Telenor has announced the carve out of its Nordic tower assets into Telenor Tower Holding and appointed Kaaren Hilsen, CEO of Telenor Sweden as CEO of the new business unit. With just under 30,000 towers set to be managed by the entity, Telenor Tower Holding catapults itself into the major league of European towercos, and joins a growing number of operator-owned towerco businesses in the continent. TowerXchange takes a closer look at the towerco, the Nordic tower markets and the changing shape of the European tower landscape.
How many towers will Telenor Tower Holding own?
Telenor currently owns 29,800 towers across their Nordic footprint. Things are complicated slightly by the fact that some of these towers are owned by joint ventures that Telenor has with other operators, plus broadcast assets and fixed sites are also included in this total count (with some telecom clients on broadcast sites and vice versa).
Norway represents Telenor Tower’s largest tower portfolio, with their towerco, Telenor Infra having 15,000 towers of which c. 10,000 are understood to be telecom sites. With no joint ventures in the Norwegian market, the towers are solely owned by Telenor.
Sweden is the most complex of Telenor’s markets when it comes to tower ownership. In addition to owning their own sites, Telenor is also involved in two active sharing joint ventures which also own towers. The total sites that Telenor Tower Sweden (Telenor Tower Holdings’ Swedish opco) owns in Sweden, inclusive of a 100% of the joint ventures, is 8,000. 3GIS, Telenor’s joint venture with Hi3G governing 3G only is set to be wound down as the technology is sunsetted ahead the 2025 3G license expiry date. As part of Cellnex’ deal with Hutchison, Cellnex also stakes a claim to 3GIS towers (Hi3G being Hutchison’s opco in the country) and as such, any winding down of 3GIS is expected to have at least one other suitor. Telenor’s other JV in the country is Net4Mobility. Net4Mobility is a JV with Tele2 that governs both 2G and 4G and is thought to have around 5,000 sites.
In Denmark, Telenor’s towers are all currently held by TT-Network, the active sharing joint venture with Telia governing 2G, 3G and 4G which has also recently been extended to include 5G. TT-Network has 3,100 towers, of which 1,200 are ground based towers and the balance rooftops and other typologies.
In Finland, Telenor currently owns 3,000 sites. Whilst Telenor’s opco in the country, DNA, is involved in a joint venture with Telia, the joint venture doesn’t own any sites and as such the portfolio of 3,000 towers is directly owned by Telenor.
Figure 1: Telenor Tower Holdings total site portfolio*
The tower sharing and towerco landscape in the Nordics
The Nordic telecom markets are characterised by some of the highest levels of infrastructure sharing globally. Extensive passive and active infrastructure sharing is in place between operators, and sharing of towers is mandated by the regulator “ if someone wants to access your tower, you must let them. This means that the tenancy ratio is high on most of Telenor’s sites, with not only their joint venture partners using the assets but also other operators and parties in the four markets having equipment on Telenor’s towers.
On top of infrastructure sharing being mandated by the regulator, lease rates in the four countries are also set by the four regulators. In other European markets it has been left up to the operators and towercos to negotiate and set lease rates and so the dynamics in the Nordics differ somewhat.
Until recently, the towerco landscape in the Nordics was characterised by a prevalence of active sharing joint ventures between operators. In the past 12 months we have seen things shift. In Denmark and Sweden, we have seen the region’s first sale and leaseback transactions and the entrance of an independent towerco, with Cellnex acquiring Hutchison’s towers in the two markets. Telia has announced plans to separate out its towers across Sweden, Norway and Finland, and has commenced proceedings to find a buyer for the tower portfolios in the latter two countries (initially preferring to retain a majority stake but open to all options). Active sharing will remain an important element of the Nordic markets but joint venture infracos will be joined by MNO-owned towercos and independent players.
Figure 2a: Tower ownership - Norway
Figure 2b: Tower ownership “ Sweden
Figure 2c: Tower ownership “ Denmark
Figure 2d: Tower ownership - Finland
What are the plans for Telenor Tower Holding? Could monetisation be on the cards?
For now, the focus for Telenor is on optimising and demonstrating the value their tower assets. Through the creation of a separate business unit, Telenor can put a laser beam focus on the assets, driving up the tenancy ratio and improving margins through enhancing operational efficiency. Treating the tower unit as a separate business line
Monetisation has not been spoken about publicly by the operator but it will most certainly be under discussion across the boardroom table. Telenor has spoken of their tower assets being “strategic” which implies that perhaps the company will prefer to retain majority control and potential sell or list a minority stake. This follows more closely the strategy of Vodafone than of Hutchison, for example “ but as was shown in the case of Telefonica and Telxius’ recent acquisition by American Tower “ the formation of an operator-owned towerco may not be the end game.
One can also expect that a tie up with another Nordic operator could be another option under consideration. Vodafone and TIM have pooled their tower portfolios in Italy, with the portfolios now owned and managed through the recently enlarged INWIT; Orange has hinted an appetite to form joint venture towercos with operators such as Vodafone and Deutsche Telekom. With a history of joint ventures in the Nordics, the formation of commercial JVs represents a very likely scenario.
Could the operator’s Asian assets be included in Telenor Tower Holdings?
In addition to operating in four markets in the Nordics, Telenor has a presence in five markets in Asia where the company owns a further c. 40,000 towers. Whilst the company has explored options for its towers in the region, the dynamics in each of the markets varies significantly with complex regulations and tax challenges, as well as (in some markets) a greater prevalence of towercos operating. What’s more, merger plans in Malaysia, as well as political challenges in Myanmar make it far from an ideal time to bring the Asian tower portfolios into towerco plans in the comparably less complex Nordic region.
For now, the Asian assets are excluded from Telenor Tower Holdings but that may not be a permanent decision.
Figure 3: Telenor’s Asian tower portfolio
