Leadcom: The structure of the managed services market in Latin America

Yamil Franco is a veteran leader of dozens of network deployment and maintenance projects across just about every country in Latin America. He started out with CONECEL in Ecuador, moved to Nuevatel Bolivia as Regional Manager and in Europe working for Western Wireless International as Regional Deployment Manager at Slovenia. For the last 11 years, Yamil has been an invaluable member of Leadcom’s team, and he currently heads their operations in Americas, where Leadcom has over 500 staff.

TowerXchange: We’ve read about Leadcom’s capabilities and experiences in Africa, so please introduce our readers to Leadcom’s operations and capabilities in the Americas.

Leadcom’s Americas operation started in 2000. By the time I joined the business in 2002, we had expanded to nineteen countries including the Caribbean, driven by the migration from TDMA to GSM.

Leadcom currently has offices in Costa Rica, Panama, Colombia, Ecuador, Peru, Bolivia and Guatemala. From Guatemala we attend the CA4 countries (Guatemala, Nicaragua, El Salvador and Honduras). We manage projects in The Caribbean from our office in Miami, as we don’t need local entities to secure and execute projects such as a telecom implementation or sell towers, power solutions and other VAR Products.

Leadcom’s initial engagements in Latin America were as a telecom implementation company implementing on a TK mode access, transmission and core network, We completed major projects and rollouts for leading regional carriers such as América Móvil, Telefonica, Tigo, Trilogy International Partners, Cable and Wireless, and Digicel.

Leadcom increasingly added civil work, site design and construction, engineering projects and VAR (Value Added Reseller) services for leading OEMs. Our portfolio of capabilities now extends from implementation, rollout, and turnkey solutions to hybrid power solutions for the improvement of energy opex and other products not just limited to the telecommunication industry. We also provide camouflage and innovative site solutions and extensive maintenance and managed services.

We are market leaders in DAS design and deployments to improve indoor and outdoor coverage.

Leadcom gained experience in fiber optic projects, maintenance of POP (point of presence), and implementing FTH.

Leadcom proved our capability to operate the network and manage maintenance through our experience in the Americas, Caribbean and Haiti, which is a logistically difficult market in which to operate. We began our work doing the maintenance of the Point of Presence (POP) from the Submarine Fiber Optics Nautilus, subsequently delivering Comcel/Voila with a turnkey network deployment, helping them swap technologies in 2004. After the success of that initial engagement, Comcel/Voila asked us to take over maintenance of 164 sites.

RFPs and maintenance contracts in Latin America only tend to go to companies with experience in the region, so our initial project in the Caribbean led to other opportunities and the Centro America region, and eventually to a major engagement with América Móvil in Ecuador and other countries including Panama, Colombia and Bolivia.

Leadcom started maintenance work with América Móvil in Ecuador in 2009, and by 2011 we were managing 100% of their 2,000+ site network, including managing the passive and active network including the AC/DC Power and SDH. This illustrates the capabilities of Leadcom from rollout to maintenance.

One of the reasons that Leadcom were selected for all these maintenance projects in Latin America, often in preference to major OEMs, is that we don’t subcontract the work - we deliver the service ourselves. We leverage different tools such as trouble ticket software, call centers and access control.

TowerXchange: Can you tell us more about the scope of your work with América Móvil and your experience of maintaining a substantial tower network in Ecuador.

Leadcom employs directly more than 350 people in Ecuador. We deliver all the core maintenance services ourselves, only subcontracting non-core services such as test of AC Power trafos and generator overhaul.

When we started the project in 2009, there were power shortages and the electricity grid was restricted to certain hours in Ecuador due to a drought’s impact on the main power; hydroelectric. This necessitated lots of extra planned site visits for refuelling and maintenance. We implemented monitoring systems and controls on sites so we could tell remotely whether the genset and other systems were working or not. It’s all automated so our control centre receives genset failure alerts. You can never eliminate site opex, but RMS minimises truck rolls.

The grid is improving now and Ecuador has become one of the more developed grids in Latin America in terms of uptime.

Generally the access roads are good in Latin America, and Ecuador is no exception, because the government has deployed brand new roads in Ecuador including in the Jungle Amazonia region. There are problematic BTS and microwave transmission sites in the highlands and in the jungle on the border with Peru, some with double gensets. Leadcom’s ability to access these difficult sites was key to us getting project. It was critical that we were using our own people, who sometimes had to hire special animals to get to these problematic sites! We also implemented power systems so that even if the BTS went down, the microwave link would be protected for the hub sites.

In many instances, the carrier didn’t have their own engineers in these difficult areas, including on the Galapagos Islands, but Leadcom had people on the island, which was particularly important to the carrier because the main business on the Galapagos Islands is tourism, which generates excellent ARPU. Leadcom were able to send our people everywhere, optimising our response time and ensuring we achieved our SLA with the carrier.

TowerXchange: Are there many green field rollout projects still available in Latin America?

Most of the greenfield rollouts are complete in Latin America in the cities up to 10,000 population.

One of the remaining substantial rollouts is currently in Peru, where Nextel was acquired by Entel Chile, where 2,000+ sites are planned. In other countries, projects tend to be smaller; 50-100 sites per operator a year.

We see that governments are motivating the operators with incentives to expand coverage and telecom services to rural areas via funds such Fitel in Peru and Fonatel in Costa Rica. This trend will continue in the comings years.

TowerXchange: How has the entry of independent tower companies into Latin America affected your business?

The entry of the towercos have created more opportunities for us in Latin America. There’s a good synergy between turnkey infrastructure companies and towercos - we’re attracted to similar markets for similar reasons, such as Peru, Colombia, Costa Rica, Guatemala and we’re entering to other Central America countries. Towercos have contracted Leadcom for services such as tower mapping, site construction, tower strengthening and also DAS.

The towercos are also creating opportunities for carriers. For example, in the recent auction for LTE frequencies in Colombia, more licenses could be issued because there were towercos able to make shared sites available quickly, reducing the capital costs of rolling out a new network, and giving new carriers the flexibility to launch.

While the majority of our business in Latin America still comes from carriers rather than towercos, the trend is shifting.

TowerXchange: Can towercos play a role in the development of DAS?

Towercos can play a key role in the development of DAS to the benefit of the carriers, buildings owners and the subscribers. Spots such as airports, hotels, malls, stadiums, metro, hospitals and office complexes don’t want to install different antennas to boost indoor coverage and capacity; at the end they would rather to have one infrastructure but good services from different cellular providers. Quality cellular service is becoming an expected service especially now in the high traffic buildings and that will increase the demands for this type of project.

As long ago as 2006, the IBS market started in Chile, where we’re working directly  with the biggest operator. Now the towercos are now entering to do multitenant DAS projects. We are currently designing and implanting DAS ultitenant projects for towercos in Peru and Costa Rica and we are negotiating other opportunities in the other countries.

While DAS might not be towerco’s core business, they are investing in DAS for customer satisfaction and with time this will be important part of their business. American Tower has a dedicated DAS unit and SBA Communications recently acquired a DAS company.

Technology innovations such as DAS tend to be adopted in South America first, and then move to Central America and The Caribbean. It’s useful for us to be able to replicate the experience we’ve had in the South and transfer best practices to Central America and the Caribbean.

TowerXchange: Are there a lot of single tenant towers in Latin America?

There are less single tenant towers in Latin America than in Africa, where the original towers were much smaller and lighter. Wind speed means much heavier towers were generally installed in Latin America in the 1990s, and American Tower and SBA Communications have bought a lot of those original towers. The towercos have added strong new towers, often with capacity for three or even four tenants. Regulations also have an effect, for example in Chile where it is the norm to build stronger towers ready with extra capacity for a second tenant. Also the towercos are doing build-to-suit for certain operators but always thinking at least to have the second tenant.

TowerXchange: How would you compare opportunities for Leadcom in Brazil, Mexico and Argentina with the other LatAm countries in which you’re currently more active?

Leadcom used to be in Brazil, Mexico and Argentina, partnering with the OEMs, but once these big projects were complete we concentrated our resources where we had longer term projects. Leadcom can still quickly re-enter those markets if the right opportunity arises especially if that opportunity combines integration of products and services. However, at the moment we find that price competition among carriers, and the total cost of labour including all the local taxes and benefits, means projects in Brazil, Mexico and Argentina yield less attractive margins. Turnkey infrastructure projects in the smaller countries tend to be more profitable.

TowerXchange: Tell us about the structure of the ‘managed services