TowerXchange Confab Highlights LatAm TowerCo Opportunities and Risks

The TowerXchange MeetUp Americas 2023 conference held in Ft. Lauderdale, FL, this week brought together tower operators, contractors, vendors, and investors to discuss the opportunities and challenges for tower companies in Latin America.

Natalia Gorohova, TowerXchange Head of Research, set the stage with an opening presentation on the state of towers in Latin America. The outlook for the tower sector across LatAm is generally positive. Brazil, Mexico, Colombia, and Peru are growth markets. Brazil and Chile have launched initial 5G deployment in urban areas even as 4G network densification continues. More importantly, national governments are creating incentives for rural connectivity, new tower builds in remote areas and making spectrum available at auction. In larger countries, like Brazil and Mexico, nearly a dozen tower companies serve three major MNOs which own about 10 percent of the towers in those countries. But in countries like Colombia, Argentina, and Costa Rica, the MNOs still own 50 percent of the towers. 

Significant M&A activity in 2022, from SBA Communications and Phoenix Tower International with portfolio acquisitions in Brazil and Chile, respectively, has changed the LatAm towerco landscape, Inside Towers reported. Moreover, América Móvil’s spin-off Sitios and Millicom’s Lati tower carve out are expected to shift the tower market dynamics in a major way.

Michael Brewer, Phoenix Tower International CFO, outlined in a keynote address PTI’s progress in the 13 markets where it operates in Latin America. He talked about investment risks in the region such currency devaluations, insufficient scale of operation and slow growth, lease defaults and high capital costs. At the same time, he identified “risk mitigants” where low investment flows do not necessarily apply to the tower business. For instance, annual escalators can be local currency-based and CPI-indexed. Furthermore, ground rents, operating expenses and SG&A denominated in local currencies generally result in lower operating costs for the towerco. He also pointed out that towercos are offering their tenants ancillary services such as energy-as-a-service to drive incremental revenues.

Several panels comprising a mix of operator, towerco and investor executives addressed a range of relevant topics including managing towers in the current economic environment, how towercos are responding to changing investor priorities, and the evolving relationship between the MNOs and their passive infrastructure providers. There was a lot of discussion on this latter point covering the pros and cons of active infrastructure sharing and the potential for towercos to offer network-as-a-service in a number of countries.

Richard Cane, EVP and President-International, SBA Communications delivered a Day 2 keynote that addressed how shared infrastructure is an important consideration in LatAm markets. Cane advocated for infrastructure sharing as a way to make effective use of capital and to curb tower proliferation, instead focusing infrastructure where it’s needed most, particularly in smaller markets.

A second keynote was delivered (in Spanish) by Juan Gabriel García Rodríguez, Head, General Directorate of Markets, Superintendencia de Telecomunicaciones (Sutel), the regulator in Costa Rica. He highlighted how new regulations are intended to help expand the base of over 5,900 towers in urban and rural areas throughout the country.

Panel discussions that followed tackled towerco operational challenges to boost efficiency and accountability, and how to meet urban densification challenges from 5G to in-building connectivity.

A number of assigned breakout sessions on both days gave conference participants an opportunity to take a dive deep into key topics raised in the panel discussions. Topics ranged from owning and deploying fiber and edge data centers, satellite connectivity, 5G site acquisition, internet service providers entering the 5G market, navigating a patchwork regulatory environment and, importantly, workforce development.

By John Celentano, Inside Towers Business Editor

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