Nicolas Roy, CEO of Orange’s towerco, TOTEM, talks about organic growth, scaling up the neutral host model and being part of a wider digitalisation of French territory
“From day one, we have had a very industrial mindset, to make sure that we are serving our customers the best as we can,” says Nicolas Roy, CEO of Orange’s towerco, TOTEM, which operates in France and Spain. The other two cornerstones of its business are scale and neutrality.
He points out that Europe’s towercos “are all quite young” because operators started hiving their passive infrastructure off into separate business units later than on other continents in the main. Some have divested themselves of their tower business units altogether (like Telefonica) and some have sold stakes in them (like Vodafone with Vantage Towers). From its inception in 2021, Orange said it would maintain control of TOTEM, which did not preclude selling minority stakes.
In February 2023, CEO Christel Heydemann (who was not in that role when TOTEM became operational) told the Financial Times [subscription needed], “When you see companies selling their towers [or] using financial vehicles to continue to invest in infrastructure there is something that is, maybe not wrong, but something weird going on in the market”.
TOTEM became operational as a separate entity in November 2021. She perhaps wanted to quash reports that Orange was weighing options for its Middle Eastern and African tower estate in February 2023, including the possible sale of stake in them, perhaps on a country-by-country basis. Orange has opcos in 18 countries in the region. Orange has made no announcements on the subject.
Since TOTEM became operational, it deployed 450 new sites in France, which Roy says has “a very strong dynamic”, and continued to build out 5G in France and Spain. It had 27,292 tower across the two countries as of the end of March 2024.
Attracting tenants
Roy says that attracting new tenants to its sites “is our key activity”. In March 2024 TOTEM reported revenues of €686 million for 2023, an increase of 0.3%. Orange said the growth was driven by a 3.6% rise in hosting revenues, including a 6% increase (to 16.6% overall) in hosting revenues from third-party customers.
In November 2022, it signed a commercial agreement with the French telco group iliad, giving it access to TOTEM’s ground-based towers and rooftops. Iliad operates under the Free brand in France (and Italy) and its French network already provided 5G coverage to more than 87% of France’s population and 4G coverage to 99.8% of it.
A month earlier, TOTEM struck a deal to upgrade and support the deployment of incumbent Telefonica Espana’s 5G network. This was in addition to the deal Telefonica had in place with Vodafone Vantage Towers in Spain.
Roy says there are “all kinds of new players going onto the grid of our sites” and adds that the creation of MasOrange (the joint venture between Orange Spain and MASMOVIL which began operations in March 2024) “will be a good thing for us, first because we will serve the biggest customer base in Spain through the joint venture. We think that in the long run, they will have to deploy a very solid, efficient capacity network… it’s perhaps too early to see exactly what will happen.”
Some indication perhaps of the likely consolidation is the deal TOTEM signed in September 2023 with DeltaComGroup in Spain to dismantle towers and recycle or reuse their components to “become part of the circular economy” and “avoid the emission of 300 tonnes of CO2 in Spain every year”.
The measurement of success regarding third-party tenancy of TOTEM’s passive infrastructure is its tenancy ratio target of 1.5 by the end of 2026. Roy points out that his company is well on the way to achieving it this year: TOTEM had reached 1.38 occupants per site by the end of June 2023.
Density and neutral host
Another key area of activity is to deploy more sites in areas of dense activity, including indoor spaces, like subways and stadia to support end users’ quality of service for B2B customers. It announced the deployment of a 5G network via a distributed antenna system (DAS) at the Orange Vélodrome stadium, in Marseille, home to football club Olympique de Marseille, making it the first stadium in France to have 5G coverage.
The antennas were designed to accommodate high peaks of mobile phone usage (the stadium’s capacity is 68,000 spectators) to provide consistent quality of service. Other French operators Bouygues Télécom, Free Mobile and SFR, have connected equipment to TOTEM’s antenna infrastructure so they can all offer 5G services at the ground. This neutral host model reduces the amount of space required by the equipment and energy consumption.
Underground ambitions
Perhaps most notably, TOTEM began deploying 5G infrastructure, end to end, on the new Line 15 Sud. This is one of the four new automated train lines under construction in Paris as part of the ambitious Grand Paris Express transportation project.
TOTEM aims to have installed the infrastructure along the entire 33km length of the Line 15 Sud and its 16 stations by the end 2025. Once completed, it will be the first 5G-connected Grand Paris Express line within the Parisian metro system.
Roy says the project is exciting and a challenge because it is technically difficult and is the largest scale neutral host project in France. This brings considerable responsibility. As he notes, “We operate mostly passive infrastructure which means downtown is not so much on our shoulders…but looking at the microsites when it comes to specific venues, it’s a different issue”.
Line 15 Sud requires new materials and network design to deal with “speeding trains, the tunnels, the thickness of the walls, the volume of traffic,” he notes. Roy agrees expertise and experience gained here will translate to other demanding projects.
Next steps in creating value
He continues, “As I said at the start, we are committed to being an industrial scale player. The key is to ensure we are developing the value of our assets…We are preparing sites, we are negotiating, we are making sure that all the stakeholders are really ready to go with us; to add new tenants and to be the one that will help extend their coverage. That’s our value. We are very focused on our organic growth, our industrial development.”
Roy explains the strategy for developing the assets’ value is “to digitalise our processes – we’re working on that. Our first step is to make sure our inventory is up to date, [so] that we know our sites and what capacity is available on our sites.
“The second step, and we are working on this currently, it is to partner with players so we can go one step further, to look deeper into our sites. I’m talking about having digital images of sites, such as of beam [MIMO] technologies, to reduce the number of visits that are necessary to host someone or perform checks at this site. This was not the first priority, so we are doing it now.”
He continues, “Then the third step is to become a platform, to provide access to each site through a very simple process…using a credential I can download a form then an auto-assign process to make it easier. We are seeing how we can build this platform.
“Once we will have perfect knowledge not only of our sites, but their surroundings in the city, the buildings, the countryside, and so on, we’ll be in a position to anticipate for customers how our sites will be beneficial for the quality of service of their network, their functions.”
Perfect knowledge from multiple sources
Obtaining this “perfect knowledge” is part of a wider scheme underway in France. The Institut national de l’information géographique et forestière (National Institute of Geographic and Forest Information), previously the Institut géographique national (National Geographic Institute) or IGN is partnering a group of French public bodies. Their mission is to establish the Large-Scale Reference (Référentiel à grande échelle or RGE) – digitalised information that can be superimposed on French territory, accurate to within 1 metre.
This includes aerial photography, topography (the shape of the Earth’s surface), a cadastral survey, that is a comprehensive recording of properties and their boundaries within France, and a database of all the addresses in the country.
This, as Roy puts it, is “working to digitalise every piece, every corner of France,” adding, “Again, we will have perfect knowledge of how sites are or will be positioned in the environment, and combining this information with information about our sites and information about our customers will enable us to anticipate how we could improve, extend customers’ coverage etc. It might be desirable to replace this site or by something else or do something differently to make sure that it will be more powerful in the end.”
Nebulous networks
He says, “This is a very long story, step by step, which at the end will create an industry with an even better the financial story”. In the meantime he observes, “If you look at all mature industries, such as the car industry, space or whatever, they reach a very high of digitalisation in all the processes for every single device.
“If you look at in our domain…not only telco but any kind of network…each site, each situation is a case in itself. Because it’s very diverse, it’s difficult to judge. With the power of IT and AI, we will enter into a new area in which players, such as those that equip cities [for example]…will be in a position to really add value by digitising their work processes.”
In the weeks after this interview took place, TOTEM announced its partnership with Ville de Demain [Tomorrow’s city]. It operates as part of STATION F, which is based in Paris and describes itself as “The biggest startup campus in the world”. Ville de Demain’s goal is to build an ecosystem that can address the challenges cities will face in future.
Participants include universities, Grandes Écoles (specialised top-level educational institution in France) and “other key players to offer a 360° vision of the City’s challenges and support the most innovative startups and project leaders. Its objective is to highlight and support the initiatives of all territories to accelerate their environmental and digital transformation.”
Ville de Demain’s approach is that infrastructure sharing “is an environmental and economic necessity to enable all cities to go further in their mobile connectivity projects while hosting their CCTV, data collectors and all smart city connected equipment. The intention is that through this partnership, TOTEM will be able to offer local authorities bespoke all-inclusive solutions to best address their needs and anticipate their future challenges [translated from French].”