What next for IHS Towers after Peru exit

Following the sale of its Peruvian operations, IHS Towers is focusing on its operations in Brazil – the towerco's second-largest market – and Colombia.

“In Colombia, we have two options: either divest or grow. For now, our bet is to grow. We believe it's a market that's reaching an interesting point of inflection with the arrival of 5G,” the head of IHS for Latin America, Farès Nassar, told BNamericas.

In the second quarter, IHS sold its subsidiary IHS Perú, including its 61 sites, to affiliates of SBA Communications. 

Also in Q2, IHS reorganized its operations in Brazil by increasing the integration of the tower and fiber businesses. Unlike most other tower players operating in the market, IHS has a fiber operation, the I-Systems JV with TIM, and operates different tower structures.

The expectation is that 5G will gradually densify the network.

“At the beginning of 5G [in Brazil], everyone used the existing towers to place 3.5GHz antennas. Now, this is starting to come down to the street level, because the capacity in the macro towers is already reaching its limit,” said Nassar in an interview during the Futurecom conference in São Paulo.

The company's main bets for this phase of 5G are smaller structures, called street-level solutions (SLS), in addition to small cells and internal structures in buildings. The latter are also known as distributed antenna systems (DAS).

The company's fiber networks will be key to connecting buildings, SLS and towers in general.

IHS currently has 800 towers installed in the country that are connected to its own GPON fiber network, said Nassar.

The executive said he wants to bring the experience of Brazil to Colombia and increase the offer of SLS and DAS in the Andean market, where he says the adoption of these formats is still very low.

COLOMBIA

The situation is challenging in Colombia, with the ongoing judicial recovery process of operator WOM, the amalgamation of Telefónica's operations with Tigo to tackle 5G and the decision of new entrant Telecall to prioritize 5G via fixed wireless access (FWA), rather than traditional mobile telephony with antennas installed on towers.

Nasser recognizes these difficulties, but he is betting on the stabilization of the market and the growth of 5G networks in the medium term as drivers for business in the country.

IHS does not have a fiber footprint in Colombia as it does in Brazil. 

Nasser says that the group is currently evaluating whether to develop its own network or to operate with partners.

BRAZIL SALE

As for reported talks to find a buyer for the Brazilian operations, Nassar denied that IHS is considering leaving the country. In fact, he reaffirmed the "central importance" of the country to the firm's global operations.

The plan, he said, is to be able to rely on new funding sources to beef up IHS's investment capabilities in Brazil.

This could come either via equity, such as with a new investor, or via loans and financing, such as from multilaterals or development bank BNDES, or a combination of both.

FOOTPRINT

At the end of Q2, IHS had 7,951 towers in place in Brazil and 243 in Colombia, of a total of 40,332 worldwide.  

Brazil is the company’s second largest market after Nigeria, but it is growing faster, has more market opportunities and better macro and political conditions than the African nation, Nassar said.

Tenants (leasees per site) in Latin America increased by 661 year-on-year at end-June, including 927 from new towers and 215 from colocation, which consists of space leased on existing towers.

These were partially offset by a loss of 424 users to competition (churn) and 57 related to net divestiture, primarily due to the disposal of the Peruvian towers.

Globally, IHS said it built 207 towers in 2Q24, including 136 in Brazil. 

In January-June, the number of new towers deployed in Brazil reached 294 and the company’s guidance is that it will deploy approximately 600 towers in the country in 2024.

Last year, IHS beat its target for building new towers and achieved a market share of approximately 12% in Brazil. 

The London-based group planned to deploy 1,250 new towers globally last year with approximately 750 in Latin America's largest economy. It ended the year with 1,329 new towers, including 812 in Brazil.

Nassar said that IHS will likely exceed the guidance again this year.

In Colombia, the tower count increased by 15 in 2Q24 after remaining flat in 1Q24. 

The executive acknowledges that deployment in the country has underperformed, but he expects it to ramp up starting in 2025.