COVID-19 has caused a temporary slowing in Atlas Tower’s continued growth, but the disruption will soon be behind them with the inauguration of their 1,000th site. Atlas Tower differentiates itself from South Africa’s two other major towercos American Tower and Helios Towers through staying committed to their core competency, ‘rapid tower development.’ In this interview, TowerXchange sits down with Nate Foster, CEO of Atlas Tower to discuss how the company is managing operations amid COVID-19, its growth in South Africa and its expansion plans in Africa. On June 15, 2015 Atlas Tower South Africa had only 10 sites their portfolio. On June 15, 2020 they built their 1,000th tower.
Towerxchange: Nice to speak again Nate, before we get into more details on reacting to COVID-19, can you bring us up to speed on site development in South Africa since Atlas Tower’s acquisition by SBA Communications?
Nate Foster, CEO, Atlas Tower Group:
Both the acquisition and the pandemic has affected business less than you might expect. The transition to work from home was a challenge. However, as an essential service, our operations teams were able to move around, albeit with official papers in hand. Randi, our CSO has worked hard through the crisis to help sustain our team unity, communication and to see to it we are supporting local communities where we can.
We had an early celebration for our 1,000th tower at our annual team event in late January, since we were scheduled to hit 1,000 towers in March. Of course, then everything slowed down.
Once we received our essential service designation, we struggled to get back to business. We had a difficult time educating our supply chain about their essential role and many simply shut down. For almost a month we didn’t have access to our typical palette of vendors for towers, civil, or electrical, because either they were fearful of the virus or of maybe arrest. Eventually, thanks to the effort of our excellent construction managers we rebuilt the supply chain and got back to business.
We now have over a thousand towers in progress with almost half of that number permitted and leased. We reached 1,000 sites in a little over five years. So we obviously feel good about the next five years.
TowerXchange: What do you think will be the impact of the COVID-19 crisis on the relationship between towercos and MNOs?
Nate Foster, CEO, Atlas Tower Group:
In the short-term, telecom demand for new infrastructure deployments will be slower, and maybe increase as networks see pressure from new geographies. However, the long-term is less certain. South Africa’s economy wasn’t strong before the outbreak began, and so pocketbook concerns will begin to put downward pressure on ARPUs. This could mean more asks for opex relief from our tenants, but if that coincides with site count reductions due to capex reductions it will be a hard sell for us. Still, we are analysing new ways to keep our model successful that help foster a healthy MNO relationship.
Low growth projections across the world are pushing central banks to implement low interest rates. This means that as MNOs look to reduce opex they are faced with a generally robust real estate sector and therefore land value is not decreasing like ARPU might as a result of the pandemic. Time will tell how this story plays out. We often get pressure from MNOs on rental rates, but in this environment it will be challenging to offer rental incentives.
Adrian Group joins Atlas Tower Kenya
Atlas Tower has confirmed execution of an agreement with Adrian Group Ltd. to become a large shareholder in Atlas Tower Kenya Pty Ltd. (ATK) Nathan Foster, Atlas Tower Group, CEO, stated, “we are thrilled with Adrian joining us and leading the build efforts in Kenya, it will allow us to quickly develop towers in more places. Ultimately, this deal helps drive coverage to underserved communities in Kenya.”
TowerXchange: How would you characterise the Atlas model versus the old American Tower model in South Africa, and the newer entrant Helios Towers?
Nate Foster, CEO, Atlas Tower Group:
Atlas Tower has always been a tower building company. 91% percent of our 1,000 towers are identified, developed and built by us, very few competitors can say the same.
Since Atlas Tower was formed in 2007, we have had a core concept of building towers for tomorrow’s network, not today’s needs. If a tower is correctly placed, with the permitting and loading allowances for the future network then operators and our shareholders are happy.
We challenge ourselves internally each quarter to continually build more towers than anyone else. For the last four years we have consistently erected more new towers than anyone else in this market. We have connected more villages, schools, and neighbourhoods than anyone else. We are obviously proud of that.
Certainly, Helios has come to the market and both ATC and Atlas have worked to stay competitive. But this is not a commoditised service business, its real estate. Therefore, we are focused on continuing to secure and develop the best real estate in the country.
We strive to maintain a high level of performance, equally maintaining speed and quality in getting a new nominal into the sky. We attempt to stay ahead on creative, high-tech, solutions that get the carrier on-air fast, with mobile and temporary sites. Atlas is big on regular communication with our tenants. We hold weekly and monthly status meetings in an effort to shower them with site details and transparency on our processes.
Atlas Tower Foundation (ATF) has invested into the communities in which we live and work. ATF is a not-for-profit organisation committed to providing support and awareness for Communities, Conservation and Research & Development. According to Randi Clendennen, CSO, one of the foundation’s objectives is to support the next generation with a focus on education and sport. It is here that youth build their confidence and knowledge to achieve their dreams and aspirations. COVID-19 has caused a set-back in already struggling areas. If we start by creating positive change individually, our ability to have successful outcomes will be greater for building a better world for tomorrow. We are working together with independent partners and mobile network operators to advance our objectives. We welcome anyone who has interest in participating and joining these efforts.
TowerXchange: 5G is moving to reality – will this mean moving to alternative typologies or is the focus still geographic diversity?
Nate Foster, CEO, Atlas Tower Group:
No, not for Atlas Tower. There is not a need to shift focus away from our core competencies. Understanding that in South Africa, SBA Communications will drive decisions on future investment in that market, but I believe generally we adhere to the same vision, that macro towers should be core to any 5G strategy. In-building solutions are vulnerable to technology changes in a way macro sites are not, and fibre is too easy to replicate to earn a towerco-style return.
We still prefer investing in other markets. Our US business is experiencing one of its best growth periods since 2012. In Kenya we recently formed a JV with Adrian Group Ltd. This deal allows us to combine their local experience and lengthy market success with our local tower business. With 9 towers in the air in Kenya, but more than 120 in process it is an appropriate time to add a local partner in to help drive our operations. Also, in Kenya, to help combat the challenges of studying from home for learners, Atlas Tower Kenya, has decided to build free towers in underserved communities. We will be adding five towers in Kibera, Mathare, and Mukuru, that will be rent free for 2 years for any licensed MNO.
TowerXchange: If you had to sum up the Atlas philosophy what would it be?
Nate Foster, CEO, Atlas Tower Group:
I’d mention three things:
- We invest in Grit, not IQ, it delivers higher returns
- Better to have fast action than prolonged oration
- We strive for consistent accountability with all failures.
How Atlas Tower responded to COVID-19
At Critical Connections II: Tower industry perspectives - Coming out of the Covid-19 lockdown operationally stronger, Randi Clendennen Chief Strategy Officer and Co-Founder of Atlas Tower discussed how Atlas Tower has responded to the pandemic and lockdown in South Africa.
From the start, Atlas Tower was designated as an essential service, which allowed them to continue work. However, some of their service providers did not have essential service certificates and Atlas Tower had to work diligently to bring their supply chain around to continue their essential work.
There were other operational hurdles too. Even with their essential service designation, it remained difficult to cross interprovincial borders in South Africa as authorities tried to limit the geographic speed of the disease, public servants offices were closed until 1 June and there were also a few cases when a team reached a tower and site access was an issue.
A taskforce was created which was in charge of providing real-time information to the team, to ensure any changes to regulations or lockdown rules would be applied immediately. Guidelines were set in place to keep the teams protected through the wearing of masks, operating at safe distances, hand sanitation and adhering to health and safety guidelines.
With offices initially closed, Atlas Tower’s office-based work changed too. Atlas Tower’s first priority was ensuring every team member had the resources needed to operate effectively in a home office setting. This required ensuring good Wi-Fi, office equipment, and online communication tools such as Zoom, WhatsApp, and Docusign to keep communication high and streamline the contracts process remotely. The processes and tools implemented have worked well and Atlas will continue to integrate these daily routines and adapt as needed to keep productivity and output high.
