In an exclusive interview with TowerXchange, Antoine Delaprée, CEO of MXT Holdings, provides valuable insights into the dynamic landscape of the Mexican telecom tower market, ahead of TowerXchange Meetup Americas 2024. From the evolution of MXT Holdings to the broader market trends shaping the industry, Antoine Delaprée offers a comprehensive overview of Mexico’s telecommunications infrastructure sector.
Mexico's Telecom Tower Market Overview
As one of Latin America’s largest economies with a population exceeding 130 million, Mexico presents a lucrative market opportunity for telecom infrastructure providers, but one which has not lived up to potential in recent years.
The telecom towers market in Mexico is characterised by intense competition while the mobile operator market is relatively concentrated. Telecom towers serve as the backbone of the country’s connectivity infrastructure, facilitating the delivery of voice and data services to urban, suburban, and rural areas alike. Against this backdrop, MXT Holdings has emerged as a key player, spearheading innovation, and growth in the industry.
Within this landscape, notable towercos include Telesites, American Tower, Mexico Tower Partners (MTP), Phoenix Tower International, IIMT, MX Towers (MXT), Torrecom, Neutral Networks, QMC Telecom International, Tower One Wireless, and Intelli Site Solutions. These companies play a vital role in providing critical infrastructure support for mobile network operators (MNOs) such as Movistar (Telefónica), AT&T, Telcel (América Móvil), and Mexico’s rural network Altán Redes, enabling them to expand their coverage and meet the growing demands of subscribers across the country.
Antoine Delaprée, CEO, MXT Holdings, speaks exclusively to TowerXchange about the Mexican telecom towers market.
The CEO of MXT Holdings, embarked on his journey into the telecom tower business in 2015, when Antoine co-founded MX Towers, later rebranded as MXT Holdings (MXT), launching the company into a phase of organic growth and expansion. Today, backed by two large infrastructure funds, Ardian, and Mexico Infrastructure Partners (MIP), MXT Holdings operates as a platform investing in and managing digital infrastructure assets in Mexico.
TowerXchange: Can you provide insights into MXT Holdings asset portfolio, including telecom towers, DAS systems, and fibre networks, and discuss the evolution of your business model over time?
Antoine Delaprée, CEO, MXT Holdings
MXT Holdings has evolved into a robust holding company, backed by prominent infrastructure, private equity funds. As of 1Q24, MXT’s portfolio comprises 1,450+ telecom towers, 11 DAS systems and 3,500 km of long-haul and metropolitan fibre networks. MXT Fibre networks are deployed across the southeast of Mexico, in the states of Quintana Roo, Chiapas, and Tabasco, whereas MXT metro fibre rings are mainly located in Mexico City and Monterrey.
Initially focused on telecom towers, MXT has diversified into indoor coverage infrastructure with DAS systems, and fibre networks, offering bundled solutions to meet market and clients’ demands.
TowerXchange: What’s the blend of macro towers versus rooftops, DAS, small cells and IBS in your portfolio, and how is that changing?
Antoine Delaprée, CEO, MXT Holdings
Historically, our business was evenly split between on one hand, what I term the "Wireless business," encompassing telecom towers and DAS systems (IBS), and fibre networks on the other hand, each accounting for 50% of our operations. However, by the end of 2023, we successfully completed the acquisition of the telecom tower assets of Centennial Towers in Mexico, a company boasting 800 towers, augmenting our existing 650 towers portfolio, and establishing MXT as the fourth (4th) largest tower company in the country. Presently, our revenue stream is primarily derived from the Wireless business, constituting around 70% (mainly from leasing space on telecom towers), with the remaining 30% attributed to the Fibre business. Currently, we do not operate small cells, as this technology is still in its nascent stages in Mexico compared to the U S. market. However, I believe in its market potential in facilitating 5G technology deployment to provide a simple and effective, urban coverage and capacity solution.
TowerXchange: With Mexico transitioning to 5G, how is MXT Holdings positioned to facilitate network expansion, particularly regarding fibre infrastructure readiness?
Antoine Delaprée, CEO, MXT Holdings
5G is now available in Mexico, but it is still in the early stages of deployment. We estimate that it will take at least three to five years for Mexico to deploy 5G in main cities and establish a robust coverage, backed by dense fibre connectivity.
Given MXT’s technical expertise, sites location, and innovative, bundle solution we can offer with last-mile, fibre connection (FTTx), we are well-positioned to help our MNO clients deploy this technology and facilitate network expansion. While there may be some delays in 5G deployment, organic growth opportunities are on the horizon.
TowerXchange: To what degree can the Mexican mobile operator market support so many towercos? Do you anticipate consolidation in the future?
Antoine Delaprée, CEO, MXT Holdings
Several tower companies, like MXT, started operating when AT&T entered the Mexican wireless market in 2014-15, and when the shared network initiative, the “Red Compartida”, was launched with Altán Redes in 2016-17. These mobile operators have historically leveraged this increased competition to diversify their suppliers base, and to deploy cell sites faster all over Mexico.
However, with the recent completion of the migration of Telefónica ‘s wireless traffic onto AT&T passive infrastructure, the Mexican mobile operators' market has become relatively concentrated, putting more competitive pressure on tower companies.
In addition, as part of private equity funds’ investment cycle, several funds with a controlling stake in tower companies in Mexico, will look to divest their participation. As a result, we expect further consolidation (M&A) in the Mexican towers market in a near future.
TowerXchange: What growth opportunities does MXT Holdings foresee within Mexico's telecom landscape, and what strategic initiatives are in place to capitalise on these prospects?
Antoine Delaprée, CEO, MXT Holdings
Urbanisation, digital transformation, and IoT adoption present significant growth avenues for MXT in Mexico. In general, we see a dynamic market environment, driven by strong data traffic growth, with great potential for future investment opportunities in the digital infrastructure space in Mexico.
Mobile data consumption is increasing rapidly with the rollout of 5G, that will require densification of telecom towers infrastructure. Additionally, several new data centres are currently being built in Mexico to support digital transformation through cloud and artificial intelligence (AI) computing. To reduce latency, these data centres will need to be connected with the latest fibre infrastructure. This creates another opportunity for MXT growth on the fibre side of the Mexican telecom market.
We envision expanding our fibre network further in the Southeast of Mexico, in line with the announced arrival of new submarine cables that should boost broadband connectivity in the Yucatán peninsula.
MXT is actively researching advanced network analytics and artificial intelligence tools to streamline its network operations, forecast maintenance requirements, and boost overall infrastructure efficiency.
TowerXchange: What are the advantages of diversifying into fibre in Mexico?
Antoine Delaprée, CEO, MXT Holdings
While investing in telecom towers provides MXT with access to stable, inflation-linked, long-term cash flows, investing in fibre provides MXT with access to the fast-growing broadband connectivity market, strong organic growth opportunities and revenues diversification.
MXT’s fibre assets combine both metropolitan networks and long-haul routes. Since 2018, we have invested in long-haul fibre routes to interconnect major cities and regions across Mexico. These fibre routes serve as the backbone for broadband connectivity in the Southeast region of Mexico, and provide redundancy to older, existing fibre infrastructure. By expanding our fibre footprint locally and nationally and investing in the latest (DWDM) lit equipment technology, MXT aims to enhance network reliability, speed, and capacity.
In large metro areas like Mexico City and Monterrey, MXT has prioritised acquiring and deploying fibre rings to accelerate the time to market of its connectivity solutions, while focusing on linking key business districts, data centres, and telecom towers to support the deployment of 5G infrastructure, and to deliver high-speed broadband services.
TowerXchange: What is MXT Holding’s strategy around edge data centres? What advice would you offer other towercos looking to invest in edge?
Antoine Delaprée, CEO, MXT Holdings
MXT remains dedicated to exploring cutting-edge technologies and innovations to enhance our mission-critical infrastructure assets, and services to our clients.
One area of keen interest is the advancement of edge computing capabilities, which promise to enhance network performance, minimise latency, and facilitate emerging applications such as IoT, augmented reality, and autonomous vehicles.
Essentially, as our primary business model is centred around leasing ground space to install macro cell towers, it also provides an opportunity to lease additional ground space for the installation of "edge" facilities like shelters, cabinets, points of presence (POPs) required by our clients. These “edge” data centres cater to both broadband and wireless carriers, offering fibre services to homes, enterprises and municipalities. Tower companies can lease cabinet space or unit racks to broadband, MNOs and cloud service providers (CSPs) for their operations, and generate additional revenues.
While this aspect may not have traditionally been associated with tower company business, it has been a pre-existing necessity driven by broadband connectivity demands and should grow further with the roll-out of 5G, and the deployment of new wireless technologies, like fixed wireless access (FWA).
TowerXchange: What is your vision for the future of your company?
Antoine Delaprée, CEO, MXT Holdings
I expect the demand for digital infrastructure across the globe to continue to rise in the years ahead as trends like 5G, streaming, AI and cloud computing continue to drive increased demand for towers, cell sites, fiber connectivity, data centers and other digital technologies.
Given these fundamentals, investors’ appetite in these sectors will remain strong, and Mexico is no exception. We firmly believe that 5G will unlock new avenues for innovation and growth across diverse industries, and MXT is steadfast in our commitment to leading this technological evolution.
As we look across the digital infrastructure space in Mexico, I feel confident that investing in Mexico’s dynamic and growing telecom sector will allow MXT to continue supporting our clients’ priorities, and also to deliver strong risk-adjusted returns to our investors
