Being small and local could be a plus in Brazil

AlfaSite might be a small entity in the Brazilian tower landscape but is able to leverage its ownership by a larger local holding, Grupo Alfa, which incorporates a managed service provider, an energy equipment company, a tower manufacturer and a tower company. Thanks to its local expertise and easy access to materials and manpower, AlfaSite has been able to win build-to-suit (BTS) projects in 2015 and has bold goals for 2016, in spite of the current challenging conditions the market is facing.

In this interview, TowerXchange discuss with the company’s COO, Eduardo Martins Pedro, what it means to do business in Brazil today; technical and operational challenges as well as opportunities.

TowerXchange: Eduardo, please tell us about yourself and your professional background.

I am a civil engineer and I started working in the telecom infrastructure sector back in 1996, at the very beginning of the digital era here in Brazil. Specifically, I worked as a site hunter, as a field engineer in various telecom plants and as site acquisition coordinator until 2009, when I joined Alfa ERB. In 2012, I founded AlfaSite along with other partners.

TowerXchange: Can you share some details about AlfaSite, its activities and footprint in Brazil?

AlfaSite is part of Grupo Alfa which includes Metal Alfa, which is a tower manufacturer, Alfa ERB, a managed service provider and Alfa Energía, a power generator rental and electrical panels designer. AlfaSite owns and operates 150 sites in major cities and we focus on build-to-suit activities as well as offering co-location services. AlfaSite is 100% Brazilian and is owned and funded privately by us.

TowerXchange: What is the status of the build-to-suit market in Brazil? How many towers did AlfaSite build in 2015 and how many are being planned for 2016?

The Brazilian build-to-suit market is indeed affected by the current economic instability but we’ve seen some opportunities coming up at the beginning of March. I am talking about a very small number of projects that have come to market relatively late, at the end of Q1.

In 2015, AlfaSite built fifty-eight new sites and we are hoping to build more than one hundred during 2016. Being a local, privately funded company is definitely a challenge, especially when competing against large companies with foreign investments. This year is being extremely tough and BTS opportunities were only assigned to towercos that presented some sort of financial or technical innovation to their customers.

TowerXchange: From a technical perspective, is it hard to build towers in Brazil, and to source partners and materials?

Being part of Grupo Alfa is actually one of our strengths as this allows us to utilise products manufactured by companies within our group. Specifically, from towers to electrical panels, skids for installation or even construction manpower, we are able to source everything “in-house”. Therefore, sourcing isn’t an issue for us. The licensing process is the tricky part for us!

TowerXchange: What has been the impact of the Lei das Antenas for towercos seeking permits?

When applied correctly, the Lei das Antenas does accelerate the process of obtaining licenses. However, the analysis on the viability of a license within each municipality isn’t always done by specialised technical teams which often results in dubious interpretations of the Law and a lack of understanding of the project itself. This is where the process becomes lengthy and licenses hard to accomplish.

TowerXchange: Which characteristics should the “perfect” tower portfolio have?

I think that an ideal portfolio consists of sites structurally able to host at least three tenants. Having all the licenses and permits in place is another key point as well as having constant availability of power and a good level of security to protect equipment.

TowerXchange: How challenging is site acquisition in Brazil?

Site acquisition is definitely a challenging activity in Brazil. Training capable professionals is a key component of this process as we need experts who are able to select good sites, negotiate competitive deals and analyse property documentation.

Planning an optimised deployment project is critical as well, especially since it affects the speed of the licensing process. Being able to present all necessary documents does increase the chances of a fast response from the municipality and in any case, a professional team does need to constantly keep monitoring the status of the application.

The underlying relationship with landlords is another key aspect. We need to deal with transparent landlords and most of all, ensure that sites are leased or sold with all the property documentation otherwise obtaining licenses is virtually impossible.