Fear of Missing Out, or Why TowerCos Simply Can’t Afford Business as Usual

Fear of Missing Out, or Why TowerCos Simply Can’t Afford Business as Usual

15 Feb 2023 Written by Sharon

We get it. Change is hard. When it comes to digitizing your TowerCo business, however, it is becoming much more difficult to stay with traditional systems than it is to introduce digitization and new technologies. While current systems may seem to be running along smoothly, the competitive landscape around the TowerCo business is changing rapidly. TowerCos remaining complacent in old business models risk finding themselves suddenly behind the curve as they miss new opportunities, customers demand new services, and profit margins drop. Digitization is one place where the Fear of Missing Out (FOMO) on future developments should be front of mind.

The TowerCo Business is Changing: New Challenges, New Opportunities
The TowerCo business is relatively new – but it’s already undergoing major changes due to market pressures and new developments in technology.

  • Rapid consolidation and M&A activity in the TowerCo industry means the number of available targets has decreased
  • 5G and Internet of Things represent new market challenges and opportunities
  • TowerCo customers face new and increasing pressures

In the last few years, many TowerCos have been able to extract significant value through deals. The rapid acquisition and consolidation that has improved profit margins and outlook for many companies may have run its course in many regions, however, as the number of available targets gets smaller – and it’s a change that can be anticipated globally as M&A activity continues in regions around the world. This shift means that TowerCos will have to extract value from their core operations in other areas: including digitization.

Technology Changes: 5G, IoT, and New Developments
The TowerCo industry has been heavily focused on the 5G rollout, which has meant greater demand, new developments and a landscape of new opportunities. As TowerCos works to increase capacity and benefit from the 5G rollout, however, their customers are facing increased pressures including substantial capital expenditures, licensing fees and development costs. These increased cost pressures mean that MNOs are looking for new ways to develop future value: and TowerCos will need to be ready to partner with them.

5G is a game changer for consumers and businesses, and it enables tremendous change. IoT, connected vehicles, smart cities, remote work of every description and more use cases are currently developing. Some of these use cases, however, may rely upon more flexible and adaptive networks, including innovations like network slicing and edge computing. These technologies are already on the horizon, but many TowerCos aren’t prepared to take advantage of them and haven’t yet considered a workable business model.

New Pressures on TowerCo Customers: the Changing Landscape for MNOs
While passive assets are bread and butter, the management of active assets may also offer new opportunities for TowerCos. 2022 research by Boston Consulting Group (BCG) indicates that MNOs are facing increasing pressures that may lead them to divest active assets and look for new business models. This change is happening fast: as MNO community looks for new revenue streams, BCG points out, they are acting with a sense of urgency.

“…MNOs are finding it increasingly difficult to differentiate their products and services based on infrastructure and connectivity alone; these are now regarded as table stakes in most markets,” says the BCG article. “For the most part, their focus is now on creating a more consumer-centric, service-based value proposition to compete better and counter the decline in average revenue per user rather than trying to create a differentiated value proposition largely based on infrastructure assets.”

Managing active assets is more complex: but for companies nimble and ready to move, says BCG: “TowerCos are uniquely positioned to unlock industrial value from the active assets (e.g., synergies with passive assets, operational efficiencies), while the network experience is managed by the MNO. Indeed, many TowerCos and infrastructure funds that own them are seeking such deals.”

Future-Proofing the TowerCo Business Through Digitization
New challenges and opportunities are inevitable. Digitization provides a means of future-proofing your business to be ready for whatever comes. (see our recent blog post on the Benefits of Digital Transformation.) TowerCos who have invested in digitization and in creating a digital portfolio of assets:

  • Offer better customer relationships and service
  • Are ready to act at speed to develop new sites and new business models
  • Have access to the portfolio level insights required to make strategic decisions

The benefits of digitization aren’t only in the future: TowerCos are optimizing workflows and solving immediate problems with digital twin software platforms. Streamlined inspections and maintenance, new site developments, M&A surveys, accurate billing, overload calculations, improving tenancy ratios and more are all made easier and more efficient through digitization. The combination of digital twins and AI-based analysis allows for immediate access to insights about a portfolio of assets, delivering accurate and easily shared and consumed data about what really exists in the field.

Don’t Miss Out. Start Now.
Change is not an emergency, it is an inevitability – and the time to prepare is now. For the TowerCo industry, developing a strategy for digitization is the best way to be ready for tomorrow’s opportunities.  TowerCos in every region around the world have begun the process of digitization and understand the need to become a “Digital Organization”. Strategies differ but the goal is the same- to become an interconnected, seamless enterprise, optimizing the customer experience. Starting with one small project is a relatively easy way to begin the journey of digital transformation and offers immediate benefits. Contact vHive to learn more about our digital twin platform, and the critical insights that vHive can provide to get your business ready for whatever comes next.

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