The next steps for Irish towercos

In the two years since we last spoke to Irish towerco Cignal, they’ve been busy growing through both organic and inorganic means in the fragmented Irish market. Cignal now owns land at 476 locations supporting telecoms infrastructure, of which Cignal own the tower infrastructure at 201 of these locations and the remaining locations (275) are leased to 3rd parties who own the tower infrastructure. TowerXchange caught up with founders Colin Cunningham and Donal O’Shaughnessy to find out how they’ve grown over the last two years, how they’re laying the foundations for 5G rollout in the market and timelines for consolidation in the fragmented Irish market.

TowerXchange: It’s been two years since we last interviewed Cignal, what has your focus been on since that time?

Because Cignal was very much a start up when we bought the Coillte portfolio and founded the company, we’ve been trying to focus on where we position ourselves in the market. In the last 12 months we have seen some momentum in what we’re trying to do. We have started delivering sites in ‘black spot’ areas which have been traditionally difficult areas to cover. We’ve had relatively high success in terms of planning applications over last 12-18 months. It’s a very different environment in terms of what was there 10-15 years ago and the government is focussing on trying to enhance rural coverage and constantly trying to support initiatives to facilitate mobile and broadband rollout. We are completing acquisitions of small portfolios and single site acquisitions and have been building some momentum into that strategy over the last 12-18 months.

We’re also keeping an eye on what’s coming in terms of the 5G rollout. Following the downturn in the economy in 2008 we are now seeing more property developments of scale in Ireland which are going to need large scale DAS-type and rooftop solutions. Cignal is currently exploring a number of these opportunities.

TowerXchange: Tell us more about how you make the rural tower business model work?

First of all we have built an efficient strategy in terms of our overall project delivery. We examined all the overheads in the business case and came up with different commercial solutions, not necessarily the traditional ones. The fact that we started with a blank piece of paper gave us the ability to do something a bit different. Our commercial model is different; the process we use; the environment is different in terms of government and community support. In fact people are ringing our office to know when the tower will be built as they want the service. A number of factors such as this feed into our strategy and mean we’re able to deliver on a commercial basis.

TowerXchange: You have been making gains in terms of acquisitions in Ireland, what’s your strategy for future growth?

It’s a mixture of organic and inorganic growth, continuing to drive new sites where coverage is needed and also trying to acquire what’s available out there. We have a steady flow of acquisitions all the time, and have put a strong property acquisition team into the business. On the portfolio acquisition side, it gets more difficult as portfolios aren’t always available but it’s timing, you can be lucky and just get it at the right time. We have the structure in place and all of the support services, if an acquisition was available in the morning we could start to react right away. We are capitalised and ready to go if the opportunities present themselves. We have pillars of internal development, rollout and construction which aren’t dependent on acquiring but at the same time we’re ready, willing and able to do that. It’s down to what opportunities the market puts our way and also what opportunities we create ourselves.

TowerXchange: Were the opportunity to arise, do you have the capitalisation and appetite to go for an acquisition of scale?

Absolutely. At the end of the day Cignal is backed by InfraVia, a multi-billion Euro fund manager. There’s appetite to deploy more funds into Cignal and no real limit on that other than the fundamentals of what we acquire has to stack up.

TowerXchange: The Irish market has several active towercos and JVs, how likely do you think it is that Irish towers will become acquisition targets for international towercos in the near future?

There is still on-going consolidation in the Irish market. Cignal for sure is very active in that process. The necessary consolidations will certainly happen over the next 24 months. The other side of it is that some of the smaller towercos are going to need capital to invest in their existing infrastructure to support the rollout of 5G equipment requirements, so that could be a catalyst for them to exit at that point in time. This may therefore create a natural exit timeframe for some of the smaller players in the market. For sure it can be expected that International Towercos will seek to enter the Irish market at some point and there are many opportunities for future infrastructure investment through the rollout of the national broadband plan, 5G Network deployments & Network densification requirements.

TowerXchange: Can you talk us through the Irish market at the moment? What are the key factors which define it?

We’ve got a couple of key changes, Eir mobile will have a new shareholder in the next couple of months and the 3/O2 network consolidation is still ongoing. Most of the operators have been densifying their 4G coverage, so that’s been the key thing over the last 24 months. The focus generally has been on optimising what they have, rolling out 4G and covering areas which have been poorly served for a number of years. Irish operators have started the 5G conversation, but no definite plans have been shared as yet, it’s still a bit early for any definitive understanding. DAS and densification of networks is under discussion and we’re looking at how we can play in that space as well, seeking opportunities to provide passive infrastructure on the street to accommodate these requirements.

TowerXchange: Talk to us about 5G rollout in Ireland and your plans for future infrastructure.

We’re certainly pushing and trying to design solutions such as fibre to the antenna and C-RAN: we’re having those discussions with our customers. We’re not seeing anything of scale yet but it’s on the horizon. Fibre to the tower and C-RAN type deployments are two areas we will be very focussed on. At the moment we are looking at the type of solution and the type of site and we’ll progress some pilot projects over the next 12 months to try out different rollout strategies with a focus on efficiency of rollout and cost. There will be opportunities for Cignal to participate in pilots of different types of rollout. We’re engaged in the conversation and trying to put forward unique solutions where we can. We started with a blank piece of paper two years ago and had a keen eye on the future, that was all part of our discussion when we started the business so we’re well placed to pursue these opportunities and have aligned ourselves to key partners who add to our pool of expertise.

Our street furniture programme will really kick off with the municipalities. When you talk about putting data centre capabilities at the base stations or putting fibre connections into sites it enhances 5G capability more than a data centre would. We’d see that more as a leapfrog in terms of infrastructure connectivity as it’s costly in terms of equipment, power and space. Moving towards cloud-based networks rather than posting everything on the site. We’re working on infrastructure which has a massive impact in dense urban areas and the next step is to take that to a C-RAN type deployment, have fibre going from a local exchange straight to the antennae. We’ve been working hard on this for the last 12 months and are engaged with a number of municipalities. The government is trying to encourage this, so we are working in a very interesting environment where we’re getting a lot of support from customers, local government and national level support too. We are very lucky to have a shareholder willing to invest and we have the necessary technical expertise in place; we’re in a very strong position as we go forward. We’re delivering on what we’ve been given from our customers and our focus is to keep doing that.

TowerXchange: Cignal has been involved in TowerXchange Meetups since we launched in Europe in 2016. Tell us about what you’re hoping to get out of the European event this year.

We want to talk about the evolution in data centres and bringing data to the site, it will be interesting to understand the scale it’s happening in. We also want to discuss the whole area around C-RAN: are operators actively rolling out? It’s quite an investment to put C-RAN architecture in a network, are they actively investing in this?

Colin Cunningham, CEO, Cignal: How are other markets planning out new opportunities for street furniture and DAS, and what does the 5G infrastructure world look like in five to ten years time? We need to be putting groundwork in place for infrastructure to support that in the timeframe in which it will be rolled out. We’re also keen to talk about the cross over to IoT networks, which are becoming more and more prominent. We’d like to see how it can actually be fixed together as opposed to looking at DAS, 5G and IoT in isolation.

Meet Colin, Donal and over 250 more European tower leaders at TowerXchange Meetup Europe on April 17-18 at the Business Design Centre in London. Find out more and register now for Meetup Europe 2018.