IPT PowerTech, the world’s largest T-ESCO, operates the energy equipment across four countries with the largest number of ESCO sites worldwide. Established in the 1990s, IPT is also a managed service and energy equipment provider with a presence in 11 countries in Africa, South East Asia and the Middle East. TowerXchange speak to IPT PowerTech’s VP and COO, Khaled Habbal to find out more about how their ESCO business is developing.
TowerXchange: Please can you re-introduce IPT PowerTech to TowerXchange readers.
Khaled Habbal, VP & COO, IPT Powertech:
IPT PowerTech was founded back in the 1990s, initially focused on the provision of starter and specialty batteries. When the telecom sector started to pick up in the mid-90s we started offering battery systems to the sector before expanding into the sale of power systems, being one of the first companies to first launch the battery hybrid concept. We spotted the need to integrate power equipment into outdoor cabinets and began manufacturing our own cabinets independently. Innovation has always been at the heart of our business.
In parallel, we built our telecom services division, providing site construction services (of both towers and fibre), telecom installation and network services and field managed services and maintenance.
Whilst the product and managed services divisions remain key parts of our business, our focus has increasingly turned to our telecom-ESCO business where we see huge potential.
TowerXchange: Please tell us more about your T-ESCO business.
Khaled Habbal, VP & COO, IPT Powertech:
IPT PowerTech currently manages power under T-ESCO contracts in Myanmar, Guinea Conakry and Lebanon and is enrolled in a Guaranteed Savings contract in Nigeria. The large number of IPT worldwide ESCO sites and our extensive know-how makes IPT PowerTech the leading T-ESCO globally. Our current pipeline sits around a total of approximately 10,000 sites under Guaranteed Savings and T-ESCO and we remain very ambitious in our growth plan beyond this.
Recognised as a Telecom Energy Service Company (T-ESCO), we offer various models to MNOs and towercos reflecting the appetite for CAPEX savings and CAPEX leasing, while ensuring the deliverables of power availability and reliability to the network respecting all SLAs related are met.
TowerXchange: What do you think is driving the adoption of the ESCO model by the telecom sector?
Khaled Habbal, VP & COO, IPT Powertech:
Operators across the globe are coming under increased financial pressure with competition from OTT players and ARPU continuing to decline. They are searching for ways to decrease OPEX whilst minimising capex and the ESCO model offers an ideal solution.
TowerXchange: Please can you share further details on the new ESCO projects that you have signed in Guinea Conakry and Lebanon?
Khaled Habbal, VP & COO, IPT Powertech:
In Guinea Conakry we have signed an ESCO agreement with Orange, with high probability of extending to new sites within the upcoming 3 -5 years.
Initially we will take over management of the existing power equipment on sites, but over time we will upgrade this to make the system more efficient, a process which we have begun already. Of the total number of sites, around a third are off-grid entirely with the quality and availability of on-grid sites varying significantly. In the worst grid areas, availability can range between 6-12 hours per day, but as you get closer to urban centres this improves. All on-grid sites however require significant backup and alternative generation and so our plan is that most sites in the country will have solar in place.
In Lebanon, we are enrolled on an ESCO contract with one of the two operators in Lebanon, where the majority of sites are on unreliable grid connections: typically, 18-21 hours of usable grid in Beirut, falling to 6-12 hours in rural areas.
The grid quality in Lebanon is better than the grid quality in Guinea Conakry but grid availability can still be quite low; in Beirut, grid availability is around 18-21 hours per day but in rural areas this drops to around 6-12 hours. There is however a power schedule in Lebanon meaning that you know when power will be on or off. This predictability makes the design and management of an optimal power system a much more scientific process.
As with Guinea Conakry, we have inherited legacy power equipment with plans to upgrade this over time, in Lebanon however, most of the power equipment is IPT PowerTech equipment and so we are very comfortable with managing it.
TowerXchange: Can you tell us more about developments in IPT PowerTech’s involvement in IHS Towers’ “big five” project in Nigeria; and for those less familiar with the model, please can you explain the difference between the Guaranteed Savings model you have in place in Nigeria and the ESCO model you have in place in other markets.
Khaled Habbal, VP & COO, IPT Powertech:
IPT Powertech Group is engaged in Nigeria with the largest towerco on a major project of Guaranteed Savings across the African continent under the “Big Five Initiative”, supplying energy efficient power solutions—including management and long-term maintenance — and OPEX optimisation under a long-term contract.
The guaranteed savings model is something which IPT PowerTech have been promoting for a long time, having introduced the model at TowerXchange’s Meetup in Africa about five years ago. Historically, when an MNO or towerco has purchased energy equipment, they have used contractors to deploy, operate and maintain it. When the equipment isn’t performing as hoped, a blame game can ensue with the contractors complaining that the equipment isn’t delivering on expectations, whereas in reality it may have been incorrectly deployed or maintained by the contractor.
Our approach in eliminating the blame game is simple: combine energy equipment provider, system integration, and O&M service contracting services to create a single point of accountability. By being the energy system integrator and the contractor at the same time, we are able to manage key points in the value chain, thus leaving no room for performance failure—or for the ‘blame game.’ In fact, we believe that our group is one the few solution providers globally offering and merging hybrid and renewable energy solutions with telecom infrastructure services and offering field managed services and maintenance all at the same time.
Under a guaranteed savings model, we sell the equipment to the MNO or the towerco who then pays a fixed rate for us to install and maintain the equipment. We guarantee that we will deliver the savings promised, any deviation from this will be absorbed by IPT PowerTech. This gives the MNO or towerco not only clarity on the capex to install the system but also provides predictability in opex. With IPT PowerTech providing, deploying and maintaining the equipment, it avoids the blame game between equipment vendor and contractor that can so often occur in the management of power on cell sites.
The guaranteed savings model offers an alternative to the ESCO model, whereby the MNO or towerco still deploys the capex (whereas in an ESCO agreement the ESCO would invest the capex).
TowerXchange: What technologies does IPT PowerTech manufacture and supply and what equipment does it source from third parties? How does it select these third parties?
Khaled Habbal, VP & COO, IPT Powertech:
The dedication of our professional team exceeding 4500 specialists, impelled the group into serving more than 60 operators in 50 countries and becoming one of the few companies in the region to combine product R&D to our assembly facilities in Romania and Lebanon. Our modernised factory in Romania is a leading ODM enclosures manufacturer of outdoor cabinets, and an integration facility for advanced energy solutions, allowing us to combine high quality in-house products of enclosures and cabinets coupled with our own services proposition.
IPT has also incorporated the controllers for all our gensets, and lately IPT RMS, a complementary tool to all our solutions guaranteeing optimal performance, and allowing mobile operators better surveillance of their sites globally in terms of energy availability and efficiency. IPT Digital Platform features advanced machine learning along with existing energy equipment compatibility, ensuring smart and centralised monitoring across the network
On the other hand, IPT Powertech is an integrator of top-notch products, developing and identifying best technologies to create products, optimising the output of the solution. Our D&D team always makes sure to choose top international brands from trusted suppliers ensuring optimal performance of the products. We know our suppliers well; how reliable their products are and the level of service that they provide. Whilst we do consider new suppliers from time to time, we are very cautious as our reputation is also dependent on the quality of suppliers that we use
TowerXchange: At present does IPT PowerTech provide all the financing for ESCO projects and do you envisage using outside investment in the future? What kind of investors do you see as being interested in the ESCO space?
Khaled Habbal, VP & COO, IPT Powertech:
We have relied on our own funds this far but do envisage that we will look at outside financing. We are receiving a large amount of interest from investors on both the debt and equity side from banks and funds and could foresee that many investors which have played in the towerco space will start to look at investment opportunities in ESCOs.
The challenge however is that the T-ESCO model is still very new and investors are still trying to understand it; there is a lot of ambiguity in the term ESCO, people don’t understand what type of contracts or MLAs are in place. There’s also a lack of sizeable ESCOs in the market which investors can compare; after IPT PowerTech, the next biggest sized ESCO is way behind.
Ultimately however, there are a lot of parallels between ESCOs and towercos; it is still in the telecom infrastructure space involving long term (10 year) contracts with creditworthy MNOs and towercos. There is a lot of commonality in the two business models and the fact that towercos often view ESCOs as the competition only goes to support this view.
IPT PowerTech are bronze sponsors or TowerXchange’s Meetup Africa (9-10 October 2018, Johannesburg) and Meetup MENA (29-30 January, Dubai)
