Introduction
Under the sun-soaked skies of Fort Lauderdale, Florida, TowerXchange gathered 200+ telecom tower luminaries over two sultry July days. This was the tenth TowerXchange Meetup Americas to take place since back in 2014, and the industry faces some very new challenges as well as some familiar ones. A poolside BBQ on Tuesday evening brought together the great and the good of the industry, while networking dinners took place all week with operators, tower companies, and suppliers in town for the event. Eight panel discussions, keynotes, presentations and roundtables in English and Spanish took place to get to grips with the challenges and opportunities facing the industry.
Top topics
The most salient point raised was the industry's resilience in the face of regional risks. It became apparent that towercos are not merely surviving but thriving in these turbulent waters. Despite political instability and lower growth in some of Latin America’s markets, tower counts have been consistently growing at a significant 12% per annum, as presented by Michel Bremer, the Chief Financial Officer of Phoenix Tower International. This remarkable growth is a testament to the industry's tenacity and confidence in its own future. With 5G rollout still slow to pick up in LATAM, this growth has been driven by 4G rollouts and coverage extensions.
5G, the buzzword on everyone's lips, dominated many conversations but the region’s lack of available spectrum was continuing to slow the next wave of investment. The wave of 5G is undeniably on the horizon, and though it is yet to crest, operators are busily planning for its arrival. Spectrum allocations are underway by regulators, heralding a new era of co-location and build-to-suit operations. However, the consensus was that large-scale work volumes wouldn't arrive until next year and beyond. This lent a sense of anticipation to the discussions and a shared commitment to prepare for the deluge.
An unexpected highlight of the event was the renewed emphasis on people and diversity. As the industry braces itself for the impending 5G demand, there's a recognition that skills and human capital will be pivotal. The telecom sector, particularly in Central and Latin America, must invest in its workforce, fostering diversity and inclusion to ensure it can deliver on the promises of 5G.
Traditionally the region has been a steel and grass market. Power-as-a-service is also witnessing a steady growth as mentioned above. Rising energy costs coupled with an expanding coverage footprint have prompted towercos to forge partnerships with energy services companies and experts. This model is burgeoning across the Caribbean and Central America, with pilot projects cropping up in South America.
What’s new?
Interest in the network-as-a-service model is expanding, reflecting a growing recognition of the lessons gleaned from Africa and Asia. Jules Deliga from AMN gave an attention-grabbing talk where he outlined how AMN has built a low-cost NaaS business in Africa. For the LATAM region, where capital is scarce, but demands for coverage are extensive, the prospect of network-as-a-service presents a compelling alternative. This model offers a tantalising combination of scalability and cost-effectiveness, critical in meeting the burgeoning demands of the region.
Adding an element of intrigue to the event, two new entrants in the towerco market, Sites and Lati, maintained a low profile regarding their future plans. This has sparked industry-wide speculation, with everyone keenly awaiting how these new players will shape the landscape.
In Austria Sites’ owner America Movil is also following a carve-out business model from its A1 operations across central and eastern Europe. In Mexico and Costa Rica, America Movil’s prior carve-out business Telesites has only made a small impact for lease-up and new build. Whether Sites follows suit or pursues a more aggressive stance will determine the future of some of LATAM’s biggest markets. Lati has the plurality of its sites in Guatemala, but has a sizeable overall portfolio of 10,000 sites. Millicom has indicated that it wants to sell a strategic stake in Lati and create an independent towerco in which it can crystalise value. Millicom has done well out of its towerco investments in Africa, and it is not surprising it wants to do something similar in its LATAM markets.
As discussed above, the telecom tower industry is continuing to grow at 12% a year and that needs a steady supply of capital. A prime concern there was the escalating cost of capital, urging tower companies to prioritise operational efficiency. Digitisation is viewed as a potent tool in this endeavour, helping tower companies allocate capital judiciously and deliver efficient services. Towercos in the region remain safe investments, and consolidation has left the remaining towercos in a good position, but the attitude on site was that every little helped when it came to today’s inflationary environment.
One significant revelation was the increasing towerco investment in fibre, both fibre-to-the-tower and large-scale fibre networks. This trend is set to accelerate with the advent of 5G. However, the challenge lies in managing investor expectations while driving this necessary infrastructural expansion. In-building connectivity was also a hot topic, with macro towers retaining their pre-eminence, but in-building and Distributed Antenna Systems (DAS) solutions gaining momentum across the region.
The macro business is well known, and in fact MNOs are starting to copy their towerco partners! The in-building and DAS business is less straightforward with tripartite agreements between MNOs-towerco-building owners gumming up the gears of progress. The industry is making slow progress, and when deals are struck, they are win-win-win and profitable. But the flywheel of progress you see with a build-to-suit build out is still lacking with these alternative assets.
What’s next?
Finally, the event sparked a debate about its geographical home. While the industry's headquarters are rooted in Florida, many felt the event should move to a South or Central American location to better attract the industry’s customers: the region’s mobile operators. As the telecom sector becomes more global, this suggestion captured a growing desire to celebrate the industry's diverse cultural makeup.
In sum, the event offered a snapshot of the LATAM sector's trajectory, underlining its robust growth, upcoming challenges, and the strategies it will employ to navigate the dynamic 5G landscape. TowerXchange Meetup Americas 2023 successfully bridged the gap between convivial networking and serious industry-wide discourse, laying the groundwork for the exciting era that lies ahead.