Andean Tower Partners: a new towerco with solid foundations and bold plans

Estrella Zaharia, CEO and President of Andean Tower Partners is a skilled business leader who exudes confidence and knowledge. Interviewing her gave me the clear perception that ATP is likely to become a strong competitor to the other towercos operating in Colombia, Peru, Chile and Ecuador. And this comes as no surprise considering the track record of Estrella’s boss Marc Ganzi, from GTP to Digital Bridge.

TowerXchange: Please tell us about ATP’s footprint, operations and plans for expansion.

Andean Tower Partners (ATP), founded by Digital Bridge Holdings, is headquartered in Boca Raton with an office in Bogota and a planned opening in Lima. During 2016 ATP will start operating in Colombia and Peru with plans to expand in Q3 2016 in Chile and in Q1 2017 into Ecuador.

In Q4 2015, ATP acquired two companies which secured us a base of 300 towers in Colombia as well as relationships with most of the carriers in the country. One of the two companies we’ve acquired had a track record in dealing with remote and technically challenging sites so now we have gained this specific skill which will give us a competitive edge in Colombia. Thanks to these 300 sites, we already cover 25% of the Colombian territory.

In addition to macro sites, we are also focused on deploying small cells for our customers. Thanks to Digital Bridge’s acquisition of ExteNet Systems in the U.S., we will offer neutral-host services throughout Latin America, where this concept is still in its infancy. ExteNet is the leading independent provider of Distributed Network Systems (DNS) in the U.S. and we will surely benefit from working side by side and expanding this business in South America.

TowerXchange: Estrella, tell us about your background and expertise and the journey to ATP.

In my career, I have gained in-depth expertise in operating telecom companies and, specifically, in building both satellite and fibre networks. As COO for Grupo Salinas’ Azteca Comunicaciones, I worked on the deployment of fibre in Mexico which connected over 1mn customers in Mexico City. Then we won two large public-private projects to build fibre in Peru and Colombia. In Colombia, we are talking about a 20,500km fibre network which covers 80% of the national territory while in Peru I followed the first two phases of the project and worked on the installation of 3,000km of fibre across the Sierra.

Then Marc Ganzi contacted me and I decided to join ATP which represents a new format of tower company, not only focused on towers but on serving its customers as a business integrator – that’s where I hope my expertise will be useful.

TowerXchange: Who else joined the ATP team so far?

The Digital Bridge team is made of phenomenal professionals and we can count on the likes of Marc Ganzi who serves as our Chairman, and Alex Gellman who is the Director of the Board as well as CEO of Vertical Bridge in the U.S.

We are now forming ATP’s team and we are delighted with the way it’s shaping up. To name a few, Piero Busani is the Chief Legal Officer with a wealth of experience as general counsel for multi-billion dollar organisations and Leo Sarria, VP of M&A, has been with Marc since GTP and dealt with many transactions at Vertical Bridge too. On the operational side, Saira Ballesteros, former Head of Operations at Azteca Comunicaciones, has joined us as VP and Cecilia Reissmeier, an experienced B2B marketer, is in charge of marketing and sales. We are very pleased with our team and will look to expand further as we grow.

TowerXchange: What were the drivers for Digital Bridge’s entrance into the Andean region and specifically, for each country? 

After our success in Mexico with MTP we believed the Andean Region was the next logical geography to continue serving our carrier partners. We’ve decided to enter Colombia and Peru first as they are growing very fast and they both need at least an additional 10,000 towers each to comply with their coverage needs. Chile is the more mature market where we will enter later and focus more on DAS and small cells.

Colombia

With regards to Colombia, market drivers include the (delayed) spectrum auction for 700MHz, 900MHz, 1900MHz and 2.5GHz bands which is likely to set new compulsory coverage targets to awarded companies. On the consumer side, we’ve seen that data adoption is still a growing and positive trend for the tower market. In fact, the volume of SMS and MMS has lowered 52.3% YOY and resulted in an exponential increase in internet usage, which for us is great news!

Our expertise in dealing with difficult sites is giving us a technical advantage against our competition and we believe this will be a major differentiator for our success. Our expertise includes working on tailor-made solutions such as low budget infrastructure, small cells, monopoles et cetera.

The October 2015 local elections are likely to cause the renewal of local planning normatives and this is a delicate phase where stakeholders can support the creation of rules beneficial for the telecom industry as a whole and to enhance connectivity.

The National Development Plan (Art. 193) is already helping the deployment of infrastructure, ensuring a positive shot clock of 60 days for permits and licenses, and by eliminating barriers against deployment of infrastructure in local legislation.

Peru

We believe Peru will become one of Latin America’s top markets in terms of tower growth in 2016-2017, especially since market trends as well as government support are leading to large investment outlays from carriers.

The telecom regulatory environment has been improving and contributing to speed up investments in infrastructure, thanks to a simplified administrative process to acquire permits and licenses. The government is playing a role in expanding towers coverage, as it aims to provide universal service for its citizens through relaxed regulation, the introduction of a fourth operator, and the auction of 700MHz spectrum that has been delayed to 2016.

The fibre optic backbone project will contribute to providing connectivity to 5.1mn citizens thanks to its 31,716km network. In the meantime, carriers are planning huge investments and towercos are likely to see a wave of new business coming in.

To give you an idea, Claro is planning to invest US$980mn to enhance its coverage and capacity as well as offering its customers new value added services. Telefónica is investing as much as US$1.8bn in the biennium 2014-2016 to deploy 4G and keep its competitive edge. Entel Chile announced investments of US$1.2bn over the period 2014-2019, as it looks to turn its Nextel assets into a national operator. And finally, new entrant Viettel, operating as Bitel, is installing as many as 2,000 new towers and laying 15,000km of fibre to reach 80% coverage with its 3G services.

With this hyper-dynamic scenario, it’s pretty clear ATP is very excited about being part of the Peruvian tower market!

Chile

Coming to Chile, the situation is a bit different. In fact, the market is more mature and we won’t focus as much on macro-sites but on supporting innovation via small cells and DAS. We believe that one of the features of 2016 in the mobile market will be the battle for subscribers among smaller players such as WOM (editor: formerly known as Nextel Chile and now owned by UK-based investment fund Novator) and MVNOs VTR and Virgin.

TowerXchange: Colombia is a very crowded market with more than ten towercos operating… Why? And is there really room for everyone?

In the mid-term, Colombia needs as many as 10,000 towers so we consider it a good-sized market and one where there’s room for several players. Over the long run, however this will not be sustainable and only the scale players will survive.

What we are seeing in the tower market in Colombia - and elsewhere - is pretty similar to what we experienced with the internet boom. Suddenly dozens of companies started crowding the market but after a few years, only the best ones remain. In the tower market we are likely to see a comparable pattern with larger towercos acquiring middle market players and consolidation becoming the norm in the future, as those with the lowest cost of capital usually win.

We expect ATP to be among the larger and more relevant players in Colombia and beyond thanks to our access to long term capital, flexibility and expertise.

TowerXchange: With Tigo, Movistar and ETB sharing 4G rollout, which business opportunities are still available for towercos?

The trend of infrastructure and network sharing goes way beyond Latin America and is becoming a global strategy as carriers explore new, more cost efficient ways of doing business. I don’t see network sharing as a threat for towercos. If anything, it’s a good opportunity to get involved with carriers in innovative projects such as small cells and DAS.

TowerXchange: Peru is definitely a less developed market. Tell us what ATP aims at achieving in the country. And is there potential for acquisitions on top of organic growth?

We definitely see the potential for acquisitions in Peru and hope to close some deals before the end of H1 2016. Our goal is to acquire 5% market share in Peru by the end of 2020.

TowerXchange: What are the expectations of ATP in terms of growth in the next two years?

The Andean region presents plenty of substantial market opportunities both in terms of organic growth and potential acquisitions. The key is to first listen to your customers and understand their needs. Our goal at ATP is to continue to grow via BTS, M&A and working with new technologies such as small cells to help our carrier partners densify their networks.

TowerXchange: What are the challenges ATP is likely to face from a sales and operations standpoint?

In Latin America there’s still a technical knowledge gap in the engineering field. It’s not easy to find experts in the tower sector capable of designing and building sites as well as deploying and incorporating new technology. Working side by side with carriers and suppliers, we hope to fill some of those gaps.

On the community side, we aim at providing a participative plan to offer information and help local populations and governments to understand our business and overcoming any reservation. There’s a lot of resistance with regards to new sites, their visual impact et cetera and our goal is to work closely with local communities while we develop new sites for the carriers. I believe this is a differentiator for ATP in this industry and will contribute to building a stronger reputation in the market.

TowerXchange: What tenancy ratio would you’d like to achieve in Colombia? And what about Peru?

Our goal is to reach 1.4x in Colombia and Peru within two years.