Innovattel/Torresec on Cuba and Argentina

Over the past year, Innovattel/Torresec has announced its entrance in the Argentinian market. Since then, the towerco has participated in a telecom fair in Cuba as one of the very few U.S. companies invited to join. In this interview, TowerXchange catches up with its COO, Juan Cueria, for an update on the status of things in Argentina and to find out the real potential of the much discussed Cuban telecom market.

TowerXchange: Please reintroduce Innovattel/Torresec for any readers unfamiliar with your company.

Innovattel/Torresec is a Puerto Rico based tower company active in Ecuador, Peru, Colombia, Puerto Rico and Argentina.

TowerXchange: Tell us about your recent experience in Cuba.

Jose Arana, our VP of Operation and Fausto Leon, our Sales Director have recently participated in Informática 2016, the IT and telecom forum held in Havana, Cuba. Innovattel/Torresec was one of a few U.S. firms approved to exhibit at the event and we were able to showcase our business model, meet several government officials and various executives from the local telecom industry.

TowerXchange: What do you think about the potential of the Cuban market? Is it likely to open to carriers and towercos? And when? 

There is a lot to be developed in the Cuban telecom sector and the tower industry will be the next to follow. Cuba is entering a crucial phase with many changes happening at all levels. And at this stage, the pace of things still suggests that it will take some time for the Government to give access to new carriers and, as a consequence, to towercos.

Our view is that it will take about three to five years for any real change to happen and for any new carrier to enter and start operating in Cuba.

TowerXchange: Has the Government expressed any interest in awarding spectrum to foreign companies and opening up the mobile industry?

We don’t think that the Cuban Government is interested in awarding spectrum to international operators for the time being. This is a crucial step that will completely reshape the telecom industry and we believe it will require some time to materialise.

TowerXchange: Do you know how many towers are in the country right now? Are they suitable for sharing or how many could be needed by a new entrant?

Our first studies indicate that there are approximately 500-700 structures installed in the island of Cuba. We are talking about towers that are shared by radio companies, TV stations and ETECSA, which to date is the only operator active in the country.

These sites are currently being shared so they could potentially be used by multiple telecom tenants. However, we don’t even know how many additional sites are needed as there aren’t any actual plans for additional spectrum to be assigned or anything alike.

TowerXchange: If you were to enter Cuba today, what would be the top three challenges to solve and deal with?

To date, accessing the Cuban telecom market is a very hard task. There aren’t well defined commercial agreements with the U.S. as of now and local telecom regulations as well as property laws do need to be amended and modernised. Having said that, these are changes that tend to happen relatively quickly once things pick up momentum.

Some key challenges of doing business in Cuba under present conditions relate to how to register a corporation and how to complete all the required paperwork, how to import steel structures and other construction materials as well as how to ensure security at sites.

TowerXchange: How are you doing in Argentina?

We are making progresses every day. Construction has begun in several locations and we’ve been assigned search rings in many different areas of the country. We are now working very closely with municipalities and other entities across each territory to ensure our sites are deployed timely.

TowerXchange: Do you foresee carriers divesting towers anytime soon in Argentina?

This is a crucial discussion in Argentina but it does present considerable tax implications for the seller. At this time, this is definitely a hurdle for operators in their decision making process.

TowerXchange: How are you dealing with issues such as permitting and land management in Argentina? How challenging is it to obtain permits and negotiate with landlords?

In Argentina, more than 80% of existing sites don’t have permits. The new government is working on a telecom regulation that should considerably improve things in the very near future. However, today we are building on a pre-feasibility basis.

These are very challenging conditions and we are moving ahead with precautions and trying to avoid very high risks but dealing with landlords is no harder than in any other country where we operate.

TowerXchange: In terms of currency and inflation, how are contracts being negotiated? 

Currently, we are negotiating contracts in Argentinian pesos with adjustment factors to be calculated twice a year.