The telecommunications market of the 5.5 million-citizen country, recognised as the happiest country in the world, is undergoing a strong change. Finland and the wider European continent has been affected by several different factors in the past few years, including the energy crisis of 2022, inflation and supply chain issues in the short term, the new kinds of services that 5G brings, and the challenges related to them that the infrastructure must meet in the longer term.
New technology and increased data traffic have accelerated the construction of digital infrastructure and this growth trend is expected to continue in the future.
Telecommunication infrastructure is seen as an essential part of Finland's current and future competitiveness and supported through a combination of reforms and investments under the Recovery and Resilience Plan which focuses on fostering the country’s digital transition.
Finland’s MNOs
Finland is one of the most sparsely populated countries in Europe. 68% of the country's area is sparsely populated countryside where only about 5% of the population lives. The country’s telecoms market has historically been very competitive and is highly concentrated.
It’s dominated by three MNOs - DNA, Elisa and Telia, having a combined market share of 99.2% and new entrants “breaking into” the current market are very unlikely. The MNOs are granted licenses on the condition that they provide basic network coverage to 99% of the population of Mainland Finland as well as all highways, trunk roads, regional roads and connecting roads, which poses special challenges for the operation of the network and the infrastructure related to it.
According to the EU’s Digital Economy and Society Index (DESI), 4G coverage extends to 99% of Finland's population and about 92% geographically.
Elisa is the MNO with the highest market share, sitting at around 39% in terms of mobile subscriptions. Elisa claims it now offers 5G in a total of 197 locations across Finland, with more than 80% of Finns within its network footprint.
Elisa launched the first 5G network in Europe in June 2018, according to the 5G Observatory, and all players have launched 5G since then.
Earlier this year, Elisa received €3.9 million in government funding to roll out its Distributed Energy Storage (DES) solution across its network. The system optimises the timing of electricity purchases to coincide with times when renewable energy is available, ensuring that the mobile network runs on green energy as much as possible and reduces procurement costs. The funding is part of Finland’s Recovery and Resilience Plan, which also promotes the use of renewable energy.
Elisa has also focused on expanding its fibre-to-the-home (FTTH) network and has signed a €32 million contract with Finnish Eltel for the construction and maintenance of mobile and fixed-network services.
Telia Finland is the second MNO in the market with approximately a 31 % share of mobile subscriptions but it has seen its share decline from 34% in the past two years in favour of DNA’s.
In end-2022, Telia Finland which has a JV with local investor CapMan Infra called Valokuitunen, signed a €200 million FTTH contract with local supplier for services for electricity and telecommunications networks Eltel which sees construction of FTTH infrastructure over a three-year period.
Telia has collaborated with Nokia on 5G commercial projects in the manufacturing industry.
DNA, which is wholly owned by Telenor, is the country’s third mobile operator with approximately 30% market share based on subscribers and says it has about 3.6 million subscriptions in fixed and mobile networks.
Telenor acquired a majority stake of 54% in the MNO in April 2019 for €1.9 billion and later in the year increased its share to 94.3%.
DNA and Telia have a network sharing JV called Suomen Yhteisverkko which was launched in 2015 and has now expanded to cover 62.5% of the land area of the country or 28.5% of the population.
Finland’s towercos
The tower market in the country is evolving. Less than five years ago most of the digital infrastructure was managed by the three MNOs and one towerco, Digita.
Unlike joint infrastructure sharing, there is no practise for joint construction of towers in the country.
According to the Finnish Transport and Communications Agency Traficom 90% of towers in the country are owned by telecom operators and construction of towers is undertaken by towercos and MNOs. The increase in the amount of data traffic, the higher frequency ranges of new technologies, and the emphasized role of telecommunication connections has accelerated the construction of towers in Finland.
Digita is Finland’s “oldest” and biggest towerco. It also owns and operates digital terrestrial television and radio broadcasting tower infrastructure network in Finland. Founded in 1999 as a spin-off from national broadcaster Yle, it was acquired by DigitalBridge in 2019 alongside 556 towers for an undisclosed amount.
In addition to owning and managing towers, Digita also rents space from other tower owners. About five years ago, Digita started actively building masts specifically to the needs of MNOs. Digita has also grown inorganically by buying sites from other local companies.
At present, Digita is estimated to own 700 towers and 3,000 rooftop sites.
Telia Towers Finland, the country's second towerco was carved out just after Sweden headquartered Telia announced it was exploring the potential monetisation of its tower portfolio back in their Q4 2020 results.
Telia's ground-based tower portfolios in Norway, Finland and Sweden were carved out into separate towerco entities and moved under a new business unit, Telia Asset Management, which was tasked with bringing in external investment. Telia sold a 49% stake in Telia Towers Finland and Telia Towers Norway to Brookfield and Swedish pension fund Alecta for €722 million in 2021.
Telia Towers Finland manages only macro towers with single tenanted rooftop sites and stakes in joint ventures remaining outside of the towerco's perimeter. It builds towers for its owner and it also rents antennas and equipment slots from the masts it owns to smaller operators like local ICT companies as well as the MNOs.
DNA Tower, the youngest towerco in Finland, was formed in 2022 and is wholly owned by DNA. It rents equipment and space on its sites to smaller local operators and its parent company. It plans to build new infrastructure primarily for the needs of the parent company, and to improve efficiency and become a profitable business separate from its parent company. DNA Tower manages both macro and rooftop sites.
There are approximately 24,000 sites in Finland split between macro towers and on rooftops or real estate. The total number of towers estimated in Finland is around 9,500-10,000. According to data in the aircraft obstacle register, in December 2022, there were 8,694 macro towers over 30 meters high. These are recorded in the flight obstruction register maintained by Fintraffic. Another 752 towers are 30 meters high, and the register does not take into account towers that are less than 30 meters in height as they are not subject to a license according to the Aviation Act. Such towers are estimated to be around 500-1,000.
A small number of local ICT companies of various sizes such as local telephone companies and cooperatives part of the Finnet association also build and operate towers which they lease to MNOs and smaller market players. Local telephone companies may have a strong position in the region they’re based and benefit from better opportunities for new tower builds than national operators. As their revenues have increased, they have worked towards expanding their tower business into national level.
What’s next for the Finnish towercos
The spin-off of the two younger towercos from their parent MNOs has been a natural evolution. The Finnish market sees great cooperation between the MNOs using the equipment and competitors like IP TV and ISPs using the same equipment, which is enacted into law.
In Finland, joint use of towers and mast support stations has been a normal operating procedure for a long time. However, the rate of shared use has improved, thanks to the towercos and enhanced maximisation of space. Costs related to the construction and use of towers and base stations have not been fully transferred to shared use pricing with the latter not keeping up with inflation. Shared use costs are expected to increase, which improve the operators' profitability and ensure increased investment financing needs
