QMC Telecom wary of direct spectrum investments

QMC Telecom, a telecom infrastructure group based in Puerto Rico, perceives traditional tower and infrastructure companies’ acquisition of spectrum as a risk.

This model is being considered by groups such as Digital Colony and American Tower, which are studying legal and technical aspects for participating in Brazil’s 5G tender expected for this half.

These companies aim to create a complete package for smaller telecom operators, offering services that cover tower infrastructure, the transport network, and spectrum. 

Currently, these companies are primarily building and leasing towers.

“Providing a complete network, with equipment and spectrum usage for multi-operators is a very different operation and business case than the one currently practiced by neutral hosts (neutral infrastructure companies) around the world,” QMC's Latin America president, André Machado, told BNamericas.

“In a country where the level of competition is remarkably high, like Brazil, this becomes even more challenging. We are not saying that it cannot be done, nor that we are not evaluating, but that the challenge must be recognized.”

Similar cases are starting out in some countries with mixed results, which reinforces the need for thoroughly evaluating the economics of such models, Machado said.

“Look at the case of Altán in Mexico and the challenges it is facing,” he said, referring to the bankruptcy protection request filed by the operator of Mexico’s Red Compartida wholesale network.

Altán's model includes full ownership of the highly coveted 700MHz band. As a wholesaler, Altán builds and operates the network, but it is not involved in providing mobile services to consumers.

Instead, it provides mobile operators access to the network, which in turn use network capacity to deliver a mobile telecoms product.

Altán recently announced that 3mn mobile users were relying on its network, which has 100 clients. The figure represents only a small percentage of the mobile market in Mexico.

REGULATION

Machado also believes regulation in Brazil and other countries must evolve to embrace wholesale spectrum offering by neutral hosts, offering greater legal security.

Officials from Brazil’s ministry of communications and from regulator Anatel, however, have said changes would not be necessary as any infrastructure company may bid for spectrum, provided terms and obligations are met.

A top executive from Brazilian telecom operators association Conexis Brasil Digital, requesting anonymity, disagreed. 

"We are talking of a market ‘de-verticalization’ here. Who will be legally responsible for the obligations associated with the spectrum concession, the infrastructure company or the service provider? This has to be considered," the source told BNamericas.

FUNDING

At the end of June, QMC Telecom increased its credit facilities for new infrastructure investments in Brazil with 500mn reais (US$96.1mn) in public debentures led by Itaú as underwriter.

“The objective of this funding is to build new telecom infrastructures for the operators we already work with to provide cellular coverage, be them towers, rooftops. Also, to build new dedicated systems for indoor environments, such as shopping malls, hospitals, corporate buildings, hotels, among others,” Machado said.

QMC develops, owns, operates and leases towers, rooftops and small cells for mobile network operation, in addition to distributed antenna systems (DAS) for enterprises. In Brazil, it supplies the main mobile operators Vivo, TIM, Claro and Oi.

While acquisitions and expansions are not the main focus, Machado did not rule them out. "When we understand that there is a good opportunity to be successful in a new market, we will evaluate a possible expansion."

Founded in 2011 in Puerto Rico, the company is present in Brazil, Mexico, Colombia, Peru and the US, the latter two being the most recent operations, launched last year. 

QMC reports 2,500 network assets installed and under development in its markets.

The company's leading shareholders include Housatonic Partners, Accel Partners, Grupo Santo Domingo, Peterson Partners and Pacific Lake Partners.

The company's board of directors also includes Chris Torto, CEO and founder of Brazil-based Ascenty, one of Latin America's largest datacenter firms.