We are very proud to publish Latin America related content as the result of our initial research and findings with key industry professionals who offered their insight and expertise. At this stage, our aim is to provide a broad overview of the key dynamics of the tower industry in both Central and South America while laying the foundations for more detailed, market-specific and topical analyses in the months to come.
The Latin American telecommunication sector was historically a state-owned business. With State-owned entities increasingly unable to keep up with the swift pace of technology innovation, many carriers have been privatized over the course of the 90s. Globalization and deregulation accelerated the process and the 90s have seen a persistent wave of privatizations in Chile, Mexico, Argentina, Peru, Bolivia, Venezuela and Brazil, among others.
The following years saw countries breaking through the transitional period and moving from a publicly owned telecom system to a relatively modern privatized model whose characteristics differ from country to country and which we will be able to analyze in more detail in the future.
While certain restructuring processes are still ongoing, one aspect is clear: innovation has not stopped. On the contrary, it has pushed the boundaries of what we thought was possible and technology has evolved swiftly from 2G all the way to 4G LTE.
And innovation is one of the keys that opened doors to tower companies in the region.
If initially Latin America tower transactions were restricted to big, international tower companies, the region now is in constant ferment with new players, transactions and projects being announced often enough to capture international attention and investment.
In order to fully understand the Latin American operational model, we need to think about its proximity with North America. North America serves as a global benchmark for its telecom and passive infrastructure models’ efficiency. With dozens of tower companies and over 100,000 independently owned towers (not including managed towers, DAS structures and rooftops), North America is host to a healthy, competitive and highly profitable tower industry. By market cap, some of the largest corporate entities in US telecoms are towercos.
While Latin America is still in the process of fully adopting the tower model and embracing it for the purpose of efficiency and profitability, the region does not encounter certain key challenges faced by Africa.
the Latin America tower industry is on the verge of becoming a highly lucrative real estate business with lean and efficient operations and top global companies leading the expansion
Key operational issues such as energy logistics and site security are only marginal problems throughout Central and South America. Despite substantial differences between the countries, the Latin America tower industry is on the verge of becoming a highly lucrative real estate business with lean and efficient operations and top global companies leading the expansion.
Surely the proximity with North America and its highly developed tower industry has helped key tower companies to break the boundaries and enter the Latin American market while exporting know-how and entrepreneurship.
Another key factor that is pushing the tower industry development in Latin America is the credibility and expertise of its pool of professionals. Local and foreign renowned business experts with years of experience in leading telecoms infrastructure businesses have formed their own tower companies. Lean companies with highly credible top management are the perfect target for investment companies looking at entering a developing, lucrative and relatively safe market like Latin America.
When looking at the regional map, it is hard not to focus on its largest state - Brazil. However, TowerXchange’s analyses will offer insights to the various dynamics governing the markets from Mexico all the way to the southern areas of Argentina and Chile, spanning South and Central Americas and including even the smallest coastal and island states.
Quite some time has passed since American Tower de Mexico was founded back in 1999, and since then, the market dynamics have changed sensibly. AMT has been expanding into the region with operations in Brazil, Peru, Colombia and Chile, and SBA Communications has acquired and is now operating towers in Brazil, Canada, Costa Rica, El Salvador, Guatemala, Nicaragua and Panama. Furthermore, highly experienced telecom professionals have teamed up and formed a new array of regionally focused tower companies, turning Latin America into an exciting and highly competitive market.
This all adds up to an irresistible opportunity for TowerXchange to dig deeper into Latin America’s tower dynamics and deliver essential information for anyone interested in the international expansion of the tower industry.
We firmly believe that local tower companies and local investors will play a key role in contributing to the growth of each country’s industry as they aren’t subject to any currency risk when operating in their own local markets. Even just over the course of the past 18 months, several new tower companies have been created with the aim of acquiring existing portfolios of towers while exploring greenfield opportunities in the region. Highline do Brazil, BR Towers and Cell Site Solutions are just a few of the new players in the Brazilian market alone.
In the meantime, Peruvian based Torres Unidas acquired over 400 wireless towers in Chile from Telefónica Moviles, commencing its expansion in the Andean region.
Costa Rica has stepped up as yet another interesting country with mobile penetration exceeding 100% in 2012, less than five years since the end of the telecom monopoly. With few greenfield projects being permitted, the potential for co-location in the country is considerable. With the recent acquisition of Global Tower Partners, American Tower has consolidated its position in Costa Rica with a new portfolio of 500 towers to manage.
Brazil is at the heart of the tower industry development with new and highly qualified players entering the market and competing with established tower companies in the rush towards portfolio acquisitions. With the upcoming World Cup followed by the 2016 Summer Olympics, the National Broadband Plan (PNBL) will likely push carriers and tower companies to cooperate even further to reach highly ambitious network expansion targets.
the Constitutional Court in Colombia has recently ruled that Claro and Movistar - two of its major carriers - will have to hand over all their telecoms infrastructure when the concessions expire in Q1 of 2014
One of the latest transactions saw Oi - the fourth major carrier in Brazil serving over 48 million customers - entering a sales and lease-back deal with SBA Communications which led to its acquisition of over 2,000 towers in Brazil.
However, managing telecoms infrastructure in emerging markets is not without its risks. Illustrative of the continuing country risk in emerging markets, the Constitutional Court in Colombia has recently ruled that Claro and Movistar - two of its major carriers - will have to hand over all their telecoms infrastructure when the concessions expire in Q1 of 2014.
One key driver to the expansion of the tower industry in South and Central America is the growing opposition of governments to allow too many new towers to be built. With tourism offering great economic development opportunities, it is key to preserve the visual appeal of these landscapes and somehow limit the proliferation of greenfield projects.
This limitation offers even greater opportunity for tower companies to enter these markets with co-locations being at the core of their activity - hence offering the opportunity for carriers to enhance their coverage and capacity without compromising the environment by building new towers. Meanwhile, progression toward 4G, and the associated need for cell site densification, promises at boost amendment revenue.
With multiple opportunities for expansion in a relatively stable and modern environment, the tower industry is set to achieve great things in Central and South America. TowerXchange will cover major industrial developments and interview key executives from the region in the hope to serve the industry and once more, deliver high quality content for our readers, and bring the community together at our annual TowerXchange Meetup Americas, scheduled for May 2014.
