Tower industry mourns passing of a true visionary

On September 24, after a serious illness one of the founders of the tower business in Russia, the Chairman of the board of Russian Towers, Peter Owen Edmunds left this life.

Peter Owen Edmunds devoted more than 20 years to the telecommunication business of Russia - beginning in 1992 he helped found St. Petersburg’s first independent fixed telephony operator PeterStar, acted as the chairman of the board of PeterStar, Comstar and other companies in the CIS countries, directed his own consulting company and was a Partner in IKS Group. In 2009 Peter became the co-founder and the Chairman of the board of Russian Towers. Prior to his career in Russia Mr. Owen Edmunds served for 14 years as an officer in the British Army.

Alexander Chub, President of Russian Towers: "Everything that we put in the concept "English gentleman" – modesty, advantage, intelligence, nobility, sense of humor and cheerfulness was shown In Peter. His ability to build with colleagues and partners not only working interaction, but also the cordial, friendly relations created the unique atmosphere of a cooperation in the Russian Towers and caused sincere admiration in all who knew him.We very much will miss him".

The TowerXchange team feel privileged to have worked with Peter over the last few years. Below is an interview we conducted with him last year, although the hard work of Peter and his team mean that Russian Towers now owns over 2,000 towers with more on the way and rumours of an acquisition in the near future would represent the realisation of Peter’s vision.

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

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?

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 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?

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 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?

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?

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?

We don’t do diesel – we try to connect to the mains so we try to keep clear of it. 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?

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?

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?

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.