Over the last nine years, Pankaj Kulshrestha, Group COO of Eaton Towers, has worked on some extremely high profile tower deals. Now leading operations at Eaton, he has the exciting task of bringing efficiency and profitability to a portfolio of 7,770 towers across the African continent. TowerXchange caught up with him to discuss how closely the current portfolio matches Eaton’s plans, how their local teams and knowledge are providing a competitive edge and what capex investments are being prioritised as new tower integration takes priority.
TowerXchange: Can you tell us a little about your background in the tower industry and the role you play at Eaton?
Pankaj Kulshrestha, Group COO, Eaton Towers:
This is my ninth year in the tower industry. My experience prior to Eaton has been in India, and mainly with American Towers. I was one of the first employees of ATC India, which now has over 10,000 towers. I was deeply involved in the acquisitions and integration of the Excel, Transcend and Essar portfolios. I was also the Regional Head (North & West) for ATC operations. I have been with Eaton Towers since January 2014 as the Group COO.
TowerXchange: As the Airtel deals close and with the MobiNil deal agreed, Eaton’s portfolio is well diversified across the continent. To what extent was the shape of the portfolio planned in advance and how far was it predicated by the opportunities which came up in the market?
Pankaj Kulshrestha, Group COO, Eaton Towers:
Eaton Towers has always planned a diversified portfolio to minimise risk. We screened countries and opportunities against risks and returns. Indeed we declined to bid for some. Of course, one needs the right combination of a willing buyer and a willing seller.
TowerXchange: Your recent deal with MobiNil gives you a tower portfolio covering key regions and also opens up BTS opportunities in those parts of the country – as the pace of tower acquisitions begins to slow, how important is this and other BTS opportunities for Eaton?
Pankaj Kulshrestha, Group COO, Eaton Towers:
Egypt is a very exciting opportunity. This is the first tower company transaction in the region, but is only 10% of the total towers in the country. There is a pent up demand for BTS opportunities that we are looking at very intently. We expect to expand further in the market through both acquisitions and BTS.
TowerXchange: Eaton is ‘breaking new ground’ in Egypt with the first MENA tower deal. The industry will be watching with interest – what measures has Eaton taken to ensure delivery on SLAs as well as profitability in the region? Has your approach differed from that taken in new markets in SSA?
Pankaj Kulshrestha, Group COO, Eaton Towers:
A tower company brings a focussed approach towards performance and SLAs. Egypt is new for a tower deal, but some Eaton people have a long history in Egypt. We have also recruited a strong local GM with extensive experience. The team will be well experienced in the market and industry.
Eaton has a site by site approach to identification of issues, their rectification and management. With my experience in India and Africa, power and estate management is crucial towards delivery of high quality service. Operational excellence is the biggest differentiator for any tower company; it helps you get more business. I know the importance of SLAs and we will invest to ensure that they are met. Egypt has a better power performance but may face reverses if the diesel and electricity subsidies are removed. We are planning for a higher percentage of solar sites, which will help counter this.
Eaton Towers African presence
TowerXchange: Operating towers for multiple tenants in so many markets must be a very complex task. Can you shed some light on how you manage that? Do you prefer a devolved or centralised management structure?
Pankaj Kulshrestha, Group COO, Eaton Towers:
This is still a B2B business. The key is to maintain your independence as a towerco and not indulge in any differential treatment for customers. We have to treat all our customers well, with sensitivity towards their requirements. We need to deliver what we commit to our customers. Our approach towards managing is by devolved management, with tight controls on capex planning, opex optimisation, commercials and contracts. Our MDs, management team members and Key Account Managers are in constant touch with the customers at all levels.
Our approach towards managing is by devolved management, with tight controls on capex planning, opex optimisation, commercials and contracts. Our MDs, management team members and Key Account Managers are in constant touch with the customers at all levels
TowerXchange: Can you give us an idea of your plans for the integration of acquired towers into your network? What are the key areas which need to be improved to bring acquired towers up to standard? How do you deploy capex to meet both the short-term imperative to deliver on SLAs as well as long-term efficiency goals?
Pankaj Kulshrestha, Group COO, Eaton Towers:
We have a detailed integration plan covering all aspects and departments, with specific timelines and responsibilities.
We have a structured shadowing process with MobiNil, which is helping us understand the nuances of the operations. We are also in discussions with the service providers to understand the portfolio from a bottom up approach.
The capex will be prioritised towards fixing SLA related issues: the upgrade/ replacement of power infrastructure et cetera, safety issues: to comply to Eaton Towers’ Health, Safety and Environment policies, and opex optimisation. We will be making capex investments towards new co-locations, and doing the required upgrades for the existing tenants.
TowerXchange: When you acquire a new portfolio of towers, is your inclination to wring every last hour of useful runtime out of existing DGs before installing new, often more efficient solutions, or is your preference to refurbish and sell ageing generators and get more energy efficient solutions onto sites as quickly as possible?
Pankaj Kulshrestha, Group COO, Eaton Towers:
During the pre-closing shadowing process we endeavour to identify the DGs that need immediate replacement and those that need to be replaced over the next 12 months. This is mainly due to end of life criteria. The replacements are made with efficient DGs, both in terms of performance and capacity. The end of life DG replacement cycle necessitates that that they need to be replaced every five to six years in the countries in which we operate. To deploy capex efficiently, we do use refurbished DGs but they are replaced on sites where the DG running is low.
TowerXchange: What are your improvement capex priorities and how do you determine the improvement capex budget?
Pankaj Kulshrestha, Group COO, Eaton Towers:
The improvement capex is budgeted mostly on the basis of the due diligence findings. We invest for uptime improvements and Health, Safety and Environmental measures. This capex is primarily utilised for replacement/ repairs of DGs, batteries, ACs, control panels, rectifiers et cetera.
TowerXchange: Between the ‘Big Four’ towercos it seems like over a dozen RMS solutions have been piloted or rolled out - what have been the principle challenges making RMS work, and do you think you now have a solution that meets your needs?
Pankaj Kulshrestha, Group COO, Eaton Towers:
Having worked with many RMS solutions, I am in favour of working off the passive alarms that are available from the operator’s NOC. It is important to ensure proper wiring and working of these alarms, but once done, they provide the most reliable alarms, since they ride on the operator’s backhaul. It is possible to manage the network well using these alarms.
TowerXchange: Are Lithium-Ion batteries, or other alternate chemistries, ready to play a significant role in African cell sites’ energy storage requirements, or will lead-acid batteries remain the most widespread choice? Are there different use cases for different energy storage solutions?
Pankaj Kulshrestha, Group COO, Eaton Towers:
Lead acid batteries will continue to have their importance in the foreseeable future. They can be used universally. However, I think Lithium-Ion batteries will play a more significant role in days to come. We are yet to evaluate Lithium-ion batteries comprehensively, but they will certainly have applications in single tenant outdoor sites.
TowerXchange: Does Eaton have an appetite reduce complexity by buying energy by the kWh from ESCOs, or do you prefer to make capital investments in energy efficiency yourselves, keeping the value creation on your own balance sheet?
Pankaj Kulshrestha, Group COO, Eaton Towers:
We are still some time away from serious discussions with ESCOs, the present focus being closing and integration of the new operations we are acquiring.
TowerXchange: If a vendor wants to sell their products and services to Eaton Towers, what do they need to know about your procurement process?
Pankaj Kulshrestha, Group COO, Eaton Towers:
The Group Procurement Manager is based in Kenya. We have a transparent procurement process. If there are any specific queries, we can respond to them.
TowerXchange: Do small cells, microcells and DAS have a significant role to play in network planning in Africa yet? Is this an opportunity for towercos, or one best left to MNOs?
Pankaj Kulshrestha, Group COO, Eaton Towers:
With a higher demand on data, the requirement for these will increase. Egypt has a large proliferation of small and micro cells, although we haven’t seen much of these in the other countries yet. We are actively looking at providing IBS and DAS solutions, coupled with the outdoor coverage requirements the customers might have in all our operations
TowerXchange: What’s next for Eaton towers? Can you share your vision for the next 2-3 years? Do you have appetite for further significant acquisitions?
Pankaj Kulshrestha, Group COO, Eaton Towers:
This year we will close seven deals in five new markets. So the main task is to get these 7000+ towers operating efficiently, safely and profitably.
