Transcript

Pablo Tomasi: Welcome back to the Telco Drift a podcast exploring tech telecoms and other sci -fi stories. so This is a spooky episode in a sense. because we will be discussing the separation

Pablo Tomasi: of body and soul and we're going to be looking a little bit on the telecom side of things and of course We will also be looking. at sci -fi but because it's halloween then we'll be looking more on a horror side.

Pablo Tomasi: of sci -fi if you want or just pure horror So you may recall that in the latest podcast. From I think it was two three weeks ago I did mention that I would further explore how telcos are evolving, so to how are they changing their nature. And I think... this fits quite well within the trend.

Pablo Tomasi: So what has happened? If you follow the market over the past decade or so telcos around the world I've been doing something that is... a little bit counterintuitive.

Pablo Tomasi: So they have been selling their physical infrastructure that makes the network possible. that includes mobile towers rooftop sites. fiber networks.

Pablo Tomasi: and other assets. So they've been selling these assets to specialist companies, private equity investors and such. And the idea is ah in a nutshell to unlock billions. in capital.

Pablo Tomasi: To reduce that... and to become a little bit more agile. Now that is all well and good. However... when a lot of these deals were uh created were secured.

Pablo Tomasi: We were not in the AI boom era that we are nowadays. So when we think about... how AI will be shaping the network, and the opportunity for computing, inferencing.

Pablo Tomasi: what five sorry, what 6G will be looking like possible those physical locations that are not part of the telco portfolio anymore could become...

Pablo Tomasi: quite relevant. So the the question itself is... Whether Telcos Operators they jumped the gun in selling part of their physical infrastructure and what are the contracts they have are actually designed for the network of tomorrow.

Pablo Tomasi: So let's look at a couple of different examples. And of course, let's start from the beginning, the rational of separation. uh body and soul so physical network and and services and software proposition.

Pablo Tomasi: now every telco has a lot of different moving pieces There is a spectrum where equipment, software, customer relationship, passive infrastructure, so on and so forth. It doesn't need to. own everything The reality is that it needs to have everything working together like an orchestra more than actually owning every single part of it.

Pablo Tomasi: And we have seen... Telcos take a different kept in selling their assets. Some of them have sold part of it, some have cut. stake in it.

Pablo Tomasi: and and some of that. Um, are trying to find new business opportunity. from these partnerships and potential investments. There are examples such as Vodafone Advantage Tower Deutsche telecom with GD. towers example from Telstra in Australia, but also the US s and China.

Pablo Tomasi: So there are a lot of different options for doing this for getting rid of your body. but let's look ah at a couple of them more closely. where We start with Deutsche Telekom. So that is from back to...

Pablo Tomasi: 2023 And... DT completed a sale of 51 % of GD towers. Uh... and that effectively enable the company to to gain some ten

Pablo Tomasi: billion euros in proceeding. So this is very interesting for a couple of reasons Um, Mostly because... according to public information. obviously a lot of contracts are sort of Not available to the public but there is a clear emphasis on the fact that this transaction was also keep it in mind that the new entity owning the tower co would have to accommodate for future needs of the company.

Pablo Tomasi: So there are certain guarantees. that were given. including access to strategically critical sites. preferential access to available capacity for future network upgrades and operational service level commitments. an agreement over new thousand thousands on your sides.

Pablo Tomasi: There's also a long -term agreement. This is like 30 years approximately approximative lease so From my point of view, this kind of shows us that the DT understood that there was a certain risk in diversity divesting certain assets.

Pablo Tomasi: And therefore... he tried to mitigate them. so didn't really look to own the assets but understood that they were still essential to what the telco had to do.

Pablo Tomasi: now If we think for instance Uh... DT wants to deploy new radio equipment. That should be pretty straightforward part of whatever contract agreement they have but even if you want to put some computing accelerator installation power capacity create a small edge computing facility out of site I was sure that the contract automatically permeats

Pablo Tomasi: all those changes or further conversation are needed. in order to allow that. That is a critical point because if further conversation needed Done. what DT wants to do may or may not align with what the tower co wants to do.

Pablo Tomasi: And I know that in a lot of cases there's going to be good alignment between the two parties, telcos and towerco. But that is none. guaranteed. maybe additional time spent in discussing the opportunity Peace.

Pablo Tomasi: the time that the telco it will lose first advantage in the marker. Who knows? but it's not just dt so there are other example right I mentioned Vodafone Vantage Tower um the Vodafone is a co -control partnership.

Pablo Tomasi: with the global infrastructure partners and KKR. What is interesting here is that it was not just about the tower business but was also about looking at new opportunities a small cell DAS.

Pablo Tomasi: and it's competing so the idea was ah not just to kind of separate things but separate to create some growth.

Pablo Tomasi: very interesting thing when it comes to other example Australia Telstra Australian an operator It sold 49%, no controlling stake.

Pablo Tomasi: uh I list business in 2021 business became known as uh Amplitel, I believe. So Telstra retains control. so in this case he has the want some divestment of sort of the the business itself and and the cause but did want to maintain control and probably understanding the criticality of owning their business.

Pablo Tomasi: Now there was examples from From India. and from the US and and from China. So we can see pretty much across the globe. There are...

Pablo Tomasi: Telco's Tendentially Kind of. chopping their bodies into pieces. And going back to the previous podcast. a TIM or previously known as Telecom Italia Complete the sale of its fixed network business to KKR.

Pablo Tomasi: and that is different because before we were talking about the mobile Yeah. infrastructure side of things that we're talking about the fixed network business but again you sell the infrastructure and then you try to focus on effectively your customer.

Pablo Tomasi: on the service Now think about this last example. I... tend to find the fixed line side of things quite boring a little bit just like consumer is fairly boring to me But...

Pablo Tomasi: Maybe I should try to invite someone. The covers. fixed line things. um broadband fiber and so on to see if they can convince me otherwise it is actually an exciting market important marks for sure.

Pablo Tomasi: but not exciting. So let's let's keep in mind, maybe drop my comment. If you would like to. See someone on the show talking about fixed broadband and similar g -pons and so on but let's go back to Um...

Pablo Tomasi: let's go back to to the actual topic of the podcast of the the podcast. So we've seen this is a trend that is happening. everywhere and on one side there is a a telcos that can can focus on

Pablo Tomasi: their their business and their customers. and from the the tower core the infrastructure company there is a very stable lengthy reliable business that is very predictable and that is sort of what they want.

Pablo Tomasi: and that worked well until now but the question is if AI is shaping networks, as some people are saying. will that require a closer than collaboration again between the telco an infrastructure provider.

Pablo Tomasi: That is... a the possibility so

Pablo Tomasi: Why? This is a critical moment. Two reasons AI. of course everything is AI right we we talk about that every podcast but with the AI boom and with the Yeah.

Pablo Tomasi: soon to becoming 6G standard. The two things are gonna be... interrelated whether we want it or not And from... the way that the network i'm gonna be I would imagine.

Pablo Tomasi: a lot of that will be shaped by the idea of how much AI. will drive demand and different type of demand. and when we're thinking about AI computing processing inferencing Of course, there's not a single architecture.

Pablo Tomasi: the endless question of the edge versus central location is still there but for some people it's gonna be RAN to run workloads at an aggregation site, a central office, at the run site So across...

Pablo Tomasi: different locations. in order to maximize what you can do with the data processing again the idea of edge computing is the same that has always been there now it's just AI edge computing and AI Enable RAN

Pablo Tomasi: could involve some form of acceleration optimization coordinatization coordination between radio equipment and software. to serve specific applications and that could be part of that. sort of 6G idea.

Pablo Tomasi: now If you sold. your passive infrastructure, if you saw some of your sites. Yes, you can put an antenna there could be really equipment but maybe if you need to put something a bit heavier some more power some additional facility edge computing requires additional secure space, several racks maybe some additional fiber connectivity electrical capacity Cooling of course.

Pablo Tomasi: um different possible arrival physical access Will that be included in the contract that these telcos have? with the parts of the naturally divested or will they need to have new conversation?

Pablo Tomasi: to see whether developing such type of network is in the best interest. of the physical infrastructure provider. So I think we're going to see something interesting. I think we... could possibly see in the next few years whether keeping full ownership of the network Oh.

Pablo Tomasi: is now more important. than having that network separation that has been so trendy and common. in order to to release some of the financial burden. I'm not sure was the right solution but - I think could be...

Pablo Tomasi: this could be a real differentiator potentially. enabling some people to be first in the market. want others to be a little bit slower to to get to the point.

Pablo Tomasi: to be able to offer their services.

Pablo Tomasi: So let's try to think of a good Segway to start making some recommendations in terms of movies. And yeah, the theme. Is there?

Pablo Tomasi: Body and soul. So one more recommendation I think is quite quite good fit within this narrative It's talk to me. horror movie recent thing from just a few years back highly recommend Have a see

Pablo Tomasi: yes it's a kind of classic horror movie Couple of horror movies that that I will also recommend that are recent. um One I think is called ah Backrooms.

Pablo Tomasi: and it's interesting because it's not scary per se it's just really weird so that is what it's good about and the other that i I must admit I haven't seen yet but everyone is telling me that it's great he's called Obsession So you do have a look and let me know.

Pablo Tomasi: what do you think of them now if we however want to have the perfect combination of sci -fi and horror movie there's only one one answer there And that's Event Horizon.

Pablo Tomasi: easy best bridge between sci -fi and horror. So... have a look and let me know what you think Now going back again. after this ah it' little slightly out of the blue comment.

Pablo Tomasi: on on horror on the horror genre. ah let's try to to bring it to a closure in a sense right so Were telcos correct?

Pablo Tomasi: in separating their assets. Possibly yes. it's easy for us to criticize them. knowing that we're now living in this sort of a AI hype. The real question is, were they forward looking enough?

Pablo Tomasi: to separate the russets while thinking on how the network will be in 10 -15 years and anticipating the relevance of AI. I think that we'll find out.

Pablo Tomasi: in the next couple of years. so Just closing things off. um if you're at alco what are you supposed to be doing now, right?

Pablo Tomasi: I think there are some practical steps. By all means. if you're like actually i'm pretty sure you know this but maybe like your casual listener That don't ask me why but if for whatever reason you are really keen in listening to someone talking about telcos I'm sure there are some people like that outside of the...

Pablo Tomasi: industry that love you hearing about telcos then here are things that you need to start thinking of first of all having have a look at the existing contract how flexible they are. in what you want to do in 10 15 years time don't think two or three things 10 15.

Pablo Tomasi: and i know that is already inside very difficult map the architecture that you want to the physical location that you may or may not have again you're not going to have computing on every tower but maybe in some towers maybe in some central offices but not all so try to think okay physically how this will look like then start to think about infrastructure constraint.

Pablo Tomasi: power cooling fibre space access rights. regulations of course uh how much would it be bottlenecks in maybe certain parts of the cities and could could you bypass them or will you not be able to add anything more because there are certain limits to what a sight can do.

Pablo Tomasi: collaboration. and making sure that both you and infrastructure owners. have the same view of how you want to develop your relationship.

Pablo Tomasi: It's kind of a marriage in a sense. how you want the marriage to To the value. over the longer term not just the short term and probably There's also a point about flexibility, but I'm gonna...

Pablo Tomasi: skip that So bottom line telcos are transforming and this is quite an interesting time to see the transformation but new trends are kind of putting in some serious question on whether the transformation that they started It was the right move at the right time.

Pablo Tomasi: Now let me know in the comments what do you think Um... i will try to be a little bit more consists in how i publish these the help of this podcast.

Pablo Tomasi: Having said so I'm gonna be in China for a couple of weeks. So definitely I'm not gonna be able to do more consistent anyways anyways drop me a message if you would like to see anyone specific on the show Let me know. And again, thank you very much for listening.