Spotlight: The LatAm investment plans of leading towercos

Expansion of 4G outside urban centers, roll-out of 5G and new physical solutions for the deployment of antennas, such as street-level towers and camouflaged sites, have been the main drivers for telecom tower companies in Latin America this year.

Many are also betting on neutral and independent fiber provision, particularly American Tower, as well as edge computing capabilities and edge datacenters. Overall, they all see good business prospects and revenue growth in the coming year.

Headwinds for 2023 include FX and the consolidation of telcos, towercos’ clients, which tends to impact the churn of many of the tower firms and lead to the renegotiation of contracts. 

Financial problems at groups such as Altán Redes in Mexico have also affected tower orders for some of these companies.

BNamericas spoke with sector players, looked into companies’ data, and presents details of investment plans of four of the major towercos, companies with operations in more than two markets.

AMERICAN TOWER

Fiber deployments, community centers, strategic tower build-outs and, eventually, M&As are on the LatAm radar of American Tower (ATC), the world’s leading wireless infrastructure company.

Particularly in Mexico and Chile, the company is advancing a program to open community digital centers to serve low-income tiers of the population in underserved areas with digital and broadband services.

In Mexico, the goal is to have 40 such community digital centers in the coming years. 

In addition to fiber and macro sites, the company also provides 92 in-building and outdoor DAS (distributed antenna systems), small cell and Wi-Fi networks, as well as managed rooftops and related infrastructure services in Mexico.

In Brazil, ATC is also investing in the expansion of a neutral IoT LoRaWAN network to support applications for industry 4.0 and IoT ecosystems, having recently closed a deal with Algar Telecom as part of this drive. 

The group also has 25,000km of fiber for wholesale use crossing five Brazilian states, although only the backbone in Minas Gerais is effectively in operation.

ATC’s Latin America portfolio totaled 45,558 owned towers at end-September, 20,643 of which were in Brazil, down from 22,839 at end-June. 

Of the 1,578 sites globally built during Q3, 68 were in Latin America. In the same quarter last year, new builds in LatAm totaled 202.

The company had plans to build approximately 6,500 new sites worldwide this year, of which 500 were to be in Latin America. In 2021, new towers in Latin America totaled 600.

By number of towers, Brazil is the third largest market for ATC after the US and India.

In Latin America, Brazil is followed by Mexico (9,627, down from 10,027 in June), Colombia (4,977, down from 4,982), Peru (3,938, down from 4,379), Chile (3,738, down from 3,875), Paraguay (1,445, flat) Costa Rica (695, down from 697) and Argentina (495, down from 503).

ATC’s main clients in the region are Telefónica, with tower contracts in all the markets except Peru; AT&T (contracts in Argentina, Brazil, Colombia, Mexico); América Móvil (all markets); and Telecom Italia.

The firm is, however, expecting heightened levels of churn over the next 12-18 months in the region as telcos’ consolidation advances in some markets, particularly Brazil and Mexico.

Unlike some of its peers, ATC is not mulling investing in the Latin American datacenter market.

SBA COMMUNICATIONS                                                                     T

The second largest towerco in Latin America, SBA Communications is investing on different fronts in the region, eyeing opportunities, among others, in edge datacenters. 

As part of that drive, earlier this year SBA acquired a datacenter in Brazil from local firm Matrix.

SBA expects an overall good business environment under the new Lula administration in Brazil, its biggest market outside the US and where it has 12,500 sites.

“I think for us, it’s going to continue to be kind of a good business environment, without a lot of policy changes,” CEO Jeff Stoops told investors in a Q3 earnings call.

The group owned or operated 36,519 sites across 16 markets in the US, South America, Central America, Canada, South Africa, the Philippines and Tanzania as of end-September.

LatAm operations and main offices in the region are in Brazil, Argentina, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Nicaragua, Panama and Peru.

“International [US-excluded] churn remained elevated in the quarter due primarily to carrier consolidations and Digicel’s previously announced exit from Panama,” said CFO Brendan Cavanagh.

Digicel Panamá requested the voluntary liquidation of its concession in early April after authorities approved the takeover of Cable & Wireless Panamá by Claro (América Móvil). Digicel claimed the move makes competition impossible.

Churn is expected to hurt SBA in Brazil as well, due to the acquisition of Oi’s mobile business. In September, Oi accounted for 4% of SBA’s international site leasing revenues, down from 28.4% a year-earlier. 

Overall, Telefónica globally accounted for 18.6%, América Móvil 18.8% and TIM 17.2% of SBA’s international revenues in September. SBA’s top three clients are US groups T-Mobile, AT&T Wireless and Verizon Wireless.

The company is also expected to continue to pursue new acquisitions itself. 

In October, it wrapped up its previously announced acquisition of 2,632 sites from Grupo TorreSur (GTS) in Brazil for approximately US$725mn in cash. The acquired sites have 2.1 tenants per tower.

The company has made 13 acquisitions in the last 10 years in Brazil.

IHS TOWERS

Among the newest players in the field, having entered Latin America just under three years ago, IHS Towers is investing in macrosites, small cells, wireless infrastructure and fiber.

Overall, Latin America accounted for 18.2% of IHS’s 39,397 active sites as of the end of September, and 9,651 tenants. That compares to 4,804 towers and 5,826 tenants a year earlier.

Tenants refer to the number customer leases per tower. For example, if one customer leased space in five towers, that would mean five tenants.

The company’s main customers in Latin America are Claro Colombia, Claro Brasil, Tigo Colombia, Telefônica, TIM and Oi.

The company has said Latin America will require over 19,000 new towers and over 42,000 new MNO points of presence between December 2020 and December 2025.

Yet, due to “timing and general market conditions,” IHS Towers twice revised down its full-year telecom towers construction outlook, including in Latin America.

It now expects to end 2022 with 300 new sites in Latin America. The number is down from 400 in its previous outlook and from 700 in its first 2022 guidance.

As per investments, the company is considering neutral fiber networks in Colombia and Peru, in addition to Brazil, where it has a neutral fiber network, I-Systems, in partnership with TIM. Those are the three LatAm markets where it operates. It also operates in seven African countries.

IHS claims to be the world’s fourth-largest independent tower company by number of sites, trailing ATC, Europe-focused Cellnex and SBA.

The group entered Latin America in February 2020, following the acquisition of São Paulo-headquartered Cell Site Solutions (CSS), which had operations in Brazil, Colombia and Peru.

In 2021, IHS Towers acquired Skysites Holdings, which is focused on Brazil, and Centennial Towers, which has operations in Brazil and Colombia. 

In the first quarter of this year, the company closed its latest M&A, adding 2,115 towers from Brazil’s GTS’s SP5 portfolio. 

As a result, and combined with build-outs, IHS Towers has at present around 7,000 towers in Brazil, 228 in Colombia, and 52 in Peru. 

PHOENIX TOWER INTERNATIONAL

Phoenix Tower International (PTI) became the largest communications tower owner in Chile following its acquisition of 3,800 sites from local operator WOM. 

The company also claims to be tower leader in number of sites in Bolivia.

Looking ahead, the group is in talks with Latin American telecom operators for the construction of over 230 towers in the coming months, Alex Tude, PTI’s director of tower development, told BNamericas.

The exact number of new sites, however, is set to be lower as usually only some of the negotiations result in deals.

PTI owns and operates over 18,000 towers, wireless infrastructure and related sites in 20 countries in the Americas and Europe. 

The company had around 9,000 sites in Latin America as of March and expects to end 2022 with 134 new sites deployed in the region, after having initially projected close to 300 new ones.

Its main markets in the region are Mexico, Bolivia, Chile, Colombia, the Dominican Republic and Ecuador, with core customers including Telefónica, WOM, Altice, Viva Bolivia and Altán.

Jamaica has also been a very important market for the company in the past two years, Hermes Figueroa, PTI's sales director for Latin America, told BNamericas.

In addition to the towers, PTI has around 1,400km of fiber optics in Mexico and provides DAS services in the region.

One of the company’s main bets is on micro or far-edge computing, with processing equipment attached to its sites, and on container-type edge datacenters, located adjacent to the towers, Figueroa said.

According to the executive, PTI has seen opportunities on this front particularly in Mexico.

Founded in October 2013, PTI is privately owned and is backed by global investors such as The Blackstone Group. 

In January, funds managed by Blackstone Infrastructure Partners purchased a 35% stake in the company, beefing up its expansion capabilities, and in August Phoenix secured US$2bn in a multi-facility transaction covering North and South America.

Last October, London-based infrastructure investment manager Wren House became, for an undisclosed sum, a minority investor in PTI.

This year the company acquired 3,200 towers from Cellnex in France, 202 towers from Tower Venture Holdings in the US and the 3,800 from WOM in Chile.