Bolivia , Colombia , Brazil , Mexico , Central America, South America, Caribbean and Argentina

Phoenix Tower looks at more Latin America expansion opportunities

Bnamericas Published: Friday, April 12, 2019
Phoenix Tower looks at more Latin America expansion opportunities

A fast-expanding player in Latin America's towerco segment, Florida-based Phoenix Tower International recently went on an acquisition spree spanning Mexico to Bolivia, using financing from IDB Invest to increase its regional footprint.

Founder and CEO Dagan Kasavana told BNamericas that PTI will seek to double its sales this year following its 600-tower deal in Bolivia, plus 500 tower sites acquired from Uniti in Mexico, Colombia and Nicaragua, and as it looks to build over 200 new towers, while eyeing additional opportunities in Argentina, Brazil, Colombia and Mexico.

BNamericas: After your recent acquisitions, PTI has around 6,000 sites. Seeing as leading competitors such as American Tower and Telesites have larger asset portfolios, how will you increase competitiveness in an increasingly commoditized market?

Dagan Kasavana: I think a lot of our success stems from a few critical factors that we have focused on as we have built the business.

The first is a level of fairness and collaboration that we display with our business partners. This is part of our mission statement and is on display every day. If our customers, landlords and possible sellers think we are being fair with them, they want to work with us and we have been able to deepen and grow our business with many sellers, which have led to repeat transactions over time and more success for both of us.

Secondly, we have strong capital partners behind us who have supported the business for many years. When we discuss projects or transactions with our business partners, bankers and customers, they know we can execute on a transaction if the terms work. That has been critical to compete against larger players as it puts us on the same footing from a capital perspective in most transactions.

Thirdly, we are quite entrepreneurial and creative when it comes to getting transactions or projects done and can be flexible on matters of importance to our business partners while working creatively to solve their problems to facilitate a transaction. Also, the team will work harder than our competition for opportunities we want to do including significant travel to meet with business partners and working the long nights when necessary to get a transaction signed, diligenced, closed and professionally integrated in a fast period of time.

And finally, sellers want to feel like the assets are being managed at a professional level with local personnel and that we will be good stewards of the assets.  We believe we have a best in class operations team that maintains our sites, works with our landlords and customers and the municipalities. That resonates with sellers that have built towers from scratch in neighborhoods they grew up in or want to take a vacation after a sale and not worry about post-closing issues leading to headaches.

In short, we follow our mission statement on every deal and every transaction and that level of focus has led to significant success in a very competitive market.

BNamericas: What is the vision of PTI regarding the availability of mobile telecoms infrastructure in Latin America and the Caribbean? Is the region capable of a more widespread deployment of 4G and 4.5G?

Dagan Kasavana: The initial vision of the business hasn't changed. Latin America is experiencing huge growth in terms of new wireless infrastructure in every market and that the customers across LatAm are multi-nationals looking for multinational partners to help them build out their networks.

Similarly, best in class developers are looking for more financing or exit opportunities to continue building more towers for their customers. And a company that focused on that by building a multinational from the ground up with strong personnel in all markets, a strong capital deployment team that can oversee M&A, BTS, land acquisitions, real estate management, fiber ownership, development partnerships, small cell deployments, DAS construction and other successful investment structures across multiple countries across LatAm would resonate with our customers and our business partners in a manner that did not exist five years ago.

We absolutely believe the region is capable of more widespread deployments of 4G and 4.5G and believe we are well positioned through our investments in fiber, DAS and small cell deployments to work directly with our customers to get more coverage solutions quickly and in all of the markets they are in.

BNamericas: What are you targeting in terms of new sites through acquisitions and organic growth this year?

Dagan Kasavana: As the company grows, one of the things we have been most proud of is our ability to achieve very strong organic growth through lease-up. This is a combination of building and buying well-constructed assets as well as a sales focus throughout the organization. We are anticipating our sales to double this year given our new assets.

As for inorganic growth, we have budgeted continued M&A in line with our historical production and have already closed on 400 towers in Bolivia and 600 towers via the Uniti transaction this year. However, we never put ourselves or our teams in a position where we have to do M&A transactions. The transactions need to make sense. 

We are growing our BTS programs and expect to build over 200 towers this year. We are also growing our DAS construction business and land acquisition program this year, both of which expect to double production from last year. So we will certainly be active and engaging on all opportunities that make sense and continue to be opportunistic if M&A transactions make sense.

BNamericas: What is your take regarding regional regulation on telecoms infrastructure building, deployment and operation? Are there countries where it is easier to build towers and adjacent infrastructure than others?

Dagan Kasavana: Overall, we believe the effect of tower site regulation is a positive one. After all, a transparent process leads to a positive result for all participants. Panama and Costa Rica each possess strong federal tower site regulations. Peru has recently made improvements to its regulations as well. Strong and improving federal regulations within such jurisdictions provides for consistency in the ability to obtain permits and less local control, as well as protection over properly constructed and permitted sites. Generally, we are proponents of tower site regulations when they are established in a manner that is consistent with actual local practices implemented when constructing towers within the region.

We also believe that in addition to strong regulation, such regulations should be clearly written because it results in easier operation and construction of wireless infrastructure.  We show support of this belief through our efforts in the Dominican Republic, where we're currently supporting a bill that would regulate applicable municipal permits, which would be required to have specific timeframes and uniform fixed costs.

BNamericas: How important an issue is telecoms infrastructure theft (batteries, fiber optics, antennas) and sabotage across the region? Is there a particular sector or country where you would like to see the authorities improve security for infrastructure?

Dagan Kasavana: PTI has not had significant issues here, as our customers typically provide security for their equipment that they own at the sites when necessary and work with us to ensure we are protecting their whole network. I think it is likely unrealistic to depend on the government for this type of security but we do take our obligations seriously to ensure we are providing the appropriate fencing, cameras and other security equipment at sites we deem need them.

BNamericas: Is there a particular region where you would like to increase your presence?

Dagan Kasavana: We see opportunities to grow in the larger markets across Latin America including Mexico, Colombia and Argentina, and of course Brazil, where we have our affiliated company Phoenix Tower do Brasil. We will continue to focus on opportunities to scale in those markets as we see significant investment and/or dispositions by our customers not only in towers but other alternative infrastructure and we will continue to monitor these opportunities.

BNamericas: How much of a game-changer is 5G with its shorter distances and denser network architecture for towerco and infrastructure players such as PTI?

Dagan Kasavana: It's definitely a game changer in terms of opening up new opportunities for tower companies as well as potentially bringing other players into the space, but the towers will continue to be central to 5G networks.

Given our relationships with our customers, presence across Latin America, entrepreneurial focus and strong capital backing, our hope and expectation is that we will find many new avenues to invest in and pursue on behalf of our customers as their networks continue to evolve and we plan on being a very relevant infrastructure player in a 5G world.

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