Phoenix Tower International: the new kids on the block - or are they?

Dagan Kasavana is a known face in the international tower space and was part of the team involved in the US$5.4bn Global Tower Partners-American Tower acquisition back in 2013. Since then Dagan has formed his own tower company, acquired towers in Panama, North America, Brazil, Costa Rica and Colombia and is now seizing more opportunities and financing options. In this exclusive interview, he shares insights on what it takes to create a successful tower business, memories from his long standing experience within GTP and an outlook for the future of Phoenix Tower International (PTI) and the tower industry as a whole.

TowerXchange: From one of the largest acquisitions of the decade (GTP-AMT) to founding your own towerco… Please tell us about your professional background and the path towards the creation of Phoenix Tower International.

I founded Phoenix Tower International (PTI) with a vision to evaluate and aggregate transactions across multiple geographies with a focus on partnering with developers and owners wherever possible, and constructing towers directly for the wireless operators. PTI is now operational in Brazil, Colombia and Central America. I couldn’t be more pleased with where the business stands today and I am excited about the future.

By way of background, I am an accountant by trade which has been very helpful as an M&A professional during my career. Starting at Ernst & Young with their Audit and Assurance practice, I became a Certified Public Accountant and later joined their Transaction Advisory Services group where I worked with buyers that were looking to make acquisitions across various industries. In 2004, I had the chance to work with Marc Ganzi of Global Tower Partners and together we worked on about ten deals over a two year period. I really enjoyed the work and was drawn to the tower industry and the tower ownership business model.

In 2006, Marc hired me to run the M&A practice for Global Tower Partners (GTP) which led to an eight year run whereby we spent about US$1.5bn and acquired approximately 4,000 towers. It was an incredible experience to be an active part of the company’s dynamic growth. The management team at GTP was comprised of some of the best professionals in the business. We constantly challenged ourselves and had a passion for the business that was contagious. It was a rewarding time in my life and we produced great results for the management team and our investors.

When GTP was sold I had a number of available paths. But I got the entrepreneurial bug from GTP and I am a young guy - relatively speaking! - and thought if I didn’t try to start my own business now, I would never do it.

Also, when I looked at the tower landscape I felt that a tower company focused on both the US and international markets from day one would be unique and allow the business to chase opportunities that delivered the highest returns for our investors and created the highest value across multiple fast growing economies, anchored by multi-national wireless operators spending significant capex on network deployments.

During the last few years at GTP we explored the international markets across Latin America and completed some great transactions, namely in Mexico, Costa Rica and Panama. We also looked at major transactions in Colombia and Brazil. Latin America as a whole has numerous countries that meet our investment thesis, with 3G and 4G deployments lagging three to five years behind the US. Also, I enjoy doing business in Latin America.

TowerXchange: How is PTI funded? And how did you bring together the members of your team?

PTI’s investors include Blackstone, through investors in its Tactical Opportunities Fund, as well as various members of the management team. Blackstone’s Tactical Opportunities business employs an opportunistic, multi-asset class investment strategy focused on special situations investments, and seeks to invest globally in opportunities throughout the capital structure.

In terms of my team, we have a mix of tower professionals and transaction professionals with significant experience doing business across the US and Latin America. PTI was founded by myself and Natalya Kashirina, who had previously worked at Global Tower Partners with me and oversaw many of the M&A functions. Natalya runs our M&A practice at PTI – having someone with years of experience in closing tower transactions and of working hand in hand with developers has been crucial to our success.

Tim Culver is the Chairman of the Board and the company’s Senior Legal Advisor. Tim has been my partner for eight years and joined the company soon after its founding to help us raise capital and provide advisory services. Tim was a senior leader at GTP where he was involved from the beginning as the General Counsel and subsequently the Senior Legal Advisor. He also was one of the key members in the sale process of GTP to American Tower. He has significant M&A and financing experience in the United States and Latin America and was involved in all of the major M&A and financings GTP undertook. Tim is central to our ongoing financing and business execution efforts.

Orlando Porras is the company’s Chief Financial Officer. Orlando has years of experience at Ernst & Young both with their audit practice as well as their transaction advisory services practice. He worked on transactions for GTP over the years and has a deep understanding of what it takes to achieve success in this industry. When we spoke to Orlando after founding the business, he was excited for the opportunity to be the CFO and has been a significant member of the team ever since. Orlando has historically done significant work throughout Latin America and as the Chief Financial Officer is responsible for overseeing tax, structuring and collections efforts for the company across various countries.

The broader team represents a mix of tower professionals responsible for sales, new tower development and operational matters throughout Central and South America as well as tower and transaction professionals based here in Boca Raton. It is a really great team and I am proud to call them my partners. To succeed in the tower industry, you need a team that is hungry, driven and experienced and I feel we have the best people in each of these positions to grow this business.

TowerXchange: Tell us about the company’s expansion into Panama thanks to your recent deal with American Tower (AMT).

The Panama transaction is interesting as this was a portfolio of towers that I had previously led to a closing at GTP. Panama is a great wireless market with four major operators and has a fast growing professional economy. It is also a very stable place to do business and transactions are denominated in US$. Luckily, when AMT looked to sell the business they reached out to PTI among others and given the PTI team’s knowledge of the portfolio we were well positioned to close the transaction quickly.

I think AMT was looking for a buyer who understood the market and the assets well and could get a closing done quickly and professionally. We demonstrated to AMT that we checked all of the boxes including country knowledge, asset knowledge, professional transaction expertise and a strong balance sheet. These are hallmarks of PTI’s transaction strength and I think we will win other opportunities with this combination of execution strength and industry knowledge. I have many friends at AMT and was proud to get this transaction done with them.

The portfolio includes both an existing footprints of towers as well as a portfolio of towers being constructed. So far the operating results have been outstanding and we have a pending backlog of leases we are signing on the towers. We are also seeing opportunities to continue to grow the business in Panama through incremental M&A as well as providing Build-to-Suit for the wireless operators and believe we will be able to continue to grow this portfolio organically in a great market.

TowerXchange: Beside Panama, what’s next in the pipeline? Which countries is the company targeting?

In addition to Panama, PTI also owns sites in Costa Rica, Colombia, Brazil and the United States. We are currently looking at various international opportunities that offer similar growth. With the strong support of our investor we are able to evaluate and acquire assets in different countries which meet our investment thesis. Of course, we are also looking to expand in the United States and are talking to many developers and brokers that have done significant business with the PTI team over the years and I am sure we will continue to evaluate and close on the right opportunities in the United States. As for other markets it will largely be driven by the opportunities to grow while also staying disciplined and we expect to have a significant footprint across the Americas and potentially other international markets.

TowerXchange: How can entrepreneurial tower companies carve out a profitable niche alongside the big publicly listed players?

The reality is that historically in the tower space, entrepreneurial tower companies have made a significant profit alongside the publicly listed players.

But the real way you are successful as an entrepreneur in any business is by being innovative, showing high character, showing flexibility with your business partners and delivering on your promises. When we have opportunities to partner with the wireless operators and developers, we want to deliver what we say we will deliver and be open and honest with them every step of the way. That will lead to long lasting relationships and repeat business and ultimately success and profit for all parties.

TowerXchange: Changing topics, is ground lease aggregation as much of a threat to the towercos in CALA as it has been in North America?

Good question. Of course, the land under towers is a valuable commodity to all of the tower operators and most would prefer to own the land under their towers.

I have always felt it is important to treat the landlords as partners and allies as it is good business practice and they too have a vested interest in the site. Many of the landlords wake up every morning living literally with a tower within eyeshot and they deserve rightfully so to be compensated for leasing their land to the tower company as well as to be respected.

At Phoenix Tower, we spend a lot of time making sure our landlords are paid in a timely manner, have various points of contact in each country as well as in our headquarters to discuss any matters that may arise at the site, and strive to ensure our landlords feel like they are a valued business partner of Phoenix Tower International. In addition, for the landlords that wish to monetise their lease payments in the form of a lump sum settlement, we work with them to see if there is a way to do so. We also offer lump sum settlements to other landlords or property owners under third party owned towers or rooftop locations in countries we do business in as an ancillary business line.  This helps landlords and other property owners use the ground lease payments they receive as a form of purchasing power to reward their family or upgrade their property in ways that they could not do otherwise.

TowerXchange: What’s the vision and desired scale of PTI, and how do you foresee the financing of the business evolving as it expands?

We want to see the business grow logically and have not set any artificial goals. Given the team’s background and our investor base, there is no reason we can’t own thousands of towers over the next few years and build a significant tower business across the Americas and other international tower markets.

On the debt side, we are working with local and multinational financing partners that wish to play a part in Phoenix Tower International’s growth and I imagine you will see announcements going forward on who those partners are as we continue to grow the business.