LatAm MarketWatch, May 2014

Consolidation rumours persist while networks upgrades throughout the region keep progressing

Mexican secondary telecoms reform delayed

The critical secondary telecom legislation is still pending before the Mexican Congress. In a recent statement, Chamber of Deputies President Jose Gonzalez Morfin informed the press that lawmakers are likely to meet for special sessions to define the content of the legislation during the month of May.

Telefonica targets Iusacell

Bloomberg report that Telefonica is in talks to acquire Iusacell, Mexico’s third ranked operator. Mott MacDonald report that Iusacell has 8% market share, with Telefonica on 19%. A merger could create a stronger competitor for America Movil’s Telcel, which leads the market with 69%.

Claro Colombia announces 4G investment plans

The leading carrier is likely to invest US$1bn to develop its 4G network over the course of 2014, as stated by the company’s President Juan Carlos Archila. The project aims at expanding LTE coverage to 50% of the Colombian population in the next three months.

Une-EPM and Tigo Colombia merger receives regulatory approval

The national antitrust authority of Colombia has approved the merger between state-owned Une-EPM and Millicom’s Tigo. The companies have eight months to come to an agreement with regards to which blocks of their spectrum will be given back to the Ministry of Information Technology and Communication.

The merger would result in the new entity holding the rights for 135MHz of frequencies in spite of 85MHz being the limit per operator. Une-EPM and Tigo Colombia would then have 28 months to hand back the spectrum.

In the event of the companies failing to reach an agreement, the authority could impose them fines up to US$31.8mn.

Substantial portfolios likely to change hands in Brazil

Sources suggest to TowerXchange that there are three substantial tower portoflios at various stages of coming to market in Brazil, including two privately owned tower firms and one sale and leaseback opportunity.

The sales are at various stages of progress but we forecast that a total tower count in five digits will change hands in the next two quarters.

TIM Brasil’s likely next moves

TIM Brasil is likely to bid in the upcoming 700 MHz spectrum auction following a recommendation by its Board of Directors. The auction is likely to take place in August, following a public consultation during the month of May.

While exploring their move, TIM Brasil is also assessing divesting its portfolio of approximately 7,000 towers in order to raise the capital needed to then deploy 4G LTE across the country. Currently, the company is looking for new financial advisers to work on the sale of its telecom towers in Brazil after a senior specialist of Morgan Stanley, their current adviser, left the bank.

Oi-PT merger receives Portuguese competition watchdog approval 

The Autoridade da Concorrencia (AdC) of Portugal has recently approved the tie-up between Brazilian’s Oi and Portugal Telecom following its Brazilian’s equivalent, Cade, green light on the deal.

Potential dropouts in Oi’s quest for capital funding

Brazil’s Itaú Unibanco Holding SA is rumoured to be considering leaving the consortium of fourteen banks currently involved in the injection of capital ahead of the Oi-PT merger. Other financial institutions such as Goldman Sachs, Banco Bradesco and Citigroup have also been rumoured to be keen to get out of the deal.

Oi aims at raising between US$2.6bn and US$3.5bn as part of its plan to merge with Portugal Telecom.

Oi-SBA 2,007 tower deal completed 

Oi and SBA Communications have concluded their recent tower deal during the first week of April with SBA acquiring 2,007 towers for US$ 696 million. As part of the deal, Oi is entering a long-term leasing agreement with SBA.

The acquired portfolio has a tenancy ratio of 1.6 per tower and features existing leasing agreements with all major Brazilian carriers. For further details of the transaction, check out the interview with Kurt Bagwell, President – International for SBA Communications, in issue 6 of the TowerXchange Journal.

Investors pour capital into middle market towercos as BTS is outsourced in Brazil

Bloomberg report that five different middle market towercos in Brazil, Brazil Tower Company, Highline do Brasil, T4U, QMC and CSS, have attracted investment form seven private equity firms including Goldman Sachs and Patria Investimentos. One of the towercos suggested that Brazil’s carriers were soliciting “bids to build about 3,900 towers, more than half the 6,680 new towers needed in 2014 to improve networks.”

Bloomberg go on to quote statistics attributed to Brazil Tower Company, who say they build towers for 200,000 reais to 500,000 reais each, which “values the 3,900 to be built by third parties at 780 million to 2 billion reais, according to data compiled by Bloomberg. Brazil Tower then expects to sell the sites in bulk for as much as $300,000 each.”

Intriguingly, Bloomberg report that the five middle market towercos have capacity to construct only 1,600 of the 3,900 towers between them. Meanwhile SBA and GTS seem less keen on bidding for BTS opportunities under the contractual terms offered by their smaller competitors, hinting at a potential opportunity for further new entrant towercos.

NII for sale?

TMT Finance report that NII Group has appointed UBS as “an advisor to conduct a strategic review which could result in a sale of part, or all of the company.” NII trades as Nextel in Brazil, Mexico, Chile and Argentina.

Nextel Argentina assessing 4G opportunities

The Argentinian carrier is currently exploring the possibility of deploying 4G LTE technology following its unsuccessful attempt to win 3G spectrum back in 2012, when the 800MHz and 1900MHZ band auction was called off by the Argentinian government and frequencies assigned to state-owned telecom operator Arsat.

Movistar and Claro Ecuador one step closer to LTE

Ecuador’s government has successfully completed the first phase of negotiations with Movistar and Claro Ecuador to award them LTE spectrum before the end of 2014. A new round of negotiations is likely to begin after the Easter break.

Currently, CNT is the only carrier in Ecuador that has been granted a license to offer LTE services.

Viettel to launch in Peru

TeleSemana quote Gonzalo Ruiz Diaz, head of telecoms regulator Osiptel, as saying that Viettel will launch on 26 July having been held up with permitting for the installation of towers. Viettel was awarded spectrum in the 1,900MHz band in January 2011.

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