Over the last three decades, SBA Communications has successfully navigated political and economic crises, large and small, in Latin America and globally. Now, this unprecedented crisis is showing the importance of connectivity for CALA once again, and the company remains bullish about future organic and inorganic growth opportunities as MNOs continue investing in network expansion and coverage to satisfy exponential data demand increase. In this conversation, Kurt Bagwell, President, International, SBA Communications provides an update on the region’s opportunities, analyses how the pandemic is impacting MNOs and their infrastructure partners and talks future plans.
TowerXchange: Kurt, would you please share an overview of the key dynamics across Central and Latin America and what is driving your growth in those markets?
Kurt Bagwell, President, International, SBA Communications:
The key dynamic for continued growth in Central and South America continues to be physical network coverage, capacity and performance to provide high quality, feature-rich voice and data services. Our clients are repeatedly challenged by their customers for a great product at a great price. Their users constantly look at their phones, hoping to see five bars of coverage, and when they connect, they demand to have high voice quality or fast data speeds with no strings attached. Wireless usage continues to be insatiable. Our role is to continue to feed the carrier networks with quality infrastructure at the right price in the right locations to satisfy this efficiently. This is the most basic dynamic, which has not changed for many years. In addition to this, we see constant activity from technology and frequency additions and alterations, on top of the organic and inorganic growth we continually work to obtain through new tower builds and existing tower acquisitions.
TowerXchange: What are the main challenges that COVID-19 is bringing to the industry and how is SBA adapting? How is this impacting MNOs behaviour, their capex and rollout plans and how are you responding?
Kurt Bagwell, President, International, SBA Communications:
No one has ever seen an event like COVID-19. Not us, not our customers. When the lockdowns began in mid-March, the towercos immediately went into war-room mode to make sure our existing sites would continue to be serviced – whether it was maintenance, repairs, landlord payments, new installation support or tower upgrades. From a physical perspective, I think all companies including SBA jumped all over their sites to provide continuity of service to our customers. We were granted “essential provider” status in all of our markets so this work could go on uninterrupted.
From our customers, we saw them quickly pull back on their projects and focus on their own existing customer service. Adding capacity to hotspots, increasing backhaul, moving capacity to new peak areas in the suburbs, etc. They had financial concerns due to the extensive economic impact of the pandemic, and thus pulled back on new projects.
The results are just starting to come out now but as predicted, the wireless networks were very busy in Q220. Customers were relying on them day and night more than ever since they were mostly working remotely. New sales are temporarily down, but so was churn. Pre-paid seems to have taken a bigger hit than post-paid. But at the end of the day, the cell networks are critical in the personal and business lives of everyone and demand remained strong. At the time when this pandemic eases up and activity returns to normal levels, we expect our customers’ projects for growth to pick back up where they left off.
Some new business has continued through the crisis, but in Latin America specifically, a lot of it slowed down to a crawl. I have been in this business 30 years now and have seen other periods of pullback. In every case, there is a strong charge afterwards. As mentioned before, until consumer demand slows, network development will continue to stay robust. We expect the same in this case, we just don’t know the timing yet.
TowerXchange: Brazil is your biggest market in Latin America. Could you provide an overview of the main opportunities over the next couple of years? What will be the impact of MNO consolidation for the tower industry?
Kurt Bagwell, President, International, SBA Communications:
Brazil is a massive country that continues to grow. We have almost 10,000 sites there today and growing. We are excited about the continued growth from Claro, Vivo and TIM. This market ranks amongst their largest in their portfolios worldwide and will also garner focus. The big news right now is with Oi. They are splitting the company into four units and selling most of it off. We are anxious to see if the three existing carriers end up with it, and if so how that will happen geographically. If another party ends up with it, the market will stay at four national carriers and we will have a new client to get to know and work with. Obviously different outcomes bring different impacts on our sites. In some cases, there will be overlap. In others, sites are complementary. In any case, we feel that this change needs to happen. New growth will stem from either outcome, and long term, we will continue to be happy we invested in Brazil.
The 5G auctions are coming in 2021 it appears, and that will also spur continued investment and growth. We are confident our dense network of sites nationwide will provide us plenty of traditional opportunities for growth and augmentation with all of the carriers. There could be a few bumps along the way but over our 31 years in business we have weathered those well by focusing on the basics, and it is made easier knowing the consumer demand continues to be upward which is the most natural driver for us of all.
TowerXchange: With Brazil and other regional markets initiating 5G trials and scheduling spectrum auctions for 2021, how are you getting ready for its arrival?
Kurt Bagwell, President, International, SBA Communications:
We’re talking to our customers constantly about their plans (and virtually, I might add). As they continue to refine their target areas for trials and early implementation, we will be ready for them contractually, physically and with speed and accuracy. It is still early in this cycle, but I expect over the next six to nine months their plans will become clearer.
TowerXchange: What is your vision for SBA’s international expansion and growth in CALA and beyond for the mid-term?
Kurt Bagwell, President, International, SBA Communications:
As you know, we culminated expansion into South Africa last year. That was our 14th operating country, having begun in the United States over 31 years ago. We own about 16,000 sites in the USA, and now about 16,000 sites in the other 13 countries combined – 32,000 sites in 31 years. And we aren’t just in any 14 countries. We worked hard to pick countries we felt had the right environment for our business. Whether it was land use, carrier-mix, size and growth potential, or currency denomination, you name it. We look at all the key factors. We have our eye on a few new countries right now, but we are also most interested in expanding our scale in our existing markets. Once we set up shop in a country, the best thing we can do is add scale. The beauty of the tower business is it can handle 500 or 100 sites with almost the same number of employees. The systems do much of the work (landlord payments, tenant invoicing, etc.) and we only deal with a few customers in each market. So we will continue to look at new markets, we will continue to grow in our existing markets. We are a long-term consolidator and operator. That focus has served us well over the years and I don’t see it changing now.
