Cameron Evans, CEO of Optus Carve Out Australia Tower Network (ATN) has been a busy man. Tasked with setting up an independent towerco essentially from scratch following Optus’s sale of a 70% stake in its tower business to Australian pension fund AustralianSuper in October 2021, Cameron has been building a towerco from the ground up.
As if hiring over 30 people, refining ATN’s digital strategy and back office IT systems, and starting work on a 565-site build to suit program that was included in the terms of the sale wasn’t enough, ATN is now working hard to integrate Australia’s largest independent towerco – Axicom –following the announcement it would acquire the business on 1 April 2022.
Formerly backed by Macquarie Asset Management, Axicom began its life as CrownCastle Australia in 2000, and acquired the majority of their 2,000 towers from Optus and Vodafone before re-branding to Axicom in 2015 when Macquarie got involved.
ATN’s acquisition of Axicom is for 100% of the company and is worth an estimated US$3.5bn.
Taking some time out from his busy schedule, TowerXchange had the pleasure to sit down with Cameron to learn more about the history of ATN, the reasons behind the Axicom acquisition and what’s next for Australia Tower Network as it cements itself as a leading Australian infrastructure provider.
TowerXchange: ATN is a relatively new company, and not all of our readers may be aware of your origins. Can you detail the history of the Optus carve out and the formation of ATN at the end of 2021?
Cameron Evans, CEO, ATN: Over the course of 2021, Singtel took the decision to divest a controlling shareholding of their Australian tower portfolio, which had been put into a separate vehicle, namely ATN. I worked closely with AustralianSuper, the party who were successful in the acquisition of that 70% stake in ATN. The transaction completed in mid-November of last year, in a transaction that valued ATN at A$2.3bn (US$1.67m).
And so over the course of the last few months we've been very busy establishing ATN into a towerco from scratch. What that means is that we've been putting in place the people, the processes and the systems to allow ATN to stand on its own as a separate business.
What we effectively acquired from SingTel was the infrastructure portfolio that sat within the broader Optus business, as well as the various different contractual obligations that supported that particular asset base. My role at ATN so far has been to enable the full transfer of those assets included in the carve out to a new platform that can effectively manage these critical assets, as well as position for future growth.
TowerXchange: Has it been a completely fresh hiring process? Or have there been any teams that have been inherited from Optus?
Cameron Evans, CEO, Australia Tower Network: It's a completely fresh team and the reason for that is quite deliberate. It's not to suggest that the existing team within Optus were not doing a good job, but fundamental to our strategy is that we wanted to create a very independent business from the other carriers in the marketplace. We want to make ATN a truly independent infrastructure company. We'd always felt that it was important to have a degree of neutrality in our business and have people work with us who have strong domain knowledge but aren't necessarily linked to any particular operator.
The other reason that we have gone down this path is that we also recognise that Optus’ systems, processes and people have been geared to support Optus, whereas we want ATN to be different in the way it manages and deploys infrastructure and in the way that it offers services to other parties. The strategy behind us establishing ATN has always been about how do we create a purpose-built business that doesn't have legacy systems, and that enables us to be agile, flexible and scalable.
TowerXchange: How has the team and the company grown since we first learnt of the formation of ATN as an independent company in November 2021?
Cameron Evans, CEO, Australia Tower Network: Back in November we started off with just myself and Jason Horley, who’s been running our property and customer engagement function at ATN since the start. Jason’s been really influential in the business since the beginning. Since then, we have hired around 30 new people. As I mentioned we’ve been very particular with the types of people we’re bringing in, and we want to create a new culture specific to ATN.
As part of our acquisition of the Optus towers we inherited a 565-site build to suit contract, of which 40 sites have already been completed. We have needed to have a “business as usual” team that can work on fulfilling this obligation, as well as a team focused more on the future of the business and putting processes and systems in place that allow us to grow.
We’ve got a great opportunity to essentially design a business from scratch, and we’re fortunate that there’s been a huge amount of innovation in technology that can support a tower company in the past few years. We want to focus on automation, and creating seamless integration between our systems.
Without the legacy workflows that may inhibit other companies trying to get to this point, we are very excited about the possibilities to set up an agile operating platform, that has very strong system capabilities. We also want ATN to be a business which has customers at the core of everything we do.
Many of our IT procurement decisions have been and will be driven by this ethos. We want to create a workflow that not only works for us but streamlines things for our customers as well – allowing customers quicker and more effective access to our asset base.
This mentality has extended beyond IT to our operating platform. We want to be streamlined and efficient when we build new sites, which has required us to take a different approach to not only the way in which we design ATN, but also the way in which we manage and work with partners and suppliers, in delivery of these services.
TowerXchange: What are some of the specific projects and ideas that you have had to create this vision?
Cameron Evans, CEO, Australia Tower Network: We’re spending a lot of time driving digitialisation across the business. Our digital twin model will play a big part in this strategy, along with the design of our operating platform. We want to utilise the information we’re gathering from the digital twin to improve access to our sites for customers, automate parts of our engineering and optimise our asset management strategies.
We also want to be at the forefront of asset design and management. We have a strong engineering capability which we intend to put to work to come up with new ideas in relation to asset, strengthening solutions and energy management.
TowerXchange: What are some of the specific projects and ideas that you have had to create this vision?
Cameron Evans, CEO, Australia Tower Network: We’re also spending a lot of time driving digitialisation across the business. Our digital twin model will play a big part in this strategy, along with the design of our operating platform. We want to utilise the information we’re gathering from the digital twin to improve access to our sites for customers, automate parts of our engineering and optimise our asset management strategies.
We also want to be at the forefront of asset design and management. We have a strong engineering capability which we intend to put to work to come up with new ideas in relation to asset, strengthening solutions and energy management.
TowerXchange: Moving on to the recent news of the Axicom acquisition, can you explain why this was of interest to ATN?
Cameron Evans, CEO, Australia Tower Network: When we made the initial acquisition of ATN, the vision was to become a leader in digital infrastructure. When we think about our business, we think about two key aspects: one is independence, the other is about our ability to support and provide broader digital infrastructure.
As data consumption continues to grow, the demand for digital infrastructure will naturally increase in tandem, and we want to be able to supply not only towers, but a whole host of other services.
Axicom presented a tremendous opportunity to leverage a mature platform to accelerate the establishment of ATN and help us scale our capabilities to manage our assets, while simultaneously fast-tracking our development into a broader range of assets.
Axicom is also a very complimentary business to ATN, as our networks have very few overlaps. Bringing the businesses together significantly increases our coverage across the country. We see this as a good thing for our customers, as we can offer more sites.
We’ll be fully integrating the two businesses to bring something new to the market.
TowerXchange: How does inheriting a mature towerco with 20 years of history and its own way of operating align with ATN’s ethos of building a nimble flexible towerco from scratch?
Cameron Evans, CEO, Australia Tower Network: It’s definitely a big challenge for us, and I think it's imperative that we don’t lose the ethos and strategic intent of ATN throughout the integration process.
I think the way that we do this is by being very clear and honest with ourselves about what the core value of both businesses are, and find a way to bring these together. The way I expect it will play out is we bring some systems from ATN and some from Axicom and merge them in a way that stays true to our ethos of being flexible and agile. That will take some work, but there’s no doubt it will pay off in the long run.
We do need to be conscious that Axicom has undergone its own transformation journey in recent years, and it’s important to us that we continue with that. While there will undoubtedly be legacy infrastructure in both businesses, the macro intentions of both groups are aligned, and that will help with integrating and maintaining a clear and focused goal for Australia’s newest digital infrastructure provider.
TowerXchange: When we heard Optus were looking to carve out its towers, Axicom seemed like a frontrunner to win that bidding process since the majority of their towers originally came from Optus. What can you tell us about the alignment between ATN’s existing portfolio of towers, and the Axicom portfolio?
Cameron Evans, CEO, Australia Tower Network: That’s absolutely right. One of the reasons why we were interested in acquiring Axicom is the complimentary nature of the two portfolios. There will be very little decommissioning, and only about 7% of the sites overlap. It’s quite a distinct network as a result of its history – it’s essentially one chunk of the Optus network, while ATN controlled another big chunk, so bringing them together makes a lot of sense.
Where the two portfolios differ is due to the objectives of the organisations controlling them. Axicom is an independent towerco that has been operating for 20 years, and has therefore been far more incentivised to encourage co-locations, whereas the ATN towers had been managed by Optus up until less than a year ago. The Axicom towers tenancy ratio is therefore around 2.5 customers per site, where as the ATN number is around 1.6.
But this is exciting! It means that ATN is a growth vehicle, and we have a great opportunity to bring that number closer to the Axicom number. Axicom on the other hand has a smaller growth profile, but it's a far more mature business with a very strong underlying capability and a very healthy tenancy ratio, which gives us some confidence about how we can grow the ATN rate as well.
Of the ATN towers, approximately 35% are rooftop sites, whereas for Axicom that number is far lower – there are only 60 or so rooftop sites among the portfolio. When we combine the two, the new entities percentage of rooftops will be around 18%.
The two portfolios also complement one another when it comes to locations as well – we have around 40% suburban and rural sites in ATN, and Axicom is far more metro-focused. Many of the Axicom sites have already been upgraded for 5G because of their urban location, while we are working on upgrading around 900 ATN sites over the next year or so.
TowerXchange: Australia is a relatively advanced 5G market, but one of the key challenges is going to be power. How is ATN looking at solving some of the energy requirement challenges that 5G is bringing with it and how does this fit into a wider energy strategy?
Cameron Evans, CEO, Australia Tower Network: At the moment, our portfolio doesn't always include responsibility for the power supply to the site, or at least the assets that provide that power, but I definitely think that has the potential to change.
As someone with a personal background in energy [Cameron spent four years running an energy business prior to joining ATN and is currently a Director at Australian Alliance for Energy Productivity] I certainly see great opportunity for us to be more creative with the way in which we provide power to sites – and that will help with 5G rollouts.
We've been exploring opportunities to supplement power drawn from the grid with renewable energy. We believe that we have an obligation to make sure that our sites are energy efficient and sustainable, and we want ATN to be an innovator and forward thinker across the industry in this regard.
As well as reducing our draw from the grid, we are also exploring whether we can use our assets to supplement the grid as well. But this is a future concern, right now our priorities are establishing the core operating model of the business.
Unfortunately, Australia has been struck by a number of natural disasters, and climate volatility persists. As a result, we are seeing more demand from MNOs for backup power solutions, and we think this is important as connectivity is an essential service that can help those affected contact emergency services and their families.
TowerXchange: you mentioned 40 of your 565 build to suit sites have already been constructed. Globally, we are seeing that raw material prices are rising and supply chains are being disrupted, which is slowing down BTS activity. What are you doing to minimise these effects?
Cameron Evans, CEO, Australia Tower Network: I think there's two issues that we're seeing. One is the rise in inflation and how that is affecting the cost of delivering of sites. The other is around supply chain disruption and the lack of capacity of the market to deliver the program in the time that we had anticipated.
With the cost issue, we absolutely recognise that there are inflationary pressures throughout the supply chain, and our approach here is to be open and transparent with our suppliers, and ensure that we keep the process for delivery efficient and that we aren’t putting a cost burden on our important suppliers.
We need to balance giving them direction, without standing in the way of their execution. The other focus area is cost-effective procurement. We are more aware of being able to procure in advance and reap the cost benefits that are associated with that – but again without putting too much pressure on our suppliers.
We need to align our schedules to avoid the delays caused by capacity constraints. We’d never be able to solve this by ourselves, so it’s so important we have deep relationships with these suppliers to work together.
TowerXchange: What’s next for ATN? We already know that you want to grow into a digital infrastructure provider, not just a towerco, but what does that look like? And do you have ambitions beyond Australia?
Cameron Evans, CEO, Australia Tower Network: Yes, we are certainly interested in creating a business that is focused on towers, but also focused on other areas of digital infrastructure as well. Right now, towers are the core of our business, and they are a key part of the digital infra landscape. But really the whole ethos of ATN is that as infrastructure specialists with a strong focus on our customers, we think that we're in a good position to be able to provide a wide range of services.
In the immediate future we want to continue building the business’ core operating model, really refine the Axicom integration and deliver on our BTS requirements. But in the future, there is a strong desire from our shareholders to maintain growth, and that may be further acquisitions domestically, or it might be international expansion. It could also include ATN making the jump into small cells, fibre, data centres, edge computing, DAS or IBS solutions and private networks.
Really the opportunities extend far and wide, but our immediate focus is creating a company that can enable us to capitalise later down the line, when the time is right.
