Towerco organisational design

TowerXchange are frequently asked about the organisational design of towercos. TowerXchange leveraged our contacts with hundreds of towerco leaders, and our database with almost 5,000 towerco CXOs and department heads, to paint a picture of an example towerco org chart. Special thanks to the towercos who kindly consented to us sharing anonymised versions of their org charts as further exemplars.

There is considerable variation in organisational design and structure across the relatively new tower industry, an industry which incorporates a variety of scales and business models across several hundred companies worldwide. As such, the example organization chart we have prepared in figure one should be considered an illustrative example, not a blueprint of a standard structure.

One characteristic common to most tower companies: these are lean businesses, much leaner than MNOs, generating much greater returns per employee.

Most towercos outsource the majority of site construction and maintenance, leaving an internal organisation that is focused on operations, sales, finance, and the management of those outsourced construction and maintenance resources.

The relative size of the technical department, and whether it is represented on the management board by a CTO, is often defined by whether the towerco provides full power-as-a-service, or whether it just provides ‘steel and grass’ (vertical structures and real estate).

Only 37 (12.8%) of 290 towercos tracked by TowerXchange operate in more than one country. Of those multi-country towercos, most operate a lean central management function, with local subsidiaries typically under a country Managing Director / CEO, supported by a local heads of sales, finance, operations, projects, supply chain, legal and HR. Strategic functions such as procurement, M&A, technology and group finance are typically centralised. Towercos in large countries, like China and India, typically have local offices: China Tower Corporation has 32 different provincial offices, the large Indian towercos will have local offices in key telecom circles. Again, the focus for these provincial offices is on relationship management, sales and maintenance – most strategic decisions are undertaken by the group management team.

Group level senior management

CEO (Chief Executive Officer): overall management responsibility.

COO (Chief Operations Officer): typically incorporates leadership of Engineering, Construction, O&M and Property / Site Acquisition functions.

Business Support: leads the administrative functions, where not distinct including HR, Corporate IT and procurement.

CTO (Chief Technology Officer): the scope of a towerco CTO is surprisingly variable, sometimes incorporating Corporate IT and procurement, but usually overseeing Innovation & Business Development and Project Management. The presence and importance of the Energy Management function, which typically reports to the CTO, depends on whether the towerco provides power-as-a-service.

CMO (Chief Marketing Officer): leads marketing communications, often also corporate social responsibility. TowerXchange have seen the CCO and CMO combined as a CSMO (Chief Sales and Marketing Officer).

CCO (Chief Commercial Officer): multi-faceted role that typically includes sales leadership, often includes significant input into M&A, and may incorporate the role of the CMO where not otherwise distinct.

CFO (Chief Finance Officer): key strategic role within most towercos, incorporating traditional finance functions (accounting, reporting, corporate finance, treasury, accounts receivable and tax) as well as sometimes incorporating M&A, Investor Relations and business support functions. In several cases, TowerXchange has seen Corporate IT reporting to the CFO.

CLO  (Chief Legal Officer) / General Counsel: most towercos will have a senior lawyer in their senior management team, reflecting the criticality to performance of contract negotiation, regulation and M&A.

Investor Relations: all listed towercos, and an increasing proportion of other large towercos, have a dedicated Investor Relations function.

Operations and Maintenance (O&M): the scale of this function depends on the extent to which managed services are outsourced – if substantially, the role will primarily focus on the performance management of those relationships.

Construction: like operations and maintenance, much of the construction capacity of most towercos is outsourced, with perhaps a small team managing oversight and resource allocation. During periods of high organic growth, some towercos will keep a small construction team on the payroll to ensure they have availability of resource and more control over quality.

Health and Safety: primary concerns include managing risk on the construction site, safety working at height, and road safety. Scope usually extends beyond towerco employees to managed service partners.

NOC Manager: manages a small team of engineers who man the network operations centre 24/7 monitoring cell site performance and responding to any alarms.

Property / Site Acquisition: managing relationships and negotiations with landlords, acquiring the land under critical sites, securing access to potential future sites (although new site acquisition is often partially outsourced to third party site hunters).

Human Resources: personnel development, recruitment.

Procurement: responsible for testing, selecting and negotiating the purchase of equipment, software and services.

Innovation / Business Development: typically focused on new product and service innovations. Note that towercos spend a fraction of the level of R&D that MNOs spend – innovation leaders are typically quite senior, but they have small, often matrixed teams.

Technical: overseeing technical project management, often including data collection, site management systems and data presentation. We have yet to see a towerco creating a role for a “Chief Data Officer”, but there is an increasing need for such a position.

Energy management: usually found only at power-as-a-service towercos, energy management is a centre of excellence for energy opex saving initiatives, often with significant touchpoints with O&M and data.

Marketing and Communications: press relations, branding, reputation management, often including corporate social responsibility.

Commercial / Sales: responsible for relationship management with MNOs and other tenants. Co-location sales is often separate from build-to-suit sales. There are often separate teams for different product / service offerings e.g. city poles, DAS and small cells.

Strategy / M&A: primary drivers of inorganic growth – even when they’re not buying big portfolios in buy and leaseback deals with MNOs, many towerco M&A departments are constantly active acquiring small portfolios of privately owned towers.

Finance: financial management (accounting, reporting, treasury, accounts receivable, tax) and investor relations (where not separate functions).

Legal: standard corporate law, contract negotiation with landlords and tenants, input into M&A.

Government and regulatory affairs: managing relationships with local and central government stakeholders, international regulatory bodies.

Figure two: org chart from a multi-country power-as-a-service towerco serving low income, low ARPU markets

See figure two. This emerging market power-as-a-service towerco, serving low-income / low ARPU markets, has a fairly typical organisational chart, with the CEO supported by a senior management team consisting of a Head of HR, a COO, CLO, CFO, CTO and the Managing Directors of each of their country opcos. Three key functions report to the CCO, headed up by Directors of Business Development, Sales and a Commercial Director. The CFO has three direct reports: a Financial Controller, Corporate Finance Director and an IT Director. As an emerging market, power-as-a-service towerco, the CTO has a complex team beneath him, headed up by a Projects Director, Supply Chain Director and Operations Director.

Each country MD has their own local management team including heads of sales, finance, operations, projects, supply chain, legal and HR.

See figure three.This towerco has a large portfolio in a single, middle income, middle ARPU country. They provide only steel and grass – they don’t provide power. The President, Director and CEO has seven direct reports. There are lean functions of Internal Audit, Investor Relations and Legal, plus three more complex functions. The COO overseas the engineering and O&M functions, plus several teams focusing on site acquisition, engineering, co-location and new build. The CMO looks after Marketing, Sales, Leasing, Inter Carrier Regulation, Business Development and Communications. The CFO looks after conventional finance functions (accounting, tax, reporting, accounts receivable and tax) as well as business support, including HR, IT, procurement and treasury.

See figure four. This steel and grass (no power) towerco is growing rapidly, primarily fuelled by deployment of urban infrastructure. Alongside conventional Finance, Legal, Business Administration, HR and IT functions, the org chart also features key strategy and business development functions for the origination, piloting and execution of innovative urban infrastructure solutions.

Cellnex’s organisational chart can be viewed through the lens of several subsidiaries acquired across Europe, as shown in the illustration, and functionally, with central corporate services focused on finance, legal, public affairs, organisation, HR, IT, procurement and security. Frontline services include installation, operators, maintenance and service, divided into telecommunication infrastructure, broadcast networks and other network services.

The organisational design of China Tower Corporation (CTC) illustrates how operator-led towercos maintain independence from their parent MNOs.

CTC operates independently from its principle shareholders, China Mobile, China Telecom and China Unicom – CTC has obtained their own licenses, premises and information systems. CTC has their own organizational structure with specific functions and internal control procedures. In particular, financial independence is assured as CTC has its own independent finance staff and can make financial decisions independent of its shareholder MNOs. CTC has independent audit, accounting and financial management systems, and its own bank accounts. CTC is registered as a separate entity from a taxation perspective.

CTC has a number of independent non-executive directors (at last report three), whose duties include review of connected transactions, and all Board Directors associated with parent MNOs are required to abstain from voting if there is a conflict of interests between CTC and the MNOs. There is no overlapping senior personnel who work with both CTC and its parent MNOs.

A distinct set of governance policies and manuals are used, both to ensure independent and to align with the laws, rules and regulations of China. Transactions with China Mobile, China Telecom and China Unicom represent a high proportion of CTC’s revenue, and are conducted on an arms length basis.