Phoenix Tower International enters the Irish market with the acquisition of eir’s towers

On 25 May, Phoenix Tower International (PTI) reached a deal with Irish MNO, eir to acquire their portfolio of 650 sites for €300mn. The deal, which also includes a significant build-to-suit commitment.  The trnsaction adds a second European country to PTI’s portfolio as the towerco continues to expand its presence beyond the Americas. TowerXchange examines the deal and the implications for the Irish and broader European market.

In late May, Phoenix Tower International announced that it had reached €300mn deal with Irish MNO, eir, to acquire 100% of Emerald Tower Limited, the entity into which the MNO had transferred its 650 sites. Of the 650 sites, TowerXchange understands 60 to be masts, 215 to be monopoles and the balance rooftops primarily in Dublin and other major cities in Ireland. The deal also includes a build-to-suit programme, rumoured to be for up to 800 sites over the next eight years. 

Speaking on the deal, PTl’s CEO, Dagan Kasavana said “We are excited to enter the Irish wireless infrastructure market and partner with eir on such an important transaction. The global pandemic related to COVID-19 has impacted all of our communities and highlights the importance of wireless infrastructure to support global trade, commerce and social connections. This will not diminish as economies rebound in the coming months and years ahead.” 

Tim Culver, Executive Chairman of Phoenix Tower International added “Ireland represents an important economic hub for Europe and the world, and we are proud to support eir on their ongoing build-outs across the country. This transaction further expands PTI’s global footprint and we are excited to be a long-term partner of eir” 

Carolan Lennon, eir’s Chief Executive Officer, said: “This transaction allows us to accelerate the rollout of our expanded 4G and 5G networks and increases eir’s capacity to further invest in our mobile network. It will help us deliver the best mobile experience for all our customers across Ireland, enabling more efficient infrastructure rollout in the future to further increase geographic coverage.”

The transaction, subject to obtaining final approvals, is expected to close in summer 2020.

There are 6.74mn mobile subscribers in the Irish market (source: ComReg Q1 2020). Vodafone has the largest mobile market share (38.6%), followed by Hutchison’s Three in second place (35.1%) and eir in third place (17.4%). Tesco Mobile (6.1%) and other authorised operators (2.9%) make up the balance. In addition to having operations in the mobile space, eir is Ireland’s largest fixed line player (45.9% market share) where it competes with BT, Sky, Virgin Media, Vodafone and a handful of other players.

Of Ireland’s 5,357 towers, 67% are currently owned by towercos but this is on track to change to practically 100% by the end of the year. Vodafone’s new towerco is already operational in Ireland, effectively shifting the operator’s towers into towerco hands, and Hutchison is set to follow suit shortly. When the Hutchison carve out is finalised and the eir tower sale complete, operators will no longer own towers in the Irish market.

There have been a handful of other tower transactions in the Irish market, with Towercom having bought 340 masts from Eircom (owners of eir) back in 2007 and Cellnex having acquired Cignal in 2019 (Cignal having previously acquired the towers - and the land under third party towers - of state forestry company, Coillte back in 2015). With Cellnex having been on a major M&A drive in the past 12 months, the towerco would almost certainly have been a bidder in the recent eir deal process, with Brookfield backed Wireless Infrastructure Group (which has a portfolio of 55 Irish towers in addition to 2,000 sites in the UK) as well as Digital Colony (yet to establish a footprint in Ireland) rumoured to have been two other interested parties. 

Given the fragmented towerco landscape in the country (figure two), and no further sale and leaseback opportunities available, one is likely to see further M&A activity in the market as some of the larger towerco players look to roll-up their smaller competitors. Whilst such M&A presents an opportunity for inorganic growth, there is still significant organic growth potential in the Irish market; PTI’s deal with Cellnex involves a BTS programme of up to 800 sites, whilst Cellnex have a BTS pipeline of around 600 sites.

Whilst new to the European landscape (save its operations in the French West Indies) Phoenix Tower International has been steadily growing its presence across the Americas to become one of the region’s most significant multi-national players (read TowerXchange’s February 2020 coverage of PTI’s journey from infrastructure start-up to multinational leader). Launched in 2013 and with its first investment made in July 2014 with Blackstone and John Hancock as its investors, much of PTI’s growth has come from smaller scale acquisitions (figure three) as well as new market entries.  This methodology has paid off and including the latest Ireland transaction, PTI is a leading global tower company with scale across three continents with leading market share in five of the fifteen countries in which it operates and is one of the largest, independent and fastest growing tower companies in the world, owning a portfolio of 9,393 towers across its markets in under six years since its first investment (figure four).

Whilst PTI has been operating in France via its presence in the French West Indies markets of Martinique, Guadeloupe and French Guiana, the towerco made its first move into mainland Europe earlier this year with the formation of a joint venture with Bouygues Telecom in France. The joint venture will build and operate up to 4,000 towers in less dense areas over a 12-year period, and play a key role in helping Bouygues Telecom meet the requirements of France’s New Deal Mobile designed to improve coverage in rural areas.

PTI’s entrance into Ireland coupled with their presence in mainland France, makes the towerco a serious contender in any future European tower deal processes. M&A activity in Europe has, in recent years, been dominated by Cellnex but PTI have the financial backing and the proven appetite to go toe to toe with the towerco. That being said, they will face stiff competition from a number of other players. Wireless Infrastructure Group recently secured the backing of investors, Brookfield and announced its appetite to expand its European footprint; Digital Colony has made a serious play for the UK market with the creation of Freshwave Group but made no secret of its appetite to grow; and whilst American Tower has been quiet on the European front since its 2016 acquisition of France’s FPS Towers, the company is no stranger to competing with PTI in the Americas.

With BTS contracts up for grabs, new tower sale rumours emerging and consolidation opportunities on the horizon, TowerXchange expects to see Phoenix Tower’s names hitting the European headlines once again in the not too distant future!