Megafon. Tele2 Russia’s low cost business model has made some early market share inroads and forced Russia’s three incumbent operators to increase their

Tele2

Tele2

T Mobile

T Mobile coverage

T-Mobile branded as T-Mobile in Austria, Croatia, Czech Republic, Hungary, Montenegro, Netherlands and Poland, branded as Telekom in Albania, Germany, Macedonia and Slovakia and as EE (company owned 50% with Orange) in the UK


own network capex. Introduced services in Moscow and Moscow Oblast in October 2015 having built a formidable network of 5,000 3G and 2,000 LTE base stations. Telefónica: Spanish owned multinational MNO Telefónica has made the headlines through the creation of new infrastructure business - Telxius, which initially incorporates their 11,500 Spanish towers plus 4,000 from other countries (understood to initially consist of towers in Brazil, Peru and Chile) and will also include the group’s international network of 31,000km of fibre optic cable.

Following rumours that a potential 60,000 Telefónica assets could be for sale, it is widely thought that

they will follow a similar approach in Germany where it is estimated they have a further 13,968 sites (primarily rooftops) remaining.

Telefónica has already sold 500 towers in Spain to Abertis (now Cellnex) in 2012 before a further bundle of 4,277 Telefónica and Yoigo towers was sold to the same company in 2014, raising €385mn. Telefónica’s acquisition of E-Plus from KPN in Germany precipitated the transfer of 7,700 sites – mostly rooftops – to Deutsche Telekom and ultimately to Deutsche Funkturm.

Telefónica has also sold a total of over 9,000 towers in Brazil, Mexico, Chile and Colombia, raising a total of over US$1.5bn.

Telemont: Leading Russian tower I&C and O&M subcontractor. Telenor: Multinational Norwegian owned MNO Telenor has shared infrastructure all over its footprint, but has tended to partner with towercos in greenfield launches, such as the launch of Uninor (now Telenor India) and the launch of Telenor Myanmar. Within established markets, Telenor has seemingly preferred to retain towers and instead form active infrastructure sharing partnerships such as with TeliaSonera in Denmark and with Tele2 and Hutchison in Sweden.

Telekom Austria: America Movil owns a 59.7% stake in €4bn MNO Telekom Austria, which has a footprint across Austria, Slovenia, Croatia, Serbia,

Telekom Austria

Telekom Austria

Telefonica

Telenor coverage

Telenor branded as Telenor in Denmark, Hungary, Montenegro, Serbia, Sweden and Norway and as Globul in Bulgaria

Telefonica

Telefonica coverage

Telefonica branded as O2 in UK, Ireland, Germany, Slovakia and Czech Republic and as Movistar in Spain. Majority stakes in O2 Czech Republic and Slovakia sold to PPF which currently still trades under the O2 brand.


Macedonia, Bulgaria and Belarus. TowerXchange have picked up the first hints that Telekom Austria might be receptive to some form of infrastructure outsourcing deal, possibly involving passive and active equipment. TeliaSonera: TeliaSonera has completed one tower transaction to date in Europe – their Spain subsidiary Yoigo contributed some of the 4,277 Telefónica and Yoigo towers sold to Cellnex in 2014. TeliaSonera has engaged in active infrastructure sharing partnerships in Denmark, with Telenor, and in Finland, with DNA. TeliaSonera’s proposed merger with Telenor in Denmark, which may have shaken loose some towers, has been called off. However the acquisition of Tele2 Norway has been closed, with network integration

ongoing – anticipate some towers being sold or decommissioned as a result. TeliaSonera recently appointed UBS to explore their potential exit from Kazakhstan, Uzbekistan, Azerbaijan, Tajikistan, Nepal, Georgia and Moldova, enabling the group to sharpen its focus on the rest of Europe and the Nordics.

Telxius: Telefónica’s newly created global subsidiary formed in early 2016 to bring together a selection of the group’s infrastructure assets. The initial infrastructure assets to be incorporated into Telxius include their 11,000 Spanish towers plus 4,000 from other countries (understood to initially consist of towers in Brazil, Peru and Chile) and will also include the group’s international network of 31,000km of fibre optic cable. The group plans to increase the number of services they provide to other operators, improving their return on capital invested and is looking at taking advantage of further growth opportunities in the sector, including the possibility of incorporating third party assets. Alberto Horcajo, former CFO of Telefónica Brasil, has been announced as Telxius’ new CEO. Teracom: Broadcast towerco for Denmark and Sweden.

Three Italy: The merger of Vimpelcom’s Wind and Hutchison’s 3 Italia may result in the sale of Hutchison’s 8,000 towers in Italy. Three UK and Ireland Ireland: Three’s merger with Telefónica’s O2 in Ireland precipitated Three exiting

the NetShare joint venture with Vodafone – could this be a precedent for a similar outcome should Three and O2 merge in the UK also, forcing Three to exit CTIL? Threefold: Leading Irish tower I&C and O&M firm which led the buyout of Eircom’s mast infrastructure in 2007, and the subsequent establishment of Towercom. Threefold now provides tower strategy advice to stakeholders across Europe and beyond. TOWERCAST: French broadcast towerco owned by NRJ Group. Also sells co-location to telecom clients. Towercom Ltd.: Towerco in the Republic of Ireland carved out and sold by Eircom in 2007. Operates over 400 towers. Sold to the Irish Infrastructure Fund in 2013.

Towercom A.S.: Slovakian tower company with over 700 masts and 90 years experience in the broadcast sector. The company was acquired by Macquarie in 2013, undergoing a process of restructuring and at the start of 2016 was rebranded.

TowerTel: Wholly owned subsidiary of Italian broadcast towerco EI Towers, managing the company’s 900 telecom towers. TT-Network: Danish infrastructure sharing joint venture with around 2,500 towers established in 2012 by TeliaSonera and Telenor. Turkcell: Leading MNO in Turkey. Carved out and retained their own towerco, Global Tower, which

Teliasonera

Teliasonera coverage

Teliasonera branded as Telia and Callme in Denmark, EMT and Diil in Estonia, Sonera and TeleFinland in Finland, Geocell in Georgia, Kcell and Activ in Kazakhstan, LMT and Amigo in Latvia, Omnitel and Ezys in Lithuania, Moldcell in Moldova, Netcom, Chess, OneCall and MyCall in Norway, Yoigo in Spain, Telia and Halebop in Sweden, Tcell in Tajikistan and Ucell in Uzbekistan


with a deal expected to be announced imminently and processes also under way in Bangladesh and Pakistan. Vimpelcom may subsequently divest tens of thousands of towers in Armenia, Kyrgyzstan, Uzbekistan, Tajikistan, Kazakhstan, Ukraine and Georgia. Vodafone: Vodafone is an advocate of infrastructure sharing and has entered into passive infrastructure sharing JVs in the UK (CTIL) and Ireland (NetShare), as well as active infrastructure sharing deals in Greece, Romania, Spain and again in the UK. Apart from Vodafone India’s participation in Indus Towers in India, a sale and leaseback deal in Tanzania through subsidiary Vodacom, and

a manage with license to lease deal in Ghana, Vodafone has not entered into deep partnerships with towercos. Vodafone Procurement Company (VPC): Vodafone founded VPC in 2008 to leverage scale and a leaner procurement and SCM model. VPC administers a total procurement budget in excess of €20bn per annum, and provides procurement services to third parties, including independent towercos. Wind Telecomunicazioni: Vimpelcom’s Italian opco whose towerco Galata was sold to Cellnex in 2015, with Wind retaining a 15% equity stake, as well as a small proportion of the towers. Wind is currently engaged in a merger with Hutchison’s 3 Italia, which could shake loose more towers.

they are now rumoured to be looking to IPO. In March 2016, their Ukrainian subsidiary, Lifecell, sold 811 towers to sister company UkrTower (also wholly owned by Turkcell) in a sale and leaseback transaction for US$52mn

UFG Asset Management: Russian focused alternative investment group is one of the founding shareholders of Russian Towers.

UkrTower: UkrTower, Ukrainian towerco wholly owned by the Turkcell group. Acquired 811 towers from sister company Lifecell for US$52mn in February 2016, taking their tower count to 1181. Vertical: Russian towerco, formed in 2013, experienced large growth in 2015, acquiring and refurbishing over 500 sites, leaving them with a portfolio of 1600 sites. Wholly owned by the company founder, the company has a heavy focus on the Moscow region and has in addition completed a number of build to suit programmes for multiple MNOs in rural areas. VICTUS Networks: Network sharing joint venture, governing 7000 towers, created in 2014 with 50-50 participation between Vodafone Greece and Wind Hellas. Uses a partial MORAN business model. Vimpelcom: Kick started the current phase of European tower sales with the sale and leaseback of 7,377 towers from their Italian opco Wind to Cellnex for €693mn in 2015. Vimpelcom has subsequently commenced processes to sell 10,400 towers (and up to 19,000 rooftop sites) in Russia -

Vodafone

Vodafone coverage

Vimplecom

Vimpelcom coverage

Vimpelcom branded as Beeline in Russia, Armenia, Kazakhstan, Georgia, Kyrgyzstan, Tajikistan and Uzbekistan, Wind in Italy and Kyivstar in Ukraine


Wireless Infrastructure Group (WIG): One of Europe’s most entrepreneurial middle-market towercos, WIG became a bona fide towerco in 2007. Through a combination of organic growth and small to mid-sized acquisitions, WIG has grown a portfolio of over 2,000 active sites. The company and their investors Wood Creek Capital Management remain acquisitive.

“If we get to half the level of outsourcing as the US market there would be an additional 100,000 towers owned by towercos,” said WIG CEO Scott Coates. “The opportunity also extends beyond towers – WIG for example has an active DAS business and we are looking at outdoor small cell networks for cities in the UK. Whether it’s towers or small cells, the wholesale sector has a major role to play in the next chapter of European wireless networks.”


Who have we missed?

Advance apologies: we’re bound to have

missed one or two key stakeholders in

European towers – if so we’d like to know

as we’re on a mission to assemble everyone

at the inaugural TowerXchange Meetup

Europe on April 12-13 in London (see www.

towerxchange.com/meetups/meetup-europe)!

If you feel your company should be profiled

in the TowerXchange who’s who in European

towers, please email Laura Dinnewell, Head of

TowerXchange Europe, at:

[email protected]

Meetup Africa201619-20 October,Johannesburg

Meetup Asia201613-14 DecemberSingapore

Meetup Europe 20175-6 April, London

MeetupAmericas 201616-17 June,Boca Raton

See you at our future events!

European mobile in fluxHow Europe’s network landscape is about to undergo a new wave of change

A wave of consolidation is taking place across Europe. In Britain, BT plans to take over EE while O2 is in the process of selling its network to Three. In France, Altice’s subsidiary, Numericable-SRF, is acquiring Bouygues, while in Norway, Telia plans to acquire Tele2. These consolidations are primarily as a result of the pressures that mobile operators are facing due to declining revenues and margins. Voice revenues have been declining much faster than data revenues have been rising, creating intensive pressure on mobile operators’ finances. To put this into perspective, the Financial Times[1] reports that European mobile revenues decreased by 18% between 2008 and 2014, whilst the return on capital employed halved in the same period to around 10.9% (post tax). Further, the European Commission is pushing for a single market in digital communications in order to encourage economic growth and increased employment. As a result, an overhaul of EU telecoms rules is expected, with EU-wide criteria for spectrum allocation at a national level and incentives for high-speed broadband. The aim will be to ensure a level playing field for all existing as well as new players in the telecoms market. Whilst it is too early to speculate on the implications for existing operators, the changes are likely to result in the need for more investments by operators. The introduction of higher-speed networks, cheaper smartphones and a thriving ecosystem of applications have resulted in a significant increase in mobile data usage. Ericsson[2] estimates that, by the end of 2015, more than half of Europe’s mobile

Read this article to learn:< The drivers and implications of MNO consolidation

< European MNO balance sheets under pressure

< Alternate models of infrastructure sharing: examples from across Europe

< Opportunities for towercos to move beyond passive infrastructure to running other shared infrastructure

< The separation of ‘NetCo’ from ‘ServiceCo’

The European mobile telecommunications market has been undergoing continuous change for some years, but more recently, seismic shifts have been taking place. The industry continues to face pressing economic challenges, which have been forcing mobile operators to reduce operating costs and capital expenditure. After a surge in operator-operator deals on sharing infrastructure, consolidation and tower portfolio sell-offs to independent third parties appear to be becoming more prevalent. Technological developments promise to help further in doing more with less. However, this may not be enough and, as a result, operators need to explore more innovative options for making network spending more efficient.

Keywords: 3G, 4G, Active Infrasharing, Altice, Arqiva, Bougues Telecom, Business Case, Capex, Carve Out, Cellnex, CTIL, Deal Structure, Decommissioning, EE, Europe, France, Germany, Hutchison, Infrastructure Sharing, Italy, KPN, Lawyers & Advisors, Market Overview, MBNL, Numericable SRF, O2, Operator-Led JV, PA Consulting, RAN Sharing, Sale & Leaseback, Small Cells, Spain, Strategic Consultancy, Tele2, Telefonica, Telia, The Netherlands, Third Party Research, Three, UK, United Kingdom, Valuation, Vodafone

By Andrew Doyle and Michel Grech, PA Consulting Group


subscribers will be smartphone users and that, by 2019, the total number of smartphones will exceed the total population. Mobile broadband data has been increasing at annual rates of 40%–50% driven by new services such as new video applications and connected devices. Cisco forecasts that Western European mobile monthly data usage will increase seven fold between 2014 and 2019[3]. Whilst this may sound like good news for the mobile operators, the incremental revenue as a result of the new investments is limited; ABI Research reported in 2014 that the price premium for Long-Term Evolution (LTE) over 3G had declined to 20% in developed countries and it is likely to erode completely. The growing gap between demand and supply is forcing operators to do more with less and while technological step changes such as Network Function Virtualisation (NVF), Software Defined Networks (SDN), BBU pooling and multi-operator core networks with shared/pooled operator spectrum (MOCN) provide opportunities for efficiencies, operators are re-thinking their approaches to network infrastructure. For many European operators, the access network is no longer seen as the key differentiator as evidenced by the number of shared infrastructure deals, active as well as passive, that have taken place in Europe. Differentiation is increasingly seen to come through launching innovative bundled data and communications services to end users, integration with unlicensed spectrum, loyalty programmes and premium content. Infrastructure sharing has been one strategy that operators have been pursuing for some time in order to reduce both capital outlay

and operating costs. The majority of the active infrastructure deals have been set up through a joint venture, where typically the two mobile operators consolidate the shared assets, including towers and masts, which are transferred to the joint venture or decommissioned over time if deemed surplus to requirements. European regulators have generally been supportive of network sharing although deals are generally looked at on a case-by-case basis. The key concerns are typically around ensuring that such deals are not anti-competitive. Active infrastructure-sharing deals typically provide operational savings of 25%–35%, depending on several factors. This is higher than for passive tower-sharing deals, which typically deliver 15%[4]

operational savings. Operator-operator deals, typically via joint ventures, have been more prevalent in European markets (see Table 1-3) compared to the sale of an operator’s tower portfolio to third parties. More recently however, there have been several instances where operators are selling all or part of their tower portfolios to independent third-party companies under a sale-and-lease-back arrangement. The Dutch incumbent, KPN, for example, has been divesting its towers across The Netherlands in a phased approach for some time. In addition, the last two years have also seen operators in France, Spain and Italy selling off their towers or a majority of their shareholding (see Table 4) to independent tower companies. The shift towards the sale of most or all of the tower estate is

Table 1 Active Infrastructure Sharing via MORAN (Dedicated spectrum) in Europe

Czech Republic

France

Greece

Poland

Romania

Spain

UK

UK

Country

O2/T-Mobile

SFR/Bouygues

Vodafone/WIND Hellas

PTC/Orange

Vodafone/Orange

Vodafone/Orange

EE/Three

Vodafone/ O2

Operators

2011

2014

2013

2011

2013

2006

2007

2012

Date


partly due to the need to raise capital but also to the perceived need for trusted third parties to deliver a cleaner separation of network infrastructure. This separation not only helps in addressing anti-competitive concerns but takes away any inherent tension between competing operators trying to share the infrastructure. However, joint ventures and operator-operator agreements are difficult to unwind once established and can potentially make consolidation with other operators not involved in an agreement difficult or slow. The consolidation taking place in the UK is a case in point. Here, Hutchison’s Three is in the process of acquiring Telefonica’s O2 while BT is planning on acquiring EE. Currently O2 has an active sharing agreement with Vodafone UK and Three has a joint venture, MBNL, with active sharing with EE, which has already integrated T-Mobile and Orange.

Network and IT expenditure often constitutes 75% of capital expenditure and 45% of annual operational costs and thus the scope for efficiencies in this area can be significant. With consolidation more likely amongst European operators, further innovative ways to make network spending more efficient need to emerge. With NFV, it is possible to envisage, for example, multi-tenanted network elements, not just at the Radio Access Network (RAN) layer but deeper into the core network. Such sharing could however significantly impact service differentiation and independence among operators and will be subject to regulatory approvals.

Other developments are on the horizon, such as the move towards smaller cell technology with

Table 2 Active Infrastructure Sharing via MOCN (Shared/pooled spectrum) in Europe

Table 3 Passive Infrastructure sharing amongst MNOs in Europe

Denmark

Finland

Sweden:

Sweden

Germany

Ireland

Ireland

Italy

The Netherlands

Country

Country

TeliaSonera/Telenor

TeliaSonera/DNA

Telenor/Tele2

Telenor/Hutchinson

Vodafone/O2

Vodafone/Three

Three/Eircom

TIM/Three

T-Mobile/Tele2

Operators

Operators

2011

2014

2009

2001

2009

2009

2011

2009

2013

Date

Date

Table 4 Towerco deals in Europe

Netherlands

Germany

France

Italy

Spain

Country

KPN

KPN

Bouygues

Vimplecom WIND

Telefonica/Yoiga

Protelindo, Shere Group, TDF

American Towers

Antin Infrastructure Partners

Abertis (now Cellnex)

Abertis (now Cellnex)

Operators Operators

2008-12

2013

2012

2015

2014

744

2,000

2,166

7,300

4,227

DateTowers


is actually hurting investment and slowing down the proliferation of high-capacity end-to-end networks – both fixed and wireless. Competitive wholesale supply of capacity to nimble retail operators could be the delivery paradigm of the future. For this to happen, regulators, investors and operators need to start thinking about their industry afresh as the model developed during the 1980s looks increasingly unsustainable. What operators do with their network assets is central to this debate. Over the next few editions of the TowerXchange Journal, PA Consulting will be exploring the state of the European mobile infrastructure market, reporting on existing joint venture initiatives, the impact of consolidation in Europe and assessing the potential strategies operators need to adopt in this shifting landscape

[1] www.ft.com, Lex in-depth, European Telecoms , 18th Nov 2014

[2] Ericsson Mobility Report; 2014, 2015

[3] Cisco VNI, 2015

[4] GSMA, Mobile Infrastructure Sharing, 2012

heterogeneous networks and the deployment of 5G. These developments will however impact third-party infrastructure economics as tenancy opportunities decrease. As an independent tower company’s business model is generally built around tenancy additions, any deal with an operator starts to look more like an infrastructure outsourcing agreement where suppliers have to make their margin through service efficiencies, which may lead to a lower valuation of the operator’s tower portfolio.

European tower companies are looking at diversification, Arqiva for example, the UK’s largest independent provider of wireless sites, has recently partnered with SIGFOX to deploy a countrywide ultra-low-band network for M2M. Cellnex, the Spanish tower company, is looking to exploit its recently acquired cellular towers in Spain and Italy for other digital dividend opportunities as well as expand internationally. Could independent tower companies move from passive infrastructure to running shared infrastructure for the operators? With the right strategy and skill set, independent tower companies can offer additional value-added services to the mobile operators as witnessed by several organisations in Europe already offering managed services for active equipment and backhaul. As for European operators, the pace at which returns on infrastructure investment have decreased over the last few years, with no sign of change, means that there is an urgent need to have a good strategy in place. The new technological step changes, in

particular NFV, will bring significant benefit in operational efficiencies as well as reduced capital expenditure. However, this may not be enough and operators may need to consider more radical changes. Potential strategies beyond consolidation or network sharing include the separation of an operator into an ultra-efficient network-focused organisation (NetCo), with sole responsibility for the network infrastructure, offering wholesale services to a service company (ServiceCo), with responsibility for delivering services to end users. Such separation could allow NetCo to operate independently of ServiceCo, offering wholesale services to other service providers and ServiceCo could potentially outsource all its operations to a third party to achieve economies of scale. ServiceCo would focus on providing differentiated services by using wholesale services, not just from NetCo but also from other wholesale providers, to compete with the over-the-top providers. KPN, for example, has already created a NetCo that combines the operations of its IT and network infrastructure covering the mobile, landline and wholesale divisions.

European operators need to continually evaluate potential strategies and find innovative options for making their network spending more efficient in order to reverse the trends in revenue and return on capital employed. Bold options are needed; for example, if the network is no longer a source of differentiation, does a retail telecommunications operator actually need its own dedicated network? It could be argued that vertical integration of operators and the duplication of national networks

About the authors

Michel Grech and Andrew Doyle work at management and technology consultancy, PA Consulting Group as part of the Technology and Innovation practice. There they work closely with network operators and blue chip enterprises, advising them on the implications of legislative and technological shifts and helping develop appropriate responses


TowerXchange Meetup Europe AgendaLondon | April 12-13, 2016

www.towerxchange.com/meetups/meetup-europe | TowerXchange Europe Dossier 2016 | 27| TowerXchange Europe Dossier 2016 | www.towerxchange.com/meetups/meetup-europe27

Day One | Tuesday 12 April

8:00 Coffee and registration

9.00 Opening presentation and TowerXchange analysis< Kieron Osmotherly, CEO, TowerXchange< Laura Dinnewell, Head of EMEA, TowerXchange

9:45 European towerco CXO panel – the big picture< Moderator: Kieron Osmotherly, CEO, TowerXchange< Scott Coates, CEO, Wireless Infrastructure Group< Frédéric Zimer, CEO, FPS Towers< Peter Owen Edmunds, Chairman, Russian Towers< Nicolas Ott, Managing Director, Telecoms, Arqiva

10:30 Broadcast assets & JV infracos in the telecoms mix< Moderator: Marco Cordoni, Senior Partner, Analysys Mason< Malcolm Collins, CEO, CTIL< Nikos Babalis, CEO, Victus Networks< Paolo Crocetti, Director of Institutional Affairs, EI Towers< Jorge Alberto Jimenez, President, Axion

11:15 Coffee and refreshments hosted by siterra, an accruent product

11:45 Roundtables session 1

12:45 Networking lunch

14:10 Roundtable session 2

15:10 Coffee and networking

15:40 Improved monitoring, management and efficiency at cell sites< Aaron Yule, Managing Director, Abloy Oy< Oliver Meganck, Business Development, Global Accounts, Acsys

< Kishore Das, CTO, Invendis< Jason Day, RVP, Telecom Sales, Siterra, an Accruent Product< Ravi Kuppan, Founder & Director, Tarantula

16:00 Towerco investment, growth & exit strategies< Moderator: Gaurav (Guri) Bath, Global Communications Group, Citi< Jack Colbourne, Partner, Arcus Infrastructure Partners< Peter Egbertson, Director of Corporate Finance, Protelindo< Jack Dessay, Managing Director, Macquarie< Dany Rammal, Managing Director, EMEA, Providence Equity< Eric Crabtree, Chief Investment Officer, IFC< Vincent Policard, Director of Energy & Infrastructure, KKR

17:00 End of day one and networking drinks

19:30 TowerXchange optional dinner

Day Two | Wednesday 13 April

8:30 Welcome coffee and breakfast hosted by FPS Towers

9:00 Keynote interview with Europe’s most acquisitive towerco< Interviewer: Enda Hardiman, Managing Partner, Hardiman Telecommunications< Interviewee: Tobias Martinez, CEO, Cellnex

9:20 Tower divestments, carve outs and M&A< Moderator: Alexandre Lucas, Executive Director, TMT Investment Banking, Goldman Sachs< Alexander Chub, President, Russian Towers< Colin Cunnigham, Managing Director, Cignal< Colin Shea, Strategy Director, CETIN

< James MacLaurin, Director, Axiata

10:00 Energy management at European cell sites< Jens Felder, VP Sales and Marketing, Heliocentris< Francesco Di Noto, Co-Founder and Vice-President, Medipower


10:50 Emerging European markets:< Moderator: Phil Cooper, Managing Director, EMEA, Digital Bridge< Temel Oktem, Head of Telecom, Media & Technology, Europe, Middle East and North Africa, IFC< Sergey Plissak, Commercial Director, Logycom Group< Sachit Ahuja, Vice President, Business Development, Tillman Global Holdings< Arthur Akopyan, Managing Director & Partner, UFG Asset Management< Zafer Ozbay, General Manager, UkrTower< Georgy Chumburidze, CEO, Vertical


12:30 Networking lunch



15:40 Small cells, DAS & heterogenous networks:< Moderator: Caroline Gabriel, Research Director & Co-Founder, Rethink Technology Research< Scott Coates, CEO, Wireless Infrastructure Group< Alexandre Mestre, International Business & Marketing Director, Cellnex< Nicolas Ott, Managing Director, Telecoms, Arqiva< Nick Johnson, Multi-Operator and Neutral Host Working Group, Small Cell Forum

16:40 End of Meetup

TowerXchange roundtables

Roundtable session 1: 11:45-12:45, 12 April

1.Country focus Russia< Alexander Chub, President, Russian Towers< Peter Owen Edmunds, Chairman, Russian Towers

2.Country Focus: Greece< Nikos Babalis, CEO, Victus Networks

3.Country Focus: France< Cedric Lepolard, CFO, FPS Towers

4.Decommissioning: Can it create value within an acceptable timescale?< David Bernal Cantero, Director of Business Development, Cellnex

5.European MNO consolidation: rumours, deals & drivers< Andrew Doyle, Managing Consultant, PA Consulting

6.Growing and scaling a towerco< Peter Egbertsen, Director of Corporate Finance, Protelindo

7.How to ensure a successful IPO< Julian Plumstead, Managing Director, Rothschild

8.Why is Europe different, how to be a successful towerco as markets mature?< Justin Speake, President, EuroTower

9.Strategic sourcing: what and how Europe’s tower owners buy to improve energy efficiency< Solange Karwera, Senior Category Manager, Network Site Infrastructure, Vodafone

10.Opportunities for towercos in small cells & DAS< Scott Coates, CEO, WIG

11. Data management to improve the efficiency of co-locations< John Leigh, Senior Manager, Product Management & Marketing, Siterra, an Accruent Product


12. Sourcing capital in Russia & the CIS< Arthur Akopyan, Managing Director & Partner, UFG Asset Management

13. Country Focus: Germany< Jonathan Dann, Managing Director, Telecom Research, RBC Capital Markets

14. Country Focus Ireland< Morag Pollock, GM, Towercom

15. What do you need to know about ground lease aggregation?< Bill Bates, International Business Development, SBA Communications

16. RAN sharing - threats and opportunities< Cedric Lepolard, CFO, FPS Towers< Pierre Cassier, Commercial Director, FPS Towers

17. Tower valuations in Europe< Brian Burns, Principal, Analysys Mason

18. Making the most of synergies between broadcast and telecoms< Nicolas Ott, Managing Director, Telecoms, Arqiva


TowerXchange roundtables19. Best practices in corporate governance and risk management for telecom infrastructure businesses< Belinda Fawcett, General Counsel, CTIL

20. KPIs for site O&M: what is optimal productivity?< David Meganck, COO, Acsys

21. Subcontractor performance management< Egor Bykov, Head of Strategy, Vertical


22. Country focus Spain< Jorge Alberto Jimenez, President, Axion

23. Regional focus: CIS< Temel Oktem, Head of Telecom, Media & Technology, Europe, Middle East and North Africa, IFC

24. Country Focus: Poland< Darragh Stokes, Managing Partner, Hardiman Telecommunications

25. Regional Focus: Scandinavia< Henrik Kamstrup, Partner, KPR Consult

26. African market focus< Terry Rhodes, CEO, Eaton Towers

27. How to carve out infrastructure assets from an MNO< Colin Shea, Strategy Director, CETIN

28. A comparison of neutral host DAS and multi-tenant small cell vendors and how to design a heterogeneous network attractive to multiple tenants< Caroline Gabriel, Research Director & Co- Founder, Rethink Technology Research

29. TowerCo – Public equity, private equity or infrastructure opportunity?< Julian Plumstead, Managing Director, Rothschild

30. From tactical to strategic sourcing of deployment services< Ahmed Saeb, Principle Category Manager, Networks SCM Technology, Vodafone

31. How to structure the European tower industry to create value for both towercos and MNOs< Alexandre Lucas, Executive Director, TMT Investment Banking, Goldman Sachs


32. European towers 2.0: how the industry has changed< Ted Miller, President, 4M Investments, Founder and former Chairman and CEO, Crown Castle International< Chuck Green, Co-Founder and Executive Chairman of Helios Towers Africa, Co- founder of HTN and former Global CFO of Crown Castle International

33. Country focus Italy< Carlo Ramella, Chairman, Towertel & COO, EI Towers

34. Country focus UK< Malcolm Collins, CEO, CTIL

35. Country Focus Turkey< Cihan Nazmi Biyikli, Executive Business Management and Strategy Consultant and former Chairman, Global Tower

36. Country Focus: Netherlands< Frank van Kuppeveld, Commercial Director, Novec< Randolf Nijsse, Open Tower Company

37. Country Focus: Czech Republic< Conor Plant, Managing Consultant, Hardiman Telecommunications

38. Change management: transitioning people and processes to meet the unique requirements of the commercial tower business< Ravi Kuppan, Founder and Director, Tarantula

39. Tower transaction deal structures & terms< Daniel Lee, Managing Director, Intrepid Advisory Partners

40. Country Focus Romania< Temel Oktem, Head of Telecom, Media & Technology, Europe, Middle East and North Africa, IFC

41. How to monetise a JV infra-sharing firm< Tim Devine, Member of Management Group, PA Consulting

42. Contractual terms that create and destroy value in the tower business< Natalie Perkin, Senior Associate, Vinson & Elkins


What is the TowerXchange Investors Club?

Held to complement the baseline market information shared during the TowerXchange Meetup roundtables, the TowerXchange Investor’s Club pre-arranges private one-to-one meetings between towercos and investors. These confidential meetings will give investors the opportunity to open dialogue with CXOs of Europe’s towercos and assess potential new investment opportunities in European telecoms infrastructure.

< How many towers do the company own?< How many have been bought versus built?< What capex on new build or tower strengthening is planned?< What is the current opex per tower?< Who are the major tenants?< What is the tenancy ratio?< Are the revenues from tenancies in local currency or euro / dollars?< What is the current shareholding of the company?< How much investment is the company looking for?< What is their proposed exit strategy?< Who is the management team and what experience do they have?

How can I get involved?

In order to participate in the first Investors Club you must be registered for the TowerXchange Meetup Europe. As a delegate you will be issued with a list of attending towercos and with whom our team will help you secure a number of meetings in our lounge area. If you would like to secure a large number of meetings, we advise that you book exclusive use of one of the on-site private meeting

rooms. These are allocated on a strictly first come, first served basis - please contact Annabelle Mayhew [email protected] to enquire about availability.

What will I learn from the co-located roundtables?

The Investors Club has been designed to complement our TowerXchange Meetup roundtables and published research which provide the critical baseline data and insight into the dynamics of key markets on which to base investment decisions.

14 country or region specific roundtables will address such issues as:< How many towers are there in the market?< What ratio of towers are owned by towercos versus MNOs?< What are current and potential tenancy ratios?< How many independent towercos are there in the market?< Are new market entrants expected?< What network sharing agreements exist between MNOs?< What MNO consolidation is on the horizon?< What is the extent of LTE roll-out and how much growth potential is there?< What is the rate of growth of data usage?< What currency risk is there?< What availability of local debt providers is there?< How does the initial yield compare to that in other markets?

< What cash flow/ EBITDA multiples can be from transactions now versus future exits?*Country/ regional roundtables: CIS, Czech Republic, France, Germany, Greece, Ireland, Italy, Netherlands, Poland, Russia, Scandinavia, Spain, Turkey and the UK

20+ strategic roundtables will centre on topics including: < Towerco valuations in Europe< Growing and scaling a towerco < Identifying new investment opportunities in European towercos< Tower transaction deal structures and terms< Towerco – Public equity, private equity or infrastructure opportunity?

Plus attend one of our operational roundtables to better understand key dynamics and performance metrics in the telecom tower industry and ensure that your investment is performing optimally.

TowerXchange Investors clubHeld at the TowerXchange Meetup Europe, 12-13 April 2016, Business Design Centre, London, UK

Registering your attendance at the TowerXchange Meetup Europe enables investors to request meetings with you. If you would like to pre-arrange a number of meetings with multiple investors, we advise that you pre-book one of the onsite meeting rooms - please contact Annabelle Mayhew on [email protected] to enquire about availability

Are you a towerco interested in participating in the Investors’ Club?

Globally, TowerXchange are tracking 166 towercos and 109 investors with investments active in or a proven appetite for the tower asset class. Our research and series of eight by-invitation-only Meetups have become a valuable source of information for investors looking for new opportunities and in 2016 we are excited to launch the TowerXchange Investors Club. The first edition of the Investors Club will be held on day two of the TowerXchange Meetup Europe in London on 12-13 April.


Cellnex, International Business and Marketing DirectorCellnex, M&A Manager, Business Development DirectionCellnex, Corporate and Public Affairs DirectorCellnex, Deputy ManagerCETIN, Strategy DirectorCignal, Managing DirectorCignal, ChairmanCTIL, CEOCTIL, Finance DirectorCTIL, General CounselDeutsche Funkturm, Head of Geodata ManagementDigita Oy, CEOEaton Towers, CEOEI Towers, ChairmanEI Towers, Director of Institutional AffairsEmiTel, CEOEmiTel, CFOEmiTel, Vice PresidentEuroTower, PresidentFPS Towers, COOFPS Towers, CFOFPS Towers, CEOFPS Towers, Commercial DirectorGlobal Tower, CoordinatorGrupo TorreSur, Chairman and Chief Executive OfficerHelios Towers Africa, Executive ChairmanHibernian Towers, Company DirectorHibernian Towers, Company DirectorIHS, Associate Communications DirectorIHS, Chief Commercial OfficerIHS Rwanda Ltd, NOC OperaterKonsing Group, CEOKonsing Group, CTOLink Development, CEOLink Development, Investment Advisor

Latest attendee list for TowerXchange Meetup Europe 2016Mobile Network OperatorsDeutsche Telekom, Vice PresidentDeutsche Telekom, VP M&ADialog Axiata, DirectorEE, Senior Property ManagerEtisalat, Vice President, Costing and Business AnalysisMegaFon, CTIONTT Docomo, ManagerTalkTalk, Director of Small Cell TechnologyTDC, Category Manager, Mobile InfrastructureTelefonica, Head of Infrastructure EfficiencyTurkcell, Merger and Acquisition & Investor Relations Member at TuUfone PTML, Senior Manager FinanceVimpelcom, Business Development ExecutiveVimpelcom, Chief Business Development & Portfolio OfficerVimpelcom, Group Director, Business DevelopmentVodafone, Marketing Manager, SCM SalesVodafone, Principal Category Manager, PropertyVodafone Procurement Company, Head of SalesVodafone Procurement Company, VP Global SCM ServicesVodafone, Principle Category Manager, Networks SCM TechnologyVodafone, Senior Category Manager, Network Site Infrastructure

Towercos, Broadcast Towercos and JV InfracosAmerican Tower, VP Business Development, EuropeAmerican Tower, VP Business Development, EMEA American Tower Germany, CEOArqiva, Product and Technology DirectorArqiva, Managing Director - Telecoms DivisionAxion, PresidentCellnex, CEO

Logycom Group, Commercial DirectorMBNL, Managing DirectorMBNL, Finance DirectorNorkring AS, CEONOVEC, Managing DirectorNOVEC, Commercial DirectorOpen Tower Company, General CounselOpen Tower Company, Managing PartnerProtelindo, DirectorProtelindo, Corporate FinanceRai Way, CEORai Way,, General DirectorRussian Towers, Co-FounderRussian Towers, PresidentRussian Towers, ChairmanRussian Towers, Marketing DirectorSBA Communications, International Business DevelopmentShared Access, CEOShere Group Ltd, Managing DirectorShere Masten BV, General ManagerTDF, Group Deputy CEO/Group CFOTDF, Strategy & Development DirectorTowercom Ltd, Chief Executive OfficerTowercom Ltd, General ManagerTowercom Ltd, New Business Development ManagerTowershare, President & CEOTowershare, CTOTowershare, CFOTowershare, General CounselTowershare, Sales DirectorUkrTower, General ManagerVertical, CEOVertical, Strategy DirectorVICTUS Networks, CEOWireless Infrastructure Group, CEO


Latest attendee list for TowerXchange Meetup Europe 2016Wireless Infrastructure Group, COOWireless Infrastructure Group, DirectorWireless Infrastructure Group, ManagerWireless Infrastructure Group, ManagerWireless Infrastructure Group, Senior Advisor

Investors4M Investments, Principal7L Capital Partners, PartnerAlinda Capital Partners, Managing DirectorAlinda Capital Partners, DirectorAMP Capital Investors, Investment DirectorAMP Capital Investor, Investment ManagerAntin Infrastructure Partners, Managing PartnerAlinda Capital Partners, PartnerArcus Infrastructure Partners, Senior Investment DirectorBrookfield, Senior Vice PresidentCapital Group, PartnerCiti, Global Communications GroupCommunication Infrastructure Fund, Managing PartnerCredit Suisse, DirectorCredit Suisse, AnalystCrescent Park, AssociateDigital Bridge Holdings, Managing Director, EMEAGoldman Sachs, Executive DirectorGoldman Sachs, Senior RepresentativeInternational Finance Corporation (IFC), Chief Investment OfficerInternational Finance Corporation (IFC), Head of Telecom, Media & Technology, EMEAKKR, Director, Energy & InfrastructureMacquarie, Managing Director, TMTMacquarie Infrastructure and Real Assets, Managing

DirectorOch-Ziff, Managing DirectorOddo Seydler Corporate Finance, Managing DirectorProvidence Equity, Managing DirectorRBC Capital Markets, Managing DirectorRothschild, Managing DirectorTillman Global Holdings, VP Business DevelopmentUFG Asset Management, Managing Director, PartnerWood Creek, CEOWood Creek, Vice PresidentWood Creek, Managing Director

OtherAbloy Oy, Managing DirectorAbloy Oy, Business Development ManagerACSYS, COOACSYS, Business Development Director Global AccountsACSYS, Head of Marketing StrategyAirsys, VP, Sales & Marketing, EMEAAnalysys Mason, PrincipalAnalysys Mason, Senior PartnerBladon Jets, CEOBladon Jets, VP Market DevelopmentCaterpillar, Global Accounts ManagerCihan Nazmi Biyilki Education & Consultancy, Executive Business ManagementCoslight India Telecom Pvt Ltd, DirectorDelmec Engineering Ltd, CTODelmec Engineering Ltd, CEODialight, Director SalesElectronic Control Systems, PresidentEnerSys EMEA, Director - Reserve Power EMEAEnerSys EMEA, VP Sales & Marketing - Reserve Power EMEA

Enertika, Business Development DirectorEricsson AB, Strategic Product Management Energy & EnclosureGSM Telecom ProductsHardiman Telecommunications, Managing PartnerHardiman Telecommunications, Managing ConsultantHeliocentris, VP Sales and MarketingHuawei Technologies, Senior Marketing ManagerHuawei Technologies, Vice President, Global Marketing and Sales SupportIntrepid Advisory Partners, Managing DirectorInvendis, CTOInvendis, COOJabil Inala, Managing DirectorJabil Inala, Senior Director, Corporate InvestmentKPR Consult, Co-Founder & ChairmanMedipower, CEOMedipower, Vice PresidentNorthStar, President, EMEANorthStar, Director, Solution EngineeringORION, Commercial ManagerPA Consulting, Managing ConsultantPA Consulting, Member of Management GroupRedflow, Sales Manager EuropeSiterra, An Accruent Product, Business Director, UK SalesSiterra, An Accruent Product, RVP Telecom SalesSiterra, An Accruent Product, Senior Manager, Product Management and MarketingStandard Advisory London Limited, Global Head Telecoms, Media and Technology, Head, Financial Sponsor CoverageTarantula, Founder & DirectorTarantula, Sales Director, EuropeVinson & Elkins, PartnerWillkie Farr & Gallagher, Partner


Tower Industry Value Chain

TowerXchange Meetups bring together 200+ business leaders representing the entire telecoms and broadcast infrastructure ecosystem. TowerXchange engages with MNOs who retain their passive infrastructure, and with 156 independent towercos and network sharing joint ventures which between them have acquired or built over 2,058,123 towers worldwide.

TowerXchange also maintains relationships with over 500 investment and advisory firms who facilitate tower transactions.

TowerXchange explores the implications of tower transactions for the supply chain: from tower designers and manufacturers to tower construction and O&M firms. The TowerXchange community engages with every major telecom energy equipment and service provider worldwide, including an emerging class of credible ESCOs. We track over 30 different RMS and ILM solution providers, as well as leaders in access control and H&S solutions for cell sites. And we connect the passive infrastructure ecosystem with innovations in microcells, small cells and DAS as well as fibre, microwave and satellite backhaul.

The TowerXchange community is brought together by the renowned TowerXchange Journal, circulated to 15,000 tower industry leaders worldwide. The tower industry’s leaders gather annually at TowerXchange Meetups – we look forward to meeting you there!

Who you will meet

Fibre, microwave, satellite backhaul Microcells, small cells & DAS Active equipment

Tier 1 OEMs

Mobile Network Operators

Investors: private equity, DFIs, debt finance, infrastructure funds

Law firms

Group level strategistsC-suite & network planners at local OpCos

Outsourceto

Strategic consultancyDue diligenceDemand modelingAsset register audits

Independent TowercosSell co-locationsGenerate amendment revenueBuild-to-suitAchieve SLAsEfficiency programmesOptimise supplier contracts

Transfer assets to

Construction servicesTurnkey infrastructure rollout Tower design & manufactureImport, customs & delivery Site acq, leasing & permitting Installation of towers Tower strengtheningDecommissioning

Dynamic assets

Energy equipmentDiesel gensetSolarWindFuel cell

BatteriesRectifiersInvertersLine conditioningPIUs

Air conditioning Lightning protectionControllerVoltage regulatorAlternator

Managed service providers

ESCOs

Static assetsTowers & mastsSheltersBracketsEnclosuresLightingFencing

0&M servicesMaintenanceStaffingSpare partsSecurityRefueling

Energy as a service

Monitoring & managementRMSIntelligence/analysisSite managementJob ticketingAsset lifecycle platform

Access control

Subcontract

Opex modelsVendor financeDistributed generationCommunity power

Subcontract or in-house

Outsourceto

Investment management advisors


80-90% of the leading towercos and MNOs attend

At other telecom events, a maximum of around 10-15% of the CXOs who lead tower strategy for MNOs and towercos are in attendance. At TowerXchange we regularly attract multiple senior representatives from 80-90% of the towercos active in any region, as well as the majority of MNOs. And thanks to our unique structured networking round tables, everyone has access to these decision makers.

Laser beam focus on towers

Another problem with other telecom events is that passive infrastructure is typically hidden away as an under-appreciated small part of a broader show. The huge audience of middle management, device and VAS influencers at other events dilutes access to the few tower decision makers present. In comparison, TowerXchange has been described as a “networking club for tower geeks” – everyone you meet at TowerXchange is focused on towers, and everyone you meet is a decision maker.

Proven over five past events attended by over 1,000 decision makers, TowerXchange Meetups are unique executive retreats for the most influential men and women in telecoms infrastructure. Held annually in Africa, Asia, CALA and Europe, we use small group round table breakouts to give participants unique access to the key stakeholders in the telecom tower industry in each country.

What is a Meetup?

Accelerate vendor selection

If you want to buy telecom tower structures and accessories, energy equipment, energy services, RMS, ILM, access control, H&S equipment, or if you want to contract with tower construction and O&M firms, then

Every TowerXchange expo has sold out

Curated expo of proven suppliers


the private expo at the TowerXchange Meetup provides a ‘who’s who’ of proven passive infrastructure equipment and service providers.

Identify opportunities for your business today…

TowerXchange introduces each Meetup with our proprietary research, defining the size of the tower market in each country, identifying who owns the towers today and predicting the future tower transaction pipeline. We also track network

consolidations, extensions and densification, and examine ownership of energy assets and the prospects for energy service providers.

…And opportunities for your business tomorrow

We use MNO and towerco CXO panel sessions to understand the future of the tower industry. What has been the progress of tower transactions and of portfolio integration? What future acquisitions are planned? How is capex being deployed? What are the

priorities of efficiency programmes? Are opex-sharing models being explored? Are microcells, small cells and DAS being rolled out?

Unique structured networking

TowerXchange’s renowned round table breakouts are led by an expert moderator, but everyone’s opinions and questions are welcomed. Each round table focuses on a specific country, financial or operational issue. You can attend three or four round tables at each Meetup. Register now to secure your choice of round table and tailor your agenda to meet your networking objectives!

Unique round table breakouts

Suresh Sidhu’s insightful keynote address


FPS Towers

FPS Towers, the only telecom tower pure player in France, owns a high-quality portfolio of 2,400 towers and rents/manages almost 20,000 rooftops.

In the three years since its launch, FPS Towers has demonstrated consistent organic and external growth: CAGR > 35% and a high level EBITDA margin from new long-term hosting agreements, boosting tenancy ratio and real estate acquisitions.

FPS Towers owes its strong yet controlled growth to a management team with deep experience in the telecom industry and a workforce that is fully invested in its corporate motto: “ Reaching your goals”. FPS Towers delivers secured and valued sites to wireless carriers or any network operator who wants to use them.

To meet the challenges of the extraordinary demand for bandwidth growth from the carriers driven by the explosion of users’ data consumption on mobile devices, FPS Towers is continuing its double digit growth in two ways: developing existing sites and by acquiring new sites (such as towers, rooftops and water towers).

http://www.fpstowers.fr

Floorplan

207Heliocentris

206Acsys

205Tarantula

204Invendis

203Siterra,

An AccruentProduct

202EnerSys

201Abloy Oy

102Small Cell

Forum

103NorthStar

101TowerXchange

302Bladon Jets

303FPS Towers

meeting room

Exit

301Medipower

TowerXchangemeeting room

Access to mainMeetup room

Entrance, exit &washrooms

Disabledaccess

GOLD SPONSOR:


Our sponsors & exhibitors

Tarantula

Tarantula is a proven world leader in telecom site

management software and the trusted partner of leading

telecom infrastructure operators in 20 countries. The

company has been operating in Europe for over a decade,

and Tarantula software is a fundamental pillar of support

behind the management of more than 18,000 colocation

transactions in the UK alone.

The Tarantula software platform is the industry standard

for end-to-end tower lifecycle management. It is built

around 30 real-world, best practice towerco processes

that have been brought to life through persona-based

workflows, linking together towerco data such as assets,

leases, billing, and financials into one central business

model. This functionality is available straight out of the

box, allowing companies to quickly deploy an optimized

towerco business model.

www.tarantula.net

Siterra, An Accruent Product

Siterra, an Accruent Product, addresses the software

needs of tower companies to sell co-locations, upgrade

capacity, build-to-suit, maintain accurate asset registers,

manage maintenance, and collaborate with vendors

Invendis

Founded in 2007, Invendis Technologies India Private Ltd.

is an M2M/IOT company based out of Bangalore. Invendis

designs and delivers IOT technology-enabled business

solutions for Telcos & Towercos to provide seamless

services to their clients.

Our core products and services include front end

equipment, sensors, transducers, business applications,

systems integration, product engineering, installation,

maintenance and 24X7 Global Monitoring & IT

infrastructure services. Invendis also specialises in

deploying complete range of Remote Monitoring &

Energy Optimization services for the data sensitive

infrastructures.

Invendis pioneered customizable IOT enabled Front End

Monitoring & Controlling equipment, which empowered

Towercos with access to real-time Monitoring & Energy

optimization solutions in shortest possible time.

In a span of 8 years, Invendis has set a global footprint

with over 1 lakh remote assets across Asia, Middle-East,

Africa & Europe.

www.invendis.com

Acsys

Acsys is a specialized towerco security and field service management software provider. Recognizing the telecom industry’s relentless drive to efficiency, we design solutions to accelerate you forward. Our software and mobile applications in combination with military-grade access control hardware form a 4 tiered tool for: Flexibility, Efficiency, Productivity, and Security. Our solutions are designed to improve your site operations through the near elimination of theft, reduced inefficiencies, vendor and ticket auditing, and real-time remote control of field technicians. In the age of Big Data, Acsys gives you the intel you need to offer your tenants a better experience while reducing your OPEX. Our expert team of mechatronic security, software development, and telecom professionals represent 14 nationalities and have combined their expertise to deploy the Acsys solutions in nearly 50 countries around the globe. Acsys is ISO 9001 certified and a preferred supplier of many of the biggest names in the telco industry. Acsys - solutions built to improve your bottom line.

www.acsys.com

SILVER SPONSOR: SILVER SPONSOR:

SILVER SPONSOR:

SILVER SPONSOR:


Our sponsorsoperationally as well as consolidate and integrate tower-

related software technically. Fifteen of the towercos and

infracos that TowerXchange tracks are current Siterra

customers, spanning 15 countries and five continents. The

first version of the Siterra site management platform was

released in 2001. 100,000 users later, Siterra has become

the industry standard, must-have operating software for

tower companies today. Accruent works with its leading

towerco customers to jointly develop new features

that are deployed regularly through the SaaS platform

to constantly improve customer value. Accruent has

developed global process standards with local flexibility to

pair with best-in-class software functionality.

Accruent’s telecommunications division serves some of

the world’s largest mobile network operators and service

providers in addition to tower companies, helping link

employees from different organizations in the industry to

collaborate to projects. Accruent is the largest independent

provider of commercial property management software,

serving the telecom, retail, education, healthcare, and

corporate markets with over 4,400 customers in 120

countries.

www.Accruent.com

Medipower

Since 2003, Medipower keeps the leading position as ESCO

for the Italian telecom sector, providing energy to off-grid

BTS for all the local MNOs (Vodafone, Wind, TIM, H3G).

Operating in FULL OPEX model within an extremely

challenging logistic and environmental scenario, the

company holds a market share greater than 80%.

Medipower experience is replicable globally, relying on

the “best-in-class” technology provided by Ausonia: AC

& DC gensets, hybrid solutions, remote management and

renewable sources integration.

For these reasons, Medipower represents the ideal energy

partner to globally approach network implementation

projects and/or operational optimization processes, in a

cost effective way.

http://www.medipower.com/en/index.php

EnerSys

EnerSys® is the global leader in stored energy solutions

for industrial applications. We complement our extensive

line of motive power, reserve power and specialty

products with a full range of integrated services and

systems. With sales and service locations throughout the

world. Headquartered in the United States, with regional

headquarters in Europe and Asia, EnerSys employs over

nine thousand people and operates 32 manufacturing and

assembly facilities world-wide. This vast infrastructure

and over 100 years of battery experience positions EnerSys

at the forefront of both manufacturing capabilities and

new product development.

www.enersys.com

Vinson & Elkins RLLP

Vinson & Elkins is one of the oldest and largest

international law firms, with approximately 700 lawyers

located in 15 offices around the world.

Our global telecommunications team has extensive

experience advising on international telecoms and

telecoms infrastructure transactions. We have significant

industry experience, advising on telecoms transactions

in numerous countries. Our telecommunications advice

includes acquisitions and disposals, debt and equity

financing, infrastructure development, operational

arrangements, regulatory matters and dispute resolution.

We also have significant experience in the negotiation and

drafting of sale and purchase, debt and equity financing,

master lease, build-to-suit, site management and service

level arrangements; and have played a prominent role in

complex fibre transactions.

www.velaw.com

Bladon Jets

Bladon Jet’s breakthrough technologies enable the production of micro gas turbine engines which are more efficient, less polluting and lower cost than traditional

BRONZE SPONSOR:BRONZE SPONSOR:

BRONZE SPONSOR:

BRONZE SPONSOR:


Our sponsors and exhibitors reciprocating power units. Introducing the world’s first 12kW microturbine genset designed specifically for the telecom tower power market delivering reduced fuel and maintenance costs, durability, and ultra-quiet operation for use in urban environments. Bladon’s revolutionary microturbine, heat exchanger and air bearing technologies harness the power of a miniature jet engine to provide a compact and ultra-reliable alternative to the traditional diesel generator. Use Bladon’s Micro Turbine Genset as a primary power source, hybrid mode with batteries or renewable energy sources, or as backup power to the grid.

www.bladonjets.com

Heliocentris

Heliocentris engineers and operates integrated power systems and hybrid power solutions for mobile and professional radio networks. Its fuel cell based backup systems provide carefree emergency power to grid-connected stations. The hybrid power solutions are designed around its leading Energy Management System and Remote Management Software, comprising various technologies reaching from conventional batteries and gensets to its proprietary self-refuelling fuel cells. Headquartered in Germany, with operations in Middle East, Africa and South East Asia, the company offers turnkey solutions including O&M services and vendor-financed long-term energy services. So customers worldwide can select to purchase on CAPEX or OPEX basis.

www.heliocentris.com

NorthStar

NorthStar is an industry leader in designing and manufacturing high performance lead-acid batteries and high efficiency telecom cabinets. The company has state-of-the-art facilities in the USA and Sweden, and their products are used in more than 120 countries worldwide. NorthStar premium thin plate AGM batteries deliver long life at elevated temperatures, with faster recharge and superior PSOC cyclic performance. NSB Blue Batteries are today reducing 85% of diesel generator run time in offgrid telecom applications. The newly launched NorthStar Academy program will help customers to prolong their battery life and save energy in their telecom network.

www.northstarbattery.com/1/2/3.php

Abloy Oy

Abloy Oy in Finland is one of the leading manufacturers of complete high security solutions. ABLOY secures business operations on land, at sea, and in the air – in all circumstances. Abloy has a proven history of telecommunication business for decades. Along with the new technology in telecom business Abloy has introduced new methods and systems to create value and fast pay-back time to telecom customers. Abloy provides a complete solution including project management.Combining mechanical and electromechanical features PROTEC2 CLIQ offers double security with wide internationally tested and approved product range.

Remotely controlled PROTEC2 CLIQ system enables to control sub-contractors activities on sites reducing management costs and providing traceability. New CLIQ Connect key together with mobile application makes the key update even more easy and flexible and enhances high security by minimizing the potential risk of a lost key. Several telecom customers have chosen ABLOY solutions to be leaders in fast developing telecommunication world.

www.abloy.com

Hardiman Telecommunications

Hardiman Telecommunications Ltd. was established in 1994. We are a boutique consultancy specialised in strategy development, due diligence assessment and valuation support. Our clients include major TowerCos, private equity funds, corporate finance / advisory and investment functions of leading banks, and telecommunications carriers. We are particularly active in end-to-end support of mergers, acquisitions and divestitures.

All of our staff have held profit-accountable positions with global telecommunications carriers, manufacturers and systems integration houses prior to joining us. This allows full support of clients across the continuum from technology through to market effectiveness, spanning engineering, commercial strategy, financial structuring and proven operating methodologies.

www.telecoms.net

Exhibitor:

Exhibitor:

Exhibitor:


Towerco perspectivesTowerXchange are currently tracking 68 towercos, broadcast towercos and JV infracos in Europe - a

market where dynamics are changing rapidly. New operator-led infracos are being spun out, tower

portfolios coming to market represent opportunities for existing towercos to reach scale and the

increased requirements for small cells and DAS mean many towercos are now extending into the space.

In the following few pages you will read interviews with the towercos at the heart of such activity.

Amongst these CETIN, recently carved out of O2 Czech Republic, share their award winning handling

of the process; towercos Cellnex and Russian Towers, each in the middle of major transactions hitting

the headlines right now, discuss their broader company strategies; and Scott Coates, WIG’s CEO and

chair of the European Wireless Industry Association explains the opportunities for towercos in small

cells and DAS.

Don’t miss:

41 Frederic Zimer, CEO & Cedric Lepolard, CFO, FPS Towers46 Olivier Huart, CEO, TDF49 Petr Slováček, CEO, CETIN52 Gunther Stein, Senior Vice President, Sales & Marketing, Deutsche Funkturm55 Colin Cunningham, CEO & Donal O’Shaughnessy, Chairman, Cignal59 Ronnie Horan, Infrastructure Manager, ESB Telecoms63 Giancarlo Benucci, Head of Investor Relations, Rai Way66 Sergey Plissak, Commercial Director, LogyCom70 David Bernal Cantero, Business Development Manager, Cellnex73 Scott Coates, CEO, Wireless Infrastructure Group79 Nicolas Ott, Managing Director, Telecoms, Arqiva84 Peter Owen Edmunds, Co-founder & Chairman, Russian Towers87 Juha Pekka-Weckström, CEO, Digita

Image courtesy of Deutsche Funkturmwww.towerxchange.com

Entrepreneurial towerco FPS expands beyond rural towers into urban rooftopsInsights into how the French tower market is evolving to meet the needs of four MNOs, including a new rollout and a network plan being shaped by RAN-sharing

TowerXchange: Tell us about how FPS was formed and your current footprint - how did you manage to scale to over 2,000 towers and 20,000 rooftop sites in just three years? Frederic Zimer, CEO, FPS Towers: We now have 2,051 towers which we acquired directly from Bouygues Telecom which is how the company was founded – through a sale and leaseback agreement between Antin Infrastructure Partners and Bouygues Telecom. Bouygues Telecom wanted to divest, and to create a new player in France to animate a market dominated by TDF. We can cover the whole of France but our focus on certain locations means our main offering has been in rural areas.

Now we are engaged in a two-part development plan – one focus is on working to put in place some build to suit towers. FPS sees a way to challenge our competitors because in France you have towers, rooftops, churches, water towers et cetera; you have maybe five to six main types of site which can be used for tenants. With this build to suit programme we’re planning to build towers to densify or to replace existing sites which are expensive or complicated to run, and we’re able to propose a good price for them, so in the next two to three years we expect to build several hundred new towers across France. In order to complete our footprint in France we also have to address urban areas. Historically urban areas are a complicated area for towercos and carriers to address as there are many constraints

Read this article to learn:< How FPS’ background has created a unique niche in the French market

< FPS’ three-stage plan for growth in France

< The size of the French tower market and who owns the towers

< How the dynamics of the French market will drive tower growth in the country

< The impact new towercos such as Cellnex and Inwit have had in galvanising potential tower divestments

FPS was formed in 2012 by Antin Infrastructure Partners to acquire and manage just over 2,000 towers acquired from Bouygues Telecom. Since then, their ambitious growth strategy has led to the acquisition of Loxel, a rooftop management organisation, in 2015, and further plans to leverage operator consolidation and partnerships to gain market share. We spoke to the management team (Frederic Zimer, CEO, Cedric Lepolard, CFO and Pierre Cassier, Sales Director) of FPS, about how the idiosyncrasies of the French market and how FPS plans to deliver on their growth plans.

Keywords: 4G, Acquisition, Anchor Tenant, Bouygues, Decommissioning, Europe, FPS, France, Free Mobile, Insights, Europe Insights, Interview, LTE, Market Overview, New Market Entrant, Operator-Led JV, Orange, Private Equity, Rooftop, SFR, TDF, Tower People, Towercos, Transfer Assets

Frederic Zimer, CEO, Cedric Lepolard, CFO & Pierre Cassier, Sales Director, FPS Towers


in terms of zoning and planning. There are also aggressive reactions from people who oppose towers near to their houses, so there are a lot of complications around deployment in urban areas. We think we’ve found a good way to address this through the acquisition of a company called LOXEL which is a council for building owners and which manages the relationship between building owners and operators. For us it’s a way to quickly grow our footprint in urban areas, allowing us to instantly address 20,000 locations in urban areas. The next step is to continue with the LOXEL offering and at the same time propose an expansion of this concept to building owners in order to put FPS between the building owners and the operators. We can both own rooftops and lease rooftops and propose long term partnerships with building owners to commercialise their rooftop real estate. We expect to transform our urban areas dramatically. The key difference between rural and urban sites is the relationship we have to establish with the building owners. In urban areas you generally cannot purchase the entire building, you have to enter into a good relationship with the building owners – their main business is to lease apartments, not rooftops, and that’s the argument we use when dealing with the building owners. We can manage the rooftops and quickly commercialise empty rooftops as well, you can have this model without any constraints on people. The basics are easy to understand but it’s a new approach: it’s not only

two people in an office signing a lease agreement and that’s it, property owners have to focus on their main business. Our proposition is that we can take any constraints they’re facing with the rooftop, report back as much as needed and share in a long term process of 20-30 years of added value. The building owners have the same timescales as us – these are long term commitments. The lease agreement is reassuring for building owners because they worry about entering into a short-term relationship without thought for the future.

TowerXchange: Tell us more about how the LOXEL portfolio of rooftop terraces fits into your portfolio.

Frederic Zimer, CEO, FPS Towers: Our plan for next two to three years is to continue deployment and manage our relationships with all our customers – we see this as an opportunity to gain market share from our competitors. We aim to push our development programme in both our rural and urban rooftop portfolios. FPS now employs 70 people and we are expecting gross revenue of more than €45 million for this year, representing 30% growth in the last three years. We are very aggressive in terms of development. We want to launch this development programme because we feel that our portfolio could be better in terms of footprint and volume to allow us to grow in the ways that we would like and to respond to the increasing market needs (several thousand points

of service). The more points we can propose to our customers, the more powerful your place in the market. In terms of rooftop growth, we currently manage with exclusivity around 20,000 and expect to reach 30-35,000 in the next two years. Within this number we also aim to have more than 1,000 rooftop sites owned outright. In terms of value added, we seek to own the rooftops and every site we have in our portfolio. FPS is a towerco and a towerco is an infrastructure investor and manager – we invest to grow our assets and after that it’s a cash machine. That’s why we seek to replicate our rural model in urban areas.

As we go to press FPS have confirmed that Antin has acquired the remaining 15% stake in FPS from Bouygues Telecom, making Antin 100% owner of the towerco. Bouygues Telecom will remain a client of FPS, with Frederic Zimmer, CEO of FPS commenting ‘Bouygues Telecom remains an important client to FPS Towers, and the sale of their residual stake reinforces the position of neutrality that we have always had towards our clients’. This is good news for FPS and towercos in general and confirms their independence, the investability of the class and the continuing appetite for investment in Europe.

Breaking news


TowerXchange: Please introduce us to the French telecom and broadcast tower market: how is tower ownership divided between operator-captive and independent towercos? Roughly how many towers and rooftops are in the market, how has that grown and how much further growth is foreseen? What are typical tenancy ratios in France?

Cedric Lepolard, CFO, FPS Towers: This is very complicated to explain because in Europe and especially in France the competitive towerco market is very new. TDF was the first independent towerco in France and has been operating without competition for a long time. The market was not really dynamic before our arrival and that’s why it’s difficult today to have clear figures in terms of sites and points of service.

FPS is a specialised telecom hosting services company, not an operator or broadcasting infrastructure provider. That’s the big difference. If you can focus on the telecom market in France you have at most 65,000 points of service – 30% (around 20,000) rooftops and the rest (around 45,000) are towers. This means in France you still have a large market share owned by the MNOs still, especially Orange and SFR and I think today Orange doesn’t have an interest in divesting their tower assets. SFR I don’t know; they have a new shareholder called Altice and we do not know what its strategy is.

In the short term we cannot see any global divestment coming from French MNOs, but what

we do expect in the short term is a growth of the market due to 1) Free Mobile’s need to quickly deploy its network which means we will see that in the next two to three years there will still be a large number of points of service to create. 2) the diversification process – as the MNOs enter into new technology like 4G or even 5G to provide new standards of data, they will need to increase their price and my feeling is that they are on the way to doing this, meaning MNOs could soon have some more budget to invest in densification and in new urban points of service which is a good thing for us. If we can propose to our customers a large amount of urban points of service, we can facilitate their radio network design within our portfolio and for us that’s a strong added value to negotiate and discuss with them.

TowerXchange: With some commentators suggesting that consolidation is likely (and indeed needed) in the French market, what are the implications for tower sharing?

Cedric Lepolard, CFO, FPS Towers: Today in France you have four main operators – Orange, SFR, Bouygues Telecom and Free Mobile. Free Mobile was the last to enter the market and they have yet to deploy and build their network – something which is a legal obligation but of course also necessary for them. It’s really a specificity of the French market at this time; we have a dynamic actor obliged to build a network from scratch, and that’s a very, very important point for FPS. In terms of point of presence numbers you can make a quick

comparison – Orange, SFR and Bouygues have on average 15-17,000 sites each and Free Mobile has fewer than 10,000, so they need 5-7,000 more to be able to compete.

Then you also have the established operators such as Orange, which is the biggest player in the market. Orange is focussed on European consolidation but in France they’re not really dynamic in terms of mobile, they’re more focussed on fibre. Bouygues Telecom and SFR have signed a RAN sharing agreement and are at the beginning of the process. It’s a massive programme because you have to find common process and create a new team which is complicated.

Luckily for us FPS was born during the negotiation of this RAN-sharing deal so we’re protected against losing revenue in the event of consolidation or decommissioning. That means that for us this deal is an opportunity – our portfolio is secure but we can work with SFR and Bouygues to design their new common network. In order to build a common and efficient network it may be necessary to dismantle two existing towers and build a whole new tower, for example if there’s 1km between them you would build a new one in the middle. We can build some new towers from this RAN sharing effect.

If we are clearly talking about dismantling and new builds it’s possible to make a win win deal – we see ourselves very much as partners to the MNOs. Redesigning the network is necessary for the telecom industry, they need to be agile.


TowerXchange: What role will microcells and DAS play as the French network densifies for 4G?

Pierre Cassier, Sales Director, FPS Towers: I don’t know how the operators see the technology but in terms of responding to densification and legal constraints, I think small cells are very interesting. That’s why for us the value of the rooftops in the coming years should increase drastically. TowerXchange: FPS is owned by Antin Infrastructure Partners, who also own other tower assets in Europe - how far does this affect your remit to extend your footprint beyond France?

Cedric Lepolard, CFO, FPS Towers: Antin is a infrastructure fund today focussed on the Eurozone with several investments across infrastructure, two in towercos; FPS in France and Axion in Spain. My feeling is that we have a lot to do in France in order to grow but I think FPS is more than an investment, it’s a real company with strategic projects and a long term programme. In the short and medium term, FPS has a lot to do in France before we entertain any international ambitions - it’s important to be ‘global’ in the domestic market, by which I mean having the visibility and credibility to address deployment, BTS, solutions in urban areas, new network services, and network design services. We are a young company we want to grow quickly but we have to take one step at a time.

TowerXchange: Given the volume of transactions in France, Italy and Spain at the moment, it

seems there’s a lot of tower activity in Southern Europe, do you feel this will have a knock-on impact in the rest of Europe?

Cedric Lepolard, CFO, FPS Towers: I think that the consolidation process will be accelerated in the coming year. For me it’s nonsense to have three to four MNOs in each country and to have three to four towercos in each country, especially in a mature market. In Brazil or Africa you can launch a towerco relatively quickly and easily with a BTS programme because it’s a growing market, but in Europe you have good infrastructure, you have a lot of funds and I think during the last five years the difficulty has been to go beyond network rationalisation.

It’s still new to discuss long term programmes with European operators, this is the main difference between US, a mature market, and Europe; in the US it’s usual for operators to divest or to operate new points of presence with towercos In Europe, this is the beginning of the story.

Cellnex are probably the best recent example of the beginning of the story. Cellnex, active on the financial market, are clearly aiming to be the pan-European player to consolidate the market and to address all existing carriers with a common process and infrastructure relationship across Europe. I am sure that we’re now entering into a period with a lot of discussions taking place.

TowerXchange: How can smaller and ambitious towercos gain market share in markets like the

UK, France and Germany, where the market is lead by large towercos with seemingly little appetite to acquire towers?

Frederic Zimer, CEO, FPS Towers: I think if you are in a dynamic market, as is now the case in France compared with the past, you have a place for everybody – for big players with process like TDF and for more entrepreneurial firms like FPS.

Our chance is that we’re in a growing market, which means you can address a new market not only to try to gain market share from your competitors, but you can profit from the global growth. Due to Free Mobile and densification in France you can have a place for global players and in the end, in terms of scale, if you want to build or manage less than 1,000 towers you can stay small with few people but if you want to grow and get over that 1,000 mark and continue to grow, you need to design an organisation with strong governance processes.

It’s important to not lose the entrepreneurial spirit as you grow. At the end of 2012 we employed fewer than 10 people, now the team is more than 70 people, but we try every day to maintain a strong relationship between the management and the rest of the team to maintain their start-up spirit and entrepreneurialism. I’m convinced that the main advantage of FPS compared with TDF is our start-up spirt, our agile processes, our capability to respond quickly and to engage people and funds if necessary. That’s the best model for a towerco: backed by strong shareholders in terms of capital and capabilities


FPS TOWERS / FRANCE / WWW.FPSTOWERS.FR / +33 (0)1 45 36 50 80

F P S T O W E R S I S F R A N C E ’ S T O W E R C O P U R E P L AY E R W I T H 2 , 4 0 0 T O W E R S A N D 2 0 , 0 0 0 R O O F T O P S

REACHING YOUR GOALS

MNO consolidation, 4G rollout andbroadcast synergies in the French tower marketAn interview with leading infrastructure provider, TDF

TowerXchange: Please introduce TDF for readers less familiar with the European telecom and broadcast tower landscape.

Olivier Huart, CEO, TDF: We are the largest independent provider of telecoms infrastructure solutions, television and radio broadcast networks and media platforms in France. We provide mission-critical services for MNOs telecom equipment site hosting and for digital and analogue TV and digital radio.

We serve all four French MNOs - Orange, SFR-Numericable, Bouygues Telecom and Free - and French leading media - TF1, M6 Group, France Televisions, Canal+, NextRadioTV et cetera - backed by a unique chain of high-quality connected sites, with highly attractive locations and outstanding territorial coverage: our DTT network covers over 97% of the French population. As at September 2015, we owned and operated over 6,500 active sites in mainland France, approximately 300 sites in French overseas territories and have signed commercial agreements covering up to 3,000 additional rooftops in France. We own around 90% of our active towers and we either own or lease the land for our sites under long-term contracts.

In addition, we own 5,000 km of optical fibre, a high capacity national backbone which interconnects sites, our four data centers and our online video platforms. This network is used by all our businesses.

On March 31, 2015, an investor consortium -

Read this article to learn:< The size of TDF’s infrastructure portfolio and how TV, radio and telecoms contribute to their revenues< Factors affecting the growth of the French telecoms market including the shortening of Free’s network sharing agreement with Orange, the appetite for small cells and DAS, and the rollout of 4G and 5G< How a merger between Orange and Bouygues Telecom would affect dynamics in the French market< How TDF have created synergies between their broadcast and telecoms businesses< TDF’s strategy for the HetNet and Internet of Things

Keywords: 3G, 4G, Active Infrasharing, Arcus Infrastructure Partners, Best of TowerXchange, Bouygues Telecom, Brookfield, C-Level Perspective, Capacity Enhancements, Co-locations, DAS, Debt Finance, Densification, Europe, Europe Insights, Finland, France, Free Mobile, Germany, Hungary, Infrastructure Sharing, Insights, Investors, LTE, Market Forecasts, Market Overview, Masts & Towers, MNOs, Network Rollout, Netherlands, New Market Entrant, NOC, Opex Reduction, Orange, Regulation, Rooftop, SFR Numericable, Site Level Profitability, SLA, Small Cells, Spain, Tenancy Ratios, Tower Count, Towercos, Urban vs Rural

TDF, the French broadcast company own and operate a portfolio 6,500 ground based towers in France with commercial agreements in place covering an additional 3,000 rooftops. As France’s largest telecoms infrastructure provider, TDF hosts 8,500 PoPs putting its market share at 14%. Refinanced in March 2015, its shareholders now comprise Brookfield Infrastructure Group, Public Sector Pension Investment Board, APG Asset Management, Arcus Infrastructure Partners and Credit Agricole Assurances. In this interview TDF CEO, Olivier Huart discusses his thoughts on where growth opportunities lie in the French market, and explains the potential impact of a merger between Orange and Bouygues Telecom.Olivier Huart, CEO, TDF


Brookfield Infrastructure Group, Public Sector Pension Investment Board, APG Asset Management N.V., Arcus Infrastructure Partners, and Credit Agricole Assurances through its subsidiary Predica - bought TDF. These new shareholders are backed by large, well-established infrastructure platforms which employ conservative, investment-grade capital structures, and have a very long-term investment horizon.

TowerXchange: What have been the drivers behind TDF restructuring to focus on your domestic business in France?

Olivier Huart, CEO, TDF: Before TDF was taken over in April 2015, its debt was very high. As a result, in order to cut debt, we decided to sell off our businesses abroad including those in the Netherlands, Finland, Spain, Hungary and Germany.

TowerXchange: Can you give us an idea of how the French tower market breaks down? How many towers are there in France and what role does TDF’s portfolio play in the market?

Olivier Huart, CEO, TDF: As of December 2015 the four French MNOs are estimated to have 60,000 PoPs (Points of presence), located on approximately 40,000 different sites including towers, rooftops and other structures (e.g. water towers, churches et cetera), as well as sites that MNOs own.

These PoPs break down as follows: 14,200 towers provided by MNOs, 27,300 outsourced towers and

18,600 rooftops and other structures.

With more than 8,500 PoPs hosted on TDF’s towers and rooftops, our market share exceeds 14%. We also provide site hosting services to governmental and public operators, such as the French Ministry of Interior (police forces, firemen), the French Ministry of Defence, blue-chip companies and machine-to-machine operators.

TowerXchange: What trends determine the potential growth of the French tower industry? Is there a lot of demand for new towers and high points as a result of 4G?

Olivier Huart, CEO, TDF: We believe that the telecom site hosting market’s growth will be driven by urban PoPs (rooftops, indoor sites), new roll-outs (IoT, 5G) and additional coverage (non-urban areas, black spots, motorways, railways).

In France, 4G coverage obligations (laid down under the licence awarded by the French Regulatory Authority ARCEP) are more stringent than 2G/3G coverage obligations and require further infrastructure in addition to the current network. The 800MHz licence requires the MNO to cover 99.6% of the population and 90% of non-urban regions in each French “département” (French county) which exceeds the MNOs current 2G/3G coverage. The recently awarded 700MHz licence even tightens these obligations: 95% in each “département”, 97.7% in each “priority rollout” area, 90% along national railways and 80% along regional lines.

Competition also drives growth. Free, the fourth MNO, is racing to catch up to the coverage of the others. Free currently has a roaming deal with Orange, under which it can use Orange’s existing very large network, but the Regulatory Authority is attempting to shorten the duration of this agreement. SFR will probably seek to compete on service quality with Orange, especially in non-urban areas where recent studies showed Orange still has a lead. Furthermore, focus is increasingly

Outsourced towers

Operator-captive towers

Rooftops and other structures

TDF’s estimated breakdown of French MNOs 60,000+ PoPs

Source: TDF

27,300

14,200

18,600


turning to indoor coverage, which requires both concentrated sites and new solutions, like small cells, DAS and other IBS.

Development of 4G and later 5G (very high speed mobile) will require networks to be re-architected around many more antennae with systematic fibre-optic threads connecting all radio stations. Very high speed mobile networks will converge with very high speed fixed networks. Our telecom operator customers will have to invest, and we will be focussed on delivering not only “optical fibre connected towers” but also FTTH rollout solutions to help them meet their coverage commitments.

TowerXchange: How is potential MNO consolidation affecting the French market?

Olivier Huart, CEO, TDF: Orange and Bouygues Telecom have begun public discussions. For the two companies to merge in practice they would require approval from the government authorities, (the State is a shareholder of Orange) and the anti-trust authority. The regulator will most probably also be involved in the discussions.

Such a merger would probably require former Bouygues Telecom assets to be sold, which could shake up the existing market. In the short term, the effect of cutting the number of operators from four to three would reduce demand for sites. In the longer run, market growth will depend on how determined the authorities are to enforce coverage obligations to for example improve high-speed

mobile coverage of the country and competition between the operators.

Rumours abound that a merger would most likely stop or mitigate the impact of the RAN sharing deal between Bouygues Telecom and SFR, which ARCEP approved under strict conditions. But the antitrust authorities will have to decide what is best for market competition between a merger and RAN sharing.

TDF works with all four MNOs on a daily basis to enhance their sites and network.

TowerXchange: How would you describe synergies between the management of broadcast and telecom towers?

Olivier Huart, CEO, TDF: At present, telecoms accounts for some 40% of our revenues. Among our 6,500 active sites in France (an “active site“ means a site with at least one tenant or hosted activity), 28% of sites are shared between at least two of TDF’s three businesses (TV, Radio, Telecom). If we consider the occupancy ratio on our towers (i.e. no. of PoPs over number of active towers), this ratio is equal to 2.9 in the telecom market, and exceeds five if we include TV, radio and telecom markets. Using our sites for all three of our businesses results in cost synergies (e.g. power, maintenance, design, radio planning et cetera), that ultimately benefit customers.

Over the last 40 years TDF has partnered with TV and radio operators under very demanding service

requirements where continuity of service is an essential criterion. TDF as an NOC operator is very well placed to provide hosting and transmission services to satisfy requirements for the telecoms industry and operate both mobile and fixed very high speed networks.

TowerXchange: What is TDF’s strategy in terms of HetNet solutions and Internet of Things?

Olivier Huart, CEO, TDF: TDF has been involved from the very outset in the rollout of M2M networks. Several players in France have developed turnkey solutions meeting the needs of companies and local authorities. We have no preferred technology and our customers can access all our sites. We help them deploy their nationwide network rapidly. Those “M2M” customers include Orange, Bouygues Telecom, Sigfox, M2OCity and Qowisio.

TowerXchange: How do you view TDF and the French tower industry in the future?

Olivier Huart, CEO, TDF: We forecast that the French tower market will continue to grow on the back of increased demand for urban sites (in particular rooftops), indoor coverage and outdoor coverage needs (in particular transport corridors, touristic zones, and black spots). And at a later stage 5G might also require more sites. TDF is improving its sites portfolio to address those needs on a daily basis. We are also ready to play an active role in any market consolidation and do look at opportunities beyond France


Carving out O2 Czech Republic’s infrastructure businessAn interview with CETIN CEO Petr Slováček

TowerXchange: Please can you provide a brief introduction to your background and how you got into the telecoms sector?

Petr Slováček, CEO, CETIN: I graduated from the Technical University, Prague, with a degree in telecommunications and then obtained a postgraduate Master of Business Telecommunications at the Technical University of Delft in the Netherlands. After graduation I joined the Telecommunications Research Institute in Prague, prior to joining SPT TELECOM (the previous commercial name of O2 Czech Republic) in 1989, working in switching, technical development, network management projects and OSS. In O2 Czech Republic, I was in charge of the Infrastructure and Wholesale Division and a member of the Board of Directors from 2003, serving as Vice Chairman from June 2008 - March 2014. Since June of last year I am now the Vice Chairman of the Board of Directors and CEO of CETIN

TowerXchange: Please introduce CETIN - how would you describe the company’s business model? Do you see yourselves as a ‘towerco’, an ‘infraco’ or something entirely unique? Petr Slováček, CEO, CETIN: CETIN (short for Česká telekomunikační infrastruktura) was created in June of last year when it separated out from O2 in the Czech Republic. We manage and operate the largest telecommunications network in the Czech Republic, consisting of 20,000,000 km of metallic cable pairs, 38,000 km of optic cables, 5300 macro towers and 750 micro-sites. We would class ourselves as an infrastructure provider

Read this article to learn:< Who CETIN are and what role they play in the Czech telecoms sector

< What motivated the separation of the infrastructure and retail businesses

< How CETIN’s separation from O2 impacted on their network sharing agreement with T-Mobile

< Why trading of CETIN on the Prague Stock Exchange was terminated in January 2016

< What synergies exist between sharing towers and networks and sharing backbone and last mile fibre

Česká Telekomunikační Infrastruktura (CETIN) manages the largest telecommunication network in the Czech Republic comprising of 5,300 towers, with access to a further 5,000 through a network sharing agreement with T-Mobile, 20,000,000 km of metallic cable pairs and 38,000 km of optic cable. The company was formed in 2015 following a spin out of O2 Czech Republic’s infrastructure business. Following a brief stint trading on the Prague Stock Exchange, CETIN is now wholly owned by investors PPF. In this interview we talk with CETIN CEO, Petr Slováček to discuss the details behind the successful carve out and delve into the company’s business strategy in the Czech Republic.

Keywords: 3G, 4G, Active Equipment, Active Infrasharing, Business Case, C-Level Perspective, Carve Out, CETIN, Core Network, Backhaul & FTTT, Czech Republic, Deal Structure, Decommissioning, Europe, Europe Insights, Infrastructure Sharing, Insights, Masts & Towers, MNOs, Network Rollout, O2, Operator-Led JV, Passive Equipment, Regulation, Tenancy Ratios, Tower Count, Towercos

Petr Slováček, CEO, CETIN


rather than a towerco as we also own and operate both the active and passive infrastructure as well as the connectivity between towers. We are an autonomous and fully independent wholesaler, entirely separate from O2 out of which we were separated through corporate spin-off as of June 2015. We provide open access to the network offering fair and equal conditions to all operators (B2B). We do not sell to end customers (B2C).

TowerXchange: What motivated O2 to separate CETIN as an infrastructure business from their retained retail business?

Petr Slováček, CEO, CETIN: The decision was suggested by O2’s board of directors to separate the business for a couple of reasons. As a former CTO at O2 I appreciate the advantages offered by the separation very well (both for O2 and CETIN).

Firstly, decision-making within a vertically integrated company always involves a number of compromises – the telco and infrastructure part of the operator have to certain extent different business targets with different investment horizons and different amounts of customers. Separating these two parts of the business enables each to make decisions independently which are in their own better interests.

Also from the regulatory point of view it is better to have these two businesses separated – most of the regulation applies to CETIN, O2 in the future will only be slightly regulated. This frees up O2 to make decisions in relation to retail price determination, balancing of the services portfolio, etc. But that is

enough of O2, what is crucial for CETIN, as we are not active in the retail segment, fulfilment of our regulatory obligations will be easier.

The separation was completely voluntary and based purely on business merits. CETIN can now plan on more appropriate investment horizons, looking for an ROI within a longer 5-10 year period which better suits our business model. This helps significantly with setting our network plans - we have, for example, just approved a seven year investment of US$900mn in backbone and FTTC.

What is necessary to emphasise from the competition office and other regulator´s points of interests – the separation of O2 and CETIN is not only of a corporate character. The separated companies have the same owner but apart from that they are fully independent. PPF, as the owner of majority of shares in both companies, does treat O2 only as a financial investment, only CETIN is part of the PPF group. After the separation was completed, we have separated HR and legal teams, we have moved to separate premises, there is no overlap in our boards of directors or supervisory board and so we are two entirely separate entities. We are also different economic units from the competition regulation perspective.

The whole process was realised in less than a year. Other attempts to make similar (although not such total) separations in various countries have not been completed to such a standard as ours as well or in such record time. O2 has been granted several awards for the completion of the separation.

TowerXchange: How has the regulator responded to the creation of CETIN? For example, how is the business licensed?

Petr Slováček, CEO, CETIN: The telecom regulator has been generally favorable to the separation and has adopted a very pragmatic approach to the assignment of regulatory obligations between O2 and CETIN. We have been registered with the Czech regulator for the provision of fixed network and services.

TowerXchange: I understand O2 and T-Mobile have had a deep network sharing partnership (governing both active and passive infrastructure) since your joint 3G rollout, extending to accelerate time to market for 4G. How does the creation of CETIN affect that partnership with T-Mobile?

Petr Slováček, CEO, CETIN: O2 set in place a network sharing agreement governing both passive and active infrastructure with T-Mobile across 10,000 macro sites (of which 35-40% are targeted to be decommissioned). The creation of CETIN did not affect the cooperation. We act as a complete network outsourcing provider for O2CZ in terms of RAN and took over the network sharing agreement in full. From that point of view nothing changed in the operating model or management of different areas. We are only now the only contractual partner to T-Mobile instead of O2.

We continuously look for ways to deepen and expand the cooperation with other operators in order to bring better services to more customers,


accelerate deployment of 4G, reduce environmental impacts of the networks, etc.

TowerXchange: Beyond the aforementioned network sharing agreement, is there a culture of infrastructure sharing in the Czech Republic? Do you foresee opportunities for more co-locations beyond T-Mobile?

Petr Slováček, CEO, CETIN: Whilst the CETIN - T-Mobile network sharing agreement is a major one, even before this hundreds of sites were used by multiple parties – I would estimate at least 20% of towers in the Czech Republic have multiple users.

When it comes to additional partners accessing our networks, yes there are more operators and we want to attract more of them to use our infrastructure. Generally speaking we continue to offer and further develop fair, reasonable and transparent conditions for tower access.

TowerXchange: Are there other independent infrastructure providers in the Czech Republic?

Petr Slováček, CEO, CETIN: Nearly all other towers are owned by respective MNOs or by broadcaster, České Radiokomunikace, which operates in particular a DVB-T networks. The state has some of its own infrastructure, for instance for the operation of Tetra integrated emergency communication systems, but this is of relatively small scale in comparison to commercial networks. CETIN is the only company focusing exclusively on telecommunication infrastructure with the

exclusion of retail.

TowerXchange: I understand CETIN will invest just under US$900mn over the next seven years, in backbone and FTTC. What do you see as the synergies between sharing towers and networks and sharing backbone and last mile fibre - should all these assets be managed by the same company and provided on a wholesale basis to all retail operators?

Petr Slováček, CEO, CETIN: I do not see a reason why not. Although this is not the case in the Czech Republic, not all or most assets (towers, backbone and last mile fibre) are held by one company, CETIN or other. We believe that investment in both backbone and FTTC is a natural direction of such a company as CETIN, being active in both these infrastructure markets.

We do offer both last mile wholesale access as well as fibre optic backhaul on a transparent and non-discriminatory basis to all interested parties and we are convinced this is the most efficient and effective way to bring high quality services to the end customer. We believe that the investments to be made will only help the end users in this respect.

In terms of towers, there is significant reuse of these assets for other forms of last mile radio access in the enterprise market, e.g. via high capacity microwaves to locations which are difficult or costly to reach with fibre.

TowerXchange: CETIN listed on the Prague Stock

Exchange on 1 June 2015 - what can you tell us about the ownership and investability of CETIN?

Petr Slováček, CEO, CETIN: CETIN is not listed on the regulated market of the Prague Stock Exchange. It was the activity of other independent parties which registered our shares to be traded on the un-regulated market of the Prague Stock Exchange and we had no influence of the fact. In any event, since 4th January 2016 trading of CETIN shares on this market was terminated due to the squeeze out of minority shareholders at the General Meeting of CETIN in December 2015. PPF (who had originally bought O2 from Telefonica) is now the sole owner of the company.

TowerXchange: Please sum up your impressions of the CETIN carve out - and should other European countries and MNOs consider following O2’s lead to carve out a infraco?

Petr Slováček, CEO, CETIN: It was a great and unique step for us, as it enables better business and investment planning for both the telco and the infrastructure company. We do not necessarily advise other operators abroad to follow our example, as every market is slightly different and such a fundamental decision must be taken in light of an individual company’s strategy, national regulatory framework and economic situation, but it was a good solution for the Czech Republic. We can see even now (some few months after the actual spin-off in June 2015) that both the market as well as the regulatory bodies do acknowledge the positive effects of the separation and we are confident that this approach will only grow/expand


Perspectives from Germany’s leading towerco on Europe’s largest telecom marketAn interview with Deutsche Funkturm

TowerXchange: Please introduce yourself, how did you get into the tower business?

Günther Stein, Senior Vice President, Sales & Marketing, Deutsche Funkturm (DFMG) & General Manager, Omega Towers: I have worked in the telco environment for the past 25 years. In 2009 I joined DFMG as the Head of Technology and moved to heading Sales and Marketing in 2012.

TowerXchange: Please tell us a little about Deutsche Funkturm and Omega Towers.

Günther Stein, SVP, Sales & Marketing, DFMG: Deutsche Funkturm (DFMG) was founded in 2002 as a subsidiary of Deutsche Telekom with the specified aim of renting out antennae space in the German market. The company currently operates 27,000 sites.

Since the deal with Telefonica in July 2015 we have also taken over another 7,700 sites which are managed under a new entity (100% owned by DFMG) called Omega Towers, of which Thore Doernemann and myself are the General Managers.

TowerXchange: What was the rationale behind creating Omega Towers to manage the sites acquired from Telefonica?

Günther Stein, SVP, Sales & Marketing, DFMG: Legal requirements made it necessary to found Omega Towers in order to transfer the sites in question from E+/O2 to our group.

Read this article to learn:< Germany’s largest towerco’s focus on new macro-site build and small cells

< The rationale behind formation of Omega towers following Deutsche Funkturm’s acquisition of

7,700 Telefonica towers

< Deutsche Funkturm’s attitudes toward decommissioning

< The priorities of MNOs in Germany and what opportunities this presents for a towerco

Deutsche Funkturm (DFMG), a subsidiary of Deutsche Telekom, is Germany’s largest towerco, operating 27,000 sites across the country. They recently acquired 7,700 towers from Telefonica in July 2015 which are now managed under a newly created entity, Omega Towers. They are currently constructing a significant number of new macro-locations across the country and are also starting to explore micro-sites to address Germany’s growing bandwidth requirements.

Keywords: 4G, Acquisition, American Tower, Anchor Tenant, Co-locations, Construction, DAS, Decommissioning, Densification, Deutsche Funkturm, Deutsche Telekom, DFMG, Energy, Europe Insight, Europe News, Germany, Infrastructure Sharing, LTE, Market Overview, Masts & Towers, MNOs, Novation of Leases, PASM, Passive Equipment, Rooftop, Small Cells, Tower Count, Towercos, Transfer Assets


TowerXchange: Who are DFMG’s main tenants?

Günther Stein, SVP, Sales & Marketing, DFMG: One of DFMG’s main customers is Deutsche Telekom. Other tenancies are primarily from Germany’s other MNOs but we do also lease space for usage by TV, radio, public security and other users.

For Deutsche Telekom we do the entire infrastructure build out; we manage the process from site acquisition all the way through the building process. Other customers manage the infrastructure that they built themselves or solicit our services to do so.

TowerXchange: So is there a requirement for new macro infrastructure building in Germany? What opportunities are there for towercos in small cells?

Günther Stein, SVP, Sales & Marketing, DFMG: We are currently constructing a significant number of new macro locations per year and this could

well augment for the next couple of years. A large portion of this is due to the need to re-locate sites following the termination of leases by landlords.

When it comes to micro-sites this is something that we just started to get involved in. If new infrastructure is required, for example antennae on houses, then MNOs may approach us to support them in this.

TowerXchange: Are permitting processes and landlord agreements becoming increasingly challenging in Germany?

Günther Stein, SVP, Sales & Marketing, DFMG: Let me put it this way: we are dealing with well informed and highly sophisticated landlords, therefore our competence in the acquisition process must meet these challenges.

TowerXchange: As well as building new sites, is DFMG heavily involved in decommissioning existing sites?

Günther Stein, SVP, Sales & Marketing, DFMG: Since the merger of O2 and E+ we are in the process of decommissioning sites as part of a project for them. Decommissioning for us tends to be project based rather than a major strategy with Deutsche Telekom having no requirements to decommission.

TowerXchange: Speaking of the merger between O2 and E+, what impact has this had on DFMG and the market?

Günther Stein, SVP, Sales & Marketing, DFMG: Whoever rented out space to the two companies – including DFMG - loses revenue from the merger between the two companies.

TowerXchange: What capabilities does the company keep in house versus subcontract out to third parties?

Günther Stein, SVP, Sales & Marketing, DFMG: DFMG subcontracts the entire construction work, some acquisition, and some business support activities. Our company philosophy though is that we control and project manage every single investment and technical project ourselves. This is why we have a substantial workforce of architects and engineers managing our technical business.

TowerXchange: Who owns the energy assets at the sites? Is there an appetite for shared back-up solutions?Günther Stein, SVP, Sales & Marketing, DFMG: DFMG or its sister company PASM (Power and Air Condition Solution Management) generally own

“ “We are currently constructing a significant number of new macro locations per year and this could well augment for the next couple of years


energy assets at DFMG locations. Definitely power and backup solutions provide opportunities for win-win solutions for MNOs and ourselves.

TowerXchange: In terms of the remaining towers and masts in Germany, who has control and do you forsee other tower companies entering the market?

Günther Stein, SVP, Sales & Marketing, DFMG: American Tower is the only other pureplay towerco in the German market at present. We have observed a lot of changes in the management of American Tower in the country and that casts some doubt about their appetite to stay in Germany, so we are watching closely.

The remaining sites are owned by MNOs, broadcast

companies, the military, public security and other users who all try to lease out space for commercial benefit. We don’t see any other small tower companies in the market.

When it comes to new market entrants, there have been various press releases and rumors about European operators looking at the German market.

TowerXchange: Do you anticipate any further divestment of infrastructure assets by MNOs in Germany?

Günther Stein, SVP, Sales & Marketing, DFMG: There have been rumors that a big MNO might try to sell more assets but this has not yet been confirmed.

TowerXchange: What do you see as the priorities for German MNOs at present and what impact does this have on towercos?

Günther Stein, SVP, Sales & Marketing, DFMG: LTE rollout is definitely a priority for the next 3-4 years and then the assumption is that 5G technologies will kick in around 2020, creating a further 3-5 years of infrastructure expansion to support this.

With increasing bandwidth demands from consumers and existing cable being unable to meet the data requirements of the population, MNOs are focused on adding additional capacity as a service to offer to their customers. These increasing bandwidth requirements will force the need for an increase in macro- and micro sites and so present a great opportunity to towercos

“ “

LTE rollout is definitely a priority for the next 3-4 years and then the assumption is that 5G technologies will kick in around 2020, creating a further 3-5 years of infrastructure expansion to support this


Meetup Africa 2016

Meetup Asia 2016



Meetup Europe 2017



16-17 June, Florida

5-6 April, London

The formation and ambitionsof Ireland’s newest towercoAn interview with Cignal’s Chairman and CEO

TowerXchange: Please can you tell us a bit about yourselves and your background in the telecoms sector prior to Cignal?

Colin Cunningham, CEO, Cignal: I have been working in the telecommunications sector for over 20 years after starting my career in Esat Digifone (now O2). I was a Founder and former CEO of Vilicom providing technical consultancy and property management services to the telecoms industry and have a wealth of experience managing Telecom Infrastructure portfolios including Coillte and the Office of Public Works (OPW) in the provision of Towers, Distributed Antenna Systems and Fibre solutions with a focus on customer engagement.

Donal O’Shaughnessy, Chairman, Cignal: I have over ten years experience in the highly successful Digicel group of telecoms companies in the Caribbean and Central America including roles as Chief Operating Officer and Chief Executive Officer. I was previously involved with the Irish mobile telecommunications company Esat Digifone as a member of the team responsible for the rollout of the network throughout Ireland. Over the last five years I have been involved in developing and investing in businesses spanning technology, property, financial services, media, hospitality and utilities both in Ireland and internationally.

TowerXchange: Please can you provide an introduction to Cignal and its structure?

Donal O’Shaughnessy, Chairman, Cignal: Cignal is a

Read this article to learn:< What the drivers were behind the acquisition of Coillte’s towers and why it was such a unique portfolio

< Who the Cignal management team are and what experience they have in the market

< How Cignal plans to expand their presence and revenues

< What opportunities are presented for a towerco by the Irish National Broadband Plan?

Cignal, a newly formed Irish towerco, came into life last year when it purchased 113 towers and 400 plots of land (on which its towers and those of third parties are situated) from Coillte, the state owned forestry company. In an Irish market where 29% of towers sit in the hands of eight independent towercos with portfolios ranging from 40 to 400 towers, the acquisition gives Cignal a strong foothold in a market ripe for consolidation. In this interview, Cignal’s CEO and chairman explain the Coillte transaction and how Cignal came into existence. We also discuss the newly announced National Broadband Plan and ask them to share Cignal’s ambitions for expansion in Ireland and overseas.

Keywords: Asset Register, C-Level Perspective, Cignal, Co-locations, Coillte, Deal Structure, Decommissioning, Europe, Europe Insights, InfraVia Capital Partners, Investment, Ireland, Irish, Leasing & Permitting, Managed with License to Lease, Market Entry, Market Forecasts, Masts & Towers, MNOs, Network Rollout, Passive Equipment, Private Equity, Tower Count, Transfer Assets, Urban vs Rural, Valuation

Colin Cunningham,CEO, Cignal

Donal O’Shaughnessy, Chairman, Cignal


newly formed towerco in Ireland having purchased the communications assets of the state forestry company, Coillte, in 2015. The portfolio consists of 113 owned towers and approximately 400 plots of freehold land, on which both Cignal owned towers and those of third parties (principally owned by Ireland’s MNOs) sit. The portfolio is strategically located right across Ireland.

Cignal is backed by Paris based Infravia Capital Partners through their infrastructure Fund II.

The board of directors of Cignal is comprised of myself (as Chairman), Colin as CEO and three representatives from InfraVia Capital Partners. Cignal’s management team is Colin and a team of six people, all based in Ireland and each with extensive experience in all aspects of telecommunications infrastructure asset management.

The management team formed by Cignal has

experience of managing multiple and prominent portfolios of assets both domestically and internationally. The company is newly formed and the corporate structure, brand, balance sheet, accounts systems, IT, banking facilities have all been set up within the first three months following the acquisition. Cignal has also successfully completed a financing arrangement with Bank of Ireland and Investec in December 2015.

TowerXchange: Was Coillte’s asset register in good order and most of the acquired assets in good condition when Cignal took them on?

Donal O’Shaughnessy, Chairman, Cignal: All of the paperwork for the sites including the various agreements with MNOs were in very good shape which has enabled a seamless transition of the assets and agreements into the company.

Colin Cunningham, CEO, Cignal: The portfolio was

pretty unique in that it was only one landlord selling property on which 400 towers sat - unusual for a transaction of that size. This made it very straight-forward and clear from a title point of view.

Donal O’Shaughnessy, Chairman, Cignal: When it comes to the 113 Cignal owned towers, they were all built as part of the National Broadband Scheme in 2008 and 2009 and so they’re all less than ten years old and in superb condition and capable of multi-tenant occupancy.

TowerXchange: What was the rationale behind Coillte selling the assets?Donal O’Shaughnessy, Chairman, Cignal: The sale of the assets was part of a state strategy to free up investment for other state projects such as the €59mn investment by Coillte in its SmartPly facility and investment in Coillte’s extensive wind power development projects – essentially the deal put fresh capital on Coillte’s balance sheet.

TowerXchange: What details can you tell us about the tender process and how smoothly it went?

Colin Cunningham, CEO, Cignal: Coillte announced the sale at the start of last year, announcing in January and closing in June. From a process point of view, six months from start to finish is very good. The process went extremely smoothly and kept in line with the timelines laid out from the start.

TowerXchange: What kind of competition was there in the bidding?

“ “The portfolio was pretty unique in that it was only one landlord selling property on which 400 towers sat - unusual for a transaction of that size. This made it very straight-forward and clear from a title point of view


Colin Cunningham, CEO, Cignal: The information on who bid was never made public, however we understand there to have been a good number of expressions of interest.

TowerXchange: What can you tell us about the deal value?

Donal O’Shaughnessy, Chairman, Cignal: Some numbers have been put out there but they are just speculated numbers and nothing that has come directly from us. We made the decision to not to disclose details of the transaction, we have an appetite for further acquisitions down the line and so it makes business sense to keep this confidential.

TowerXchange: Why did InfraVia look at the Coillte portfolio?

Donal O’Shaughnessy, Chairman, Cignal: The interest from InfraVia was on a number of fronts. Firstly it’s a sector they invest in and know well and they had already been looking at other opportunities in the infrastructure sector in Ireland. The asset base was also highly attractive - it’s very rare that state owned telecom assets come to market. One of the principal motives was that it was a great way to get a foothold in what is a pretty fragmented towerco market. The ownership of Ireland’s towers sit in many hands, some private, some state, some MNOs - there is good consolidation potential here.

TowerXchange: What areas of growth do you see for Cignal?

Donal O’Shaughnessy, Chairman, Cignal: We see three areas of growth. The first is to maximise the portfolio we bought from Coillte, increasing revenues and tenancies down the road, especially as new technology gets rolled out. Secondly it’s to invest further money in either new site build out (if the industry requires it) or by bringing fibre up to our sites. As part of the acquisition of this portfolio, we also have the fibre wayleave rights to all of these sites which is a huge benefit to the MNOs and those who may participate in the National Broadband Plan (which is being unveiled by the government currently). The final area of growth is in terms of strategic acquisitions of towers.

TowerXchange: Do you foresee any challenges presented by MNO consolidation in the market?

Donal O’Shaughnessy, Chairman, Cignal: Although we are in a consolidating market, the MNOs are all in the process of adding new technology layers and rolling out more equipment so ultimately a strategic set of sites like ours will always be a key part of the operators networks.

TowerXchange: Is Cignal considering developing their own fibre capabilities to play in the National Broadband Plan?

Colin Cunningham, CEO, Cignal: We will probably enter the fibre business through a partnership approach, acting as a facilitator. A lot of Cignal’s sites are multi-operator sites and so the plan is to try to facilitate a fibre strategy that allows everybody open access to fibre at these locations

in the most cost effective way possible. The site locations are within forests and surrounded by land owned by Coillte, so the wayleave rights we have are very significant - having the framework agreement with Coillte makes the process a lot easier. In addition, the operators are aware of the strategy to bring fibre to the sites as Coillte started to promote this before they entered the sale process - in fact, two of the sites today are already fibre enabled.

TowerXchange: What can you tell us about the National Broadband Plan and its rollout?

Colin Cunningham, CEO, Cignal: The government issued a PQQ before Christmas which outlined the process. The responses have to be back in by the end of February and after the pre-qualification process they’ll enter into a formal tender process with the pre-qualified candidates. Criteria for the National Broadband Plan are very well set out in the document but there seems to be a lot of flexibility in there about what will happen in relation to availability of future spectrum and there has been a lot of discussion about whether or not the strategy will be a fibre to the home strategy. We certainly believe that part of the delivery will form a wireless strategy but details are still up in the air. The positive thing is that the process has commenced and all the key players have started to engage.

TowerXchange: Is the primary goal of the plan to expand coverage to rural areas?

Colin Cunningham, CEO, Cignal: There was a National Broadband Scheme initiated in 2006 - 2007


in which 3 Ireland was the preferred bidder. The criteria at the time was to provide a minimum of 1.2MB of download speed but the Broadband Plan is to bring this up to a minimum of 30MB - creating a real step change in broadband provision to rural areas. The state have done a lot of mapping and there are approximately 750,000 premises in the catchment area to be covered by the plan.

Donal O’Shaughnessy, Chairman, Cignal: A key thing to note is that the 113 towers that Cignal owns were built primarily for the original National Broadband Scheme and as such, they will be strategically relevant in the National Broadband Plan. The physical structures are already built, they’ll just need the new technology capability added to provide the necessary coverage and broadband speeds.

TowerXchange: Moving away from the growth potential offered by fibre and focussing on potential acquisitions in the Irish market for Cignal, where do you see opportunities?

Donal O’Shaughnessy, Chairman, Cignal: Whist there have been no rumours or talk from tower owners in Ireland, either state or privately owned, we will hold discussions with all interested parties to discuss potential opportunities. It is too premature to speculate at this early stage of Cignal’s development but we see excellent potential.

TowerXchange: What volume of decommissioning is happening and are there any opportunities for Cignal in this field?

Donal O’Shaughnessy, Chairman, Cignal: Across our portfolio we don’t envisage a huge amount of decommissioning because of the strategic geographic spread of the site locations.

We’re in the very early stages of upgrading networks and the plans of the operator are still evolving and so it is too premature to guess which sites or whose sites will be decommissioned. We think that the amount of sites that will be decommissioned will be smaller than what everybody thinks, whilst the amount of new equipment added to the existing sites will be higher that what people commonly think.

TowerXchange: Is the plan for Cignal to focus solely on Ireland or is international expansion likely?

Donal O’Shaughnessy, Chairman, Cignal: At the end of the day the InfraVia Fund is a European fund. Cignal is the fund’s first investment in a tower company and certainly there would be an aspiration there to expand beyond the Irish market. We don’t have any plans or any specific markets in focus at the moment but we would be very keen to bring Cignal beyond the shores of Ireland.

TowerXchange: How would you sum up the first four months of trading as Cignal?

Donal O’Shaughnessy, Chairman, Cignal: We have had an exceptional first four months setting up the business, putting a first class and highly experienced management team in

place, successfully raising finance and have had excellent engagement with our 30 customers. We are very excited about taking the business forward and developing our relationships as a true infrastructure partner for our customers

Cignal tower portfolio site location


Protecting towerco revenues from MNO consolidation in the Irish marketInsights from Irish towerco and fibre business ESB Telecoms

TowerXchange: Please can you introduce yourself and how you got into the telecoms sector?

Ronnie Horan, Infrastructure Manager, ESB Telecoms: I started my career training as a telecoms technician in the state telecoms company which used to be called the Department of Posts & Telegraphs before joining ESB in 1980. Back then there was no commercial telecoms business at ESB and I worked on our own microwave and radio network. In the nineties, when ESB set up a commercial business to leverage the towers they had, I transitioned into this area, and then in the early 2000s a fibre optic component was added to my remit. My current role is as infrastructure manager for three teams – the tower team, the fibre team and the safety team (critical for a business particularly in the power sector).

TowerXchange: Can you give us a bit of background to ESB Telecoms’ role in the telecommunications industry?

Ronnie Horan, Infrastructure Manager, ESB Telecoms: ESB is the Electricity Supply Board of Ireland and ESB Telecoms is a wholly owned subsidiary of ESB Group. The telecoms business was originally founded back in the seventies as the incumbent operator wasn’t delivering a network that could meet ESB’s requirements and so we developed our own radio and microwave network to support our operations on the power side.

As mentioned previously, it was decided back in

Read this article to learn:< How ESB Telecoms evolved and what additional challenges are presented by its link to Ireland’s

electricity network

< The challenges of MNO consolidation

< How ESB Telecoms are increasing the customer value of their towers to mitigate loss of tenancies

< What opportunities are arising in fibre rollout and what this means for towercos

The acquisition of O2 by 3 in Ireland coupled with the EU ruling that Mosaic, the network sharing agreement between Meteor and O2, must remain has effectively created two transmission networks in the Irish market – Vodafone and the rest. Not only must consolidation of the O2 and 3 tower infrastructure take place, but where some towers originally may have had four MNO tenants in the past, this will be reduced to two, threatening towerco revenue. In this interview Ronnie Horan, Infrastructure Manager for ESB Telecoms (which owns and operates 377 of Ireland’s 3,780 towers and manages 1,600km of national fibre optic cable) shares some of the challenges this consolidation has placed on Ireland’s towercos and discusses strategies that the company is deploying to protect their revenues.

Keywords: 3, 4G, Access Control, Acquisition, Active Infrasharing, Build-to-Suit, Business Case, Business Model, Capex, Cignal, Co-locations, Coillte, Construction, Decommissioning, Eircom, ESB, ESB Telecoms, Europe, Europe Insights, Europe Research, Health & Safety, Hutchison, Infrastructure Sharing, Ireland, Market Forecasts, Meteor, Monitoring & Management, Mosaic, Netshare, O2, O&M, Office of Public Works, Operator Led JV, OPW, Procurement, Regulation, Site Level Profitability, Site Management System, Small Cells, Telefonica, Tenancy Ratios, Tender, Towercos, Towercom, Transfer Assets, Urban vs Rural, Valuation, Vodafone


the nineties to set up a commercial business to leverage the towers that we owned and we started renting tower space, originally to MNOs and then to wireless broadband operators. In the early 2000s ESB decided to rollout a fibre optic business and so as well as the 400 towers that we own, we have 1,600km of fibre. Excess capacity on this fibre optic network is leased to MNOs and broadband providers.

TowerXchange: We understand the majority of ESB Telecoms’ towers to be located adjacent to power distribution stations – what challenges does this bring, particularly in regards to safety?

Ronnie Horan, Infrastructure Manager, ESB Telecoms: Whilst our telecom tower sites are adjacent to power distribution stations they have separate access systems and usually separate compounds. Access to sites is controlled by our own safety extranet system which also includes method statements and work plans. Contractors are only issued a permit for the system once they have been through our own rigorous training and induction programme. Generally supervision is not necessary once the training and induction programme has been completed. The only exceptions being for example, if they’re using lifting equipment which may bring them in close proximity to power cables and they are not allowed to do any digging on site.

We process 4,000 access requests per year and ESB Networks, that controls the power distribution stations, allow us to grant this access because of the

rigorous safety control measures we implement. When it comes to contractors working on the fibre network, even more rigorous procedures are required due to the added safety risks. For both the tower and fibre business, we have our OHSAS system (like an ISO18001 safety management system) and every manager in the business has a safety audit quota so the work and sites are monitored and checked regularly.

TowerXchange: With such a rigorous process for contractors to go through does this mean that you tend to be reluctant to change contractors?

Ronnie Horan, Infrastructure Manager, ESB Telecoms: Our contractors are generally on three year cycles, but this is more of a procurement value thing. We operate on framework contracts which go to tender every three years – the safety angle doesn’t stop us going to tender.

TowerXchange: There has been a great deal of MNO consolidation in Ireland, what challenges does this create and how does it affect your ability to forward plan?

Ronnie Horan, Infrastructure Manager, ESB Telecoms: It has been challenging. Up until recently the four MNOs (Vodafone, O2, 3 and Meteor) were independent and so all four MNOs were occupying our towers. Consolidation means that aside from engineering challenges, there are going to be serious revenue challenges going forward, as the number of tenancies are set to decrease – where you had four MNO tenants previously this in effect

could reduce to two. Complexity has also been added by the network sharing alliances that MNOs had been forming. For example O2 and Meteor created a joint venture called Mosaic. Since the acquisition of O2 by 3 the EU has mandated that Mosaic must remain, effectively tying O2, 3 and Meteor networks together.

In terms of required new build, the MNOs’ current focus appears to be on consolidation rather than new build, we need to get past this to plot new build opportunities. Our sales and marketing people are in negotiations with different entities to try and see what can be retained and progressed. We have made significant progress, but it has been challenging for both sides. Our business development people are constantly exercised by this, before the purchase of O2 by 3, our team were well advanced in negotiations but that takeover changed the Mosaic/Netshare configuration. All the towercos in Ireland are facing the same challenges, there is a huge degree of uncertainty.

This uncertainty has been around for the past two years so we are working on enhancing the value of our sites for our customers and entering into long term tenancy agreements.

TowerXchange: What strategies are there to increase the value of your towers to tenants and mitigate loss of tenancies through the period of MNO consolidation?

Ronnie Horan, Infrastructure Manager, ESB Telecoms: One of the key things that we are looking


at is bringing fibre optic cable to more towers. With this added feature, operators are more likely to view them as core sites and thus retain them. With the fibre side to our business we are ideally positioned to do this. In fact other towercos are coming to us with enquiries about running fibre to their towers.

We are also starting to look more at small cells and less expensive structures. The days of building huge lattice structures in urban areas are probably numbered – with 4G technology you need to be closer to users and in lot of cities, towers are just not an option. We are looking at more discrete monopole structures and have had some early traction with one of the MNOs in that space.

TowerXchange: How has your interaction with MNOs changed?

Ronnie Horan, Infrastructure Manager, ESB

Telecoms: When we started in this business we were mainly dealing with transmission engineers and so if we wanted to do something on a site, the conversation was from one engineer to another. Now we have started to deal with property managers, so it’s a landlord type scenario and a different type of discussion.

We have also found that a lot of MNOs are moving away from core staff and are looking at leveraging more value from their contractors. Instead of looking for contractors to do pure rigging and climbing they are looking at contractors to do the setting up and commissioning of links for example. As a result of this we have seen a lot of the important experts within MNOs taking early retirement and leaving.

We also see variation between MNOs in how they manage their strategy and decision making. For example, one MNO still operates very much as

an independent entity, whereas another seems to be heavily influenced by the parent global organisation.

TowerXchange: Beyond the challenges presented by MNO consolidation, what are some of the other key challenges that you face?

Ronnie Horan, Infrastructure Manager, ESB Telecoms: For us, one of the biggest problems is in the bandwidth business. The price per MB is being squeezed but the capital cost for network deployment and maintenance is not. The business case is getting very difficult as there are limitations on what the retailer can ultimately charge, but for us the cost of rolling out fibre is at best stable.

We try and drive down costs through our contracting framework as we operate a heavily outsourced model, but there are only so many savings that you can achieve before you start compromising on safety, which we will not do. With our business being linked to the power side our safety standards are more stringent than other companies, for example in burying fibre in the ground we do it in the same way that we would with the power network.

With our contractors, we get them to sign up to a rate card when we appoint them, we list as many tasks as possible and ask for prices for everything from cement to building a fence so that there are no random items – that is where unexpected costs can arise. We also arrange both volume discounts and regional discounts if they’re working on

“ “One of the key things that we are looking at is bringing fibre optic cable to more towers. With this added feature, operators are more likely to view them as core sites and thus retain them


maintenance. This model ensures best value and speed of delivery to our customers.

TowerXchange: Given the pressures on both the tower and the fibre business, how do you anticipate each to contribute to revenues going forward?

Ronnie Horan, Infrastructure Manager, ESB Telecoms: At present, the towers business is more reliable - despite everything that is going on with MNOs the tower business is solid. With regards to both sides of the business we need to wait another few years and see how it plays out, although pressure on fibre revenues will continue, there will have to be a realignment in the value chain to ensure commercial returns for future fibre investment. In parallel, ESBT has significant opportunities to drive growth by broadening our customer base and enhancing our product portfolio.

TowerXchange: Is a fibre business a natural fit for towerco?

Ronnie Horan, Infrastructure Manager, ESB Telecoms: I believe increasingly so. As mobile traffic volumes increase the number of microwave hops are reducing with fibre connection required at an increasing number of towers. We are unusual in that we do both, as far as we’re aware we’re the only player active in both in the country. As mentioned, other site owners are looking at increasing value to their sites by bringing fibre to the tower, but they are speaking to fibre providers

(including us) to do so and we also expect a lot of other towercos to do the same.

TowerXchange: Following the sale of towers by Coillte to Cignal last year do you forecast any more tower transactions or towerco buyouts in the Irish market?

Ronnie Horan, Infrastructure Manager, ESB Telecoms: We looked at the Coillte network and whether we could buy it but couldn’t justify it on the basis of the expected return. We are always constantly looking at potential acquisitions but they have to add value and a good fit with our existing portfolio.

With regards to MNOs and towers we will have to

wait and see still.

At a slight tangent, on the fibre side there are some interesting opportunities arising. Rural Ireland has a serious issue with lack of broadband and just this December the government have opened a tender to address the issue. The challenge remains as to how to make this profitable, it will take massive capital investment to run fibre to remote areas and it almost becomes more of a social than a commercial play. This fits well with ESB’s track record of operating commercially in the national interest. The government is putting forward funding and whilst wireless operators are seeing this fibre rollout as a threat, opportunities will arise as fibre can’t be deployed to all areas – and with this will come new opportunities for towercos

“ “We have looked at the possibility of buying smaller players but ultimately you want a towerco that adds value. It’s pointless buying a network unless it is close to population centres and traditionally a lot of towers for sale haven’t been


The appetite of an Italian broadcast towerco for telecom towers and tenanciesRai Way’s take on the changing dynamics for a broadcast company in the Italian telecoms sector

TowerXchange: Please can you provide an introduction to Rai Way?

Giancarlo Benucci, Head of Investor Relations, Rai Way: Rai Way is a listed Italian broadcast towerco which owns 2,300 broadcast towers used to provide broadcasting and transmission activities to RAI – the public service broadcast company in Italy. Around 850 towers also host third party equipment including MNOs, broadcasters (other than RAI) and tenants such as emergency services and wireless access operators. They are one of the two big players in the broadcast tower market in Italy and each account for around 45% of the market. The other major player is EI Towers who also owns 2,300 broadcast towers and then after that there are a number of smaller companies which account for the remaining few hundred.

TowerXchange: Rai Way has been the subject of much consolidation speculation following an interest by EI Towers in acquiring the company – what can you tell us about this and whether an acquisition still looks to be on the cards?

Giancarlo Benucci, Head of Investor Relations, Rai Way: Talk around an acquisition of Rai Way has cooled off since earlier in the year. At the time of the offer by EI Towers, RAI, in accordance with the decree issued in the context of the IPO of Rai Way, complied with the condition to maintain a stake in Rai Way of at least 51%. There was also some preliminary indication (although not final judgment) from the Italian Anti-Competition Authority that the potential creation of dominant

Read this article to learn:< Rai Way’s history, future strategy and attitudes to outsourcing

< Why their potential acquisition by EI Towers fell through and whether consolidation could still

be on the cards

< Why Rai Way’s appetite for M&A of telecom towers (including Inwit’s) has changed since their IPO

< Where Rai Way forecast growth for a broadcast towerco in the Italian market

Rai Way, with 2,300 towers, is responsible for around 45% of Italy’s broadcast tower market. A failed take over by competitor EI Towers in 2015 coupled with speculation surrounding their interest in the acquisition of the Inwit portfolio thrust the company into the limelight in 2015. In this interview, Rai Way’s Head of Investor Relations, Giancarlo Benucci sheds some light on the failed EI Towers acquisition and explains why the company’s attitude towards M&A in the telecoms sector has changed since their IPO at the end of 2014.

Keywords: Active Equipment, Air Conditioning, Business Case, Cellnex, Co-locations, EBITDA, EI Towers, Energy, Europe, Europe News, Europe Research, Fixed Price, Inwit, Italy, Leasing & Permitting, Market Forecasts, Masts & Towers, Mediaset, MNOs, Monitoring & Management, O&M, Operational Excellence, Opex Reduction, Pass-Through, Passive Equipment, Procurement, Rai Way, Tender, Towercos, Valuation


market positions should be investigated. Whilst a merger seems rational from an industrial perspective (as synergies certainly could be created for both businesses), we don’t expect any movement on this in the short term.

TowerXchange: EI Towers are looking at a potential acquisition of the Inwit portfolio, is this something of interest to Rai Way?

Giancarlo Benucci, Head of Investor Relations, Rai Way: We understand that EI Towers have been invited to tender but it is not something that we are looking to get involved in. Back in September of 2015 we presented our first industrial plan following our listing on the Milan Stock Exchange. At that time we presented our strategy with regards to inorganic growth and stated that whilst we were committed to exploring M&A opportunities this was focussed on the broadcast and not the telecom sector.

When it comes to the telecom sector, in terms of small M&A we do not see many opportunities to build a portfolio and critical mass to be competitive with the likes of Cellnex and Inwit who have portfolios of thousands of towers. You could spend years building a portfolio with a few hundred towers and still not be competitive with the big portfolios. There could be some financial rationale for small M&A in the telecoms sector but it is not something that we are pushing as it’s not a strong proposition for us.

When it comes to large M&A, the narrative of our

company story has changed since the time of our IPO to today. Before the IPO we had said we had the ambition to consolidate in the telecoms sector and look at for example the Telecom Italia or the H3G tower portfolio. At the time of our IPO there were only two players in the market – ourselves and EI Towers – two broadcast towercos with the ambition of consolidating telecom assets. Since then we have however seen the entry of Cellnex and also Inwit as a separate entity. Competition for potential tower acquisitions in the telecom sector has become really tough. Cellnex and Inwit are much bigger in terms of market cap than us (roughly €3bn and €1bn) and they are trading at much higher multiples. This means that they have much greater firepower for consolidation which we are just not able to match.

Cellnex and Inwit have much higher synergies to achieve by acquiring towers. If you put together two or three telco tower portfolios you have a much higher overlap than putting together a tower and a broadcast portfolio. These higher synergies mean that they are willing to pay a higher price than Rai Way would be willing to pay.

The bottom line is that when it comes to M&A in the telecom space, Rai Way do not consider it compellingly in line with their strategy – which is focused on increasing the value of our broadcast portfolio.

TowerXchange: Do you foresee any changes in demand from MNOs on renting space on broadcast towers?

“ “

At the time of our IPO there were only two players in the market – ourselves and EI Towers – two broadcast towercos with the ambition of consolidating telecom assets. Since then we have however seen the entry of Cellnex and also Inwit as a separate entity. Competition for potential tower acquisitions in the telecom sector has become really tough


Giancarlo Benucci, Head of Investor Relations, Rai Way: We expect that demand from MNOs will remain more or less stable for a couple of reasons. Firstly, MNOs in Italy are much more focused on cost optimisation than they are on expanding their network coverage. The second reason is that broadcast towers are generally in rural locations – while MNOs are focused on expanding their network in metropolitan and densely populated areas.

As to why we don’t expect a decrease in tenancies from MNOs: they tend to use broadcast networks for emergency coverage. When their networks go down, the network on broadcast towers serves as back-up so that they can continue to deliver coverage to their customers. As this is an essential service, we don’t expect tenancies to decrease.

TowerXchange: When it comes to optimising costs and levels of service to tenants what are Rai Way’s strategies?

Giancarlo Benucci, Head of Investor Relations, Rai Way: In the telecoms sector we have no issues at all when it comes to delivering a high service level to MNOs. We offer a pure tower hosting service, providing the space, air-con and energy whilst the MNOs keep ownership of their equipment and management of their network.

TowerXchange: Is energy something that your provide or is it a pass-though?

Giancarlo Benucci, Head of Investor Relations, Rai

Way: We don’t provide it as a pass-through rather we pay the bill and the cost is recovered via fixed revenues in the tenancy payments.

TowerXchange: When it comes to monitoring and doing maintenance on sites what capabilities are kept in-house versus outsourced?

Giancarlo Benucci, Head of Investor Relations, Rai Way: The majority of our engineering and maintenance is kept in house. If you look at one of our tower’s P&L and look at our opex maintenance costs you will see that they pretty low, lower than our peers. This is because the majority of our maintenance is carried out internally. In the

broadcast sector, Rai Way is not just a pure tower hosting company, it is also responsible for all the transmission and broadcasting activity of the whole group. We own and manage the active equipment for RAI and so with this added engineering requirement, it makes sense to keep technical expertise in house.

TowerXchange: How healthy is the Italian broadcast sector and revenues within it? Will the telecoms sector become increasingly important to protect revenues?

Giancarlo Benucci, Head of Investor Relations, Rai Way: The broadcast sector in Italy is stabilising - which is good news. In the past few years, advertising has decreased a lot and many regional broadcasters have had a lot of issues and have ended up either financially distressed or going bankrupt. The situation has however, now bottomed out as the economic conditions in Italy have started to improve.

We haven’t been too affected by this as before our IPO, our activity with third party broadcast tenants was pretty limited meaning that we haven’t lost revenues as these companies have gone bust.

Whilst the telecom sector will experience higher growth than the broadcasting sector, if you look at the top line growth for Rai Way we expect this to be mainly from the broadcast side. The majority of growth is expected to come through the provision of new services for RAI and will be a key focus for us going forward

“

“

If you look at one of our tower’s P&L and look at our opex maintenance costs you will see that they pretty low, lower than our peers. This is because the majority of our maintenance is carried out internally


Kazakhstan’s firstindependent tower companyEstablished ICT service provider LogyCom diversifies into towers, and introduces TowerXchange to the Kazakh market

TowerXchange: Please introduce LogyCom Group to our community - what is the company’s background? What experience does the management team have? How is the group financed? Sergey Plissak, Commercial Director, LogyCom: LogyCom is a modern IT company supporting and developing our customers through innovations and efficiency; we strive for leadership in everything and we are proud of our business! The LogyCom group of companies has worked in the market for over 20 years. Due to its unique knowledge of the market of computer and digital technologies, the company has a long established reputation as an IT expert among its customers and partners. We do not only offer high-tech product for the markets, we also develop and implement complicated turnkey IT infrastructure projects! Today, the LogyCom group covers several sectors of the IT business:< Equipment manufacturing under our own trademark;< Developing and implementing high-tech projects for corporate business;< Developing and implementing software products, such as the LogyCom ASTRUM ERP system;< IT outsourcing of local networks of SME Customers;< Retail and service maintenance in all the regions of Kazakhstan;< e-commerce.

Read this article to learn:< Introducing Central Asia’s towerco pioneers LogyCom’s – their credentials and financing

< The size of the tower market in Kazakhstan

< Mobile market share among Kazakhstan’s four MNOs

< LogyCom’s business model

< The potential for sale and leaseback transactions in Kazakhstan

The prospective sale or carve out of almost 25,000 Russian towers has highlighted interest in the adjacent and formative Central Asian tower market, where almost all towers remain operator-captive. 20-year-old ICT service provider LogyCom Group recently launched the first tower company to serve the 4,000 tower / 17mn population market in Kazakhstan – TowerXchange spoke to Commercial Director Sergey Plissak to learn more.

Keywords: 4G, Altel, Asia, Asia Insights, Build-to-Suit, Business Model, Capex, Central Asia, Central Asia, Europe, Europe Insights, Insights, Kar-Tel, Kazahtelecom, Kazakhstan, Kcell, LC Commerce, Lease Rates, LogyCom, MLA, Market Overview, New Market Entrant, On-Grid, Regulation, Sale & Leaseback, Tele2, TeliaSonera, Tower Count, Towercos, Towercos, VimpelCom, Who’s Who

Sergey Plissak, Commercial Director, LogyCom


LogyCom JSC is a successful issue of the Kazakhstan Stock Exchange (KASE). Logycom Group is financed through borrowed funds. We have established strong relationship with the top banks in RK. In 2009, an automated celled warehouse with total area of 2,400m2 was built and brought into service on the premises of LogyCom. In 2002, the company was ISO 9001:2000 certified. According to ranking results from Expert RA Kazakhstan for 2010 and 2011, LogyCom is a leader among Kazakh IT companies in the sphere of ICT. A LogyCom branded product won the “Choice of the Year” National Competition in the category of “Personal Computer No.1 in Kazakhstan” eight times. TowerXchange: Congratulations on creating the first independent towerco in Kazakhstan! What can you tell us about your progress toward building your first 100 towers? Sergey Plissak, Commercial Director, LogyCom: We have already signed 77 Site Area Lease Agreements with a local MNO called ALTEL. We plan to sign another 20 or so agreements in the beginning of 2016. They all have the same conditions. It was the request of Altel to shift from a Master Lease Agreement to separate Site Area Lease Agreements. The agreement is mixed and consists provisions for built to suit agreements as well as lease agreements. The duration of the contract is ten years. All other

conditions are close to industry standards. TowerXchange: Could you put that into context for us by introducing the structure of the telecom tower market in Kazakhstan – roughly how many towers are there in the country? Who owns them? Are towers widely shared already? Sergey Plissak, Commercial Director, LogyCom: We don’t have exact numbers of towers in Kazakhstan. This information is secured by MNOs and regulator. We can just share the results of our analysis. We believe the total amount of base stations in Kazakhstan is about 18,000. We appraise the total amount of existing towers to be between 3,500 and 4,000. Among them 2,500 are owned by MNOs, about 700 tower are owned by the national

operator of fixed line communications, and the rest are owned by private individuals. Local MNOs still consider passive infrastructure as a source competitive advantage and don’t share towers. Only private persons are ready to invite all interested parties to lease their towers but the technical quality of private towers is generally poor and their bearing capacity is limited. Therefore, Kazakhstan has undeveloped tower market and we consider ourselves evangelists. TowerXchange: Please add further context by introducing us to the mobile market in Kazakhstan - I understand it’s quite a mature market with penetration over 150% and four active MNOs - what are the opportunities for growth?

“

“

We appraise the total amount of existing towers to be between 3,500 and 4,000. Among them 2,500 are owned by MNOs, about 700 tower are owned by the national operator of fixed line communications, and the rest are owned by private individuals. Local MNOs still consider passive infrastructure as a source competitive advantage and don’t share towers… Kazakhstan has undeveloped tower market and we consider ourselves evangelists


Sergey Plissak, Commercial Director, LogyCom: At the end of 2014 sales of smart phones and mobile phones in Kazakhstan amounted to 4.079mn units, worth 177.809bn KZT (Editor: that’s around US$0.5bn). In 2015 (January through September) sales amounted to 2.616mn units, worth 100.941bn KZT (US$0.3bn). In 2015 smart phones and mobile phones market declined (compared to the same period in 2014) averaged 10% in pieces and 3% in the national currency. The market leaders are Samsung (59%), LG (15%) and Apple (8.6%). According to the Ministry of Transport and

Communications, cellular communications in Kazakhstan are carried out in GSM (900, 1800), UMTS (700, 2100) and CDMA (450, 800) formats. The following mobile operators function in GSM and UMTS formats: < “Kcell” JSC – the majority stock holding in the company is owned by TeliaSonera, purchased from “Kazakhtelecom” JSC; 47% is owned by FinTur Nordic-Turkish holding company. It is represented in the market by Kcell, Activ and Vegaline trademarks. At Q3 2015 they had 10.79mn subscribers – 39% market share.

Coverage map:http://opensignal.com/networks/казахстан/kcell-покрытие?output=казахстан/kz-kcell-покрытие

< “Kar-Tel” LLP – a subsidiary of Russian MNO

VimpelCom with the Beeline trade mark. At Q2 2015 they had 9.708mn subscribers – 35% market share. Сoverage map:http://opensignal.com/networks/казахстан/beeline-покрытие?output=казахстан/beeline-kz-покрытие

< “Mobile Telecom Service” LLP – is a Tele2 trademark with 4.4mn subscribers in Q3 2015 and 16% market share. Coverage map:http://opensignal.com/networks/казахстан/tele2-покрытие

< The CDMA format is presented by the “ALTEL” JSC operator, owned by “Kazakhtelecom” JSC. The company is represented in the market by the Dalacom, Pathword and City trademarks. The 4G LTE standard is also represented in the market by “ALTEL” JSC. They had 3mn subscribers in Q3 2015, good for 11% market share. Coverage map:http://opensignal.com/networks/казахстан/altel-покрытие?output=казахстан/altel-4g-покрытие

Kazakhstan’s mobile penetration rate is 160%. TowerXchange: What will be Logycom Group’s business model – for example will you provide power as a service, or will energy costs be passed through to the tenant? Will I&C and O&M be managed in-house or outsourced?

MNO subscriber market share, Q2-3 2015

Kcell JSC (TeliaSonera)

Kar-Tel LLP (VimpelCom)

Mobile Telecom-Service LLP (Tele2)

Altel JSC (Kazakhtelecom)

Source: LogyCom

39%

35%

16%

11%


Sergey Plissak, Commercial Director, LogyCom: Logycom Group’s tower business is organised through an affiliated company named LC Commerce LTD. We are striving to maximise our lease rate revenue and our partner’s satisfaction through the proposition of a wide range of services, e.g. security, active equipment installation, fibre line laying from a tower to the closest connection point of national fixed line operator, and provision of diesel generators. We are not going to manage I&C and O&M in-house. It is not efficient in local conditions. Kazakhstan is a very big country by area and small by population. We have several I&C contractors in each region of Kazakhstan and one general countrywide contractor for O&M (the company provides to local MNOs FLM services for active equipment and has branches in each region of the country). We are not going to provide power as a service.

This kind of commercial activity is licensed and license requirements are very tough. We install our towers next to electricity distribution company’s lines or substations. Our tenants conclude direct power supply contracts with distribution companies. In case of absence of a close electricity connection point we lay the line from our tower to the closest connection point.

TowerXchange: Do you foresee potential for larger scale sale and leaseback transactions with Kazakhstan’s MNOs? Or does your focus remain on build to suit in the near term? Sergey Plissak, Commercial Director, LogyCom: The total number of towers in Kazakhstan doesn’t exceed 4,000. It is not huge scale for sale and leaseback transactions, but we hope to acquire entire portfolios after the establishment of built to suit relationships with all local MNOs. We started our business with a trial built to suit

transaction with the local MNO which the only has LTE frequencies in Kazakhstan. The company started development of its GUL network in 2012. Therefore, the company has the biggest capex plan among local MNOs and we hope that we will provide all necessary towers. A recent initiative of the regulator gave a breath to the Technological Neutrality Principle in Kazakhstan in exchange for an obligation to cover rural areas. This change in the market will force local MNOs to increase capex to satisfy regulator obligations. Partnerships with a towerco will become the most efficient way to resolve the issue. TowerXchange: Finally, what is your vision for the future of Logycom Group’s towerco business? Sergey Plissak, Commercial Director, LogyCom: We have a competitive advantage as a pioneer of the tower business in the Central Asian region. We see ourselves as the only towerco in Kazakhstan. We plan to expand our business through Central Asia in the near future. We will initiate sale and leaseback transactions as well as offer our clients built to suit opportunities. We understand that our ambitious plans require significant financial resources as well as industry competence. Therefore, we started negotiations with potential partners to enter our business. The negotiations are on the initial stage and not binding. So, we are open for new cooperation offers from interested parties

“ “We see ourselves as the only towerco in Kazakhstan. We plan to expand our business through Central Asia in the near future. We will initiate sale and leaseback transactions as well as offer our clients built to suit opportunities


A new breed of European towercoInsights into Cellnex’s towerco origins, how the deal was done and what’s next for this exciting European towerco

TowerXchange: Cellnex Telecom has become Europe’s largest independent towerco in a little over three years. Can you tell us about how that came about?

David Bernal Cantero, Business Development Manager, Cellnex Telecom: We launched the pure tower business three years ago but before that, several years ago, we were actually going after different mobile operators’ towers in different countries (mainly in Latin America) to analyze different tower schemes. (On one hand an asset acquisition from the mobile operator and on the other hand to set up a vehicle which would have different tower assets from different markets with the same operator). We’d chased some of the towers but some of the operators took the decision to sell the towers on a country by country basis rather than all at once and as a result it became a very competitive process.

At that time we thought that instead of competing in emerging markets we should be focused on mature markets in order to deploy our tower industry proposal. We analysed and tried to learn from the profile of the main actors - our competitors too - within this market. They had a higher appetite for risk (for example going into emerging markets) and they were backed up by a strong presence in the growing US market. Once we reached this conclusion we decided to pull out and focus on Europe, which is our home ground and is more difficult for companies coming in from other regions as it’s based more on consolidation than on growth. Our model here is not based on the idea of getting three or four tenants on a tower, it’s based around the idea you can dismantle

Read this article to learn:< How Cellnex’ tower origins (formerly as Abertis Telecom) in LatAm drove their European strategy< European regulations and their impact on tenancy ratios< The reasoning behind Abertis’ IPO of Cellnex< What events in the Italian market mean for competition

Abertis’ (referred to in this article as Cellnex following an IPO of Abertis’ tower business in May 2015) deal with Wind was announced formally in early March, during Mobile World Congress 2015. Amongst the hubbub of product launches and Silicon Valley celebrities, a deal for the acquisition of telecoms towers in Italy might not seem headline news, but if you dig deeper this announcement could well mark the beginning of something rather exciting for the European market. Thus far slow to transfer assets from operator-captive to third party towercos, Europe has lacked a truly international force to champion the towerco model which has worked with such success in the US, Africa, Asia and Latin America. While Cellnex’s plans are still in their infancy, it’s clear scope of their ambition could be a catalyst which will see significant change taking place in European telecoms infrastructure over the next few years.

Keywords: Abertis, Acquisition, Anchor Tenant, Business Model, Cellnex, Co-Locations, Deal Structure, Decommissioning, Europe, Infrastructure Funds, Infrastructure Sharing, Interview, Italy, Market Overview, Opex Reduction, Regulation, Sale & Leaseback, Spain, Tenancy Ratios, Towercos, Transfer Assets, Valuation

7,472 sites

Total sites:15,170

7,698 sites



the tenants on an existing tower and transfer them to new sites. Europe is a mature market and different to any other market – European investors aren’t used to the level of risk you get in markets like Africa so you need to build up the business step by step, you can’t go all at once. We want to invest in Europe, reach a certain volume and then deploy our industrial knowledge elsewhere.

TowerXchange: Was this also the reasoning behind your IPO for Abertis’ tower business?

David Bernal Cantero, Business Development Manager, Cellnex Telecom: For Abertis, telecoms was a part of the wider business, Abertis invests heavily in the motorway side of the business as well. The drivers for the telecom business are very different from the motorways part of the business and that was the assessment by the market too.

That’s one of the reasons that drove Abertis’ decision to let Cellnex float: i.e. facilitate its ability to encompass growth opportunities in the telecom markets while having a flexible and efficient financial mechanism through being a quoted company. Now we are independent we can focus on expanding our frontiers and access to the financial markets and a specific type of investors.

TowerXchange: You say you’re keen to establish a base in Europe first, what are your plans for the European market?

David Bernal Cantero, Business Development Manager, Cellnex Telecom: Our plan in Europe is

diversification. Germany is an attractive market at the moment, reducing the number of operators from four to three will shake things up. The UK is also interesting but it’s a very competitive market with strong incumbent towercos. France is a strong market with some MNO transactions in the pipeline which might drive some changes in the market. We see some good short term opportunities in Europe, not only in the countries mentioned above but also in other European countries. It doesn’t make sense to have three or even four competing networks in a market so some consolidation will need to take place to capture all the value and be shared between the different players, telecom operators and tower companies. The challenge for us there will be to protect our transactions from a possible tenant dropping out of the market.

TowerXchange: What kind of tenancy ratios do you think are achievable in Europe?

David Bernal Cantero, Business Development Manager, Cellnex Telecom: In terms of tenancy ratios in Europe, there are a lot of factors at play.

One which isn’t really an issue in places like Africa are the regulations around magnetic emissions. In Italy the restrictions are stringent and the levels limit the capacity to host tenants. It means you can’t have more than three tenants on each tower at the most but it depends on location of the towers (levels are lower close to hospitals or other critical places). These restrictions vary dramatically country to country so the effect on tenancy ratios will vary but it’s a clear consideration in Europe and should be taken

into account at the time you plan a consolidation process between two different networks. Anyway, what it doesn’t make sense is to have different towers at the same place because first the value of this overdimensioned infrastructure is low and the market players burden become burdened with inefficiencies. TowerXchange: You mentioned decommissioning earlier, is that something Cellnex is very involved in?

David Bernal Cantero, Business Development Manager, Cellnex Telecom: Decommissioning is a hot topic in Italy. In Spain there are three main MNOs and a fourth one with a small number of towers, and Italy has four full networks (one of which has sold part of its network to Cellnex) of which the smallest has 8,000 towers. With 40,000 towers in Italy you’ll have to dismantle some of them, particularly as the towerco model grows. We are involved in the analysis of the decommissioning of overlapped towers in different countries, we could dismantle the tower and move a tenant’s equipment for them if we have a tower in a better location nearby which increases market value for them and maintains the level of quality and coverage – MNOs right now value savings over assets and that’s what the towerco model offers them in addition to some cash in to cover different type of costs.

TowerXchange: How much of the Wind tower portfolio have you acquired?

David Bernal Cantero, Business Development Manager, Cellnex Telecom: We didn’t acquire all the


Wind towers, we acquired around 60% of the total. It depends on the attractiveness of the site. In this deal Wind pre-selected the most interesting sites which were offered for sale. They originally proposed around 6,000 towers and then they increased the number of towers to make the transaction more attractive.

TowerXchange: How do you see the Wind acquisition changing the tenancy mix of your Italian portfolio (Abertis bought 300 towers from Atlantia in 2014)?

David Bernal Cantero, Business Development Manager, Cellnex Telecom: The TowerCo acquisition was completed in May 2014 so we did have assets in Italy already but it’s a very different business. TowerCo’s towers are focussed on motorways and tunnels, not typical towerco assets at all. They also manage a portfolio of real estate which is rented to operators for their own tower portfolios. TowerCo has just 300 towers so of course the acquisition of the Wind portfolio will dilute the tenancy mix significantly.

TowerXchange: How do you see the competitive landscape in Italy now?

David Bernal Cantero, Business Development Manager, Cellnex Telecom: Italy is a competitive environment and has very high mobile penetration but there’s a situation based on the fact that there are a lot of small companies with small portfolios of maybe 10-50 towers which means you have local or regional concurrence. Anyway, it gives you the chance to build an industrial project and consolidate the different existing networks



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Opportunities for an independent infrastructure provider in European DAS and small cellsInsights from leading European DAS and small cell player Wireless Infrastructure Group

TowerXchange: Please can you tell us a little about yourself and how you got into the telecoms business?

Scott Coates, CEO, Wireless Infrastructure Group: Before launching WIG I ran TMT investments for an infrastructure fund. In 2007 a 5,000 tower portfolio was sold by National Grid to Arqiva and I ran one of the under-bidder consortiums. This process got me very close to sector and I saw a huge opportunity to build an infrastructure business in a very dynamic industry.

TowerXchange: Please can you give us a bit of an introduction to Wireless Infrastructure Group?

Scott Coates, CEO, WIG: We launched WIG as an independent infrastructure company eight years ago. We set out from the start to be a pure play telecoms towerco rather than follow the broadcast led model that was the norm in Europe at the time – we were probably the first in Europe to do that. Everything from our strategy, systems and the KPIs we use to run the business were drawn out of the US market. We’ve built the business up from scratch through a combination of organic and M&A initiatives and also navigated some interesting challenges along the way such as network sharing and consolidation. We now have 2,000 towers across three European markets and a fast growing DAS and small cells business. We see a tremendous opportunity to scale up our business, both in the UK and through M&A in other European markets.

Read this article to learn:< How WIG developed the largest venue-DAS side business in the UK

< The value proposition of an independent infrastructure provider in small cells and DAS and how

this is viewed by venues and MNOs

< How and why the European outdoor small cells and DAS market will differ to the US

< Where WIG forecast the biggest growth in small cells and DAS and how this compares to the

macro-structure side of their business

Wireless Infrastructure Group, an independent towerco with over 2000 macro sites in the UK, Ireland and Netherlands entered the DAS and small cells business in 2012 and have since grown to be the biggest installer of large venue-DAS systems in the UK. With not only ambitious plans for expansion of the venue-DAS business in the UK and other European markets but also a developing business in outdoor small cells, WIG see strong opportunities for growth. In this interview we speak to Wireless Infrastructure Group CEO, Scott Coates.

Keywords: 4G, Active Equipment, Anchor Tenant, Business Case, Co-locations, Crown Castle, DAS, Densification, Europe, Europe Insights, Europe Research, ExteNet Systems, Infrastructure Sharing, Installation, Intu, Ireland, Market Forecasts, MNOs, Monitoring & Management, Netherlands, Network Rollout, O&M, Opex Reduction, Opex Sharing, Outdoor Equipment, Passive Equipment, Research, RMS, Site Management System, SLA, Small Cells, Towercos, UK, WIG, Wireless Infrastructure Group

Scott Coates, CEO, Wireless Infrastructure Group


TowerXchange: When did you decide to enter the small cells and DAS market and what was your rationale behind entering?

Scott Coates, CEO, WIG: We started looking at DAS and small cells five years ago and entered the market in 2012. When people talk about small cells, they use the term very openly but effectively there are two different streams. The first is the indoor side of our business which we term as venue-DAS. This is where we build and operate shared infrastructure in large venues such as shopping malls. Then there is the outdoor small cell market. In the US you have outdoor DAS as well but we don’t currently see that architecture in the UK or elsewhere in Europe.

When we launched, our focus was on venue-DAS. We looked around Europe and couldn’t see anyone independent DAS, one or two of the larger broadcast players had dipped their toe in the market but the MNOs didn’t seem happy with the product. We wanted to find technical solutions and a business model that could gain support and traction with the MNOs before launching this business stream.

We spent some time in the US and noted the presence of independent infrastructure providers in the space, either towercos (such as Crown Castle) who had extended into small cells and DAS or independent small cells players such as ExteNet Systems (the largest independent distributed network business in the country). The type of business model that we aspired to was being executed by ExteNet Systems; we liked the way that

they were approaching the market and we set out to at least try and follow their customer driven model.

TowerXchange: What barriers to entry were there?

Scott Coates, CEO, WIG: One thing I would say about entering this market is that DAS and small cell delivery requires very long lead times. When building new networks you have to first of all secure the relationship with the venue owner and then with the anchor MNO. A lot of the early business development for a new network involves

persuading venues to value the wireless utility that the infrastructure will deliver. We have to make the case that venues seeking income from these solutions will only push up prices to the MNOs and risk the bigger prize of better coverage. We launch all of our venue-DAS with a single anchor MNO which is part of the value proposition that our independent network infrastructure has brought to the market. We allocate capacity on the network to our anchor MNO and they only pay for what they use, which significantly lowers lifecycle costs compared to an MNO deploying their own network. We take the risk that other MNOs will

MediaCityUK in Manchester; where WIG installed the UK’s largest multi-operator DAS network


use the network over time, which we are highly incentivised to pursue as we don’t make a return until we’ve got the network populated.

We launched our first venue-DAS in early 2013, launched another in 2014 and at the end of 2015 we’re up to twenty deployed networks. Momentum is now building and we have a pipeline over fifty venues we’re working with – it’s taken a while to build that momentum but we’re now seeing the benefit.

TowerXchange: What differentiates WIG’s value proposition and makes it so customer centric?

Scott Coates, CEO, WIG: In venue-DAS, the venue generally only wants one DAS network deployed and it’s also costly for the industry to invest in separate DAS networks to support each MNO. As an independent infrastructure provider we are

incentivised to get all of the MNOs onto the same network which is highly desirable to our venue partners.

Another part of doing business differently is the level of service that we offer – all of our networks come with full SLAs for our MNO customers, we provide service credits if there’s downtime and we have an obligation to monitor and maintain the network around the clock.

Furthermore, we work hard to create the very best network designs that people want to support, we have invested heavily in getting the technical specifications for our networks right from the beginning. This is key when your business model is dependent on getting additional customers to sign up, you need to design a network that is desirable to all MNOs. It has taken time but our design standards are now being adopted by some MNOs

when specifying their own network requirements which gives us confidence that we are delivering a design that our customers really value.

TowerXchange: Which verticals did you decide to focus on when entering the venue-DAS market?

Scott Coates, CEO, WIG: Shopping malls and large office developments were the verticals we decided to focus on initially. Our first venue-DAS was deployed at MediaCityUK in Manchester (see picture one) which is still to this date, the UK’s largest multi-operator DAS network. It was the first 4G MIMO DAS network in the UK, it covers two million square feet, has 300+ antenna points, 40-50km of cabling and provides service to a number of venue tenants including BBC and ITV’s offices, Europe’s largest studio facility, a hotel, a university and over 200 SMEs. The second installation we completed was a top five UK shopping mall – intu Trafford Centre in Manchester, which was the first shopping centre in the UK to get a dedicated 4G network.

The majority of our deployments to date have been in shopping centres and offices. There is still huge potential in both – if you look at the top 100 UK shopping centres, less than 20% have 4G. We have a relationship with Intu (the largest shopping centre owner in UK) who are a partner in our venue-DAS deployments and this is an important part of building our business. We have completed installations in hotel and leisure venues and see potential in concert arenas, hospitals and other sectors. This month for example we will switch on new networks in The Leadenhall Building (the City

“ “It has taken time but our design standards are now being adopted by some MNOs when specifying their own network requirements which gives us confidence that we are delivering a design that our customers really value


of London’s largest building, see picture two) as well as Center Parcs latest holiday village in Woburn.

TowerXchange: What is the route to market in the venue-DAS business?

Scott Coates, CEO, WIG: Generally this would be us going out and speaking to the venues (or the venues reaching out to us) and creating network solutions that we can present to the MNOs. We are however increasingly getting asked by MNOs to try

and acquire specific venues on their behalf, putting in place our infrastructure so that they can deliver services on a cost effective basis.

TowerXchange: You mentioned at the time of launching that your focus was on venue-DAS but what opportunities do you now see in outdoor DAS and small cells?

Scott Coates, CEO, WIG: Our view is that in the next ten years, the UK needs over 50,000 small cells

deployed across city streets. Whilst there is some wireless technology which can help connect small cells, over time we believe that the vast majority will need to be on fibre.

Fibre companies (such as BT) would like to connect all the nodes individually and charge for transmission to each separate node. We can provide an alternative solution and disrupt that business model by creating outdoor distributed networks, tying multiple nodes on a single fibre backbone and effectively creating savings relative to buying separate circuits from players such as BT.

In the US market you find that the DAS and small cells market is more of a fibre business as operators tend to deploy their own equipment at the end of the fibre. This model typically results in single operator nodes whereas in the UK and Europe,

“ “Our view is that in the next ten years, the UK needs over 50,000 small cells deployed across city streets

Leadenhall Building - the City of London’s largest building, where WIG are switching on a new venue-DAS network this month


operators are much more cost conscious and willing to share infrastructure and this creates opportunities for independent infrastructure providers such as ourselves to help facilitate this demand.

In the UK, the venue-DAS business is based very much on infrastructure sharing - we own, operate and manage the nodes and share the capacity between the MNOs. Infrastructure sharing goes right the way down the network to a far greater degree than it does in the US, and we think that outdoor small cells will be the same.

The value proposition for the MNOs under our model is shared economics on both the fibre and the node and a partner that is doing all the asset management – the prospect of lowering our customers cost of ownership is significant and we see huge opportunities there.

TowerXchange: What work has been done on developing your outdoor small cell business model and what has been deployed to date?

Scott Coates, CEO, WIG: About two years ago we started R&D on outdoor small cells and have developed some very interesting IP, essentially enabling an installation that can support multiple MNOs at a single lamp-post in a way that works for UK streets. It will involve a cabinet on the ground which can support eNodeB and cloud-RAN architectures and even a more traditional DAS approach should the market require it.In terms of how we’re starting to go into the market,

we competed successfully against BT last year and were awarded rights to the City of Aberdeen’s lampposts and so are developing a trial there. We are also working in various stages with other cities in the UK to become their partner.

TowerXchange: Will Aberdeen be the first UK city to run a trial for an outdoor small cell network?

Scott Coates, CEO, WIG: We know that some of the MNOs are doing trials, and in the UK a lot of the cities have run concession tenders for Wi-Fi but Aberdeen was the first city to award a 4G small cell led concession. Some other cities are now starting to look at that this as well.

TowerXchange: How does the UK compare to other European markets in terms of outdoor small cells deployment?

Scott Coates, CEO, WIG: Trials are taking place across Europe, particularly in the dense metro areas. The UK, however, has very fast take up of 4G and we believe that the combination of demand for online and our urbanised nation will position the UK amongst the European front-runners. What we might find in Europe is more MNO-led solutions as a starting point – from a WIG perspective, we first need to create the market for independent infrastructure providers, we don’t expect it to land in our lap.

TowerXchange: Do you envisage permitting problems with municipalities and other

authorities to be a hurdle further down the line?

Scott Coates, CEO, WIG: We are a communications code operator which means we have the rights to deploy infrastructure in certain places. Part of a partnership that you need to form with a city or municipality (which is where a lot of the hard work goes in) is in assessing and setting up the processes for deployment. What assets do they have? What is the physical capability of their lampposts and traffic light systems and can they handle our infrastructure on top of them? Is everyone happy to sign off on that? How do you connect up power and transmission to these? We have been doing a lot of that work over the past 12 months with Aberdeen, just getting all the processes set up for deployment. That is a big part of our value-add to the MNOs, handling all this in the field.

TowerXchange: How will monitoring be managed and how costly will this be relative to management of macro structures?

Scott Coates, CEO, WIG: We run 24/7 monitoring on all of our venue-DAS assets at the moment and carry out both routine preventative and unscheduled corrective maintenance. Our monitoring system is intelligent enough to tell us when something is wrong and we work with a group of partners who both build the assets and support some of the monitoring activities as well.

With outdoor small cells, we need to look at the US to see what experience they have. The trick is that we need to build good networks on day one and we


need appropriate monitoring and maintenance. It will be a different kind of monitoring and maintenance to that with macro structures – coming with its own set of challenges

TowerXchange: How do you forecast the outdoor side of the business developing?

Scott Coates, CEO, WIG: With outdoor systems it is too early to say at the moment, we are still in the trial phase and it’ll probably be 2017 before we see anything of any scale coming through. We’re not getting into any revenues for outdoor small cells yet, we are still developing the product however this is critical groundwork for us ahead of MNOs starting to look at options for deploying small cells in a major way, we need to be ready.

TowerXchange: What have been MNO attitudes towards using an independent infrastructure provider versus developing networks themselves?

Scott Coates, CEO, WIG: We’re seeing a really open mindset from the MNOs and whilst we are still at early stages of engagement, we’re optimistic about their appetite to partner with an independent infrastructure provider that can deliver a cost effective alternative to the fixed line incumbent.

TowerXchange: Where do you see the immediate opportunities for WIG in the small cells and DAS market?

Scott Coates, CEO, WIG: There is a huge amount

of work for us to still do in venue-DAS in the UK. Whilst it’s very hard to size the market, there could be around 1000 venues that need infrastructure and we’re just starting on that journey. We’re the market leader in the UK in the deployment of venue-DAS networks, having deployed more than anyone else last year including (we think) the MNOs. We are also looking at the UK transport network and are very keen to deploy infrastructure along tunnels in the UK which is a big priority for the government. Our next move for venue-DAS will then be outside the UK, potentially forming partnerships with other mid-market European towercos.

TowerXchange: Which countries would be the most logical next step for WIG in venue-DAS?

Scott Coates, CEO, WIG: There are a few different thoughts around that. As a company we already have macro-structures in both the Netherlands and Ireland which gives us an understanding of those markets and so both could be attractive options. Secondly, a lot of European real estate gets run through London and so relationships we have built with companies here could facilitate our entry into other European markets. For example, our largest partner, Intu, also has three shopping centres in Spain and so we are in discussions with them about providing networks to those venues. Our focus will be on capturing multi-venue owners to facilitate further venue-DAS deployment.

TowerXchange: How do you see the small cells and DAS side of the business shaping up relative to the macro side in years to come?

Scott Coates, CEO, WIG: We’re a long way off it being close to the revenues from the macro side but small cells and DAS is definitely a key area of growth. If you look at Crown Castle’s last set of results, small cells represented around a third of growth. We see towers as long term infrastructure assets which will provide steady revenues in supporting wireless networks for many decades. DAS and small cells represents an entirely new and very significant independent infrastructure opportunity as network densification becomes critical to our customers

““

there could be around 1,000 venues that need infrastructure and we’re just starting on that journey. We’re the market leader in the UK in the deployment of venue-DAS networks, having deployed more than anyone else last year including the MNOs


View from the top: the UK’sbiggest towerco on rural coverage and capacity solutionsArqiva illustrates the synergies between broadcast and telecom towers, and highlights value added services

TowerXchange: Please share Arqiva’s background. How was the company formed? Nicolas Ott, MD Telecoms, Arqiva: Arqiva is a private company owned by pension and infrastructure funds. We have a long history in the UK starting at the beginning of the 20th century as Arqiva’s roots go back to the ITA (Independent Television Authority) in the 1950s. It’s been going through a long journey in TV infrastructure whilst developing the mobile tower business step by step. The ITA was renamed a number of times and as NTL Broadcast was bought by a Macquarie-led consortium in 2005 and renamed Arqiva. In 2007 Arqiva acquired National Grid Wireless, which was owned by Crown Castle until 2004, and which included within that business the former BBC terrestrial broadcast assets. In the UK Arqiva does all the TV broadcasting (which is a regulated activity) and it was Arqiva who made the digital switchover two years ago, we also do most of the radio broadcasting in the UK and buy wholesale satellite capacity and resell as a service to TV channels all over the world for Turner, Al Jazeera and many big TV groups. We also have recently formed a strong machine-to-machine division. We won the smart meter tender issued by the UK government, from Manchester to North of Scotland, making us defacto one of the biggest players in the UK. We have also invested in other technologies, for example we have exclusive rights of the SIGFOX technology in the UK for the first nationwide Internet of Things network.

Read this article to learn:< How one of Europe’s oldest towercos has diversified to remain competitive in the current market

< How broadcast infrastructure can be employed for telecoms coverage and capacity

< How potential consolidation in the market will affect MNOs’ appetite for further independent

tower access

< How Arqiva is making capacity solutions work for MNOs and landlords in the UK

With over 60 years’ history in broadcast infrastructure, Arqiva is one of a uniquely European breed of towerco which has grown up from a solid history in television broadcasting and now owns a large chunk of both broadcast and telecommunications infrastructure in their home countries. Nicolas Ott, MD of Telecoms at Arqiva, spoke to TowerXchange to explain why he thinks the broadcast/telco infrastructure synergy works so well in Europe, how capacity solutions will be the next big area for growth, and how he sees the UK tower market developing.

Keywords: Interview, Towercos, Europe, Arqiva, United Kingdom, England, Scotland, Wales, Northern Ireland, O&M, Construction, Market Overview, Investment, 4G, EBITDA, Valuation, Tenancy Ratios, Co-locations, Infrastructure Sharing, QoS, Build-to-Suit, On-Grid, Procurement, Skilled Workforces, Rooftop, DAS, Small Cells, Decommissioning, Infrastructure Funds

Nicolas Ott, MD Telecoms, Arqiva


In terms of telecom infrastructure we own roughly 25% market share in UK macro tower sites. We service all of the four MNOs and have around 8,600 active towers for these mobile operators. Our tenancy ratio is around 2.5 MNOs per tower on average. Our total portfolio consists of over 16,500 towers but they’re not all active either because the specific locations do not currently form part of wireless operators’ network rollout plans, are in rural locations where there is no current demand or in some cases are sites which are complex and expensive to deploy (such as electricity pylons). Either way we are the largest independent wireless infrastructure provider in the UK. We have around 2,200 employees across the whole business and most are in the UK – we do have a handful of staff in the Republic of Ireland, France, USA and Asia but primarily we are a UK company. TowerXchange: Would you describe Arqiva as a towerco, an infraco or something different - we’re trying to understand the language the industry uses in Europe. Nicolas Ott, MD Telecoms, Arqiva: We’re a communications infrastructure and media services company, operating at the heart of the broadcast, satellite and mobile communications markets in the UK. If you want a comparison we’re similar to TDF in France or Abertis Telecoms/Cellnex in Spain or other broadcast infrastructure providers across Europe. The African model doesn’t look like Europe

and the US is different again so comparisons are hard. We offer infrastructure (mobile, broadcast and satellite) and we also package up services to broadcasters and MNOs. In order to do this we need to co-ordinate who does what, so we end up doing the end to end service as a natural part of what we do. TowerXchange: We encounter a lot more hybrid broadcast and telecom towercos in Europe than elsewhere, and we’re trying to understand why. To what extent do the telecom and broadcast tower businesses complement one another - are a lot of resources and capabilities shared across the business units, or are they really quite distinct operations? Does the relative maturity of European mobile network infrastructure make telecom towers a more typical infrastructure investment and thus more natural complement to broadcast towers than telecom towers in higher growth, higher risk markets?

“ “We service all of the four MNOs and have around 8,600 active towers for these mobile operators. Our tenancy ratio is around 2.5 MNOs per tower on average. Our total portfolio consists of over 16,500 towers

Nicolas Ott, MD Telecoms, Arqiva: It’s a very simple, three layer answer: infrastructure, sourcing and skills. Infrastructure; if you look at a broadcast tower it’s always a relevant structure for MNOs. If you look at our tower at Crystal Palace it does the TV broadcasting for most of London, it would be a lost opportunity not to use it for telecoms as well. These broadcast towers are so big and strong, adding a few antennas for MNOs is easy. The majority of our broadcast towers have antennae for MNOs as well and they’re liked by our MNO clients as they are high up and stable. There’s no need to duplicate assets and investment with these towers. In terms of sourcing, for both telcos and TV we outsource a lot to third party suppliers for maintenance and other ‘easy’ work, although we do keep the sophisticated stuff in house. We use the same suppliers for all parts of the business, so


when we issue a tender we can propose a bigger scope, which means the bidder can offer us a more competitive price and service. The same applies for electricity as we buy electricity on our sites for both our MNO and broadcast customers, and by combining we get a better service and price, so our customers all benefit. There are very demanding service level agreements (SLAs) in terms of maintenance and, because sites are everywhere across the country, putting a bigger tender makes it easier to find a supplier capable of delivering the right SLA at the right price all over the country. When it comes to skills, we keep the most value-add functions in house. When someone wants to put an antenna on a mast you need to do fairly technical drawings, we do a lot of that in house as we have to be sure it’s done well. Also in terms of the 4G rollout right now we have about 6,000 requests for 4G upgrades, so you need huge project management capabilities to manage that. Also for TV we’re working on the next digital upgrades so we can

create a much more efficient project management office by combining everyone together. And last, in terms of shared service desks, it becomes possible to provide a better service for our customers. There are some really interesting synergies in all of these three areas. TowerXchange: How has Arqiva’s telecoms tower mix developed?

Nicolas Ott, MD Telecoms, Arqiva: The ITA had been renamed a number of times and was known as NTL Broadcast when it was bought by a Macquarie-led consortium in 2005 and then renamed Arqiva. Between 2005 and 2007 we acquired various satellite assets, and in 2007 we acquired National Grid Wireless, which included the BBC’s terrestrial broadcast assets. Both NTL Broadcast and Crown Castle/National Grid Wireless had developed their own telecoms mast portfolios, before both were merged into Arqiva.

After the merger, Arqiva continued with a number

of smaller acquisitions, including Spectrum Interactive, the WiFi business, in 2012 and we continued to develop the telecoms mast portfolio, including outsourcing from mobile operators, to around the 8,600 active macro sites we have today. Of these, less than 1,000 are broadcast sites, a mix of former ITA/NTL Broadcast and BBC/National Grid Wireless masts. In total we have wireless infrastructure rights on around 16,500 marketable sites - by ‘marketable’ we mean that a site is capable of accommodating the equipment of at least one new wireless operator, but as I mentioned not all of these are attractive to use for mobile operators due to their often remote locations, but nevertheless would be available any time to deploy MNO or other wireless operator equipment on.

TowerXchange: Given unique position of the UK market with both MBNL and CTIL providing infrastructure sharing (and more) across all the operators, how does that affect Arqiva’s role as a towerco and what your tenants require from you? Nicolas Ott, MD Telecoms, Arqiva: For us it’s pretty straightforward. If you take the long term view, in 10 years’ time, especially in rural areas, there’s no valid reason why MNOs would keep duplicated towers.

When MNOs launched, the big USP was to construct towers faster than your competitors and market your network as a competitive advantage. Now when there’s a big spectrum auction in Europe it comes with high coverage obligations. For the MNOs

“ “

For the MNOs coverage in rural areas won’t provide marketing differentiation any more. So at a time when profitability in the UK is challenging, they’ll have to move step by step to a shared tower infrastructure


coverage in rural areas won’t provide marketing differentiation any more. So at a time when MNO profitability in the UK is challenging, they’ll have to move step by step to a shared tower infrastructure. So we provide towers to all of them. MBNL and CTIL are our top two customers. We see it as Arqiva’s’ responsibility to find solutions for MBNL and CTIL to have the capacity to consolidate their network in the most efficient way. If you take the long-term view once they complete their 4G roll out, BT will buy EE and Hutch might buy O2, so if you look to 2020 and beyond, they’ll need to consolidate where they have sites. Most sites in the UK are still owned by the MNOs themselves; you’ll often see two masts very close together as they are owned by CTIL and MBNL. Fundamentally we will find elegant solutions to help them to reduce these towers. The UK government launched the Mobile Infrastructure Programme (MIP) which constructs brand new sites in remote areas where all four MNOs are installed. So MIP is a model of what the UK will be in five years’ time. It’s not just specific to the UK, though, every European country is in a similar situation. TowerXchange: What are you doing in response to your clients’ long term needs?Nicolas Ott, MD Telecoms, Arqiva: It’s publicly available information that we have long-term contracts with MBNL and CTIL. We have the right clauses in place so the ball is in their court and for them to decide what and how they want to build.

You also have to consider what their priorities are – 4G rollout is high on their agenda. We meet with them daily, I meet their CTOs every month. The day they want to put it on the agenda it will happen as it is provided for in our contracts with them which are designed to allow for future technology upgrades and growth. TowerXchange: Where is the growth coming from in UK communications infrastructure today? For example, what’s the balance of existing and new business between macro towers and infill sites - small cells, metro cells, Wi-Fi and DAS? Nicolas Ott, MD Telecoms, Arqiva: This is one of the most interesting things happening in this industry at the moment. There are two main areas for growth; the first is coverage in rural areas, the

second is by far the biggest growth area and that’s capacity solutions. In terms of rural coverage there is still growth; the UK government is investing in new masts in this area, some MNOs want to densify coverage in rural areas and the 4G rollout is a lot of work. There’s good growth there but it’s not game changing. The challenges around capacity solutions, however, are very exciting. Think about London; we’re often struggling to have a decent call in congested places or indoors and the data speed isn’t always what we want. We offer a portfolio of capacity solutions to MNOs, cities and big real estate owners. It might be a rooftop, a city cell network, a distributed antenna system in a shopping mall, outdoor small cells on street infrastructure, indoor small cells or Wi-Fi. We offer everyone that portfolio of solutions, work out

“ “The challenges around capacity solutions is one of the most interesting things happening in this industry at the moment


what problems they want to solve where and then pick the best mix to address the issue. For example we now provide all the Wi-Fi at Heathrow. They weren’t happy with the Wi-Fi they had and wanted to provide high quality connectivity so we provide that for them. MNOs don’t always have the right indoor coverage so Arqiva can do this as an agnostic host for all four mobile operators – we did this at Canary Wharf with an indoor and outdoor distributed antenna systems. For a landlord it’s easier as they only have one company to deal with, one set of wires going in and one company coming out to do maintenance. For the MNO it’s a better price and their service is provided by a company for whom this is a core competency. We’ve been tendering for street infrastructure in several London boroughs and we’ve won almost all of them, plus contracts in Manchester. We also work in partnership with Virgin Media Business who won assets across Birmingham, Leeds and Bradford and the London Borough of Hackney, so we are the number one player in the UK to provide the best managed service for small cells to UK operators via our combined, wireless, fixed, deployment and operational expertise. We’re in the trial phase with MNOs but it’s very promising. The roll out of small cells in Japan is hundreds of thousands, so the UK is a bit behind but we will catch up. We believe it will generate significant growth. TowerXchange: As a growing area there doesn’t seem to be a clear precedent for who pays for a lot of this additional network capacity. How does it work for your clients?

Nicolas Ott, MD Telecoms, Arqiva: It’s an endless debate in the industry. You have to differentiate – outdoor small cells are always paid for by the MNO, it’s part of their coverage solution, it’s just a micro site and there’s no difference to any other site. The big debate is about the indoor solutions. In five years from now if you enter a shopping mall or an airport you won’t go back if you don’t have phone or WiFi coverage. In fact, either you won’t go back at all, or if you go into a coffee shop with a friend who’s with another operator but your friend has coverage, and you won’t be happy with your operator so you’re more inclined to switch to the other operator with coverage. So the long term view is that from a customer point of view the landlord has an obligation to provide coverage but the MNOs also have an obligation to provide coverage. So everyone is in the same boat! We have agreed with MNOs that if they don’t have coverage we go to see the landlord and we agree with them that everyone is contributing. It has to be a win-win; the time when the one said the other should pay everything is over. One of the biggest London flagship department stores came to us saying their coverage wasn’t good so we went to the MNOs and three of the four agreed to contribute to the financing of the solution along with the landlord and Arqiva to implement the right solution, resulting in a good solution for everyone and satisfied customers. TowerXchange: Does Arqiva have any ambition

for expansion in mainland Europe over the next few years? Nicolas Ott, MD Telecoms, Arqiva: No. We don’t believe there are synergies in operating on a multi-country basis. Every EU country has its own equivalent of Arqiva, and a new entrant is destined to fail. And the multiples we see in tower acquisition of 12x to 16x EBITDA don’t make sense to us. TowerXchange: Apart from the UK, we’ve seen relatively few substantial communications infrastructure transactions and joint ventures in recent years, the recent acquisition of Wind’s towers by Abertis notwithstanding. What are the most common drivers for the transfer of assets from MNOs and broadcasters to independent towercos and infracos in Europe, and should we expect more transactions in future? Nicolas Ott, MD Telecoms, Arqiva: MNOs will outsource more towers to towercos and the main driver is to generate savings. So right now they carry all the costs and capex, but when it’s outsourced they create savings. I think that outsourcing or selling towers is a complex exercise, so you have to be sure it’s worth all the work and pain to do it, which means it has to be done on a big scale. If you want savings to be material enough to have a big benefit you’ll do it in a big chunk, not in small pieces, to make it worthwhile. So I think we will see some big divestments in future


From towers in Moscow to bears in Kamchatka – how Russian Towers have built Russia’s independent tower marketRiding the ups and downs of the Russian market, Russian Towers is positioning themselves for growth in a turbulent but potentially exciting tower market

TowerXchange: Peter, can you tell us a bit about your background?

Peter Owen Edmunds, Co - Founder and Chairman, Russian Towers: I spent ten years in the Welsh Guards, and completed a Russian language course and went to Berlin. While I was there the wall came down. After learning the language I was drawn to Russia and ended up in telecoms by chance. In 1992 I moved to St Petersburg and was a Director and then Chairman of fixed line network for PeterStar.Until 2003 I worked in Russia for PLD Telecom and later Metromedia International as their Director for Russia doing all sorts of roles: overseeing assets, mergers, acquisitions, fixed and mobile assets, cable TV and radio. In 2008 I realised that towers was an up and coming sector and with partners began work on Russian Towers, which was funded at the end of 2009 by UFG and EBRD. TowerXchange: How has Russian Towers developed since then? Peter Owen Edmunds, Co - Founder and Chairman, Russian Towers: We started operations in 2010 – our cornerstone client was Tele2 as their European background meant they understood the tower model and value of outsourcing.

We had first towers for them completed by the end of 2010. We were creating the market from scratch as the concept wasn’t understood or adopted in Russia at the time. We spent a lot of time and effort building towers and working with the big three operators to make them understand this

Read this article to learn:< How Russian Towers secured funding from the most credible investors in Russia

< The partnerships put in place to allow them to build credibility in the market

< How Russian Towers divides responsibilities in house or via third parties

< Timeframes for maximising first mover advantage in the Russian market

< Russian Towers’ appetite for opportunities in the CIS

Since 2009 Russian Towers has been working to create a towerco market in Russia from scratch, reaching a point where they now have over 1,000 towers and all of the major Russian MNOs as tenants. We spoke to Co-founder and Chairman Peter Owen Edmunds about his background in Russia, how the company has grown and what their ambitions are for the future.

Keywords: Interview, Towercos, Russia & CIS, Europe, Russia, Russian Towers, Acquisition, Market Overview, Investment, Transfer Assets, Opex Reduction, Urban vs Rural, Co-locations, Risk, Build-to-Suit, First Mover Advantage, Country Risk, Anchor Tenant, On-Grid, Skilled Workforces, Rooftop, Private Equity, Masts & Towers, Fencing, RMS, Site Management System

Peter Owen Edmunds, Co - Founder and Chairman, Russian Towers


was an interesting model for them. It took a long time especially as the Russian psyche dictates that building and owning your own towers is a good thing. In Russia construction and technology are well understood and pride in that technology made it more of a wrench to use a third party. In 2012 we brought in more shareholders and capital to the company with Maqcuarie Russia Investment Fund, ADM Capital and Sumitomo then the IFC. We were fortunate to attract a strong shareholder base who understand the Russian market and the tower business – for a small company it was a statement of intent that the market was viable.

We have developed consistently organically over the years and all the big operators are now primary customers for our build to suit offering and adopters as second and supplementary tenants. Our initial aim of getting trust in the market has been achieved very successfully. TowerXchange: Can you give us some detail on the capital raise process?

Peter Owen Edmunds, Co - Founder and Chairman, Russian Towers: We did the first capital raise from our own resources and contacts. We were fortunate in UFG in having a fund committed to Russia which understood telecoms and the EBRD has strong backgrounds in both as well. We had crossed paths before on other projects so the pedigree of our management team was known to them.

We were careful to choose investors who were likely to bite and were flexing our reputation in

the market to show we were likely to deliver. Our relationship with Tele2 meant we could bring something tangible to the market already. Once we got the first round of funding and established we could deliver it was relatively easy for the second round funders to come in. Towers and Russia are both interesting for Macquarie, Sumitomo has a long history in Russia and well understands the dynamics, ADM were looking to find a credible path in Russia, and the IFC is mandated to work in Russia, so they all had strong motivations to be involved. TowerXchange: Can you tell us about how your partnerships with transport providers helped you to reach your goals?

“

“

We’ve partnered with several Russian organisations in good times and in bad and we’ve never had the rug pulled from under our feet – we’ve taken the highs and lows together

Peter Owen Edmunds, Co - Founder and Chairman, Russian Towers: We have a relationship with RZhD (Russian Railways) which allows us to build along the railway infrastructure. We can both build and lease infrastructure from RZhD which they prefer for us to maintain and run. Early on it gave us a unique selling point, profile and enabled us to offer operators something well recognised, so it’s been an invaluable partnership for us. TowerXchange: Have you encountered any corruption in getting a business set up in Russia?

Peter Owen Edmunds, Co - Founder and Chairman, Russian Towers: I’ve never come across any corruption in our line of business. We’ve partnered with several Russian organisations in good times and in bad and we’ve never had the rug pulled from under our feet – we’ve taken the highs and lows together. In my personal experience if you set the right tone and agenda the rest will fall into place. Given the shareholder group we have and the stringent standards of the IFC and EBRD it is clear to employees that everything has to be above board. TowerXchange: How do you manage a lean business model – what sits on your payroll and what is outsourced?

Peter Owen Edmunds, Co - Founder and Chairman, Russian Towers: At the top of the company our executives and the board formulate our strategy for growth and how the company is financed are all done in-house. Running the commercial relationships with the operators is also critical


and is controlled within the company, similarly our relationship with strategic players like RZhD remains managed in-house.

Our tower management system and key proprietorial systems are in-house too. It’s a third party system bespoked for us, and sitting on top of that is our remote monitoring system which is a testament to Russian know-how. It gives us a buzz to watch bears scratching their backs on our fences in Kamchatka via a live feed!

The guys who design towers and order materials (design compliance in Russia is important and hefty) are all kept in-house to comply with local standards. Interaction between our tech guys and tech in operators is important. A key piece that we

hand out is construction and maintenance. For us it’s extremely fragmented and labour intensive – a patchwork of varied relationships for building and maintenance is a huge challenge. TowerXchange: Can you tell us about your power mix?

Peter Owen Edmunds, Co - Founder and Chairman, Russian Towers: We don’t do diesel - we try to connect to the mains. We have backup diesel and a simple battery bank at most sites, but the grid is fairly good. One benefit of our relationship with the railways is that they have power along the main routes anyway. Power is a time consuming issue for us.

The remote monitoring we use is less about power and more to do with diagnostics and knowing what’s going on on each site and also controlling access – for example which contractors have gone in to each site on which day at what time. TowerXchange: What are Russian Tower’s longer term ambitions both in and out of Russia?

Peter Owen Edmunds, Co - Founder and Chairman, Russian Towers: We are pleased with how the organic underpinning build is going. We know the model works and we have a viable business.Given our shareholder group and how the market works we feel we’d be in a position to do an acquisition when and if that comes up. Our shareholders are able to invest in the CIS and, in terms of looking for opportunities in wider

geographies, we’d consider that as time goes on. That said you’ve got to get it right somewhere and prove you can make it work, only then you can go elsewhere with a credible path to delivering something of value to all parties. TowerXchange: What are the current dynamics within the domestic Russian market and opportunities for anyone looking to divest a tower portfolio?

Peter Owen Edmunds, Co - Founder and Chairman, Russian Towers: From what we can see within the timeframes of organic growth I think there’s still potential leaseup from Tele2 or alternate operators for there to be a reasonable return for the first tower sale. There is a finite window for Tele2’s appetite to co-locate rather than build, which will focus people’s attention, but their need won’t decline significantly in the next four to five years. Remember that the 4G expansion in Russia is a top priority and is sucking in a lot of capital which provides a lot of opportunities for us.

TowerXchange: How has Russian Tower been affected by the devaluation of the rouble over the last few months?

Peter Owen Edmunds, Co - Founder and Chairman, Russian Towers: We can do most of our sourcing locally so we’re mainly insulated. Plainly sanctions are a huge challenge but we feel the environment will be good for our organic growth as it stops MNOs having to spend on non-essential equipment which makes our proposition more compelling

“

“There is a finite window for Tele2’s appetite to co-locate rather than build, which will focus people’s attention


Coverage, infrastructuresharing and tower ownership in the Finnish marketAn interview with Digita CEO, Juha-Pekka Weckström

TowerXchange: Please can you tell us a little about yourself and your experience in the telecoms sector.

Juha-Pekka Weckström, CEO, Digita: Prior to joining Digita in January 2015, I spent nearly twenty years working for TeliaSonera Group during which I held several executive positions including CEO of TeliaSonera Finland, SVP, Strategy for the Eurasian Region and SVP for Products & Services for TeliaSonera Finland.

I have also held board positions in several international public listed and private companies within telecom sector including Eesti Telecom AS (Estonia), Elion AS (Estonia), Tilts Communications AS (Denmark), SIA Lattelecom (Latvia) and TeliaSonera Finans AB (Sweden).

TowerXchange: Please can you provide readers with a short introduction to Digita?

Juha-Pekka Weckström, CEO, Digita: Digita is a spin off from Yle, the national public broadcaster in Finland. The spin off was done in 1999 then in 2005, Digita became 100% owned by the French group, TDF before being sold in 2012 to First State Investments, a European financial institution which forms part of the asset management division of the Commonwealth Bank of Australia.

Digita is the only broadcasting tower infrastructure company in Finland, and has 210 employees with revenues of €80mn. We own 27 very high masts (over 200m tall) and use 480 smaller masts, the

Read this article to learn:< Digita’s ownership structure, annual revenues and tower portfolio size

< How the broadcasting sector is evolving in Finland

< Digita’s presence in the telecoms sector

< The extent of 4G rollout in the Finnish market

< Who owns Finland’s 10,000 towers, what culture of infrastructure sharing exists in the country,

and whether any tower divestitures could be on the cards in Finland

Digita, Finland’s only broadcasting infrastructure company, owns a total of 27 high masts and uses an additional 480 smaller masts, of which approximately a third are owned. With Finland boasting some of the best network coverage in Europe, TowerXchange spoke to Digita CEO, Juha-Pekka Weckström, who brings with him twenty years of experience at TeliaSonera Group, to better understand Finland’s tower industry and culture of infrastructure sharing.

Keywords: 4G, C-Level Perspective, Co-locations, Denmark, Digita, DNA, Eesti Telecom, Elion, Elisa, Estonia, Europe, Finland, First State Investments, Infrastructure Funds, Infrastructure Sharing, Latvia, Lease Rates, Masts & Towers, New Market Entrant, Operator-Led JV, Regulation, Scandinavia, SIA Lattelecom, Sonera, Sweden, TDF, Telenor, TeliaSonera, Tilts Communication, Tower Count, Urban vs Rural, Yle

Juha-Pekka Weckström, CEO, Digita


majority of which are ground based, with roughly one third owned by Digita and the rest rented (typically from telecom companies). Our network covers 100% of the population.

TowerXchange: How healthy is the broadcasting sector in Finland and could we see any consolidation in the market?

Juha-Pekka Weckström, CEO, Digita: The industry has had a relatively big hit in revenues, primarily because of internet TV which has taken a significant portion of broadcasting company advertising revenue which most of the commercial companies live on. Yle is state funded and as such, its revenues have been very stable.

I don’t however see consolidation happening. The companies are generally very large and are either family owned or part of major international companies such as Discovery and Fox. Rather than the number of broadcast companies in the market decreasing, we could see some new entrants with the emergence of some smaller, niche channels such as Russian speaking channels as the population diversity increases.

TowerXchange: We understand the Finnish government to have recently reallocated broadcast licenses with Telenor securing three of the licenses that Digita had previously held. What was the rationale behind the government’s decision to do this? How has this affected Digita?

Juha-Pekka Weckström, CEO, Digita: The Finnish

government made the decision to promote competition - they felt Digita had a very strong position in the market, even though the market in financial terms is not very large. The government wanted to open up the market so that the new player, Telenor in this case, could use our infrastructure for the provision of broadcasting services. They will lease space for antennae and equipment from Digita but Telenor (rather than Digita) would have the end customer relationship.

Our view is that the Finnish market is too small a market for that many network players, however Telenor, if they start their operations, will become a major customer and will guarantee a major revenue stream for us going forward. It is still up in the air however as to whether Telenor will enter the market as negotiations with broadcasting service companies are still ongoing and to our knowledge, Telenor are yet to secure any customers.

TowerXchange: What would the typical lease payments be from Telenor?

Juha-Pekka Weckström, CEO, Digita: Infrastructure rates for our masts are regulated by a government agency and as such, they dictate the prices, although there is a big discussion going on about what is the right rate to charge. Lease rates vary widely dependent on a number of factors including what equipment is being added and at what height, each station is different.

TowerXchange: Does Digita have a presence of many telecom tenants on its towers?

Juha-Pekka Weckström, CEO, Digita: There are approximately 10,000 towers in Finland, of which we own less than 200, and as such, our presence in the telecom sector is limited. We tend to focus more on tenants for the high masts as are they are the rare infrastructure in the country. I would say that all of the operators are leasing something from us but it is relatively limited. We do see tenants with requirements for higher towers - for example those with mobile broadband coverage needs on the 450MHz or 700MHz band and if more of such players come to the market we would look to invest more in this area.

TowerXchange: Who owns Finland’s 10,000 towers and is there a culture of infrastructure sharing?

Juha-Pekka Weckström, CEO, Digita: There are three equally strong MNOs in the Finnish market. Sonera, who used to be the incumbent operator and currently has 35% of mobile subscription market share, owns most of the masts (approximately 5,000). The other two MNOs, Elisa and DNA own less than 3,000 masts each. In addition, there are some very small players that have masts for other purposes which are leased by the operators.

It is very competitive market and there are a lot of cross deals where the operators lease from each other, primarily on a commercial basis. There is however one joint venture being formed between Sonera and DNA in the northeastern part of the country where the population is sparse. With so few subscribers, the region is unattractive financially


and so the joint venture has been formed as a more efficient way to meet the two operators’ coverage obligations in the area. The operators will compete on service level rather than their network coverage.

TowerXchange: Is 4G rollout completed across Finland?

Juha-Pekka Weckström, CEO, Digita: 4G rollout is about half way completed - most of the urban areas, airports, harbours, roads are covered as well as most of the rural areas in the south. Finland is one of the countries where prices are the lowest but coverage is the best.

TowerXchange: Are any Finnish MNOs showing

any signs of divesting towers and would an acquisition of these be interesting for Digita.

Juha-Pekka Weckström, CEO, Digita: I don’t think the MNOs are looking to divest their towers but if they did we would definitely be interested. We are a tower infrastructure company and so expanding our portfolio is in our strategy.

TowerXchange: Why do you think that Finland’s MNOs haven’t shown an interest in divesting their towers?

Juha-Pekka Weckström, CEO, Digita: It’s hard to say but the three MNOs that own the infrastructure are relatively profitable and stable and the tower infrastructure is a relatively profitable and stable part of their business. None of them are in such a crisis that they would be forced to divest to raise funds.

TowerXchange: Could other towers be coming to market in the region?

Juha-Pekka Weckström, CEO, Digita: There are other players in the market with significantly smaller tower portfolios who may be interested to sell, but to be honest as we already have 100% coverage and we are talking such a small number of towers, such an acquisition would probably not make sense strategically.

When looking at the Scandinavian and Baltic region as a whole, there may be some bits and pieces coming to market in the near future


“

“

4G rollout is about half way completed - most of the urban areas, airports, harbours, roads are covered as well as most of the rural areas in the south. Finland is one of the countries where prices are the lowest but coverage is the best

Meetup Africa 2016

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16-17 June, Florida

5-6 April, London

123456

Country-specific analyses

Over the past 12 months, TowerXchange has been

conducting detailed research and analysis into

Europe’s tower markets - identifying key stakeholders,

obtaining estimates on tower counts and deal values,

uncovering transactions on the horizon and developing

our community’s understanding of different country

dynamics at play.

This section shares some of our most recent research

ahead of 15 country focus roundtables being held at this

year’s Meetup.

Don’t miss: 91 Ireland

96 Germany

99 France

104 Russia

110 CIS


TowerXchange’s analysis ofthe Irish tower marketAn insight into one of Europe’s most fragmented tower markets

How many towers are there in Ireland?

There are currently 4,000 towers in the Irish market, of which 60% sit in the hands of the three incumbent MNOs - Vodafone, Meteor (owned by Eir, previously known as Eircom) and 3 (Hutchison) who have just recently acquired O2 (Telefónica). The remaining 40% of towers are owned and operated by a number of towercos, broadcasters and state enterprises.

Who are Ireland’s MNOs and what scale are their networks?

The history of MNOs in Ireland is complicated by a number of mergers and acquisitions and network sharing agreements. Eircell, 100% owned by Eircom was the first MNO in the Irish market. In 2001 Eircell was bought by Vodafone, demerging from Eircom. Vodafone currently has the largest market share in Ireland sitting at 38% with 99% network coverage.

The second MNO to launch in the Irish market was Digifone, owned by Irish billionaire Denis O’Brien. Digifone was rebranded O2 in 2001 following a take over and then demerger from BT, and was then owned by Telefónica following their takeover of O2 Ireland’s parent company in 2006 (until their recent acquisition by 3).

Meteor Mobile, at the time owned by US company Western Wireless, launched in Ireland in 2001 as the third MNO in the market and then was subsequently acquired by Eircom in 2005, still

Read this article to learn:< Who the key players are in the Irish tower market

< How MNO consolidation has affected tower industry dynamics

< What potential exists for tower transactions in the future

< What opportunities are presented by new build and decommissioning

< How factors such as the entry of ground lease aggregators and the rollout of the National Broadband

plan will affect the market

With a population of 4.78mn and 4.9mn mobile connections, 60% of Ireland’s 4,000 telecom towers sit in the hands of the country’s three MNOs leaving the remaining 40% in the hands of independent tower companies, broadcast operators and public sector players. With no one dominant tower company, the market is ripe for consolidation as ambitious towercos look to get a foothold in the region. December’s announcement of the National Broadband Plan, coupled with the consolidation from four to three MNOs following 3’s acquisition of O2, creates new opportunities and challenges for towercos in the market.

Keywords: 2RN, 3, Britannia, Build-to-suit, Business Case, Business Model, Carve Out, Cellcom, CIE, Cignal, Co-locations, Coillte, Deal Structure, Decommissioning, Densification, Editorial, Eir, Eircom, ESB Telecoms, Europe, Europe Insights, Europe Research, FIM, Hibernian, Highpoint, Hutchison, Infrastructure Funds, Infrastructure Sharing, Insights, Installation, Investment, Investors, Ireland, Market Entry, Market Forecasts, Market Overview, Masts & Towers, Network Rollout, O2, Obelisk, OPW, Regulation, RTE, Sale & Leaseback, Telefonica, Tenancy Ratios, Tender, Three, Tower Count, Towercom, TowerCos, TowerXchange Research, Transfer Assets, Urban vs Rural, Valuation, Vodafone, Who’s Who, WIG, Wireless Infrastructure Group

By Laura Dinnewell,Head of EMEA, TowerXchange


operating under the brand Meteor. Meteor currently have 21% of the market share in Ireland with 75% network coverage and is the only Irish owned MNO in the market.

3 (Hutchison) was the latest MNO to launch in the Irish market in 2005 and up until 2014, held only 9% of the market. Following an acquisition of number two operator, O2 from Telefónica in 2014 for €780mn, the newly formed entity currently controls 33% of the market with over 95% network coverage.

The consolidation from four to three MNOs (following 3’s acquisition of O2) has been further complicated by network sharing ventures set up by each of the operators. Vodafone and 3 formed a network sharing venture called Netshare which has

since been restructured - Netshare is now wholly owned by Vodafone. Prior to O2’s acquisition by 3, O2 created a network sharing agreement with Meteor - the EU has ruled however that following O2’s acquisition the network sharing agreement must remain - thus tying together the O2, 3 and Meteor networks.

Who are Ireland’s independent tower companies?

40% of towers in the Irish market are outside the hands of MNOs, higher than the 27% average in Europe. The biggest towerco players are Towercom and ESB Telecoms each with around 400 towers, joined by six further tower companies which TowerXchange are tracking, with portfolios ranging

from 40 to 113 towers (see table two). In addition, state owned broadcaster 2RN (RTE) owns 150 towers, the Office of Public Works 180 and CIE, the Irish national railway company, 100. See sidebar one for information on each company.

How has MNO consolidation impacted towercos in the market?

Towercos have been affected to varying degrees by the acquisition of O2 by 3. Towercom, whose towers had a predominance of Vodafone tenancies have felt the impact less than others. Those that had a high concentration of O2, 3 and Meteor have most acutely felt the impact of consolidation as, due to the network sharing agreement between O2 and Meteor, the three networks are now effectively one. In order to mitigate the loss of tenancies, some towercos are looking at the added value they can bring to their towers to position them as core assets for the MNOs - one of the primary mechanisms being the deployment of fibre to sites.

What tower transactions of scale have occurred in the Irish market?

In August of 2015, Coillte, the state forestry agency, sold a total of 113 masts and 400 plots of land (on which Coillte masts and those of third parties - predominantly MNOs sat) to French investment fund InfraVia Capital Partners. Following the deal a new entity, Cignal, was created to manage the sites on InfraVia’s behalf. Whist details of the deal value have not been released by any of the involved parties, rumours indicate this was in the order of

Figure One: Irish operator mobile market share

Vodafone3 (Hutchison) + O2 (Telefonica)Meteor (Eir)Others (primarily MVNOs Tesco Mobile & Lyca Mobile)


38%

35%

19%

8%


€70mn. Prior to that Towercom bought 340 masts from Eircom for €155mn in 2007.

Could we see Ireland’s three MNOs divesting towers?

Despite the sale of 340 masts from a cash-strapped Eircom to Towercom back in 2007, MNOs have not to date expressed an interest in the sale of their towers. Whilst tower companies have approached the incumbent MNOs with sale and lease-back proposals, the well capitalised operators have not yet been motivated to sell.

Prior to the takeover of O2 by 3, observers were

watching O2 closely with the belief that their financial pressures may necessitate the sale of towers to raise capital. The recent carve out of 11,500 Telefónica towers in Spain and speculation surrounding divestment of further assets has brought credibility to this theory, however since the acquisition by 3 we are unlikely to see a sale in the near future. Similarly, Vodafone, who have yet to monetise many of their towers globally, do not look set to be bucking this trend in Ireland. So no divestiture is currently expected from their Irish operations.

There have been no rumours of any further tower divestments by Meteor, although Eir is now selling

its exchange portfolio (including some very valuable urban locations). Potentially once they’ve run out of unused properties some commentators believe they could look to sell their 525 towers.

Could we see M&A amongst Ireland’s towercos?

As a highly fragmented market, there exists strong potential for consolidation between Irish towercos. Whilst 2015 saw one transaction of note, no further transactions are currently expected in 2016, although the more acquisitive towercos are keen to engage in dialogue on the subject.

Insiders believe that a sale from a state or semi-state entity could be more likely. An ESB Telecoms tower sale had been considered a few years ago as a means to help reduce state debt, however with ESB now being in a much better financial position and with strong management in place, a tower sale in the near future seems unlikely. There has been talk that OPW could look to sell some of their towers and some observers believe there is a potential for a sale

Figure Two: Irish MNO installation and tower counts

MNO Number of Number of installations towers

Vodafone 2400 800

3 + O2 (Hutchison) 3600 1100

Meteor (Eir) 1800 500


*3 had 50% network coverage prior to merger with O2 which had 95%. There are also two key MVNOs in Ireland- Tesco Mobile and Lyca Mobile which account for the remainder of the mobile market share

3 + O2 (Hutchison)VodafoneMeteor (Eir)TowercomShared AccessESB TelecomsOffice of Public Works2RN (RTE)Cignal*CIEWireless Infrastructure GroupHibernian (Britannia)Highpoint (Obelisk)Cellcom

Figure Three: Who owns Ireland’s 4,000 towers?

1,100800

500

400

377 377

180

150113*

100

100705040

*113 owned towers with additional ground lease income on 400 plots of land on which Cignal and 3rd party towers sit


at 2RN with its assets having been carved out from parent company, RTE, however, to date there have been no qualified rumours of such a transaction occurring.

What level of new build is happening in Ireland?

Following the amount of MNO consolidation that has occurred in the market, MNOs are currently very closed regarding future rollout plans and most believe appetite to be limited in the market with

operators instead using existing assets and rights on rooftops. The last major batch of towers to be developed was as part of the National Broadband Scheme, led by 3 (which Cignal’s towers played a major role in).

Whilst rumours surrounding rollout are limited, we have heard talk that Vodafone are approaching towercos in the market regarding a build to suit programme but discussions are very much in the early stages.

What is the level of decommissioning?

Following the acquisition of O2 by 3, a requirement for decommissioning of existing sites has been created. The lengthy regulatory process surrounding the acquisition had stalled decommissioning but a program over the next two to three years has commenced and represents a key focus for some towercos. There are mixed opinions when it comes to the volume of decommissioning in the market however there is a growing sentiment

Towercom Formed in 2007 following the acquisition of 400 masts from Eircom, Towercom was one of the first independent tower companies in Ireland. In 2013 the company was acquired by the Irish Infrastructure Fund (managed by AMP Capital).

ESB Telecoms ESB Telecoms is a fully owned subsidiary of the state owned power company – the Electricity Supply Board of Ireland. Formed in the 1970s to meet ESB’s own telecommunication requirements, ESB Telecoms entered commercial operation in the 1990s, leasing space to operators on their towers. They currently own 377 towers and have also launched a fibre business.

Office of Public Works The Office of Public Works is a public service organisation tasked with managing the country’s estate portfolio. They currently own and operate 180 towers.

2RN (RTE) RTE is the national communication and radio company currently owning 150

broadcast masts. They haven’t proactively sold space to MNOs but there has been a high uptake by operators for tenancies on their masts.

Cignal Cignal, is Ireland’s newest towerco, which was established in 2015 following InfraVia Capital Partners’ acquisition of 113 towers and 400 plots of land (on which towers are situated) from Coillte, the state owned forestry company.

CIE CIE is the Irish railway company and currently owns 100 masts on which around 35 have MNOs as tenants. There is however a drive to get away from these sites as licensing arrangements are very complicated.

Wireless Infrastructure Group Wireless Infrastructure Group, launched over eight years ago and have 2,000 towers across three European markets (UK, Netherlands and Ireland) and a fast growing DAS and small cells business. They currently own around 100 towers in the Irish market having acquired FIM’s portfolio of 42 towers.

Hibernian Towers Hibernian towers formed ten years ago and have since acquired the majority of their portfolio from MNOs and smaller towercos (with some degree of new build). In addition to their 70 towers in Ireland they also have a similarly sized portfolio in the UK under the name Britannia. Highpoint Highpoint, owned by Obelisk group, currently manages a portfolio of 150 sites, of which 50 are Highpoint owned. The majority of their towers are based around the borders and the West Coast, having stayed away from the East Coast.

Cellcom Cellcom, with a portfolio of 40 towers, based mainly around the West Coast are privately owned. Their towers have a high tenancy ratio, thought to be upwards of two

Shared Access: Towerco with 377 sites in Ireland with build plans set to take this to 420 by the year end. Also have a portfolio of 79 sites in the UK

Snapshots of Ireland’s tower operators


that the level of decommissioning required will be lower than people originally thought and that potentially there may be a risk of “over-decommissioning” as MNOs look to focus on short term stock market performance over longer term network planning.

What role have ground lease aggregators played in the market to date and how exposed are each of the towercos?

The exposure of Ireland’s towercos to the actions of ground lease aggregators varies company to company. State or semi-state towercos are relatively safe - 2RN owns the land under most of its portfolio, ESB Telecoms own all of their own sites and OPW are in the same position. Other companies not at risk from the interference of ground lease aggregators are Cignal (who are end owners of the land) and Towercom (who have full rights to all of their sites). Cellcom have long leases but are exposed somewhat, whilst the majority of Hibernian, Highpoint and WIG’s sites are leased.

Ground lease aggregators who have been looking at the market include AP Wireless, but to date they have reportedly not been getting a huge amount of traction. The problem in the market is not finding the product, rather it’s finding a party to offload it to. Towercos are not mature enough and the financial institutions won’t pay a large enough multiple.

Is there a focus from the MNOs on improving rural coverage?

Whilst there are a few not-spots in rural areas, the issues are very much localised. After a deep recession some of the MNOs took their foot off the pedal in addressing these not-spots but they are now working on infill for some very specific locations. Due to the fragmented and very localised nature of this infill, it does not constitute a major opportunity for towercos.

What is the National Broadband Plan and what implication does this have on Irish towercos?

In December, a new National Broadband Plan was announced for Ireland to build upon the work of the National Broadband Scheme initiated in 2006. The original scheme, awarded to 3 Ireland, was to provide a minimum of 1.2MB of download speed to rural areas; the aim of the new National Broadband Plan is to bring this up to a minimum of 30MB. The state have done a lot of mapping and there are approximately 750,000 premises in the catchment area to be covered by the plan.

Companies were invited to enter the pre-qualification process just before Christmas and responses need to be in before the end of February, after which a formal tender process will be opened. Details need to be extrapolated within the plan, however thinking is that the delivery will follow both a fibre and a wireless strategy, potentially creating requirements for new tower build (as was the case with Coillte’s towers in the original scheme) and also the bringing of fibre to towers (which is something that is currently being planned by some towercos in the country)


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Tower transactions, carveouts and IPOs in the German tower marketA look at recent and rumoured activity in Europe’s biggest telecom market

TowerXchange: Please give a short introduction to yourself and the work that you do at RBC.

Jonathan Dann, Managing Director, Telecom Research, RBC Capital Markets: I have been a telecom and related industries analyst for 20 years and with RBC for the last two years. I work with a team of five covering European and Emerging Market Telecoms, Towers and Satellite operators.

Tower companies are relatively new in European equity markets. Currently, the market is particularly focused on looking at how the listed operators expand beyond their current Spanish/Italian roots. M&A permutations and also future tower spin offs take up the majority of investor interest; while the organic side of the tower story has tended to take a back seat. TowerXchange: Please can you tell us a little about the German telecom market, who are the main operators and what is their market share?

Jonathan Dann, Managing Director, Telecom Research, RBC Capital Markets: There are three mobile network operators in Germany, following consolidation in 2014 of Telefónica Deutschland and KPN’s E+; Telefónica Deutschland, Deutsche Telekom and Vodafone. There are also a large number of MVNOs, with each of the main mobile operators also owning and selling via a variety of sub-brands. Each of the operators has c30% subscriber market share (figure one). The operators are all backed by strong and large internationally diversified parents, although the balance sheets of

Read this article to learn:< Who owns Germany’s c.70,000 telecom sites< What percentage of sites are ground-based towers versus rooftops and how this compares to other European markets< Typical tenancy ratios and ground lease rates< The estimated size and valuation of Telefónica Deutschland’s infrastructure portfolio< The implication of the proposed part listing of Deutsche Telekom’s tower portfolio

The German tower market is becoming the subject of speculation with the carve out of Telefónica’s Spanish towers sparking rumours that Telefónica’s German business may follow suit; whilst market leader, Deutsche Telekom has reportedly opened discussions on a part listing of its German portfolio. Meanwhile, could American Tower be soliciting third party investment into its German business? We speak to Jonathan Dann, Managing Director of Telecom Research at RBC Capital Markets to better understand the landscape in the German tower industry and discuss how the market looks set to evolve.

Keywords: Acquisition, American Tower, Co-locations, Decommissioning, Deutsche Funkturm, Deutsche Telekom, E+, Europe, Europe Insights, E Plus, Germany, Infrastructure Sharing, KPN, Lease Rates, Leasing & Permitting, MarketWatch, Masts & Towers, New Market Entrant, Rooftop, Telefónica , Telefónica Deutschland, Tenancy Ratios, Tower Count, Towercos, Transfer Assets, Valuation, Vodafone

Jonathan Dann,Managing Director, Telecom

Research, RBC Capital Markets


some are stretched compared with historic levels making potential tower spin-offs or sales attractive.

TowerXchange: At the end of 2014, Telefonica Deutschland bought E-Plus, how did this affect both Telefonica and the German mobile market and could we see any further consolidation? Is there any possibility of a new market entrant?

Jonathan Dann, Managing Director, Telecom Research, RBC Capital Markets: The merger created a strong third operator with around 39,000 mobile sites in use, compared with peers Deutsche Telekom and Vodafone who are using around 25-26,000 sites each. One of the remedies was for a certain number of towers (around 8,000) and some high frequency spectrum to be held back for five years for a potential new fourth entrant. Currently, it

seems unlikely that a new entrant will emerge. Telefónica Deutschland has recently announced plans to transfer 7,700 tower sites (mainly rooftops) to Deutsche Telekom which will be managed under a newly created subsidiary, Omega Towers. TowerXchange: How many towers do each of the operators own and which other companies possess portfolios of towers in Germany? What percentage of these towers are ground based versus rooftop and how does this compare to other European markets?

Jonathan Dann, Managing Director, Telecom Research, RBC Capital Markets: Currently on our estimates, Deutsche Telekom and Vodafone use 25-27,000 tower sites and own approximately 8,000 and 4,000 macro towers, respectively (table one).

TMO

VOD

TEF DE

E-Plus

Telefónica Deutschland owns around 2,000 macro sites and currently uses 32,000 (adjusting for the 7,700 transferred to Deutsche Telekom). Telefónica Deutschland has plans to continue to decommission to a “Golden Grid” of 25,000 sites over the coming years. Beyond the MNOs, American Tower owns 2,031 tower sites acquired from E+/KPN in 2012.

Germany is rare, in that around 75-80% of sites are rooftops and only 20-25% ground based towers compared to most European countries where two thirds of sites are typically ground based towers and only a third are rooftops.

TowerXchange: What indication do you have of tenancy ratios on German sites?

Jonathan Dann, Managing Director, Telecom Research, RBC Capital Markets: Tenancy ratios appear to be low at just over 1.1x, but this is also due to high proportion of single tenancy rooftops.

On our estimates the “lease up” ratio on towers is 1.3x which is still low by European standards and very low by US standards.

TowerXchange: Telefonica recently transferred 7,700 sites to Deutsche Telekom, what do you know about the details of the transaction and what are the implications of any decommissioning?

Jonathan Dann, Managing Director, Telecom Research, RBC Capital Markets: The 7,700 sites transferred appear to be mostly rooftops, with

Figure one: Subscriber market share in Germany


Source: Company reports, RBC Capital Markets estimates. TEF DE includes adjustment aft

34.3 31.5 31.0 31.5 33.0 33.7 34.6 35.3 35.7

33.3 33.5 32.2 29.9 28.0 27.4 27.0 26.7 26.6

14.7 15.8 16.1 16.7 17.1 16.6

37.4 38.2 37.9

18.2 19.6 20.7 20.7 21.6

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%1Q

10A

2Q10

A3Q

10A

4Q10

A1Q

11A

2Q11

A3Q

11A

4Q11

A1Q

12A

2Q12

A3Q

12A

4Q12

A1Q

13A

2Q13

A3Q

13A

4Q13

A1Q

14A

2Q14

A3Q

14A

4Q14

A1Q

15A

2Q15

A3Q

15A

4Q15

E1Q

16E

2Q16

E3Q

16E

4Q16

E

no financial compensation paid. Telefónica Deutschland will be vacating the sites over time whilst Deutsche Telekom will be taking over any ground lease obligations as well risks around decommissioning, or retention. We estimate that typical ground leases are in the €4,000-€5,000 per year range making the costs relatively modest.

TowerXchange: Apart from the sale and leaseback of 2,031 E-Plus towers to American Tower Germany in 2012 and the aforementioned transfer of the Telefonica towers (acquired from E-Plus) to Deutsche Telekom have there been any other transactions of note in the German market?

Jonathan Dann, Managing Director, Telecom Research, RBC Capital Markets: Deutsche Telekom sold its broadcast transmission towers “T-Systems Media & Broadcast” to TDF in 2007 for €850mn.

The bulk of this business (now Media Broadcast Group) was sold to Freenet for €295mn (around 12x EBITDA) in March 2016. TowerXchange: Speculation is rife regarding the Telefónica tower portfolio following the carve out of their Spanish towers into new infrastructure business Telxius – what do you estimate their portfolio in Germany to be worth?

Jonathan Dann, Managing Director, Telecom Research, RBC Capital Markets: In Germany, we estimate Telefónica Deutschland owns around 2,000 towers as well using a further 12,000 rooftop sites that they own. The remainder of its network sits on American Tower towers (2,031) and third party rooftops (including the 7,700 transferred to Deutsche Telekom).

We estimate that Telefónica Deutschland’s 2,000

towers would be worth at least the €400mn based on the transaction between American Tower and E+/KPN in 2012 and more likely higher given recent transactions and the potential for competitive tension between Telxius (Telefónica’s towerco) and American Tower to reach scale in Germany. Additionally, the owned rooftops could have value depending on the structure of the sale-leaseback offered by Telefónica Deutschland.

TowerXchange: What other activity could we expect to see in the German tower market beyond a potential carve out of Telefónica towers?

Jonathan Dann, Managing Director, Telecom Research, RBC Capital Markets: Deutsche Telekom has discussed a part listing of its German tower portfolio. With around 8,000 owned towers and as a market leader they could potentially accelerate lease up rates on their portfolio. One caveat is ground leases in Germany appear to be in the €4,000-€5,000 per annum range, limiting the financial benefits for second tenants of co-locating

Deutsche Telekom*

23,636 18,000 11,968 0 53,604

8,000 4,000 2,000 2,031 16,031

31, 636 22,000 13,968 2,031 69,635

-7,700 1,500 22,700 0 16,500

3,000 2,000 2,031 0 7,031

26,936 25,500 38,699 2,031 93,166

Rooftop sites owned

3rd party rooftops

Ground based towers owned

3rd party towers

Total owned

Total used (Jan 2016)

TotalAmerican TowerTelefónica Deutschland

Vodafone


Table one: Tower ownership in the German market Source: RBC Capital Markets

Jonathan Dann will be hosting a roundtable breakout focusing on the German tower market at the TowerXchange Meetup Europe, taking place at the Business Design Centre, London on April 12-13. Among 200 other participants at the Meetup are senior representatives of Deutsche Telecom, Telefónica, Deutsche Funkturm and American Tower Germany. For further information and to register visit www.towerxchange.com/meetup/meetup-europe/

Synergies & consolidation:towerco growth in the dynamic French marketAs MNOs battle for market share, France’s towercos see opportunity for growth in a changing market

France is a highly developed Western European market, a founding member of the European Union and is one of the top ten global economies. While it’s easy to assume the ‘data boom’ has already taken place, there remains significant growth potential in the French tower market, both through urban infill and improving rural services. France is also at the forefront of the drive towards the Internet of Things, which will substantially change both the way mobile communications are consumed and the way they are delivered. In a market where operators are jostling for market share and towercos are taking very different approaches to growth, we assess some of the drivers which have brought the market to its current point, and evaluate how it may develop over time.

The French population is currently 64.09mn making it the third biggest country in Europe. Offering GSM services since 1996, there are now around 64.4mn subscribers. Despite struggling to recover from the recession of 2009, the French economy is now slowly coming into line with European growth levels, with the slow growth of 0.4% in 2014 unlikely to be replicated in 2015.

3/4G rollout is well underway with 68% of subscriptions including mobile broadband and all four MNOs in France rolling out their 4G networks since 2012.

French MNOs

The French market currently supports four national MNOs, although rumours of market consolidation

Read this article to learn:< How the French economy is recovering from the downturn of 2009

< An overview of the French MNOs and their relationships with one another

< Which French towercos are poised to find growth on the back of a changing market

< How consolidation among the operators or a new entrant into the tower market might upset

the balance in the market

Since Free Mobile burst onto the French MNO market in early 2012, the incumbent operators have struggled to retain market share. As they battle with lower ARPUs, higher need for capital investment and increased market competition, French towercos are seeing an opportunity to help release cash, reduce opex and build new, fit-for-purpose networks for their customers.

Keywords: 4G, ARPU, Active Infrasharing, Altice, Anchor Tenant, Bouygues, Capex, Co-locations, Decommissioning, Editorial, Europe, FPS, France, Free Mobile, Iliad, Infrastructure Funds, Infrastructure Sharing, Itas Tim,LTE, Market Entry, Market Overview, Network Rollout, New License, Operator-Led JV, Opex Reduction, Orange, Rooftop, SFR, TDF, TowerXchange Research, Transfer Assets, Urban vs Rural, Valuation

Frances Rose, Head of Europe, TowerXchange


have been rife for several years. From Orange, one of France’s most established brands and successful exports, to Free Mobile, the newest market entrant, the French market remains dynamic and highly competitive.

Orange

Orange is France’s oldest and largest MNO and currently owns 34.6% mobile market share. With origins dating back to the formation of France Telecom in 1988, Orange is a highly recognisable French institution, operational in various forms in 27 countries worldwide, Orange is listed on the Paris Stock Exchange, with a current market cap (at 20.9.15) of €37bn. The state owns 25% of the company, 13.4% directly and 11.6% though BpiFrance, the state-owned investment bank. The

remainder is in free float on the Euronext Paris market and the New York Stock Exchange, with no other shareholder owning a stake greater than 5%.In June 2015 Orange’s Fitch rating was upgraded from Negative to Stable, as a result of both Orange’s moves to reduce debt and the growth potential identified in the French market.

Orange lost out in terms of market share when Free Mobile entered the market, losing the most market share to the new entrant. Although competitive pressures will continue to keep tariffs down and force Orange to maintain market share through capex-intensive projects, the market does seem to have stabilised since Free Mobile’s launch in January 2012 and we believe that Orange’s faster deployment of 4G networks should provide an important point of differentiation in the market.

Despite the fact that capex is likely to remain high due to upcoming spectrum auctions, fibre rollout and their commercial strategy to lead the market in mobile data provision, Orange is targeting gross cost savings of €3bn from its transformation programme over 2015-2018.

In 2014 Orange spent €5.6bn (or 14% of revenues) on capex, a number which is likely to increase in the next two years before it can be reduced. Therefore they need to explore different ways to raise cash and reduce opex to support this. Orange does plan to release cash through the prospective sale if its 50% stake in EE in the UK, which should raise around £3.4bn plus a 4% stake in the acquiring party, but there is also a significant asset sitting on their balance sheet in the form of around 20,000 telecoms towers, the sale of which could not only release well in excess of €2bn but which could also help them to stabilise opex for the next ten plus years.

Numericable-SFR

Founded in February 1987, SFR also has a long history in the French market and offers services in both fixed line and mobile telephony. Originally founded as an arm of Vodafone in France, in April 2011 Vodafone sold their 44% stake in the company to media giant Vivendi, who owned the company with Altice until Q2 2015. With 28.6% of French market share, they are currently the second biggest MNO in France.

In April 2014 Vivendi’s management accepted a

Mobile subscription market shares, Q115

Source: BMI Mobile Operators Database

Orange

Numericable-SFR

Bouygues Telecom

Free Mobile

Others

34.6%

28.6%

14.3%

13.4%

9.1%

Orange

Numericable-SFR

Bouygues

Free Mobile

TDF

FPS

Itas Tim


takeover offer for SFR from Numericable’s parent Altice. Under the terms of this deal, Altice paid Vivendi €13.5bn in cash and Vivendi took a 20% stake in a newly formed company, Numericable-SFR, of which 60% was owned by Altice and 20% publicly listed in Paris. Vivendi exercised its option to sell its 20% SFR-Numericable stake in February 2015, with half of its stake being sold to Numericable-SFR for €1.947bn in cash in February 2014 and an agreement for the remaining shares to be acquired by Altice France no later then 7 April 2016.

Notably, Vivendi’s withdrawal from SFR came only two months after SFR signed a network sharing deal with their competitor Bouygues Telecom. The agreement, which will see the two operators share some 11,500 towers in low-population areas, should save SFR around €200mn and Bouygues around €100mn per annum, a move necessitated by the price war initiated by Free Mobile’s entry into the market in 2012.

Between them, SFR and Bouygues Telecom currently have around 18,500 mobile towers in the underserved areas covered by the network sharing agreement (representing 80% of French territory and 57% of the population), necessitating the decommissioning of over 7,000 towers, as well as further build to suit in areas which are inadequately served by either network. Once the new network configuration is complete, each company will assume responsibility for part of the territory on behalf of both parties.

Bouygues Telecom

Bouygues, a giant in both the French telecoms and construction markets, is the third biggest operator in the French market, with 14.3% market share. The company is listed on Euronext Paris exchange and is a blue chip in the CAC 40 stock market index. Founded in 1952 by Francis Bouygues, since 1989 it has been led by his son Martin Bouygues who has overseen the expansion of the company, and launch of Bouygues Telecom in 1996.

On June 21 2015, French Sunday newspaper Journal du Dimanche reported that the owner of Altice, telecommunications billionaire Patrick Drahi, had offered more than €10bn to buy Bouygues Telecom, the assumption being that he could merge the company with his existing asset Numericable-SFR to jump straight to the number one market position.

However, the offer proved unpopular with the French government and on June 23 the offer was rejected by Bouygues, citing the significant growth potential it sees in the French market. The move surprised many, as Drahi’s price tag was considered to be a generous valuation – roughly twice that of many estimates.

Bouygues’ ownership is currently dominated by the Bougyues family themselves, with 20.9% ownership of capital and 27.3% of voting rights, the remainder is split between Bougues employees, who own 23.3% of capital, 19.2% of capital is owned by French investors and the remaining 36.6% is owned by foreign investors in the company.

Free Mobile

Arguably the most disruptive force in the French

“ “Between them, SFR and Bouygues Telecom currently have around 18,500 base stations in the areas covered by the network sharing agreement (representing 80% of French territory and 57% of the population), necessitating the decommissioning of over 7,000 towers, as well as further build to suit in areas which are inadequately served by either network


mobile market in the last five years, Free Mobile has quickly reached 13.4% of market share since its launch in January 2012. Owned by French entrepreneur Xavier Nel, who also co-owns French newspaper Le Monde and Monaco Telecom, Free Mobile’s model relied on low numbers of physical outlets, low-cost offers and non-handset deals to undercut the existing market players, with Nel claiming the incumbent MNOs saw their subscribers as ‘cash cows’ rather than customers.

Originally reliant on France Telcom for around 70% of their network, Free Mobile has been building up their own network coverage and now owns around 10,000 towers in the country. This leaves them some 7,000 short of the 17,000 sites TowerXchange

estimates MNOs need for full coverage of the French territory, and makes Free Mobile attractive prospective tenants for towercos in the market.

France’s towercos

Given the rapid change taking place in the French market, it’s unsurprising that the towerco market has recently enabled smaller players to enter the market and grow rapidly. With Free Mobile’s appetite to grab market share, Numbericable-SFR and Bouygues’ network redesign and Orange’s need to reduce opex in favour of high capex deployment to maintain their position as market leader, both the reduced opex offering and the potential to release cash through the sale of towers could prove highly

tempting to France’s MNOs. TDF TDF is the most established player in the French tower market, founded in 1975 as a public-sector broadcasting operator and becoming part of France Telecom in 1991. From 2002, the when France Telecom first sold off 64% of the company, TDF has been through several acquisition processes, most recently being acquired in 2015 by Brookfield Infrastructure Group, Public Sector Pension Investment Board (PSP Investments), APG Asset Management N.V. and Arcus Infrastructure Partners, valuing the company at approximately €3.6bn. TDF provides services and infrastructure to the media, broadcasting and telecommunications sectors in France, owning and operating a national network of infrastructure with more than 6,690 multi-purpose towers and active rooftop sites, as well as 5,000 km of fibre backbone. These services drive almost 90% of the current revenues of the business, supported by long-term contracts and inflation-linked cash flows. The company expects the portfolio’s growth to be driven by ‘increasing tower deployment by mobile network operators as a result of rising mobile data consumption needs’.

Indeed, when Free Mobile entered the market in 2012, declining revenues from the existing three operators meant TDF was forced to take hit in terms of revenue from these clients, however, Free Mobile’s need for rapid market coverage worked

Estimated tower ownership in France

Orange

Numericable-SFR

Bouygues

Free Mobile

TDF

FPS

Itas Tim

5,000 10,000 15,000 20,000


to TDF’s advantage, and the towerco was able to offer services to all four of the French MNOs, working with them on 4G roll out and securing 35% of their overall revenues in 2012-2013 from the telecoms side of their business (the largest single contributor to Group revenue). TDF sees the ongoing data boom and the future of the Internet of Things as a significant opportunity for them to further capitalise on their network, which remains the biggest in France by some margin.

For the short term, TDF’s growth ambitions appear to be focussed heavily on the domestic French market. Despite owning assets abroad from as early as 2001, when TDF acquired a 49% stake in Digita in Finland, from 2011-2014 they divested several European businesses including Axión in Spain, Alticom in the Netherlands, Digita in Finland and Antenna Hungaria in Hungary. CEO Olivier Huart claimed this series of divestitures was made in order to pay off group debt by selling off non-core assets and refocus the business geographically.

FPS

Founded in 2012 through the acquisition of 2,166 towers from Bouygues Telecom by Antin Infrastructure Partners, FPS sees itself as offering the market an alternative to TDF. Particularly focused at first on less well-served rural areas, FPS identified Free Mobile as a potential tenant who would need to make significant headway into their rural network over the next few years.FPS has also benefitted greatly from the 15% stake retained

until September 2015 by Bouygues Telecom, who remain their anchor tenant on the majority of sites. As the Bouygues/SFR network sharing deal was already under negotiation when FPS was created, the towerco is in the enviable position of being contractually protected from the worst of the potential revenue loss through decommissioning, while simultaneously being the first choice partner for network extensions and other build to suit opportunities required by the new entity.

A very ambitious towerco, with an eye on significant growth over the next few years, FPS also recently acquired Loxel, a rooftop management company, which opened up their urban network and has made a further 20,000 rooftop points of service potentially available to their clients.

Itas Tim

Currently the smallest of the French mainstream towercos, Itas Tim is still well established in the market. Launched in 2008, the Itas group focussed originally on the broadcast market and provision of active equipment to TV, radio and telecoms clients and their core business remains Digital Terrestrial Television (DTT) provision, within which a partnership with TDF allows them to cover the whole of the French territory and serve more than 11mn households. However Itas Tim does own around 420 points of service in France and sees telecoms as an important new line of service. Their aim is to position themselves as a ‘new challenger’ to TDF

and FPS in terms of market position. What next?

Further consolidation in the French mobile market is still likely, and indeed is considered necessary by many, not least the French MVNO community, who represent 9% of the market and have struggled to maintain a competitive advantage since the arrival of Free Mobile in 2012.

Whether this consolidation happens in the short term or not, the market looks promising for independent towercos, whether because of France’s impending 4G specutrum auction, Free Mobile’s need for network expansion or Orange’s desire to increase capex spending in order to support their position in the market.

In terms of the French towercos, TowerXchange believes that there is still a significant amount of organic growth potential in the market due to the above factors. However, this doesn’t rule out the potential for a significant acquisition should a package of towers come to market. Certainly, we believe TDF and FPS would both have the financial backing to raise funds for a large-scale acquisition of >5,000 towers. Of course with both Cellnex (formerly Abertis Telecom) and Telecom Italia’s Inwit eager to prove they can close significant deals in order to justify their high market valuations, and American Tower keen to expand beyond their successful base in Germany, there is a good chance that the French market could become even more competitive than it is now


Russia and CIS FAQs(updated March 2016)Over 40 questions and answers to help you understand the tremendous opportunities within the Russian and CIS tower markets

Russian telecoms infrastructure How many towers are there currently in Russia?TowerXchange estimates that there are around 42,100 ground based towers (GBTs) in Russia. Megafon has the most extensive network with ~14,000 towers, MTS and VimpelCom each have around 10,400 towers, while Tele2 has around 3,500. Russian Towers owns a further 1,700 towers, newer entrants Vertical claim to have 1,600 sites, and a handful of smaller towercos including Link Development and Service Telecom account for a few hundred more. How many rooftop and streetpole masts are there in Russia?TowerXchange estimates there are around 75,000 urban mast solutions in Russia, mostly rooftops and streetpoles. However this number is hard to pinpoint as asset registers and contractual documentation is often incomplete as far as these assets are concerned. What is the current situation for urban masts?A lot of the urban capacity in Russia is currently provided by rooftop and pole solutions. MNOs find it easier to secure licensing for streetpoles and are subsequently more inclined to put points of service on existing high buildings. However there is no standard for agreements on rooftop space and dealing with multiple private landlords across urban areas is a logistical nightmare for operators. There are also a lot of question marks over the legality of new and existing rooftop masts and the permitting situation is not always clear. Although

Read this article to learn:< Which Russian MNOs have an interest in an independent tower industry

< What the current towerco landscape in Russia looks like

< How the Russian wireless market has developed and where growth is needed

< Sources of potential funding in the Russian market

< Challenges and opportunities in the wider CIS

As the largest country on the planet, Russian telecom networks are made up of ~42,100 towers and ~75,000 rooftops across its populated regions, most of which remain operator-captive. In a fiercely competitive MNO landscape with relatively few shared sites, only Russian Towers, Vertical and a couple of other smaller towercos are steadily creating an independent towerco market in the country. That may all be about to change. VimpelCom is nearing the end of a process to sell 10,400 Russian towers (to which a further ~19,000 rooftops and an unspecified number of towers in the CIS could be added). Meanwhile, Megafon are carving out their own towerco and even new entrants Tele2 Russia are rumored to be selling their towers.

Keywords: Editorial, MNOs, Towercos, Russia & CIS, Europe, Russia, Ukraine, Kazakhstan, Russian Towers, ESN, Tele2, Megafon, Vimpelcom, MTS, Acquisition, Market Overview, Valuation, 4G, LTE, Deal Structure, Transfer Assets, Urban vs Rural Co-locations, Infrastructure Sharing, Risk, Build-to-Suit, First Mover Advantage, Country Risk, Rooftop, Sale & Leaseback, Private Equity, Infrastructure Funds

By Frances Rose, Head of Europe, TowerXchange


rooftops and streetpoles would probably not be included in a potential tower divestment, TowerXchange believes there may be room in the market for a standardised and legal solution provider for Russian rooftop points of service. How extensive is current LTE coverage?LTE population coverage in Russia is now significantly in excess of 50%. MTS reportedly has coverage in 83 Russian regions, MegaFon 77 regions and VimpelCom 58 regions. Politics, economy and business environment How has the recent decline of the rouble affected the Russian telecoms market?On one hand the unstable currency and resulting economic turbulence is causing operators to reassess their capital expenditure, but on the other hand devaluation of the rouble is a disincentive for divestiture of passive infrastructure assets as MNOs won’t want to sell if they can’t get full value. Russian tenants would pay their bills in roubles and although raw materials and rent for towers are bought in roubles, and Russia has plenty of domestic energy resources, technology tends to be bought from overseas and is thus effectively building and maintaining towers becomea more and more expensive as a function of devaluation. With at least the first Russian tower transaction, and possibly subsequent transactions, priced in roubles and with lease revenue in roubles, this narrows this field of prospective investors.


Estimated GBT count, Russia

Breakdown of Russia’s 117,100 sites: GBTs versus rooftops and streetpoles

Mobile subscribers of Russia’s top four MNOs, Q4 2015 (mns)


Source: TowerXchangeSource: Annual Reports, note that most recent figure for Tele2

dates from Q3 2015, the other subscriber numbers from Q4 2015

GBTs Rooftops and streetpoles

42,100

75,000

MTS MegaFon

VimpelCom Tele2

77.3

76.8

59.8

35.5

MTS

VimpelCom

Tele2 Russia

Russian Towers

Vertical

MegaFon/First Tower Company

Other independenttowercos

10,400

14,000

10,400

3,500

1,700

1,600

500

3,000 6,000 9,000 12,000 15,000

What is the current status of the Russian mobile market?A competitively balanced market between MTS, MegaFon and VimpelCom has been shaken up by the consolidation and refinancing of Rostelecom and Tele2, whose investment in infrastructure (leveraging co-location where possible) and launch in Moscow has shaken up the market. A further new entrant, LTE-only Antares, is scheduled for launch in the second half of 2016. SIM penetration sits at a whopping 173% among Russia’s 140mn+ population, but mobile broadband penetration is still only 38% (statistics courtesy of GSMA Intelligence, Q4 2015 and the World Bank). ARPU sits in the 220-290 rouble range (US$3.20-4.20).

The status of potential tower transactions in Russia and the CIS What is the status of the VimpelCom tower divestiture?The process, led by BAML, has been ongoing since 2015 and is nearing conclusion. An initial shortlist of eight bidders has reportedly been whittled down to three: Russian Towers, Vertical and a consortium led by the Russian Direct Investment Fund also including Mubadala and Baring Vostock Capital.

At the core of the process is the sale and leaseback of VimpelCom’s 10,400 Russian GBTs. The portfolio could be supplemented by up to a further 19,000 rooftop and streetpole sites, or through the

addition of as many as 40,000 VimpelCom sites in CIS countries. However, it seems increasingly likely that any CIS deal may be closed subsequent to a Russian tower sale. Whilst there may still be a gap in valuation (TowerXchange latest intel suggests that the latest round of bids are believed to be in the US$550mn range, while VimpelCom drives for a $600mn+ valuation), we feel there is a strong probability this deal will close. VimpelCom has placed tower monetisation at the heart of a global strategy to reduce debt, with parallel processes under way in Pakistan and Bangladesh, with a new process mooted in Algeria, and with €693mn already pocketed from the sale of 7,377 Wind towers in Italy. What is the status of the MegaFon carve out towerco?In November 2015, Megafon carved out their ~14,000 towers into a captive towerco, First Tower Company. Motivated by the high valuation multiples commanded by towercos relative to their MNO parents, MegaFon CEO Ivan Tavrin has since explained his intention to “have an SPV with a service agreement, properly executed towers and management. We’re absolutely convinced that this will enable us to get the best price and a high quality buyer. People will see that they are investing in a well-managed business and not just in a collection of steel towers.” More recently Tavrin provided further hints as to the potential means and timelines for monetising

MegaFon’s towerco: “We are not going to put our tower company on the bourse.” It seems that a partial or complete sale to a strategic investor may be the more likely outcome: “It primarily depends on conditions, on how the tower company works with your towers, from the financial climate and other factors,” said Tavrin. “We don’t think that if we are the first to sell our towers, we will be able to earn the most money and sign the best deal. We believe that if we thoroughly prepare, we’ll manage to pocket a high-quality investor and win a high-quality future operating history.” Could the other Russian MNOs also monetise their towers?Russian publication Vedomosti reported in February 2016 that Tele2, Russia’s #4 MNO, was seeking to raise US$500mn through the sale of 10,000 towers. While TowerXchange has not been able to verify this report, it would seem logical for Tele2 to monetise their tower assets before they became stranded on their balance sheet, although reports that Tele2 is selling 10,000 towers may be erroneous – our intel suggested Tele2 had a little over 2,000 towers a year ago and, although they are building fast, TowerXchange estimate Tele2 has ~3,500 GBT’s with their rooftop count bringing the total to 10,000. As recently as November 2015 MTS indicated that they saw no business case to sell their towers: “Tower companies enjoy profitability of 60–70% in other markets. A question arises: who creates


this profitability for tower companies?” Asked MTS President Andrei Dubovskov. “It is created by lessees, and the lessees are cellular companies. For the latter, it will be a constant, stable, huge and always growing expense. That means that a cellular operator turns into a hostage of its partner, from whom they once received a big lump of money… We are the owners of our infrastructure; we can manage it with flexibility. If an operator has a ten year contract for tower lease, it has to bear expenses for ten years; its hands are tied,” concluded Dubovskov. Where is the capital to finance one or more Russian tower transactions going to come from?The combination of forex challenges and trade sanctions make it difficult, if not impossible, for US or Western European investors to participate in the current round of Russian tower transactions. However, that will not significantly reduce the number of credible bidders at the table as a significant local operational footprint was always likely to be required. Russia has no shortage of it’s own investors with an appetite for telecoms and/or infrastructure assets. Foremost of which the RDIF has been linked with Russian tower transactions since last mooted in 2012 (when a prospective joint venture towerco between Russia’s leading MNOs failed to materialise). Middle Eastern and Far Eastern investors could also be attracted to invest in Russian towers, as well as smart money investors who have achieved good returns from Southern Asian towers.

The market in Russia and the CIS What is the most important market in Russia?Moscow is the biggest market in Russia, with by far the greatest population density and the highest ARPU, however there are still significant coverage gaps in the area and MNOs are keen to add capacity to improve their quality of service to Muscovites. Which regions are the hardest for Russian operators to cover?Due to a much lower ARPU and population density than the rest of the country, the far east is the hardest area to cover and sustain operationally and MNOs are much more open to infrastructure sharing in this area to try and minimise opex. All operators are under pressure from the government to provide service to rural areas and 4G licenses require that Russia’s MNOs cover all areas with a population of 10,000+. Leveraging the Rostelecom network then delivering the ‘last mile’ helps them to do this. The current status of tower sharing in Russia How has the Russian tower market evolved?As mobile penetration has exploded in Russia over the last ten years, the three major MNOs engaged in something of an ‘arms race’ in order to gain competitive advantage through better network coverage. However MNOs are now being more cautious about this kind of capital expenditure and over the last couple of years Russia’s operators have started to focus on bilateral swaps and leasing space where possible, and only built new

infrastructure where there was a clear revenue stream. A large MNO in Russia told us they currently spend around US$1bn per annum (a figure quoted before the rouble crashed) on their network to develop coverage and capacity. Where is tower growth needed in Russia?The main priorities for operators in the short term is the LTE roll out and infill in Moscow. In sparsely populated parts of Russia offering network coverage is commercially unattractive, however MNOs are able to use Rostelecom’s fixed-line infrastructure and focus on providing the ‘last mile’ of network connection in order to fulfil license obligations.

What does sharing look like now?Currently tower sharing does take place to a limited extent in the form of bilateral swaps. Tele2 is generally excluded from this, particularly in Moscow where the most value is to be found, as they are unable to offer attractive tower locations to the most established MNOs.

There are substantial network sharing agreements between VimpelCom and MegaFon, to cover ten Russian regions and over 1,300 4G base stations, and between VimpelCom and MTS, with MTS deploying in 19 regions and VimpelCom in 17. What is the current tenancy ratio and how many towers are shared?TowerXchange sources suggest that less than 30% of towers are currently shared, typically


through bilateral swaps and some through existing towercos such as market leaders Russian Towers. Existing tenancy ratios on independent towers are thought to be around 1.2.

Who are the most likely prospective tenants on Russia’s towers?Tele2 have the most to gain from a tower transaction, provided the MLA does not prohibit them from co-locating on many sites. Tele2 would not take on tenancies on the towers wholesale – they would pick and choose according to when the towers became available, their locations and local competition. Nonetheless, Tele2’s appetite to rollout represents a potential near-term spike in tenancy ratio growth. In Q3 2015 Russian publication Vedomosti reported that Russian Towers received 37.6% of its revenues from Tele2 compared to 19% from VimpelCom, 17.7% from MTS and 13.1% from MegaFon.

The oft-delayed entrance of LTE-only MNO Antares into the Russian market could add a further MNO hungry to accelerate time to market through co-location, particularly in Moscow. What is the current state of asset registers in Russia?A year ago, the majority of asset registers were blighted by poor maintenance, poor record keeping, complex legislation and unclear information about land ownership. Since then a significant amount of work has been undertaken to prepare Russian tower portfolios for monetisation,

certainly by VimpelCom, whose asset register has already been exposed to the rigors of several due diligence processes, and likely at MegaFon as they professionalise their management of towers under the First Tower Company entity, in advance of a potential trade sale in the next 6-18 months. Who’s who: the shortlisted bidders for VimpelCom’s towers (in alphabetical order) Russian Direct Investment Fund (RDIF)RDIF, a US$10bn government fund established in 2011 to make equity investments in their domestic market, heads up a consortium of investors believed to include Mubadala and Baring Vostock Capital. RDIF’s ideal deal size is US$50-500mn, with up to 50% ownership. RDIF was previously linked with investing in a Russian joint venture towerco, mooted by MTS and VimpelCom in 2012. Russian TowersRussian Towers was established in 2009 by both Russian and Western professionals with substantial telco experience in Russia. Russian Towers is backed by both Russian and international investors, including ADM Capital, EBRD, IFC, Macquarie Russia & CIS Infrastructure Fund, Sumitomo Corporation and UFG Private Equity. Russian Towers’ current portfolio of around 1,700 towers are spread across 50 regions of Russia, counting all MNOs as tenants. Leveraging relationships with key partners including Russian Railways, the business grew over 90% YOY organically, adding 950 towers in 2015. The

company are also deploying light poles with capacity for two to three tenants, particularly as an urban infill solution.

Russian Towers’ appetite for acquisitions extends to the CIS in the immediate term, and beyond thereafter. VerticalFormed in 2013, Vertical experienced rapid growth in 2015, adding the acquisition and refurbishment of 500 street poles to scale to a portfolio of 1,600 sites. Their assets primarily consist of 30-35m street poles in Moscow and the surrounding region.

Vertical has developed in-house tower building capability to accelerate time to market, and now has around 250 staff. Serial entrepreneur, Vertical Founder and owner Georgy Chumburidze is also a Director of Massive Multiplayer Online Games company 4game and content distribution management company Pladform. Strategy Director Egor Bykov has a background investing in telecommunication infrastructure at Macquarie. Other interested partiesOther parties which could be interested in future Russian tower opportunities, either as direct bidders or participants in a consortium, include local Russian towercos Link Development and Service Telecom, one or more Chinese towercos, and Quippo International, the international investment subsidiary of SREI Infrastructure, which recently agreed the sale of their stake in Viom Networks to American Tower India.


TowerXchange don’t expect Cellnex, American Tower or any of the other listed U.S. towercos to be direct bidders for Russian towers in the near term. TowerXchange forecast for the Russian tower market

Towerco penetration to reach 62.5% in 2017It is not difficult to foresee a Russian tower market where independent towercos might own 30,000, 62.5% of a 48,000 ground based tower market by 2017. Such a forecast would depend on the closure of the current VimpelCom process, the sale of MegaFon’s First Tower Company to a strategic buyer, and the continuing organic growth of Russia’s existing tower companies. The level of towerco penetration could reach 70% if a Tele2 Russia tower sale were also completed. One of Russia’s tower companies will be among Europe’s largest towercos by 2017 – although which one, we’re not sure! Expect upwards of US$1.5bn (100bn roubles) to be spent transferring Russian towers from MNO-captive to independent towercos in the coming 18 months. We’ve seen Russia get to the brink of tower deals before, only to step back, but the process has gone farther than before, the drivers are real, the assets are ready, the buyers are ready, the capital is there. It’s an exciting time for Russian towers! Tenancy ratio growth could exceed 0.2 per yearGiven Tele2’s ongoing need for network expansion, and the continuing rollout of 4G, the tenancy ratio

in Russia could achieve a healthy annual growth rate near 0.2, and eventually exceed two, although would be unlikely to go beyond three. We would expect a substantial difference, in the order of 0.5 or greater, between the potential tenancy ratios

in major urban cities compared to smaller towns exceeding 10,000 population. Infrastructure sharing in rural areas may be more likely to be facilitated by RANsharing that by substantial involvement of independent towercos

While the Russian market gains momentum toward the adoption of the independent towerco model, it’s earlier days for the tower industry in the CIS. However, TowerXchange still antici-pate tower deals in the CIS within the next 12-18 months. VimpelCom has made no secret of their interest in divesting tens of thousands of towers in Arme-nia, Kyrgyzstan, Uzbekistan, Tajikistan, Kazakh-stan, Ukraine and Georgia during or, more likely, following their Russian tower sale process.

“VimpelCom as an entity is now looking across its networks for divestitures, so any place where they have a presence therefore becomes a poten-tial market where we will next see independent towercos emerging,” said the IFC’s Eric Crabtree in a recent TowerXchange interview. “VimpelCom will drive the creation of the industry as they move, they are quite serious about the divestiture process and it’s not just going to be Russia, it’s go-ing to be others in the region and so that’s where to place your bets on anything happening.”

MegaFon has only one CIS subsidiary, in Ta-jikistan. It is not known whether their towers are included in First Tower Company. MTS also operates in Ukraine, Belarus, Armenia, Uzbeki-stan and Turkmenistan, but seemingly has little appetite to monetise towers. TeliaSonera and Telenor’s appetite to exit their CIS investments may precipitate transactions which could be part financed by tower divesti-tures. While there is little towerco activity in the CIS at present, there are a couple of interesting excep-tions. Turkcell has transferred 811 towers from it’s Lifecell subsidiary in Ukraine to it’s Ukrtower subsidiary in the same country, for US$52mn. Ukrtower now has ~1,200 towers, representing 11% of the country’s total tower stock. Turkcell are known to be exploring the monetisation of their tower assets, so the restructuring of their Ukrainian assets could precede a sale or IPO. Meanwhile, Logycom has secured a contract to build 100 towers in Kazakhstan

CIS towers


The emergence of independent tower markets in the CIS?IFC insights into how the region could be following in Russia’s footsteps

TowerXchange: Within the Eastern European and Central Asian markets that the IFC operates what is the status of the independent tower market? Do any countries have independent tower companies and is there any culture of infrastructure sharing?

Eric Crabtree, Chief Investment Officer, IFC: If you look at the region, Russia is the most advanced with towercos such as Russian Towers and Vertical present and also an active bid process underway with the Vimpelcom divestiture. This is by far the biggest thing happening in the region at the moment and is also the clue to what may happen next. Vimpelcom as an entity is now looking across its networks for divestitures, so any place where they have a presence therefore becomes a potential market where we will next see independent towercos emerging. Vimpelcom will drive the creation of the industry as they move, they are quite serious about the divestiture process and it’s not just going to be Russia, it’s going to be others in the region and so that’s where to place your bets on anything happening.

Temel Oktem, Head of Telecom, Media & Technology, Europe, Middle East and North Africa, IFC: In terms of existing towercos in the region, you only find examples in Russia (as Eric mentioned) and Poland where the company Emitel is present - to my knowledge there are no other materially sized independent towercos. I came across a company, Konsing Group, with 47 towers in Serbia and there may be others like them, but in terms of sizeable independent towercos, you are really limited to

Read this article to learn:< What culture of infrastructure sharing exists in the CIS

< Who the key MNOs, towercos and JV infracos are in the region

< Where the next tower divestment would be likely to happen after Russia

< How new towercos could form in the respective markets

< What role the IFC is playing to support the development of an independent tower market

The commencement of Vimpelcom’s sale of 10,400 towers in Russia coupled with the public declaration they are looking into the sale of additional assets in the CIS marks the start of a new wave of activity in developing markets in Eastern Europe and Central Asia. Whilst towerco activity and infrastructure sharing in the region are currently very limited (with only a handful of towercos and JV infracos of note outside the Russian market) there remains significant potential for the formation of new commercial entities through the assemblage of local technical expertise, regional and international capital and experienced management teams. In this interview we speak to the IFC’s resident tower expert Eric Crabtree and the bank’s Head of Telecom, Media & Technology for the region, Temel Oktem to discuss the dialogue they are having with MNOs, investors and local stakeholders surrounding the development of an independent towerco market in the region.

Keywords: 3G, 4G, Acquisition, Active Infrasharing, Carve Out, CCE, Cellnex, Central Asia, Cinven, Country Risk, CVC, Debt Finance, Deutsche Telekom, Emitel, Europe, Europe Insights, Global Tower, Greece, IFC, Infrastructure Sharing, Investment, LTE, KKR, Market Entry, Market Overview, Masts & Towers, Mid-Europa, MNOs, Orange, Ovidiu Telecommunications, Poland, Private Equity, Providence Equity, Regulation, Risk, Romania, Russia & CIS, Russian Towers, Serbia, Telekom Austria, Telenor, TeliaSonera, Towercos, Transfer Assets, Turkcell, Turkey, Ukraine, UkrTower, Victus Networks, Vimpelcom, Vodafone, Wind Hellas


Russia and Poland. We also see an appetite amongst local tower builders to move up the value chain (as they have done in Russia) but to date, outside of the Russian market this has not yet resulted in the formation of any new towercos.

In both Turkey and the Ukraine, Turkcell have subsidiaries which manage their towers (Global Tower and UkrTower respectively) but they are wholly owned by Turkcell and as such, cannot be classed as independent towercos.

We also see some infrastructure sharing in the region. In Greece, Victus Networks exists as a network sharing agreement between Wind Hellas and Vodafone; and in Romania there is Ovidiu Telecommunications, a network sharing agreement between Vodafone and Orange. In both scenarios there is both active as well as passive infrastructure sharing, however the joint venture infracos don’t actually own the towers, rather they manage them on behalf of the operators.

TowerXchange: Could we see any of the big international towercos entering the region?

Eric Crabtree, Chief Investment Officer, IFC: Cellnex are looking very aggressively at the Italian divestiture (Inwit) and when we look at the firms in Western Europe, they look likely to be the earliest major player that could go into some of the markets that the IFC is involved in. When they listed, however, the story given to investors was “Western Europe” and so their latitude initially is going to be limited. As a firm however, they know Vimpelcom

well - it is one of their chief clients, and so that may entice them to enter the region at some point.

TowerXchange: Could we see any local tower builders moving up the value chain to become towercos in the region? Are there any strong candidates that stand out?

Eric Crabtree, Chief Investment Officer, IFC: When you look at developing markets globally, the generic observation is that there are always a number of local tower builders - there are fairly low barriers to entry, the margins aren’t particularly good as a general rule and they frequently get taken advantage of by the tower owners in terms of payment terms, however some of them do graduate. It is a leap, but in Russia we are seeing that a few builders are making the transition into ownership.

Temel Oktem, Head of Telecom, Media & Technology, Europe, Middle East and North Africa, IFC: Those principles apply to the region also. Some builders are bigger than others but it doesn’t change the fact that there are narrow margins and the builders are not strongly capitalised and so on their own they’re not able to acquire the towers and turn into a towerco by themselves. What the tower builders do bring however are many of the critical skills that are needed to play in the tower market, which is why they make a great combination with private equity funds who want to get into the business.

TowerXchange: Could these potential new entrants compete effectively with more

established regional players like Russian Towers?

Eric Crabtree, Chief Investment Officer, IFC: Firms with the right assemblage of talent - the money and the build expertise but also someone in the mix who has managed a portfolio of towers could become genuine challengers. It’s one thing to put the site up, throw down the foundations and get the steel up - it is quite different to make sure the site is up and running and taken care of and that the relationship with the client is managed correctly. The money can’t accomplish that, you need other kinds of talent brought in. If you have all that in the mix it’s not impossible - Russian Towers will face and is facing competition on the bid for Vimpelcom’s towers.

TowerXchange: It is quite fragmented when we’re talking about tower builders who could make the transition into towercos; when it comes to the financing part of the equation, who are the key players here? Are they mainly funds with a regional interest or is it more funds that have an appetite for towers globally?

Temel Oktem, Head of Telecom, Media & Technology, Europe, Middle East and North Africa, IFC: The smaller deals tend to have interest from the regional funds. When we’re talking about larger deals, you will also see interest from the more sizeable regional funds (such as Mid-Europa, Cinven and CVC) but there will also be global players like Providence Equity and KKR who are very active in this sector.


TowerXchange: Has the dialogue between private equity funds and local tower builders surrounding towerco formation started already?

Temel Oktem, Head of Telecom, Media & Technology, Europe, Middle East and North Africa, IFC: I don’t think there are many active discussions at this point. The private equity funds need to smell the deal before they get really active and then they’re able to move very quickly - they need to see the divestitures coming into the market first. I know that some of the funds are talking to advisors to get an idea of what potential asset sales are on the horizon, but they’ll only act once there is a serious process in place.

TowerXchange: What risks are there for investors looking at the region?

Eric Crabtree, Chief Investment Officer, IFC: Outside of the Eurozone, the obvious concern is going to be currency devaluation and the ability of towercos to negotiate dollarised or euro based lease payments, or at least partial ones, to cover off some of that that risk. That’s a big concern right now - even though eventually of course the Euro and Dollar will weaken against these emerging market currencies, they are not in a strong position today.

A second key indicator to look at is the number of healthy MNOs in any given market - this is usually the driver of a market’s attractiveness and sits quite apart from any macro risk.

In relation to regulatory risk, one thing that I am

observing in other markets, which holds up a lot of build out, is the auctioning off of spectrum. Anything that is holding up the data revolution on the regulatory side is another potential risk you must evaluate.

Another concern to note is as to whether the country has (and most haven’t) made any noise about regulating the sector. The problem you find in developing markets globally is that you can often have a very interventionist state, a divestiture doesn’t occur until certain personal interests are met or they get a piece of the tower company and as such the bidders don’t go in. I haven’t got any specific examples of that happening in the CEE but it is definitely something that investors need to be aware of.

Finally, If you’re looking at a country like the Ukraine where you have a conflict that’s obviously

going to deter a lot of investors. On the other hand, for the IFC that situation makes it a priority market and one that we would be prepared to invest in with the right partner.

Temel Oktem, Head of Telecom, Media & Technology, Europe, Middle East and North Africa, IFC: What I can also add to the list is the availability of debt financing in some of these markets. Sometimes international lenders familiar with the tower business will not be active in the market and then you will be limited to local banks who have never seen a tower business trying to finance it. This can create problems for a potential investor and towerco.

TowerXchange: We discussed Vimpelcom’s appetite to divest some of their assets as a key factor in stimulating the independent tower market in the region. Who are the other key

“ “Outside of the Eurozone, the obvious concern is going to be currency devaluation and the ability of towercos to negotiate dollarised or euro based lease payments, or at least partial ones, to cover off some of that that risk


MNOs in the region and what are their attitudes towards tower divestment?

Temel Oktem, Head of Telecom, Media & Technology, Europe, Middle East and North Africa, IFC: The other MNO with a very similar footprint to Vimpelcom is TeliaSonera - they have operations in Azerbaijan, Georgia, Kazakhstan, Moldova, Tajikistan and some of the neighbouring countries. The one caveat with TeliaSonera however is that they have announced an interest in selling up and exiting those operations and so may cease to be a major player there. Telenor who is an investor in Vimpelcom, is also looking at an exit from the region.

One interesting company to watch is Turkcell who are TeliaSonera’s partner in markets including Moldova, Georgia, Kazakhstan and Azerbaijan (where TeliaSonera is the controlling partner and Turkcell is in the minority). Turkcell also have operations in Turkey and the Ukraine. Turkcell have started to approach bankers regarding a potential sale of their towers and whilst it is most probably a longer shot given the regulatory barriers in Turkey, it is an important indicator of changing sentiment in the region.

When you go to more Southeastern Europe, you start to see operators such as Telekom Austria, Deutsche Telekom, Vodafone and Orange active in multiple markets, as well as Telenor having a presence here.

We have been talking with all the various MNOs

for a while, and whilst generally they keep their cards close to their chests, we are starting to see movements. If you take Turkcell as an example, the tower business idea had been floated in Turkey a while back and it was a no go for them at that time. Now they’re approaching banks to give them advice on how to do a transaction which is a radical change. As in other markets, once someone takes that first step, the others will follow. I’m optimistic on the market developing having seen Vimpelcom advancing on their bid process and people like Turkcell publically considering it, it’s a very good sign that things will evolve, firstly in the Vimpelcom markets and then the rest of the region.

TowerXchange: What work is the IFC currently doing in the region to support the market?

Temel Oktem, Head of Telecom, Media & Technology, Europe, Middle East and North Africa, IFC: We engage with the MNOs, not only in relation to towers but also generally in the region and we talk to potential investors, government bodies and regulators. One role we are trying to play is to increase the awareness of the telecom tower market, highlighting potential issues and trying to make sure that risks are mitigated under the right structure - as the deals come through that will be more of a role we continue to play. As the deals emerge, we will help bring people together, both on the buy and sell-side and also play a key role in supporting the local and regional banks. We will share our experience of financing tower transactions globally and help them get more comfortable in understanding the tower business


Meetup Africa 2016

Meetup Asia 2016



Meetup Europe 2017



16-17 June, Florida

5-6 April, London

Exhibition preview

TowerXchange is not only about the views of towerco and MNO strategists. One of our top priorities is to provide a

platform for proven passive infrastructure equipment and service to introduce themselves and their activity. From

static asset manufacturers to access control systems, site management systems, RMS and backup power solutions,

these companies play a critical role in ensuring the efficiency and safety of towercos, MNOs and their employees.

In this section we gather interviews with the top service, solution and equipment manufacturers joining the

TowerXchange Meetup Europe this April.


115 Abloy Oy

118 Acsys

124 Bladon Jets

129 EnerSys

134 Heliocentris

138 Invendis

142 Medipower

147 Northstar

153 Tarantula

158 Vinson & Elkins RLLP

207Heliocentris

206Acsys

205Tarantula

204Invendis

203Siterra,

An AccruentProduct

202EnerSys

201Abloy Oy

102Small Cell

Forum

103NorthStar

101TowerXchange

302Bladon Jets

303FPS Towers

meeting room

Exit

301Medipower

TowerXchangemeeting room

Access to mainMeetup room

Entrance, exit &washrooms

Disabledaccess

An integrated approach to telecom site securityABLOY’s expansion in the telecom tower industry

TowerXchange: Could you introduce us to Abloy? Which countries are you active in?

Edward Lee, Business Development Manager, Abloy South East Asia: We are a Finnish company, and we are a leading manufacturer of electric locking systems and architectural hardware. We develop easy to use locking solutions to satisfy the needs of end users. Abloy has a global presence spanning over 90 countries in all continents. Our presence in Asia is represented by our direct sales offices in China, India and Singapore where Singapore is the regional co-ordinating office for the Southeast Asian market.

TowerXchange: Who are your main clients?

Edward Lee, Business Development Manager, Abloy South East Asia: Our main clients are in the high security and infrastructure segment where we provide solutions to professional end users such as banks, government institutions, transport and logistic companies. Essentially, we supply to installations with a wide network of applications including utilities and telecommunications companies. In the telecoms industry we work primarily with the operators. Telecom tower companies is a relatively new concept in Asia for us, although securing telecommunication equipment has been one of our major strengths. The route to market has changed and we look forward to grow as a partner of choice with all telecom tower companies, as we believe we have the technology, know-how and capability to service them.

Read this article to learn:< Abloy’s footprint and client base

< Key security issues in remote telecom sites and how to solve them

< Abloy’s cutting edge solutions integrating mechanical and electronic technology

< The need for a change in mindset: a joint approach to site security

ABLOY is one of the leading manufacturers of locks, locking systems and architectural hardware in the world. They are also a leading developer in the field of electromechanical locking technology. The company has been providing security locking solutions to telecom companies globally since the early 1970s, with increased presence in the Southeast Asian market since 1987.

With the evolution of the telecommunication industry, the company has also streamlined its product offering and developed new locking solutions using the latest technology available to meet the challenging demands of providing telecommunication services to end users. In this interview, Edward Lee, Business Development Manager for Abloy South East Asia and Alan Goh, Business Development Manager for Abloy OY (Finland) introduce the company, its footprint, products and strategy in relation to their security solutions and services in the telecom tower industry.

Keywords: Abloy, Southeast Asia, Interview, Access Control, Urban vs Rural, Fuel Security, Site Visits, Shelters, Fencing, Batteries, Diesel Generators, MNOs, China, Singapore, Bangladesh, India, Philippines, Thailand

Alan Goh, Business Development Manager, Abloy OY (Finland)


TowerXchange: What kind of security issues is the region exposed to? And how can Abloy help solving them?

Alan Goh, Business Development Manager, Abloy OY (Finland): Security issues that our telecom clients usually encounter are related to the size of their operational sites; managing the various groups of people and individuals with access to them. They need to integrate an efficient locking mechanism into their current processes. Often many of these sites are in remote areas and they are subjected to harsh environmental conditions and they need to ensure that these sites are well secured and also when they need to be accessed, they have to be certain that the locks will work when access rights are granted. Over the years, our clients have continued to choose and

recommend Abloy as their preferred security locking solution partner.

With regards to remote sites, these are high risk areas and most of these sites hold very expensive and important equipment and consumables that are required to keep the site itself operational. Hence, they are subjected to theft and pilferages with most incidents resulting in loss of fuel, cables, generators and batteries, often rendering the sites non-functional, resulting in performance downtime for the clients. A reliable locking solution, enhanced with technology and process management – which Abloy offers, creates a stronger barrier and resistance for intruders and saboteurs.

TowerXchange: How does the demand for security

solutions differ between Asian countries? And between Asia and other regions Abloy serves?

Edward Lee, Business Development Manager, Abloy South East Asia: Currently, our primary business clients are telecom companies located in India and Bangladesh. Other countries, where our locks have been deployed in traditional landline installations, such as Philippines, Thailand and Singapore are exploring and starting to move towards the independent towerco model. We understand very well, that every country has their own culture and management processes, and hence we know that it is very important to customise our products and solutions according to our customers’ specific requirements, and not roll out a standardised model across the region.

Most of the sites we serve in Bangladesh are located in remote areas, although we do operate in urban areas as well. In the city there are many options for protecting expensive equipment. For instance, some telecom companies store their equipment in residential areas near the site rather than on it. Remote sites have limited options.

In India, our focus has been on mobile network operators rather than tower companies. A tower company runs a site with two or three network operators, and each of the them contracts us individually to provide a locking solution for their equipment. We are working towards getting tower companies to understand the importance of a consolidated security system, taking into consideration that each tower is likely to have


multiple vendors. We are also learning how we can work and collaborate more effectively with tower companies in this region. The opportunity to network with key players in the tower industry through TowerXchange Meetups is extremely useful to us.

TowerXchange: Why have tower companies been slower to adopt your solutions?

Alan Goh, Business Development Manager, Abloy OY (Finland): There are probably a couple of reasons. One would be that tower companies are unaware of our solutions, as our brand has traditionally been associated with mechanical locking, although they are highly reliable and secure. We welcome the towercos to experience our high-tech electronic locking solutions. Secondly, towercos currently rely on operators to each adopt a locking solution for their own equipment, whereas we firmly believe that there are many advantages to be enjoyed with a joint approach to site security. We are most willing to discuss further with the towercos and deploy pilot trials with them to understand how they can save on operational costs over a specific period of time and the possibility of monetising their investment in our solutions.

TowerXchange: What are telecom companies typical requirements for site security?

Alan Goh, Business Development Manager, Abloy OY (Finland): We offer many different security products for telecom companies, and these are usually tailored to fit the needs of each individual customer. Most of

our clients in the telecommunications industry have been purchasing our master key solutions and some are using electronic locking solutions.

Mechanically, Abloy’s patented and controlled key profile with detainer discs technology is bump proof and virtually pick-proof. Our high product quality and reliability is also ideal for harsh environmental conditions. Not forgetting the endless master-keying capabilities from our comprehensive range of locking products that include padlocks, door cylinders, cam-locks, cabinet locks and key deposits.

To further enhance the mechanical solution, our electronic technology known as CLIQ provides more flexibility in key control for infrastructure projects which are geographically dispersed.

CLIQ technology allows for audit trails so you can see events and times of occurrence from all locations. Easy-to-change access rights are based on time and calendar; e.g. enabling cleaners to be automatically granted access only at predetermined times. CLIQ technology provides unique identification for every opening through encrypted communication. The integration of mechanical and electronic technology is double-checked and secured with Abloy Protec2 CLIQ wherein the CLIQ technology is further tested on top of the mechanical durability and resistance force of our product.

However, if our client wishes to have an immediate communication with various sites, Abloy’s electromechanical locking solution can offer a variety of monitoring signals to inform the security

system of the status of the site. Setting the lock to fail secure is a plus point in terms of power consumption. With this setting, the lock does not consume any power at all unless an authorised user presents his or her card to gain access. As such, our electromechanical lock is “greener” for the environment, creating savings in power consumption versus other locking devices that require constant power supply to them.

Testing standards have been raised and Abloy electromechanical locks are tested not only for their mechanical durability and resistance. The individual electrical components encased in our electromechanical locks are tested as a complete unit under the new EN14846 standard, where a complete test is done instead of testing the component parts separately, thus ensuring the best product life cycle of our electromechanical locks to our customers.

TowerXchange: Did the entrance of towercos in the telecom industry change the way Abloy works? And if so, how?

Alan Goh, Business Development Manager, Abloy OY (Finland): We understand that telecom companies are divesting their assets to tower companies and we have to adapt our business approach to reach out to attract new clients; namely the towercos. There is likely to be exponential growth and we are quite excited about this. Abloy is ready to ride on the wave of opportunities in this fast developing sector, by partnering closely with towercos to implement the best possible high-tech electronic security locking solution for them


How to improve cell siteproductivity and workforce managementData is the key to productivity

TowerXchange: Please can you provide an introduction to Acsys and why they are now looking to expand beyond access control?

Michael Sothan, Business Development Global Accounts, Acsys: Acsys was originally a general access control and workforce management solution provider. In the company’s early days we did a lot of work with the government and military sectors but after seeing a very good fit in the telecom infrastructure space, we developed a telecom-centric access control and workforce management system specifically for the sector which has now become well recognised by the industry.

Whilst security is always a concern for tower owners, the market, especially in Europe, is shifting towards an increased focus on efficiency and opex reduction - with ARPU decreasing and capex on the increase, operators are putting more focus on their bottom line, looking at ways to make savings.

In order to improve efficiency on site one must first understand what is happening on site; to date it has been hard to get a clear picture on this. There has been a real lack of data detailing what is going on - even to the extent of knowing for certain whether a job has actually been done! If a job is being done, it is useful to know factors and metrics such as when it was done, who did it, how long it took, did it take longer than it has in the past? When you start to obtain and interpret this data you start to develop a meaningful picture of site operations.

Operators deploy lots of different pieces of software

Read this article to learn:< How Acsys are expanding their focus outside of security to better monitor workforce patterns

at cell sites

< Which third party systems and metrics can be integrated to develop a holistic picture of cell

site operations

< How data can be used to develop job based KPIs and SLA clauses to monitor and improve

productivity

< What trends are starting to be observed on optimal completion times for key maintenance tasks

< How Acsys’ system is being adopted and customised by infracos

Keywords: Access Control, Acsys, Africa, ARPU, Business Case, Capex, Change Management, Energy Efficiency, Installation, Investment, Job Ticketing, KPIs, Managed Services, Monitoring & Management, O&M, Opex Reduction, QoS, RMS, ROI, Rooftop, Site Level Profitability, Site Management System, Site Surveys, Site Visits, Skilled Workforces, SLA, Uptime

To date, monitoring of workforce activity on cell sites has been reliant on the use of disparate systems, paper records and word of mouth. Acsys, best known in the telecoms sector for their access control systems, is now expanding their focus to develop a platform which integrates access data with data points from multiple third party systems, offering infracos the opportunity to better track activity and productivity on site. TowerXchange spoke to Acsys’ Michael Sothan to understand the platform, what data it can capture and how it is set to revolutionise productivity at telecom cell sites.


Michael Sothan,Business Development Global Accounts, Acsys

such as OSS systems, trouble ticketing systems, billing systems and remote site management software systems to monitor what is happening on site, but these systems don’t talk to each other. Acsys’s solution, while focused on managing physical activity on-site, is to provide an open platform which can integrate with one or all of these third party systems to give a more holistic view of site operations. This fills in the vacuums of data that have existed and presents a complete picture of what is happening at your cell site.

TowerXchange: How long have Acsys been working on this software?

Michael Sothan, Business Development Global Accounts, Acsys: It has been very much an ongoing evolving process but something which we have begun to shift our focus more heavily towards in the past year.

TowerXchange: Prior to such a platform being developed by Acsys, how have tower owners been able to monitor operations?

Michael Sothan, Business Development Global Accounts, Acsys: What we’ve realised is that whilst the telecom industry is a very high tech industry, when it comes to O&M they have relied on a very piecemeal and low tech approach. Infracos have been amalgamating multiple types and sources of data from digital records to paper based reports right through to word of mouth - all with the aim of increasing visibility and control of their operations. Infracos have been putting in place

processes to oversee what is happening but where a lot of inefficiencies have been coming in is that these separate processes are not integrated. There have been a lot of gaps in the data and as such guess work has had to take place. This has made enforcing their processes a real challenge.

Putting in place the Acsys system means that each time a job is being done there is real time data correlated with that job which can then be integrated with further data points. This not only allows for the creation of more effective processes but also allows for their enforcement.

TowerXchange: How have you worked with clients to develop the solution and what has been their reaction to the system?

Michael Sothan, Business Development Global Accounts, Acsys: As we work with clients they give feedback on what data they would like to capture to enable us to create them a tailored system. Generally what most of the clients really want is an increase in the data generated about their O&M and an increase in the efficiency of their O&M. Key questions they’re looking to answer include the obvious; who is on site and what asset are they accessing? This is critical for tenants who want to monitor their active infrastructure, to the less evident; which vendor is doing the job more efficiently? What is the average time spent on site? How many sites can be serviced a day under routine or preventative maintenance?

In terms of the appetite for such a system, we have


realised that companies are much more willing to budget for and buy a solution that increases productivity in their operations. Security is an essential component to a towerco business but it is not something that people are excited to purchase. When we can provide a solution that saves people money by reducing their opex, it becomes much more interesting for the client to invest in it.

TowerXchange: Have you developed the solution in partnership with third party software providers? Can most main systems be integrated into Acsys’ solution?

Michael Sothan, Business Development Global Accounts, Acsys: With a lot of work still under development, I can’t name all the vendors that we are working with but what I can tell you is that we are working with a number of major remote

monitoring system providers from across the US, Europe and Asia. With several of them we have already completed integrations and a few have already been deployed in the field. We’ve also been working with some of the major ticketing providers and are now beginning to look at specific billing softwares and larger scale ERP platforms.

The idea is to keep our system as open as possible, using open APIs and web services which allow for integration. The strategy is not to create a pre-made system, rather one that on a project by project basis we can discuss with a client what systems they are currently using and where they are finding gaps in the data so that we can create something customised.

TowerXchange: What kind of metrics are clients looking to obtain through using Acsys’ system?

Michael Sothan, Business Development Global Accounts, Acsys: Clients are interested in a number of factors, perhaps the most obvious being vendor time to site and time on site. They want to gain a hard verification of how long it takes a given vendor to reach a site, especially in the case of emergency maintenance, and also how long a given supplier or contractor spends on site. Even if the client is not paying on an hourly basis, they need to have a clear picture of this. If you are putting in place service level agreements you need to be able to monitor this in order to be able to enforce the clauses you put in place. Vendors also need to know they are being monitored. it all links back to SLA adherence - if you can’t verify whether the visit was even made it makes it impossible to enforce the SLA clauses you put in place.

Another useful feature of this is that you can develop job based KPIs, working out how long it should take, on average, to complete a specified task. This allows you to better plan your routine maintenance and also enables you to budget more accurately, setting aside a set amount of time for a contractor to do a job, and avoiding overtime payments when they go outside of this.

As well as assessing response and service times or vendors you can also use this to monitor the equipment itself. For example, if you take a diesel genset you can look at the number of call outs that it needs on an annual basis and compare the MTTR following a fault. This enables you to make more informed decisions when it comes to equipment selection.


“ “The strategy is not to create a pre-made system, rather one that on a project by project basis we can discuss with a client what systems they are currently using and where they are finding gaps in the data so that we can create something customised

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TowerXchange: From deployment of your systems to date, have Acsys started to observe benchmarks for given tasks and is there anything that you can share?

Michael Sothan, Business Development Global Accounts, Acsys: We try to be as consultative as possible in working with our clients but the amount of data that we have access to depends on how independent our client wants to be. In some instances they prefer to keep everything in-house whilst in others we work very closely with them in analysing their data. At the moment the amount of information that we can share is dependent on NDAs that are in place, but we are ultimately very happy to help the client analyse and interpret the data they obtain.

We have however started to see certain trends in different regions. For example, in India we’ve noticed that because of traffic, especially when it rains, there was a certain client which couldn’t get more than one site serviced per day as they were driving back and forth to collect keys. This problem could be rectified by installing our mechatronic locks, taking the number of sites that could be serviced up to as many as four and as such this gives us an indication of the number of sites that a client should be able to have serviced in a day.

Another example I can give is in Africa where we did a study on three different vendors carrying out oil filter changes. One vendor was taking 20 minutes to do the change, a second took an hour and a third took two hours. When the client

inspected the sites it became clear that the vendor that was doing the job in 20 minutes was frequently not changing the filter at all, whereas the vendor taking one hour was doing a good job. From this we could elucidate that the required time to do an oil filter change was one hour, much less and the job wasn’t being done properly and any longer and the vendor should be more efficient.

TowerXchange: How much analysis is required to extrapolate meaningful findings from the data? Is there a degree of automation?

Michael Sothan, Business Development Global Accounts, Acsys: There are certain elements which can be automated, for example with our system you can pre-set alarms if, for example, people are on site too long or are requesting access outside of their normal zone. The system can go as far as automatically blocking access until the vendor’s geo-location is at the correct site. If you want to break down findings and connect them to other data points, some of this is still being done manually.

Acsys can offer a service whereby our engineers run analysis every week and send a report back to the client and we are always working to add in more ways to further automate the process.

TowerXchange: Why is it so important to improve the way in which infracos can better understand workforce patterns on cell sites? Michael Sothan, Business Development Global

Accounts, Acsys: From a very general perspective if you look at the advent of management science you have all these innovative concepts that were developed like systems theory, value based management and lean manufacturing which have been adopted by various industries and are being taught in the world’s top management schools. The approach to managing operations in telecoms infrastructure shouldn’t be any different.


We are trying to equip infracos with the skills to adopt lean O&M in the same way you hear about lean manufacturing - working to achieve more with less, reducing costs and acting more efficiently. Companies that can use tools like ours to identify patterns in workforce behaviour can than weed out the inefficiencies, create optimised processes and obtain a competitive advantage, resulting in them becoming leaders in their field.

A more specific answer to the question is that

understanding workforce patterns enables you to better manage staff and subcontractors on site, not only verifying that work is being done in a timely and accurate fashion but also enabling you to better plan and forecast work that needs to be done. When you have an indication of how long a job should take you can put in place job based KPIs - planning the amount of time and cost required for a given job, avoiding overtime payments. Similarly by having a definitive answer on whether a job is being done you can enforce SLA clauses,

with a data trail in place vendors know that their activities are being monitored. Knowing this means vendors are now required to follow processes established by management which they may have previously ignored.

TowerXchange: Do any other companies have a similar offering to Acsys?

Michael Sothan, Business Development Global Accounts, Acsys: There are companies offering wired or Wi-Fi dependent solutions which require a lot of hardware to be installed on site. These companies are generating a lot of data which has the potential to be integrated but the issue is they don’t have the reach to be able to install it on the majority of sites. A high level of expense and time is required to install these systems and as such, the solutions are usually only being installed on a few critical backbone sites. Such systems lose much of their value as they can’t correlate what is happening on those handful of sites with what is happening on the other 90% of the network. No other vendors have the ability to not only install a solution on every single site – from critical backbone sites, to rooftop sites to remote sites out in the middle of nowhere – but also on every asset on the site

When it comes to other mechatronic lock providers, we don’t see any other companies going the extra mile to utilise or exploit the data that is being generated by the system. They focus exclusively on the security aspect but to us that is just the foundation - the real value is in using the data generated


Jet powered microturbine gensetsoffer a more efficient alternative to traditional DGsInnovative solution is more cost effective, cleaner, greener, quieter, burns just about any liquid or gas fuel and breaks even compared with DGs after approximately 15 months

TowerXchange: Where do Bladon Jets fit in the telecoms infrastructure ecosystem?

Stuart Kelly, VP Market Development, Bladon Jets: We have invested considerably in R&D over the last 5 years and perfected the design and manufacture of low cost jet powered microturbine gensets (MTGs). Our MTGs are positioned to replace diesel generators as the primary or backup power solution at cell sites, thanks to our superior performance and reliability. Bladon’s MTGs are ultra quiet, clean and green, small and light, which is critical at shared cell sites.

Jet engines aren’t new. This is a 70 year old technology, and is the power of choice at 40,000ft. Our secret sauce is not so much a new technology as a manufacturing methodology that enables us to produce microturbines economically in volume. One of our most important manufacturing techniques is a process to cut turbine blades from a single piece of material. Our units are about 30% smaller than a diesel generator, yet they generate the same power. We’ve been able to manufacture to a price point such that our MTGs are commercially viable compared to reciprocating diesel gensets.

TowerXchange: How did your micro jet engines evolve as a solution for cell sites?

Stuart Kelly, VP Market Development, Bladon Jets: TATA became excited about our micro turbines and invested via Jaguar Land Rover in 2010. The first incarnation was actually in the Jaguar CX75 concept supercar, but the ancillary application of

Read this article to learn:< How Bladon Jets harnessed the power of choice at 40,000ft for static power solutions< The size and weight advantages of MTGs over traditional DGs< A low maintenance solution: no oil, no water, only one big moving part< The importance of an energy efficient solution that compliments your existing supply chain – MTGs can run on almost any liquid or gas fuel< Months to breakeven/crossover in different scenarios, compared with traditional DGs

Keywords: Africa, Asia, Bladon Jets, Capex, DG Runtime, Energy, Fuel Cell, Hybrid Power, Off-Grid, Opex Reduction, RMS, ROI, Rooftop, Shelters, Site Visits, Skilled Workforces, Solar, Spare Parts, Unreliable Grid, Uptime, Who’s Who

It’s not often TowerXchange comes across a genuinely innovative alternative to a traditional diesel genset that provides primary or backup power to many emerging market cell towers, but when we heard about Bladon Jet’s micro turbine gensets (MTG), we had to find out more! While the MTG is cleaner and quieter than a traditional DG, with almost no maintenance requirements, what makes the MTG particularly interesting to towercos is the fact that they are more efficient and are cleaner and quieter than a similar powered DG. Delivering cleaner and more efficient energy are key business requirements we continuously see from mobile operators and towercos.Stuart Kelly, Bladon Jets


the technology was for static power solutions for telecoms.

We are finalising our market entry strategy to sell 12kW MTGs into telecoms. For us the towercos, managed service providers and MNOs themselves are all prospective clients.

TowerXchange: Which telecom markets are you targeting and why?

Stuart Kelly, VP Market Development, Bladon Jets: Given the Tata connection, an early market will be India. The continent of Africa is also a key market for Bladon’s products. We have conducted field trials in Africa over the last few months and learned valuable feedback from our partners there. Some of our field trial units have been running nonstop for 1000+ hours without ANY filter changes or servicing. That’s a really compelling proposition to towercos that are crippled with genset maintenance costs.

We have attended TowerXchange Meetups around the world to share Bladon’s vision with MNOs and towercos. With so many assets changing ownership in Africa, there is a new focus and financial drive to leverage tower assets harder. When towers are bought, or being prepared for sale, audits often reveal the assets aren’t operating as efficiently as the owner might have thought. But the new owners don’t want to create too much turbulence in the supply chain, so it’s important that our solution complements the existing energy supply chain in developing markets.

TowerXchange: Tell us about your solution’s maintenance requirements.

Stuart Kelly, VP Market Development, Bladon Jets: Microturbine engines are a low or no maintenance solution. Unlike a diesel reciprocating engine, there is no oil and no liquid coolant in our solution. We have just one moving part, the turbine itself, which runs on air bearings with no liquid lubrication. Maintenance is a key issue at remote sites that might be many hours drive on a lousy road – the cost to get there can kill the TCO – so a technology

with the potential to dramatically reduce site visits can be very compelling. There is a very low skill requirement to maintain our MTGs – in the highly unlikely event of a turbine failure, our strategy is remove and replace, not rebuild onsite. For lesser maintenance issues, such as filter changes, the O&M subcontractor can readily maintain a stock of fuel and air filters.

As well as reducing fuel and maintenance costs, thieves are less inclined to steal our MTGs as there are few if any parts they can recycle.

Clean, green and ultra low maintenance makes the MTG most attractive for telecom sites


Aspiring ESCOs that are currently in the business of maintaining traditional diesel gensets have an opportunity to profit handsomely by deploying a more reliable solution like ours – their goal of selling at a price per kWh rate becomes more compelling. Our MTG unit has robust telemetry built in, so you need fewer field engineers as many settings can be changed remotely. From the NOC you can see if units are operating outside of their tolerances, enabling preventive maintenance rather than waiting for it to break. Also, and not insignificant for the tower operator, is the use of telemetry to know where the unit is as well as having the inbuilt electronics to stop the unit operating if moved without permission – the same technology as a tracker system on a car.

TowerXchange: Okay, so what are the advantages of micro jet engines over other alternate energy solutions such as fuel cells or solar?

Stuart Kelly, VP Market Development, Bladon Jets: There is no reliable or sustainable supply chain to support hydrogen or methane fuel in Africa yet. As a technology that is hostile to the current supply chain, the practical challenges of keeping fuel cells running are prohibitive to embracing that particular alternative energy solution in more than perhaps 20% of the estate. Let’s be honest, green power is not widely used on cell sites. In India for example, eco-friendly cell sites account for less than 1% of the estate, but tower owners still want to migrate away from the reciprocating diesel genset because of the substantial energy and maintenance opex it incurs. We don’t see our solution as an

alternative to a 200sqm PV array; our solution is so much more compact that the use cases differ significantly. Solar isn’t the optimum alternate energy solution for all cell sites; even in Africa, sites don’t get good quality sunshine all the time, especially in high rise areas with shadows. You can install solar panels on an urban rooftop, and find that six months later the neighboring building has had five floors added! Our solution doesn’t succumb to such vagaries. Solar has to be a part of the future, but in the context of telecom towers it’s not a killer app, it’s a point solution. Our MTGs can be used to smooth power from solar as well as replacing a chugging tractor engine based generator. When renewables work the MTG can become a part core part backup, there are no startup issues even if it’s left idle for some considerable time between use. The fuel will contaminate before the genset has a problem!

But the important thing is that this is an evolution not a revolution – the MTG can be adapted to any

local fuel supply resource. Bladon gensets, in keeping with all turbine based solutions, run on a wide range of fuels, including green alternatives such as natural gas and biofuels as well as diesel and kerosene. Bladon MTGs will also tolerate a blend of fuels like diesel mixed with kerosene thus making the mix useless for thieves planning on using it for other diesel engines.

TowerXchange: How does the capital outlay for your MTGs compare to traditional DGs, and when does the Total Cost of Ownership (TCO) crossover?

Stuart Kelly, VP Market Development, Bladon Jets: The capital outlay for an MTG is currently slightly higher than a quality diesel genset solution, but the price difference is a double not triple digit percentage. Running for 12 hours a day in SSA in 30° heat then within 15-19 months the TCO will crossover having recovered the difference in capital outlay through fuel and maintenance cost savings.

“ “We don’t see our solution as an alternative to a 200sqm PV array; our solution is so much more compact that the use cases differ significantly


TowerXchange: How near are your MTGs for telecom to being a market-ready solution?

Stuart Kelly, VP Market Development, Bladon Jets: We go into production later this year. The first run of MTGs have already been ordered, and we’ve signed distribution agreements already with partners in Africa and India. We’ll be manufacturing in the UK, and in Asia soon too, and from the US in due course.

TowerXchange: What is the sweet spot in terms of the load your solutions can support?

Stuart Kelly, VP Market Development, Bladon Jets: Our Bladon MTG12 MTG delivers up to 12kW, with output options 230V AC or 120V AC. We also have a 48V DC output variant that telecom clients tend to like. Most telecom sites need somewhere between 3kW and 6kW for constant power, maybe 9kW if there is a hybrid arrangement requiring battery bank charging. Since the MTG runs at variable speed to match the load our efficiencies are much better at partial loads compared to traditional DGs

TowerXchange: How do you ensure modularity as power requirements increase with the addition of multiple tenants?

Stuart Kelly, VP Market Development, Bladon Jets: Given that operators are trying to drive power consumption down, a new BTS might need 1kW when the last model needed 2kW. At the moment the applications we see don’t consume more the 3kW in total, so it should be possible to add a second

tenant without upgrading the MTG. Because our unit doesn’t de-rate over time, its ability to deliver continuous power is stronger. The MTG is a more reliable means of delivery of consistent power than a conventional DG for a multi-tenant site. If additional tenants are added beyond what one MTG can provide, the answer is to add a second unit in a daisy chain. And if the power requirement reduces again, our units are relatively easy to relocate to another tower. Another critical consideration is that the MTG can be 25% more efficient as a reciprocating engine when running at part load.

TowerXchange: How do you bring Bladon Jets to market – do you sell direct or through channel partners?

Stuart Kelly, VP Market Development, Bladon Jets: Our model is to sell through partners. Towercos and MNOs need the credibility of boots on the ground to provide after sales service, even with a low maintenance solution such as ours. We are targeting key managed service providers on the front lines of tower builds, upgrades and maintenance, with the objective of creating a pipeline for thousands of unit sales.

TowerXchange: Finally, please sum up how you would differentiate Bladon Jets from other cell site energy solution providers.

Stuart Kelly, VP Market Development, Bladon Jets: We’ve taken a well known form of power generation in the reciprocating engine, turned it on its head and married it with another established

technology in jet engines, then developed a manufacturing process to bring to market an innovative solution with a lower TCO business case for telecom tower operators. Micro jet engines are ultra reliable, super durable, low maintenance, and generally have a TCO runway in Africa and India from 9 to 19 months. The MTG is designed to support the current supply chain, which means our solutions can be easily introduced with an expectation of a short term payback. The fact that it’s an exciting jet engine is only so interesting – what matters is reducing fuel bills, and the ability to deploy it into the field easier and cheaper than a regular diesel genset

“

“

We go into production later this year. The first run of MTGs have already been ordered, and we’ve signed distribution agreements already with partners in Africa and India


ULTRA QUIET – CLEAN & GREEN – MINIMAL MAINTENANCE – FUEL FLEXIBILITY

WWW.BLADONJETS.COM

12KW MICRO TURBINEGENSETSCOST EFFECTIVE & CLEANTOWER POWER

JET POWERED ELECTRICITY GENERATIONThe Bladon Jets 12kW microturbine genset (MTG) is a cost effective, clean

alternative for telecom tower power applications. Bladon’s revolutionary

microturbines, heat exchanger and air bearing technologies harness the

power of a miniature jet engine to provide an ultra-reliable alternative to the

traditional diesel generator.

LOWER COST OF OWNERSHIPWith service intervals of 1,000+ hours and no oil or liquid coolant required,

the MTG needs fewer site visits. The MTG has just one moving part giving it

jet engine like reliability and longer life. Superior part load effciency, ability

to utilise blends of fuels that would otherwise damage a regular diesel

genset, thus eliminating fuel theft, and no reusable parts all contribute to

lower TCO.

CLEAN & EFFICIENT MULTI-FUEL POWERBladon MTG’s operate with very low emissions and are highly fuel-effcient.

Bladon gensets run on a wide range of fuels, including green alternatives

such as natural gas and biofuels as well as diesel and kerosene.

COMPACT, LOW NOISE & VIBRATION FREEBladon gensets compact footprint and low noise, vibration-free operation

enable them to be installed almost anywhere indoor, outdoor and rooftop -

including in sensitive business or residential locations.

MULTI-MODE OPERATIONUse as primary power source, hybrid mode with batteries or renewable

energy sources, or backup power to the grid.

COST EFFECTIVE & CLEAN TOWER POWER

© Bladon Jets – www.bladonjets.com


MTG12 DATA SHEET

COST EFFECTIVE TOWER POWER

JET POWERED ELECTRICITY GENERATION

tower power applications. Bladon’s revolutionary patented microturbines, heat exchanger and

air bearing technologies harness the power of a miniature jet engine to provide a compact and

ultra-reliable alternative to the traditional diesel generator.

LOWER COST OF OWNERSHIPWith service intervals of 1,000+ hours and no oil or liquid coolant required, the MTG needs

fewer site visits. The MTG has just one moving part giving it jet engine like reliability and longer

life. Other factors that contribute to overall lower total cost of ownership are; superior part load

thus eliminating fuel theft, and no reusable parts.

CLEAN AND EFFICIENT MULTI-FUEL POWER

on a wide range of fuels, including green alternatives such as natural gas and biofuels as well

as diesel and kerosene.

COMPACT, LOW NOISE AND VIBRATION FREEBladon gensets compact footprint and low noise, vibration-free operation enable them to

be installed almost anywhere indoor, outdoor and rooftop - including in sensitive business or

residential locations.

MULTI-MODE OPERATIONUse as primary power source, hybrid mode with batteries or renewable energy sources, or

backup power to the grid

$$$

Up to 70% lower maintenance Costs

Traditional DG

Bladon MTG

Up to 30% lessfuel costs

Up to 60% longer lifetime

© Bladon Jets – www.bladonjets.com


MTG12 DATA SHEET

COST EFFECTIVE TOWER POWER

JET POWERED ELECTRICITY GENERATION

tower power applications. Bladon’s revolutionary patented microturbines, heat exchanger and

air bearing technologies harness the power of a miniature jet engine to provide a compact and

ultra-reliable alternative to the traditional diesel generator.

LOWER COST OF OWNERSHIPWith service intervals of 1,000+ hours and no oil or liquid coolant required, the MTG needs

fewer site visits. The MTG has just one moving part giving it jet engine like reliability and longer

life. Other factors that contribute to overall lower total cost of ownership are; superior part load

thus eliminating fuel theft, and no reusable parts.

CLEAN AND EFFICIENT MULTI-FUEL POWER

on a wide range of fuels, including green alternatives such as natural gas and biofuels as well

as diesel and kerosene.

COMPACT, LOW NOISE AND VIBRATION FREEBladon gensets compact footprint and low noise, vibration-free operation enable them to

be installed almost anywhere indoor, outdoor and rooftop - including in sensitive business or

residential locations.

MULTI-MODE OPERATIONUse as primary power source, hybrid mode with batteries or renewable energy sources, or

backup power to the grid

$$$

Up to 70% lower maintenance Costs

Traditional DG

Bladon MTG

Up to 30% lessfuel costs

Up to 60% longer lifetime

Why lead-acid batteriesmeet the requirements of >80% of the world’s cell sitesA comparison of energy storage chemistries, and a comparison of requirements across EMEA

This article includes forward-looking statements and / or information, which are based on the Company’s current expectations and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to materially differ from those anticipated. Such risks include, among others, risk associated with competitive actions, technology development and implementation, intellectual property infringement, failure to integrate acquired businesses, penetration of existing markets, expansion into new markets, hiring and retaining high quality management and key employees and general economic conditions including the risks described in the Company’s most recent annual / quarterly report, as applicable, on Form 10-K / 10-Q respectively, filed with the SEC, along with other unforeseen risks. Nothing that we say today should be interpreted as an update to the information or guidance that we provided in our most recent investor call, our most recent quarterly / annual report, as applicable, on Form 10-Q/10-K respectively, filed with the SEC, and our current reports filed with the SEC on Form 8-K since quarterly / annual report. TowerXchange: Please re-introduce EnerSys - where does the company fit in the telecom infrastructure ecosystem? Anssi Laitinen, Marketing Director – Reserve Power EMEA, EnerSys: EnerSys is a global leader in energy storage for industrial applications. We have over 10,000 customers in over 100 countries and have been supplying reliable products and services for 100 years. Both in Europe and in the US we boast

Read this article to learn:< Lithium-ion, nickel-cadmium, Sodium Nickel Chloride and flow batteries‘ suitability for Telecom markets

< Tailoring EnerSys’ core TPPL technology to meet specific client requirements

< The implications on performance of correct charge, discharge, maintenance and replacement regimes

< Intelligent temperature management: modernizing sites and moving equipment outdoors

< A closer look at backup power requirements of European cell sites

Keywords: Air Conditioning, Batteries, DG Runtime, EnerSys®, Energy, Energy Efficiency, Energy Storage, Lead, Lithium, Logistics, Off-Grid, On-Grid, Opex Reduction, Outdoor Equipment, Project Finance, RMS, Renewables, Shelters, Site Visits, Skilled Workforces, Sodium, Unreliable Grid, Vanadium Redox, Who’s Who

Leading energy storage solution provider EnerSys® has transformed from a few hundred million into a $2.5bn business over the last 13 years that Anssi Laitinen has been with the company. He started as a Sales Engineer back in 2003 and has witnessed the global expansion and growth of EnerSys. During the last five years Anssi has been in a marketing leadership role and witnessed the shift in customer demands. Today’s customers are now wanting advanced, application specific solutions to meet their challenges.


Anssi Laitinen, Marketing Director – Reserve Power EMEA, EnerSys

tremendous heritage and knowledge, with many of the world’s most renowned battery plants under our umbrella. As a segment, Telecom is a part of our Reserve Power business and contributes >35% (FY15) of global Reserve Power sales. The Telecom business is an invaluable opportunity to interact and develop together with a fast changing industry. Traditionally EnerSys has been a faithful, valued battery supplier to OEMs and end users, which we are proud of, however we are increasingly adding an extra layer of product and services. Though our recent acquisitions EnerSys has focused on vertical integration and value added solutions. EnerSys remains a trusted battery manufacturer, and now supplies a variety of other product and services; latest being thermally managed enclosures, cabinets for BTS and Fibre-to-the-X environment. We are integrating power into cabinets, provide monitoring solutions and offer a range of anti-theft solutions. This has enabled EnerSys to become a broader supplier and partner to the telecom industry. TowerXchange: When tower companies are providing shared power solutions, what are their energy storage options, and what are the pros and cons of each solution? Anssi Laitinen, Marketing Director – Reserve Power EMEA, EnerSys: More than 80% of all batteries are still supported by lead-acid chemistries.Lithium-ion and other alternate energy storage

chemistries may be getting lots of exposure, but deployment has been slower than expected and their track record remains limited. Lithium-ion has found a narrow niche where the situation calls for reduced space and weight. Lithium-ion may offer more cycles, but there is still a narrow band where Lithium-ion benefits materialise in terms of Total Cost of Ownership (TCO), and recycling can be expensive. Nickel-cadmium is a capital intensive solution, and has seen small scale usage as backup power; typically at remote telecom sites. Sodium Nickel

Chloride batteries never really took off, and some well-known players have divested that business now. Flow batteries have a niche presence in the market place but typically this technology has a relatively low energy density, round trip efficiency and some complexity at a system level. While flow batteries offer good cyclability, are relatively safe, nonetheless it remains a big exercise to get the system commissioned.

Every energy storage technology has its pros and


cons, technically and commercially. In the context of infrastructure sharing where power is shared, loads are significant at the outset, which calls for a certain type of energy storage solution. There is risk in investing the extra capex to get the 10,000 cycles that some of these alternate chemistries claim to provide. If they fail at 6,000 cycles, or if there are instances of theft or vandalism, the TCO fails. In the EMEA and Asia telecom markets, you have to be brave to count on a battery to survive on a site for more than five years due to challenging grid conditions, theft or pure application related challenges. Lead-acid batteries have been supporting industrial applications for over 100 years. Today Thin Plate Pure Lead (TPPL) is our backbone technology – and for example EnerSys SBS® EON Technology® batteries launched in 2007 in the telecom off-grid landscape continues to be used in the harshest conditions. Whilst EnerSys is already the industry leader, we are still exploring how far this technology can be stretched – we have not seen the limit of what lead batteries can do. Manufacturing process improvements like design and materials development are enabling us to improve the product every year. We have our base TPPL platform and we don’t need to deviate too far from that – it’s more a matter of fine tuning the engine, using features of the chemistry to match the requirements of the specific race. In the MEA tower business it is all about high cycles and temperature resilience. In the US and mainland Europe the

battery may need to deliver high performance in one minute when in utility scale energy storage these requirements may be combined. TPPL can be tailored to the application. TowerXchange: One of the ways towercos can add value for their clients and improve their own bottom lines is to reduce opex - can you share some examples of how EnerSys’ solutions have enabled opex reductions? Anssi Laitinen, Marketing Director – Reserve Power EMEA, EnerSys: Whether we can reduce opex by around 60% compared to a site running the DG 24/7 depends on the customer specific operating conditions. Fuel costs are relatively low today, so this is not only a driver but when you plug in service costs (such as those defined simply by the distance of the site from the refueling depot), and the replacement cost of the DG, all significantly influence the potential opex saving. Having implemented our TPPL batteries in challenging telecom grid conditions for over nine years, we now know how the product has performed and this gives us the confidence to continue to support our existing and future customers. Towercos need to recognise that energy storage is becoming a crucial component of value creation. If battery banks are sized, charged and discharged correctly, monitored correctly and if timely actions for replacement is taken, then the site operation and reliability will be optimised.

C-level guys at towercos should understand it is not just a simple battery: it can be your best friend or worst enemy depending on execution. If uptime targets are missed, the cost of SLA penalties is compounded by reputational damage. We have seen sites where best in class deployments are ruined by adding a cheap battery to an expensive generator. This has led to the generator not starting when needed. Or in other scenario, the business case is spoiled due to the wrong battery operating settings used by the customer. The worse the grid conditions, the more crucial the role of energy storage and correct operation is needed. TowerXchange: What role is EnerSys playing in the migration from indoor to outdoor telecom systems? Anssi Laitinen, Marketing Director – Reserve Power EMEA, EnerSys: EnerSys provides a variety of thermally managed enclosure solutions. This offering helps the transition from traditional, high energy consumption sites to more environmentally friendly, lower opex solutions. Typically in many of these projects, the requirements are governed by this simple question: what do you want to cool and what is the best way to do it? Does your battery require cooling? Radio equipment and rectifiers can often run up to 55-65°C. If you’re dealing with a supplier who understands the role of batteries in thermally managed cabinets and who can provide one energy storage solution, you can reduce risk and complexity and develop an overall power package tailored to meet the requirements of your specific rollout with the minimum opex.


TowerXchange: Is the migration from indoor to outdoor telecom systems nearing completion? Anssi Laitinen, Marketing Director – Reserve Power EMEA, EnerSys: What I see is that site modernisation from an energy consumption perspective has not proceeded at the rate and the scale many expected. It requires a fundamental change in thinking to move everything out into the sun and/or really start to run your equipment in higher temperatures. It will be a long process to modernise Eastern European and African cooling systems to stop or reduce running A/C. Most equipment today still remains in the same small hut or building, but many of these could be converted to outdoor equipment in the future. Temperature tolerant TPPL technology together with thermally managed solutions can play a significant role in this. TowerXchange: Let’s talk about the European telecom tower market; what backup power solutions are typically on European cell sites, and what typical energy storage requirements do those sites have?

Anssi Laitinen, Marketing Director – Reserve Power EMEA, EnerSys: Europe is a different market compared to Middle East and Africa. There is generally less expectation for cyclic capability. Float non-high cyclic lead acid batteries have proven to be the most reliable, most deployed energy storage product in European telecoms.

European grids are generally stable, but challenges

arising from equipment or ambient temperatures mean there is still an interest to run sites at higher temperatures and unlock the savings of free cooling. In Italy, Spain and parts of Russia and the CIS; markets where towercos are increasingly active, free cooling can help. On these areas where we see extreme temperature differences free cooling could offer a solution to optimise sites’ yearly energy consumption. Many countries in Europe have recommendations or even regulatory instructions regarding the back-up times on mobile cell sites. For example, Sweden has recently started to move from two hours back-up time to four hours, especially outside densely built-up areas. On the other hand, in Germany, regulators do not require any backup power, so there are sites without any back-up power. Towercos should understand these fundamentals to determine what kind of requirements and dynamics this may drive. It also significantly impacts the risks and returns of the investment. Problems can begin to occur in countries where grid stability varies for example between major cities and less populated areas. This drives the battery selection especially in cases when major cities may utilise less cyclic batteries in comparison with less populated areas, where there may be a need for high cyclic, more robust battery solutions. TowerXchange: As the tower industry becomes increasingly global, please explain the

importance of working with global partners.

Anssi Laitinen, Marketing Director – Reserve Power EMEA, EnerSys: As mentioned, EnerSys has over 10,000 customers in over 100 countries. We have a leading worldwide presence with 32 manufacturing facilities located in the Americas, EMEA and Asia. At EnerSys we believe we need to build the solution to create the best overall value. As a global company we maintain our leadership position by providing customers with world class products and services, achieved through total employment involvement, team work, and supplier partnerships. This belief is the foundation that helps shape the company’s vision for progress and allows our customers to achieve their goals. TowerXchange: Finally, please summarise how you would differentiate EnerSys from competitive energy storage solution providers. Anssi Laitinen, Marketing Director – Reserve Power EMEA, EnerSys: I believe what makes EnerSys unique is our products and our people. Our products and services are the foundation of our market leadership, and our solutions are recognised for their quality and heritage. Our battery products span a broad range of sizes, configurations and electrical capabilities, enabling us to meet a wide variety of customer applications. And I believe EnerSys has very talented people to fit the needs of our customers worldwide


Do you have the EnerSys Power Advantage?Global leading partner for stored energy solutions

Get the EnerSys power advantage www.enersys.com

Rapid roll-out multi-tenant hybrid solutionsHeliocentris’ achieves unprecedented growth and quad nines uptime in Myanmar

TowerXchange: Tell us about your current offering and footprint.

Jens Fiedler, VP Sales & Marketing, Heliocentris: Heliocentris offers energy solutions for autonomous, complementary and emergency power supply of distributed stationary applications, supplemented by I&C, O&M services and financing to enable an offering of opex-like business models to customers, especially tower companies. We are component agnostic, have a world class remote energy management system and a vertical technology portfolio enabling completely autarkic carbon free solutions based on fuel cells and electrolyzer products combined with solar technology. This is unique in the market and offers the customer not only solution engineering in order to optimise solutions to their specific needs, but also enables us to offer financed power businesses, up to a full ‘Power As A Service’ (PAAS) offering, for which Heliocentris is well prepared.

The rollout in Myanmar of close to 1,000 sites over the past year demonstrated the strength of our organisation and partners, and we are currently raising the footprint to above 2,000 sites equipped with our advance energy management system for operators and towercos. Myanmar now represents around 50% of our footprint and Africa around 30%, although we expect to grow our business there.

Andrew Gruar, Business Development Manager, Heliocentris: We have deployed networks in Mozambique and Zimbabwe and also deployed

Read this article to learn:< Heliocentris’ readiness to provide ‘Power As A Service’ (PAAS) business models< How a rapid rollout of energy solutions for 20 sites a week was achieved in Myanmar< The importance of monitoring and control solutions in the African market< Locating and training a skilled workforce to maximise the lifecycle of your technology investments< Simple shortcuts for increasing efficiency in legacy equipment

Doubling their footprint from 1,000 to around 2,000 towers through a massive roll out in a burgeoning Myanmar tower market has enabled Heliocentris to refine their offering not only in terms of technology but also process, partnership and flexibility. They’re now keen to take the lessons learned in Asia and apply them in the African market, where their presence is already established and growing.

Keywords: Africa, Asia, Batteries, Brownfield, Build-to-Suit, ESCOs, Energy, Energy Efficiency, Energy Storage, Fuel Cell, Greenfield, Heliocentris, Hybrid Power, Installation, Monitoring & Management, Myanmar, NOC, O&M, Off-Grid, Opex Reduction, RMS, ROI, Regulation, Renewables, Skilled Workforces, Solar, Unreliable, Grid, Urban vs Rural, Who’s Who, Wind

Jens Fiedler, VP Sales & Marketing, Heliocentris


networks with some of the Middle Eastern MNOs including Etisalat and Du. Over the last year we’ve doubled our operational sites footprint. Based on customer demand, we have been deploying an average of 20 sites, at peak even up to 70 greenfield sites per week in Myanmar. That’s a compliment to the product but also to our ability to commission teams, interoperate with other vendors’ equipment and manage ongoing O&M through a power NOC. We can replicate that in Africa and apply the same competence where the market isn’t focused on both legacy and greenfield sites.

TowerXchange: How has Heliocentris grown in the tower market and what has fuelled that growth?

Jens Fiedler, VP Sales & Marketing, Heliocentris: Years of expertise in energy management and hybrid solutions is the foundation of our business which has translated into substantial growth. Years of development of our advanced and field-proven energy management system yielded a leading approach to remote management of hybrid power solutions for telcos and other businesses. The uptime we achieved - Quad 9 (99.99% uptime) - in Myanmar is a big success for our clients and for our system.

In terms of the origin of the business, the first key success for us was in the Middle East with companies like Du, later on supplemented by business in Africa then in Asia.

Another significant commercial change which took

place last year is that we’re now publicly listed on the Frankfurt stock exchange. This improves our ability to finance and support different service models and gives us more scope to offer clients mutually beneficial business models.

We also have another business in education and research. We call it ‘empowering the future engineers’ and we offer services and products starting from schools and into universities and companies. Our aim is to provide the tools to educate future engineers about renewable power and systems so people can work with solar power

and fuel cells et cetera and understand them better. It’s a worldwide project: we have business in Latin America, Africa and North America.

Andrew Gruar, Business Development Manager, Heliocentris: From our recent conversations with several African towercos we know that in Africa they have been through at least two generations of remote monitoring and energy hybrid systems. A variety of technologies have been deployed to varying degrees of success, meaning every three years infrastructure owners ended up spending more money trying to improve power systems and control. We want to help create an environment where we can help to train our clients’ workforces, in product and process, create a competence centre and ensure installed systems are properly looked after in the field.

TowerXchange: How have you found customer response to your solution in the African market? Which products are most popular and how does that vary across the continent?

Dr Sakib Khan, General Manager sub-Saharan Africa, Heliocentris: Due to the diversity of the African telecommunications market Heliocentris is well placed to offer a wide range of power solutions, from autonomous solar and fuel cell solutions to generator/battery hybrid systems through to simple remote monitoring. The response from African customers has been extremely positive, in particular due to the fact we have an office with supporting staff based in Johannesburg who are extremely well versed in doing business


in Africa, and rapidly supporting projects in Africa. Our battery/genest hybrid system, enabled by our energy management system has been very well received due to the significant savings it offers. Our remote management NOC software receives praise from our users, as well as our flexibility in providing customized solutions. TowerXchange: As operators turn their attention to meeting regulatory requirements in rural areas and on maximising capacity through urban infill, do you see a change in what the market demands?

Dr Sakib Khan, General Manager sub-Saharan Africa, Heliocentris: Towercos are now some way through acquiring and optimising the ‘most desirable sites’ in Africa’s most densely populated areas, and now are asked by operators, through build to suit programes, to increase number of sites and colocations in rural and off grid sites.

This drives interest in ‘Fit & Forget’ solutions: power cubes, solar integration et cetera; minimising the use of ‘technology’ and focusing on minimal maintenance, total system deployments. The ultimate goal would be to purchase power, not solutions. However Heliocentris is prepared to support almost every site situation with an optimum power solution while also reducing carbon emissions.

Moreover, we are exploring how we can support tower companies and MNO’s in providing power to remote communities with the BTS site as the

“anchor” in a mini-grid construct. This enables the use of productive power instead of just consumptive power for communities and increases social development.

TowerXchange: In a sector where both capex and opex are kept to a minimum, can you talk us through the numbers, which make your solution stack up?

Jens Fiedler, VP Sales & Marketing, Heliocentris: We can’t talk about specific numbers since each and every solution differs but mostly there is strong interest in ROI of less than three years and provision of financing on a long term basis. Even where fuel is a pass-through there are opportunities to save money and resources, which are distributed either through shared saving models or fixed rates which reduce over time. It’s hard for renewables like solar power to deliver that kind of ROI within three years however we have solutions and cases which can support this kind of requirement. TowerXchange: Tell us more about operations and maintenance? How does that compare to the other energy options on the market?

Jens Fiedler, VP Sales & Marketing, Heliocentris: O&M is the biggest part of a long term contract so people are interested to reduce the burden here. You can have highly trained people but the equipment should be easy to use and manage remotely, providing for flexibility in terms of operational costs. It is extremely important to

implement efficient solutions and processes, prepared for multi-tenant growth, long life utilisation of components such as batteries, and the lowest possible number of maintenance site visits.

We installed a monitoring system for a client in the Middle East and just through raising visibility we reduced fuel loss by 20%. There are companies in the market who offer tools and monitoring across the entire supply chain, and they have revealed that most of the theft takes place within the supply chain, not on site. With this in mind we’re on the way to implementing mobile operations within our offering to reduce theft.

TowerXchange: What are your ambitions for the future? As the African market shifts towards independent towercos, are you finding a need to change your services to suit?

Jens Fiedler, VP Sales & Marketing, Heliocentris: Heliocentris have a strong foundation in the design and delivery of Energy Solutions, including Energy Management, RMS, Hybrids, Batteries, Solar & Fuel Cells. Our ambition is to provide towercos with Certified I&C and O&M services, direct or through partners, to ensure the longevity and cost benefit is sustained in the African market.

As towercos scale, increasing tenancy ratios, building new sites, winning new clients, we aspire to support their technology and process advances, and offer solutions and business models, including finance/risk share for mutual benefit. Our ambition – to invest in Africa


Heliocentris Group . Rudower Chaussee 29 . 12489 Berlin, Germany

Your Partner for Managed Power Services One-Stop Shop – Solution Engineering, Full Turnkey Solutions, O&M, Energy Management System & RMS Software

Power for the 21st Century

WWW.HELIOCENTRIS.COM

14113_HC_Anzeige_ICT_303x216.indd 1 14.10.15 15:19

Invendis: Expanding operationsin Africa and AsiaHow Invendis is expanding its footprint and delivering increased opex reductions

Satish Kulkarni, CEO, Invendis

TowerXchange: Please give us an update on some of your new projects and milestones since we last spoke. Satish Kulkarni, CEO, Invendis: Over the last two years we have moved into several new countries and territories. Two to three years back a lot of our business was from Africa in countries like Tanzania and Malawi. Over the past four to five years we’ve installed systems in over 4,000 sites in Africa; we work with almost all of the towercos in Africa. We have some business from Helios Towers in Africa, and we’re about to sign a contract in Ghana and Tanzania with them. We’re still active in Africa and continue to grow there. In the Middle East we have a contract through Nokia as a primary contractor, and we’re doing work for them on 275 sites increasing to 1,000 sites. In Asia we recently won a contract with edotco to install systems on 12,000 sites in Malaysia, Bangladesh, Sri Lanka and Cambodia. We are deploying 3,000 systems in Bangladesh and 3,000 in Malaysia, and then we will deploy another 6,000 by the end of 2016. There is also a lot of activity in India; we estimate that towercos are using RMS on close to 200,000 sites. We are installed on 3,400 of Ascend Telecom’s sites and we also have an order from Intelligent Energy who are handling the energy assets on GTL’s sites. There is a lot of consolidation happening now and new capex is being deployed including energy monitoring and optimisation. At one point 95% of our business was coming from outside India, and now over the past

Read this article to learn:< The expansion of Invendis’ footprint in Africa and Asia

< How Invendis reduces inventory cost by 20 to 25%

< How Invendis is reducing fuel theft

< The benefits of tracking individual batteries on sites

Keywords: Africa, Asia, Asia Insights, Batteries, edotco, Invendis, Logistics, Monitoring & Management, Operational Excellence, Off-Grid, Opex Reduction, RMS, Site Level Profitability, Site Management System, Site Visits, Unreliable Grid, Uptime

TowerXchange recently caught up with Satish Kulkarni, CEO of Invendis to get an update on their latest projects, plans to expand their footprint, and successes in Africa and Asia. We discussed best practices for inventory reduction, fighting fuel theft, site monitoring and capturing data on energy usage.


two to three years things have been changing. We are also deployed on 2,500 of American Tower’s sites in India, and we manage another 5,000 towers for a power equipment company. Over the past five or six years we’ve deployed on over 20,000 sites in all of our markets. There is consolidation happening across Africa and Asia and our business will grow there as a result. There are some huge potential opportunities in countries like Thailand, Indonesia, Myanmar and Singapore. Prices for connectivity have come down and a lot of companies and governments are switching to green energy, batteries and hybrid solutions. We feel that over the next three to four years there will be a lot of interest in replacing diesel generators with batteries, and our solutions will play a role in managing these. TowerXchange: Do you have any success stories to share? Satish Kulkarni, CEO, Invendis: In Ghana we were able to bring down the inventory cost for the towercos by 20-25%. There were some major issues with the grid there and the power was down about three hours per day once every four or five days. We installed our system and it greatly increased the efficiency of the sites. There are also difficult conditions in countries like Bangladesh that experience annual flooding. The sensors that we installed on the sites were able to detect when flooding of the equipment was imminent so that clients could be notified and

measures could be taken. Our project in Iraq is challenging due to the security issues and political situation, not to mention the environmental conditions. However we had experience operating in desert conditions from a previous deployment in Oman for Omantel a couple of years back. We provided automated coverage of 300 remote exchanges; we’re in talks to install on their towers as well to collect operational data which should happen later this year. We’ve also handled extreme cold at -10 or -20 degrees in some of the more remote northern sites in India. Two or three years ago about 10-15% of our clients were MNOs but now it’s mostly towercos. TowerXchange: We’ve heard about markets where 30% or more of diesel has been stolen, 15% of batteries stolen. What can towercos and MNOs do to improve security at remote cell sites? Satish Kulkarni, CEO, Invendis: This is a major issue in a lot of countries, any market where the grid is unreliable; people can steal upwards for 160 litres of fuel and if the readings are not accurate it’s hard for towercos to judge how much fuel has been used and whether any is missing. When you install highly accurate sensors they have the ability to interface with the site management system and update data on fuel levels in real time. Clients can do an end-to-end audit of fuel use

and power generated to get an idea of how much the site requires in general, and any abnormal activity usually indicates theft. Most of our clients in Africa have said that pilferage has been reduced considerably and within eight to ten months they’ve recouped the cost of the system. Our systems also protect expensive batteries by embedding sensors on them that trigger an alarm if they are moved out of the site, alerting clients that they have to go to the site to investigate. TowerXchange: Since a lot of fuel pilferage originates within the supply chain, is there a risk of remote monitoring sensors being damaged by staff or subcontractors? What can be done to prevent this? Satish Kulkarni, CEO, Invendis: This does happen and it can be difficult to manage. With remote management the sites don’t need to be visited on a regular basis; workers can go when required to investigate an alarm or make occasional deliveries. The increased efficiency of RMS means that there is less work to be done and fewer hours are required which hits the ground crews financially. It’s important to invest in the ground crews and involve them in the security of the site, and some companies offer rewards for reports about tampering. TowerXchange: How can data from site monitoring be integrated with maintenance workflows and job ticketing to reduce O&M costs?


Satish Kulkarni, CEO, Invendis: Data from the site goes directly to the ground crews and they are notified via their phones or computers. This constant flow of actionable data has greatly decreased opex since clients know where and why they need to do site visits. Prior to this, an engineer could make a scheduled site visit, identify a problem, but not have the necessary equipment to fix it since they didn’t know about it in advance. Now the multiple site visits have been greatly reduced and travel is always based on need. This has been especially valuable in Africa where the sites are more remote, the roads are difficult, and hours of travel in four-wheel drive vehicles is required. TowerXchange: CCTV is expensive to install and footage needs a lot of bandwidth – under what circumstances is this investment worthwhile, and how can costs be contained? Satish Kulkarni, CEO, Invendis: The cameras that we install on sites are activated when they detect movement and grab images of what’s going on in the tower. This has helped us overcome the challenge of expensive cameras that are on 24/7 and require constant power and bandwidth to transfer images when most remote sites don’t have a data connection. Multiple cameras running constantly would be expensive and unnecessary when a small amount of footage can identify the perpetrators, or let you know that it’s a false alarm caused by an animal or a branch. TowerXchange: How do you customise alarms to

ensure the customer isn’t overwhelmed and can focus only on alarms which require action? Satish Kulkarni, CEO, Invendis: We provide complete end-to-end security including motion detectors on the doors, smoke detectors, water detectors and other combinations of sensors. These provide a wide variety of parameters but the clients don’t require all of them so the granular data is collected and can be built into reports that can be used later. Some data are critical and some are less

so; we categorise them based on the action needed to respond to them. Some are extremely critical like fire alarms, but they all have varying degrees of importance and escalations that go up the command chain. It’s all differentiated by the action that is needed to be taken. TowerXchange: How do tower operators translate RMS data into actionable intelligence? Satish Kulkarni, CEO, Invendis: Here are two examples: with RMS a client can continuously monitor the charge and health of the batteries and identify any one that isn’t performing. When a battery isn’t performing it’s a drain on resources; it draws more power and decreases the amount of power available. As soon as this situation is identified the battery can be replaced, saving resources by acting on the problem as early as possible. For the second example, all of the information on the tower is constantly available, and if the power goes off for 12 hours, the system will also remember that it went off for seven to eight hours the previous week. This can be extrapolated to all the towers in that region and the data can tell whether there is a trend of increasing power cuts requiring more fuel for backup generators. Many times the rolling power cuts in these places are not announced and it helps to have data on them to put into actionable intelligence like this. Clients can get a very detailed set of data on the grid situation, and once they have nationwide deployment of RMS on their sites they may even be able to share or monetise it

““Data from the site goes directly to the ground crews and they are notified via their phones or computers. This constant flow of actionable data has greatly decreased opex since clients know where and why they need to do site visits


Improving the reliability, efficiencyand scalability of power provision at on and off-grid cell sitesHigh Efficiency Gensets deliver 60% opex savings, available through capex or opex business models

TowerXchange: Please introduce Ausonia and Medipower – where do your companies fit in the telecoms infrastructure ecosystem?

Massimo Ombra, President of MediPower: Both companies belong to a group which has been one of the major players in the telecom industry for many years. Ausonia was created in 1932 and as such, benefits from a long tradition in the production of diesel generators, not only for telecoms, but also for other important industries: oil and gas, mining, transportation, and even military defence, in which we drive the technology standards at worldwide level. For the telecom industry we have developed a wide range of genset solutions, for use as a main energy source or as backup power, for BTS, BSC, MSC, data centres and disaster and recovery applications. Being an Italian company with particular attention given to detail and quality, we are strongly focused on developing innovative and customised solutions, as recently evidenced by our wide portfolio of High Efficiency DC Gensets, Hybrid Power Systems and No-Break Power Solutions, providing significant operational advantages and cost reduction.

In 2003 we increased our service capabilities through the creation of our own ESCO, named MediPower, which is mainly focussed on providing energy supply services on an opex model to off-grid BTS sites, where our own Ausonia products are installed.

TowerXchange: The first question our readers will want to know is ‘how proven is the

Read this article to learn:< The adoption and performance of Ausonia technology in the field< How a modular approach can facilitate easy deployment< How Ausonia and Medipower’s solution can be scaled to meet increasing power requirements as new tenants are added to sites< How solutions have been designed to protect against fuel and equipment theft< The appetite of towercos and MNOs for opex led energy models and what savings it can offer in opex and TCO

Keywords: Africa, Asset Lifecycle Platform, Ausonia, Batteries, Capacity Enhancements, Capex, Co-locations, DG runtime, Energy, Energy Efficiency, Energy Storage, ESCOs, Europe, Fuel Security, Hybrid Power, Installation, Logistics, Managed Services, Medipower, MNOs, Monitoring & Management, NOC, O&M, Off-Grid, On-Grid, Operational Excellence, Opex Reduction, QoS, RMS, ROI, Site Level Profitability, Site Management System, SLA, Towercos, Uptime, Who’s Who

Italian diesel genset manufacturer, Ausonia and their ESCO subsidiary Medipower have developed a strong reputation for the reliability of their energy solutions and high performance against service level agreements. The scalability of their solutions offer significant advantages to customers who forecast the addition of further tenants to their sites, whilst their experience gleaned through their ESCO model has given the company real world experience of the in the field challenges their clients face. We spoke with Medipower President, Massimo Ombra to learn more about Ausonia and Medipower’s product and service offerings and how they have been adapted to meet the needs of global tower owners.


solution in the field’ – please tell us about the performance of your High Efficiency Gensets and Hybrid Integrated Modules in the field – who is using these solutions and what results have been achieved?

Massimo Ombra, President of MediPower: The reliability and performance of our genset solutions are proven by the fact that, since 2003, we have periodically renewed our energy supply contracts with all four Italian MNOs (Vodafone, TIM, Wind and H3G), without any period of service discontinuation so far. This clearly shows that MNOs are satisfied with the energy services we provide to their network of sites and with the power availability we guarantee. Additionally, our ability to be the first user of our products allows us to get direct experience from the field and enables us to develop an excellent track record in maximising the performance and reliability of our solutions.

Within this scenario, we have developed our series of High Efficiency solutions, whose core technology is a variable speed DC generator which is able to provide a very significant reduction in fuel consumption and opex, independently from its configuration - either standalone for continuous operation (24/7) or integrated with deep cycling batteries. We initially deployed the new technology in the Italian off-grid BTS network and today we estimate that approximately 80% of it is powered by us through the opex model. Encouraged by these successes, different MNOs and ESCOs have selected our systems to power their sites in Africa, LatAm, the Middle East and Southeast Asia, obtaining more

than 60% in opex savings and more than 50% in TCO reduction.

TowerXchange: How have your solutions’ design evolved to ease delivery and simplify installation?

Massimo Ombra, President of MediPower: Being one of the main users of the products we directly design and produce, we have developed our genset solutions following a modular approach, in order to facilitate the scalability of the system and to simplify all operational activities on site, from delivery to installation.

All our solutions can be disassembled into lower weight modules in order to be transportable not only on small boats and helicopters, but also carryable by animals or manpower. Once on site, the installation is very quick and easy, typically less

than 6-8 hours are needed to reassemble the unit and to perform installation and commissioning activities. Considering all this, we can definitively say that our genset systems, regardless of the configurations we can offer, are all plug and play solutions.

TowerXchange: Towerco SLAs often demand 99.9% or higher uptime – tell us about the reliability and autonomy of your solutions.

Massimo Ombra, President of MediPower: As explained before, the reliability of our systems is proven by our 13 years of offering an opex model. When you offer energy as a service, you have to be 100% confident of the quality and reliability of the power systems deployed on site - unpredictable costs due to system failures and downtime periods heavily affect company financials, putting profits of the business at risk.


“ “We initially deployed the new technology in the Italian off-grid BTS network and today we estimate that approximately 80% of it is powered by us through the opex model

The 99.9% uptime level requested by towercos can only be met if the power systems installed on site are robust and designed to provide redundancy, in order to avoid a single power failure taking the BTS down and thus decreasing your uptime performances. Our Hybrid Integrated Modules and, even more specifically, our Dual DC genset system, have been designed to take into consideration such energy service exigencies, being conscious that the impact of unmatched SLA expectations can seriously damage a vendor’s reputation.

TowerXchange: How is your solution scalable to accommodate the increasing power requirements as multiple tenants are added to a site?

Massimo Ombra, President of MediPower: Being in daily contact with MNOs, towercos and ESCOs, we are perfectly aware of their increasing requirement for power solutions that are immediately ready for multi-tenancy agreements. On this basis, we have designed specific modular products which are ready to manage higher loads without affecting the fuel efficiency of the power system, whilst at the same time being equipped with a ready-to-use DC distribution board for any co-siting exigency, along with its necessary energy metering tool. One of these products consists of a power system which integrates, in one single compact unit, two variable speed DC generators in 1+1 configuration set-up, capable of running efficiently in continuous operation by adjusting the speed of its engines, according to the actual site load. As new tenants

are added to the site, this system automatically increases the engine speed to cope with the increased power requirement, always following the most efficient point of the power curve of the engine. It’s the solution which our customers appreciate the most when they want to deploy a power system on a site which, in the future, could host more tenants. If this happens, they don’t have to change or upgrade their existing power system as the Dual Gensets system will immediately take care of the increased power demand, even being capable of automatically running the two gensets in parallel mode, if site load is temporarily higher than each genset’s rated capacity. On top of this, the system also provides total redundancy, very high power availability levels, long maintenance intervals of up to three months and high efficiency performances.

TowerXchange: How have your solutions been ‘hardened’ to protect against fuel and equipment theft?

Massimo Ombra, President of MediPower: Thanks to our direct experience in the field and thus our knowledge of the main security issues, we have worked on a number of levels in order to increase the entire system security, from the improvement in the mechanical aspects, to the development of new software releases for our control boards, up to the development of an optimal remote management system for the NOC.

I can start by saying that all access doors of our gensets are protected by double key locks and can be provided with additional external metal

bars equipped with unbreakable padlocks. All doors, including the fuel inlet door, are equipped with magnetic sensors for unauthorised opening detection and with remote alarm dispatching via SMS and/or TCP/IP. Moreover, the entire canopy parts are welded, with a total absence of external screws, bolts or rivets.

Even the deep cycle batteries compartment and the starting battery of our hybrid systems can be duly protected with security devices which do not allow theft of these very attractive elements.

On top of this, the fuel tank, which could be a double wall type up to 2000 litres, is integrated within the system itself, not allowing any external pipe connection. The fuel inlet is also equipped with double key locks and provided with mechanical anti-siphoning traps to avoid external pipe intrusion. Additionally, an alarm is sent remotely in the event that the controller detects an abnormal decrease in the fuel level in the tank.

To increase the control over the unit from afar, our systems are equipped with GPS complete with geo-fencing features, which is able to pre-set the permitted location of the system and which will send a remote alarm any time the unit is moved from its original place of installation.

Last but not least, the lifting points can be dismounted after the installation activities and, once the modular unit is assembled on site, an internal blocking system will unify the different modules together, making the overall system too


heavy to be easily removed as one single piece. TowerXchange: What is the typical asset life cycle of your High Efficiency Gensets and how can it be maximised?

Massimo Ombra, President of MediPower: The typical lifecycle of our High Efficiency Gensets goes from five to ten years, depending on the chosen system configuration and its operational use. The lifecycle can be extended by integrating the system with renewable energy sources, as we offer for our range of hybrid solutions, in which solar and wind power input can be added, along with their dedicated control system.

TowerXchange: What warrantee and after sales support do you offer?

Massimo Ombra, President of MediPower: We usually offer a warrantee period of up to two years, which can be further extended depending on specific agreements with our customers and on the operational use of the power system.

Due to the high accessibility level we created in the system configuration, all our high efficiency and hybrid solutions can be easily maintained by any technician used to working with standard AC gensets and, additionally, the main components of our systems are selected to take into account the availability of relevant parts worldwide, to further simplify the local parts provisioning for maintenance. Moreover, as we enter new countries with our power systems, we provide suitable service support through agreements with

local partners. To be a service partner, companies must be capable of covering the entire territory, they must have direct and qualified experience with genset installation and maintenance operations, and, among other required skills, they have to be used to coping the needs and expected service levels of MNOs.

As you can imagine, we select our local partners very carefully in terms of reliability and capability, as we are not only interested in guaranteeing our customers proper after-sales support locally, but we are also interested in the possibility of introducing our opex business model (where all capex investments and operational costs are on our side) to that country.

TowerXchange: Having launched Medipower in 2003, what has been MNOs’ and towercos’ response to opex-led and leasing business models? Are you providing a lot of equipment on this basis, or is the majority still capital purchases?

Massimo Ombra, President of MediPower: We started our opex model activities in 2003 when we launched MediPower, which is now the undisputed leader in Italy for energy supply services based on such a commercial approach. Up to now, in foreign countries most of our business has been via the capex model, but due to our successful service organisation and easy replication in other countries, MNOs and towercos are showing more and more interest in the opex model.

TowerXchange: Finally, please sum up how you would differentiate your solution from your competitors’?

Massimo Ombra, President of MediPower: One of our main distinctive factors is that, within our group of companies, we combine together qualified engineering skills, customised system production and full service operation capabilities for an opex model. This allows us to have a complete view of the Total Cost of Ownership of the power system and correctly adjust all relevant cost drivers, starting from the design of the products up to their operational performance, during the entire lifecycle of the system. Additionally, our organisation allows us to present a high level of commercial flexibility in terms of possible business models to be offered, going from pure capex to pure opex, especially if we are compared to players which are typically limited to product sales or service activities only.

Moreover, having been historically focussed on driving technology innovation in our business of diesel generators, we have been capable of developing a range of variable speed DC generators which, on their own, can provide the same high efficiency level as a hybrid system, even without operating the genset in cycling mode with a battery bank, which all other genset manufacturers are forced to do in order to achieve fuel efficiency. Consequently, in our case, the cycling operation with batteries can be used to further extend the already long lifetime of our power systems and offers the possibility of integrating different energy sources (solar, wind and/or mains) in one single integrated power solution


AD_TowerXChange.indd 1 07/03/16 15.00

NorthStar: more than justa battery companyMarket leaders in premium lead acid batteries committed to understanding and resolving their customers’ energy storage problems

Thierry Tardivent, Head of MEA and APAC, NorthStar Battery

TowerXchange: Please introduce NorthStar to our readers - what role do you play in the telecoms infrastructure ecosystem? Thierry Tardivent, Head of MEA and APAC, NorthStar Battery: Since 2000 NorthStar’s telecom batteries and site solutions have been delivered in more than 150 countries. NorthStar helps its customers globally to extend battery life and save energy by providing High Performance AGM Batteries specially designed for different grids and telecom applications – I believe today NorthStar Batteries makes the best AGM batteries in the industry. But NorthStar Battery is more than just a battery company. We also have a unique expertise in power systems for emerging markets which is key to optimise battery life and energy saving. TowerXchange: We usually ask how many cell sites in Africa, LatAm and Asia the interviewee’s solutions are installed - I guess that may be difficult to specify given the scale of NorthStar’s business! However, can you give us a sense of the size of your telecoms business in those three regions. Thierry Tardivent, Head of MEA and APAC, NorthStar Battery: Tens of thousands sites in MEA are equipped with NorthStar products. In Pakistan alone, Northstar has equipped over 5,000 sites with a pure fuel saving application delivering outstanding results. Many thousands of hybrid sites in Africa have been equipped with NorthStar

Read this article to learn:< Why premium lead-acid batteries remain the best compromise between capex and opex

< How to choose the right battery for the grid profile and application

< How to overcome common problems in the installation and setting of batteries

< How to cool batteries with just 40W, even at 30-40°C ambient

< How to protect batteries from theft and vandalism

NorthStar is more than just a battery company. They’ve made a commitment to really supporting their customers. A commitment to help customers select the right batteries. A commitment to identify and resolve power system problems, even if they aren’t caused by batteries. And a commitment to manufacture, and dispose of, lead-acid batteries in an environmentally aware manner. Of course, NorthStar also manufactures premium lead acid batteries which they say represent the best compromise between capex and opex, which is why they are one of the market leaders in energy storage for emerging market cell sites.

Keywords: Who’s Who, How to Guide, Meetup Preview, Energy, Installation, Opex Reduction, Batteries, Fuel Security, Air Conditioning, Off-Grid, Unreliable Grid, ROI, Hybrid Power, DG Runtime, Dimensioning, Procurement, Warehousing, Shelters, Rectifiers, Africa, Asia, Pakistan, NorthStar Battery


technology since 2000. TowerXchange: Why are lead acid batteries standing up to the challenge of alternate energy storage chemistries in a telecom context? Thierry Tardivent, Head of MEA and APAC, NorthStar Battery: Frank Fleming, our renowned CTO, has a strong belief that lead acid can remain the technology of choice for telecom energy storage for the next 50 years, as long as we push the limits of the design. We also want to push back against the bad environmental image of lead acid batteries, which is why we invested massively in environmental controls when we built our new factory. Many of our key customers select NorthStar as their preferred / strategic supplier partly because of our strong environmental control. Corporate Social Responsibility policies make environmental control a key target for companies like Ericsson, with whom we’ve been a key strategic partner since 2002. We’re also strategic suppliers to NSN, Huawei and ZTE. TowerXchange: How much tailoring to the specific requirements of individual sites can really be achieved through the selection of batteries? Thierry Tardivent, Head of MEA and APAC, NorthStar Battery: One battery cannot fit all applications. You need different chemistry depending on the grid profile and energy situation. There’s a huge difference between the battery you

should deploy on a stable grid in USA, compared with the unpredictability of the grid in Pakistan, and pure off grid applications in Myanmar for example. NorthStar differentiates ourselves by offering different chemistry depending on the application and grid profile. Whereas with other vendors the battery is a standard, commoditized component, forcing site designers to solve their problems through the modification of other power systems, NorthStar have been able to customise the design of our batteries for different grid availability and telecom applications. For example, one of the most unstable grids we have experienced was in Bangladesh. No matter what power system we used, there were so many repeated power outages that it seemed we were never able to fully recharge our batteries. That presents a problem for traditional lead acid energy storage technology, but we were able to modify our electro chemistry to be fully partial state of charge (PSOC) compatible. TowerXchange: Why is the replacement cycle so much shorter for batteries on developing market cell sites, and what can be done to deliver reliable, sustainable power? Thierry Tardivent, Head of MEA and APAC, NorthStar Battery: We think there is too little understanding of why batteries are failing. While the right choice of battery is crucial, it’s as much about the electrochemistry as it is the choice

of supplier – so simply switching to a different supplier won’t fix the problem. Energy storage solutions need to be redesigned to provide reliable, sustainable power to cell sites in emerging markets, providing faster recharge, high cyclic, high temperature, high efficiency operation. You need to deploy the right power system, on the right settings and ensure it’s installed properly. This is why we are lauching the NorthStar Academy – to help to extend battery life by two to three times and save energy. While some battery vendors may prefer their batteries die sooner to accelerate replacement cycles and sales volumes, NorthStar want to make sure our batteries last a long time and deliver the opex savings targeted. Our success comes from our people in the field, people with a background from the power industry, who can address power system problems holistically and who can help our customers fix those problems. If it’s not a battery problem, we don’t just say “talk to the power system vendor”, we help the customer to change controller settings, cabling et cetera – training their people to avoid repeating mistakes. TowerXchange: I understand NorthStar initially, and to a certain extent still do, sell a significant proportion of batteries via OEMs – how does the entry of the independent towercos affect the criteria against which energy storage solutions are acquired?

Thierry Tardivent, Head of MEA and APAC,


NorthStar Battery: We have always had a strong strategic relationship with OEMs and we will always will. But we also realised we need to accelerate the battery technology and solutions awareness at the end customer level such as with towercos as they are more and more driving the battery selection process. Our technology has been approved already by two major emerging market towercos this year. We still see a few examples where energy storage solution selection is driven by short term capex savings, resulting in a temporary improvement in the P&L. However, making the wrong decisions in the selection of energy storage is does not yield

performance improvements that are sustainable in the medium and long term, particularly at unstable and off grid sites. There are only three or four factories worldwide that can manufacture premium AGM batteries. But the good thing about premium AGM is that they have a two year shelf life thus we can then easily maintain inventories in hubs all around the world and provide a short lead time to our customers; we adapt to the logistical challenges to ensure our products are available as close as possible to market.

TowerXchange: What is the performance, and

cost, difference when using premium lead acid batteries versus lower cost alternatives at cell sites in harsh conditions?

Thierry Tardivent, Head of MEA and APAC, NorthStar Battery: A premium AGM (thin plate technology) would normally cost 30% more than a Standard AGM battery with three to four times greater storage life and up to five times longer operating life in real harsh conditions (typically 2.5 X the life). A lot of our customers are migrating from dual DG to DG plus battery hybrids to cut DG runtime by 50% or more. If you want to optimise energy efficiency programmes, you have to think about total efficiency; about DG efficiency, the efficiency of rectifiers, and the efficiency of batteries. A standard battery can suffer two to three times more loss than a premium battery, which can make a huge difference for some applications. A premium, fast charge battery can take a lot of energy to recharge the battery in short time, which enables the customer to run the DG faster and more efficiently, for a shorter time. For example, when we rolled out NorthStar Blue Technology in Pakistan, we found that most of the operators were buying low cost batteries because of their focus on capex. When they saw that at off grid sites we were cutting DG runtime by up to 85%, we helped them realise that it doesn’t even matter if you replace in your batteries every two to three years if you payback the investment in three to four months.

Delivering reliable and sustainable power to the world

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NorthStar Blue Technology is ideal for unstable and off grid sites; it’s a fast charge, high efficiency battery with Partial State of Charge (PSOC) compatibility. If used in a hybrid genset combination, it offers the best capex and opex compromise. Other technology such as sodium and lithium batteries are two to three times the price and are not so easy to implement in large scale projects.

TowerXchange: Why are telecom batteries failing so early? And what are the key steps towercos and MNOs can take to extend battery life? Thierry Tardivent, Head of MEA and APAC, NorthStar Battery: We need to increase customer awareness of the root cause of batteries problems. What NorthStar have done, and what all the battery manufacturers should have done, is make an assessment on over 60 countries where our batteries had been installed, to find out what were the key challenges were with using batteries, and to and try to find a solution for each: 1 Make sure to select the right battery based on grid and application including sizing/dimensioning; in too many cases there is not enough power to recharge the batteries. Our recommendation is that customers need to use different chemistries for different locations.

2 Solve installation and setting issues: everything from cabling the battery properly to controller settings (charging voltage, boost timing et cetera);

low voltage disconnect; temperature sensor configuration and cooling systems. Too many site installers don’t even know how many rectifiers they need to recharge the batteries – spending an extra US$200 on a rectifier can save a US$5,000 battery bank. 3 Temperature: a 10°C change in temperature can reduce battery performance by as much as 30-50%. But air conditioning just to cool energy storage elements costs a lot of money. A few years ago we partnered with one of the most famous fridge manufacturers to leverage proven consumer product technology into the telecom fields. We took the high efficiency, high reliability DC compressor

cooling technology, added a unique cabinet structure and made the world’s most efficient telecom battery cooler called SiteStar. We can now cool batteries with just 40W even at 30-40°C ambient. Over 30,000 sites have been equipped with our SiteStar technology to date with very positive feedback from the field. 4 Protect batteries from theft and vandalism: One approach we’re trying is to protect batteries in a safe-like structure. We’ve co-operated with a safe manufacturer to come up with a cabinet which used to be a safe box; made of robust, very thick metal. Another area we’re starting to explore is advanced locking systems.

Source: NorthStar Battery

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In some countries theft is related to the parallel market; at one point batteries were even being resold to the operators from which they were stolen! This was resolved with a relatively easy to fix – an engraving that cannot be removed. In other cases the parallel market is home usage, but I feel that’s minimal. No single approach to combating theft can be successful everywhere as there are different causes of theft, from theft by large organisation’s to pilferage within the fuel supply chain. Ultimately combating theft requires working with the operators and towercos to develop an understanding of the nature of their theft problem and what budget they can afford to resolve it. Theft is a problem, and we want to address it. NorthStar can help MNOs and towercos overcome all four of these challenges. I’m particularly concerned when people talk about minimising the competence required of people in the field. While the solution needs to be as simple as possible to be installed and operated, the competence of the average field engineer is not necessarily the same in Southern Asia and Africa as it might be in Europe. We see a lot of mistakes in installation, and we’re happy to the deliver first training at the NorthStar Academy on the basic principles – we can put all the installers in one room, identify common problems and misconceptions, and make corrective actions. TowerXchange: How do NorthStar ensure you remain sensitive to environmental

considerations from manufacture to disposal? Thierry Tardivent, Head of MEA and APAC, NorthStar Battery: NorthStar has invested heavily in building the most environmentally advanced battery plant in the world. But our environmental policies actually start from the design of the product; making sure the battery is designed to last longer and also not to deteriorate beyond the end of its life. We are also developing an advanced solution to operate batteries with the minimum energy consumption – our SiteStar battery cooler designed in Sweden is still the most energy efficient Battery cooler in the industry. TowerXchange: Finally, please sum up how you would differentiate NorthStar’s batteries from other energy storage solutions for remote cell sites. Thierry Tardivent, Head of MEA and APAC, NorthStar Battery: Most battery companies are focusing only on selling their own components. But NorthStar are more than just a battery company. We take a different approach – we really want to help our customers (as well as help ourselves). How we support our customers is a tangible, core value for NorthStar Batteries. In the past few years we’ve assessed the typical problems faced by our customers, and come up with solutions for what can we do to extend battery life and save energy. We seek to understand our customers’ problems. We’ll audit your site for you and we won’t leave without giving you an analysis of the problem

and corrective actions. You won’t get an “it’s not a battery problem – talk to power system vendor” attitude with NorthStar – we have a strong competence on the whole power solution, not just the batteries. We’ve changed the focus of our business to help our customers understand how to select the right batteries. One best electro-chemistry and battery technology isn’t right for all grid profiles and applications. For example, low technology batteries could be good enough for some developed market applications. But battery performance is more problematic in developing markets, so we’ve developed energy storage solutions for unreliable and off grid applications which we think represent the best compromise between capex and opex. Lastly we are developing solutions which have a very quick payback. Payback after five to ten years won’t work in telecom industry – everything needs to pay for itself in less than two years. NorthStar are focused on developing the best opex solutions, with affordable capex and quick payback – making our energy storage solutions a ‘no brainer’!

NorthStar Battery are exhibiting at the 2015 TowerXchange Meetups for Africa (October 19-20, Johannesburg) and Asia (13-14 December, Singapore). For more information, visit:www.towerxchange.com/meetups/africawww.towerxchange.com/meetups/asia


www.northstarbattery.comDelivering reliable and sustainable power to the world

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Tarantula platform designedto facilitate co-location in EuropeEnabling tenants and tower companies to collaborate and realise significant time savings

Ravi Kuppan, Founder and Director, Tarantula

TowerXchange: Please introduce yourself and Tarantula for readers less familiar with your company.

Ravi Kuppan, Founder and Director, Tarantula: I was developing OSS tools for Telefónica in the UK before going on to found Tarantula in early 2000.

The company formally launched in early 2001 as an industry-wide site sharing co-location platform in the UK. Our software has helped manage more than 18,000 co-locations on this platform in the UK and hundreds of thousands of co-location transactions across Europe, Asia and Africa. This equates to millions of dollars of site rent being collected each month, all enabled by our platform. Our co-location module provides centralised management of co-location on the web, which in turn enables the customer and tower owner to collaborate and yield time savings for all parties. Tarantula provides transparency for end to end co-location – users can identify hold-ups, manage documents awaiting approval, improve performance against SLAs, and reduce disputes.

So what makes us stand out as a company? Our team has in-depth knowledge of working with and experience in operating tower companies. This alignment means we understand their software needs inside out. Based on this, we have taken 30 real-world, best practice towerco processes and brought these to life through persona-based workflows, linking together towerco data such as assets and leases into one central business model. Moreover, we have linked this integrated data with

Read this article to learn:< How Tarantula’s platform helps towercos and their tenants to collaborate and reduce costs

< How independent towercos and MNO JV infracos are taking differing approaches to portfolio

management

< The 30 Tarantula tower best practice processes

< Tarantula’s experience working in Western and Eastern Europe

Tower companies and their tenants have historically struggled to get visibility into the end to end co-location process. They have not been able to identify hold-ups and have often found it difficult to manage documents waiting for approval. Tarantula has a proven, trusted and highly configurable software platform (Red Cube) which leverages the latest technology to significantly improve the efficiency of co-location operations. In this interview, Ravi Kuppan, Founder of Tarantula, explains how Tarantula is shaking up the world of site management.

Keywords: Asset Lifecycle Platform, Asset Register, Capex, Co-locations, Due Diligence, Infrastructure Sharing, Installation, Investment, Job Ticketing, KPIs, Leasing & Permitting, Masts & Towers, MNOs, Monitoring & Management, Novation of leases, O&M, Operational Excellence, Operator-Led JV, Opex Reduction, Procurement, QoS, RedCube, Risk, RMS, Sale & Leaseback, Site Management System, SLAs, Tarantula, Towercos, Transfer Assets, Uptime


master lease agreements to offer a built-in pricing and billing platform. This is available straight out of the box, allowing companies to quickly integrate and deploy a towerco business model and end to end site management in a single software platform. The software is being used in 20 different countries around the world which gives us a wide breadth of industry experience.

It is these inherent values and benefits that have

powered our product philosophy and links the Red Cube platform to the creation of business value.

TowerXchange: What has been Tarantula’s experience of working with European towercos, infracos and MNOs?

Ravi Kuppan, Founder and Director, Tarantula: We have been working with UK opcos since early 2001. Over the last 15 years we have also worked with a variety of tier one MNOs and tower operators across Western and Eastern Europe.

We’ve learnt that Western and Eastern European MNOs and service providers operate slightly differently. For example, in Russia, planning processes are slightly different than in the UK – things tend to get done much faster in Russia.

TowerXchange: How do you see the evolution of the European Tower industry in the past year?

Ravi Kuppan, Founder and Director, Tarantula: It appears that the time is ripe for European tower divestment. A lot has been spent on licenses. There are a number of planned divestments across Spain, Russia, and Italy. On top of this, we’ve also noticed an increasing number of interested buyers - strategic as well as financial – getting engaged in European tower transactions.

All of these players have one overriding concern – how to absorb or transfer these assets quickly and how to monetise assets in a sustainable manner. That’s why out of the box software is so critical.

The industry will need to adapt faster as time to market considerations become increasingly important factors for start-up tower companies and newly acquired portfolios. Out of the box software will play a critical part in developing best practice processes for these businesses so they don’t need to re-invent the wheel.

TowerXchange: How does the unique structure of the European tower industry - consisting of many operator-captive and MNO JV infracos as well as independent towercos - affect their respective appetite and need for portfolio management information?


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The industry will need to adapt faster as time to market considerations become increasingly important factors for start-up tower companies and newly acquired portfolios

Ravi Kuppan, Founder and Director, Tarantula: I’d like to answer this question in two parts. The first thing that needs to be borne in mind is that there are two very different drivers affecting the market. Fortunately, we have experience in both segments.

The Indian market is a good example. In India, you have Indus, which is an operator-led joint venture tower company. You also have traditional tower companies like American Tower. Both of these companies have quite different goals and objectives. One goal is to serve their MNO parents and ultimately deliver efficient service provision. In this regard, automated portfolio management tool-sets are critical for managing and provisioning the process for installing and upgrading equipment. MNOs are less interested in how the lease agreement links back to the original customer order and whether it was installed at the correct height. Joint venture infrastructure companies are often more interested in being efficient service partners than in monetising the rental of the tower. So portfolio management is more asset and SLA centric.

For independent tower companies, the business is all about real estate. Managing the space on towers is central for these companies’ profitability. As a consequence, a portfolio management platform needs to provide a level of data granularity that can efficiently link leases with assets and ensure revenue is not lost.

A lot of people seem to think the tower industry

is homogeneous, when it clearly is not. Over the last 15 years we’ve learnt a lot about the nuances in our industry. We understand the differences between different geographies and business models. So we know a lot about the different ways in which companies view their portfolios. This is why we have built a software platform that is flexible and configurable and takes into account the different business drivers for each type of tower company.

TowerXchange: We hear increasing appetite for the European tower industry to engage with active as well as passive infrastructure, and broadcast as well as tower assets - how can management information support this extension of the business model?

Ravi Kuppan, Founder and Director, Tarantula: Extension of the business model for tower companies will link back to processes being extended and adapted. This will ultimately drive the management information. Capturing data and providing a flexible and configurable process layer that is scalable will allow the tower industry to quickly seize new opportunities.

TowerXchange: New tower businesses are being created, carved out or acquired on an increasingly regular basis in Europe - where should such entities start when it comes to improving asset register accuracy and commercialising tower management which might have previously been managed purely on a cost charge-back basis?

Ravi Kuppan, Founder and Director, Tarantula: First of all, tower companies need to understand what is on their sites in terms of assets. Secondly, they have to understand how these assets link back to commercial site licenses.

This allows tower companies to enjoy cost optimisation when they service their sites, and this represents a substantial proportion of opex.

Understanding these two questions is not an overnight process. The faster a new tower company can invest in a proven software platform such as Tarantula, the quicker they can enhance their asset valuation and accelerate the whole process of integrating assets.

We have seen several examples of this such as the recent American Tower-Viom transaction; Helios Towers Africa buying assets from Bharti Airtel; and edotco buying Digicel MTC in Myanmar. A solid platform provides confidence to the investors when conducting any due diligence and this makes integration of the towers easier once purchased. Tarantula has developed an integrated tower purchase module to ensure customers benefit from a ‘step by step’ process to ensure any new assets can be monetised quickly.

Lastly, it should be mentioned that adopting the 30 Tarantula tower best practice processes can enable a new tower company to rollout the platform faster across its ecosystem of operations to create a single version of the truth. Managing the business through multiple Excel sheets does not inspire


the same level of confidence with investors and potential transaction penalty warranties can be invoked later if substantial data mis-matches are found.

TowerXchange: How would you characterise the current state of portfolio management information in European telecoms - are built-for-purpose platforms like Tarantula’s widely used, or is your main competition still Excel spreadsheets?

Ravi Kuppan, Founder and Director, Tarantula: Portfolio management only covers one part of the challenge – assets are typically understood in a narrow sense. For example, many telcos see it as the ground and tenant lease. We look at portfolio management in a much broader, holistic sense. For example - the end to end process from the

initial co-location request through the installation all need to be covered and managed. A tower asset is constantly changing and the key is ultimately to derive a full history of all changes on the tower and track how they are linked back to the commercial lease arrangements.

Some companies think they can ‘build it themselves’, using Excel or other building blocks. Building your own tool really makes little sense when standard products like Tarantula are available with millions of dollars of ongoing product investment that reflect improved business practices across the industry. Also, it dilutes the core “lease management” focus of towercos by needing to build IT teams and manage “non-core” IT projects.

Tower companies are waking up to the importance

of data quality, but face numerous challenges with data integrity. Our experience is that the challenge of creating and managing a new tower company via a single software platform is often underestimated. Managing expectations when all users have ‘one platform’ and they have their own Excel or Access database is not a trivial matter.

TowerXchange: Finally, please sum up how you would differentiate Tarantula’s solution from competitive site management platforms.

Ravi Kuppan, Founder and Director, Tarantula: Tarantula brings 15 years of experience in this sector globally with its software platform. We recognise that markets are different, the US is not Europe or Asia, while other solutions are still learning the market differences. Having global experience with roots in co-location from early 2000, gives us a depth of knowledge no other competitor has when it comes to implementation.

With an installed base in 20 countries, we are always well aware of the industry’s needs and this fuels our ongoing roadmap enhancements, providing our customers with the latest knowledge incorporated within the product.

Our 30 real-world tested, best practice towerco processes integrate all data including assets, leases, billing information, and financials, into one central business model. This allows companies to quickly integrate and deploy a towerco business model as a single source of truth delivered as a software service

20%

10%


“ “Tower companies are waking up to the importance of data quality, but face numerous challenges with data integrity. Our experience is that the challenge of creating and managing a new tower company via a single software platform is often underestimated

www.tarantula.net

tarantula Now in 20 countries across Europe, Asia, and Africa

Leading telcos and towercos rely on Tarantula for centralised data management

The most widely deployed tower portfolio management platform

How to structure a joint venture towercoOperational issues should be covered by the MLA, not the JVA

Vinson & Elkins have been advising on tower transactions for decades. Previously they represented American Tower, and more recently they represented Crown Castle during their push into Europe, when a flurry or potential tower transactions was triggered by MNOs’ need to raise capital for their 3G licenses. When the emerging market tower industry started to become active over the last decade, Vinson & Elkins drew on their relationship with Chuck Green from his time at Crown Castle, and some work they had done for Helios Investment Partners, becoming a natural choice to represent Helios Towers Africa in their pioneering transactions. Keen to become more active outside Europe, Africa and North America, Vinson & Elkins are sponsoring TowerXchange Meetups for the Americas and Asia.

TowerXchange: Structuring joint ventures is a complex process, but what are the unique complexities of tower JVs? Jeffrey Eldredge, Partner, Vinson & Elkins: The biggest concern is the tension between Mobile Network Operator’s (MNO) desire to maintain some form of control over what they view as critical assets to their business and operation, and the necessity to retain only a minority interest in the joint venture and make sure the towerco is independent from the MNO and can be marketed as such to potential co-locators.

There can be a tendency for the MNO’s operational control provisions to bleed into the Joint Venture Agreement (JVA), whereas I feel they belong in the Master Lease Agreement (MLA). We take the view that the MLA defines the commercial relationship between the mobile network operator and the towerco, so matters pertaining to the provision of tower space and rights belong in MLA not in the JVA. If you start putting contractual and operational issues into the JVA, those matters become known when other operators participate in the joint venture, and it can also lead to issues about who controls the business and who is responsible for commercial decisions, such as leasing and pricing. For the independent tower company business model to work effectively, it is key that the towerco retains control, not the anchor tenant MNOs, otherwise competitive MNOs may be disinclined to co-locate.

Jeffrey Eldredge, Partner, Vinson & Elkins

Read this article to learn:< How to balance MNO’s need for control with the need for towercos to be independent to maximise

co-location sales

< How to use the MLA to protect MNO’s operational needs, and use the JVA to protect MNO’s investment

< How to add a new party to a joint venture towerco: experiences in Tanzania

< How the management of competitively sensitive information is governed within a joint venture towerco

Keywords: How to Guide, Lawyers & Advisors, Deal Structure, Rental Rates, MLA, Anchor Tenant, Joint

Venture, Stakeholder Buy-In, Infrastructure Sharing, Africa, Tanzania, Helios Towers Africa, Vodacom,

Millicom, Tigo, Vinson & Elkins


If you allow operational matters to bleed into the JVA, you can muddle the business model, and it makes it tougher to sell the towerco as independent. TowerXchange: What’s in it for the seller to structure a joint venture in this manner? Jeffrey Eldredge, Partner, Vinson & Elkins: The legacy tower owners, or anchor tenants, can still secure certain rights that are superior to the rights of co-locators, but they need to relinquish control rights over the assets.

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Structuring a joint venture towerco becomes more difficult as you bring additional operators into the joint venture, but that should not discourage MNOs from considering joint venture transaction structures when selling their towers

Given the rationale for MNOs to retain a stake and to participate in the growth and economic benefits of co-location on joint venture-owned towers, there are greater co-location opportunities if those towers are no longer seen as owned and controlled by the MNO. TowerXchange: Vinson & Elkins recently advised Helios Towers Africa on the creation of a joint venture towerco in Tanzania, bringing together assets previously acquired from Millicom-Tigo, together with additional assets acquired from Vodacom Tanzania. What insights can you share from structuring that joint venture?

Jeffrey Eldredge, Partner, Vinson & Elkins: Structuring a joint venture towerco becomes more difficult as you bring additional operators into the joint venture, but that should not discourage MNOs from considering joint venture transaction

structures when selling their towers. Again, the priority has to be to balance the control rights of the parties coming together in the joint venture. If you give one MNO control rights, how do you balance that as subsequent MNOs participate in the joint venture? The joint venture has to be run by the towerco, which in most cases means the towerco needs to retain at least 51% equity. So once again, the lesson learned is that if you agree on rights to do with the operation of towers, or even a limited right of veto, put it in MLA, don’t let it bleed into the governance of the joint venture company. The reality is that when you bring in new party, they have a different world view and different priorities. You can’t just impose an existing JVA on them, so there were inevitably some intensive

Helios Towers Africa acquired an estimated 1,149 towers from Vodacom Tanzania. The assets were rolled into the joint venture towerco Helios Towers Tanzania, in which Helios Towers Africa retained a controlling interest and 51% equity, with 24.5% equity each retained by Millicom-Tigo and Vodacom Tanzania.

A reminder of the details of the Helios Towers Africa deals with Millicom and Vodacom Tanzania


Helios Towers Africa acquired an estimated 729 towers from Millicom Tigo for a purchase price of US$60mn. The transaction was structured as a joint venture with Helios Towers Africa receiving 60% equity and Millicom 40% equity in the joint venture towerco, Helios Towers Tanzania.

2010: 2013:


three-way negotiations. TowerXchange: What were the main transferrable lessons learned from that three-way negotiation? Jeffrey Eldredge, Partner, Vinson & Elkins: The ease of completing joint venture tower transactions is largely defined by the extent to which you can keep the JVA and MLA separate. With the help of our towerco client, we were able to work each party’s unique needs into their MLA. Structuring a JVA is tough enough without a bunch of operational clauses clouding the picture!

My advice to MNOs considering participating in joint venture towercos is to work hard to figure out what you need and how to protect yourself in the MLA. The MLA is your hook into the towers, through which you protect your operational needs. In contrast, consider the joint venture as an investment vehicle, and concentrate on protecting your investment in the JVA. The MLA will be around for the full term of the leaseback, sometimes 20 years or more, while the joint venture company in many cases may substantially restructured during refinancing or during a strategic sale. So it doesn’t make sense to put operational clauses in the JVA when the MLA will likely outlast it. TowerXchange: How is the management of competitively sensitive information governed by the joint venture structure?

Jeffrey Eldredge, Partner, Vinson & Elkins: The most competitively sensitive information is the lease rate paid by each party. Under ordinary circumstances, you would share such fundamental revenue information with board members, which may include competitive MNOs. So if towercos are renegotiating a contract and lease rate with one MNO tenant, there may be provisions to exclude the board members from other MNOs. With many towercos securing build-to-suit

programmes, sensitive information around network coverage maps and rollout plans are similarly dealt with. TowerXchange: Finally, why should operators and towercos not be scared of structuring JVs? Jeffrey Eldredge, Partner, Vinson & Elkins: If MNOs are comfortable entering into MLAs concerning co-locating on independent towerco sites or bi-lateral swaps with other MNOs, then there’s no reason to be afraid of participating in a more expansive joint venture towerco. The economic benefits of selling towers are obvious – you take a non-core asset off your balance sheet and release cash and/or negotiate a good lease rate opex, and you remove the operational burden of owning and operating the passive network. If MNOs retain an interest by forming a joint venture, they can benefit from the enhanced value of the towers in the hands of someone who can benefit from the co-location opportunity. Forming a joint venture is a way of MNOs retaining an interest in the success of the towerco, which is in everybody’s interests. Forming a joint venture towerco is complicated, and it takes a lot of work, but if you work with people who know how do it, then win-win-win deals can be agreed. But I would urge MNO’s to let go of control of the joint venture itself, and to protect their operational interests in the MLA. Separate the JVA from the MLA, otherwise it gets messy

““Forming a joint venture towerco is complicated, and it takes a lot of work, but if you work with people who know how do it, then win-win-win deals can be agreed. But I would urge MNO’s to let go of control of the joint venture itself, and to protect their operational interests in the MLA. Separate the JVA from the MLA, otherwise it gets messy


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Thursday 16 and Friday 17 June, Boca Raton Resort and Club, Boca Raton

A unique networking opportunity with 250 leaders of the CALA telecom tower industry

To discuss your participation, contact Annabelle on +44 7423 512588 or email [email protected]

Silver Sponsors: Exhibitors:DIAMOND SPONSOR: Bronze Sponsors:

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