One of the world’s fastest growing tower companies, Russian Towers are evolving into more than a vertical real estate provider. In this interview, Russian Towers President Alexander Chub and Marketing Director Alexey Podryabinnikov describe the IT architecture they are leveraging to transition into service-orientated infrastructure provider. We also gain insights into the organic and inorganic growth plans of Russia’s leading independent towerco.
TowerXchange: Please re-introduce yourself and Russian Towers.
Alexander Chub, President, and Alexey Podryabinnikov, Marketing Director, Russian Towers:
Russian Towers Group was founded in 2009. Our shareholders are UFG Asset Management, The European Bank for Reconstruction and Development, International Finance Corporation (IFC), Macquarie Russia CIS Infrastructure Fund, ADM Capital and Sumitomo Corporation.
Russian Towers is the largest independent operator and owner of antenna-mast structures in Russia. The company invests in the construction and acquisition of tower structures of different designs in the regions of Russian and ensures their maintenance and operation.
The clients of Russian Towers are federal and regional mobile operators, internet broadband access operators, government agencies, developers and other companies. The company provides a wide range of shared telecommunications infrastructure services: provision of technological sites for telecom equipment placement, provision of power supplies, fibre-optic connection, twenty-four-hour remote monitoring and access management.
The company’s development strategy is to expand its services portfolio based on a constantly expanding infrastructure field.
TowerXchange: What is your vision for the evolution of towercos beyond telecommunications real estate aggregation and provision?
Alexander Chub, President, and Alexey Podryabinnikov, Marketing Director, Russian Towers:
The development of technology is leading to mutual penetration (convergence) of industries.
Mobile operators are getting rid of their towers and expanding their product line with financial services, banks are becoming MVNOs and transnational internet companies (Apple, Google, Facebook et cetera) are enticing customers of both. UBER, Whatsapp, Yandex, Tinkoff et cetera all originally built their businesses in direct interaction with subscribers on top of someone else’s infrastructure.
Customers require personal attention in critically important qualities of service and are not paying much attention to any accessory issues. The most important thing is to be able to quickly reform, to know what is in the best interests of the customer and what is secondary. The company’s significant market share is appearing and successfully focusing on tough competitors, initially unburdened by its own infrastructure.
And against this background, companies which professionally deal exclusively with infrastructure and remove this burden from market-oriented companies are appearing.
The time has come for horizontal integration: shared computing power and software (clouds), collaborative logistics, car sharing, shared towers and common service offices for example between mobile operators and banks.
The task of infrastructure companies is to provide its customers (in our case network operators) with a level of service which will allow them to put infrastructure to the back of their minds. Already, the focus of the interaction of mobile operators with Russian Towers has shifted from a discussion of the lease rate of a particular tower to a discussion of the percentage of the operators’ rollout plan of new infrastructure which Russian Towers is prepared to implement. And this is determined by the possibility of mass access to the basic infrastructure (land, lighting poles, energy et cetera) and the speed of business processes to provide operators with access to tower/pole/electricity/fiber constructed there.
In our opinion, the future of infrastructure companies in the 5G era is creating communication networks at a much higher speed and efficiency than mobile operators themselves.
TowerXchange: What are the technology platforms and processes that will enable you to realise that vision?
Alexander Chub, President, and Alexey Podryabinnikov, Marketing Director, Russian Towers:
The key technology elements of our IT platform are a Business Processes Management (BPM) System, allowing maximum automation and fast creation of new business processes, client workspace and CRM to allow services to be ordered and visualised, Geographical Information System (GIS) with extensive analytics, and our Enterprise Data Warehouse.
The triad of BPM+CRM+GIS built atop a data warehouse assures least latency, best client value, using off-the-shelf (OTS) interoperable software components. Clients can work with Russian Towers personnel and/or use automated orders of services, from the lease of space for equipment on tower, to ordering fiber, installation works, revising levels of service et cetera. All client demands, history, contracts, and assets are stored within the CRM.
The GIS solution supports asset location, selection, comparison, and analytics. Using a data warehouse supports near real time operations to support ‘best client interactions.’
Since every customer and subcontractor requires different information, services to create value by hosting their equipment with Russian Towers, a workspace is provided that shows clients tower pictures, maps, rates, and requirements in real-time. Client roles may vary, as will the information provided by the workspace. For example, the owner viewpoint will differ from say the maintainer or installer viewpoints – only the appropriate services are shown.
TowerXchange: How do these streamlined processes specifically enable towercos to accelerate provision of new equipment and services in the heterogeneous network layer?
Alexander Chub, President, and Alexey Podryabinnikov, Marketing Director, Russian Towers:
Network densification will require a tenfold increase or more in the number of sites. Taking into account that operators can afford to spend as much or even less money on a communication network, a site’s TCO must decrease ten times. This could be achieved simply by changing the approach to network rollout and handling. One of the solutions is sharing, but this is not enough. We need to make shared networks ten times more efficient.
Given the difficulty of altering the laws of physics, not all elements of the cost chain can be made cheaper than today. That means that others must be even more than ten times cheaper. One way of making things cheaper on a per unit basis is to make more units at the same time. That works, for example, for installation works, site search, maintenance and use of typical processes, hardware, settings… everything. Every decision point decreases speed of process, increasing its cost.
For example, choosing a location for a site today, made by network planners, 3D radio propagation modelling etc., finally comes down to choosing between three available sites, 25m apart and selecting one by answering few simple questions. This can be automated without a big difference in quality, but with a huge effect on rollout speed. By implementing streamlined processes we can target real optimisation of network costs for our clients.
Russian Towers’ growth narrative
TowerXchange: How many new sites have you built in the last year, what kind of structures, and how have you been able to rollout so fast?
Alexander Chub, President, Russian Towers: We built around 800 sites in total in the last year. Almost 90% of them are City Poles, the rest are regular towers. Getting access to the standard city infrastructure is critical to success. We noticed this driver in advance and have become fully prepared to meet the 4G penetration rush, providing MNOs with a variety of options (light poles, electric grid poles, city transport et cetera) to serve their needs. The extended level of mutual trust we have engendered enabled Russian Towers to participate in the network planning process and save time at this stage too.
Needless to say we stretched our ability to deliver through entire processes optimisation and individual operational excellence control.
TowerXchange: I understand you’ve supplemented your organic growth with the acquisitions of some small local towercos in Russia – are there many privately owned tower portfolios in Russia and how receptive have their owners been to your approaches?
Alexander Chub, President, Russian Towers: There are dozens of them. Most of them are small niche regional players and are not designed or prepared for the long run. We propose a cooperation model with them including the buy out of their assets and a long term partnership within the Russian Towers-centric business ecosystem. It works.
TowerXchange: Last year we saw VimpelCom (now Veon) and MegaFon carve out their towers with a view to potentially selling them to a company like Russian Towers – what is your current view of the future structure of the Russian tower market?
Alexander Chub, President, Russian Towers: We believe the independent tower market segment in Russia has bright prospects, and have acknowledged all the trends and developments. I’m sorry I can’t say more at this stage!
TowerXchange: How have towercos traditionally sold space on towers, and how will that change?
Alexander Chub, President, and Alexey Podryabinnikov, Marketing Director, Russian Towers:
Towercos started their development as real estate, renting tower space, just like floor space in an office building. That was enough at a time when operators required thousands of such “offices” to accommodate equipment, worth a hundred thousand euros, for decades.
As the development of telecom dictates, towercos’ (or more accurately, infracos’) future is in selling access to revenue, including the optimal location of a site, full operation and relocation dependent on when operators’ subscribers’ behaviour changes. That will require not only much faster processes, but a much deeper knowledge of our clients’ clients.
TowerXchange: Is RANsharing a threat or an opportunity for towercos?
Alexander Chub, President, and Alexey Podryabinnikov, Marketing Director, Russian Towers:
RANsharing, as we discussed earlier, is inevitable, so we should adapt to it. If we look at it from a current towers’ perspective, it’s definitely a factor, reducing future lease-up. And we must factor it in, discussing the acquisition of operator’s towers. But if we look at it from future networks’ development, it’s an opportunity for service-oriented infrastructure companies, who can offer fast and efficient infrastructure development to mobile operators.
TowerXchange: Please sum up your vision.
Alexander Chub, President, and Alexey Podryabinnikov, Marketing Director, Russian Towers:
For many towercos, tower asset is the goal. For us, tower asset is merely a tool.
Alexander Chub, President, Russian Towers
For more than 25 years, Alexander has worked and delivered on several successful projects in the IT services and telecommunications sectors.
Most recently, from 2012-2014, Alexander served as General Director at Navigation Information Systems (NIS GLONASS), a subsidiary of AFK Sistema. Prior to that from 2005, Alexander worked as Country Manager for the American company 3COM in Russia and the CIS. In 2002, Alexander served as Chief Representative and General Manager for Dell’s operations in Russia and prior to this was GM of Bull S.A. Earlier in 1995, Alexander was Managing Director of Hewlett-Packard for CIS countries and Mongolia.
Alexander has a degree in Computer Science from the Moscow Institute of Electronic Technology (MIET) and an MBA from MGIMO International Business School and he has also completed the Senior Executive Programme at London Business School.
In 2017 Alexander was elected co-chairman of the Committee on Information Technology of the Managers’ Association. Alexander is a member of the TowerXchange ‘inner circle’ informal advisory board
Alexey Podryabinnikov, Marketing Director, Russian Towers
Alexey is responsible for strategic marketing and the creation of new products and services.
Before joining Russian Towers, Alexey was Deputy General Director at Nokia Siemens Networks Russia and Head of the Department responsible for business with MegaFon. From 2006 – 2007, he served as Senior System Solution Manager of Nokia Russia and prior to this role, Alexey was a Senior Technical Solution Consultant at Siemens. In 2001 Alexey completed an internship at Siemens AG in Munich. From 1999 – 2000, he was an engineer at United Europe Telecom.
Alexey holds Ph.D. degree in engineering sciences, graduated from the Moscow State Institute of Electronics and Mathematics, in the field of Applied Mathematics and additional degree in Network Technologies.
