Russian Towers shifts its focus

Russian Towers Group of Companies is looking for new areas of business development. The strategy of the Group of Companies for 2015-2020 includes not only high-pace tower construction in the next few years, but also extension of the types of services that the company can render on the basis of the existing infrastructure. They include connection of towers to the backbone channel via a fibre optical cable, as well as working with Big Data. Other tower infrastructure market players are also trying to provide customers with additional services.

"The level of significance of each of the said areas is different; for us the current construction is one of the top priorities. But we also understand that this construction project will be completed in some years. And then, a service package offered by us on the basis of the infrastructure will be the key factor for further business development. We have already begun to get prepared for this moment," said Alexander Chub, President of Russian Towers GC, to journalists.

One of the strategic development areas is to connect towers to the backbone cable channel via a fibre optical cable. "In fact, by investing into a technically simple solution "the last mile" via optic fibre we provide operators with the opportunity to place their equipment on our towers and to get connected to a ready-for-service cable system," says Alexander Chub.

In 2015, the company implemented a pilot project for laying the "last mile" optic fibre in cooperation with MasterTel. "The results made us happy. Such connection makes it possible to increase the efficiency of each our facility by 25-30%. We expect that this year this area will generate a considerable part of revenues," says Arthur Akopyan, managing partner of UFG Private Equity (one of the shareholders of Russian Towers). According to him, this is an insignificant area of business right now, but it is growing very rapidly.

Apart from connection to optic-fibre lines, Russian Towers will offer storage batteries for lease (to provide uninterrupted power supply to equipment located on towers), antenna-feeder devices (AFD), as well as services of maintenance, planning and management of facilities and equipment.

Working with Big Data is another priority area of development of Russian Towers. "The company has a huge database in which statistical information is collected regarding land plots where a tower is located, its height, etc. In addition, there are devices located on our towers which make it possible to collect dynamic information; for example, there are several video cameras on each tower," says Alexander Chub. The company leaves open the possibility to install weather sensors on the towers, and other additional devices to collect different information from them.

"This is a scope of services which may be based on the big data analysis. Our objective is to arrange for correct processing, packaging and selling this data to those who need it," he clarified and specified that the company is gradually beginning to develop this area.

Link Development LLC, one of the major regional players in the tower infrastructure market, is also not limited by purely infrastructure business. "Historically we provide services of placement of video equipment for surveillance of forest fires, monitoring of territories of cottage settlements and horticultural partnerships. Sometimes we install lighting equipment on the towers," says Denis Skazov, Director for Commerce.

Apart from the Big4 the towers of Link Development are used by independent WiMAX and Wi-Fi providers, as well as fixed-line telecommunications providers. "In the constrained urban environment, places on the facilities are leased out to operators on the term of joint use of AFD, enclosure with a BackUp battery, which are also provided by our infrastructure company," he underlined.

It is a reminder that Link Development provides telecom operators with an opportunity to place their equipment on more than 300 towers in five regions of the North-Western Federal District. The company’s plans for 2016 are to continue the organic growth in the home region, as well as to enter the Moscow and Moscow region market.

Russian Towers does not rule out its development in geographical terms. "Business development in the CIS is part of our strategy. We have carried out a detail research of the markets of interest, including Kazakhstan, Kirghizia, Georgia, Armenia, Azerbaijan, Ukraine, Belarus and Mongolia. We understand what these markets look like and which opportunities for development are available there,” noted Arthur Akopyan. On 11 February the Board of Directors of Russian Towers will meet, where among other things business development in the CIS will be discussed. The company leaves open the possibility of construction and purchase of towers in the neighbouring states.

In Russia, Russian Towers continue to increase the size of the infrastructure. By the end of 2015, the company owned 1.7 thousand antenna mast structures. In 2016, it is planned to build yet another 1 thousand structures. Alexander Chub explains that the high-pace construction is due to the demand for 4G technology, which became most obvious in 2015 and continues to grow. The fourth generation communication standard requires placement of more base stations and, accordingly, more poles are required. He noted that in 2015 operators started to resort to the services of Russian Towers more often.

More than two years ago Russian Towers entered the urban environment where the mobile traffic consumption is at its highest, in particular in 3G and 4G networks. In December 2013, the company entered into an agreement with SUE Mossvet for lease of external lighting facilities in Moscow and put into operation over 500 dual-purpose poles within only six months of 2015. In January 2016, Russian Towers reported about the execution of a contract with MUPGC PJSC for the lease of power transmission towers for placement of base stations (BS) of mobile communication networks in Moscow and the Moscow region (ComNews release dated 19 January 2016). "There is a number of similar projects under development but it is too early to talk about them," mentioned Alexander Chub. By the end of 2016 the company plans to implement such partnership projects in 10 coverage regions.

Structures of Russian Towers are built in 50 regions in Russia where 85% of the country’s population reside. "Actually a “skeleton” of our presence in the country's territory has been built. Now we are going to build up mass by the means of such projects as with the Moscow United Power Grid Company. Our task is to extend the geographic reach in Russia and achieve domination in the country," says Alexander Chub.

According to Alexander Chub, Russian Towers is interested in the increase of the number of structures, including by way of acquisition of large portfolios of towers, whoever offers them for sale. "When we started our business we anticipated that a similar opportunity would be possible and therefore we are ready for this," said Peter Owen Edmunds, Chairman of the Board of Directors of Russian Towers GC. According to him, the company is experienced in maintaining towers; skilled personnel and technical facilities are also available. “Russian Towers has reached necessary agreements with banks and investors that will invest subject to this course of events," noted Arthur Akopyan. In addition, he noted that company may well attract new investors. The company still does not comment on the tender for sale of the tower infrastructure announced by VympelCom PJSC last year.

As regards the results of the company’s performance in 2015, the revenue of the Russian Towers GC increased more than twofold. The EBITDA grew 3.5 times (the company does not disclose any absolute figures). The total number of towers increased by 96%. The tenancy ratio indicator (the average number of lessees per one facility) amounted to 1.8. As estimated by ТМТ Consulting, the average indicator was equal to 1.25 in QIII 2015. Investments of Russian Towers in the infrastructure in 2015 made RUB 1.2 billion.

Link Development, a big regional infrastructure operator owns 300 towers, whereas in 2015 their number increased by 12%. "Last year the tenancy ratio factor hit a fresh all-time high for the company and reached 2.63," underlined Denis Skazov.

Original: http://www.comnews.ru/node/99688#ixzz3zmBAZvqp

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