Alticom: a smart strategy for smart data
Being a pioneer when you have been in business for 60 years is challenging but Alticom, a Netherlands-based transmission tower operator and datacentre provider, has managed to achieve it. Since 2008, Alticom has radically altered its business model: it now offers datacentre services alongside its traditional broadcasting and telecoms services. Even more importantly, Alticom has become one of the most environmentally sustainable datacentre providers in the Netherlands.
Alticom’s transformation puts it at the crossroads of the dynamic telecoms, broadcasting and datacentre sectors. Moreover, its energy efficient operating model puts it in the vanguard of change and helps to boost the green credentials of customers.
“Our business has been transformed in a short period of time by our entry into the datacentre market,” explains Robin Verlangen, director of marketing and sales at Alticom. “The change has come about for two reasons. Firstly, the opportunity is there. There is a huge growth in demand for datacentre capacity as a result of developments such as cloud computing and the internet of things. Secondly, our infrastructure offered the ideal proposition for datacentres.”
Robin Verlangen, director marketing and sales Alticom
Alticom has always been in the continuity business as its transmission towers were originally constructed to transmit broadcast signals, including in case of emergencies. Consequently, Alticom has considerable energy generation capabilities. “It was originally surplus emergency generator capacity that prompted us to enter the datacentre market,” says Hans ten Hove, CFO at the company. “However, we rapidly saw the significant long-term opportunity in datacentres.”
Hans ten Hove, CFO Alticom
Alticom operates 24 smart towers in the Netherlands that, in addition to emergency generating capacity, are connected to communications networks by fibre optic cable and microwave. The transmission side of the business and the nascent datacentre operations are fully complementary. Both are essentially about distributing data while, from a logistics perspective, the recent replacement of analogue terrestrial broadcasting equipment with smaller digital equipment freed up space for new uses.
Broadcasting and telecoms transmission continue to represent 90% of Alticom’s revenues, but the datacentre business is growing rapidly and is likely to account for as much as 30% of revenues within a few years. “Gartner predicts growth of 30% a year in the datacentre business and we hope to grow in line with the market,” notes Verlangen. “Moreover, we have considerable flexibility: each floor of our towers is a fully independent datacentre and can be made available as demand increases.” Alticom currently has 40 floors available for datacentre purposes.
Go green, save costs
The datacentre business is power intensive, both to facilitate data storage and transmission and to cool the equipment required. In traditional datacentres, efficiency ranges from 50%-62%, with 38%-50% of overall energy expenses being cooling costs. By operating in tall towers, Alticom benefits from free air flow, which results in efficiency of between 83% and 91% - just 9%-17% of Alticom’s expenses relate to cooling (which is only required on warm days).
However, Alticom does not just make use of freely circulating air: it uses a triple-filtered air supply and constantly monitors temperatures to automatically enable mechanical cooling (using proprietary equipment) only when necessary. “For instance, in one of our towers we only used 26 hours of mechanical cooling in one year,” says ten Hove. “Our energy efficiency comes from efficient management of air - not just having towers.”
Alticom’s green credentials give it a unique selling point. There are 151 datacentres in the Netherlands and Dutch development organisation Hivos certifies just three as green providers - including Alticom. Alticom is not only the most efficient provider in the market, but also sources 100% of its power from wind power. “The Dutch government encourages companies to improve energy efficiency so working with Alticom can be a helpful way to bolster a company’s credentials if they are competing for government business,” says Verlangen.
Of course, Alticom’s energy efficiency also yields cost savings that can be passed on to customers. “One of our energy intensive customers, which analyses internet data, and operates 24 racks across two towers, is able to save €150,000 a year at maximum workload compared to standard data centre costs,” says Verlangen.
Financing Alticom’s growth
In 2011, Alticom welcomed a new shareholder to the company, Infracapital, the infrastructure fund of M&G Investments: ING provided financing for the acquisition. In 2015, Alticom was refinanced through a €51 million loan from ING. “Part of the loan refinanced the original acquisition cost but there was also capital for investment,” says ten Hove. “It costs €250,000 to convert a single floor of a transmission tower to a datacentre. Overall, our expectation is a €10 million investment: existing cashflow will finance 35% of that cost and borrowing from ING will cover 65%.”
Ten Hove says that Alticom’s relationship with ING has strengthened considerably since 2008. “We have found ING easy to work with and enthusiastic about our business strategy,” he adds. “Indeed, when we approached ING to suggest refinancing our existing loan to remove some barriers to growth, they were extremely proactive and constructive. It helped us restructure the financing to give us more flexibility and enable us to meet our needs as a growing business, while allowing us to take advantage of the decline in borrowing costs since 2011.”
Stefan Piotrowsky, director in structured finance telecom, media & technology at ING, says that the bank has a strategic focus on the telecoms, broadcasting and datacentres segments. “Alticom is at the crossroads of these industries and stands to benefit from the growth of data consumption,” he notes. “With fibre links, energy and space – plus an attractive green aspect to its business – it has clear potential to grow into a significant datacentre player.” Verlangen is equally flattering: “Our company motto is ‘Smart Save Your Data’ and we like to work with smart people: ING fits that category perfectly.”
Robin Verlangen joined Alticom as director marketing & sales in the beginning of 2014. Verlangen is a seasoned marketing and sales specialist with over 25 years of experience. Before Alticom he served as director and MT member at Maccs International, global market leader in ERP software for the international film industry. In the preliminary decade Verlangen served as marketing director of Weber Marketing Communications for several national and international companies as Philips, Gasterra and Accell Group. For 5 years he was responsible as manager for the marketing & communications of Van Calcar/Meeus Insurance brokers (subsidiary of Aegon). He started his career as a marketing consultant at the Dutch mail & telcom company. After 4 years he became the youngest manager at the postal division. Verlangen graduated from the Hanze University of Applied Sciences. Additionally he specialised himself in direct marketing at NIMA.
Hans ten Hove
Hans ten Hove joined Alticom as chief financial officer in December 2011. He brought over 25 years of financial and management experience to the company. Before Alticom he served as CFO for Nozema, a Dutch broadcast company. At Nozema, he played an important role in splitting the company in two entities and afterwards selling both entities. Ten Hove also held significant roles at Berghuizer Papierfabriek and PricewaterhouseCoopers. Ten Hove graduated from University of Amsterdam and obtained the title of executive master of finance & control.
More information on Alticom’s ‘green’ datacentre services can be found on www.alticom.nl.