Phoenix Tower in negotiations over 230 new sites for LatAm market

Phoenix Tower International (PTI) is in talks with Latin American telecom operators about the construction of over 230 towers in the coming months, according to Alex Tude, PTI’s director of tower development.

The exact number of new sites is set to be lower as usually only a portion of the potential deals actually materialize, Tude told BNamericas.

The executive oversees PTI's tower development in the US, Latin America, the Caribbean and Europe. The company is one of the largest tower players in Latin America.

The figures provided by Tude refer exclusively to new sites, those deployed in the built-to-suit (BTS) model, which is when towers are developed to meet specific design and physical characteristics of one particular client, or tenant. Such towers are usually built after signing a leasing contract.

The company expects to end 2022 with 134 new sites deployed in Latin America, after having initially expected 300 new ones. Key customers in Mexico and Bolivia either canceled their orders or are only now confirming them, which explains the decrease. 

“We have two customers who had quite a large volume of orders that didn't move forward. One was Altán, in Mexico, due to the company's financial situation, and the other [Viva Bolivia] with which we had a strong estimated commitment that was only now confirmed. With that we had a pretty big reduction in the numbers for this year,” said Tude.

"On the other hand, the expectations we have with Viva are quite positive for next year," Hermes Figueroa, PTI's sales director for Latin America, told BNamericas.

Viva is the third largest mobile operator in Bolivia, with a market share of around 13%, according to industry estimates.

Earlier this year, Trilogy International said it was selling its 71.5% controlling stake in NuevaTel, which operates under the Viva brand, to the Balesia group. Bolivian telecommunications cooperative Comteco owns 28.5%.

Balesia develops, owns and operates telecom towers, IoT edge and multi-edge computing technologies across Latin America.

Three months ago, however, Bolivia’s telecom regulator ATT rejected the sale to Balesia. The watchdog said that “the information provided isn't transparent, it's not sufficient for this authority to make an affirmative decision to authorize the transfer of Viva.”

In Mexico, Altán Redes, the concession-holder in charge of the country’s shared wholesale network (Red Compartida), just recently concluded the bankruptcy process it entered into last year. 

In June, Altán confirmed that the government would provide a bail-out worth US$388mn to ensure the long-term viability of the project to connect around 92.5% of the country by 2028.

OUTLOOK REVISIONS

The year has seen several tower companies reducing their initial forecasts for 2022.

Citing “timing and general market conditions,” IHS Towers cut its full-year BTS construction outlook for Latin America by around 300 sites, and now expects to end the year with 400 new sites. 

This was IHS’ second outlook revision for 2022 as it had initially said it expected to deploy 700 sites in the region.

In addition to macroeconomic factors, telco market consolidation and some telcos’ financial woes, a major problem weighing on the business of the tower firms has been the delay in the supply of antennas and radio equipment by components-affected network providers to telecom carriers.

Tude said that this generates a “cascading effect” for the tower companies who are at the end of the chain.

PTI owns and operates over 18,000 towers, wireless infrastructure and related sites in 20 countries in the Americas and Europe. 

The company had around 9,000 sites in Latin America as of March. 

In addition to Mexico and Bolivia, it also has towers in countries such as Colombia, the Dominican Republic, Chile and Ecuador. 

Figueroa also highlighted Jamaica as a very important market for the company in the past two years.

Founded in October 2013, PTI is privately owned and is backed by global investors such as The Blackstone Group. 

M&A

On the non-organic growth front, PTI expects to remain active in dealmaking, although Figueroa sees increasingly less assets available for opportunistic and strategic acquisitions in Latin America.

In January, funds managed by Blackstone Infrastructure Partners purchased a 35% stake in the company, ratcheting up its expansion capabilities. 

After that, PTI acquired 3,200 towers from Cellnex in France in March, 202 towers from Tower Venture Holdings in the US in April, and 3,800 from WOM in Chile in July. 

In August, PTI unveiled a US$2bn multi-facility transaction to repay debts, including those related to the WOM deal. 

Valued at US$930mn, this deal saw PTI become the main telco tower player in the country. Chile is one of the countries with the lowest rates of tower tenancies, with only one in every five towers being used by more than one operator.

“[This deal] enables us to strengthen our investment in Chile, particularly expanding 5G coverage from Arica to Punta Arenas over the next several months, as well as expanding coverage into rural areas of the country by delivering upgraded connectivity and contributing to a reduction of the digital gap,” WOM’s CEO Sebastian Precht said at the time.

As part of the transaction, PTI acquired 2,334 tower sites at the initial closing, while 1,466 additional ones are due to be delivered by 2024. 

According to Figueroa, around 2,700 sites have already been transferred with a sizeable number of other WOM sites being handed over to PTI before the end of this year.

In the coming weeks PTI is expected to unveil a new tower acquisition in the Chilean market, although not as large as the one with WOM.

The group is also looking to offer energy-as-a-service solutions to companies and service providers in some Latin American markets, and to provide fiber, edge computing, small cells and distributed antenna systems (DAS). 

PTI has seen demand grow for edge, mini-datacenters and fiber deployments, especially among Mexican customers, said Figueroa.