Spotlight: The investment outlook for LatAm’s top tower companies

Telecom tower companies remain at full throttle with their investment plans for Latin America plans, as mobile carriers in the region advance with 5G activations and more markets prepare to auction spectrum for the technology.

Many of them are also betting on new structures, such as rooftop installations, street-level solutions, camouflaged antennas and indoor sites to densify mobile networks.

Headwinds for their operations in the region, however, include the active consolidation of telecom operators, in addition to macroeconomic conditions in certain markets.

BNamericas takes a closer look breaks at the updated construction and investment projections for the leading companies in this sector.

AMERICAN TOWER

Earlier this year, American Tower Corporation (ATC) said it planned to deploy around 300 towers in Latin America this year of a total of 4,000 worldwide. For now, the company is maintaining that guidance. ATC is the biggest tower player in the region.

At the end of June, its Latin American tower portfolio comprised 48,542 sites, including in-building and distributed antenna systems (DAS), five more in the quarter. At end-2022, the company had 48,548 in the region.

The Latin American business accounted for 16.1% of the group's property revenues in 2Q23, down from 17.1% in 1Q23, but the company increased its tenant billing growth and tower count in the region. 

It had 22,803 towers in Brazil at end-June, up from 22,797 the previous quarter. The country remains the third largest market for ATC in number of properties after the US and India and accounted for 7.2% of its property revenues.

In Latin America, Brazil was followed by Mexico (9,849 sites, up from 9,844). Next was Colombia (4,981, up 4,979), Peru (4,403, up from 4,400), Chile (3,846, down from 3,859), Paraguay (1,449, up from 1,447), Costa Rica (702, flat) and Argentina (509, flat).

ATC’s global markets are at different stages of network development relative to the US, where the level of 5G coverage deployed over a combination of low- and mid-band spectrum has reached approximately 95% of the population, according to the executive.

“In Europe, that number is closer to 60%, while Africa and Latin America are closer to 7% to 8%, suggesting a long tail of 5G and other next generation technology investments requiring significant incremental network density and cell site points of presence,” CEO TOM Bartlett told investors in an earnings call.

In key markets such as Brazil, the company is also expanding its fiber network business. Meanwhile in Mexico, American Tower decided earlier this year to pull out of that segment, selling the local fiber operation to Flō Networks for US$252mn.

SBA COMMUNICATIONS

SBA Communications plans to concentrate the bulk of its tower deployments in Brazil in the coming quarters, which is one of its strategic global markets.

The company does not provide a full-year outlook for tower construction in specific economies, however.

During the second quarter, SBA built 64 towers globally. It also acquired nine communication sites for US$7.2mn. SBA added that it is under contract to purchase 134 communication sites for U$72.9mn, which it is expected to complete by the end of the year.

In Latin America, the company increased the number of tower leases, as well as amendments to existing leasing contracts, in key countries in Central America and in Brazil.

As of June 30, 2023, SBA said that it owned or operated 39,426 sites worldwide, 17,426 of which were in the US and the remainder throughout the Americas, in Africa and the Philippines.

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

“We remain excited about our opportunities in Brazil,” CEO Jeff Stoops said in the call, referring to contracts with top local clients TIM, Claro and Telefônica Brasil.

“I continue to be pleased with our operational performance, cost management and customer relationships in Brazil which has made us a leader in the market. And we have recently seen positive movements in the currency exchange rate, providing some financial benefit and increased US dollars for repatriation as well as contributing to our increased full year outlook," said the executive.

SITIOS LATINOAMERICA

Sitios Latinoamérica (Sitios Latam), the telecom infrastructure spin-off of América Móvil, is focused on diversifying its client portfolio beyond the Mexican telecom group.

Sitios previously said it planned to deploy 1,500-1,800 towers in Latin America this year.

In total, the company inked 404 new individual site agreements with clients other than América Móvil subsidiaries during the second quarter.

It also reported 335 new sites or sites under construction as of end-June. The period was also marked by the start of operations in Colombia, following the absorption of the local Claro tower portfolio. 

During the quarter, 124 new sites were built and began generating revenues, mainly in Ecuador, Peru and Central America, it said. Another 211 were at “’advanced stages of construction,” primarily in the Andean and Central American regions.

“We estimate that 17% of our tower lease revenue is attributable to clients other than Claro [brands]. This is the result of an ambitious commercial strategy focused on diversifying our client base through the closing of new tenancy agreements,” Sitios said in its 2Q23 report.

In tower count, Sitios is already one of the largest towercos in Latin America, with 34,240 sites at end-June, up from 29,163 in 1Q23. It also had a total of 41,392 site agreements.

This portfolio is now in Argentina, Brazil, Chile, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Paraguay, Puerto Rico and Uruguay.

IHS TOWERS

IHS Towers is targeting the deployment of some 750 new towers in Latin America this year, virtually all of them in Brazil, its main market. The projection is roughly three times the amount deployed in the region in 2022.

In 2022, however, IHS twice made downward revisions to its annual telecom tower guidance, as demand and projects failed to materialize. 

Worldwide, IHS maintained its full-year global guidance of building 1,200 new sites in 2023. 

Overall, the company deployed 175 towers in Latin America in Q2 and 209 in the first half of the year, ending June with a total regional portfolio of 7,424 sites. In the first six months of 2022, IHS had built 115 sites in the region.

The company, which in Latin America operates in Colombia, Peru and Brazil, also reported an increase in its regional fiber capex. Brazil is IHS's second largest global market with 7,139 towers. Colombia and Peru had 228 and 57, respectively, at end-June.

Overall, IHS reports 39,298 towers (up 0.6% year-on-year) across seven countries in Africa, three in Latin America and one in the Middle East, with annualized revenues of US$2.19bn as of end-June.

The company also said it ended June 2023 with 9,896 tenants (customers per tower) in Latin America. 

“Macro conditions continue to improve following the government transition in January,” CEO Sam Darwish told investors regarding Brazil, highlighting the improvement in FX rates and the local central bank’s intention of starting a cycle of interest rate cuts.

“We are focused on our sizable build-to-suit program and continue to assess a growing number of opportunities. We are excited about Brazil,” Darwish said.

The group’s main customers in Latin America are TIM, Claro, Telefônica and Oi (fixed) in Brazil, Tigo and Claro in Colombia, and Entel and Bitel in Peru.

IHS’s fiber operations in the region are concentrated in Brazil, where it controls I-Systems, a neutral fiber JV formed in 2021 with TIM. IHS invested over US$10mn in fiber deployments for the telco in the quarter.

PHOENIX TOWER INTERNATIONAL

Phoenix Tower International (PTI) previously told BNamericas it was negotiating the construction of over 230 towers in the region in the coming months. 

The company, however, is not publicly listed and therefore does not published details of its tower business on a quarterly basis.

PTI reportedly ended 2022 with 134 new sites deployed in Latin America. The latest figure disclosed by the group was 22,000 sites deployed worldwide. 

Last year, the company closed a sale-and-leaseback deal for up to 3,800 sites in Chile from WOM, becoming the largest player in the Chilean market.

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

In addition to the towers, PTI has around 1,400km of fiber optics in Mexico.

The company is also betting on micro- or far-edge computing, with processing equipment attached to its sites and in container-type edge datacenters, located adjacent to the towers.

The group is equally looking to offer energy-as-a-service solutions to companies and service providers in some Latin American markets, as well as providing fiber, small cells and DAS. 

In 2022, PTI closed a US$2bn cross-border syndicated loan agreement to support its operations.  

The transaction covers 14 of PTI's operations across Latin America and the US. Proceeds from the facilities were used to repay existing debt, fund the acquisition of the WOM portfolio and to fund future capital expenditure requirements, acquisitions and working capital, the company said.

PTI's main investors are funds managed by Blackstone.