When we first spoke to Estrella Zaharia, Andean Tower Partners (ATP) was in our own words “a new towerco with solid foundations and bold plans.” Since Q1 2016, ATP has achieved outstanding results thanks to its own portfolio of 432 sites in Colombia and 32,290 master agreements in both Colombia and Peru with Interconexión Eléctrica S.A. (ISA). Additionally, ATP serves its regional customers with its small cells and DAS offering thanks to its close bond with ExteNet Systems, also part of the Digital Bridge group. In this interview, Estrella offers TowerXchange’s readers with an exclusive update on the company’s footprint and achievements to date, as well as an outlook on the future of telecom infrastructure.
TowerXchange: Estrella, it’s been a while since we last spoke, can you give us a high-level overview of ATP’s presence in the region as of Q1 2017?
Estrella Zaharia, President, Andean Tower Partners:
ATP has been focused on executing our shared wireless infrastructure model for the benefit of our carrier partners in Colombia and Peru. Our goal is to have ATP be the facilitator and a neutral manager of a large set of infrastructure solutions for the region. This all starts with a focus on delivering a high-quality set of locations for 4G deployment to support the growing needs of our customers. ATP’s core strategy is to enhance the mobile operators’ speed to market in increasing their coverage needs through co-location services in this portfolio.
ATP is now the largest private operator in the Andean Region. We manage and operate more than 30,000 sites and this number is growing every day. We operate in two markets. In 2015, we started in Colombia and more recently in Peru. Our strategic partnership with ISA has been critical to our growth. The utilisation of ISA’s transmission and telecommunications infrastructure in the Andean region brings a significant added value to ATP and will be very attractive to our wireless clients as they deploy their 4G networks in 2017 and beyond.
ATP is also building towers. Our development, operations and service processes have been proven in other geographies throughout North America and Latin America and provide ATP’s wireless customers expertise throughout the full lifecycle of site and tower development.
Finally, ATP also sees growth potential in new technologies like indoor DAS systems, small cells and C-RAN as areas where we can apply the tower model and bring value to operators as they execute their densification strategies. ATP is the only towerco in the Andean Region deploying these various solutions to help our customers realise the full potential of their network.
TowerXchange: ATP has successfully raised capital this year. Tell us about the experience.
Estrella Zaharia, President, Andean Tower Partners:
ATP just completed its institutional raise of US$230mn of new capital to support the next phase of the business. We are delighted to have partnered with ISA, Olayan Group, TC Latin America Partners, and Equity International on this transaction. The experience and knowledge these investors have in the sector and the region show the growth potential of this market as well as the validation in the leadership of ATP’s team.
TowerXchange: With more capital comes more work! What’s the plan for the future?
Estrella Zaharia, President, Andean Tower Partners:
ATP is looking to continue our growth plans in the Andean region through organic and inorganic growth (M&A). ATP is actively investing capital in building new sites, acquiring existing tower portfolios and partnering with carriers to consolidate the market with a ubiquitous portfolio to serve as a neutral host for co-location services. In this spirit, ATP is preparing for the 700 MHz spectrum auction in Colombia which should be happening soon. Overall, with this auction taking place, there will be significant more activity in the region versus the last three years, which has seen moderate growth.
In Peru, the 700 MHz buildout is currently well underway and ATP is actively participating in this process. More infrastructure will help operators expand their user base. Last year, the government announced Peru still needs more than 7,000 macro sites for coverage purposes, and this number does not include capacity. Our plans in Peru are to help our customers build, fill their coverage gaps and realise a return on their investment made to acquire new spectrum and deploy their network.
TowerXchange: Any plan to expand in other regional countries?
Estrella Zaharia, President, Andean Tower Partners:
For the moment, ATP’s focus is in the Andean region, where we will evaluate new countries opportunistically.
TowerXchange: Can you tell us about ATP-ExteNet’s synergies in advancing small cell deployment in the Andean region?
Estrella Zaharia, President, Andean Tower Partners:
ATP brings to the Andean region the experience of its sister company, ExteNet Systems, the largest private provider of Distributed Network Systems in the U.S. I like to think of it like ExteNet Systems being ATP’s extended engineering and small cell deployment team.
With operators consistently constrained by capital budgets, wireless densification will be slower in the Andean region, but nonetheless critical to realising the full potential of the LTE devices and product offering. Reducing the distance from the device to the base station allows for an incredible consumer experience.
Andean consumers want video, streaming music and more social media applications, this in turn drives ARPU. So, there is a bit of a chicken and the egg scenario, but we know the carriers will need small cells, dark fibre and other solutions to enhance the user experience.
ATP facilitates network deployment and makes enhanced wireless capacity possible. Our innovative business model has been proven in the U.S. through the DAS systems our Chairman built at GTP and now thanks to ExteNet Systems; which helps our clients increase revenues and reduce costs, and at the same time enables them to increase network capacity, with aesthetic solutions for venues and communities. There is a visual impact that local municipalities like about small cells as well. This is an evolving topic and ATP is at the forefront of the discussion.
TowerXchange: How receptive are clients to small cells?
Estrella Zaharia, President, Andean Tower Partners:
Right now carriers are focused on enhancing indoor coverage and so DAS is central to this thesis. Large venues, office buildings, hotels and football stadiums are key bottlenecks in the network. At the moment, ATP sees more activity in indoor DAS and as such we are executing on that vertical. This follows a trend in the U.S., where small cells started on indoor DAS and evolved to outdoor from there and the same narrative has played out in Mexico, with our sister company MTP that already has over twelve indoor multi-carrier DAS systems in operation today.
Right now carriers are focused on enhancing indoor coverage and so DAS is central to this thesis. Large venues, office buildings, hotels and futbol stadiums are key bottlenecks in the network. At the moment, ATP sees more activity in indoor DAS and as such we are executing on that vertical
In Colombia and Peru, ATP has already signed agreements with landmark venues to offer a customised solution. We will start there with our customers and build the small cell thesis from success-based indoor DAS as the neutral host model evolves towards a story of capital efficiency of using ATP’s balance sheet versus self-performing plays out.
In the area of densification, carrier activity in Latin America is in its early innings. Over time we will see it grow. So far, small cell building has been geographically driven based on addressing current coverage traffic issues and not solving the future network congestion issues. We believe carriers are looking for bulk solutions: a single company to give them, for example, 30 small cells in one location fed by dark fibre. ATP’s portfolio, which includes ISA’s unique footprint of transmission and telecommunications infrastructure and dark fibre, will be very attractive to our wireless clients as they deploy these new technologies.
TowerXchange: And how about new site typology? Are you experiencing a shift from traditional, higher towers to lower monopoles or other types of sites?
Estrella Zaharia, President, Andean Tower Partners:
Yes, depending on the site conditions, we need to adapt structure types to the use the carrier needs and this sometimes leads us to small cells, slim line monopoles, rooftops and we believe utility transmission assets.
The key is to be creative and address the client’s need. ATP’s site development goals are based on the customer’s requirements and our main objective is to deliver in the fastest time possible with the highest quality – meaning zero quality rejections.
TowerXchange: From the “outside” there’s much talking about how LatAm’s economies are struggling, and then we talk to a success story like ATP. What’s the key to succeed in the region?
Estrella Zaharia, President, Andean Tower Partners:
Experience, patient long term capital and a great management team!
At a regional level, the support, know-how and experience ATP receives from Digital Bridge and its portfolio companies like MTP, ExteNet Systems and Vertical Bridge has set ATP at the forefront of the industry. This value-added has been recognised and validated by our strategic partners.
At a local level, it is all about our execution and how we can offer flexible, fast and friendly solutions to mobile and wireless operators.
On capital sources, you need to have long-term patient capital that can weather the macro challenges in the Andean consumer economies that exist, to focus on the long-term opportunity that presents itself today in 4G LTE networks, eventually going to 5G and MIMO.
We are fortunate to have Digital Bridge as our partner in this regard, as they understand the entire landscape and where the market is headed long-term. The key as they say in the sport of hockey is to “not skate to the hockey puck, but skate to where it is going.” This is the key to building a successful enterprise in tower in the Andean Region today, ATP is skating to where the puck is going!
TowerXchange: And what is the real status of local markets from a towerco standpoint?
Estrella Zaharia, President, Andean Tower Partners:
The Andean region is experiencing substantial growth in smartphone penetration and mobile data usage, and as a result requires a significant investment in mobile infrastructure to support this demand.
From a macro demand side this bodes extremely well from a towerco standpoint; this is a terrific opportunity for ATP (and all towercos), but it also has required patience and careful planning. Everyone thinks when they come to the region, that every market is the same, when they are not. What works in Mexico, Brazil or the U.S., doesn’t work always in Colombia and Peru. Towercos need to develop each country as a standalone business plan. ATP has tried to approach each country differently, while successfully growing our footprint to capitalise on the regional opportunity.
