Global Tower: international ambitions

Global Tower are becoming a benchmark for the successful expansion of an operator-led towerco. Carved out of Turkcell in 2007, the company now operates over 10,000 towers across four countries, with a consolidated tenancy ratio of 1.4, and is delivering 15-20% topline growth. TowerXchange spoke to Global Tower CEO Nihat Narin to learn more about their portfolio, the structure of the business, and their international growth plans.

TowerXchange: Please introduce Global Tower, how the company was formed and your current role in the markets in which you operate

Global Tower was established in 2006 as a 100% subsidiary of Turkcell and commenced its operations in 2007 to provide infrastructure management by leasing places on towers to private, public entities and institutions. Today, we serve to not only MNOs but also the broadcasting industry, ISPs, energy, public institutions and other related industries. Global Tower is the first and only tower company in Turkey and the fifth largest tower company in Europe. In addition to Turkey, we have operations in Ukraine, Belarus and the Turkish Republic of Northern Cyprus. Our 100% owned subsidiary in Ukraine; UkrTower LLC, was founded in 2009 and its 100% owned subsidiary in Belarus, Beltower LLC, was founded in 2016.

Global Tower operates a unique portfolio of 10,140 towers, 8,000 of which are located in Turkey. UkrTower, a 100% subsidiary of Global Tower, has a tower portfolio of 1,201. With the addition of 115 towers in the Turkish Republic of Northern Cyprus and 830 towers in Belarus to our portfolio, we became a regional player in the telecommunications infrastructure sector.

We help our customers expand their network and we provide broadcasting industry infrastructure solutions, turnkey installation and integration services and professional operation and maintenance services.

Global Tower’s wide service and product portfolio consists of:

- Shared infrastructure services on tower/rooftop/in-building sites

- TV-radio infrastructure solutions

- Build and sale or build and rent of new towers

- E2E systems for broadcasters and sensor networks

- M2M / scada / telemetry solutions

- GSM-R Solutions

- Mini data centre infrastructure solutions

- Mobile tower solutions

- Climatised system room solutions

- Energy line capabilities

- Hybrid energy (solar / wind) solutions

- Infrastructure maintenance and operation services

- Site acquisition and contract management services?

TowerXchange: Can you share how Global Tower manages operations across different parts of Europe?

Our main philosophy is to create value for our shareholders and partners in the markets we operate and to become first a regional player and then a global player. In addition to Turkey, Global Tower has operations in Ukraine, Belarus and the Turkish Republic of Northern Cyprus. In April 2016, UkrTower, a 100% subsidiary of Global Tower acquired 811 towers from Lifecell, increasing its tower portfolio in Ukraine to 1,201. In Belarus, BelTower was established at the end of 2016 to provide infrastructure management services. In Northern Cyprus, Global Tower executed an agreement with Kibris Telekom, an MNO operating in Northern Cyprus as a part of Turkcell Group, for a right-of-use arrangement relating to 115 towers owned by Kibris Telekom.

All in all, country offices are run through distinct legal entities. Since every country has its own specific environment in terms of regulation, specification, laws and ways of doing business, distinct legal entities deal with day to management activities. At the end all performance is consolidated under Global Tower.

TowerXchange: How do you feel your status as an operator-owned towerco affects your position in the market?

Global Tower positions itself at an equal arms-length distance to all MNOs, while operating as a fully independent company.

We have a transparent price regime and we treat all MNOs the same. Our international know-how and expertise help us and our business partners grow together. A considerable part of our annual revenues are derived from non-group customers and our philosophy is to increase non-group revenues’ share significantly in the years ahead. In the non-group category, Global Tower has credible and strong business partners in Turkey and abroad, namely the Turkish Ministry of Agriculture, Turkish Ministry of Communication and Transportation, Turkish Ministry of Education, Vodafone and Turk Telekom in Turkey and Kyivstar, MTS (Vodafone), Intertelekom and Vega in Ukraine.

Regarding the status of Global Tower; first of all, Global Tower has been in the telecommunications infrastructure sector since 2007 as a licensed and fully independent company. We have a tenancy ratio of 1.40 on a consolidated basis, we serve multinational and credible clients in the four countries in which we operate. Global Tower has a transparent price regime which is executed equally among our customers, including our parent company Turkcell. Our anchor tenant regime is the same for all MNOs and we look for returns not related party issues. In addition, as a company policy, we fully adhere to corporate governance and related party regulations and practices. In this sense, independence and transparency are the indispensable principles we have going forward.

TowerXchange: You attempted an IPO in September 2016, which was postponed. Can you give us some insight into the decision making processes behind taking the decision to IPO and why it was postponed?

The tower business is a solid business which attracts investors with visible and long term revenues streams, strong profits, high cash conversion and attractive dividends. Before answering your question regarding the IPO let me give you few highlights of Global Tower in this regard:

- Global Tower is operating in minimum double digit growing industry

- Our customers are credible and multinational companies

- Global Tower is growing 15-20% topline with 60% of EBITDA and a high cash conversion ratio of 90%

- Our revenues are guaranteed with long term (15-20 year) MSAs

- Our business model does not carry any hard currency risk, which is covered through MSAs

- Our balance sheet is strong; unleveraged and healthy

After giving this information, let me say that our main motivation was not to raise funds but to build our brand reputation and to escalate Global Tower to an international platform through IPO. However, after seeing the interest in our company, while analysing the adverse macroeconomic conditions in the market (Federal rate hike cycle, cyber attacks, escalated EM risk), we decided to hold our IPO for a more favorable environment. We will pursue our goal to become a globally known, reputable tower company in the near future.

TowerXchange: Telxius (who cancelled their IPO just before your was postponed) have just sold a 40% stake to KKR. Is selling a minority stake to a financial investor something which Global Tower would consider?

Global Tower has a strong business model in a growing and high potential industry, operating in four countries. Global Tower has a strong capital structure with healthy financials. Currently we are unleveraged and have zero debt. In this sense, we have no need to sell an equity stake to obtain external funding. On the other hand, we are open to strategic partners such as multilateral development banks, sovereign wealth funds, infrastructure investment funds and private equity firms who want to maximise value with IPO and share our long term vision of being a top company globally, and who have the ability to add value to our business.

TowerXchange: Turkcell have laid out plans for significant growth outside of Turkey over the next few years. Do you see Global Tower’s remit changing as this focus shifts?

Turkcell has operations in nine countries; Turkey, Ukraine, Belarus, Northern Cyprus, Kazakhstan, Azerbaijan, Georgia, Moldova and Germany with combined subscribers of 50.1 million. Global Tower has benefited from this extensive know-how and the expertise of this footprint in recent years by expanding its operations into four countries. On the other hand, we are strong in our business and we possess the know-how and expertise to run operations at international level. We are currently working on projects that will add value to our shareholders.

We are open to new opportunities. We believe the cultural and social proximity of countries especially in the Eastern Europe, the CIS region and the Middle East which are in line with Global Tower’s vision and growth plan in the future.

TowerXchange: Can you share Global Tower’s vision for the future? How do you see the company developing in the next three to five years?

Global Tower has a strong management team and a dedicated workforce experienced in rental services, build to suit, build and sale, contract management and maintenance services. We act as a solution partner with end to end services. In addition we have a strong and healthy financial structure with zero debt. We create added value and grow together with our business partners in all platforms we operate. In this sense, with a vision of being a global player Global Tower aims to emerge as world’s one of the top tower companies by transferring its international expertise to new territories.