SBA Communications' strategy in Africa

SBA Communications first started investing in Africa in 2015 through Atlas Tower in South Africa. This year they announced a planned acquisition of 1,400 sites in Tanzania and a rebrand in South Africa. SBA Communications, long a giant in the western hemisphere is now investing in Africa because it sees the potential for growth in African population, economy and telecom penetration. In this interview TowerXchange speaks with SBA Communications’ Kurt Bagwell about SBA Communications’ long-term strategy in Africa and how the towerco plans to support telecom development across the continent.

Thanks. In 1989 I was hired as a Customer Service Manager at Centel Cellular in Panama City, Florida. A small town, running a cell phone retail store. We had two cell sites in the area, our competitor, Cellular One, had three cell sites. I was always calling Corporate telling them we needed more coverage so I could sell more phones. They told me they were focused on the larger markets, and it was also hard to get sites done in my area. Well, that didn’t really work for me, so I went out and found some land for lease, talked to the county about permit approvals and why another tower would be so good for everyone, and went back to our headquarters and told them it was all ready. They built the site, sales went up. That same small area now has over 20 sites and is part of Verizon Wireless. I bet they are selling a lot of phones now.

I then moved on to a regional marketing role and was a liaison with our headquarters to help other markets in the Southeast United States get more sites, and hence, more sales. I then was selected for a cross-training exercise and moved to headquarters in Chicago to be a Director of Engineering. That’s when I really got into not only Engineering but really into Site Development.

Having come from a real market where new sites meant real sales, I was very focused and committed to this. In the next 12 months, I built 80 towers that were 400 feet high in North Carolina to expand the network, in addition to a group of rooftop sites as well. Going through the leasing, zoning and permitting issues on those 80 tall towers was a real learning experience, but we did it, and the markets all were stronger because their network became dominant. After that stint, I moved to Kansas City as one of the first employees of a related company, Sprint PCS. I was hired to manage the buildout of 16 major markets in the Eastern United States from New York to Florida. After that, I ran the Site Development function for Sprint nationwide for three years, culminating in a program with 27 teams building over 300 sites per month for three years. So building sites is in my blood.

After being with Centel/Sprint for 11 years, and being one of the largest SBA customers, and having many close contacts at SBA, I joined them in 2001, and my wife and I moved back to our native Florida. In the past 21 years with SBA, I have run the USA operations and then 12 years ago started the International Department. We are now in 15 International markets in three continents outside of the USA with over 16,000 sites and over 27,000 tenants. In the African continent, we have been in South Africa since 2015 and are working now to close our M&A deal with Airtel in Tanzania by the end of 2021.

Africa offers growth, that’s the biggest thing. We are a growth company. That’s what we do. We’ve been growing for 32 years. Back in the early 1990s, SBA was site acquisition and construction, then moved into build-to-suit offerings, then co-location on M&A sites they bought. When we started internationally, we started close to our headquarters in Florida with Canada and then Central and South America. Those made the most sense to us, high growth markets, close to us physically and from a time zone perspective, and even in terms of language, as our Florida back-office has many Spanish and Portuguese speaking personnel, which allows us to share back-office resources seamlessly. And now it is time to continue to expand the footprint, but cautiously and profitably.

The towerco model is the same worldwide. Yes, there are many local nuances, but generally, it is the same. Our systems, processes, procedures, back-office sharing and overall expertise allow us to continue to open up in new markets and feel confident we can succeed, and so far, we are 15 out of 15. So South Africa was first for us in Africa, next is Tanzania, after that we will see. While we have grown into 15 international markets in 12 years, we try to be very selective. We have not entered over twice that many new markets where there were opportunities, for a variety of reasons. Our goal is to be a great, long-term focused, growing towerco. Not just the biggest. Our financial track record is second to none, and I think we have shown that we are disciplined in the area of growth, and we plan to maintain this record.

We chose South Africa as our entry point into the African continent due to a few factors, including our partner’s research on the potential for new tower builds and our own research on the country level factors like macroeconomics, real estate rights and law, labour, taxes, population growth, economic maturity and carrier dynamics, amongst others. We felt that the market, at that time, was ripe for entry and growth, and so far, the number of our multi-tenant sites has proven that out.

We currently have over 1,200 sites in South Africa, most of which we built, not bought, and are headed to over 1,500 by end of 2022. Rooftops are part of our numbers, but not significant. Outside of the major urban and suburban areas, you really can’t find the heights required to satisfy multiple customers at just the right location to provide them optimum coverage using the lower rooftops generally available in those areas. However, we look at every site individually, and we build out whatever we need to.

So if a rooftop is a viable solution for our customers, then we will lease out the rooftop and make it ready for our tenant’s equipment. If we need to build stealth towers due to zoning requirements, we build stealth towers, although these of course have physical loading limitations and cost issues, so it is not something we want to do at every location, nor do I think it is necessary at every location. Renting ground space from public or private parties and securing all proper permits is also a key part of our expertise. The structure type is one thing, but you need the exact right location to put it in. Hence, after searching and negotiating multiple candidates in a ring, we gain approval on the best candidates and begin the lease negotiations with them. Then we secure all the permissions required.

That’s really how this should work – don’t just pick a spot that is good for the towerco, pick a spot that is just right for our customers, then make it happen. That’s the true value add. Of course, our job is to hire the right employees and consultants to make that happen quickly and cost effectively – that’s at the core of any good towerco.

Key targets for SBA in Africa are continued growth in South Africa through building sites, buying sites, adding new tenants to existing sites, and adding equipment to existing sites. We love South Africa, and our team there has done an incredible job in performing for our customers, hence the repeat business. We are obviously making a big bet on Tanzania, purchasing over 1,400 sites from Airtel later this year with our partners at Paradigm Infrastructure. We feel Tanzania has enormous potential, is very similar to South Africa in many ways, and has good long-term potential. We like what the government is doing right now, and we feel confident we will be able to enter this market smoothly and grow our business profitably. Our business there is an SBA majority-owned partnership with Paradigm, and will use the local name of Minara Tanzania.

Which services are driving this interest? Again, we are a macro site-focused company – not just towers, but sites of different types. In South Africa the primary/supplemental/backup power issue is not the same as it is in Tanzania and other markets in sub-Saharan Africa that have electric utility challenges. In Tanzania, we will be entering into our first market where every site will have power responsibilities.  These systems are in place today, we have solid transition plans, and our partners at Paradigm bring to the table strong experience in other African markets operating such type systems, so we feel confident this new addition to our traditional scope will go well. We have other interests in other products and services as well, and more on that later, but our focus right now is the macro site business.

5G is just the next evolution for our customer’s networks. It is not completely different than the upgrades to 3G and 4G. We’ll make sure our sites can physically and economically handle their needs. We will move quickly to help them complete rollouts. We will end up building more sites for densification purposes than ever before – whether you call them “small cells” or “mini macros” or another name.

Densification is required to achieve the proper penetration of signal especially for the high-frequency bands, so more antennas closer to the users is key – typically that means using shorter sites as an “underlay” to the larger site macro network, which is still critical for the future as well. The key for us in helping our customers in this environment is to be flexible and creative with matching up value on our services and their services. If they need smaller sites with limited but highly penetrating coverage areas, we may offer lower capex, lower height, lower equipment load sites at a lower monthly rental rate to help them achieve this.

In South Africa right now traditional macro sites are still the most popular, but there are already many more smaller sites coming into play, and I foresee that becoming more commonplace in the heavier traffic urban and suburban areas. But for highway coverage and small towns, traditional full-size macro towers will still be the best way to go – they can’t be matched from an efficiency of coverage and cost perspective.

Yes, in South Africa we ran under the name “Atlas Towers” until October 1, 2021, so for the last six years. Our partner had started the business before we joined together, and that was the company name. We are now moving to the name SBA South Africa in this market effective immediately. We feel our team has cemented themselves, and the international recognition of the SBA name is the way to go at this time. In Tanzania, we are starting there with a local name, Minara Tanzania, which in Swahili translates into Towers. We typically have a few ex-pats help us get a market going but every one of our employees long term is local. We want to be seen as a local business, working hard with experienced local personnel to do a good job. We will look at the SBA name later in Tanzania as well, but for now we are Minara Tanzania when we launch in late Q4-2021.

Yes, I have been working with TowerXchange since the earliest days. For us, it’s all about the information exchange and networking, and the key research and publication of timely interviews from key market leaders on different topics. It’s been a great resource for data, trends, and networking. With Covid the shows have taken a bit of a hit, but in CALA we did the same as we are in Africa this year, part virtual and part in-person. It worked in CALA, it will work in Dubai for Africa. Hopefully in 2022 it will all be back to normal. Having these in-person events is an incredibly efficient use of my time to see so many key contacts worldwide in such a short amount of time.