09 Nov Digital infrastructure bolsters societal transformation
Henrik Clausen, CEO, TDC Group, outlines the company’s critical role in Denmark’s digital transformation and the correlation between digital advances and the rise of sustainability.
Why has Denmark been so successful in its digital transformation and developing its digital industries?
There is a significant link between investments in high-quality digital infrastructure and a country’s economic growth; by increasing a country’s broadband, its gross domestic product is increased. Digitalization is also expected to lower carbon dioxide emissions by 15 percent across all industries. There has been a good understanding of these benefits on a national level in Denmark. Denmark is quite developed in the digital market, both in the private and public sector. Digital banking services are a prime example. Most public services in the country are digitized to some extent. We have a history of building competence within this area and there is a great deal of trust in the population. This has provided a great foundation for the development of digital services, not only between businesses but between individuals and authorities. Since Denmark is a tight-knit country with a manageable number of key industry players, we have been able to roll out high-quality digital infrastructure quickly. The combination of a sharp political focus, maturity in how we adopt new digital services and a robust investment community has enabled Denmark to be at the forefront of digital development.
Can you give us a brief history of TDC Group’s operations?
We have a long history of over 100 years, including around 42 years of experience in mobile. Until the 1970s, the development of services was traditionally over fixed infrastructure service. From there the Danish telecommunications market developed quickly and was liberated early. Today TDC offers a full-fledged service portfolio including mobile, broadband and entertainment services. In 2018, TDC Group received new owners, the pension funds Arbejdmarkedets TillaegsPension, PFA Pension and Pensionskassernes Administration and the infrastructure fund Macquarie Infrastructure and Real Assets. In 2020 we invested around $754 billion in digital infrastructure, which was approximately half of the total investments in the Danish telecommunications space.
Driven by the belief that there was value to be created not only for our owners but our customers, we split the company between being a wholesale network provider and a service provider. The split was legally carried out in 2019 and today we have two stand-alone companies. Our investment hypothesis was that there was value to be created because the two businesses are fundamentally different. The first company, TDC NET, focuses on building high-quality, high-speed digital infrastructure, in particular mobile, broadband and fiber networks. To grow TDC NET, we opened our digital infrastructure to all service providers so they can build their commercial mobile and broadband offerings on our networks. At the same time, TDC NET continues to invest four to five billion every year into futureproofing our digital infrastructure and transforming us into being the strongest national infrastructure provider. Our second company, Nuuday, gathers our strong service provider brands to deliver digital customer and entertainment services. Nuuday will continue to offer connectivity, mobile and broadband services on TDC NET’s digital infrastructure. They will also collaborate with other network owners to access customers in areas where TDC NET is not present. We are approaching the final phase of separation. As of January 2022, the two companies will be truly stand-alone entities with independent boards, management and financial structures.
What major landmarks has your company recently passed?
Developing futureproof telecommunication services and new digital infrastructure are our key enablers and drivers of growth. Maintaining and developing the quality of both our high-speed broadband networks is crucial. Much of our focus from an investment standpoint has been on rolling out fiber connections across the country to provide next generation networks in terms of speed. At the end of 2020, we completed an ambitious modernization of our nationwide mobile network. We upgraded the 4G network across the country and established nationwide 5G coverage. We are the first country in the Nordic region to do so. Since we launched the 5G network commercially, we have seen a significant uptick in traffic. Now, most new smartphones sold in at Nuuday are 5G enabled and more than 50 percent of all new mobile subscriptions in Denmark include 5G. It was a fast transition. Every year data traffic increases by around 40 percent. We need to continuously adapt and optimize our digital infrastructure to match this from capacity, reliability and speed perspectives.
How has the company leveraged its partnerships in both public and private sectors to enhance its offerings?
We collaborate a great deal with partners. We have a strong collaboration with Ericsson who supported us in rolling out the 5G mobile network in Denmark. We share a 5G Innovation Hub located on the other side of the bridge from Copenhagen in southern Sweden and collaborate with Ericsson on how 5G can be applied in the Danish context. Since Denmark and TDC are frontrunners, we can demonstrate how to leverage the unique qualities of 5G technology to drive innovation and value for businesses. We also work with some of the biggest national universities, such as the Technical University of Denmark just outside Copenhagen. We work on how to use 5G technology to support new industrial areas such as robotics. There is a huge amount of effort being put into using telemobility to operate robotics using 5G infrastructure. We are also conducting research projects in using drones as a more effective way of transporting freight. As a market leader we have the financing and resources to deliver on core technologies. However, to do so one requires deep relationships with technology partners and large research institutions.
How has the COVID-19 pandemic pushed forward digitalization of industry and changed the lives of citizens in Denmark?
The importance of digital infrastructure became obvious when the pandemic hit. We coped well due to Denmark’s mature digital infrastructure and advanced approaches on how we use digital services. We are used to interacting digitally with businesses and public authorities as individuals and companies. When we were hit by the COVID-19 pandemic and lockdown, our focus across TDC NET and Nuuday was to ensure sufficient capacity and reliability in our network and services, which we managed to do. We saw an increase of data traffic last year during the COVID-19 lockdowns of around 50 percent, which is a massive ramp up and stress test of our digital infrastructure. We managed very well and ensured reliable connections and sufficient capacity throughout the period. We even managed to deliver all-time-high network quality during this period. While our digital transformation was accelerated during the lockdowns, we had previously prepared ourselves to work more digitally beforehand. Our workforce is large, and they were forced to work from home from one day to the next. Within a couple of weeks, we managed to reconfigure the way we ran our entire business. We made it a priority to stay close to people. Our transformation was accelerated during the lockdowns, and we are now confident to work in a more flexible, smarter and sustainable way.
Additionally, the pandemic stress tested our ability to cope as a company, industry and society in leveraging digital infrastructure and managing extraordinary circumstances. 2020 was an eye opener that we can use going forward as both a company and country. We now know a new way of working that creates more flexibility for individuals and provides the right level of efficiency. Our society has learned how to engage with authorities, partners, companies and industries in new ways. These experiences have shaped organizations and industries across Denmark. We need to take these lessons in how we can engage and run our businesses with us moving forward. Digitalization can be a key enabler in building a greener and more sustainable economy. The focus on sustainability and the digital transformation are coming together and creating opportunities to accelerate change at a national level. As a company, we need to lean aggressively into these agendas. We feel a sense of responsibility and pride and a need to step up.
What is TDC Group doing to promote sustainability and lower greenhouse gas emissions?
With the ultimate ambition of reaching net zero in 2050, the Danish government has launched several initiatives focused on individual sectors. However, a lot of the change needs to come from Danish companies. We have set a target of having net-zero impact by 2030, and we believe this is achievable. We are rated in the top one percent of most sustainable companies, and we look forward to continuing our work in this area in the years to come. Our sustainability approach is twofold. First, we must ensure we consume less energy. As end users continue to use more data-heavy services such as streaming, we need to transport more traffic through our networks, which requires energy. We have an obligation to address this and make sure we decrease our own carbon dioxide footprint in a variety of ways. One is using artificial intelligence to operate our car fleet more effectivity and reduce the total number of kilometers taken by 20 percent.
We must also raise our use of green energy. Rather than purchasing green energy, which is already in the utility grid, we decided to actively engage with projects that add new and more green energy to the grid. We signed an agreement for four new solar parks that will cover around 60 percent of our electricity consumption. These are specifically dedicated projects. We are working to close the remaining 40 percent and are considering wind power. There needs to be a combination of driving reductions in the energy consumption of our networks and ensuring that the energy we use is green and based on new sources. We are at a defining moment, not only locally but globally. We need to act on the climate agenda and find faster routes to a sustainable future. All of us have a responsibility—governments, companies and individua
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