TOTEM CEO Nicolas Roy on investing in the future of TowerCos

Orange has been a long-standing holdout against the trend of telcos selling their towers to raise cash, which in Europe has seen BT, Deutsche Telekom, Telecom Italia, Telefónica and Vodafone divesting their tower assets to a greater or lesser degree.

Instead, the French operator is banking on independently managed, passive, physical tower infrastructure as an essential asset amid an industry-wide rethink of network architectures and services.

In particular, Orange sees its towers as an opportunity to develop a neutral host and infrastructure-sharing business. To this end in November 2021 it launched an independent TowerCo, TOTEM, in France and Spain.

Now, TOTEM is investing in strengthening its network coverage and performance, enhancing customer service, and improving operational efficiencies, the company’s CEO, Nicolas Roy, tells Inform.

A changing competitive landscape

When TOTEM launched, the European tower market was already in full transition: Independent TowerCos increased their share of the European neutral host and wireless network infrastructure market from 13% in 2014 to 39% in 2023, according to EY Parthenon. The consultancy expects this figure to rise to 54%, in line with current global averages, although the US stands apart with independent tower companies controlling 90% of the market.

TOTEM competes in its principal markets of France and Spain with TowerCos that have helped drive change across Europe, including ATC, Cellnex and Phoenix Tower International.

Network expertise and the ability to provide coverage represent a competitive advantage for TowerCos, whether they are building and operating shared distributed antenna systems (DAS), enabling radio access network (RAN) infrastructure sharing, or hosting mobile private networks or IoT networks. TOTEM is no exception.

“We have to make sure that the signals of our customers will cover very deeply the whole territory,” says Roy.

In France TOTEM owns and manages nearly 20,000 sites, of which 59% are ground-based towers, 29% are on rooftops and 12% are in other locations. TOTEM in Spain meanwhile has nearly 7,300 macro-sites, equally divided between ground-based towers and rooftop towers.

TOTEM’s revenue growth and profitability depend on attracting tenants, and the company is aiming to “grow tenancy on its sites by 1.5 by 2026” in France and Spain, according to Roy.

Digital twins

When it comes to improving operational efficiency, customer service and network performance, TOTEM is undertaking a digitization and process automation program, which will include the adoption of digital twin technology.

TOTEM plans to use digital imaging of sites to help anticipate operations and maintenance demands and increase remote decision-making, thereby reducing the number of field-staff visits to sites, which in turn contributes to a lowering of the company's carbon footprint.

“We’ll be looking at partnering to see how we can go one step deeper in really building images of sites to reduce the number of times we visit the site,” says Roy.

It is part of a broader program to automate and digitalize TOTEM’s way of working, using a single platform.

“There will be a further step, which is to build a platform to mesh with all the people on our sites,” explains Roy. “Whether it is to maintain sites or to add equipment, they can … have a single platform [where they can find] knowledge of base stations [within the context] of the surrounding cities and countryside ... and anticipate what needs to be done, using technology to make more efficient use of their time and to reduce errors.”

TOTEM also wants to use its investment in digitization to “go one step further to see how we can optimize our sites to improve the coverage of our customers.”

The objective, says Roy, is to “create a very nice image not only for sites … but for the whole territory. “

Further down the line TOTEM would like end-customers to be able to combine their data with the platform to gain in-depth insight into the quality of network performance and coverage, explains Roy.

“Deep knowledge of any specific situation [will allow sites] to be very efficient, adapting to specific use cases and to customer demands, and extending the reach of networks,” he says.

Small cell growth

In the meantime, TOTEM is adapting to evolving requirements from MNOs, including their growing appetite to use small cells. Roy believes this trend will “help the entire telco ecosystem to go faster and deeper, covering the entire territory.”

Indeed, TOTEM expects the number of small cells in large Spanish cities to grow by more than 35% per annum until 2030, as part of a drive to boost connectivity and foster the development of smart cities.

“We are seeing that MNOs are willing to deploy different type of cells – small cells or even microsites – and this approach to densification is changing our way of working,” says Roy.

These changes include identifying and securing rights of use for diverse sites. “In the city you're looking for street furniture … and sites where it will be easy to deploy,” explains Roy.

Going green underground

Other recent major contracts for TOTEM include building and operating a multiband DAS on a new metro line in Paris providing 4G and 5G as a neutral host to France’s four mobile operators, including Orange.

The project requires TOTEM to meet telcos’ technical and service demands, while navigating the complexity of coordinating its build with other stakeholders’ construction deadlines and network needs. The project also entails adhering to sustainability targets, which Roy believes should be an integral aspect of a TowerCo’s business.

“What’s nice from a financial point of view is that [the TowerCo business] is really stable; your sites are there for decades,” says Roy. “But at the end, what you create is not only the sites to ensure steady financial flows for investors. There is a direct impact on ESG – the visual and the environmental impact and energy efficiency.”

Success, he adds, depends on “being able to master multiple requirements.”