In June 2019, the world’s largest tower company, China Tower Corporation (CTC), created two new subsidiaries to extend a philosophy of smart sharing to energy and “intelligent connections.” In carving out subsidiaries Tower Energy and Tower Zhilian, CTC has created the world’s largest consumer of telecom energy equipment and services, and a landmark new centre of innovation as towercos diversify beyond focusing on sale of “vertical real estate” for the co-location of antennae equipment for MNOs to develop IoT, civil and government services. Naturally, TowerXchange’s Research team are on the ground in Beijing to explain more.
On June 26 in Beijing, CTC announced the creation of two new wholly-owned subsidiaries: Tower Energy Co., Ltd. and Tower Zhilian Technology Co., Ltd. Zhilian translates as “intelligent connections”.
Tower Energy Co., Ltd
CTC currently has 1.954mn sites, most of which are equipped with a standby power supply systems to ensure uninterrupted service from the BTS in the unlikely event of mains power failure. This means that China Tower has the world’s largest distributed telecom energy storage system.
Tower Energy will leverage CTC’s extensive experience of managing energy efficient backup power battery banks, its large-scale procurement advantages, its professional maintenance capabilities, and the company’s intelligent monitoring system. As such, Tower Energy’s primary responsibilities will be power assurance and energy services, including both backup and primary power generation, as well as battery charging, power conversion, and energy storage for financial, transportation, medical, and low-speed electric vehicle customers. For example, Tower Energy is developing an electricity exchange service for the express logistics and catering industry to enable low speed electric vehicle battery sharing.
Gao Yunhu, Director of Energy Conservation and Comprehensive Utilization Department at MIIT, said that in recent years, China’s new energy automobile industry has developed rapidly. (The Chinese government uses the term “new energy vehicles” to represent plug-in electric, hybrid electric and fuel cell electric vehicles). By the end of 2018, the total number of new energy vehicles in China has exceeded three million, and the number of power storage batteries has exceeded 144GWh. The problem of recycling of decommissioned batteries has become more and more obvious. Since 2015, China Tower has taken on this social responsibility. It has pioneered the replacement of lead-acid batteries with decommissioned new energy vehicle batteries. The scale (and use of) decommissioned batteries in 200,000 base sites nationwide has made outstanding contributions to solving the recycling utilisation problem of new energy vehicle batteries.
Tower Energy has already signed cooperation agreements with a number of partners:
- China Post Express
- China Construction Bank
- Shanghai Automobile
- BYDMeituan Delivery
- Yunda Express
- Qianxun SI
- Tencent Cloud
The cooperation agreements cover battery leasing, equipment room power backup, emergency charging, electric vehicles, and the construction of a battery recovery system for automotive energy. New low-speed electric vehicles are to be leased, and existing lead-acid batteries will be replaced by lithium-ion batteries.
Mr Tong Jilu, Chairman of CTC, suggested that Tower Energy was a socialized extension of CTC’s power assurance and backup power service capabilities, and that it further deepened and expanded their capabilities in of power battery management and related resource sharing and maintenance services
Mr Tong Jilu, Chairman of CTC, suggested that Tower Energy was a socialised extension of CTC’s power assurance and backup power service capabilities, and that it further deepened and expanded their capabilities in of power battery management and related resource sharing and maintenance services.
Tower Energy has registered capital of is RMB 5bn (US$710mn), and it’s Chairman will be Liu Guofeng, who previously served as General Manager of CTC’s Operation and Maintenance department.
Tower Zhilian Technology Co., Ltd.
CTC has carved out Tower Zhilian to encompass several key offerings from their business development department in the fields of social information, government services and the Internet of Things (IoT). Essentially the remit of Tower Zhilian will encompass “intelligent connections”, or to use tower industry language, serve “non-traditional mobile tenants”. Demand for and usage of social information and IoT services are developing rapidly in China, so Tower Zhilian has a large and growing addressable market.
Leveraging the communications infrastructure resources and specialisation capabilities of parent company CTC, Tower Zhilian will accelerate the transformation of “communication towers” to “social towers” by focusing on sensors and services for ecological environment protection, land, agriculture, forestry, security, emergency, transportation, and satellite positioning. Tower Zhilian thus pushes beyond CTC’s traditional mobile customer base to provide cross-industry site application and information services, and to serve the national economy and enhance citizen’s lifestyles.
Much like Tower Energy, Tower Zhilian announced a raft of cooperation agreements covering site resource leasing, intelligent monitoring and comprehensive informatization with the following partners:
- China Satellite Communication Co. Ltd.
- China Transport Telecommunications and Information Center
- Allystar
- Eastcom
- Yangguang Media Development Corporation (wholly-owned by CNR, China National Radio)
Sun Zhongliang, General Manager of Allystar, said in an interview that with the advent of 5G, the 5G+ Allystar positioning was becoming more and more widely used in unpiloted driving, structural measurement, and the Internet of Vehicles (IOV). As a professional company that provides shared services for society based on CTC’s 1.954mn sites, Tower Zhilian has obvious advantages in helping to quickly construct and operate Allystar’s high-precision ground basic network.
Based on CTC’s messaging at two recent exhibitions, the Tower Zhilian proposition encompasses three groups of services:
Smart sharing: mainly oriented to customers who have intensive requirements for advanced machine equipment room services, and/or a need for high-hanging equipment or sensors using CTC’s towers and poles, often at lower elevation than telecom RAD centres.
Smart connection: leveraging the site location and monitoring resources of CTC, the ”Smart-connection” brand provides an integrated informatization solution for vertical industries, such as transportation, security protection, underground pipes, and public buildings.
Smart control: combines two types of products: managed device monitoring and maintenance; and social computer room monitoring and maintenance. (“Social computer rooms” appear to be the equivalent of Mobile Edge Computing sites).
CTC Chairman Tong Jilu said cross-industry services would be enabled by the efficient utilisation of tower site resources and the expanded social sharing space. Whether the past, present, or future, China Tower would firmly grasp the core value of sharing, fulfilling its responsibilities to society, creating value for industry, bringing rewards to shareholders, and cooperating with various industries to create win-win situations.
Tower Zhilian was established with a registered capital of 1bn RMB (US$142mn). Mr Yu Zhe, who previously served as the General Manager of CTC’s Business Development department, will serve as the Chairman of Tower Zhilian. Yu Zhe said that the company will firmly rely on the unique resources and capabilities of CTC to help quickly and efficiently deploy services to various industries, such as earthquake monitoring, environmental protection, transportation and security, promoting high quality economic and social development.
What these two subsidiaries tell us about CTC’s expanded vision and diverse business model
Since inception five years ago, China Tower has continuously deepened the concept of sharing beyond towers and rooftops. CTC has actively transformed itself from a focus on industry resource sharing to a focus on social resource sharing, promoting the expansion of a vision of a “telecommunication tower” to that of a “social tower;” high quality, high reliability sites and resources that can be fully and efficiently shared by multiple business and government stakeholders.
Mr. Tong Jilu, Chairman of CTC, said that the establishment of two wholly-owned subsidiaries of China Tower was a pioneering initiative to implement the concepts of innovation, coordination, green, openness, and sharing. Tong also mentioned that the two professional subsidiaries of Tower Energy and Tower Zhilian Technology had been set up to accelerate the strategic layout of “one body and two wings”. One body, to integrate towers and indoor distribution services in the communication industry. Two wings, energy services oriented to society, and cross-industry site applications and information services.
Mr. Chen Jinqiao, General Secretary of the Information and Communication Economics Expert Committee at MIIT added that it was estimated that RMB hundreds of billions of investment costs have been saved for the telecom industry, greatly accelerating the efficient construction of the mobile broadband network and creating many intangible values for society. The establishment of two wholly-owned subsidiaries represents the further extension and deepening of the concept of tower sharing in China.
Why CTC remain an important global benchmark
By Kieron Osmotherly, CEO, TowerXchange
China Towers’ peers within towercos and MNOs worldwide should pay close attention to these innovative new subsidiaries.
As ever, China simply offers a greater scale, and a unique appetite for both innovation and social improvement. This creates a unique “proving ground” for the expansion of the “infraco” business model.
- Should infracos engage in providing backup (and occasionally primary) power in good grid markets?
- Is there a role for infracos in the electric vehicle ecosystem, or in peak energy grid load balancing?
- What role will cell sites have in the V2I ecosystem?
- What is the opportunity for infracos to enable smart cities: to convert cell sites into points of service for civilians, enterprises and governments?
- Can the cabinets / “computer rooms” at cell sites be leveraged to provide mobile edge computing capacity?
- How does the product and service proposition of infracos need to evolve for the 5G era?
...And crucially, what are the unit economics of these opportunities at scale?
China Tower operates in a unique context in terms of both scale and business / social drivers. This means China Tower is going to be answering many of these questions before the rest of the world. The rest of the world would be well advised to pay strict attention!
