Russian Towers

Russian Towers Group of Companies is an independent owner of antenna-mast structures in Russia.

The company provides services for the joint use of telecommunications infrastructure: it invests in its own construction of tower structures of various structures in the regions of Russia, and also acquires them with subsequent high-quality service.

The company was founded in 2009 with the financial support of UFG Asset Management, the European Bank for Reconstruction and Development (EBRD), Macquarie Russia & CIS Infrastructure Fund, ADM Capital, Sumitomo Corporation and International Finance Corporation (IFC).

Services

• Operating business model: construction (or purchase), ownership and management of tower infrastructure for leasing seats on it to accommodate equipment of mobile operators and other organizations.
• The customer base of the Republic of Belarus consists mainly of mobile telecom operators with high credit ratings and a multimillion-dollar subscriber base.
• The company operates in 63 regions of the Russian Federation and has 3 regional offices (St. Petersburg, Krasnodar, Yekaterinburg).

Evolution of technological solutions of JSC "Russian Towers"

History and performance indicators

The company was founded in 2009. The volume of initial investments is not disclosed.

2022: Kismet Capital Group bought Russian Towers

On January 10, 2022, the sale of Russian Towers Group of Companies to the structures of the investment company Kismet Capital Group (KCG), owned by the former head of MegaFon Ivan Tavrin, was announced. The value of the transaction is not disclosed. It was only noted that the transaction was financed at the expense of KCG's own funds, as well as a loan from Sberbank.

After the close of the transaction, the Russian Towers will enter the New Towers JSC, created on the basis of the assets of the Vertical Tower Company and MegaFon's First Tower Company.

Kismet Capital Group Ivan Tavrin bought Russian Towers

As a result of the inclusion of Russian Towers Group of Companies in New Towers JSC, shareholder participation in the combined company will look like this: more than 65% - KCG, 25% - MegaFon, the remaining share - from the structures of the founder of Vertical.

By January 2022, the portfolio of the Russian Towers Group of Companies totals about 7.2 thousand antenna-mast structures throughout Russia. As a result of transactions to combine three tower assets, the portfolio of New Towers JSC will exceed 30 thousand objects and become the largest in Russia, the press release says.

The acquisition of Russian Towers is a logical step in our long-term strategy for the development of tower business. The combined company is the leading independent tower operator in the Russian market, and we are aimed at further creating additional value in the tower industry. We also plan to make the combined company public and will be open to entering new geographies, "said Ivan Tavrin, founder of Kismet Capital Group.

MegaFon CEO Khachatur Pombukhchan noted that the company supports this transaction, which, according to him, is aimed at increasing the value of the combined company. MegaFon considers the consolidation of tower infrastructure and the creation of a large independent player the most promising form of development of this business in Russia, Pombukhchan added.

2020

Business growth by more than 25%

On March 23, 2021, the Russian Towers group of companies, a player in the market of independent infrastructure operators in Russia, published the results for 2020, which was a record for the company. So, according to the company's report, in 2020 the team successfully coped with difficulties and exceeded annual plans despite the ongoing impact of the pandemic.

The average percentage of growth of the entire business of Russian Towers Group of Companies was more than 25%. The total number of objects in the portfolio was 6,400 in 63 regions of Russia. The number of existing service contracts amounted to more than 11,000.

The main points of business growth and revenue were both the construction of classic single facilities and new projects - projects for complex coverage of complex territories, for example, entire areas or cities, when the infrastructure operator provides telecom infrastructure for all telecom operators throughout the territory. As a result, telecom operators receive a ready-made solution and can fully focus on the development of services for subscribers, and city and district administrations, owners of shopping and business centers can be sure of seamless, optimal communication coverage of their territories.

For example, in Kronstadt, the company first implemented this approach, building infrastructure in the interests of all four federal operators. The project took a year and a half, required great efforts, numerous approvals with operators, administration, power grids, various city committees and other services. In addition to Kronstadt, such projects have already been implemented or are developing in Nizhny Tagil, Tobolsk, a number of other cities and territories.

The company has also already implemented 12 projects to create comprehensive coverage in shopping, exhibition and business centers in different cities of Russia, providing them with seamless communication from all operators in the region.

In 2021-2022, the company plans not to reduce the pace of commissioning of new facilities, continue to increase financial performance, as well as increase the share of new products (DAS (Distributed Antenna System, or distributed antenna system), complex coverage projects) in the company's portfolio and strengthen regional expansion.

"The key factors for success in times of uncertainty are the ability and readiness of the company for innovative development and the success in digitalization of the business. And this should always be done regardless of the circumstances, so even the crisis year has become a breakthrough for us, "said Alexander Chub, president of the Russian Towers group of companies.

Transition of 100% of Russian Towers on VTB collateral

On July 22, 2020, it became known that VTB received 100% of the Russian Towers telecom infrastructure operator in Russia on loan. This is evidenced by data from the SPARK-Interfax system.

According to Interfax, VTB has become a pledgee of 100% of Russian Towers LLC, which is part of the Russian Towers group along with other companies, including Russian Towers CJSC. The latter is owned by Russian Towers Transport LLC and OOO Supports of the Capital.

VTB was pledged on a loan of 100% of Russia's largest telecom infrastructure operator Russian Towers

Russian Towers agreed with VTB to open a 10-year credit line for 10 billion rubles in March 2020. The funds raised will be used for the construction and acquisition of new infrastructure facilities.

Part of the funds will go to projects of comprehensive seamless coverage of complex territories. Similar projects by July 2020 are being implemented on the  territory of Kronstadt, Nizhny Tagil, on  separate highways  and large facilities. The geography of such projects will be expanded by attracting funding.

This is our first loan project  with VTB Bank, which, we  are confident, will become the basis for the further development of mutually beneficial relations between our companies. The implementation of this agreement will accelerate the development of telecom infrastructure  in the regions of Russia,  and at the same time  the introduction of new digital information and communication services by mobile operators, "said Alexander Chub, president of the Russian Towers group.

According to the analytical company AC&M Consulting, Russian Towers is the largest independent operator in the number of its own facilities (5.1 thousand) after the Big Four and Rostelecom. They are followed by Vertical and Service Telecom (data for 2019).

2019: Revenue growth by 22% to 3.65 billion rubles

In 2019, the consolidated revenue of Russian Towers reached 3.65 billion rubles, which is 22% higher than a year ago.

2018

Revenue growth by 35%. More than half of the revenue was provided by urban infrastructure

March 20, 2019 "Russian Towers" presented the results of activities for 2018 and shared their expectations for 2020. Over the past three years, the revenue of the group of companies has more than tripled. In 2018, this indicator increased by 35% compared to 2017.

Alexander Chub, President of Russian Towers Group of Companies, explained the rapid growth in revenue by the accelerated pace of development of the company.

We created more objects, and the placement factor became larger. If we build new facilities at an accelerated pace, then the rate of attracting "second" and "third" tenants will also actively grow, "he said. - Mobile operators generate 90% of our revenue, the Big Four are our key customers. Only 2% of our business is a non-telecommunications segment, but we do not refuse it.

One of the directions of the company in 2018 was an increase in the density of coverage in large cities. Almost 60% of the revenue of Russian Towers in 2018 was provided by urban infrastructure, and in the previous year this share was 46%.

This is the transition of the equator, and I believe that the dynamics for 2019 will continue. The simultaneous growth of both the number of objects and the number of locations while maintaining a high placement factor is a very great achievement. This is the main contribution to revenue growth, and we exceeded the plan for the growth of this indicator in 2018. The specifics of our business are in long-term investments and long-term contracts with customers. The revenue brought by facilities built in 2018 will not be limited to this year's indicators. We can make money on them for decades. In 2019, we expect revenue growth of 25%, "Alexander Chub shared his forecasts.

The company notes that 2019 will be devoted to providing areas of seamless and complex cellular coverage.

According to the statement of the president of the Russian Towers, at the end of 2018, the company overcame the bar of 4 thousand objects and 7 thousand placements. Thus, the placement factor (tenancy ratio) on one object is 1.75. At the same time, the number of objects per employee in the company exceeds 30.

In 2018, Russian Towers expanded its competencies through radio planning and the creation of an integrated infrastructure to provide seamless coverage of the terrain of various topologies by mobile communications and mobile Internet. In 2019, the company plans several pilot projects to create active 5G-ready antenna systems.

Most of the projects that we are conducting are already 5G-ready. As soon as there is a request for fifth-generation technology, we are ready, "said Alexander Chub.

In 2018, the Russian Towers also continued regional development, commissioning more than 200 new facilities in the regions of Russia. As of March 2019, the company is already present in 60 regions. This is five more regions than in 2017.^[1]

Appointment of Boris Shevelev Chief information officer

On November 26, 2018, the Russian Towers group of companies announced the appointment of Boris Shevelev as director of information technology. More on this here.

2017

Purchase of Sector CJSC

Russian Towers Group of Companies acquired Sector CJSC, which owns antenna-mast facilities in the Moscow, Kirov and Tver regions. At these facilities there is equipment of the Big Four operators, the average number of tenants per facility is more than 1.5.

150 objects in the center of Moscow

The Russian Towers Group of Companies and the Primtelecom Group of Companies signed an agreement at the beginning of the year, under which the Group of Companies acquires more than 150 dual-use supports (ODN).

With the acquisition of these facilities, located mainly in the center of the capital, the Russian Towers complete the stage of development of the largest segment of the infrastructure market Russia - the city. Moscow

VimpelCom will sell 13 thousand towers to Russian Towers

The operator VimpelCom agreed with the Russian Towers infrastructure company to sell 13 thousand telecom towers worth $700 million to it. The transaction will be completed in the second quarter of 2017.

The tender for the sale of the asset was announced at the end of 2015. The bidding process was delayed, because, according to the publication, VimpelCom planned to receive $1bn for the towers, but the proposals received amounted to about half of this amount, and the value of the asset was revised. All towers of the company will be allocated to a subsidiary of the provider - National Tower Company JSC. Due to the sale of towers, VimpelCom intends to maximize the monetary benefit and find new reliable partners.

2016

Revenue growth by 50%

The revenue of the Russian Towers group of companies at the end of 2016 amounted to 1.5 billion rubles - this is 50% more than a year earlier. The group's assets include about 2.5 thousand objects in 54 Russian regions, RNS writes. It is also reported that the Russian Towers invested 1.5 billion rubles in the development of infrastructure and attracted a credit line of 2 billion rubles.

"Russian Towers" and the Ministry of State Administration of the Moscow Region agreed on cooperation

The Russian Towers Group of Companies and the Ministry of State Administration, Information Technology and Communications of the Moscow Region concluded an agreement in September 2016 on cooperation in the development of telecommunications infrastructure in the Moscow Region.

The agreement is of strategic importance for the development of the economic potential of the Moscow region and creates additional conditions for the formation of modern telecommunications infrastructure in order to ensure the high quality and accessibility of mobile communication services for residents of the Moscow Region. By 2020, the Russian Towers Group of Companies plans to invest up to 3 billion rubles in the development of telecommunications infrastructure in the Moscow Region.

Project with ACADO Telecom

The Russian Towers Group of Companies and the Moscow Telecommunications Corporation - Comcor (AKADO Telecom trademark) entered into a cooperation agreement in August 2016, according to which fiber-optic communication lines (VOLS) of the operator will be brought to the antenna-mast structures of the Russian Towers. This will expand the interaction of AKADO Telecom with cellular operators, whose equipment (base stations) are also installed on the Russian Towers supports: at the expense of ACADO Telecom, cellular operators will receive data transmission channels.

Project with PJSC Rostelecom

On June 15, 2016, it became known that an agreement of intent was signed between Russian Towers Group of Companies and Rostelecom PJSC, under which companies will become partners for the development of a network of data channels and improving the quality of communication in Russia.

To expand the range of telecommunications services, Rostelecom intends to develop and lay a network of fiber-optic communication lines to the equipment of operators, which is located on the antenna-mast structures of the Russian Towers Group of Companies. Cooperation with Rostelecom will allow the Russian Towers company to use the available space as efficiently as possible and receive additional income from their operation.

The conclusion of an agreement with Rostelecom will not only allow us to expand the range of services offered to telecom operators for joint use, but will also positively affect the entire telecommunications market. Given that expanding the network of fiber-optic communication lines requires a lot of resources, Russian Towers is ready to provide Rostelecom with all the necessary infrastructure support for the early launch of the project. Alexander Chub, President of the Russian Towers Group of Companies

The construction of fiber-optic communication networks is dictated by the need to meet the growing requirements of customers for data networks. Fiber-optic networks provide high transmission rates and ensure network security.

Taking into account the peculiarities of the development of communication networks and the scale of the Russian Federation, we use both fiber-optic transmission lines and radio relay lines. However, everything goes to the fact that not only in large cities, but also on mainlines, radio relay lines will be replaced by optical lines. The use of optical channels created as part of a joint project with the Russian Towers company will allow telecom operators to receive a complete set of equipment placement and transmission support services. And this, in turn, will allow faster and more efficient deployment and use of 4G networks in regions. Semenov Vasily Vladimirovich, Director of the Department for Work with Telecom Operators of the Macroregion "Center" PJSC Rostelecom

With successful partnership work, the project will allow connecting to Rostelecom's backbone networks the small settlements of Russia that have not yet been covered and provide users with modern telecommunications services.

Project with MGTS

On June 20, 2016, the Russian Towers Group of Companies Moscow City Telephone Network and PJSC announced the signing of an agreement according to which the Russian Towers dual-use supports To Moscow MGTS will be equipped with fiber optics.

When placing their equipment on dual-purpose supports of the Russian Towers Group of Companies in Moscow, cellular operators will be able to use the potential of MGTS fiber-optic lines.

Cooperation can influence the quality of communication in the city and help to unlock the potential of LTE + networks and in the future of the 5th generation.

Subscribers will receive a higher quality of telecommunications services, including broadband access to the Internet, the organization of multi-service data networks and virtual private networks, cloud services and IP telephony.

Alexander Chub, President of Russian Towers Group of Companies Our strategic partnership with MGTS, one of the largest local wire operators in Europe, allows us to take another step towards offering our customers the most complete range of services. Thus, the Russian Towers will provide telecom operators with completed telecommunications infrastructure, which will allow them to provide high-quality communication services to citizens, as well as expand their presence in the Moscow market.

Growing mobile Internet traffic requires mobile operators to constantly invest in the network in order to provide their customers with a high data rate. With the increase in the number of users of LTE devices and the development of communication technologies, the volume of mobile traffic and requirements for Internet speeds will increase and, therefore, the costs of telecom operators will increase further. MGTS's proprietary GPON fiber network covers the whole of Moscow and provides data rates of up to 300 Gbit/s in the transport network and up to 1 Gbit/s in the direction of the subscriber without loss of quality. The infrastructure we have created and its application in the framework of cooperation with Russian Towers will allow mobile operators to significantly improve the quality of communication and Internet speeds without additional costs, as well as be ready for any traffic growth tomorrow. Alexander Trokhin, Technical Director of MGTS

"Russian Towers" restored the square around the monument to N.N. Miklukho-Maclay

As part of the charity program of the Russian Towers Group of Companies, the square around the monument to the famous Russian ethnographer and traveler ^[2] in his homeland - in the city of Okulovka, Novgorod region. During the arrangement of the square, work was carried out on laying concrete tiles, benches and urns were replaced, lighting was installed.

2015: Joint project with Mastertel

On November 13, 2015, the Russian Towers Group of Companies and Mastertel announced the start of a joint project to build optical lines for dual-use supports in Moscow. Its goal is to improve the quality of communication in 4G and 4G + networks.

The use of optical channels created in the framework of the joint project will allow telecom operators to receive a complete set of equipment placement and transmission support services, which will allow the faster and more efficient deployment of 4G networks. Compared to the classic approach (building their own infrastructure), by placing equipment on the supports of the Russian Towers, operators can get savings of up to 30%.

"Cooperation with Mastertel allows us to expand the range of infrastructure offered to operators to share the infrastructure and form the full range of services necessary to place the base station on our sites - a place to accommodate, power, tele-monitoring and, now, fiber optic connection to the transport network," said Alexander Chub, President of the Russian Towers Group of Companies. "The organization of LTE networks requires a high quality of communication channels, and Russian Towers is ready to provide operators with all the necessary infrastructure support."

"Now the telecommunications business in Russia is going through a difficult stage. At the same time, the crisis often provides new opportunities, and the sharing of infrastructure with the Russian Towers company is one of them. We are sure that cooperation with the Russian Towers will find a successful continuation in the future, "said Vitaly Ezopov, CEO of Mastertel.

As of November 11, 2015, 40 optical lines were built in all areas of Moscow for test purposes. The Russian Towers and Mastertel plan to additionally equip all the supports of the Russian Towers with optical lines by the end of 2016, bringing the number of such supports to 1 thousand.

2012: Second round of investments

In February 2012, Russian Towers CJSC announced a second investment round in the amount of $100 million. The attracted investments will be aimed at expanding the fleet of telecommunications towers. With the help of new investments, the company plans to increase the fleet of towers from 300 to 1000 in the next 3-4 years. The growth of the number of towers is planned both through the construction of new ones and through the redemption of existing telecommunications towers from mobile operators.

The company's founding investors, UFG Private Equity (funds from the UFG Private Equity II, L.P) and the European Bank for Reconstruction and Development (EBRD), will additionally invest $15 million in the framework of the new investment round. A pool of investors, including the Macquarie Renaissance Infrastructure Fund (MRIF), will invest $85 million, of which the fund itself invests $50 million, and ADM Capital invests another $20 million.

New investors will acquire shares of the Russian Towers, issued during the additional issue. The parties agreed not to disclose the commercial terms of the transaction.

Garth Self and Peter Owen Edmunds, the company's founding managing partners commented on this deal: "We are very pleased that our current shareholders, UFG Private Equity and EBRD, have decided to increase their investments in our company. We are also pleased to welcome MRIF and other investors among our new shareholders. We expect that the unique experience of MRIF fund shareholders with similar independent operators of telecommunications towers in other countries of the world will help our company in the development of this market in Russia. We see high demand for towers in the Russian market, and international experience shows that it is most advisable for tower operators to work within a wide geographical framework. The attracted investments will help Russian Towers to quickly achieve an operational scale that meets the needs of the market. "

UFG Private Equity Managing Director Dominic Reed added: "We welcome MRIF and ADM Capital as our partners and look forward to continuing the successful development of the Russian Towers. Companies such as the Russian Towers contribute to Russia's economic growth. An independent management company provides the necessary infrastructure for mobile operators and allows them to increase operational efficiency, eliminate gaps in 2G network coverage, and, more importantly, quickly deploy 3G networks that require higher density infrastructure. Our business partners in the EBRD and we, UFG, are very pleased with the development of the Russian Towers and are looking forward to the future in anticipation of further growth in demand in Russia and the CIS for telecommunications data exchange services, which explains our decision to increase our initial investment in this company. "

Natalya Khanzhenkova, managing director of the EBRD in Russia, said: "Russian Towers is the first company to offer the joint use of telecommunications tower infrastructure for mobile operators, wireless operators, radio and television companies on a federal scale. This contributes to the spread of mobile communications and other advanced telecommunications technologies in those regions of Russia where there is no geographical coverage, or it is insufficient, and also avoids the oversaturation of tower construction in densely populated regions of Russia. We highly appreciate the participation of the MRIF, which will undoubtedly increase the scale of the company's activities. "

MRIF CEO Damian Sechen commented: "Investments in tower business in Russia are very attractive. The penetration of mobile communications in the country is very high, and this requires reliable network coverage. The business model of Russian Towers has proved its success in other countries and we highly appreciate the prospects for our investments in the growing Russian market. "

Hansen Varawalla, co-chair of the MRIF, said: "We are pleased to join UFG and the EBRD, the founders of this business as one of the largest shareholders. The telecommunications industry has high investment potential - the main trends in emerging markets are high network utilization, fast capacity filling and a high need for infrastructure development. And we are pleased to play our part in the development of this infrastructure. "

Rob Appleby, founder and CEO of ADM Capital, said: "The Russian Towers is the first investment of the newly created ADM CEECAT Recovery Fund. We are pleased to work with UFG, EBRD and MRIF and see this investment as an important element of our expansion in Central Europe and the CIS countries. "

Notes