To Sell or Not to Sell: Telecom Operators Differ on What to Do with Towers

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At the same time, the new owner of NBK, the Service-Telecom group, began actively promoting tower infrastructure on the market for new placements of cellular company equipment.

In the fall of 2021, PJSC VimpelCom (Beeline brand) sold 100% of the shares of JSC National Tower Company (NBK) to the Service-Telecom group of companies for 70.65 billion rubles. At colombia whatsapp number database the same time, Beeline, apparently, began to pay NBK more than before for the placement of telecom equipment on its towers. This is evidenced by NBK's revenue, which in 2022 almost doubled compared to 2021 - to 9.1 billion rubles against 5.6 billion rubles. Based on the financial statements published on the Federal Tax Service website, from 2018 to 2021, NBK's revenue changed insignificantly (from 5.2 billion rubles to 5.6 billion rubles).

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After a series of deals in 2021-2022 on the sale of antenna mast structures (towers), the situation on the market has not changed globally: MegaFon and VimpelCom (Beeline) sold the tower business to independent companies, and MTS and T2 Mobile (Tele2) kept the towers. The general trend identified by market players is the joint use of towers by operators.

Alexander Torbakhov noted that Beeline only benefited from the sale of NBK. "We are very pleased with the result of the deal, which allowed us to monetize the asset with an EV/Ebitda multiplier exceeding x11 (while the telecom multiplier does not exceed x4), and invest the released funds in the development of the core business," he said.

Alexander Torbakhov also spoke about the reasons for selling NBK: "The fierce competition between operators often resulted in absurdity, when in the same location each spent huge amounts of money on building its own tower, instead of cooperating and being located together on one. As a result, a forest of several towers appeared in almost every potato field. VimpelCom, like other operators, saw this inefficiency and realized that in fact it could be turned into an opportunity. We decided to allocate and later sell the tower infrastructure to an independent tower operator, forming a market and allowing it to sort out this inefficiency itself. Now operators pay for each placement at market prices and are more responsible in their investment in infrastructure."

In addition to Beeline, PJSC MegaFon sold its tower business in 2022 out of the "big four" telecom operators. Konstantin Ankilov, CEO of the consulting agency TMT Consulting, called the sale of the tower business an established trend: "The sale of tower infrastructure is an international trend. Operators earn money on the deal and then free up organizational resources, focusing on the main tasks: maintaining the operation of the telecommunications network and providing services."

Leading analyst of Mobile Research Group Eldar Murtazin supports the trend of operators selling tower business: "Today tower assets are of no interest to operators, because they are additional expenses. The trend of selling tower business has passed. Almost all operators have sold assets. And today we have a division of labor: some companies are engaged in antenna-mast structures, and operators service the equipment. This is the right division, because when you keep a huge infrastructure for this inside yourself, overhead costs are very high. It is easier to save, and almost all companies do this."

However, PJSC Mobile TeleSystems (MTS) and LLC T2 Mobile (Tele2) still own the antenna mast infrastructure.

"In order to increase efficiency, we have combined tower assets with Rostelecom into a single portfolio and are considering various options for managing it. Our tower company Pilar offers for rent places on technological sites with antenna-mast structures up to 250 m high. Its portfolio exceeds 18 thousand objects in the territory of the Russian Federation. In our opinion, operators should move towards infrastructure sharing, which will optimize costs and maintain affordable prices for subscribers," a representative of the Tele2 press service told a ComNews correspondent.

A representative of the MTS press service reported that the company is negotiating with potential investors: "In 2021, MTS allocated more than 23 thousand antenna mast structures to its 100% subsidiary BIK LLC in order to improve the management of the tower infrastructure and make it interesting for investment. We continue to own this company, while considering various scenarios, seeing interest in the asset and communicating with potential investors."