While ESCOs are gaining traction in Africa, in Europe most towers are in easy reach of reliable national grids. However, for those towers which are off grid, either because of their remote location or temporary nature, handing over responsibility for power to a third party is a very attractive proposition for European tower owners, Massimo Ombra, President of MediPower, talks us through the details.
TowerXchange: Please introduce MediPower to our readers, and explain your offering in the European market.
Massimo Ombra, President, MediPower:
In the European telecom industry scenario, MediPower is a pathfinder company which has been able, for almost 14 years, to offer a different concept in the supply of power to local MNOs. The new business model introduced by MediPower was based on the idea to replace, and effectively act as, the national provider of a commercial grid, servicing those sites which were still too remote to be touched by the national electrification plan of the country, and those locations where customers required temporary power for their equipment.
So, with our wealth of experience in the generating sets business, and being a genset manufacturer with more than 80 years’ pedigree, Ausonia’s management team decided to create its own Energy Service Company (ESCo), named MediPower, with the aim of taking responsibility for all the power-related aspects for its customers, guaranteeing MNOs a stable and continuous energy supply to their sites, based on a monthly payable service fee. To do that, Ausonia and MediPower joined their strengths to design and produce a range of diesel generators which had to have specific features in order to reach the lowest TCO and to generate an attractive offer based on OPEX. Since then, thousands of sites have been powered by our gensets, which have been installed, maintained (both in the preventive and corrective sense), overhauled, refueled, remotely monitored and managed by MediPower NOC throughout the Italian territory.
Today we serve all four Italian MNOs (Vodafone, TIM, Wind and H3G), with a market share above 80% and being sole supplier to three out of the four previously mentioned MNOs. At the same time we are exploring different opportunities in other European countries where our OPEX business model seems to be attractive to MNOs and towercos.
TowerXchange: What is MediPower’s strategy to expand its power lease-based business across Europe?
Massimo Ombra, President, MediPower:
After several years of continuous successes, a few years ago we reached the maximum market share we could ever think to achieve in Italy, basically due to two main reasons: the first one is that some MNOs have got specific internal policies forcing them to keep at least two suppliers for energy services; the second one is that the number of off-grid sites in Italy could change only in terms of a few sites per year, as the grid network is well distributed and it covers almost the entire Italian territory.
Since we are ambitious and we strongly believe in the benefits and advantages our services can provide to our customers, we started looking over the Italian border, mainly at Greece, Spain, Albania and other countries where the commercial power network is not as well distributed and reliable as it is in Italy. As part of this process, we started discussions with different European MNOs and towercos, in order to explore business opportunities in the region and verify if our OPEX-based approach could match their energy requirements and cost savings targets. We have deepened such discussions with some of them and, once the opportunity is close to materialising, we will soon launch the relevant new country-based opcos. The implementation of our business model in a new country is quite easy and quick to achieve, as the technological framework which is behind it is ready to be replicated and immediately deployed, so that we can start offering our energy services to any new customer in Europe within a short period. The sooner we launch our new opco, the sooner our customers start enjoying the benefits, in a win-win business cooperation.
TowerXchange: Can you talk us through the energy needs of Italian towers? What are the main drivers for your clients’ energy demands? How does this differ from other parts of the world?
Massimo Ombra, President, MediPower:
When it comes to power, we see that Europe is different from other parts of the world, and, within Europe itself, every country has its own power requirements and territorial distribution of the energy needs.
In Italy, the energy we sell to our customers is mainly required on sites which are quite difficult to reach, such as the Alps or remote areas, and on temporary sites which are still not reached by the National Grid. In other countries, the main energy need is concentrated on islands, forests, wild areas or simply to give energy to small communities. All this represents a very challenging scenario in which to perform our business, as from a logistical point of view accessibility to the site is difficult and the genset rotation on temporary sites, at least in Italy, is close to two months. On sites which are unlikely to be reached by a national electrification plan, the rotation ratio is much higher, so we try, as much as we can, to adopt green energy solutions, with the aim to strongly reduce OPEX and bring down the logistical costs relevant to site visits for maintenance and refueling.
Within this scenario, MediPower is able to provide high efficiency and green energy solutions, based on the deployment of Ausonia products such as high efficiency DC gensets and hybrid power systems, integrated with renewable energy sources such as solar and/or wind. By doing this we can definitively state that the significant advantage of having MediPower as an energy partner is the fact that our customers are no longer dependent on CAPEX for their power needs, as they can enjoy of a “pay per use” energy service, totally complementary to the electrification process of their network.
TowerXchange: In a market where there is a large amount of towerco activity, what differences do you see between how towercos and MNOs respond to energy needs?
Massimo Ombra, President, MediPower:
Generally speaking, both MNOs and towercos are moving from a CAPEX based selection towards a TCO analysis of the energy solutions, as their attention to OPEX is very important and the control over these variable costs is a key tool in monitoring their own operational performance.
Additionally, the energy demand is generally variable, as it mostly depends on the strategies they adopt in their different markets. In fact, if we consider sites with one MNO only (single tenant), the site power consumption is today generally reduced compared to a few years ago, thanks to the new technologies of the telecom equipment installed on site, and it’s typically stable over the period.
But if we look at the towercos, which have an interest in entering into multi-tenancy agreements and sharing their costs over more customers, the site power consumption is typically subject to variations over the period, as it depends on the total number of tenants in collocation. This forces them to look for efficient, scalable and reliable energy solutions which can guarantee them the lowest TCO, in order to always optimise the energy production costs in terms of $/kWh.
We have also to highlight that there is a clear tendency for both MNOs and towercos to subcontract the power supply and all relevant issues, in order to stay focused on their natural business and following development. This is something already happening in Africa and other regions, but the process is clearly slowed down by the hesitations which arise during the evaluation of the potential energy partner(s) to be selected, which must be financially and operationally reliable, as the powering of the network will be based on their service performance. Of course, the introduction of Service Level Agreements (SLAs) and strict ratios for power availability can help them to identify which company can really perform the services successfully, especially in the short term, during the ramp-up period. Honestly, we think this process will still take several years to be widely used among the telecom industry players, but it’s something that is definitely going to happen, creating a new category of energy service and solutions vendors.
TowerXchange: The Italian market is due to change again with the entry of Iliad’s Free Mobile, what’s your take on how this will affect the status quo?
Massimo Ombra, President, MediPower:
It will definitely be interesting to see what will happen upon the entry of Iliad’s Free Mobile into the Italian market, once the green light is given by the European Union to the joint venture between Wind and H3G. The low-cost tariffs which are going to be offered by the French company will force all the rest of the mobile operators to react fast, creating a more competitive market and more attractive offers to the subscribers.
With reference to our energy service business covering the entire national territory, we see this new entry as an opportunity to extend our offering to Free Mobile, and it’s worth bearing in mind that that some of their future sites are already currently powered by our fleet of gensets, because of the energy supply agreements we signed with both Wind and H3G for their off-grid and temporary sites. Additionally, among their priorities, it seems that Free Mobile will have to build a big portion of its network infrastructure for mobile base stations, which will be additional to those inherited from Wind and H3G, and we are ready to offer the extension of our energy services even to any additional site where they would decide to enjoy of the advantages and benefits MediPower can offer to them with for many years.
