TowerXchange Meetup Americas 2019 Post Event Report · CEO Dhabi Group Scott Coates CEO Wireless Infrastructure Group Carlo Ramella COO, EI Towers and Chairman, Towertel Alexander

| TowerXchange Meetup Americas 2019 report | www.towerxchange.com/meetups/meetup-americas1

TowerXchange Meetup Americas 2019 Post Event Report

Exclusive insights from the 6th annual gathering of key Americas telecom infrastructure leaders

www.towerxchange.com


Our informal network of advisorsAbout TowerXchange

Founded in 2012, TowerXchange is your independent community for operators, towercos, investors and suppliers interested in EMEA, CALA and Asian towers. We’re a community of practitioners formed to promote and accelerate infrastructure sharing. TowerXchange don’t build, operate or invest in towers; we’re a neutral community host and commentator on telecoms infrastructure.

TowerXchange produces a monthly newsletter and quarterly journal, both available to subscribers, which cover industry news and provide deep insights into telecoms infrastructure worldwide. We also host annual Meetups on each of four continents to bring together the leading tower industry stakeholders.

TowerXchange was founded by Kieron Osmotherly, a TMT community host and events organiser with 21 years’ experience, and is governed with the support and advice of the TowerXchange “Inner Circle” – an informal network of advisors. TowerXchange was acquired by Euromoney Institutional Investor PLC on December 1, 2017

TowerXchange’s “Inner Circle”

© 2019 Site Seven Media Ltd. All rights reserved. Neither the whole nor any substantial part of this publication may be re-produced, stored in a retrieval system, or transmitted by any means without the prior permission of Site Seven Media Ltd. Short extracts may be quoted if TowerXchange is cited as the source. TowerXchange is a trading name of Site Seven Media Ltd, registered in the UK. Company number 8293930.

(Chairman) Charles GreenCEO, International DigitalInfrastructure Alliance

Zhiyong ZhangChairman & PresidentMiteno

Akhil GuptaChairmanBharti Infratel

Nat-sy MissamouSharing New Business Program Director, Orange

Nina TriantisManaging Director, Global, Head of Telecoms & MediaStandard Bank

Terry RhodesCEOEaton Towers

Marc GanziManaging Partner & InvestmentCommittee Member, Digital ColonyCEO, Digital Bridge Holdings

Arun KapurCo-FounderIrrawaddy Green Towers

David MurphyDirector - TMT, EMEAStandard Chartered Bank

Dagan KasavanaCEOPhoenix Tower International

Daniel Lee Managing DirectorIntrepid Advisory Partners

Suresh SidhuCEOedotco

Rhys PhillipChief ExecutiveCornerstone

Ted ZhongFounder & CEO,Astro Tower

Hal HessExecutive Vice President & Chairmanof Latin America and EMEAAmerican Tower

Nobel TanihahaPresident DirectorPT SOLUSI TUNAS PRATAMA (STP)

Umang DasChief MentorAmerican Tower

Gilles KuntzCEOTowerCo of Madagascar

Maria ScottiCEOTorrecom

Tilak Raj DuaDirector GeneralTAIPA

Dimitris LiouliasGM of StrategySaudi Telecom Company

Kurt BagwellPresident InternationalSBA Communications

Jim EisensteinChairman & CEOGrupo TorreSur

Bimal DayalCEOIndus Towers

Inder BajajAdvisor, Helios Investment Partners & former CEOHTN Towers

Tunde TitilayoVice ChairmanSWAP International

Peter BendallSenior Vice PresidentMacquarie Infrastructure and Real Assets

Jeffrey EldredgePartnerVinson & Elkins RLLP

Enda HardimanManaging PartnerHardiman Telecommunications Ltd.

Adeel BajwaCEODhabi Group

Scott CoatesCEOWireless Infrastructure Group

Carlo RamellaCOO, EI Towersand Chairman, Towertel

Alexander ChubPresidentRussian Towers

Steve WeissCFOProtelindo

Toni BrunetCorporate & Public Affairs Director,Cellnex Telecom

Manish KasliwalVP and Chief Business Development Officer, C&SE Asia, American Tower


Contents

4 Foreword

5 TowerXchange Meetup Americas roundup

6 Testimonials

7 2019 attendee list

8 How we promote TowerXchange Meetups

10 TowerXchange Meetup Americas 2020

11 TowerXchange’s analysis of the independent

tower market in CALA

28 TowerXchange Meetup Americas 2019: reports

and summaries

Knowledge sharing

Business opportunities Interactive roundtables

TowerXchange Meetup calendar

< TowerXchange Meetup Asia 2019, December 3-4

< TowerXchange MENA 2020, January 28-29

< TowerXchange Meetup Europe 2020, May 19-20

< TowerXchange Meetup Americas 2020, June 23-24

< TowerXchange Meetup China, September, 2020

< TowerXchange Meetup Africa 2020, October 13-14


Foreword by TowerXchangeOnce again, TowerXchange gathered the very best in class from the CALA telecom infrastructure ecosystem under one roof!

This past July, 243 senior executives from the regional industry joined forces in Boca Raton for two days of intense business talks and high-level networking. Thanks to the knowledgeable insights of the experts on stage and in the many breakout sessions, TowerXchange offered its audience an unparalleled updated perspective on the state of the market across top CALA countries, from Mexico to Argentina.

Towercos shared plenty of exciting news, including their diversification plans into fibre, small cells and data centres as well as their very first attempts to take over energy management and optimise operational efforts across their portfolios. As the CALA region slowly shifts towards a more mature digital infrastructure landscape, the event hosted plenty of discussions on 4G and 5G, innovation and densification plans, opportunities across virgin markets as well as financing best practices for towercos and infracos.

New this year: TowerXchange welcomed some of the very top mobile network operators from the CALA region – including Telefónica, Telecom Argentina, Entel Peru and Entel Chile – who shared their upcoming deployment plans, operational requirements and technology advancements in exclusive, closed-door sessions. A unique opportunity for solution providers and advisors to interact with leading operators and understand their needs and future projects!

The TowerXchange Meetup Americas closed its doors for the sixth year in a row but left us all energised and optimistic for the future. The CALA telecom infrastructure industry is evolving and we are here to serve it with plenty of news, research and our unmissable live event. The team is already working on the 2020 edition of the TowerXchange Meetup Americas, which will be held in Boca Raton, 23-24 June; in the meantime, do not miss the exclusive content of this report from the 2019 show.

We look forward to welcoming you once again at the TowerXchange Meetup Americas 2020.

Warmest regards

Arianna Neri Pablo CrespoManaging Director, Americas and Asia Head of Research, Americas and AsiaTowerXchange TowerXchange

Arianna Neri, Managing Director, Americas and Asia, TowerXchange

Pablo Crespo, Head of Research, Americas and Asia, TowerXchange


TowerXchange Meetup Americas 2019 at a glance

Join us on 23-24 June 2020 for the seventh annual TowerXchange Meetup Americas!

Find out more at www.towerxchange.com/meetup-americas/

Seniority of the TowerXchange Meetup Americas 2019 attendees

C-level

Director-level

SVPs, VPs and

Partners

Managers & others

TowerXchange Meetup Americas 2019 industry breakdown

Towercos and infracosInvestors, analysts and advisorsMNOs, small cells, DAS and active providersOtherSolution providers and contractors

28%

26%24%

22%

Two days of intensive discussions and networking:

Amongst the delegation were:

243 senior executives from the CALA telecom

infrastructure ecosystem

26 towercosin attendance as well as seven

leading regional MNOs

31investors, analysts and advisors

from 23 organisations

32 sponsors and exhibitors benefited from:

Unparalleled and highly effective networking

opportunities

Executive industry interviews on TowerXchange’s website

and Journal

Exposure to database of 45,000 telecom infrastructure

industry leaders

Extensive pre-event and on-site

branding

6executive

panels

2interactive

polls

5closed door

sessions

48moderators and

panellists

10+sessions in

Spanish

1networking

dinner

12+hours of structured and

informal networking

26roundtable discussions

45%

15%

13%

25%

2%


Feedback from TowerXchange Meetup Americas past attendees

Excited to have had the opportunity to discuss regulatory issues affecting infrastructure deployment in Latin America at this year’s TowerXchange Meetup Americas - Susanne Kandell, VP & General Counsel, HispAm, American Tower

Fue un placer participar en el evento y el material repartido fue especialmente útil. La conferencia me ayudó a comprender las dinámicas del mercado de torres en CALA. Además, las mesas redondas fueron muy interesantes y destacaría también la diversidad de países y distintos perfiles profesionales. Fue muy enriquecedor - Ana Liz Ferretto, Gerente, Control de Areas Corporativas, CFO, Telecom Argentina

The TowerXchange Meetup Americas is always a great event! A very convenient way to get plenty of valuable information and make a ton of new contacts in a 48-hour period. Venue is excellent as well and very functional - Kurt Bagwell, President – International, SBA Communications

Enjoyed participating in the interactive roundtables that were very specific to our interests. The variety and depth of topics covered were remarkable - Juan Lucena, Director, A1 Torres

When we met with investors, we used TowerXchange reports to provide independent market data and to corroborate our view of the market. We’re delighted to now be a sponsor of the TowerXchange Meetup Americas - Dagan Kasavana, CEO, Phoenix Tower International

Fantastic! Year after year, the event gets better and better. Well worth the time and travel - Spencer Crawford-White, CTO, Delmec


TowerXchange Meetup Americas 2019 attendee listA-Prime Engineering LLCA1 Torres SASAbloy OyAccruentAcsys International LtdAdvanced Wireless CommunicationsAktivcoAlbright Capital ManagementAlpina Capital LLCAmerican TowerAMP CapitalAnalysys MasonAndean Tower Management LLCAntin Infrastructure Partners SASAscot IndustrialAsentriaAtis GroupAtreboBALESIA TOWERSBarclaysBentley SystemsBrazil Tower CompanyBrookfield Asset Management IncBTS TowersCaban SystemsCamusat InternationalCartesian Capital GroupChengdu Hizima Technology Co., LtdCIEMCiti

Clean Power SolutionsComba Telecom Inc.Continental Towers CorpCrossflow EnergyCrowd SiteIntel by M2Catalyst, LLCCS TowerDelmecDigital Bridge Holdings LLCDigital ColonyDirectvEntel ChileEntel PeruErsan CompanyFacebookFlash TechnologyGalooli PowerGencellGeneracGoldman SachsGrupo GTDGrupo TorreSurGUZMAN NACICH S.A.I.C.Halo EnergyHighline do BrasilHybrico Energy Technologies Ltd.iBwave Solutions Incieng GroupIHS TowersInnovattel/TorresecInside Towers

Inter-American Development Bank (IADB)International Digital Infrastructure Alliance (IDIA)International Finance Corporation (IFC)Internet Para TodosiTTelKaiser AssociatesLotoi SAMacquarie Infrastructure and Real AssetsMariner TowerMastecMexico Tower PartnersMitsui NantEnergyNeptuno USA CorpNetEquity NetworksNorthStar BatteryOverseas Private Investment Corporation (OPIC)Peppertree Capital ManagementPhoenix Tower do BrasilPhoenix Tower InternationalPolar Power IncRBC Capital Markets LLCRG Towers, LLCRosenbergerSabre Towers and Poles

SBA CommunicationsSeccional BrasilSelmecSera4SerEnergySignifySitetrackerSKYSITESSmart LamppostSouthcom HoldingsSTP TowerSTULZ GmbHTelecom ArgentinaTelefónicaTelesitesTelrad Networks LtdThe Bank of Nova ScotiaTillman Global HoldingsTorrecomTower Alliance LLCTrilogy International PartnersUrbanpolesValmont StructuresvHiveVinson & Elkins RLLPVirtual Site TechnologiesVoltaliaYegoZHU HAI COSLIGHT BATTERYZinier


How we promote TowerXchange Meetups

< The core of our promotional campaign is TowerXchange’s proprietary database of the top 45,000 decision makers in the global telecom tower industry< The TowerXchange database includes the management teams of 503 towercos who between them own 2,936,086 (68.2%) of the world’s 4.3mn towers and rooftops< We also maintain relationships with over 3,000 CXOs and Heads of M&A, Network Planning, Procurement and Tower Strategy at MNOs worldwide< TowerXchange is read by 2177 individuals at over 609 investment firms, of which 116 have capital deployed in towers and is followed by 1321 investment bankers and advisors < TowerXchange also maintains the world’s most exhaustive database of telecom infrastructure suppliers, from tower manufacturers, managed service providers, to RMS, site management platforms, access control and energy equipment and service providers< Every month TowerXchange adds an average of 500 new highly qualified members to our community through a combination of “pull” marketing via TowerXchange research, and P2P introductions and research within the tower industry< A total of 112 personalised targeted emails with industry specific messaging were sent to our database to promote the TowerXchange Meetup Americas< Our email campaign is supported by a direct mail campaign to 597 selected VIPs, and by courtesy calls to over 1,300 key target attendees< A unique feature of our marketing campaign is the TowerXchange Americas Dossier – this annual publication collates and updates critical baseline data and includes the best interviews conducted throughout the year with key Central and South American industry stakeholders< We use Google Adwords to amplify the findability of the dossier, and other selected industry news and analyses, attracting new, qualified members to our community

TowerXchange thanks its Americas media and association partners for their ongoing support:< National Association of Tower Erectors< AGL Group< Analysys Mason< Fitch Solutions< Inside Towers< Telecom Finance< Global Listed Infrastructure Organisation

Unparalleled networking opportunities

Isfandiyar Shaheen, CEO, NetEquity Networks


Thank you to our 2019 sponsors and exhibitors

DIAMOND SPONSOR:

SILVER SPONSORS:

BRONZE SPONSORS:

EXHIBITORS:


How can I get involved?

To register your interest or to discuss sponsorship and exhibition opportunities at the TowerXchange Meetup Americas, contact Annabelle Mayhew, Chief Commercial Officer:E: [email protected]: +44 (0) 7423 512588

Seventh annual TowerXchange Meetup Americas 2020Save the date: 23-24 June 2020, Boca Raton Resort & Club, Boca Raton (Florida) for the seventh annual TowerXchange Meetup Americas! Find out more at www.towerxchange.com/meetup-americas/

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TowerXchange Meetup Americas2020 provisional floorplan


TowerXchange’s analysisof the independent tower market in CALA

The CALA infrastructure industry is undergoing considerable changes and 2019 is expected to be quite an exciting year across the region. Towercos (or should we call them infracos?) are finally eyeing opportunities beyond macro-towers and diversifying into two segments.

On one hand, fibre and edge data centres are being identified as new revenue streams with the

likes of American Tower and Phoenix Tower International to name two scooping up existing fibre portfolios while starting to deploy dark fibre too. On the other hand, towercos across CALA are partnering with ESCOs or RESCOs to provide energy management solutions to their clients. A groundbreaking change in direction for a business model originally firmly set on steel and grass.

In terms of deals, Phoenix Tower International is acquiring portfolios at a fast pace and recently made its move into new markets including Bolivia, Argentina and Nicaragua, in addition to its entrance in Mexico with a fibre deal. And while consolidation among towercos isn’t going as fast as originally predicted, MNOs are making the headlines with Telefónica divesting its Mexican and Central American units and Millicom and América Móvil strengthening their positions.

In this analysis, TowerXchange takes a close look at each country’s telecom infrastructure market, its characteristics and reports on the latest tower counts from across the region.

Mexico

The Mexican BTS market continues to expand with most towercos reporting tens of new towers in their portfolio. In the meantime, Phoenix Tower International entered Mexico where it now owns 974km (or 17 rings) of fibre. TowerXchange is currently starting its coverage of fibre news in CALA and we hope to have more details soon.

As of June 2019, ALTÁN Redes’ Red Compartida covers around 33% of the country’s population. To date, ALTÁN Redes has signed 35 contracts with 26 clients, including Telefónica, Televisa and Dish. Promtel estimates that the country has invested over US$638mn on the project’s deployment and Red Compartida’s network includes more than 2,700 BTS as well as 20,000km of fibre.

Breakdown of ownership of CALA’s 186,549 telecom towers (Q1 2019)

Source: TowerXchange

American TowerTelesitesSBA CommunicationsGrupo TorreSurTelxiusPhoenix Tower International & Phoenix Tower BrasilOther independent towercosOperator-captive

16,248

37,535

13,091

6,50014,300

88,450

3,3907,350


Phoenix Tower International + Phoenix Tower do Brasil7,350

CALA top towercos - Q1 2019

* AMT global count 170,750 ** SBA global count 29,647

American Tower37,535*

20+ towercos with<100 towers

SBA Communications13,091**

Grupo TorreSur6,500

Cell Site Solutions~2,000

Brazil Tower Company~1,200

Torrecom 903

Innovattel/Torresec ~1,049

IIMT 600

Intelli Site Solutions 313

AlfaSite 254

BTS Towers 145

QMC Telecom~1,400

Telxius3,390

ATP Torres Unidas2,300

Mexico Tower Partners2,100

Telesites16,248



Major tower transactions in Latin America 2011/2019 * 1,000 urban wireless sites and 2,500km of fibre**American Tower acquisition of 4,630 BR Towers includes 2,530 towers plus 2,100 exclusive rights

Year Country Seller Buyer Tower count

Deal value US$

Cost per tower US$ Deal structure

2019 Bolivia Trilogy Phoenix Tower International 600 $100,000,000 166,666 SLB2019 Mexico, Nicaragua, Colombia Uniti Towers Phoenix Tower International 500 $100,000,000 200,000 Portfolio acquisition2018 Dominican Republic Teletorres Phoenix Tower International 1,049 $170,000,000 162,059 Portfolio acquisition2018 Guatemala Undisclosed Phoenix Tower International 202018 Jamaica Digicel Phoenix Tower International 451 $90,000,000 $199.556 SLB2018 French Antilles Digicel Phoenix Tower International 215 SLB2018 El Salvador Tigo SBA Communications 800 $145,000,000 $181,250 SLB2017 Colombia/Peru Torres Andinas SBA Communications ~350 Portfolio acquisition2017 Brazil Highline do Brasil SBA Communications 1,200 Company acquisition

2014-7 Brazil TIM American Tower 5,873 $850,000,000 $144,730 SLB2017 Mexico Axtel American Tower 142 $56,000,000 $394,366 SLB2017 Colombia/Peru Undisclosed Phoenix Tower 1502017 Colombia Millicom/Tigo American Tower 1,200 $147,000,000 $122,500 SLB2017 Paraguay Millicom/Tigo American Tower 1,400 $125,000,000 $89,285 SLB2017 El Salvador Digicel Phoenix Tower 202 SLB2017 Panama Torrecom 252017 Chile CTR SBA Communications 172 Portfolio acquisition2016 Mexico, Colombia, Nicaragua NMS Uniti Towers 359 $65,000,000 $181,058 Company acquisition2016 Argentina CyCSA American Tower 1,000* Company acquisition2016 Dominican Republic Viva Phoenix Tower 545 Portfolio acquisition2016 Peru Telefónica Telxius 900 Portfolio acquisition2016 Chile Telefónica Telxius 328 $11,500,000 $35,061 Portfolio acquisition2016 Brazil Telefónica Telxius 1655 $214,000,000 $129,305 Portfolio acquisition2015 Ecuador Torresec SBA Communications 130 Company acquisition2015 Dominican Republic Amzak/Teletower Phoenix Tower 190 SLB2015 Brazil Algar Telecom Highline do Brasil 125 $16,000,000 $128,000 SLB2015 Brazil T4U Phoenix Tower 529 Company acquisition2014 Panama American Tower Phoenix Tower 60 Subsidiary acquisition2014 Brazil BR Towers** American Tower 4630 $978,000,000 $211,231 Company acquisition


Major tower transactions in Latin America 2011/2019

Year Country Seller Buyer Tower count

Deal value US$

Cost per tower US$ Deal structure

2014 Brazil Oi SBA Communications 1641 $527,000,000 $321146 SLB

2013 Brazil Nextel American Tower 1940 $349,000,000 $179,897 SLB2013 Brazil Z-Sites American Tower 236 $129,000,000 $546,610 Company acquisition2013 Brazil Oi SBA Communications 2007 $645,000,000 $321,375 SLB2013 Brazil Nextel American Tower 2790 $413,000,000 $148,029 SLB2013 Mexico Nextel American Tower 1666 $398,000,000 $238,896 SLB

2013 Brazil Oi SBA Communications 2113 $343,000,000 $162,328 SLB

2013 USA, Panama &Costa Rica GTP American Tower 15700 $4,800,000,000 $305,732 Company acquisition

2013 Brazil Oi BR Towers 2113 $251,000,000 $118,788 SLB2013 Brazil Oi Grupo TorreSur 2113 $293,000,000 $138,665 SLB2013 Brazil Telefónica American Tower 93 $18,000,000 $193,548 SLB2013 Mexico Axtel American Tower 883 $250,000,000 $283,126 SLB2013 Brazil Sitesharing BR Towers 100 Partial acquisition2012 Peru Telefónica Torres Unidas 350 SLB2012 Chile Telefónica Torres Unidas 400 SLB2012 Brazil Telefónica SBA Communications 800 $178,000,000 $222,500 SLB2012 Brazil Oi Grupo TorreSur 1208 $258,000,000 $213,576 SLB2012 Brazil Telefónica American Tower 192 $33,000,000 $171,875 SLB2012 Brazil Telefónica BR Towers 1912 $252,000,000 $131,799 SLB2012 Brazil Telefónica American Tower 1500 $225,000,000 $150,000 SLB2012 Chile Telefónica American Tower 558 $96,000,000 $172,043 SLB2011 Mexico Telefónica American Tower 1554 $323,000,000 $207,851 SLB2011 Mexico Telefónica American Tower 584 $122,000,000 $208,904 SLB

2011 Colombia Telefónica American Tower 125 $18,000,000 $144,000 SLB

2011 Colombia Millicom/Tigo American Tower 2126 $182,000,000 $85,607 SLB

2011 Brazil Telefónica Grupo TorreSur 1358 $206,000,000 $151,694 SLB

2011 Brazil Sitesharing American Tower 666 $585,000,000 $878,378 Partial acquisition


Tower and Telesites, especially since Carlos Slim is reportedly considering the divestment of a minority portion of his 61% stake in the towerco.

Telefónica has been considering a potential sale of its Mexico unit but the company’s President José María Álvarez-Pallete has recently stated that the MNO is now exploring “agreements to share its network with other operators to improve capital return”, which could stop the company from exiting Mexico. Meanwhile, América Móvil has announced an investment of US$8.500mn to deploy fibre, towers and new technologies as the company is also getting ready to provide triple play services in the country.

In the meantime though, ALTÁN Redes’ progresses are good news for Mexican towercos since build-to-suit activities have been stalling in the country for the past two years.

One might argue that this is the perfect scenario for towercos to start a consolidation process. But in reality, some of these new firms have built unsellable towers, on discounted lease rates and in remote areas and unlikely to attract multiple tenants or - even worse - unsuitable for being shared from an engineering standpoint. So larger towercos who might have an appetite to consolidate and rationalise the market are left empty-handed unless they are willing to buy “bad towers”… A no-go especially for public entities such as American

Mexico - Estimated tower count 32,584

Market highlights PTI seals deal with Uniti Towers and

acquires fibre Telefónica assessing unit sale

Mexico quick factsTowers 32,584SIMs per tower 3,535Mobile connections 107.3mn (Q4 2017)Population 130mn (Q4 2017)SIM penetration 83% (Q4 2017)MNOs Telcel, Movistar, AT&TTowercos BTS Towers, Telesites, American Tower, Mexico Tower Partners, IIMT, Centennial, Torrecom, Intelli Site Solutions, Conex, MX Towers, Rent-A-Tower, Tower One, Phoenix Tower International, several other smaller local and new entrant towercos

Source: GSMA Intelligence, TowerXchange

The MNOs, that contract power through state-owned CFE, are now exploring the integration of renewables to cut down energy costs and looking to sign Power Purchase Agreements with the many international and local providers that are now offering affordable power solutions across the country.

Central America and the Caribbean

In Central America, the biggest news are coming from Telefónica as the Spanish telecom giant has signed an agreement with Millicom for the sale of partial and whole parts of Telefónica Costa Rica, Panama and Nicaragua for US$1.7bn. The MNO


Telesites

American Tower

Mexico Tower Partners

IIMT

Torrecom

BTS Towers

Phoenix Tower International

Other independent towercos (QMC, Centennial,

Conex, Rent-A-Tower et cetera)

Estimated MNO captive towers

600240

15,953

9,326

2,100

~1,500205354

2,300

* Being acquired by PTI


Who sold their towers in Central and South America?

Costa Rica - Estimated tower count 3,889


SBA Communications

American Tower

Telesites


Continental Towers

Other independent towercos

(Continental, TOCSA)

ICE

Claro

~465

566~1,120

295160~300

~180

803

has already completed the sale of its Nicaraguan subsidiary for US$437mn, while Salvador’s regulator has put the sale of Telefónica’s assets to América Móvil on hold. Earlier this year, the Spanish telco agreed to sell both El Salvador and Guatemala’s unit to América Móvil for US$500mn, with the goal of reducing the company’s debt and strengthening its balance sheet.

Belize has 379.7K connections and 100% penetration rate as of Q4 2017 according to GSMA Intelligence. With two carriers, DigiCell and Smart, and no active towercos to date, the country is too small to attract much attention from the tower industry, and our estimates suggest there are approximately 70-80 towers in the national territory.

Following the spectrum auction held in Costa Rica last year, Claro and Movistar have finalised the acquisition of additional spectrum in the 1800MHz and 2100MHz bands. The announcement follows last year’s frequency auction, during which Claro paid US$19mn and Movistar US$24mn for available spectrum in the two bands.

Central America market highlights

América Móvil’s takeover of Telefónica in El

Salvador on hold, Guatemala completed

Millicom closes Nicaragua deal with

Telefónica, Costa Rica and Panama still

pending


BTS Towers, AMT, Centennial, IIMT, Intelli Site, MTP, MX Towers, PTI, QMC, Rent-A-Tower, Tower One, Telesites, Torrecom

BALESIA TOWERS, Continental, PTI, SBA, Torrecom

AMT, Antyl, ATP, BALESIA TOWERS, Innovattel, BTS Towers, PTI, SBA, Telxius, Torrecom

AMT, Antyl, ATP, BALESIA TOWERS, SBA, Telxius, Torrecom

BTS Towers, Aplicanet, BALESIA TOWERS, Ecuador Tower Company, Innovattel, SBA Communications

BALESIA TOWERS, Continental

BALESIA TOWERS, Continental, PTI, SBA

BALESIA TOWERS, SBA, PTI, Torrecom

AMT, BALESIA TOWERS, Catalina, PTI, SBA, TOCSA

BTS Towers, Continental, Innovattel, SBA, Torrecom

AMT, ATP, Centennial, Golden Comunicaciones, PTI, QMC, SBA, Telesites, Torrecom, Tower One

PTI

AMT, AlfaSite, BTC, CSS, Centennial, GTS, PTB, QMC, SBA, Skysites, Telxius

American Tower, SBA Communications, Atis Group, Innovattel/ Torresec, Plata Tower Company, PTI, Teletower Argentina, Telxius, Tower One, CSS,GME Alliance

Continental, PTI

Innovattel, PTI

PTI


Towercos have acquired the majority of towers from carriers

Towercos have acquired a significant proportion of towers

from carriers, but the majority remain carrier-owned.

Significant BTS towerco activity also present

Less SLB activity, but plenty of BTS towerco activity

Early stage market for BTS and/or SLB

Negligible towerco activity

Legend

American Tower, BTS Towers, Innovattel


El Salvador - Estimated tower count 1,807Source: TowerXchange

SBA Communications

Tigo

Claro

Digicel

752

~345

~325

~65

Selected estimated CALA tower counts

Costa Rica quick facts

Towers 3,889

SIMs per tower 2,565

Mobile connections 8.6mn (Q4 2017)

Population 4.9mn (Q4 2017)

SIM penetration 175% (Q4 2017)

MNOs Kölbi, Tigo*, Claro

Towercos SBA Communications, American

Tower, Continental Towers, Telesites, Phoenix

Tower International, TOCSA* Millicom in the process of taking over Telefónica


Since telecoms were liberalised in 2008, Costa Rica has proved an increasingly fertile ground for towercos. SBA Communications remains Costa Rica’s largest towerco with just nearly 800 sites, followed by American Tower and Telesites. PTI, Continental and a handful of local firms complete the roster of towercos, who own over half the country’s towers between them.

Cuba’s SIM penetration grew from 29% in Q4 2015 to just 40% in Q418 according to the GSMA, but that isn’t enough to get anywhere near the regional average. With only one mobile network operator in the country, ETECSA, who share around 500-700 towers with radio companies and TV stations, it will take some time for international towercos to be able to enter the island. However, TowerXchange is keeping a close eye on Cuba in light of its untapped market and undisputed potential to become a

Estimated total towers in rest of South America: ~5,700 (Venezuela, Ecuador, Uruguay, Surinam, French Guiana and Guyana)

Brazil ~60,500

Mexico 32,584


Argentina 17,252

Colombia 16,351

CentralAmerica~14,500

Peru 11,202

Caribbean~10,800

Chile9,148

Paraguay4,250

Bolivia 4,200


41

SBA

Torrecom

Continental Towers

Tigo

Claro



* América Móvil acquired Telefónica’s operations and assets

682

265

110

~2,100

~710

Guatemala - Estimated tower count 3,908

target of international towercos should the telecom market liberalise.

The only towercos active in the Dominican Republic are Phoenix Tower International, which runs a portfolio of almost 1,800 sites and Torresec.

PTI scaled its Dominican Republic’s operations thanks to a string of acquisitions including Teletower Dominicana’s 190 sites, Viva’s 545 towers’ portfolio and, lastly, the agreement to purchase the assets of Teletorres del Caribe, owned by Altice Europe (1,049 sites) for US$170mn.

Following a regional trend, market leader Claro, who owns around 1,400 towers in the Dominican Republic, is now integrating renewable energy in more than 40 sites across the country and plans to continue expanding its renewable energy use to power towers nationally.

In February, Tigo El Salvador sealed an agreement to sell up to 800 towers to SBA Communications for US$145mn. SBA Communications owns and operates 242 sites in El Salvador and this deal with exponentially grow the company’s footprint.

Guatemala is a complex country with a very

El Salvador quick factsTowers 1,807SIMs per tower 5,704Mobile connections 9.6mn (Q4 2017)Population 6.4mn (Q4 2017)SIM penetration 150% (Q4 2017)MNOs Claro, Movistar, Digicel, Red, TigoTowercos SBA Communications, Phoenix Tower International, Continental TowersSource: GSMA Intelligence, Phoenix Tower International,

TowerXchange

Dominican Republic quick factsMobile connections 8.5mn (Q4 2017)Population 10.8mn (Q4 2017)SIM penetration 78% (Q4 2017)MNOs Claro, Orange, VivaTowercos Innovattel, Phoenix Tower InternationalSource: GSMA Intelligence, TowerXchange

competitive tower industry. SBA Communications, Torrecom, Balesia and Continental all operate in the local market which is characterised by a fairly strong regulatory environment and the huge influence of local communities – Consejos Comunitarios de Desarrollo Urbano y Rural (COCODES) – in the approval of new deployments. In spite of these difficulties, Torrecom and SBA Communications have achieved good levels of organic growth in the country and have added a combined 300 towers since Q2 2015. In October, Phoenix Tower International entered the market with the acquisition (from an unknown seller) of twenty towers.


SBA Communications


Torrecom


Cable & Wireless

Claro

Tigo*

Panama - Estimated tower count 1,719


586

127

~100

36

~560

~160

~150

Honduras - Estimated tower count: 1,200


Operator captive towers

Independent towercos

(Balesia and Continental Towers)

~1000

~200

Local billionaire Mario Lopez owns substantial equity in market leaders Tigo, and also owns most of the land under their towers, which makes the operator reluctant to participate in widespread infrastructure sharing. Could Tigo consider selling any of its assets following the sale and leasebackdeals in Colombia and Paraguay?

According to TowerXchange’s research, Honduras is home to two towercos, Balesia and Continental Towers Corp. For now, there’s been little visibility on the local industry and its potential with around 20% towerco penetration and the two carriers – Tigo and Claro – still holding on to their tower portfolios.

In spite of being a high-risk market, Nicaragua presents interesting build-to-suit opportunities. In 2018, the market stalled due to security issues

Guatemala quick facts

Towers 3,908





MNOs Tigo, Claro, Movistar

Towercos SBA Communications, Torrecom,

Continental Towers, Movistar, Phoenix Tower

International


* Millicom in the process of taking over Telefónica


American Tower

SBA Communications

Grupo Torresur

Big 4 MNOs


Brazil - Estimated tower count ~60,500


18,982

8,536

6,500

~19,000

~7,500

SBA

Torrecom

Uniti Towers*

Claro

Tigo**

Nicaragua - Estimated tower count 1,295Source: TowerXchange

503

36255

~320

~55

for nearly seven months but now towercos have resumed BTS activities.

Panama earned an entry in the regional tower transaction report through the acquisition by Phoenix Tower International of 60 sites from American Tower. SBA remain market leaders but lately the country has seen the entrance of another towerco, Torrecom, who has acquired 25 sites and made its debut on the market. Other portfolios are held by Continental Towers and Torres de Panama. According to GSMA Intelligence, Panama is a fast grower market in Central America with four active carriers (Cable & Vision, Claro, Digicel and Movistar), 138% penetration rate and 5.7mn mobile connections (Q4 2017). TowerXchange estimates there are around 1,700 towers in Panama. In 2018, Phoenix Tower International announced the acquisition of 215 towers from Digicel in the French Antilles. While no further details of the

Nicaragua quick factsTowers 1,295SIMs per tower 7,698Mobile connections 9.2mn (Q4 2017)Population 6.3mn (Q4 2017)SIM penetration 148% (Q4 2017)MNOs Claro, Tigo, CooTelTowercos SBA Communications, Torrecom, PTI, Continental Towers* Millicom took over Telefónica in May

Source: GSMA Intelligence, TowerXchange * Being acquired by PTI

** Millicom took over Telefónica in May


Paraguay - Estimated tower count: 4,250

Bolivia - Estimated tower count: 4,200



American Tower

Personal

Claro

Tigo

Vox

* 1,400 announced of which 1,309 transferred

Entel

Tigo


NuevaTel

750

400200

400

600 1,309*

~2,100

1,100

~1,500

Brazil quick factsTowers ~60,500SIMs per tower 3,879Mobile connections 221.6mn (Q4 2017)Population 210.1mn (Q4 2017)SIM penetration 105% (Q4 2017)MNOs TIM Brasil, Vivo, Claro, Oi, Nextel, Algar Telecom, SercomtelTowercos American Tower, SBA Communications, Grupo TorreSur, Phoenix Tower do Brasil, CSS, Brazil Tower Company, AlfaSite, Centennial, QMC, Skysites, Telxius


transaction have been shared, this deal solidifies PTI’s position as the first towerco in the Caribbean.

Brazil

Brazil has faced three tough years as a result of a deep economic recession and political crisis but to date, the market finally seems in full recovery both towercos and MNOs are now focusing on efficiency, energy management, cost reduction and new technologies integration.

On the towerco front, Phoenix Tower do Brasil has been steadily growing and now runs 2,019 sites, including 373 small cells thanks to the acquisition of K2 Tower. The towerco recently spoke with TowerXchange and shared its plans to offer energy management services across certain sites by partnering with a RESCO. And while at MWC19,


American TowerPhoenix Tower InternationalSBA CommunicationsBTS TowersOther independent towercos (Andean Tower Partners, Innovattel, Continental, Balesia, Centennial et cetera)América MóvilTelefónicaMillicom

Colombia - Estimated tower count 16,351

Source: TowerXchange, Company reports, RBC Capital Markets estimates

~6,520

~2,000

~1,000

4,975

796

15195~850

TowerXchange gathered that to date, every towerco in Brazil is equipped or getting ready to provide energy solutions to its clients - a real game changer after years of steel and grass operations.

Consolidation among towercos isn’t moving very fast but it’s been reported that certain portfolios might be up for sale, including CSS’ nearly 2,000 sites.

On the MNO front, market leader Vivo has set ambitious deployment targets and aims to build 1,500 new sites per year between BTS and co-locations. Claro will consolidate its position as the second operator in the country with Nextel’s acquisition, which will give them almost an extra

2% of the market share. América Móvil’s agreed to pay US$905mn to NII and AI Brazil Holdings BV but the transaction still needs to be approved by telecom regulator ANATEL. In addition, Claro is developing the largest private renewable energy generation project in Brazil as the operators seeks to improve efficiency and cut down cost throughout its infrastructure and all Brazilian MNOs are exploring different renewable energy auto generation initiatives. In the meantime, Oi has hired Bank of America Merrill Lynch to assist them with their sale of non-core assets, which will include more than 13,000 towers as well as the MNO data centres. Finally, regulator ANATEL has recently confirmed that the bidding for 5G spectrum will take place early next year and the four MNOs have already

started their trials in different parts of the country.In Q4 2017, SBA Communications has sealed a deal for the acquisition of approximately 900 towers to its Brazilian portfolio from Highline do Brasil as well as solid build-to-suit pipeline. TowerXchange has recently interviewed the Senior Vice President of International for SBA Communications, David Porte, who said about Highline’s portfolio that it “included a set of solid BTS contracts with positive terms that were negotiated before a wave of mediocre contracts were signed by numerous towercos across the region.”

Bolivia

After many years of failed attempts, Bolivia has finally welcomed the first independent towerco. In fact, earlier this year Phoenix Tower International sealed the sale and leaseback deal with Trilogy International Partners’ subsidiary NuevaTel and initiated the acquisition of 600 sites (400 of which have already been transferred) at a total price of US$100mn. While Bolivia has always been perceived as a “risky market”, TowerXchange looks forward to finding out more over the next few months.

Paraguay

Paraguay is one of the newest markets to open its doors to towercos, following the acquisition by American Tower of 1,400 Tigo’s towers at a value of US$125mn (of which 957 were transferred in Q3 2017). As anticipated, the valuation per tower in the Tigo/AMT deal is lower than the regional average (US$89,285 vs US$199,966). In fact, valuations are


Peru - Estimated tower count 11,202

affected by the limitations on the length of land leases, currently capped at five years, as well as the rising real estate costs. Along with Millicom’s portfolio, Personal’s 1,100 towers could come to market soon and this would surely increase the interest of towercos in this new market.

In January 2018, the 700MHz spectrum auction took place and generated bids for US$84.5mn. Tigo, Claro and Personal all scooped spectrum allocation while State-backed Vox didn’t enter the bidding process.

Colombia

In December 2017, the Colombian Ministry of IT and Communications (MinTIC) increased the spectrum caps to allow operators to increase the capacities of their networks. The move should allow the spectrum auction (of 700MHz and 1900MHz bands) to get back to track following two years of delays. In fact, one of the reasons why the local BTS market has been stagnant is the delay in the spectrum auction and the subsequent absence of strong deployment plans by the local operators.


Telxius

American Tower

SBA Communications


BTS Towers


(Andean Tower Partners, Innovattel,

Telecommunications Partners et cetera)

Claro

Bitel

Entel

Telefónica

DirecTV

1,001

303

~840

80248

~2,510~2,500

~2,100

~560 920

~140

In 2017, the country has delivered some interesting tower news with various deals having been completed over the past few of months. Tigo has announced the sale and leaseback of 1,200 sites to American Tower for US$147mn while Phoenix Tower sealed several deals with two Colombian firms (and a Peruvian one) for a total of 150 sites. PTI’s deals are under confidentiality agreements and no further details have been disclosed. Lastly, SBA Communications acquired Torres Andinas’ portfolios in Colombia and Peru in yet another private deal.

With tens of towercos operating in the country and not enough business for everyone, local players report tough pricing and economic

Colombia quick facts

Towers 16,351





MNOs Claro, Movistar, Tigo, Avantel

Towercos American Tower, SBA

Communications, Andean Tower Partners,

Centennial, Golden Comunicaciones, Innovattel,

Torrecom, PTI, QMC, Telesites, Tower One


Paraguay quick factsTowers 4,250SIMs per tower 1,788Mobile connections 7.6mn (Q4 2017)Population 6.9mn (Q4 2017)SIM penetration 111% (Q4 2017)MNOs Tigo, Personal, Claro, VoxTowercos American Tower, BTS Towers, InnovattelSource: GSMA Intelligence, TowerXchange


conditions which are putting small BTS firms under more pressure they can sometimes handle and TowerXchange expects more consolidation to take place among towercos, especially since some developers might decide to exit the market, exemplified by one of PTI’s counterparts in thelatest deals.

On the MNO front, the local government is currently selling its 32.5% stake in Movistar, following the fine imposed to Telefónica and Claro for a breach of their 1994 licensing contract. According to the terms of the original agreement, the operators were supposed to return all wireless network infrastructure to the State after ten years, a term then extended for a further ten years, but failed to. As detailed by Telegeography, the government was one of the co-owners of the operators and therefore “duly obliged to participate in a capital increase of approximately US$1.64bn to pre-pay all commitments in relation to PARAPAT, the consortium that owns the telecoms assets and manages the pension funds of the former companies that resulted in the creation of legacy operator ColTel (now Telefónica Colombia).”

The Ministerio de Tecnologias de Informacion y las Comunicaciones (MinTIC) has finally announced that the much awaited 700MHz spectrum auction should take place in October this year.

Ecuador

Ecuador is the quietest of all Andean States especially since its MNO landscape is less attractive for towercos. Claro enjoys a dominant position in the country, while CNT is the government-owned player holding the third spot after Telefónica’s Movistar.

On the towerco front, SBA Communications is reporting steady growth in Ecuador where it now runs a portfolio of 405 towers. The portfolio is made of sites acquired by Innovattel/Torresec as well as sites built via BTS. Local firm Aplicanet

The evolution of the CALA telecom tower industry 2013-2019 (Q1)


has confirmed good volumes of BTS activities too, having added 35 sites to its portfolio in Q1 2018.

Peru

Last year, Phoenix Tower International sealed a private deal with a Peruvian firm and added 49

Year Est. total towers Towers owned by towercos Towerco penetration

2013 140,000 46,011 32%

2014 148,000 61,729 41%

2015 156,000 69,850 44%

2016 164,207 81,207 49%

2017 172,542 89,142 51.6%

2018 181,527 96,427 53.1%

Q119 186,549 98,099 52.58%

Peru quick factsTowers 11,202SIMs per tower 3,531Mobile connections 37.6mn (Q4 2017)Population 32.4mn (Q4 2017)SIM penetration 116% (Q4 2017)MNOs Movistar, Claro, Entel, BitelTowercos American Tower, Andean Tower Partners, Innovattel, Balesia, BTS Towers, Telxius, TorrecomSource: GSMA Intelligence, TowerXchange

Ecuador quick factsMobile connections 14.5mn (Q4 2017)Population 16.7mn (Q4 2017)SIM penetration 87% (Q4 2017)MNOs Claro, Movistar, CNTTowercos SBA Communications, Innovattel, Balesia, Aplicanet, Ecuador Tower CompanySource: GSMA Intelligence, TowerXchange


sites to its portfolio, SBA Communications snatched Torres Andinas’ 100+ towers and Andean Tower Partners further contributed to consolidating the market by sealing the landmark acquisition of Torres Unidas. Telxius has more around 930 sites and the company plans to continue expanding its footprint in the country.

With only a handful of towercos now active in the country, Peru is one of the less penetrated andpossibly more sustainable tower markets in CALA. To date, MNOs haven’t shown much appetite to divest their tower portfolios, resulting in the level of towerco penetration to remain low (approximately 25%).

However, Telefónica has recently announced a project that set an example and drive towerco

penetration in the country. Alongside Facebook, the Inter-American Development Bank and the Development Bank of Latin America, the Spanish telecom group is launching Internet para todos (IpT), an open-access, wholesale broadband mobile internet service that aims to expand coverage in rural areas. The project aims to bring a new, open approach to network deployment that can be replicated across Latin America to deliver mobile broadband to remote areas.

Chile

Still affected by the infamous 2012 Antenna Law, Chile isn’t like any other CALA market yet the two main regional towercos both operate in the country in spite of its challenges.

As part of the Women in Towers initiative, TowerXchange talked with Priscila Oliva, Country Manager for Chile at American Tower, who recently described the country’s market as follows: “Most towers in Chile are still in the hands of operators and since 2012, there haven’t been significant divestments […]. Chile is advanced in terms of its densifications and networks so we are working on a lot of alternative site typologies such as light poles and other low coverage solutions.”

In 2017, SBA Communications has entered the market thanks to a deal with CTR, a local cable and internet provider. In a previous interview with TowerXchange, SBA’s CEO Jeffrey Stoops noted that “entering Chile isn’t easy since companies need to be licensed and approved, and SBA has been through that process, which has been a barrier to entry for other towercos. In Chile, we’ll focus on new deployments and we’ll keep an eye if any portfolios of existing assets become available.”

American Tower

Telxius

SBA

Other independent towercos (incl.

Andean Tower Partners)

América Móvil Telefónica

Entel Chile WOM

Chile - Estimated tower count 9,148

Source: TowerXchange, Company reports, RBC Capital Markets estimates

~750

253

~2,370~1,020

~3,050

~15

1,320

370

Chile quick facts

Towers 9,148





MNOs Movistar, Entel, Claro, WOM

Towercos American Tower, Andean Tower

Partners, Antyl, Balesia, SBA Communications,

Telxius, Torrecom


Estimated MNO captive tower


Argentina

After a very tough socioeconomic year, Argentina is back in the spotlight as one of the most promising tower markets in CALA. The country needs to build around 50,000 towers in the next five year and the government, who is very aware of that need, is working very closely with MNOs, infrastructure providers and local government bodies to reduce the regulation barriers that have historically slow down infrastructure deployment in the country.

Market leader Telecom has set ambitious deployment targets and both Claro and Movistar are expected to build a decent number of towers this year to continue their expansion and keep up with the current aggressively increasing demand. The market is very fragmented and towercos ownaround 1,300 towers. Torresec is the market leaderwith 356 sites and 300 more under construction.After paying US$30mn to Telefónica for 323 sites,Telxius was able to build only six new sites last

year, and they expect to deploy 40 more before theyear ends. GME Alliance, one of the first market entrants, hasa portfolio of over 100 sites and has 30 more underconstruction. Atis Group, who received a US$100mninjection from Pátria Investimentos, has successfullydeveloped a portfolio of almost 100 sites, andthey are hoping to build 150 more in the next fewmonths.

Although the country’s economy is slowly recovering and both central government and operators have started to understand the benefits of infrastructure sharing, the fee regime imposed by municipalities alongside the tedious permitting process for new builds are still posing considerable challenges to the expansion of the towerco model across Argentina

Argentina quick facts

Towers 17,252


Mobile connections 61mn (Q4 2017)



MNOs Claro, Movistar, Telecom Argentina

Towercos American Tower, SBA

Communications, Atis Group, Innovattel/

Torresec, Plata Tower Company, Teletower

Argentina, Tower One, Telxius, CSS, GME

Alliance


Argentina - Estimated tower count 17,252

MNO captive towers ~16,000

GME Alliance +100

Others 100

Evotech40

PTI 36ATIS ~100 SBA 64

Torresec 356

American Tower 56

Telxius 330

TowerOne Wireless 70


Special feature:

The TowerXchange Meetup Americas 2019 featured tens of plenary and breakout sessions on the key issues affecting the regional telecom infrastructure industry. In the following pages, we offer our readers insights into top findings and discussion points from selected sessions.

29 Tower industry survey: live poll results from the Meetup Americas 201936 CALA tower market dynamics - views from the industry leaders 41 CALA MNOs opt for optimisation and towerco collaboration46 New business models and new opportunities for towercos53 Overcoming the regulatory challenges of running a tower business in CALA

TowerXchange Meetup Americas report


Tower industry survey: live poll results from the TowerXchange Meetup Americas 2019This past July, during the sixth edition of the TowerXchange Meetup Americas, we hosted a live poll to engage the audience and find out what their views are on the CALA region, its opportunities and threats. We received around 50 answers per question and given that the majority of people in the room were senior management of key companies across CALA, we consider the results to be based on a substantial sample. Here are some key findings and considerations from the latest TowerXchange poll.

Q1. Do you anticipate the volume of new build towers increasing, decreasing or staying about the same in the markets in which you operate?

49% of respondents agreed that the volume of new builds is due to increase a little in the future, while 28% even more optimistically expect their organic growth to increase significantly. The answers reflect last year’s results, when 48% of respondents opted for a modest increase of new builds.

Q2. Is tenancy ratio growth accelerating or slowing in the markets in which you operate?

Same as last year, 61% of respondents remain cautious with regards to tenancy ratio growth, especially in light of the MNO consolidation occurring in Central America and the absence of new operators entering the CALA market.

Tenancy ratio growth is accelerating 24%

Tenancy ratio growth is slowing 15%

Tenancy ratio growth is about the same 61%

Increasing significantly

Decreasing significantly

Decreasing a little

Staying about the same

Increasing a little

19%

0%

4%

19%

49%


Q3. What has been the % of macro towers versus other types of sites (e.g. urban poles, rooftops, billboards) in your new build in 2019?

While macro-towers are still the predominant product developed by towercos, with 41% of respondents still having built over 75% traditional towers as opposed to new site typologies, new solutions are definitely finding their way. In fact, the other half of respondents are all involved in deploying sites other than macro-towers, including urban poles, rooftops, billboards and more. There’s an interesting trend surfacing in CALA, with a number of more traditional towercos focusing on macro-towers and some progressive entities pushing towards innovation.

Q4. What do you expect will be the % of macro towers versus other types of sites (e.g. urban poles, rooftops, billboards) in your new build in 2020-2021?

Once again, it’s clear that the CALA tower market is shifting towards urban densification and innovation, with 70% of respondents expecting to be increasingly involved in new site typologies. That said, the efforts to cover rural areas and to deploy macro-sites won’t stop in the imminent future as CALA still needs tens of thousands of sites to reach optimal coverage throughout.

41%

29%

27%

4%More than 75% traditional macro towers

50-75% traditional macro towers, 25-50% alternate site typologies

50-75% alternate site typologies, 25-50% traditional macro towers

More than 75% alternate site typologies

More than 75% traditional macro towers

50-75% alternate site typologies, 25-50% traditional macro towers

More than 75% alternate site typologies

50-75% traditional macro towers, 25-50% alternate site typologies

30%

26%

4%

40%


Q5. Should CALA towercos incorporate provision of energy to their offer?

Our readers will be familiar with the relatively new trend that sees CALA towercos involved in energy management or, at least, assessing the potential of getting into this operational aspect. There hasn’t been yet a considerable volume of business going from towercos to energy providers and ESCOs but 76% of respondents agreed that towercos should get involved in energy management. TowerXchange is aware of pilot projects in the Dominican Republic, examples in Brazil and ongoing discussions across the region but we’ll keep an eye and report on more developments as they occur.

Q6. What are the greatest threats to the CALA tower market and its growth?

While CALA is home to some of the best performing towercos in the world, it should come as no surprise that the regional industry is also affected by the wrongdoings of some inexperienced entities. In fact, the unsustainable terms agreed with MNOs by those towercos are seen as the number one threat to the market and its development by the wide majority of the audience. The hurdles of sourcing permits and navigating through complex regulatory and tax environments come in second place – again, with no surprise. The TowerXchange Meetup Americas hosted several discussions on the topic and while much effort has been put on improving the state of permitting and regulatory environments, there’s still a long way to go before the regional industry can be defined mature and functioning.

Yes 56%

Yes, but through ESCO / RESCOs partnerships 20%

No 24%

Unsustainable terms agreed by certain towercos with carriers

Rising ground lease costs

Permitting / zoning concerns at Municipal level

Regulatory / tax concerns at Federal level

Overcrowded tower markets / too much competition

Lack of permits / underlying paperwork on legacy towers

42%

16%

14%

19%

4%

5%


Q7. As of Q119, towercos currently own nearly 53% of CALA’s towers. What proportion of the region’s towers do you think towercos will own by next year’s event?

In terms of towerco penetration, the majority of the audience agreed on relatively healthy levels of growth. To date, TowerXchange is aware of a couple of sales processes, including Entel’s, which will definitely affect the level of towerco penetration across CALA for the better.

Q8. Do you think we’ll see more operator-led carve-outs in CALA in the next year?

There’s definitely less consensus on the opportunity for more MNOs to opt for carving out their assets rather than divesting them to towercos. To date, notable examples across CALA include América Móvil’s Telesites and Telefónica’s Telxius and only a few MNOs still retain their towers. América Móvil could opt for transferring more towers to Telesites across some of the markets where it operates as the MNO is basically the only one in the region – exception made for Argentinian Telecom – who has not sold any towers to towercos.

48%

10%

14%

29% 53-58%

58-63%

63-68%

Over 68%

Yes, more carve-outs in addition to Telesites and Telxius

No, but I expect Telesites and / or Telxius to expand into new countries

No, we won’t see growth in operator-led towercos beyond

38%

27%

35%


Q9. If you had US$500mn to invest in any CALA market today, in which country would you invest it?

Brazil and Argentina ranked first in the list of investible markets, followed by Peru and Chile. While none of them comes a real surprise, TowerXchange remains cautious about Argentina, whose political and economic turmoil has so far seriously hindered the development of the tower sector, alongside the well-known taxation and permitting hurdles.

Brazil is now on its way to recovery, hence presenting good opportunities for organic growth and possible future consolidations among towercos. Peru and Chile, with their stable economies and solid MNOs, definitely represent good bets for towercos looking for relatively de-risked environments.

Interestingly, last year’s top three investible markets were Mexico (44%), Colombia (40%) and Brazil (27%), showing that while Brazil as well as the Andean region are showing improved conditions and more stable environments, doubts remain regarding the potential for growth and returns in Mexico and Colombia.

Q10. Which segments do you think makes more sense for towercos to get involved in CALA?

The audience agreed that small cells, IBS and DAS are the most natural extensions for towercos to get involved in. However, to date only marginal examples of deployments have been taking place across CALA, with towercos struggling to find the business case for small cells and DAS, and mostly opting for IBS.

Fibre and power as a service are additional products for towercos to get involved in. TowerXchange is aware of pilot projects in power as well initial examples of towercos acquiring and starting to deploy fibre, such as Phoenix Tower International in Mexico, American Tower in Mexico and in Argentina.

Perú 3

Brazil 5

Chile 4

Uruguay 1

Argentina 6

Colombia 1

Mexico 2

Small cells, IBS & DAS

Fibre

Power / backup power as a service

Edge data centres / edge computing

None of the above. We should stick to building/buying macro towers

IoT network 3%

39%

23%

19%

10%

6%

3%


Q11. Which of these will be significant inhibitors to 5G rollout?

The MNOs’ financial availability to contract all the sites needed to densify their networks was recognized as the number one inhibitor to 5G. That is only partially a surprise, as MNOs across CALA are still heavily involved in 4G overlay and aren’t likely to be ready to invest in 5G in the imminent future. On the other hand, permitting is seen as another bottleneck, especially since 5G is set to densify urban networks and permitting within major cities and urban centres is likely to be more complicated than in suburban and rural areas. On the technical front, power requirements are set to dramatically increase with 5G and that is seen as yet another hurdle to its development.

Q12. What is the greatest opportunity in CALA towers in the coming year?

The industry expects inorganic growth to be the biggest opportunity for the next few months, with MNOs potentially divesting more towers across multiple markets. Additional growth streams can be found in diversifying into new services and products as well as in focusing on organic growth. Interestingly, last year’s poll saw consolidation among towercos as one of the greatest growth opportunities across the region (28%) but this year’s results (11%) prove that the trend of towercos acquiring towercos has considerably slowed done in recent months.

The size and weight of massive MIMO 17%

Ability to permit and deploy sufficient sites for densification 38%

Power requirements rising from an average of 2KW to 4-6KW 28%

MNOs having the financial capacity to lease the necessary sites 69%

Other inhibitor not stated 7%

Towercos acquiring more

towers from MNOs

41%

Diversifying into provision

of new infrastructure

categories / services

22%

Improving efficiency of operations

7%

Building new towers

19%

Towercos buying other

towercos

11%


Q13. Which of the following are significant inhibitors to investment in CALA towers?

Once again, the difficulties in acquiring permits across CALA is seen as the number one limitation to regional investments. Tedious paperwork and bureaucracy are followed by the burdensome tax regimes at both local and federal level, with the latter stopping sale and leaseback opportunities in markets such as Argentina.

To check all the results from last year’s live poll check this page.

Conclusions

While the Central and Latin American telecom infrastructure industry might not be living its golden age, it is definitely entering into a new and more dynamic phase. Regional players expect more sale and leaseback to take place, with the likes of Entel assessing a tower sale and Digicel and Millicom having started to divest assets among others, while towercos are now going beyond towers and eyeing opportunities in small cells, fibre and energy management.

Growth might not be at an all-time high, but CALA remains an extremely attractive region thanks to its scale, creditworthy MNOs and wide array of strong and experienced towercos. But at the same time, the region is affected by a series of bottlenecks, causing slowdowns in the opening of new markets, deployment of sites and in the overall flow of investments. In fact, permitting and regulation across the region remains a major issue, with various countries still affected by complex permitting procedures as well as burdensome tax regimes.

The TowerXchange Meetup Americas and its live poll created an opportunity for players from across the industry to share their thoughts and express their considerations on where the industry is heading, some of the challenges ahead as well as where growth can be found. We look forward to more insights and discussions at the next TowerXchange Meetup Americas, taking place 23-24 June 2020, in Boca Raton. Stay tuned!

Slow / inconsistent permitting of cell sites

Multiple layers of fees and taxation at local / municipal level

Prohibition of indexation to mitigate currency risk / inflation

Federal taxation regimes that effectively restrict sale and leasebacks

EMF restrictions

55%

26%

26%

0%

39%

https://www.towerxchange.com/tower-industry-survey-live-poll-results-from-the-towerxchange-meetup-americas-2018/

https://www.towerxchange.com/meetup/meetup-americas/


Keywords: 4G, 5G, APRU, American Tower, Americas, Americas Insights, Argentina, Brazil, Build-to-Suit, Colombia, DAS, Densification, Fibre, Grupo TorreSur, Market Overview, Mexico, Phoenix Tower International, Phoenix Tower do Brasil, SBA Communications, Small Cells, Torrecom

CALA tower market dynamics- views from the industry leadersHighlights from the opening panel of the 6th TowerXchange Meetup Americas

Brazil: recovering, at last? Grupo TorreSur entered Brazil in 2010, when they acquired 1,000 sites from what is now Telefónica. The towerco then went on to seal five more acquisitions and now owns nearly 6,500 towers across the country. In the words of its Chairman, Jim Eisenstein, “Brazil is finally moving in the right direction, with promising growth ahead and reforms such as pension reform, and PLC79 which could further boost the economy and its recovery.” The government seems to be taking a pro-business approach and wireless is recognised as a necessity, not a luxury. 4G has been growing 50% YoY but people still need to be able to afford phones and their bills – which was a struggle during the tough recession the country has recently been dealing with. In terms of MNO spending, TIM and Telefónica are quite active with new network capex being deployed, while Oi is continuing its 4G overlays and is looking more stable since emerging from its bankruptcy. The future is still uncertain as rumours persist about its possible acquisition by a competitor but for now, towercos are quite satisfied with its activities and commitment. On the other hand, Claro has been reducing its network investments following the acquisition of Nextel and its spectrum. Macro-towers still steal the show in Brazil and across CALA in general. In fact, the panel agreed

Read this article to learn:< High level updates from Brazil, Colombia, Mexico and Argentina

< Why 5G is not yet a priority for CALA towercos and their customers

< Does it make sense for towercos to get involved in fibre, DAS and small cells?

< TCF multiples in the U.S. versus CALA – why CALA is still behind

The opening panel of the 6th annual TowerXchange Meetup Americas offered a broad overview of the key dynamics across key CALA markets including snapshots of Brazil, Mexico, Colombia and Argentina as well as considerations on other aspects of the industry such as opportunities in fibre, the path towards 5G and more.Panellists on stage


that while some investments are being made in small cells and DAS, the vast majority of capex is still going into macro-towers. SBA Communications entered Brazil via acquisitions as well, and then went on to build around 7,000 sites of its own. The listed towerco has been reporting strong growth both via amendment revenue as well as new builds and co-location. The Brazilian MNO scenario is comparable to the U.S. one, with four operators with fluctuating capability to invest in their networks. The fundamental difference with the U.S. is that the demand for data far exceeds what MNOs can offer in Brazil. But MNOs can’t offer it because it exceeds what people can actually pay for. Across Latin America and the rest of the developing world, wireless grows apace with each country’s economic health. American Tower is present across eight CALA markets with over 40,000 sites, of which 19,000 are in Brazil. The company is quite bullish about the developments happening in Brazil and 2019 is proving a stronger year than 2018. In fact, last year AMT built 45 Brazilian sites, but it has already completed over 100 in 2019. The ratio of users per tower in Brazil is still 80% higher than in the U.S. so the pathway towards becoming a truly mature market is still quite long. Phoenix Tower International owns and operates over 6,000 sites across CALA and its sister company

Jim Eisenstein, Chairman and CEO, Grupo TorreSur

David Porte, SVP International, Strategyand Business Development,

SBA Communications

Dagan Kasavana, CEO, Phoenix Tower International

Jonathan Atkin, MD, RBC Capital Markets

Katherine Motlagh, CFO EMEAand LatAm, American Tower

Maria Scotti, CEO, Torrecom

Meet the panellistsModerated by Jonathan Atkin, MD, RBC Capital Markets, the session welcomed five experts from some of CALA top towercos


Phoenix Tower do Brasil (PTB) over 2,000 in Brazil. The company has recently celebrated the fifth anniversary of Blackstone’s initial investment and since its creation, has maintained an impressive growth rate. In Brazil alone, PTB has built over 400 towers per year and complemented its organic growth with the acquisition of T4U and its 500 sites, mostly located around São Paulo. Lately, PTB has acquired K2, a Brazilian small cell firm with 300 installations across the country, and the towerco has been building DAS as well. While Brazil is now presenting stronger and steady growth opportunities, the challenges represented by forex and its turbulent economy are real and this is the main reason why PTI and PTB were conceived as two separate businesses. That said, “PTB’s growth, lease up and yields have been fantastic” in the words of PTI’s CEO Dagan Kasavana. Mexico back in the game Torrecom built its footprint mainly via organic growth, in fact 875 of its nearly 1,000 towers have been built rather than acquired. With a portfolio across Mexico, Nicaragua, Guatemala and Panama, the towerco is now active in the Andean region too. The towerco did their first sale and leaseback with Telefónica back in 2012 and – commenting on the quality of sites across CALA – Maria Scotti noted that those towers weren’t very good. To date, carriers are more demanding, they know what they want and recognise a healthy, robust structure. And good towers cost more.

In the words of Scotti, “Torrecom is fastidious about how towers are built and how they look” and this is a reason why the towerco has been cooperating with ALTÁN Redes, the Mexican wholesale network, for its buildouts. “ALTÁN is quite demanding as well,” added Scotti. In Mexico, Telcel and ALTÁN are the main operators keeping towercos busy, both being active co-locators and the latter also requiring BTS to meet its aggressive rollout plans. In fact, while AT&T remains quiet with regards to new builds and is instead increasingly involved in small cells, Telefónica hasn’t been very active for a few years now, even more so with a possible sale of its local operations closer than ever. Phoenix Tower International is the latest new entrant in Mexico, having acquired 350 towers as well as 1,000km of fibre. Since its entrance, the towerco has been leasing up its fibre while also seeking BTS opportunities and assessing the potential of DAS across the country. Katherine Motlagh noted that Mexico is American Tower’s strongest growth market at the moment, with plenty of demand coming from ALTÁN. In her words, “American Tower and ALTÁN are a good match in terms of co-location requirements as well as business profiles with both companies being publicly listed and FCPA compliant.” Panellists agreed that both Mexico and Brazil are on a positive growth curve, with the former stronger

in the short term but Brazil playing catch up, especially in light of its dire need for more macro-towers. Towercos still keen on Argentina but… Argentina is a market with huge potential, possibly the greatest across the entire region, with three strong MNOs and plenty of demand for data and coverage. That said, the market still presents unresolved issues and uncertainty on political, economic and legal fronts which make it complicated for towercos to invest freely. Some of the issues mentioned by the panellists include the requirement for towercos invest in US dollars and get returns in Argentinian Pesos – a condition which towercos have been fighting back since their entrance in the country. Another limitation to the towerco industry is the municipal taxes charged as “inspection fees” for each new build, which can be extremely high and can be amended at any time by each municipality – and results in many unpermitted towers still going up across Argentina. The key to succeeding in Argentina might be to keep building a few permitted sites per year while strongly lobbying with municipalities and other officials for the right conditions to be implemented. So far, Argentina has welcomed quite a few regional towercos but ostensibly they’ve only been able to build a few dozen towers each. And questions remain about the country’s capability to solve its many issues and bottlenecks.


A new golden age for Colombia, maybe? After a couple of very complicated years, Colombia might be finally emerging as a fast-growing tower market. In two years, PTI has grown to nearly 1,000 sites and, if the much awaited 700MHz spectrum auction takes place this year as announced, it is likely to catalyse further growth and boost carriers’ investments. Colombia has been the playing field of a few somewhat undisciplined towercos in the past few years, who have contributed to compromising the state of the market by accepting very uneconomical terms, such as giving away RANsharing for free, and building without permits in spite of Colombia’s relatively organised permitting process. As a result, Colombian municipalities are increasingly prone to take down towers built without permits. Permits and playing by the rules still key One of the beauties of a heterogeneous towerco landscape is that some towercos will be more inclined to move first and de-risk certain countries, products and concepts while others will be happy to be fast followers, once that particular aspect of the business is proven. This is the case with certain markets (such as Bolivia or Nicaragua), products (such as fibre or DAS), and services (such as energy management). But the consensus was that towercos who are open to a more entrepreneurial approach to the

business add value, while developers who take ill-considered risks and compromise the principles of the towerco business model (sound contracts, high quality structures, compliance with permitting rules) can be value destructive. Building with permits and all the regulatory approvals is not just “ideal” but should be the norm – and panellists stressed the importance of playing an advocacy role in the countries where they operate, to educate communities as well as authorities of the benefits of sharing infrastructure with the final goal to ease permitting processes and overall new build procedures. In the words of David Porte “if as an industry we simply started following the laws, things would go better.” Valuation Tower Cash Flow (TCF) multiples across CALA are still low compared to U.S. equivalents, in spite of the large majority of returns from tower portfolios in the region being in US Dollars. That said, buyers are still cautious with regards to multiples and take extra care in analysing the quality of the underlying paperwork and steelwork. In fact, “most growth is coming from existing inventory and their transfer to towercos” in the words of Maria Scotti, hinting at the need for robust due diligence to assess what it is for sale. That said, Dagan Kasavana noted how sometimes it is necessary to “clean up sites as we go and apply best practices we’ve learned and inherited from doing business in the U.S.”

Early buyers might have had a competitive advantage when it came to the quality of the sites for sale. Not only because the inventory of available sites was wider but also because of the swap clauses which allowed them to run a post-sale due diligence and swap any unsatisfactory site for legal, technical or regulatory reasons. Jim Eisenstein noted how Grupo TorreSur “was able to swap a significant proportion [of sites…] and buy when MNOs were eager to sell.” In those early days, swaps allowed towercos to dramatically enhance the value of their portfolio. Towercos were also able to pass the risk of unpermitted sites back to the carriers. In fact, if a site acquired by a towerco was taken down because of a lack of complete permits, the towerco would get another site from the seller in return. Is 5G going to be a game changer in CALA? In two words: not yet. In fact, in the short term, panellists agreed that 5G won’t have a considerable impact across CALA. We are likely to see more small cell deployments in the future as well as fibre rollouts but some of the key markets in the region, such as Brazil, are still six to eight years behind the U.S. As noted by Katherine Motlagh, “5G is driven by a demand for latency and capacity” which in CALA is not yet as stringent as it is in the U.S., but it will eventually come. Questions remain as to whether 5G will drive ARPUs and subscriptions up, which


would in return speed up the rollout process. Panellists agreed that macro-towers will remain a key component of 5G networks’ architecture, which is obviously great news for towercos. Fibre and DAS appealing but not for everyone Fibre is a critical component of communications infrastructure for both 4G and 5G, and towercos are starting to covet opportunities to own fibre, deploy it and lease it up. American Tower is involved in fibre in various markets including Brazil, Mexico, Argentina and Colombia. PTI now owns fibre in 17 cities across Mexico and is leasing it “like a horizontal tower” while it is also deploying DAS, as is PTB in Brazil. Around 25% of LatAm towers are fiberised and that number should rise to 70-80% in the medium term, so MNOs are pushing towercos to get involved in fibre but the required initial investment is high and the technical characteristics of fibre deployment are quite complex. Fibre is not for everyone but those who get involved need to be ready to take some risks. Dagan Kasavana noted how PTI underwrites fibre and DAS without necessarily assuming lease-ups. But so far, lease-ups have been positive and, in some cases, “yielding better returns than macro-towers.” Conclusions Panellists during the opening session of the latest TowerXchange Meetup Americas shared a predominantly positive outlook with regards to the

prospects for the tower industry across CALA. The perception is that while the region is still far from mature in terms of overall towerco penetration, network rollout and stability of the market as a whole, key macro dynamics are definitely improving and shifting in the right direction. Brazil and Mexico – after years of instability and uncertainty – are presenting towercos with new growth opportunities both in terms of new build, overlays and co-locations. Colombia seems to finally be getting its act together after a few years of irrationality, but the 700MHz spectrum auction will be crucial for the market to finally pick up and get MNOs’ investments going. On the other hand, Argentina is still far from offering the ideal scenario towercos are hoping for, with a mix of macro and industry-related challenges that are still hindering the ability of towercos and investors to rollout sites and deploy capital into the country. While the region is still not ready to leap into the 5G future, market leaders are well aware of the opportunities that lay ahead, especially when it comes to fibre. That said, the business leaders on stage agreed CALA is still ripe with opportunities for the traditional towerco business model and macro-towers deployment. Excited by the turnout of a superb TowerXchange Meetup Americas, we look forward to welcoming you next year, 23-24 June 2020, in Boca Raton, for the seventh edition of the show


Meetup Asia 20193-4 December, Singapore

Meetup MENA 202028-29 January, Dubai

Meetup Europe 202019-20 May, Barcelona

Meetup Americas 202023-24 June, Boca Raton

Meetup China 2020September

Meetup Africa 202013-14 October, Johannesburg




Keywords: 5G, Americas Insights, Argentina, Brazil, Chile, Editorial, Energy, Energy Efficiency, Entel, Mexico, MNOS, Network Rollout, Operational Excellence, Peru, Renewables, South America, Telefónica, Telecom Argentina, Tenant’s Perspective

CALA MNOs opt for optimisationand towerco collaborationEntel, Telefónica and Telecom Argentina explain what they need from their infrastructure partners

For years, towers were one of the most valued assets for Latin American MNOs and outsourcing their management was unthinkable. Towercos and the numerous benefits that their business model brought to the table have changed that, and the 6th TowerXchange Meetup Americas demonstrated that synergies and collaboration across the industry continue to grow. MNO leaders have changed their mindsets and an unprecedented engagement from CALA operators at the Meetup proved it.

Successful synergies

Telefónica is one of the most experienced operators when it comes to dealing with towercos. The Spanish telecom giant has around 150,000 sites across 12 different countries. Half of its portfolio are traditional macro towers, and over 50,000 of those sites are currently operated by their infrastructure partners, as Telefonica’s Head of Network Nilmar Seccomandi likes to call them. “We have been working closely with towercos over the years so we don’t see them as providers but as our business partners.” The operator has fully embraced the towerco business model over the last decade. Between 2010 and 2013, Telefónica sold tens of thousands of assets across the globe through several sale and leaseback agreements with independent tower providers. Back in 2016, the company launched Telxius and now, over 35% of the telco’s new sites are deployed through its carved-out towerco and other independent towercos.

Entel’s Chile and Peru units are other good examples of successful collaboration. Between 2009

Read this article to learn:< Case studies of successful MNO and towerco collaboration

< Entel, Telefónica and Telecom Argentina’s infrastructure strategies in CALA

< What are the main challenges that MNOs are facing in Latin America?

< How is the industry preparing for 5G?

The 6th TowerXchange Meetup Americas in July 2019 hosted several MNO executives who explored and discussed the main challenges that they are facing in their infrastructure rollout and management. Entel, Telefónica and Telecom Argentina led different closed-door sessions and took the main stage to participate in a panel discussion, where the three telcos shared their operational headaches and discussed how their infrastructure partners can make their lives easier while releasing some pressure from their balance sheets.


and 2011, the increase of data demand required a very aggressive network rollout from the leading operator in both markets, Entel it decided to co-operate towercos through build-to-suit (BTS) and co-locations. After a decade of prolific partnerships, Entel has started a process to sell more than 2,000 assets in both countries, which will enhance operational synergies with future investors.

Although neighbouring Argentina was one of the latest countries that welcomed towercos to Latin America, market leader Telecom Argentina has quickly understood the advantages of outsourcing, and the company is currently shifting its strategy and increasing the number of new assets that will be built by towercos. Last year, the operator deployed 883 new sites, which is a considerable effort if you take into account the numerous challenges of building sites in the country. This year, over 60% of Telecom Argentina’s 910-site

pipeline is in hands of towercos, a notable change in the company’s strategy and culture as, until recently, the operator considered towers to be a competitive differentiator. Competitors Claro and Movistar are not expected to deploy as many sites, but both companies are also strengthening ties of cooperation with Innovattel, Telxius, Atis and the other infrastructure providers that are active in Argentina.

Cutting down cost through optimisation and dialogue

As a good reference, Telefónica allocates over 20% of their annual revenue to cover infrastructure leases. Furthermore, lease costs are rising by ~10% year on year, but MNOs’ incomes are not increasing as quickly. On top of that, MNOs also pay their energy and maintenance costs which,

“ “This year, over 60% of Telecom Argentina’s 910-site pipeline is in hands of towercos


alongside rent, are telco’s most significant expenses. Optimisation is therefore critical and the operator is one of the most advance and proactive players on that front. “Leases, energy and infrastructure maintenance are our biggest costs, so we decided to review and optimise each of those inputs individually,” Seccomandi stated.

Since maintenance cost are very difficult to reduce, Telefónica focused on cutting down energy bills by modernising the equipment, implementing new free cooling systems as well as investing in renewables though PPAs and auto generation initiatives. Moreover, Telefónica handpicked all the sites where costs were higher than revenue and tried to directly renegotiate the rental fees with the landowners, relocating in cases were proprietors were not willing to reduce or maintain reasonable prices. “We didn’t want to relocate any of our sites but in some cases we had to. We have moved more than 500 sites globally, which reduced our leases by 10%.”

Not all MNOs’ sites are profitable and their strategy is often affected by the regulatory obligations to provide coverage in underserved and remote areas. In some cases, stadiums, malls or airport do not offer high returns but MNOs have to deliver the service so it is especially critical to cut down cost at those lower income points of presence. Telefónica has addressed that issue by deploying optimisation systems that reduce energy consumption in low traffic periods.

On top of the above expenditures, Argentinian operators have to deal with high and ambiguous

municipal fees, which sometimes are higher than the actual land leases. Industry stakeholders have started to understand the importance of education and the key role that the industry can play by working together as a lobby to unlock the bureaucratic bottlenecks that are slowing down infrastructure deployment in the country.

Operators have been working closely with regulator ENACOM and municipalities, and they could use help from their infrastructure partners to design effective educational and regulatory initiatives that can boost social license and reduce local and municipal opposition. “Having a federal telecom law would be the dream for us,” Telecom’s Deployment Manager Alejandro Berenyi stated, “and we need the support of our infrastructure partners to educate and convince both the government and the Argentinian people on the fundamental role of telecom infrastructure for the prosperity and future of our country.”

Social opposition and the lack of a strong regulatory framework is a common challenge in the whole region. Therefore, groundwork is key, as much of the population in rural Latin America have misconceptions about antennas and their potential effects on health. In Chile, the infamous Antenna Law has forced Entel to shift its focus to lower structures and they have been working closely with their towercos partners to educate municipalities and the population on the benefits and positive effect of these solutions.

Eduardo Concha, who manages Entel’s assets

in Chile, highlighted another common social misconception that ultimately affects their balance sheets. “Here, landlords tend to think that MNOs are very powerful financially so try to take advantage and demand very high fees.”

Four years ago, the Chilean market leader started a renegotiation process and reviewed every single contract across the country to reduce rental costs. In addition, they pushed towercos to also renegotiate the fees, as in CALA this is a pass through and operators sometimes feel that their infrastructure partners don’t adequately push land owners on the matter. “In Santiago, we pushed the Metro to reduce fees because it was critical to connect the passengers as the subway is the most popular mean of transportation in the city. The market here is very competitive and our towerco partners need to also support us in the dialogue with landlords and property owners.” After four years of ongoing conversations and groundwork, Entel has notably reduced its rental costs and, as Telefónica did, they relocated their antennas when landlords didn’t show the expected flexibility.

Room for improvement

When asked about their relationship with towercos, the operators highlighted three key aspects that could make the relationship more fluid. First, there is still a cultural paradigm as some MNO executives think that towers are source of competitive differentiation and they don’t want to release or outsource their management. In addition, MNOs


claim that while their revenues are constraining, towercos should adapt their offer and provide optimised and affordable solutions. Finally, there is an operational element where towercos can really make a difference: speed of delivery.

Exploring MNOs energy needs: Should CALA towercos provide power as a service?

Entel’s position is clear: “A change in the business model is definitely needed. Energy is a critical operational aspect as it guarantees our service continuity. Towercos should start providing power for their sites or at least support MNOs with backup systems,” Concha commented, after highlighting that Chile has experienced several natural disasters that have shown the need of strong and reliable backup solutions.

In Argentina, energy distribution is linked to municipalities, which ironically enough are the biggest bureaucratic barriers for both deployment and obtaining energy meters. MNOs would like to obtain an individual meter so they can assess exactly what their energy consumption is. 24/7 reliability is their main challenge and we see again an opportunity for towercos to provide at least backup solutions and monitoring systems to calculate the consumption of each operator.

Utilisation of renewables is increasing in the industry and Latin American operators are investing in greener solutions to cut down cost and reduce their carbon footprints. Telefónica has already deployed hybrid and renewable energy solutions on 4,200 sites and Secommandi highlighted that in many cases, they have

collaborated with their towerco partners in order to find the best solution for each site. In Brazil, the regulation allows private entities to develop their own renewable energy projects and sell their surplus, hence towercos can take advantage of the opportunity and secure greener power supply for their clients while diversifying and finding good returns.

Security remains a challenge

Vandalism and theft are one of the most common issues that the industry faces globally and the complicated social and economic contexts of certain countries in the region makes security a top priority on towercos’ and MNOs’ agendas.

Telefónica has reduced theft by 90% thanks to the installation of Bluetooth locks at 5,000 sites across the region. In high-risk countries such as Mexico and Venezuela, the Spanish operator has switched to lithium-ion batteries, which has also considerably reduced theft.

The panel highlighted how towercos could gain a competitive advantage by offering monitoring systems, which could also become a cost effective option for them due their scalability.

Forecasting the future

Although 5G is not expected to fully penetrate CALA in the near-term, several countries are already planning spectrum auctions and both operators

“

“A change in the business model is definitely needed. Energy is a critical operational aspect as it guarantees our service continuity. Towercos should start providing power for their sites or at least support MNOs with backup systems


and vendors are testing and collaborating on 5G-technology development in preparation for the future.

5G will require densification and more urban infrastructure, and Chilean market leader Entel is already deploying smaller sites as well as more posts and poles across Santiago and other densely populated cities. “We don’t expect posts to replace traditional macro sites, but we need them to complement our towers and guarantee quality of service. We are massively investing in and deploying on billboards, collaborating with utilities, working closely with municipalities and searching new urban locations to address this data growth. We call this move pre-5G,” Concha stated.

Telefónica, which has already deployed over 100 5G sites in the United Kingdom, is also getting ready in CALA: “We don’t expect an immediate arrival of 5G in CALA, but we are working towards its upcoming challenges. Energy consumption will double and we will need more space and new antennas. We are also thinking about 5G when deploying our 4G sites, therefore we try to rollout new sites that, with a small tweak, can host 5G equipment in the future,” Seccomandi commented. Telefónica is conducting 5G trials in Brazil, Colombia and Uruguay and expects to deploy 5G technology in existing sites in the next two to three years. “We will deploy on existing sites first and densify after. We are exploring every alternative, from towerco collaboration to urban solutions and synergies with utilities, as we

know we will need many new sites and typologies in a very short time.”

Fibre, the critical piece

Most of Telefónica’s sites in Europe are connected to fibre and they will try to replicate that in Latin America, where the company mostly relies on microwave backhaul. “We see fibre as a huge opportunity for towercos and we are already using towerco-owned infrastructure in some of our sites. Fibre could be what towers were ten years ago, and it is critical that MNOs can rely on towercos when we don’t have the financial or operational capabilities to deploy it,” Seccomandi highlighted.

“Steel is just steel in any part of the word,” Berenyi commented, before suggesting that towercos need to differentiate from their competitors by providing an

integrated service, where fibre, energy support and security will play a very important role.

However, leasing fibre requires different skills from leasing vertical real estate asset, and towercos still need to figure out if, how and what parts of the fibre network they will build as well as how to make sufficient returns to justify the investment.

Reducing the cost of the land under towers, securing an affordable and cleaner energy supply, and reducing vandalism are some of the biggest operational and financial headaches in CALA, and collaboration seems the best way forward. It’s clear that many of the region’s MNO leaders are willing to form deep partnerships with towercos. Flexibility, dialogue, convergence and innovation will be key differentiators for both vendors and infrastructure developers

“ “We see fibre as a huge opportunity for towercos and we are already using towerco-owned infrastructure in some of our sites. Fibre could be what towers were ten years ago, and is critical that MNOs can rely on towercos to support us when we don’t have the finance or operational capabilities to deploy it


Keywords: 5G, Amercian Tower, BTS Towers, Bankability, Business Model, DAS, Data Centre, Edge, Fibre, Infill, Infraco, Mexico Tower Partners, Multi-Region, NetEquity Networks, Phoenix Tower International, RANsharing, Research, Small Cells, The Future Network, Towercos

New business models andnew opportunities for towercosWhat parameters define towercos’ appetite for innovation? And what specific diversification opportunities are they exploring?

This commentary is drawn both from a panel session focusing on new business models for tower companies, held at the 6th annual TowerXchange Meetup Americas (July 9-10, 2019), and also from a round table breakout on a similar topic. As the round table was held under the Chatham House Rule, the sources of insights and quotes are not attributed. However, many remarks from the panel session are attributed to the relevant participant, who we thank for their contributions: Moderator:< Isfandiyar Shaheen, CEO, NetEquity Networks, and formerly a Director at MENASA towerco Towershare Panelists:< Gonzalo Cornejo, CFO, Mexico Tower Partners (MTP)< Mariano Gomez, Vice President, Business Development, BTS Towers< Steven Haymore, Director, M&A and Managing Counsel, Latin America, American Tower< Don Van Splunteren, Global Vice President of Sales, Phoenix Tower International (PTI)

For the sake of clarity, readers should not assume that non-attributed quotes originated from one or other panellist, because in most cases they didn’t.

Introduction: the parameters that define towercos’ appetite for innovation

Many of the world’s largest towercos have access to substantial cash flows, cash reserves and low cost capital: they have the resources to diversify

Read this article to learn:< Retaining investor buy-in: why towercos are inclined to diversify into communications

infrastructure opportunities similar to towers

< What is the right kind (and location) of fibre for towercos to be interested?

< How are towercos leveraging small cells and DAS for infill?

< How will towercos respond to the opportunity of edge computing? Provide space or provide service?

< Will towercos engage with active infrastructure and/or enable RANsharing?

How do towercos think about innovation? Into which categories of communications infrastructure are they diversifying? While the source for this report was a panel session and roundtables at the TowerXchange Meetup Americas 2019, the insights are applicable worldwide, as all towercos are ordering from the same menu of innovation. For starters, they’d like some non-traditional tenants on their existing towers, plenty of fibre with perhaps a side of small cells for the entree, edge data centres as the icing on the cake.

By Kieron Osmotherly, CEO, TowerXchange


beyond ‘vertical real estate’. In many cases, the scope of potential diversification is limited to categories of communications infrastructure that are adjacent to towers; typically business models that are still predicated on generating long term revenues through building or buying then leasing communications infrastructure to credit-worthy tenants. However, large towercos are cautious about diversifying beyond their core tower business for fear of diluting their focus and adversely affecting their robust valuations. If large towercos are to evolve and diversify, they must retain the buy-in of a relatively conservative base of investors, many of which favour investing in the tower industry precisely because of its laser-beam focus on ‘vertical real estate’ – by which we mean the purity of their investment in masts, towers and rooftop sites for the wireless industry. So large towercos have the resources to innovate, and they are innovating, but they are doing so with caution. In contrast, smaller, privately funded, independent towercos are sometimes free to innovate and act with more agility and flexibility to embrace opportunities to diversify into adjacent categories of communications infrastructure. The tower industry has emerged as a more efficient business model for the deployment of capital into communications infrastructure than the vertically integrated Mobile Network Operator. The extraction of towers into specialist infrastructure companies has functioned as a remedy for the overlapping tower networks originally built by

MNOs. Through organic new build and inorganic acquisitions, towercos now own 68.8% of the world’s investible towers and rooftop sites, creating a new infrastructure asset class with a US$330bn global valuation, creating efficiencies and value by sharing those towers with multiple MNOs, and with other tenants. The emergence of tower companies has been one of the success stories of the wireless era. But how will towercos sustain their impressive growth and

margins? How do they find comparably stable cash flows, which their investors have gotten used to? And how do towercos ensure their proposition, products and services remain indispensable in an era when networks are being transformed as data demand continues to grow exponentially? Picking up that theme, Gonzalo Cornejo, CFO of MTP, the leading independent towerco in Mexico with 2,500 sites, asked: “Where is growth going to come from? We have seen lots of opportunities to

A glimpse into American Tower’s innovation program American Tower has invested a billion dollars into their innovation program. Much of that capital has been deployed into acquisitions focused on provisioning fibre to the tower in five countries to date, but they’re not putting investments into U.S. fibre in the same magnitude as Crown Castle and Digital Colony. American Tower are also exploring opportunities in small cells, smart poles, IoT, energy as a service, and edge data centres. In doing so, American Tower is adapting to meet the changing needs of their clients, whilst plotting a roadmap for the potential future evolution of their business. American Tower is innovating at a carefully controlled velocity and scale – moving from ideas to proofs of concept to regional pilots. By starting early, making small investments, and doing small acquisitions, American Tower is learning in which adjacent categories of communications infrastructure they can add value, where they don’t add more value than other actors, and eliminating innovations that may prove value destructive. Designed to position the company for continued success in a 5G world, the American Tower innovation program has three key prongs:< Leveraging existing assets for additional applications< Evaluating new communications real estate architectures< Capturing opportunities to serve new tenants beyond their traditional MNO client base While American Tower is committed to innovation, that doesn’t mean they’re making a radical shift away from a focus on macro towers, indeed they are explicitly targeting macro tower-like returns on innovation investments


invest in macro towers in recent years, and into the medium term, but that won’t continue in the same rhythm, so where will growth then come from?”

“As wireless operators have evolved in the smart phone era, so our business must evolve,” suggested Mariano Gomez, VP Business Development for BTS Towers. “There’s plenty of money still to be made in macro sites development, and wireless operators’ CTOs have less money than ever for deployment.” PTI owns and operates over 7,000 towers in 14 countries, from the U.S. to Argentina. PTI Global

VP of Sales Don Van Splunteren asked “Where is the technology taking us? Telecom infrastructure depends on how the network needs to be designed, and technology dictates how the network needs to be designed. For example, massive MIMO enabled us to increase capacity, but ultimately created different antenna configurations and different infrastructure needs.”

“The questions we are asking about innovation are: in what sectors and in what business models can American Tower add value for our clients?” Asked Steven Haymore, Director, M&A and Managing

Counsel. “We are not always going to be the best company to play in different spaces. So we’re thinking about where we can add value, while respecting our shareholders and maintaining fundamentals of the tower industry.” PTI’s Van Splunteren echoed Haymore’s view “We like the fundamentals of the tower model very much: long term, non-cancellable contracts, the capex intensity, relatively light opex. We want to respect those fundamentals.”

What is the right kind of fibre for towercos to be interested?

PTI’s Van Splunteren continued: “We like fibre. We would prefer to concentrate on dark fibre, getting a contract, constructing a different model. We’re less keen on lit fibre – it’s more of a service than passive infrastructure.” With upwards of 30% of cell sites in CALA not yet fiberised, PTI are not alone in investing in FTTT – that has been the focus of American Tower’s forays into fibre, albeit focusing to date beyond the U.S., including Mexico and Argentina. During their Q119 earnings call, American Tower Chairman, President and CEO Jim Taiclet said the company had “made some relatively small investments in international fibre... but continue to view U.S. fibre assets as inherently less attractive, due to the extensive availability of competitive fibre supply in the U.S. and the resulting less attractive growth and return characteristics of domestic U.S. fibre.”

Innovation panellists


Panel moderator Isfandiyar Shaheen of NetEquity Networks emphasised the commonalities between towers and fibre: “fibre is a long term asset – futureproof in terms of bandwidth – which like towers provide long term, predictable cash flows. What are the challenges to applying a similar financing construct as we have to towers to a long term asset like fibre?” “We’re thinking how we can create contracts and business models more similar to the tower industry than what we see in the fibre industry,” said American Tower’s Steven Haymore. “My personal view is that when we look at wholesale, neutral host, fibre providers with long term contracts, if we can setup contract conditions and margins similar to a tower sale and leaseback transaction, we might be able to unlock some capital and resources for the fibre space.”

BTS Towers’ Mariano Gomez added: “A lot of the capability to deploy fibre at scale is determined at municipal level. If they don’t help by providing rights of way, we’re at an impasse.” Isfandiyar Shaheen called attention the example of Open Fiber, to a joint venture in Italy between energy company Enel and investment bank CDP. Open Fiber is a wholesale only, FTTH infrastructure-as-a-service play, which last year secured EMEA’s largest fibre project finance package (€3.5bn) to facilitate rollout of their ultrafast network. “My personal thesis is to leverage the electrical grid to provide fibre and bridge the digital divide,” added Shaheen.

Infill sites: small cells, DAS and other alternate site typologies The rollout of modern wireless networks using lower and mid-band spectrum has enabled radio network planners to rely on a relatively low number of high sites, primarily the macro towers that form the majority of towercos’ portfolios. But as carriers start to use millimetre wave spectrum for 5G, and as legacy macro networks become overloaded, radio network planners need more sites. And as they need

more sites, interference becomes an increasing problem. As a result, low height, low power densification sites are being added to networks both outdoors and indoors. How must towercos evolve to meet the changing characteristics of today’s radio networks?

Many towercos have diversified into alternate site typologies. For example, at the end of 2018, PTI acquired Syscom Telecom, a company with 80,000 billboard-mounted wireless sites, primarily in the

Mariano Gomez leads the innovation roundtable


U.S., but PTI also has 2,000 such sites in Colombia. “Billboards are great infill sites,” said PTI’s Don Van Splunteren, “as they offer low elevation, powered sites, near populations and high trafficked areas. Billboards will be particularly useful as operators start using millimetre wave spectrum and seek to cover smaller distances with smaller search rings.” As cities become more and more densely populated, and as networks become more crowded, capacities need to increase, and small cells may emerge as a valuable opportunity. But, at an event and in a report focusing on Central and Latin America, it should be noted that there remains a five-plus year lag to the U.S. market, where carriers are actively deploying small cells. CALA is not a completely nascent market though. “We see demand for small cells, especially in Brazil with Phoenix Tower do Brasil, plus some in Mexico,” said Van Splunteren. As for who will take the lead when small cells are rolled out in volume in CALA, in the words of one small cell vendor at a round table: “the era of selling small cells to a single MNO has passed. The economics simply don’t make sense if they are not shared.” DAS continue to be deployed in selected use cases – most CALA towercos have a few DAS in their portolios. But cost and complexity means we’re seeing less investment in DAS by both MNOs and towercos, and often it’s now the facility owner who pays for the DAS.

Edge “Everyone has heard about moving service to the edge,” said Van Splunteren. “It’s a great opportunity, and it’s a real estate play: saving on the time and cost of transporting data needs secure space, close to fibre. The FANGs (Facebook, Amazon, NetFlix and Google) don’t want one single episode of Game of Thrones sitting middle of the country, they want to bring that closer to the subscriber. We are starting to see the emergence of companies specialising in edge data centres, and we’re starting to get inbound requests regarding our real estate. But it’s still a nascent market. We don’t expect volume for four to five years, until the 5G era.” “I agree that edge data centres are currently a nascent market,” added MTP CFO Gonzalo Cornejo. “That might give us a couple of years to think which model each towerco would like to see. There’s

a model respecting our fundamentals, wherein we provide white floor space with power and security. Then there’s a model when we provide the whole data centre service, but some of the tower fundamentals are not present: there many different contracts, those contracts are of relatively short duration and higher churn, and there is more exposure to technology. We try to follow the fundamentals of the tower business – we don’t want to get involved in providing service to end users – we want to provide service to MNOs and to the FANGs.”

“American Tower has recently acquired Co-lo Atl in Atlanta,” said Steven Haymore. “We see it as an opportunity to learn about the edge. We want to see it as a potential extension of our focus on passive infrastructure, and we feel we can add value both through capital allocation and operationally. We want to meet the evolving needs of MNOs and of

American Tower shares early insights into their thinking on the edge

FierceWireless reported on comments made by American Tower SVP Rod Smith at the Oppenheimer investment conference in August 2019.

Smith intimated that the concept of edge computing wasn’t happening quite yet at the base of the towers, “but we think there could be a day where the latency in a 5G network is so important that having that edge computing right at the base of a tower.” American Tower reportedly has already located a number of small data centres at the base of towers, increasing revenue from the sites, although they don’t think this represents true edge computing yet. Smith continued: “The most important thing there is we’re learning about how to deploy these things, we’re learning about the cost of deploying small data centers,” including the power and cooling needs that goes into them so that if edge computing does land at the base of a tower, American Tower will be ready to execute on that


FANGs in the 5G era. American Tower believes there’s a real commercial opportunity to build incremental income from new clients from our existing assets, although it might not be for a while in Latin America.” Experts estimate that adding an eight rack edge data centre to a cell site could add 20KW to the power load – possibly more than the grid can provide. Whilst towercos in the Americas cling to their ‘steel and grass’ model, and seldom provide energy as a service, co-locating edge data centres at cell sites could be problematic. What will be the uptime targets for edge data centres? It is not yet clear. It may be less than five nines, but it will require the site owner to guarantee power against a Service Level Agreement that would make towerco CEOs’ eyes water! And security will have to be similarly robust. A model response may emerge from China, where Internet giant Alibaba is among the shareholders in China Tower Corporation (CTC). CTC has recognised the concept of the “social computer room” – secure, powered enclosures at cell sites which can enable “intelligent connections” – which sounds a lot like an edge data centre. CTC has carved out a new subsidiary Tower Zhilian to manage social computer rooms, social information, IoT and other new emerging opportunites.

Will towercos engage with active infrastructure? While there are communications infrastructure companies whose scope extends beyond passive infrastructure, they are to date found

only in Europe (for example CETIN, MBNL and Cornerstone). While towercos may become fully fledged ‘infracos’ in the long term, deploying both passive and active infrastructure, it is not likely to happen in the near term – at least not in the Americas. “Getting into active equipment would raise questions about how we’re regulated,” said one towerco. “The problem towercos are solving on an ongoing basis is to accelerate deployments, help out with permitting, and unlock efficiencies through co-location,” added another towerco. “A broader skillset is required to manage active equipment. If we’re talking about just energy, it may make sense, but managing antennae requires a deeper knowledge of frequency engineering – that’s a core competency of our carrier clients.” “The potential efficiencies unlocked by managing both passive and active equipment might best be captured at the managed service level,” continued the towerco. “Driving toward one site visit.” “We check who the MNO is using as their O&M contractor”, added another towerco. “We prefer to have three way conversation and to consolidate site visits for passive and active equipment maintenance where possible.”

“Towercos can offer managed services, and energy as a service, but we still put the network up,” said

a tier one OEM. “The barriers are the economics and the contracts we have today.” “I don’t see us getting into active equipment. Having the active equipment on our books would be an issue for us,” concluded one towerco. “I agree,” said another towerco. “Our investments are based on long term contracts – I’m unconvinced how long term an investment in active equipment would be.” RANsharing… or not One towerco participant at a round table suggested: “we thought would could play a positive disruptive role by enabling active infrastructure sharing. But rent-seeking investors seek bankable contracts with a certain quality of rent – pushing beyond passive to active infrastructure sharing was asking too much from investors. Ultimately our contracts ended up with same penalties against active sharing as other towercos.” Could RANsharing ever become an opportunity for towercos? “MNOs don’t want to share anything!” Said one towerco. “It’s been a battle to move the build-to-suit model in Central America – if they were reluctant to share towers, they’re going to be even more reluctant to share antennas.”

“Turning RANsharing into a bankable contract would be difficult,” added another towerco.


Wholesale networks What role could wholesale 4G and 5G networks play in the future? ALTÁN Redes is a unique wholesale network – what is it, and how does it make towercos think differently? Mexico has only three MNOs: dominant market leader Telcel, AT&T and Telefónica, and a lower population coverage than most other CALA countries. Seeking to increase competition and coverage, the government awarded a contract to ALTÁN Redes, which is responsible for the design, deployment, operation and maintenance of Red Compartida, a wholesale network (or ‘carriers carrier’) providing a ‘Connection for All’.

ALTÁN Redes was granted coveted 700MHz spectrum for 4G free of charge, in exchange for an obligation to cover 92.2% of Mexico’s population in five years. Having achieved 30% population coverage by March 2018, Red Compartida commenced commercial operations. The Red Compartida currently covers about 50% of Mexico’s population. Gonzalo Cornejo, CFO, Mexico Tower Partners explained the implications for towercos. “ALTÁN Redes is effectively a new operator in the Mexican market. While they are a wholesaler, they had no infrastructure at the outset, so initially they’ve leveraged a lot of co-location, particularly in urban areas. They will increasingly focus on build-to-suit as they push into rural areas.”

Many towercos report that ALTÁN Redes represents the lion’s share of both co-location and new build in Mexico. And most towercos have reconciled themselves with ALTÁN Redes’ wholesale business model, which is somewhat competitive to towercos’. Conclusions Towercos are thinking about how they need to evolve to solve carriers’ problems, and to support changing radio network designs. Whether we’re reporting on TowerXchange Meetups for CALA, Europe, Asia or Africa, there are strong commonalities in towercos’ thinking about innovation. There is a preference to stick close to the proven fundamentals of leasing up communications infrastructure on long term contracts.

But there is also a growing awareness of how cell site owners can leverage their infrastructure to tackle the inefficiencies in cost structures of multiple industries. We’ve seen examples of towercos completing the ‘cold chain’ to bring life-saving vaccines to kids. We’ve seen towercos enable ‘Digital Villages’ and support rural electrification. Reverting to urban environments, the convergence of cell sites and municipal services could enable smart cities: Wi-Fi services, smart lighting, V2I, sensors, CCTV and other public safety applications. PTI enables 911 services in the Caribbean: “the equipment is on 70 towers so far, and it’s usually very light equipment, so it can go on any structures the government wants! We’re conscious that government services and healthcare adds value to our customers, so we’re happy to help,” concluded PTI’s Don Van Splunteren

Towercos are thinking about how they need to evolve to solve carriers’ problems, and to support changing radio network designs


Keywords: American Tower, Americas, Argentina, Brazil, Central America, Chile, Continental Towers, Costa Rica, Country Risk, International Digital Infrastructure Alliance, Leasing & Permitting, Peru, Regulation, Research, Towercos, Research, SBA Communications

Overcoming the regulatory challenges of running a tower business in CALAAn updated commentary covering liaison at Federal and Municipal level

This commentary draws on anecdotes drawn from various round table discussions at the TowerXchange Meetup Americas (July 9 and 10, 2019), plus remarks from an insightful panel session chaired by Chuck Green, CEO of the International Digital Infrastructure Alliance (IDIA) featuring contributions from Carol Echeverria, COO of Continental Towers, Susanne Kandel, VP and General Counsel for Hispanic America at American Tower, and Josh Koenig, VP and General Counsel for International Business at SBA Communications. While some quotes are drawn from the panel and thus attributed, TowerXchange’s round tables are hosted under the Chatham House Rule, thus quotes are not attributed. For the sake of clarity, you should not assume that unattributed quotes originate from one or other named panellists, as in most cases they do not. An introduction to the regulatory environment in CALA towers “When we think about regulation, we think about the policies and paperwork that allow us to build or continue development of tower projects in Central and Latin America (CALA),” said Carol Echeverria, COO of Continental Towers, during the regulatory panel session at the 6th TowerXchange Meetup Americas. “Each country in the region is very different, even though we try to secure a consistent and complete set of permits, and undertake the same checks for every site. The situation is made more complex by different municipalities’ implementation of Federal policy and those municipalities’ local priorities. As such, there is very

Read this article to learn:< How CALA towercos are managing relationships with regulators and municipalities< What we can do to improve permitting processes, and reduce the risk of sites being built without

a full set of permits< Examples of towercos and MNOs working collectively to positively influence policy< Snapshots of the regulatory environments in Brazil, Argentina, Central America, Chile and Peru< How the regulation of cell sites needs to evolve for the 5G era

There is no single, unified telecom tower market in Central and Latin America, in particular due to the wide range and constant change in regulatory landscapes from one country to the next. Investment in towers may be inhibited one year, it may be encouraged the next thanks to subtle but important changes in Federal policy and Municipal implementation. This analysis summarises discussion and debate of tower industry regulation during the 6th annual TowerXchange Meetup Americas.

Regulatory panel at the TowerXchange Meetup Americas 2019


little commonality in regulatory frameworks – it’s not a single region in a regulatory context.” “It’s difficult to discuss regulation in the region on a wholesale level – every country and municipality is different,” concurred Susanne Kandel, VP and GC for Hispanic America at American Tower. “At end of the day, the regulators are trying to do the same thing for most part: improve connectivity for people, balanced against aesthetic and health concerns.” Josh Koenig, VP and GC for International Business at SBA added: “SBA’s experience with the regulations in this region is long and diverse. There are markets like Costa Rica where we worked with the regulator to craft regulation which has enabled infrastructure to be deployed in an orderly manner over the years. We’ve also stepped into less organised countries where regulation has been put in at a later time.” “The deployment of infrastructure in Latin America has outpaced regulation, so the tower industry has been able to survive, albeit in not always in as organised and transparent a way we’d like to see,”

continued Koenig. “This has been a distinguishing factor, for example, between Africa or Asia and CALA: here most towercos are not regulated by the telecom regulator – there is no need for a national license to operate except in Chile, for example – so our focus has been more on the permitting process, including at a local level. Where there is Federal regulation applicable to towers, our focus has been on local enforcement thereof. For example, Chile and Nicaragua have National regulation but it is the Mayors who are on the front lines of implementation.” Education, particularly at municipal level Panel moderator Chuck Green, CEO of the International Digital Infrastructure Alliance, asked: “If each negotiation effectively starts with a blank sheet of paper at municipal level, and there is seldom a Federal telecommunication infrastructure licensing regime in CALA, and given that your focus is more on the zoning and permitting issues that speed up or slow down deployment, is there a need for better education and understanding of the socio-economic benefit of towers? And of the fundamental differences

between towercos and MNOs?” “American Tower has a robust Public Affairs team in each market that deals with these issues at a local level,” replied Susanne Kandel. “We’re on an education mission, for example debunking health concerns, and we’ve had some success reaching out to regulators and municipalities and sharing knowledge on such topics. We’ve taken people from regulators and municipalities on tower

How the big public towercos resource government relations and regulatory affairs

Both SBA Communications and American Tower have a formal government and regulatory affairs functions. Their focus on is on information gathering, relationship building including face to face at the diplomatic, Federal, and local municipal level. In CALA, the focus tends to be both on priority municipalities, and on regulators that are receptive to precedent and comparison. Both American Tower and SBA Communications are typically willing to share model regulation as exemplars

Susanne Kandel, VP & GC, American Tower


tours to physically show them our business and our business model and how we can help their communities.” “Another important facet of our role is working with Federal regulator to understand the way their regulations play out in practice, through working with the DOMS (Direccion de Obras Municipales) back and forth to get the concessions,” added Kandel.

“Dialogues with regulators tie into concerns about the speed of deployment and expansion of wireless networks: closing the lag to the U.S. and other markets,” added SBA’s Koenig. “There is growing convergence in regulation – for example on rights of way and small cell deployment – and those debates are ongoing in U.S. too. More and more governments have prioritised further deployment of wireless infrastructure; some candidates have even run on it!” “Regulators don’t like to be told what to do, but giving them examples of what has worked well for others has helped. Educating them on the tower industry: our impact on economics, environment and efficiency, the fundamental benefits of co-location. This all tells a story of how to expand wireless infrastructure efficiently in a way that gives wireless service to the customer at the lowest cost,” continued Koenig. “What is the most persuasive data you can put in front of municipal authority that they would be most responsive to, in terms of recognising the need to accelerate permitting?” Asked Green. “You might touch upon a range of concerns from health issues, community needs, security, development, population growth and how the infrastructure they have now won’t cover that,” said Carol Echeverria, COO of Continental Towers. “Local teams mark the path.” “The way you can ‘sell it’ to a municipality depends on the objectives of that municipality. We already

understand the economic benefits of connectivity, we invest the time to understand the municipality’s specific requirements,” added Susanne Kandel, VP and GC at American Tower. “The quickest way to transform siting regulations is to get something done at Federal or State level – we’ve talked a lot about that in Argentina for example, albeit there is reluctance to step on the toes of powerful municipalities,” replied Koenig. “Educating municipalities is a local game. We gather information and put it together so its easily digested. We’ve disseminated videos and hosted gatherings of Mayors to talk about best practice and benefits to communities. Every market is local to some degree, and education has to be done face to face at a personal level.” “We’ve asked forward-thinking municipalities to educate people – community engagement is critical” added Continental Towers’ Echeverria. “Some communities still have health and privacy concerns; one needs to understand the main, local concerns, and respond by proposing how connectivity can enable a better quality of life for the community.” “I’d agree that we must strike a partnership with municipalities at a local level,” added American Tower’s Kandel. “That said, engagement at the Federal / State level is most efficient – the tone at the top trickles down. For example, Colombia pushed the Digital Agenda at Federal level and that trickled down to the municipalities. In contrast, the previous Mexican government was very pro-telecom efficiency, exemplified by Red Compartida and the

Josh Koenig, VP & GC, SBA Communications


programme to lease municipal land for telecom infrastructure, but unfortunately that didn’t trickle down to the extent we’d like.” “It’s not just about deploying faster. You can deploy fast by simply targeting municipalities that don’t have a permitting regime,” added Koenig. “We’d welcome a transparent, uniform regulatory regime that all actors can follow. The way for independent tower developers, and for our industry as a whole, to gain credibility is to follow the existing rules. It is counterproductive if we don’t respect those rules. As an industry, we need to set example of good behaviour.” Permitting Where permitting regimes are particularly opaque, or where the regulator simply doesn’t have the resources to address permit applications in a timely manner, MNOs and towercos will often find that they have to build without permits in order to achieve coverage targets. “We’ve acquired towers in some markets where the majority of sites are permitted and there is a clear path to regularisation,” said one towerco, “but in Brazil, for example, site permitting regimes were non-existent so the MNOs had to build anyway and, as many of Brazil’s towers were sold, it increasingly became the towercos’ role to conform with the laws that were later implemented. It’s important to distinguish between non-compliance that is bad behaviour versus unpermitted towers that could never realistically have been permitted.”

In one of the round table breakouts, an independent tower developer shared a pragmatic perspective, which might be considered typical: “if we understand the path to permit, sometimes we’ll take the risk and not wait to receive the permit as long as we have that path to regularise.” What does our industry need to focus on to improve permitting processes, and reduce this risk of sites being built without a full set of permits?

At a level of Federal / State dialogue, this can be tied in to what governments are seeking to achieve for their citizens within Digital Economy initiatives. In order to facilitate the continued rapid deployment of communications infrastructure, the tower industry needs improved siting regulations, for example by:< Reducing the number of touchpoints< Avoiding duplication of processes and of fees< Agreeing transparent and predictable processes and fees< Instituting single windows< A framework which limits the municipalities’ right to unreasonably object Towercos often lobby for ‘shot clock model legislation,’ which the WIA helped secure in the U.S., whereby a municipality might have 25 days to reasonably object to a permit application, otherwise the towerco or MNO can move forward with construction. However, it is important to emphasise that such regimes don’t mean that anything goes after 25 days; the towerco or MNO must still comply with pre-agreed the rules and standards, ignorance of which can still result in the tower being dismantled. Whatever improvements to policies and processes are sought, they must cut across macro sites and small cells. The investibility of the permitting regime is not just a function of speed and transparency of process. Once a party has invested in a tower, they need some security that another tower won’t be

Carol Echeverria, COO, Continental Towers


permitted in the immediate vicinity. For example, in Chile a minimum distance between sites is mandated in urban areas, exceptions can only be granted for technical reasons. On the flipside, a lack of protection of the zone around a tower can have dire consequences. “We can only justify building a tower if we can trust that someone will not build next to us,” said one towerco. “In one country, a number of towercos experienced a new towerco working with an MNO to build towers adjacent to theirs, which they

were able to do because of lax zoning regulations. As a result we’ve halted to all investment in that country.”

There are other facets of permitting regimes that can be detrimental to investment. Local authorities must appreciate that if they make it too complex, or too expensive, to build communication infrastructure in their municipality, that investment will simply go elsewhere. “We won’t invest in municipalities that charge US$900 per month in recurring fees – in such stark examples, nobody will invest,” said one towerco. “Providing it is reasonable, it’s always better to to know that there is a recurring municipal fee,” added another towerco “it’s when it’s unexpected

that such fees really cause problems. Your site maybe legal today, but if the municipality changes the rules it may not be legal tomorrow. And if they change the fees, it may not be economically viable tomorrow.” In many CALA municipalities, agreements are only as long as someone holds office. “We may limit our exposure to such municipalities,” commented one towerco. “Sometimes we can mitigate that in situations where, even if you have a short term lease, you may be afforded some protection if they are obligated to show a compelling alternate need for the land.”

One towerco summed up the permitting situation in CALA succinctly: “The more expensive the

The International Digital Infrastructure Alliance (IDIA)

As this report illustrates, there are many circumstances when towercos can benefit from presenting a ‘united front’ with their peers in dialogue with regulatory stakeholders. Filling a void in terms of representation of emerging market towercos, and thus with a particular focus on CALA, Africa and Asia, the IDIA has been founded to give our industry an independent voice. One of the IDIA’s first priorities is the compilation of a global database of regulatory regimes and benchmarks, which will enable targeted interventions in supports of member towercos’ dialogues with Federal and municipal stakeholders. Whether the need is to help regulators understand the differences between MNOs and towercos, to overcome NIMBY concerns, or to work towards an accelerated site permitting regime, the IDIA stands ready to complement and augment local collaborative groups. Founder members of the IDIA include IHS Towers, Helios Towers, edotco and the IFC. For more information about the IDIA, and to enquire about joining, email IDIA CEO Chuck Green [email protected]

Chuck Green, CEO, IDIA

mailto:ccgreen%40btconnect.com


permitting process, the longer it takes, and the less predictable the outcome, the more likely it is that sites don’t get fully permitted. Site regulations are only as good as the enforcement of those regulations, and can lead to bad actors ignoring them.” Readiness to “play defence” against regulatory or policy change that would curb investment Towercos are acutely aware of the risk of political interference in the regulation of communication infrastructure, and act both individually and collectively to secure the transparency and certainty necessary to unlock long term, stable investment in infrastructure. “We’re ready to ‘play defence’ against policy changes that might reduce the invisibility of infrastructure in a market,” said one towerco. “We have built the necessary relationships to maintain constructive dialogues. If a politician comes up with an idea that would be destructive for us – and it should be emphasised that these proposals have good intentions – often it is because they aren’t aware of or don’t understand the private tower sharing industry, or they don’t understand the fundamental difference between MNOs and towercos.” “We invest in ensuring we have the right relationships on the ground,” added another towerco. “We know the players in government that can step in if necessary.”

There have been examples of towercos, sometimes hand in hand with MNOs, working collectively to influence policy. Examples were cited of an industry organisation in Peru which successfully lobbied to have the local Antenna Law amended and expedited, while towercos in Chile worked together to increase the speed of implementation of the National concession regime. Most towercos in Brazil are members of ABRANTEL, while the International Digital Infrastructure Alliance has been created to provide a voice for towercos across all emerging markets. “There is strength in numbers and in working together as an industry, and in some cases governments might expect us to come together as an industry group,” added one towerco. “But we’re not always aligned on how we approach things. As such, we use collective lobbying on a case by case basis.” Regulatory snapshots: Brazil Brazil is an unfortunate example of the results of a lag between permitting processes and the speed of deployment needed to keep up with demand and with coverage targets. Brazil now has increasingly well-developed regulations around permitting, but at one point it took two to three years to secure a permit (indeed in some municipalities there seemed to be no way to permit a tower), and MNOs couldn’t delay rollouts without risking penalties for QoS and coverage deficiencies, so many towers were built without permits.

The situation is improving, in no small part thanks to the actions of ABRANTEL, but there are still problem areas. “São Paulo stopped granted licenses and started issuing fines,” complained one towerco, “although there are ongoing talks to re-open that market.” Regulatory snapshots: Argentina Against a backdrop of political and macro-economic uncertainty, the emerging Argentinian tower market is characterised by many of the same challenges as had been prevalent in Brazil, such as slow permitting. These challenges are exacerbated by inconsistent and often exorbitant municipal fees. Again, the result is that many towers have been built in Argentina without permits. “Argentina is a mess,” said one towerco. “There are around 2,600 independent municipalities, most with the independent ability to permit, and many use that to hold up new site build for political reasons.” “Site harmonisation and municipal fees (‘tasas’) remain substantial challenges to be overcome in Argentina,” added another towerco. “The municipalities call them fees for inspections, but inspections cost a fraction of the cost of those fees, besides which the inspections seldom happen at all. The fees are really taxes, and thus might ultimately be found to be unconstitutional.”

Towercos are working with the Argentinian regulator INACOM and Invest Argentina, seeking


to achieve some harmonisation similar to the U.S. regulatory environment. However, it is tough to find common interests among towercos in Argentina, as each seems to have slightly different issues and priorities; for example, some have negotiated a deal on fees with certain municipalities, and they don’t want destabilise such delicate situations. Argentina’s tax regime, and the depreciation of existing towers, continues to inhibit the potential for the sale and leaseback of towers in the country. Regulatory snapshots: Central America “There are favourable siting regulations in Panama and Costa Rica,” said one towerco, “and we’re actively working with other Central American governments to try to bring in better site permitting regulations. We’re looking for, and often finding, fair, predictable permitting regimes that offer a reasonable tenor, without excess cost.” Costa Rica was a greenfield market for towercos, and most of the country’s tower stock was developed under a regulatory regime that first movers drafted with the regulator. As a result, there is a transparent, compliable regime in place, which the government is increasingly inclined to enforce. In contrast, Guatemala was described as having “out there legislation of telecommunications” which “would benefit from a stronger regulatory framework.”

Regulatory snapshots: Chile Chile will be one of the first countries in CALA to embrace 5G, for which the regulator SUBTEL anticipates a need to more than double the country’s current tower stock (9,148) to ~20,000. The need is particularly acute in urban areas such as Santiago, where wealthy property owners still often have a NIMBY (“Not In My Back Yard”) mentality, and where rooftop sites are both scarce and expensive, so expedited deployment of short poles and small cells will be critical, as will be partnerships with municipalities and utilities to leverage existing sites. Several towercos presented a united front to the Chilean regulator SUBTEL, seeking a mechanism that makes it easier and faster to deploy cell sites, particularly the capacity sites needed to improve QoS. Previously, it could take 12-18 months to secure a permit from the DOMS (Direccion de Obras Municipales) in Chile, which represented a significant bottleneck since aviation, environmental and other permits took much less time. The goal of the open discussions with SUBTEL is to pre-approve site standards then, if the both the application and build is compliant, site building can commence whilst permit approval is pending. In return, SUBTEL is asking that a comprehensive database of sites be compiled. The outcome of SUBTEL’s deliberations is expected in September / October 2019.

Regulatory snapshots: Peru Peru is another market in need of both sites and capital for 5G, with a potential auction of 3GHz spectrum anticipated next year. There have been suggestions that the country’s tower inventory needs to rise from 11,202 today to 15,000 sites by 2022. Also like Chile, there is as much demand for short urban pole sites and small cells as macro sites. When it comes to securing urban rooftops in Lima, another challenge must be overcome: “around 90% of buildings in Lima only had a permit for the ground floor, so using a rooftop may require regularising the rest of the structure, risking a penalty fee for the landlord, or worse still maybe a demolition order,” said one round table participant. “Fixing that may require an amnesty to regularise illegal property.” Again, industry stakeholders in Peru co-operated and successfully lobbied to have the Antenna Law amended to expedite rollout. Small but important changes included an “automatic license, which helps with deployment”, 250m zoning for public sites, and a requirement to hide cables inside structures.

“Build-to-suit is easier in Peru than in many countries,” said one tower builder, “but the problem remains that many local governments don’t always follow national policy – even with a full set of permits, the local population or


municipality can still block site installation. We have a 70% success rate in building sites, even when fully permitted.” “We’re completing better than 70%, but it’s still a problem,” added a towerco. The NIMBY mentality has escalated to the point of violence in Peru: “we had a site burned a couple of years ago,” said one round table participant. Some towercos have been able to defuse escalating community tensions by donating land or lights for a soccer field, for example.

How the regulation of cell sites needs to evolve for the 5G era “Regulatory issues are only going to get more complicated as we move into the 5G era,” concluded IDIA CEO Chuck Green. “More and more stakeholders within regulatory authorities and municipalities are intervening as debate extends from permitting macro sites to rights of way for small cells. Our agenda and our dialogues with regulators must evolve to be prepared for that.” “The need for network densification for 5G represents a unique opportunity for all stakeholders to work together more closely in a way that a focus on a single greenfield or rooftop doesn’t require,” said Susanne Kandel of American Tower. “This is a practical opportunity to negotiate rights of way and work with municipal land to deploy small cells and bring significant benefits to communities. At the

same time, we must appreciate that there are often limitations on what concessions municipalities are able to grant, for example a local government may not be able to grant land rights or easements beyond their term of office – that makes our economics more challenging.” “If municipalities can be the landlords on many sites, that’s a decent way to partner with them,” said Josh Koenig of SBA Communications. “Such partnerships are often difficult in the public sector, but paying reasonable fees for the use of land is consistent with the strategies we’re following.” “There needs to be a convergence and an

acceleration of dialogue. We need to put improvements in wireless communications infrastructure at the front and centre of National Agendas, perhaps partnering with financing sources like the IADB or World Bank in order to have broader dialogue,” added SBA’s Koenig. When Central and Latin America begins the rollout of 5G, and cell sites are splitting and infill and indoor sites are being sought, the dialogue with regulators will shift from today’s focus on coverage to a focus on densification. The criticality of swift, fair permitting will be accentuated, but new priorities will emerge like the proliferation and aesthetics of smart poles

“

“The need for network densification for 5G represents a unique

opportunity for all stakeholders to work together… to negotiate

rights of way and work with municipal land to deploy small cells and

bring significant benefits to communities


See you at our future events!


Meetup Asia 20193-4 December, Singapore

Meetup MENA 202028-29 January, Dubai

Meetup Europe 202019-20 May, Barcelona

Meetup Americas 202023-24 June, Boca Raton

Meetup China 2020September

Meetup Africa 202013-14 October, Johannesburg


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