Tillman Global Holdings’ vision for small cells, towercos and ESCOs across five continents

With experience honed at Orange, Eaton Towers and Apollo Towers Myanmar, Tillman Global Holdings (TGH) has a unique understanding of what MNOs need from their infrastructure partners today and tomorrow. In this exclusive interview, TowerXchange reveal the vision behind Tillman’s impressive partnership with JCDecaux, which opens access to a million potential sites for small cells, and we get a sneak preview of Tillman GTS, their ESCO play. And what of Tillman’s appetite for opportunities in India?

TowerXchange: Please introduce our readers to Tillman Global Holdings (TGH) and your role in the business.

Tillman is an investor in, and operator of, telecommunications infrastructure and renewable energy. We’re a holding company formed by Sanjiv Ahuja, former CEO of Orange S.A., and former Chairman and Founder of Eaton Towers.

We built Apollo Towers Myanmar as founders and operators and subsequently brought in other investors and a management team; we chair the board now. We leverage that experience operating towercos like Eaton Towers and Apollo, and our knowledge of the operators and their requirements, to evaluate opportunities to build or acquire towers in other countries, sometimes in partnership with other investors. So we operate a hybrid business model: we’re investors, builders and operators, and we’re regionally agnostic.

TGH has experience on five continents: we go where we believe we can become a market leader.

- Having exited Eaton Towers, we’re now seeking opportunities in Africa.

- We’re very focused on our launch in North America, where Tillman Infrastructure is an acquirer and a builder; we are working with the major MNOs to build a US tower business. Contrary to popular belief, we think there is a lot of growth to be found in North America, but the barriers to entry are high.

- In South America we’ve identified a couple of key opportunities that we are pursuing.

- In Southeast Asia our current portfolio company Apollo recently closed the largest U.S. investment in the history of Myanmar, thanks to OPIC, while we are actively looking for other opportunities in the region.

- And in Europe we’re looking at opportunities both large and small – expect an announcement about how we will be entering Europe in the next couple of months. We attended the TowerXchange Meetup Europe, and feel that the European independent tower market is where Africa was six to seven years ago – we think we can become a leading towerco in the region.

TowerXchange: What’s the vision behind your partnership with JCDecaux in JCDecaux Link? What are the synergies between the billboard business and the telecom infrastructure business as it expands into small cell?

JCDecaux Link is the core of our small cell strategy and is a joint venture in which JCDecaux and TGH, via our subsidiary Way4orth.

The joint venture came about because two to three years ago we identified MNOs’ need for further capacity especially in urban environments, driven by 4G and with 5G to follow. We think small cells will play a critical role in future network topographies, but small cells are complementary, not competitive to macro cells.

We wanted to find the right partner with the most amount of real estate, so we approached the leading outdoor advertising company in the world – JCDecaux has over a million sites – and formed a joint venture to promote those real estate assets and structures to MNOs. JCDecaux’s huge footprint allows us to become the only global player with a scalable business model, and access to hundreds of cities.

JCDecaux Link already has an MSA with Vodafone – and we have a great relationship, able to give them access to around 50 cities in Europe. We also have an MSA with Verizon, and have several sites already up in the USA. We’re in discussions with over 40 operators worldwide, with trials in over a dozen cities – every trial has been successful, based on MNO metrics.

We feel the small cell business is at an inflection point where all operators are going to need to add thousands of small cells to their networks. The timing is now – in the next few years you’ll see a lot more small cells rolled out, particularly in urban areas. We may have been a bit early when we launched JCDecaux Link in 2014, but if you launched today you’d already be late to market. We were ahead of operator needs, but we were right on in terms of the business model: rolling out hundreds of thousands of small cells is going to need access to a lot of real estate.

It’s essential to work closely with municipalities, many of which don’t have plans for small cells. JCDecaux has long term concessions for street furniture. We understand the MNOs’ needs and the technical requirements: we work with their radio engineers to figure out how to deploy small cells. It’s new for everyone, but we’ve had a couple of years to learn how it will fall into place.

The assets JCDecaux Link currently has are mainly in urban, high data traffic areas, and that’s key to the business model. But there are other street furniture assets that might be useful including utility poles, light poles, and phone booths – for example LinkNYC leverages phone kiosks to offer Wi-Fi access points. So sometimes an MNO’s needs will fall outside what we can provide with JCDeceaux’s advertising assets; in such cases we’re looking at other types of real estate, taking a collaborative, operator-friendly approach.

It’s hard to put up new infrastructure in urban areas, so we need to work with what exists.

TowerXchange: What’s the blend of talent and expertise at JCDecaux Link – what comes from the advertising firm, what comes from TGH?

It’s a true joint venture – they have fantastic real estate and fantastic knowledge of how to take a collaborative approach to working with the cities. TGH bring technical expertise and operator relationships.

We know from experience how hard it is to zone towers and other telecom infrastructure in the U.S. Now imagine hundreds of urban sites at once – you need those great relationships, and you need pre-existing sites and structures: it’s a full service offering.

TowerXchange: How would you characterise the maturity of that emerging small cell operating company ecosystem – are there many peers of JCDecaux Link?

No-one who has a global footprint of high traffic, urban sites like JCDecaux: I think we have the largest global operation. There are various large utilities of course; most are regional or country focused, but nothing that compares to the scale of JCDecaux Link.

TowerXchange: Is small cell technology ready to be shared between multiple carriers by an independent neutral host?

We’ve done quite a bit of R&D to create solutions designed to accommodate the equipment from multiple carriers, and we’re looking at solutions that can host multiple carriers.

TowerXchange: How do the economics of small cells compare with macro cell sites?

The economics are favourable and the business model makes sense. However, that business model is different from towers, although the customers are the same. For a towerco, a small cell offering can become just another complementary product line.

One of the challenges with small cell deployments will be dealing with a fragmented ecosystem of urban landlords – in our case our partner is our landlord and they have a million sites!

The work to rollout small cells for operators is more intensive and more bespoke – it’s not “one size fits all” like a tower, where your vendors have done it a hundred times.

In conclusion, where small cells are concerned, real estate key. JCDecaux has a global presence to offer a current and future offering to telecom infrastructure clients. It’s a complementary product line for the tower industry.

TowerXchange: Let’s move on to talk about Tillman GTS – what’s the vision behind that?

Tillman GTS is a joint venture with Global Tower Solutions, founded by Robert Suss and Stewart Dodd, who have an impressive pedigree in finance and renewable energy. We created the Tillman GTS joint venture this year to tackle both utility scale ground mounted solar solutions, and also to offer financing to or operate Energy Services Companies (ESCOs).

In Africa and Asia the tower business is a power business – that’s the name of the game, and it’s the biggest headache. Power is the source of most of the costs and the unpredictability. Tillman GTS will take the risk, and we’ll invest the capex. We think there’s a gap in the market: most aspiring ESCOs lack the balance sheet to achieve scale. They might get 500 sites each time, but they’re having to take on expensive debt and equity.

Tillman GTS is both a financing vehicle willing to take the risk in backing proven O&M companies looking for the capital to move to a more asset-intensive energy services business model, and also for ESCOs seeking to provide capex. We are planning to deploy ~US$700mn of capital for this venture over the next three to five years. We are working to finance contracts for existing ESCOs or build and operate the ESCO ourselves with O&M partners.

TowerXchange: What is the current state of Tillman GTS - do you have any sites under management, or is it currently smart money seeking an opportunity?

We only launched Tillman GTS in April 2016, but we’re already in deep discussions with MNOs to do trials in East Africa and India, which are our initial core focus markets.

The ESCO market today is like early days of tower industry: lots of small, under-capitalised players chasing MNOs and towercos who are still not sure about the business model – there’s an education process to be followed. But we see ESCO as the next big opportunity in the traditional macro space.

TowerXchange: Why is a RESCO better positioned than a towerco to unlock and maximise the efficiencies of hybrid energy?

The towercos with a great balance sheet who want put in the effort to optimise energy opex themselves should go for it! But many don’t have the luxury of access to such capital. The funds many towercos have raised are primarily earmarked for acquisitions rather than kind of deep investments in efficiency ESCOs propose to make.

All towercos, and their clients, have challenging sites they would rather not manage, but they still want a single point of contact to resolve the logistical and operational headaches; and that’s what we propose to we take on.

TowerXchange: How would you respond to a towerco that suggests they would prefer to invest their own capex in reducing opex, and capture the value on their own balance sheet?

We often propose sharing cost savings. We feel the benefits will increase over time – it’s not a winner takes all situation. We provide visibility on opex and take on capex.

We’re open to undertaking larger scale deals, similar to tower transactions, where we acquire hundreds or thousands of cells sites’ existing power systems.

Ultimately we’ll evaluate each opportunity on a case by case basis, adapting the model to meet the requirements of our counterparts.

TowerXchange: We just came back from the 3rd annual TowerXchange Meetup Americas where the towercos pointed out that they don’t take responsibility for power in CALA, yet the MNOs complain that the towercos don’t want to build “difficult sites” in rural areas, often with poor or non-existent grid coverage. Is there a gap in the market?

In terms of building such sites, we would probably fill such a gap out of our towerco business. But Tillman GTS stands ready to help towercos and MNOs in CALA put sites in bad grid areas – we’re willing to provide capex for new build up front, and we can provide power where it’s required.

There are opportunities everywhere, but today the highest percentage of sites running on diesel generators are to be found in SSA and Southern Asia.

TowerXchange: The two most common reasons towercos cite for why they haven’t formed deep partnerships with ESCOs is that no ESCOs have the balance sheet and the proven track record to operate a tower network of the scale necessary to be transformational - how do we overcome that impasse?

Tillman GTS bring both – we know the tower business as well as most having done it in 15 countries, while our Chairman has run an MNO in 25 countries, and we’ve provided power in most of those countries. We have a balance sheet with which we’re willing to back those with vision and opportunity but who lack capital, or we’re willing to partner direct with towercos and MNOs.

TowerXchange: If an opportunity were of such scale that a US$700mn warchest were insufficient, are Tillman GTS open to taking on third party investment?

As the business scales, we’re open to working with partners

TowerXchange: Changing topics, and appreciating you cannot say much about an active process, does TGH still have an appetite to get into India, and is the acquisition of Reliance Infratel still a possibility?

It’s in the public domain that we were in a period of exclusive negotiations with Reliance to acquire RTIL, and we’re no longer in those exclusive negotiations.

We’ve spent several months on the ground in India understanding the landscape, and we have the financing ready for large acquisitions. We’re still exploring various opportunities to enter India through different channels.

American Tower’s acquisition of Viom Networks has been a catalyst, while there is a lot of activity from India’s MNOs at the moment, both consolidation and rollouts. We see it as a growth market and an infrastructure play.