Two days of the biggest telecom tower infrastructure conference in Europe saw 420 attendees from across the continent discuss towerco diversification, policy, asset digitisation, investments, carbon footprint reduction and much more.
As big and small telecom infrastructure managers are looking for new avenues of business growth, a common theme shared by four of the multi-country towercos present was a focus on digitisation and simplification to futureproof their businesses.
Christian Hillabrant, CEO Vantage Towers
Vantage Towers’ new CEO, who comes from an infrastructure background in the US, made a comparison between US and European infra providers.
The US has achieved roughly 95% population coverage from 5G, whereas Europe is lagging behind at 75%, despite having more towers.
A cost-design philosophy shared by both the American operators and towercos is focused on building towers in locations where they can easily be shared as a way of stretching their capital across their businesses.
This has resulted in a higher tenancy ratio, roughly 2.3 per tower in the US versus 1.4 in Europe. As a result, towercos have been able to re-invest that capital to provide greater 5G coverage. This has also allowed them to get a head start in terms of developing new technologies as they consider growing beyond 95% coverage.
US towercos, Hillabrant says, have already moved on from the pure macro tower business and are focusing on adjacent solutions such as in-building deployments and small cells.
In many of the major US metropolitan areas, such as New York, Chicago, San Francisco and Los Angeles, small cell density is very high.
So where will the European towerco sector be in ten years’?
“The past is a prologue” Hillabrant says. ”Look to the US and that is what I think we can expect more of here in Europe across the towerco landscape.”
First, Vantage Towers specifically will focus on delivering on the organic growth and turning a backlog of tower build for its anchor tenant Vodafone into future revenue.
Second, it will also be exploring the adjacent infrastructure its US peers are already familiar with to prepare for future demand. ”We are running small cell trials in a project in Spain and we believe this is a future source of growth,” Hillabrant said. Third, it will work on business transformation and efficiency. Due to higher interest rates, Vantage Towers has had to adapt and look at standardisation.
And finally, the towerco sees energy management as a big opportunity in Europe.
Energy prices have spiked over the last 12 months, so Vantage Towers are focusing on co-investing with customers on upgrading power equipment to their most efficient, modern configurations in an effort to reduce their carbon footprint and that of their customers.
“Vantage Towers is working to adapt and to retain our leadership in that field and for us that’s what we’re focusing on for the next 12 months and beyond.”
While executing on organic growth in the next 12 months, Vantage Towers will be working to diversify its revenue base as it can’t just be a one-tenant towerco. Alongside this, business process optmisation across its eight operating markets will enable it to industrialise.
Dagan Kasavana, CEO, Phoenix Tower International (PTI)
At a time when other towercos have been retrenching, there has been one who has been growing across a few markets.
According to Kasavana, there have a been a few factors contributing to PTI’s growth.
The main one is the core business plan of PTI which focuses on international growth and expansion.
When Dagan started the company, he and the team focused on building an organisational structure that was focused to being able to grow internationally from its US headquarters and build the most efficient business they could.
However, a business plan is only as good as the investors who are behind it.
Kasavana said PTI investors led by Blackstone Group have been behind them since the first tower transaction.
During the last couple of years PTI has also re-financed its debt facility, the Americas one being a $USD 2bn facility in the US led by Scotia Bank.
In Europe last year PTI closed its European facility, a EUR1.2 bn arrangement led by Deutsche Bank.
Being able to lock in long-term tenure, and lock-in interest rates has been very helpful.
These financing facilities have also given PTI the ability to have dedicated financing for all of the opportunities it sees across the Western hemisphere.
“Of course, having the best investors in the world, you still have to perform and produce results,” Kasavana said, proudly sharing the company achieved 12% organic growth last year and stressed the importance on being focused on lease up and driving the organic growth.
PTI entered Germany at the end of 2023 with the mindset that “we don’t have to be the biggest tower company to deliver returns, we do not have to be the biggest tower company to be the best tower company and we always strive to be the best tower company we can.”
Kasavana shared PTI felt covering white spots across rural locations with the expertise that Novec (a small German towerco who PTI acquired in end-2023) brought to the table, became part of a business plan to own and build 1,000 towers in Germany in the future.
Today a large proportion of PTI’s business is macro tower solutions. Small cells and fibre, what PTI calls next generation solutions, are more prevalent in the US today, but that doesn't mean they won’t be prevalent in Europe over the next 10 years.
Kasavana thinks this will continue to evolve and is confident the company has a European team ready to meet that need when it evolves.
In France, PTI has just over 4,000 sites, the majority of which house 5G equipment, helping its customers meet their needs ahead of the Olympics.
PTI have a JV with Bouygues Telecom that is closing white spots as part of a new deal for mobile coverage across France.
Marco Patuano, CEO, Cellnex
The new CEO of Europe’s largest towerco shared it has been an interesting challenge to lead the company.
Management has had to move from the first chapter of Cellnex’s history, which has been significant inorganic growth.
Now, the second chapter is to focus on how to transform a financial project into a strong industrial chapter.
This part of the story is less M&A-orientated and required Cellnex to think less like a real estate firm, even though this remains a significant part of its business.
Instead, there will be more engineering, more processes, more focus on the industrial component, and simplification because efficiency comes hand in hand with simplification. Patuano said that when Cellnex have to go in the direction of diversification, it will not make it too complicated and will stay focused.
Cellnex is assessing its portfolio and it’s possible that it’s not at scale today but can go at scale at some time from now.
In addition to macro business diversification, Cellnex will aim to transform to a landco.
Owning the land under the towers is strategically important; it enables towercos to protect themselves against land aggregators.
Referring to the percentage of land owned by towercos in the US, which stands between 40% and 70%, he stressed that this brings efficiency.
Cellnex is already the towerco that owns the most land in Europe, but even this ownership is below 15%. This puts the company and its European counterparts in less favourable positions compared to the other side of the Atlantic.
Patuano reiterated Cellnex’s commitment to 100% green energy by 2025, which has been challenging as clients have been onboard with higher costs.
In addition, he stressed the company’s efforts to improve gender diversity and move away from ‘boys’club’ structures.
Similarly to other telecom infrastructure managers in France, Cellnex is working on various connectivity projects in the country including the Paris underground, DAS and small cells, as well as cooperating with the French state to support security during the upcoming Olympic games.
Nicolas Roy, CEO, TOTEM Group
TOTEM’s CEO Nicolas Roy shared it has had a busy 12 months, deploying 150 sites in France as well as hosting new tenants both in Spain and France.
The towerco has supported deployment of 5G and has worked with IoT and wholesale market players, which has included connectivity projects for big venues such as a stadium in Marseille andMetro Line 15 in Paris.
In Spain, the company has started a new chapter with its anchor customer Orange merging with MasMovil. TOTEM are optimistic this is a promising business opportunity allowing it to serve the biggest customer base and network in Spain.
A major priority for TOTEM is to industrialise. In addition to industrialisation, digitisation is what TOTEM will also continue to pursue.
According to Roy, the first step is to better understand TOTEM’s inventory and sites and what the capacity of each site is.
The second step, for which they’re partnering with several start-ups, is to build digital twins of towers, and to be in a position to anticipate future developments.
This will help to avoid as many visits to sites and improve lead times for new tenancies and maintenance.
The third step is to build a platform and to be in a position to host all stakeholders working on TOTEM’s sites, whether it is to maintain, to equip, or upgrade.
Roy says this will be truly a business transformation as the company will have a full picture of its towers and its customers will be in a position to anticipate changes to its sites.
Roy was optimistic as to the opportunities that combining site digitisation with AI and all the data that a towerco will accumulate would unlock.
Finally, Roy emphasised that TOTEM is three years-old and a native ESG company. All of the moves it is making are done through an ESG filter, he said.
In Spain, where TOTEM provides energy, it is 100% green energy.
The company also has a partnership to recycle all of its equipment which has led TOTEM saving 300 tonnes of carbon on an annual basis.
Going further, TOTEM believes that each site is an ESG story in itself. Where it integrates a site in its surrounding environment, where it has any potential visual impact or environmental impact is a story that TOTEM needs to develop locally to receive acceptance from all the stakeholders and ensure that in the end TOTEM has a story that is shared and this is the dimension TOTEM will be going for.
