Spotlight: The investment plans of LatAm’s biggest towercos

Slower-than-expected 5G growth, the consolidation of mobile operators and saturation of masts in some areas are seen as challenges for the telecom tower sector in Latin America.

Regional leader American Tower expects weaker growth, while SBA is doubling down on the acquisition of towers from operators under a model known as sale-and-leaseback, tied to long-term leasing contracts, to expand presence, retain carrier customers and reduce the risk of churn.

Other major regional players are Phoenix, IHS and Sites. 

Among the main markets, Brazil, which accounts for around 35% of the 215,000-240,000 sites installed in Latin America, has seen a slowdown in the construction of towers, despite the advance of 5G.

This apparent contradiction is due, among other things, to the fact that local operators are mainly prioritizing the installation of antennas on existing towers and focusing on the expansion of the technology in urban centers with better mobile infrastructure.

BNamericas breaks down the main investments and demand perspectives of the major tower companies.

American Tower

The biggest company in the sector, American Tower (ATC) forecasts that its Latin American operations will continue on a trajectory of low growth for the foreseeable future. Consolidation of telcos, forex effects and macroeconomic uncertainties explain the outlook.

In 3Q24, Latin America delivered a 1.7% year-on-year increase in tenant (site leases) revenue for the company, the lowest of all its geographies. Earlier this year, the company was planning to invest US$150mn in the region in 2024.

“We believe that [Latin America] will come back to high single-digit growth, but for the next few years we are projecting low single-digit growth there,” CFO Rod Smith told investors in an earnings call.

Overall, ATC ended September with 48,247 sites deployed across Latin America, compared with 48,242 in June. The portfolio includes towers, in-building sites and outdoor distributed antenna systems (DAS).

Brazil alone accounted for 22,675 of the total, inching up by five sites in the quarter, followed by Mexico (9,695, up by nine).

Next was Colombia (4,958, down by eight), Peru (4,424, down by two), Chile (3,821, up by one), Paraguay (1,452, up by one), Costa Rica (712, up by one) and Argentina (510, flat). 

Considering only towers, the company built 27 in the quarter and 98 in the first nine months of the year in Latin America. That compares with 46 and 96 in the same periods of last year, respectively.

Last year, ATC missed its tower deployment target for Latin America.

In 2023, the company planned to deploy around 300 sites in the region of a total of 4,000 worldwide. However, ATC deployed only 210 towers in Latin America.

SBA Communications

SBA Communications sees the possibility of investments in edge computing and has advanced deals for the acquisition of telcos’ towers in the region.

In October, SBA signed a US$975mn contract with Millicom for the telco’s approximately 7,000 sites in Guatemala, Honduras, Panama, El Salvador and Nicaragua.

Millicom will be a tenant on each site under a leaseback arrangement for at least 15 years. 

In addition, as part of the leasing arrangement, Millicom agreed to extend all of the approximately 1,500 existing leases with SBA for a new 15-year term.

Following the closing of the transaction, expected for later in 2025, SBA will become the largest tower company in Central America, significantly increasing its scale in four of the five countries involved in the operation.

By September 30, the company owned or operated 39,762 communication sites, 17,477 in the US and its territories and 22,285 internationally. Its largest market outside the US is Brazil, with 11,000-12,000 towers.

In addition to the sites under contract with Millicom, globally SBA purchased or is under contract to purchase 45 sites for an aggregate consideration of US$16.3mn in cash that it expects to close by the end of March.

The company's biggest international clients are Telefónica, América Móvil and TIM.

Telefónica accounted for 21.6% of SBA’s international site leasing revenues in 3Q24, América Móvil for 20.3% and TIM 14.8%. In 3Q23, the Spanish telco’s share was 22.8%, while América Móvil’s was 19.7%.

In Latin America, SBA operates in Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Nicaragua, Panama and Peru. 

Phoenix Tower

Florida-based Phoenix Tower International (PTI), which is not publicly listed, is estimated to own over 29,000 telecom towers throughout Europe, the US, Latin America and the Caribbean.

In April, PTI secured a strategic global investment from Grain Management and BlackRock to support its expansion into new markets. Financial terms were not disclosed.

Based on PTI’s interactive portfolio map, BNamericas estimates Latin America and the Caribbean account for some 12,000 of the sites. One of its leading regional clients is Liberty Latin America.

Colombia, Ecuador, Peru, Chile, Mexico and parts of the Caribbean account for the bulk of its Latin America portfolio. PTI exited Brazil in 2020, selling its sites to DigitalBridge's Highline.

PTI has also invested in sale-and-leaseback agreements with operators in Latin America. 

In November 2023, it entered into an agreement to buy 1,300 mobile sites from Liberty Latin America in Panama, Jamaica, the Bahamas, Puerto Rico, Barbados and the British Virgin Islands.

The companies also announced the joint deployment of 500 new sites across the region in five years. Total deal value amounted to US$407mn.

In 2022, Phoenix Tower closed a similar sale-and-leaseback deal for up to 3,800 sites in Chile with WOM, which is currently in judicial protection, in a deal worth US$930mn, reportedly turning PTI into the largest player in the Chilean market.

IHS Towers

Telecoms infrastructure group IHS Towers expanded the number of towers and tenants for its sites in Latin America, but saw a reduction in revenue and capex related to regional operations.

In Latin America, the company operates in Brazil and Colombia. Overall, IHS ended Q3 with 8,354 towers in place in those two countries, up 8.9% year-on-year. Of the total, 8,109 were in Brazil and 245 in 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 October.

In Brazil, IHS reorganized its operations 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. 

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

During 3Q24, IHS built 160 towers in the region, adding to 151 built in Q2 and 161 in Q1. Worldwide, IHS has 40,650 towers.

IHS revised its global capex outlook for the year, but upheld its guidance of deploying approximately 850 sites worldwide, of which around 600 are in Brazil. 

The company is now targeting a capex range of US$270mn-300mn, versus a previous range of US$330mn-370mn.

Sites LatAm

América Móvil spinoff Sitios Latinoamerica (or Sites Latam), plans to increase its capital by 3bn pesos (US$150mn) to cope with demand.

The group is among those that deploy towers at the fastest pace in Latin America, mainly to serve its Claro operations.

Sites operated 36,201 towers across Latin America in September, up by 423 from June and by 1,532 new sites over September 2023. Brazil is its biggest market in the region, with 11,670 sites.

The group had 9,528 towers in Chile, Ecuador, Peru and Colombia (Andean Region); 8,032 in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama (Central America); 5,449 in Argentina, Uruguay and Paraguay (AUP); and 1,522 in Puerto Rico and the Dominican Republic (Caribbean).

In 3Q24, Sites registered 43,952 individual site agreements and equivalents, an increase of 2,501 when compared with the same period of last year.

During Q3, growth was driven by Brazil and the Andean region, contributing 183 and 144 new sites, respectively. At the end of the quarter, the tower firm also said it had 232 additional sites in advanced stages of construction in Latin America.

“We believe that the potential of the Brazilian market is enormous and that we can increase our construction pace in the coming quarters. Brazil will undoubtedly continue to be an essential element in the coming years,” the company said in a statement.

In the Andean region, growth in the last 12 months was led by Peru and Colombia. 

“We are convinced that the Andean region will be a key player in the future, and that Colombia will be a growth driver within the region for the coming years.”

Other players

Other major players in Latin America include DigitalBridge-owned companies Highline (Brazil), Mexico Telecom Partners (MTP) and Andean Telecom Partners (ATP). 

Highline has around 13,500 sites deployed in Brazil, with long-term take-or-pay contracts with the main mobile operators in the market. It is the second largest towerco in the country after American Tower. Recently, Highline secured a loan from development bank BNDES to expand its footprint.

MTP reports over 3,500 sites (towers, rooftops, DAS, small cells, among others) and 6,500 managed contracts. 

Operating in Chile, Colombia, Peru and Ecuador, ATP has not updated its tower base.