Defence-as-a-Service: A New Revenue Stream for TowerCos

Introduction: From Passive Rent Collectors to Active Service Providers

For the past decade, TowerCos have been valued as yield assets — stable, predictable, rent-collecting businesses. But yield is not enough anymore. Investors and governments are seeking resilience, security, and strategic optionality.

Enter Defence-as-a-Service (DaaS) — a model where TowerCos leverage their vast footprint of 18,000 cell sites to deliver situational awareness, threat intelligence, and emergency communications as a service.

This is not just a public good — it is a commercially viable growth market. And it may define the next decade of TowerCo evolution.

What DaaS Looks Like in Practice

Imagine a subscription model where governments, defence agencies, and even critical-infrastructure operators pay for:

• Spectrum Monitoring & AlertsAutomated detection of jamming, spoofing, or rogue base stations, with national dashboards and real-time alerts.

• Drone & UAV Detection FeedsContinuous telemetry sweeps with geolocation of suspicious drone activity.

• Edge Cyber DefenceTowers hosting honeypots and intrusion sensors that provide early warning of cyber attacks targeting network equipment.

• Emergency Fallback ServicesEncrypted fallback comms slices for first responders during crisis situations, prioritised over commercial traffic.

• Resilience ReportingMonthly or quarterly intelligence reports on spectrum health, attack attempts, and near-misses — providing data for national resilience KPIs.

Commercial Model Options

Boards have several options for monetising DaaS:

1. Government Subscription:

   • Annual service fee per tower, per region, or nationwide.

   • Scales predictably with tower count, ideal for infrastructure funds seeking stable revenue.

2. Pay-per-Alert Model:

   • Defence agencies pay for validated, actionable alerts.

   • Encourages investment in AI to minimise false positives.

3. Public-Private Partnership (PPP):

   • Government co-funds SDR/edge upgrades in exchange for priority data access.

   • Capex recovery over a long-term contract (10–15 years), similar to energy or transport concessions.

4. Tiered SLA Offering:

   • Bronze/Silver/Gold tiers with progressively higher data resolution, response time commitments, and exclusivity zones.

Funding and Investment Opportunities

DaaS can be funded through:

• Sovereign Resilience Budgets: Many nations have post-COVID and post-Ukraine infrastructure funds earmarked for cyber and hybrid threat resilience.

• Defence Offsets: Telecom-related defence upgrades could be tied into existing offset obligations for foreign suppliers.

• Green/Social Infrastructure Bonds: Investors are increasingly interested in assets with “resilience” or “security” ESG credentials.

This opens TowerCos to new pools of capital beyond traditional telecom infrastructure investors — including sovereign wealth funds, DFIs (Development Finance Institutions), and even NATO/EU security programmes.

Strategic Advantages for TowerCos

1. Revenue Diversification:Moves TowerCos beyond MNO lease dependency, creating a counter-cyclical income stream.

2. Regulatory Goodwill:Participation in national security initiatives can smooth approval processes for new tower builds and spectrum allocations.

3. Asset Re-rating:Towers with active defence infrastructure may be classified as critical national assets, increasing strategic value and defensibility against hostile takeovers.

4. Competitive Moat:The first TowerCos to deploy DaaS at scale could establish long-term government contracts that competitors cannot easily replicate.

Challenges and Board Considerations

The DaaS model is powerful, but boards must manage:

• Neutrality Concerns: Multi-tenant TowerCos must ensure one customer’s defence sensors do not compromise another’s traffic or security posture.

• Data Sovereignty: Ensure that threat data never leaves the jurisdiction unless explicitly authorised.

• Operational Readiness: DaaS requires 24/7 monitoring, SLAs, and potentially a new NOC/SOC function within the TowerCo.

• Liability: Clear agreements must spell out whether TowerCos are merely “signal carriers” or responsible for incident response.

Board Conclusion: Time to Build the Business Case

Defence-as-a-Service is no longer a futuristic idea — it is an emerging product category that aligns TowerCo economics with national security objectives.

Boards should immediately:

1. Commission a Market Study: Quantify potential government and enterprise demand.

2. Run a Financial Model: Evaluate ROI for SDR/AI upgrades versus subscription revenue.

3. Engage Regulators and Ministries: Position the TowerCo as a trusted national partner.

4. Pilot a Commercial Contract: Even a single-region proof-of-concept could establish the playbook for national rollout.

For TowerCos, this is a chance to move from passive landlord to active national guardian — and to capture a premium valuation multiple in the process.

“Defence-as-a-Service is the next big revenue stream hiding in your tower portfolio.”