Sitios Latam expands tower business beyond América Móvil contracts

Sitios Latinoamérica (Sitios Latam), the telecom infrastructure spin-off of América Móvil, is not only ramping up its tower portfolio with new deployments and acquisitions but is also diversifying its customer base beyond the Mexican telecom group.

América Móvil approved the creation of Sitios Latam in September 2021 and remains its anchor-customer or tenant.

“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 total, the company closed 404 new individual sites agreements with clients other than América Móvil subsidiaries in 2Q23.

For now, Claro brands remain Sitios' main clients, in a sale-and-leaseback format. 

América Móvil gives up control and ownership of towers to rent them, which is cheaper. It is a capex-for-opex trade-off.

Sitios, meanwhile, is responsible for building, installation, maintenance, operation and marketing (either directly or indirectly) of different types of towers and support structures. 

But Sitios' growing bet on customer diversification is shaking up the tower market in Latin America.

This is because not only does it take América Móvil’s subsidiaries away as the main tenants of other, fully independent tower companies – such as American Tower – but also lures other customers away from these players.

GROWING BASE

In tower count, Sitios is already one of the largest towercos in Latin America, advancing despite the dominance of American Tower, SBA Communications and Phoenix Tower International, among others.

In 2Q23, Sitios' portfolio reached 34,240 sites, up from 29,163 in 1Q23, with 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, with 11,262 in Brazil alone. 

Sitios also reports that it had 335 new sites or sites under construction as of end-June.

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

Total 2Q23 revenues reached 3.41bn pesos (US$200mn), up 8.5% from the previous quarter.

Brazil contributed 39.2% of total tower lease revenues, while the Andean region [Chile, Ecuador and Peru] accounted for 20.7%.

Central America (Costa Rica, Guatemala, Honduras, El Salvador, Nicaragua and Panama) followed with 19.4%, AUP [Argentina, Uruguay and Paraguay] with 15.2%, while the Caribbean (Puerto Rico and the Dominican Republic) represented the remaining 5.5%.

Tower lease revenues rose 2.3% compared with 1Q23 in Central America while the rest of the operations saw this income remain stable.

COLOMBIA

Sitios Latam also started operations in Colombia in the quarter, following the absorption of the local Claro tower portfolio. 

Sitios reported 76 towers “in advanced stages of construction” in the country as of end-June, with a “steady and long-term organic growth pace” in the country in the months to come.

The second quarter was also the first full period of operations for Sitios’ business in Peru and in the Dominican Republic. 

In February, Sitios wrapped up the acquisition of 1,388 towers from the group's Claro brand in the Dominican Republic. In March, it added 2,980 from Claro Perú.

The operation in Peru contributed 7.2% of Sitios’ infra leasing revenues in the quarter, while the Dominican Republic contributed another 4.6%, according to the company.