In France, we work with more than 16,000 landlords, whether they are individuals or companies. For example, we have just signed with a real estate company in Paris which owns around forty buildings in the capital and which provides us with square metres on their roof terrace for our infrastructures.
What is the link between Landlords and TowerCos?
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Historically, operators were responsible for their network infrastructures and the many pylons that we find in the European landscape. Now managed by independent companies, called TowerCos, it is sometimes difficult for landlords and local authorities to understand with whom they can discuss new opportunities in this market undergoing major restructuring. This is why we met Olivier Ract-Madoux (O. R.), Marketing and Sales Director at TOTEM France. He agreed to answer in an educational way to the many questions landlords ask themselves, so that they can better understand the world of connectivity and the links they can maintain with it…
For an owner or a landlord, what is the difference between a mobile/telecom operator and a TowerCo?
“Today it is easy to get tangled up between the definitions of operators and TowerCos.” O. R.
A TowerCo is a company that builds, maintains and rents infrastructure to its customers, so that they can host their own communication equipment. The infrastructure can consist of pylons or roof terraces, for example.
“If I own an area (a piece of land) or a building (with a rooftop) and I want to make these spaces more profitable by setting up telecommunication infrastructure there, it is to a TowerCo that I should reach today.” O. R.
And the importance of its responsibility towards the local actors who house their infrastructures?
“To simplify, it’s almost real estate. It is like the owner/landlord logic. For example, if you are a tenant in a building, you have a relationship with your landlords. As Towerco it’s the same thing, we rent to an owner a plot on his land or his roof terrace, for an annual rent, to install our infrastructures there, which will be rented, in turn, to operators or actors in need of connectivity.” O. R.
Which local and economical actors are affected by TowerCos?
We can distinguish four main categories of actors:
- Individuals who own land, such as a farmer who makes a part of his field available.
- Local authorities or social organisations such as HLM (social housing) offices which have assets in certain towns.
- Major landlords who have significant real estate assets.
- Operating companies such as for the metro (underground train) or a stadium.
Are TowerCos a yield opportunity?
The very nature of the TowerCos business is to find new spaces available for rent. They are therefore constantly looking for candidates to expand their infrastructure portfolio and improve network coverage on a European scale.
“Yes clearly, TowerCos are additional return opportunities for owners and landlords since it will generate income for them.” O. R.
To what extent is it profitable?
“Is it profitable or very profitable? It’s always a matter of supply and demand. It all depends on the rarity of those locations. Obviously, we will pay more for sites where it is very difficult to obtain authorizations and strategic points in terms of network coverage. However, in an area where we have lots of candidates, the income generated will logically be less important.” O. R.
Hosting infrastructures is certainly a profitable activity, but beware, the amounts are not staggering either. Far from millions, the income is between a thousand and a few tens of thousands of euros per year.
“The TowerCos pay rent to landlords and in return receive income from the rental of the installed infrastructure. Our whole job is to ensure profitability with these two major components, expenses and income. We must therefore be realistic about the conditions of this market.” O. R.
Can an owner or landlord approach a TowerCo to offer his land or a roof?
“Now the question is: am I a good candidate or not? There are two scenarios, either we knock on your door, because you have an ideal location, or you come knock on ours and we assess the strategic interest of your locations.” O. R.
Every day landlords spontaneously call TowerCos to offer them locations. Some already have equipment and ask them to offer other plots. For their part, the TowerCos will also prospect and seek new locations.
“For example, we have a city with a landlord who gives us extremely favourable conditions, so we are looking for other buildings on which we will be able to install our infrastructure and therefore welcome new customers. It works both ways, we are solicited, and we solicit.” O. R.
What are the conditions of a collaboration between owner or landlords and TowerCos?
The core business of a TowerCo is hosting telecom operators such as Orange, Bouygues and Free. The main criterion for them is first of all the state of their network coverage at the local level. Then, logically, the presence and proximity of infrastructures in a given territory.
“Because it makes no sense to plant a pylon if there is already one in the plot next door. So we first look for scarcity and need. The meeting between supply and demand.” O. R.
If there is already an existing site nearby, the second question a TowerCo asks itself before initiating a procedure with an owner or landlord is about its sustainability.
“In an area of strong development, operators will need to add 4G and 5G antennas. It is not uncommon for us to have 2 points of presence in the same municipality and this allows better coverage for the benefit of operators.” O. R.
What are the responsibilities of a landlord or owner regarding the infrastructure?
The main responsibility is to allow access to the infrastructures so that an intervention is possible at any time. These interventions and these accesses concern both the agents responsible for the maintenance of a TowerCo and the customers and personnel in charge of their telecommunications equipment.
“We also host the communication equipment of the police and firefighters on our infrastructures, which have critical needs. This is why we must also be notified in the event of material damage on site so that we can intervene expeditiously.” O. R.
What are the challenges of TowerCo infrastructures?
“A first concern is that of aesthetics, which worries some of our customers. I take the liberty of specifying that these infrastructures can be integrated from a landscape point of view. To the point where you could not suspect that behind certain chimneys, an operator antenna is hiding.” O. R.
With the deployment of 5G, the investment needs of operators are stronger than ever. The TowerCos help them to meet the connectivity needs of their customers.
