Frontier Tower Solutions are appropriately named. Over the last year CEO Montgomery Simus and COO Chris Lundh have built a towerco with a unique appetite for acquiring, building and operating towers in frontier markets: they have experience in Afghanistan and Iraq, two of the toughest parts of the world, and they are closing in on opportunities in Africa and South America. FTS focus on tower markets that are largely off the radar screen for other towercos, either because they are believed to be too small, or because the market is considered too risky. TowerXchange met Chris Lundh on his way out to Nairobi.
TowerXchange: First, please introduce us to yourself. What’s your personal background in emerging market telecoms Chris?
Chris Lundh, COO, FTS:
I have over twenty years of experience working with high profile MNOs and ISPs in Africa and South America, starting in the Democratic Republic of Congo as Managing Director of Telecel, then the first mobile network operator in Africa. I also held Managing Director or CEO roles with Africa Online in Kenya and Tanzania, Rwandatel in Rwanda, and with Nuevatel in Bolivia. Prior to working with FTS, I most recently spent two years in Afghanistan as Deputy Managing Director with Afghan Wireless.
TowerXchange: Please introduce our readers to Frontier Tower Solutions (FTS).
Chris Lundh, COO, FTS:
FTS is a leading owner, operator, and developer of broadcast and cell sites in emerging high-growth markets in the Middle East, North and East Africa, Central Asia, South America and the Caribbean.
While FTS is a young company, operating as an independent entity for just over one year now, we grew out of our own experience building, operating, and maintaining more than 900 towers in Afghanistan for more than a decade for our MNO “sister” company, Afghan Wireless. We are proven in Afghanistan and in Iraq, and have taken our experience as an operator and leveraged our 160+ dedicated network rollout personnel and strong supplier relationships to explore projects worldwide. As our name suggests, we are very comfortable building and managing towers in austere locations. That is our core expertise so we are looking to operate in some of the most under-served and challenging regions of the world, engaging in active and passive infrastructure outsourcing (tower sale and leaseback), structural engineering, network design, transmission and RF planning, and site development / build out activities for mobile network operators.
Our main focus thus far has been structuring tower sale and leaseback opportunities, with colocation agreements in place pending final tower acquisition, in East Africa and Bolivia (the anchor market for our South American “cluster’), and we are now in the process of finalising investor interest in these projects. FTS is also soon to open regional client support and technical service centers in Nairobi, Kenya and La Paz, Bolivia.
TowerXchange: What is the ownership of FTS?
Chris Lundh, COO, FTS:
FTS is U.S. corporation wholly owned by an American ownership group with MNO operator experience. Because of the smaller numbers of towers in transactions we typically bid for, we’re still self-funded, but we are presently in discussions with investors regarding several specific project finance opportunities and have also been approached by others looking to invest at the overall FTS holding group level. We are happy to explore either but, initially, have been setting the projects up as market-specific investment opportunities.
Because of FTS’ “frontier market” focus, we’ve also attracted interest from certain types of international, development and institutional investors whose mandates include very dynamic, emerging markets. For example South Sudan is a key priority for OPIC funding (“Overseas Private Investment Corporation”, the US government’s development finance institution) so, if we were to proceed with a project in that market, we would definitely explore this type of potential access to US government financing and a degree of political risk cover.
Our CEO Montgomery Simus handles the financial side of the business. Monty is a Yale and Harvard graduate with more than two decades of experience with leading technology, telecommunications, financial services, and energy corporations, and he has experience in building and obtaining finance for technology/telecommunications start-ups, holding accountability for P&L management, and developing and deploying technology-related services for new emerging markets worldwide. He has spent significant time with various MNO and broadband service provider initiatives through our “sister” organisation in Afghanistan and also lived in Kenya earlier in his professional career.
TowerXchange: How are the operational norms of building and managing towers affected when you’re operating in high risk markets, such as conflict regions?
Chris Lundh, COO, FTS:
We rely on local knowledge and expertise and try to use people from the neighboring villages or the area to assist in the physical construction of sites and towers. Additionally, we prefer to use in many cases the same local people as the backbone of our on-site security. This generally provides better results than high walls and razor wire!
There aren’t many environments in which it’s more challenging to manage towers than Afghanistan. For example, we lost 25 towers in Afghanistan to the Taliban last year
We’re used to political risk - we eat this stuff for breakfast! There aren’t many environments in which it’s more challenging to manage towers than Afghanistan. For example, we lost 25 towers in Afghanistan to the Taliban last year.
TowerXchange: So how does it work in practice, for example do you need a military escort when installing or maintaining towers in conflict regions?
Chris Lundh, COO, FTS:
No. In some ways a military escort is exactly what you don’t want when building and maintaining towers in conflict zones. It’s important to be neutral and focus on our mission which is Connecting Communities, Building Markets. Ultimately it’s in everyone’s interests to extend communications, and we want to foster that sense of community partnership in the markets in which we operate. We have our own people and selected partners who we send into the field of course, but we’ll never take a chance with the lives of our employees or contractors.
Political risk is another challenge. We think a strong, transparent government can be helpful if they have a will to attract international investment in infrastructure. But you don’t want a government to be so strong that there is a risk that they could simply seize assets.
TowerXchange: Tell us about the opportunity FTS are working on in East Africa.
Chris Lundh, COO, FTS:
We’re presently focused on opportunities in Burundi and in South Sudan.
We got to know the Aga Khan Foundation through their work with universities, hospitals and clinics in Afghanistan. Through East Africa Telecom, the Aga Khan Foundation is starting up new mobile network operators in Tanzania, Uganda and Burundi.
We’re exploring an opportunity to acquire 43 towers, and operate a build-to-suit programme, with Lacell, East Africa Telecom’s subsidiary in Burundi
We’re exploring an opportunity to acquire 43 towers, and operate a build-to-suit programme, with Lacell, East Africa Telecom’s subsidiary in Burundi. There are five active licensed operators in Burundi, although none has more than 180 towers. 3G has been rolled out by Econet and by U-Com / Leo, the old Telecel business that was recently sold by Vimpelcom to Niel Telecom. There’s also Africell, Onatel and Lacell.
We think there are more pros than cons about the Burundi market, including real tourist potential.
We are exploring a similar sized opportunity in South Sudan, a very low-density market. There is limited geographical coverage in South Sudan - the tower count is in the low hundreds - and the challenges of logistics, security, and distance remind us of some of things we had to overcome in Afghanistan.
We are currently establishing partner relationships with local specialists in specialists in building and maintaining tower infrastructure in Africa, and also developing energy partnerships for diesel generators and hybrid equipment.
TowerXchange: What can you tell us about FTS’ interest in Latin America?
Chris Lundh, COO, FTS:
Outside of the very large markets such as Brazil, Colombia, Chile, and Argentina, we have believe that there are a number of compelling tower opportunities in South America, and strong potential for upside when towers are migrated from operator-captive to third party towercos.
We’ve been examining opportunities in markets such as Suriname, French Guyana and Guyana - three adjacent but very different markets - as well as Bolivia. Populations in the former countries are concentrated along a coastal strip, where there is grid power, but inland most sites are off-grid. High towers are required to overlook the jungle.
Our niche/expertise is smaller, “frontier” or very dynamic post-conflict markets that may not normally appeal to bigger tower companies, or markets with tower portfolios too small to be worth larger towerco’s due diligence to acquire
TowerXchange: Finally, please sum up what role you see FTS playing in the emerging market tower industry compared to other towercos?
Chris Lundh, COO, FTS:
Our niche/expertise is smaller, “frontier” or very dynamic post-conflict markets that may not normally appeal to bigger tower companies, or markets with tower portfolios too small to be worth larger towerco’s due diligence to acquire.
Having grown out of a GSM operator’s background, FTS acutely understands what it takes to build, maintain, fuel, and service large numbers of towers in austere environments. We bring a MNO mindset first, keeping our operational experience as a large scale MNO as the main criterion for successful service delivery to our customers versus that of a “steel, rigging & power” mentality.
Our business model - true to our name - is focused around building “clusters” of infrastructure in challenging but high-growth markets in two expanding primary locations: East Africa and South America.
FTS does not harbor ambitions to take on global passive infrastructure sale and leaseback operators in developed or mature markets; rather, we prefer to work with MNOs who share our understanding of the challenges and potential presented by such relatively young, dynamic and “frontier” markets.
Frontier Tower Solutions will be hosting a round table on “How to manage towers in high risk markets” at the TowerXchange Meetup on October 1 and 2 in Johannesburg. For more information, click here
