Sustainability was undeniably one of the hottest topics at this year’s Mobile World Congress, with operators and equipment vendors alike keen to show off their ever-improving green credentials.  But while the telecoms industry is making a largely concerted effort to reduce their carbon emissions and, indeed, to help their customers and partners do the same, there is still much work to be done.  
Orange, like many of the world’s largest network operators, including Vodafone, Deutsche Telekom, BT, and Telefonica, has set the ambitious goal of reaching carbon neutrality throughout their entire value chain by 2040. To achieve this, the Orange has been implementing Group-wide changes over the past two years, including appointing Hervé Suquet as the Group’s dedicated VP of Energy to oversee these changes. 
Speaking to Suquet at this year’s MWC, it became clear that Orange’s strategy towards going green and reaching their net-zero carbon emissions goals revolves around three key focuses…

Sustainability was undeniably one of the hottest topics at this year’s Mobile World Congress, with operators and equipment vendors alike keen to show off their ever-improving green credentials.  But while the telecoms industry is making a largely concerted effort to reduce their carbon emissions and, indeed, to help their customers and partners do the same, there is still much work to be done.  

Orange, like many of the world’s largest network operators, including Vodafone, Deutsche Telekom, BT, and Telefonica, has set the ambitious goal of reaching carbon neutrality throughout their entire value chain by 2040. To achieve this, the Orange has been implementing Group-wide changes over the past two years, including appointing Hervé Suquet as the Group’s dedicated VP of Energy to oversee these changes. 

Speaking to Suquet at this year’s MWC, it became clear that Orange’s strategy towards going green and reaching their net-zero carbon emissions goals revolves around three key focuses: set specific goals, create accurate key performance indicators (KPIs), and work with partners to deliver a broader impact. 

Start at the beginning: Energy consumption 

Achieving carbon neutrality across organisations as big and as varied as Orange is no simple task and is a goal that can only be achieve incrementally. 

As such, Orange has set intermediary goals for 2025, including reducing Scope 1 and Scope 2 emissions (i.e., emissions produced by the company directly and those produced when creating the energy that the company uses, respectively) by 30% compared to 2015 levels. The Group is also aiming to ensure that 50% of the Group’s electricity comes from renewables. 

Like all telcos, the vast majority of Orange’s energy consumption comes directly from the network usage itself – roughly 80% of their usage, according to Suquet – hence this is the largest immediate challenge they will need to address.  

“If nothing is done, Network and IT energy usage tend to be roughly proportional to the traffic… which is growing over 30% per year. Hence, it’s easy to understand that letting things go without action is not an option!” explained Suquet. “As such, the first key element is to ensure we constantly improve in our energy efficiency: Less energy for same usage.” 

For Suquet and Orange, meeting the challenge of network energy consumption has a three-fold solution. Firstly, the networks themselves need to be made more energy efficient, using the latest technologies to consume less energy while delivering the same results.  

Secondly, the type of energy used is of the utmost importance, with renewable energy greatly reducing the resulting CO2 emissions.  

Finally, telcos need to start to think differently about energy, switching to a more dynamic sourcing strategy that makes use of long-term renewable energy purchase agreements, as well as mid-to-short term market tools. 

Transparency is also important throughout this process. While climate change and environmental responsibility is becoming more important year after year in industries around the world, the reality is that a lot of what is celebrated is greenwashing, with far less environmental impact than advertised. 

This is, at least in part, why clear KPIs are needed, giving both Orange themselves and its customers, a clearer view of the progress being made. 

“A complete frame of audited financial and usage energy data points has been set, so as to ensure that we are able to pilot our action, but also report transparently and rigorously on it,” explained Suquet. “All this has to be done in such a way that we cannot be suspected of green washing, both on our energy action plan and deliveries.”

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Setting meaningful KPIs 

Orange has created four key KPIs to give a broad overview of its sustainable progress to date. 

– Economic Efficiency: Defined as the ratio of IT and network energy costs to revenue.  

– RAN kWh/Gb: This is typically the leading contributor to company energy usage and is a metric easily comparable across the Group’s international operations and with GSMA standards.  

– Power usage effectiveness (PUE): The ratio of total energy used by a computer data centre to the energy delivered to computing equipment. Once again, this is easily benchmarked against international standards.   

– Renewable energy ratio: A simple metric comparing renewable energy usage to non-renewable usage.   

Tracking these four KPIs throughout the Group’s various markets alongside quarterly reviews has proved invaluable, not only for outlining progress, but ensuring that successful ideas and strategies are disseminated throughout the business. As such, significant progress was made on energy efficiency in 2021. 

“From all this work done across the Group, I am quite proud of the results achieved by the Orange teams in 2021, where we succeed in Europe to break the curve, meaning reaching a flat energy usage while sustaining over a 30% traffic increase,” said Suquet. “Thanks to a wise energy sourcing strategy, we were also able to strongly limit the energy cost increase impact; a challenge that will clearly be more difficult in 2022.” 

Building partnerships to tackle Scope 3  

With traffic continuing to increase almost exponentially each year, the challenge of flattening the energy curve is far from over. Further innovation will be required to create more energy efficient network solutions, from data centres to RAN equipment, but perhaps even more challenging is looking beyond 2025 and targeting Scope 3 emissions. 

Scope 3 emissions are those created by a company’s entire value chain, from its suppliers to its customers. Since these emissions are caused far more indirectly, it can be challenging for a company to impact these emissions effectively.  

In a sense, however, telcos are in somewhat of a privileged position in this regard. By providing crucial connectivity, telcos are gatekeepers to what the GSMA calls the ‘enablement effect’ – enabling downstream digital transformation, thereby helping customers and partners to better achieve their own sustainability goals. According to the GSMA’s Enablement Effect report, the total emissions produced by the mobile sector are roughly 220 MtCO2e, around 0.4% of global emissions. In contrast, the level of avoided emissions that mobile communication enables is roughly 10 times this amount, primarily from reductions in electricity, gas, and fuel consumption, meaning the mobile industry as a whole has a tenfold positive impact on global sustainability efforts. 

But while this is indeed impressive, more work needs to be done to assist partners and customers to achieve carbon emission neutrality. For Orange, this has meant creating a new range of sustainable solutions, particularly focussed on creating greener IT. 

“In addition, by teaming up with technology partners (small or established), we are building a ‘solutions for green’ portfolio – a set of solutions with demonstrable positive impact on the environment,” explained Suquet.  

These solutions include virtualisation services, hosted in best-of-breed data centres; the application of green coding methodologies; management of mobile device lifecycles; smart building solutions to improve energy efficiency; and smart metering of energy and water to reduce consumption. 

Want to keep up to date with the latest developments in the world of telecoms? Subscriber to receive Total Telecom’s daily newsletter here

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N0r5ke Fibre will be joining Submarine Networks EMEA in London for the first time next month. Ahead of the event, Total Telecom caught up with Anders Vik, Co-Founder of N0r5ke Fibre to learn more about the growth of the Nordics as a connectivity hub as well as to hear about the N0r5ke Viking Cable project.
N0r5ke Fibre secured funding for its N0r5ke Viking cable project last autumn. Please can you tell us more about the system??
Yes, it was a busy autumn for us last year. Firstly, we raised NOK 40m from management and existing investors during the summer. Then, we initiated a process with Arctic Securities where we structured a financing package for new investors consisting of a NOK 150m Nordic bond and a NOK 40m equity issue to fully finance the project…

N0r5ke Fibre will be joining Submarine Networks EMEA in London for the first time next month. Ahead of the event, Total Telecom caught up with Anders Vik, Co-Founder of N0r5ke Fibre to learn more about the growth of the Nordics as a connectivity hub as well as to hear about the N0r5ke Viking Cable project.

N0r5ke Fibre secured funding for its N0r5ke Viking cable project last autumn. Please can you tell us more about the system??
Yes, it was a busy autumn for us last year. Firstly, we raised NOK 40m from management and existing investors during the summer. Then, we initiated a process with Arctic Securities where we structured a financing package for new investors consisting of a NOK 150m Nordic bond and a NOK 40m equity issue to fully finance the project. The equity was committed subject to a signed customer contract (serving as a proof-of-concept for the prospective investors), and once that was signed we launched the bond issue which was substantially oversubscribed with very strong support from institutional investors in the Nordics, UK, Continental Europe and USA.?

The structure of the financing is based on pre-funding both a debt service account for interest payments during the construction phase and a construction account that will be used to finance the project capex. We are allowed to draw on the construction account to pay invoices for construction-related costs and an agreed budget with a third-party consultant to finance the project, which has worked well for us so far. This way we were able to give the bond investors the required comfort on their investment, while not putting too many unnecessary restrictions on our day-to-day operations to complete the project (on budget and in time for onboarding the first customer in December this year).? ?

The Nordics have become a hub of activity for the global submarine cable market. What will the N0r5ke Viking cable mean for connectivity in the region?
Indeed, much of this activity can be linked to the growing interest in establishing green data centers and submarine networks, which are key for connectivity. Even though Norway has abundant production and supply of cheap hydro power, the data center build-out has been significantly slower than our neighbours’, mainly due to the lack of available and diverse connectivity. We expect this to change as several new submarine cables are now RFS connecting Norway directly to Denmark, UK, Ireland and the US. The N0r5ke Viking cable provides significantly improved diversity and is the missing link in a national fiber network ring with a new direct connection between the 2nd and 3rd largest cities Bergen and Trondheim. Along the cable route we have landing sites and ILA huts in areas with hydropower production output of combined 50 Twh.?

In the current market, what are the biggest challenges that a cable owner needs to overcome in order to launch a new project??
Apart from all the detailed planning and permitting needed, we would say that there needs to be a real commercial interest justifying the capex. For most companies this translates into the actual signing of an IRU type customer contract prior to initiation of the build out.? ?

What are your predictions for the submarine cable market in the next 12-18 months?
We expect continued good activity in terms of new submarine cable projects. There are basically four factors that we think will drive these investments:?
1. Low fibre count cables built during the early internet days reaching end of life, some of these will need replacement.?
2. The low interest rate environment and continued expanding digital economy has fuelled a tremendous increase in the allocation of institutional money to digital infrastructure funds, cementing digital infrastructure as an asset class of its own. Submarine cable networks characterised by long stable cash flows, low opex and strong underlying demand for data transport, provide an attractive investment for these funds. With generally high levels of dry powder available combined with a strong focus on ESG, we believe digital infrastructure funds will take a larger portion of the needed capex.?
3. ESG targets set by investors in the form of reducing digital infrastructure related emissions and improve diverse connectivity to areas with high and stable production output of cheap green energy e.g. Norwegian hydropower.?
4. Strengthen submarine cable network diversity and interconnectivity.? ?Recent developments and escalation in geopolitical tensions, if not reversed, could become a relevant source for rethinking the business rational for new subsea networks that would have made sense to build only a few years ago. This could favour cable projects a more decentralized model business cases as globalisation and cross continental interconnectivity. 

What are you most looking forward to about attending Submarine Networks EMEA in May??
This is our first time at Submarine Networks EMEA, so we’re looking forward to meet, interact and present details of our 810km submarine cable build-out along the Norwegian coast to the international submarine cable community.

Submarine Networks EMEA, the region’s leading subsea conference, will return to London on 17th and 18th May. For more information on how to join N0r5ke Fibre and 600 more industry leaders, head to the event website.

Russia’s invasion of Ukraine in late February was met with immediate condemnation by the international community, swiftly followed by weighty economic sanctions. As a result of this global pressure, many international firms quickly paused their operations in Russia to align with these new policies.
Swedish vendor Ericsson announced that it would cease equipment deliveries to Russia in early March, with rival Nokia doing likewise.
Now, it seems that the Ericsson is preparing to take the next step, announcing that it has suspended its business indefinitely…

Russia’s invasion of Ukraine in late February was met with immediate condemnation by the international community, swiftly followed by weighty economic sanctions. As a result of this global pressure, many international firms quickly paused their operations in Russia to align with these new policies.

Swedish vendor Ericsson announced that it would cease equipment deliveries to Russia in early March, with rival Nokia doing likewise.

Now, it seems that the Ericsson is preparing to take the next step, announcing that it has suspended its business indefinitely.

“Ericsson is engaging with customers and partners regarding the indefinite suspension of the affected business. The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave,” said the company in a statement.

The company reportedly has around 600 staff working in Russia. 

While not explicit as to what this means, the announcement appears to imply the closure of Ericsson’s Russian offices, indicating that they are preparing for long-term closure.

The move will not affect Ericsson’s ability to manufacture equipment in Europe, since its European factories are instead located in Estonia and Poland.

Ericsson says it expects to record a $95 million provision in Q1 2022 for the impairment of assets and other exceptional costs. This total does not include staff redundancy costs.

Whilst this is no small sum, it should be noted that Ericsson’s operations in Russia and Ukraine account for below 2% of the company’s global sales, and falling foul of international sanctions against Russia, intentionally or otherwise, would have far greater financial impact.

For the Russian operators, however, this news will be a cause for consternation. With no new equipment arriving from either Nokia or Ericsson for the foreseeable future, network maintenance and expansion will rapidly become a major challenge – one that could warrant shifting to a new equipment supplier entirely.

Indeed, many have suggested that these sanctions could represent a major opportunity for China’s Huawei and ZTE, two vendors that are already market leaders within Russia. These companies, much like China’s broader stance on the invasion of Ukraine, have refused to follow Western sanctions against Russia while also avoiding lending the country overt aid. 

Around a month ago, two of Huawei UK’s non-executive directors, Sir Andrew Cahn and Sir Ken Olisa, both resigned from their position citing Huawei’s refusal to officially condemn the Russian invasion. Two weeks later, Huawei’s chief financial officer, Meng Wanzhou, in her first public appearance since being released from house arrest in Canada, said that the company was still evaluating the complexities of government sanctions being put in place against Russia.

Both Huawei and ZTE comfortably have the scale and expertise to exploit the market opportunity presented by the temporary or even long-term departure of Ericsson and Nokia, but to do so would not be without risk. The US, for example, has made it clear that those companies seeking to circumvent sanctions against Russia could face sanctions of their own. 

With China’s telecoms sector, including Huawei and ZTE, already suffering under the weight of US sanctions put in place over the last three years, the threat of additional measures will not be taken lightly. 

In fact, reports suggest that Huawei may itself be preparing to reduce its business in Russia for fear of impinging on international prohibitions. Last week, Forbes reported that Huawei had sent part of its Russian staff on holiday for a month and had stopped entering into new supply contracts with Russian operators.

Huawei currently accounts for more than a third of all network equipment installed in Russian telecoms network.  

Want to keep up to date with the latest developments in the world of telecoms? Subscriber to receive Total Telecom’s daily newsletter here

Also in the news: 
Crafting the perfect digital foundation: DE-CIX and the importance of regional expansion
TIM starts formal talks with CDP for building Italian single network
Connecting Germany: Building the fibre that underpins 5G