Fresh from the WIA’s Connect X in New Orleans, La., TowerXchange sat down with Dagan Kasavana at Phoenix Tower International. Turning is attention from the United States and Latin America, we discussed how PTI are applying lessons from its global footprint its European markets. Much like our TowerXchange Meetup Europe in mid-May, the WIA’s Connect X focused on 5G deployments, telco energy and edge, without straying from the core focus of the business: macro towers and the benefits they bring.
TowerXchange: PTI has been serving MNOs beyond steel and grass, offering a wider array of solutions from fiber networks, neutral host DAS and energy as-a-service in the Americas. How do these services compare and what do they look like for your European markets at present?
Dagan Kasavana, CEO, Phoenix Tower International:First and foremost, I have always believed that the macro tower model is the best model of them all. That doesn’t mean that fibre or other wireless investments aren’t good too, it’s just that I remain committed to the macro tower model because they generate cashflow straight away, you get economies of scale, you get long-term revenues secured by good contracts with good counterparties.
Plus, a macro tower is technology-agnostic. Some of the towers in the US have been up for over 100 years and have seen military use, pagers (which some younger readers may not remember), 2G, 3G, and they can be ready for 6G despite being designed and built during radio’s infancy. Macros are something we know well, and we lean into that.
Of course, as well as loving macros we love our MNO customers, and we want to follow what our customers want us to do. When customer has an infrastructure project we want to figure out a way to meet their needs. Do I want a big enterprise fibre play? No, because that will not help serve our customers, but if our MNO partners ask us for help then we want to find ways to help them.
We have route 1000km of fibre in Mexico and our power business in the Americas has been growing. Certainly a cell site power solution is additive to our business model because it creates a better macro tower. Many of our MNO customers, and us, care deeply about ESG and power efficiency. So as well as helping us to diversify our revenues it allows our MNO customers to reduce their power cost and environmental footprint.
Our US Services Business is something we want to bring to other international markets too. We have 100 people in the USA through two firms that we acquired: Technology Associations and Sector Site, located in New Jersey and the Pacific Northwest that provide our towers and other site owners with A&E, site acquisition, construction management, desktop services as well as maintenance or construction services. We can bring that model to Europe and other international markets by expanding PTI’s current businesses in Europe and offering those excellent services to other customers too in addition to our real estate footprint.
When it comes to more marginal technologies like Edge Data Centres or private networks, we will be thoughtful and open midned to engage with our customers, but these are more medium-term opportunities.
Then on 5G, in the US we’re ahead, but still very much only in the second or third innings (of a nine innings baseball game for the non-US readers), whereas in Europe we’re still in the first or second innings and we’re still warming up in LATAM. So there’s lots of lessons we can apply from our other markets.
TowerXchange: You've mentioned you're focused on infrastructure expansion. What does this look like for your European markets - is there any appetite for further M&A activity, particularly in Central and Eastern Europe?
Dagan Kasavana, CEO, Phoenix Tower International:We’re looking at lots of options and have an active pipeline of M&A across the region; but we aren’t limited by region because we have deals we’re tracking in Central, Western and Eastern Europe. In Eastern Europe in particular we are mindful of focusing on NATO markets, EU markets and our preference across Europe is for euro currency deals with high quality counterparties under long term contracts. Those guarantees make these investments more secure
We would like to look at opportunities where others aren’t, and double down on markets where our existing customers operate. We have some smaller markets in the Caribbean and Latin America, so we aren’t afraid to take some first mover risks for the right opportunities that afford us the best risk adjusted returns. But in our existing markets there are options to expand too. Italy has more opportunities. We are growing in France by acquiring sites from Cellnex. And in Ireland we have a built-to-suit pipeline to focus on as well as other lateral opportunities that are quite interesting.
In some smaller markets we remain the sole operator and we’ve seen big benefits in the Dominican Republic, Jamaica and Bolivia where we have a tight and productive relationship with our customers. Malta and Cyprus are similar where as the only infrastructure provider we see really interesting opportunities and partnerships that we might not see in the larger geographies where we can help deliver more connectivity solutions for our customers and the broader population. There are various projects in front of us in all markets and we are seeing opportunities like that all over Europe.
TowerXchange: You've showcased the first tower within the Build to Suit agreement in Ireland following the acquisition of eir’s tower portfolio. How is the BTS programme going and have you secured any BTS contracts from the country’s other MNOs?
Dagan Kasavana, CEO, Phoenix Tower International:Build outs are going exactly as anticipated. We are about to cross over 1000 towers, up from 650 when we entered Ireland due to build-to-suit which is a great pace of expansion. We expect another 200-300 sites from that programme over the next couple of years too.
Our relationship with eir is excellent, but the other operators in that market have relationships with the towercos that bought their towers, so there’s less competition for build-to-suit and lease-up than in some other markets. (CK Hutchinson sold to Cellnex and Vodafone formed Vantage Towers in 2020, at the same time as PTI’s acquisition from eir).
Of course, all the operators and towercos want to build the most efficient network possible, so we’re avoiding parallel infrastructure. This is especially important in a relatively small market. There’s no tension because of the three MNOs and three towercos having strong relationships. But where you’re 5mn people served by three towercos and three MNOs you find that there’s less creativity and more focus on fulfilling your contracted sites efficiently. In a sense its straightforward to focus on delivery and partnership but until those commitments are fulfilled there is less flexibility to structure new business with all of the operators
Of interest in Ireland is that 3 and eir ended their RAN sharing agreement to focus on individual 5G rollouts. The new technology puts new customers in play for them and we’re able to help our customers deliver quality service and compete for customers on network quality and coverage.
TowerXchange: The transfer of 3,200 sites in France from Cellnex to PTI is expected to complete in 2023 and 2024. How is the transfer going and are you getting closer to your plan to operate over 5,000 sites in France?
Dagan Kasavana, CEO, Phoenix Tower International:France is a market that we’ve been enthusiastic about since we started looking at Europe: the people and the culture are great and France is a market leader across European telecoms and a major leading European market. We have a fantastic relationship with Bouygues who are anchor customer nearly all our sites today. And through our acquisition from Cellnex we’re diversifying by acquiring sites with SFR/Altice as an anchor customer. We already work with SFR/Altice in the Dominican Republic and French West Indies which speaks to the benefits of global expansion.
Cellnex have been very professional and we closed our first tranche of towers a couple of weeks ago. There’s a lot of governance around minimum conditions for sites and some flexibility to swap assets if we identify any issues. The timing is quite specific in terms of when the transfers will occur and we are excited to continue our closings and conclude the transaction.
We have a great future ahead of us in Europe and I wish I could be there in London on May 16th. TowerXchange has always been a great resource for the industry and I hope that you have a great show everyone. Various folks from PTI are at the conference so I hope you all get a chance to learn, collaborate and share best practices amongst the participants in the spirit of TowerXchange since inception! I look forward to another exciting year in Europe and look forward to helping more of our business partners achieve their goals in partnership with PTI.
