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Tower Xchange

Tower Xchange

Meet top 200 LatAm tower decision makers at the TowerXchange Meetup Americas!

ISSUE 7 | February 2014 | www.towerxchange.com

Special feature:How to raise capital and conduct due diligence on tower transactions

The journal for the emerging market telecom tower industry

TowerXchange Africa:< Africa’s $3bn tower sale kicks off in Nigeria

< BMI revisits first movers in Ghana

< IHS’s deal with MTN in Rwanda and Zambia

TowerXchange Americas:< Will the tower market open further in Mexico?

< Trilogy and Cizmic views on Caribbean towers

< The first LatAm independent tower count

TowerXchange Asia:< Indonesia’s mature and profitable tower industry

< Myanmar: the last frontier

< A first look at Myanmar’s four towercos

Jim Eisenstein on Brazil: “The US tower industry on fast forward”

With special thanks to the TowerXchange “Inner Circle”About TowerXchange

TowerXchange is your independent community for operators, towercos, investors and suppliers interested in African towers. We’re a community of practitioners formed to promote and accelerate infrastructure sharing in Africa. TowerXchange don’t build, operate or invest in towers; we’re a neutral community host and commentator on African telecoms infrastructure.

The TowerXchange Journal is free to qualifying recipients. We also provide webinars and regular meetups. TowerXchange monetizes this community through hosting annual Meetups and the sale of advertising, without compromising editorial integrity.

TowerXchange was founded by Kieron Osmotherly, a TMT community host and events organizer with 16 years’ experience, and is governed with the support and advice of the TowerXchange “Inner Circle” – an informal network of advisors

Our informal network of advisers:

Chairman: Daniel LeeManaging DirectorIntrepid Advisory Partners

Michel FaivreDirecteur Programme Partaged’Infrastructure AMEAFrance Telecom-Orange

Fazal HussainCEOSWAP International

Nina TriantisManaging Director, GlobalHead of Telecoms & MediaStandard Bank

Jeffrey EldredgePartnerVinson & Elkins

Ayman Al AdlDirector, TMT, Middle East & AfricaStandard Chartered Bank

Torsten EsbjørnRegional Director, AfricaRamboll

Gary StauntonCEOLikusasa Group

Alan HarperCEOEaton Towers

Riana DonaldsonManager: International NetworkOperations SupportVodacom

Laurentius HumanSnr Director, Corp FinanceJabil

Andrew DoyleManaging DirectorTech & Comms PracticeMott MacDonald

Natasha GoodPartnerFreshfields

Ahjeeth JaiJaiConsultantInvestec

Rajat MalhotraCEO, Middle East & AfricaHayat Communications

David MeganckFounder & COOAcsys

Chuck GreenCEOHelios Towers Africa

Adeel BajwaSenior GM of Legal Affairs andContractsWarid Telecom

Inder BajajCEOHelios Towers Nigeria

Chris Gabrielformer CEO, Zain AfricaSenior Adviser, Macquarie GroupChairman, Clean Power Systems

Areef KassamDirector of InfrastructureGSMA Mobile for Development

Tunde TitilayoVice ChairmanSWAP International

Thorsten SchaeferCEOazeti Networks

Zouhair KhaliqConsultant, Executive DirectorWarid Telecom, Former CEO,Orascom Int’l Investment

© 2014 Site Seven Media Ltd. All rights reserved. Neither the whole nor any substantial part of this publication may be re-produced, stored in a retrieval system, or transmitted by any means without the prior permission of Site Seven Media Ltd. Short extracts may be quoted if TowerXchange is cited as the source. TowerXchange is a trading name of Site Seven Media Ltd, registered in the UK. Company number 8293930.

www.towerxchange.com | TowerXchange Meetup | 9www.towerxchange.com | TowerXchange Issue 7 | 2| TowerXchange Issue 7 | www.towerxchange.com2

Contents

Regular features11 LatAm news: consolidation imminent

15 LatAm tower count

16 TowerXchange Meetup Americas agenda

30 Africa news :Nigeria, DRC, Rwanda and Zambia

38 Africa tower count and heatmap

42 BMI Analysis: Ghana

64 46 83

112

Mexico case study

Due Diligence Dossier

A sneak preview of the tower industry in Southeast Asia

RMS and site management systems

65 Mott MacDonald Share Square & BMI Analysis73 Mark Ganzi’s Mexico Tower Partners76 IIMT: 90% coverage requires 70,000 towers80 Ve Por Más: could infrasharing be mandated?

47 Daniel Lee on how to raise capital51 Hardiman compares towercos worldwide56 Citi’s Gulfraz Qayyum takes the sell side59 Analysys Mason tackle the buy side

84 Introduction to Indonesian towers 91 TowerXchange’s Myanmar case study 95 Myanmar - the last frontier 97 GSM TP adapt tower design for Myanmar

134 Who’s who in turnkey infrastructure in LatAm

135 Leadcom on the structure of TI in LatAm 140 Grid Rental Sites on rooftops and DAS143 Jtel serve Northeast and jungle regions of Brazil147 Integrated solutions provider AJ Ingenieros

116 Accruent improve time to project completion121 Infozech’s applied analytics125 NAAP on infrastructure lifecycle management129 Westell: Intelligent Site Management in LatAm

www.towerxchange.com | TowerXchange Issue 7 | 3| TowerXchange Issue 6 | www.towerxchange.com3

Special features

5 Cover story: Jim Eisenstein, GTS interview

100 Caribbean case study with Trilogy and Cizmic

148 TowerPower: Controllis, ELTEK and SDMO

160 Rooftops, masts and towers: TNX and Solaris

Africa’s leading, independent, telecom tower company

HTA acquires, builds and manages wireless telecom infrastructure, leasing it to mobile network operators across Ghana, Tanzania and the Democratic Republic of Congo.

HTA’s model of shared telecoms infrastructure, and its scale, helps to deliver improved efficiency and network quality and reliability for operators, reduced costs for users and increased accessibility.

Find out more about our business www.heliostowersafrica.com

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Latin America: the U.S. Tower Industry in Fast ForwardJim Eisenstein’s journey from the first four American Tower sites to Grupo Torresur’s 6,100 Brazilian towers

Jim Eisenstein, Chairman and CEO, Grupo TorreSur


TowerXchange: As one of the patriarchs of the independent tower industry, how did this notion of renting capacity on towers to multiple tenants first come about?

Jim Eisenstein, Chairman and CEO, Grupo TorreSur: We all came into the tower business from different paths, but for me, it happened thanks to the radio industry.

In the early nineties, our family was selling its radio stations to a radio group based in Boston. When we sold the stations, we decided to keep our four broadcast towers. The decision to keep them was based on the fact that we had multiple tenants on each tower in addition to the radio stations, and they were providing significant revenue. This was back in 1995 and the Government had started talking about auctioning six PCS licenses, which suggested we could attract even more tenants, so I thought it might be wise to keep the towers.

Steve Dodge, who was Chairman of American Radio and became a great mentor to me, told me that many of their radio stations also had tenants on their towers, and we agreed to combine our towers with theirs and create a quasi-venture capital structure within American Radio, which we not surprisingly called American Tower.

Growing the tower business, though, was a direct function of the explosion of the wireless business in the U.S. Once the PCS license auctions became a reality, we realised we had the opportunity to be an early entrant (and hopefully a leading player) into

Jim Eisenstein was among the founders of American Tower back in the nineties. From four towers and a shared sense of a booming market opportunity, he went on to become one of the leaders of the tower industry in North America. Jim has since transferred his passion for towers to the latest tremendous growth market, Brazil, where he currently serves as Chairman and CEO of Grupo TorreSur.

Read this article to learn:< Comparing the origins of the North American tower industry with the tremendous growth of LatAm towers

< Topline growth potential in Brazil with 3G still being deployed and 4G largely yet to come

< How Brazilian towercos make money; new tenancies and expansion (amendment) revenue - and the current

state of BTS

< How many more towers could change hands in Brazil?

< At what scale do towercos operate efficiently? A look at Grupo Torresur’s lean organisation

Keywords: Who’s Who, Interview, Jim Eisenstein, Grupo TorreSur, Brazil, South America, North America, American Tower, American Radio, Tower People, Towercos, investment, 3G, 4G, Urban vs Rural, Tenancy Ratios, Co-locations, Infrastructure Sharing, Build-to-Suit, Densification, Consolidation, Oi, TIM, Vivo, Claro, ANATEL, OpEx, Amendment Revenue, Market Share, C-level Perspective

the emerging wireless tower business.

The tower industry had and still has today two huge barriers to entry. One was the zoning limitations for competing structures where an existing tower was already in place. The other was the substantial capital needed grow the business to scale. Steve’s Midas reputation on Wall Street gave us early credibility and tremendous access to capital and the zoning of sites became only more difficult. So the more of the right towers in the right locations we owned, the more protected we were. We knew that the co-location model worked and understood its potential. We knew we could make a decent return on an individual tower with one tenant, a good return with two tenants, and a significant return with three or more tenants.

TowerXchange: How do those early days of the U.S. tower industry compare with the early days of the Latin American tower industry, particularly Brazil? And how has the towerco business model been adapted for Latin America?

Jim Eisenstein, Chairman and CEO, Grupo TorreSur: The entrance of tower companies into Latin America has happened at a slightly later stage of wireless deployment compared to the U.S. By the time tower companies arrived in Latin America, carriers had already built out their 2G networks. Since then, though, we have experienced a much more rapid growth than occurred in the United States. Brazil, in particular, has been like the U.S. tower industry in fast forward.

To give you an idea of the growth curve, at the end of Q3 2010, American Tower had developed about 1,500 towers in Brazil and our company, Grupo TorreSur, had just been created. Since then, we have completed six transactions and our portfolio is currently 6,094 towers. American Tower now


has approximately 7,200 sites, SBA now operates around 5,200 towers in Brazil and BR Towers has approximately 4,000.

This means that in three years, around 23,000 of an estimated 60,000 towers have been sold in Brazil.

Rio de Janeiro, financial district


The speed and volume of growth in the tower industry is definitely much greater than in the U.S.

The tower company model has been adapted very quickly in Latin America. We believed that Brazil, in particular, presented all the right macro factors for us. It is a good country in which to do business, carriers are still in the middle of building out their 3G networks, 4G is coming right behind it, which in turn presents a vast array of opportunities for us. Brazil is also a very competitive market. Out of the five carriers active in the country, four of them have 18-28% share of the market.

Brazil’s carriers are fiercely competitive but also have a great need for capital to build out these new 3G and 4G networks. Tower monetization allows the

carriers to shed non-core assets, garner the funds to build these new networks and concentrate on their core competencies. This has allowed for the dramatic growth of the tower industry. Given the fact that Brazilian wireless carriers are probably six to eight years behind U.S. carriers in terms of rollout and technology migration, there is hopefully a very long runway for tower company growth.

With carriers in the midst of their 3G implementations and slowly beginning to work on 4G, the potential revenue growth for tower companies is much more significant in Brazil than in the United States. In the U.S., network build out is largely complete, and most 4G projects are currently focused on cell densification, whereas in Brazil we are still in the comparatively early stages of tower market maturity.

TowerXchange: What are the key differences between Latin America and the US in terms of how towercos make money? For example, how does the balance of new tenant vs amendment vs build-to-suit (BTS) revenue compare?

Jim Eisenstein, Chairman and CEO, Grupo TorreSur: Our main focus, much like any tower company, is to grow our business organically by placing additional tenants to our towers. The second focus, also very important to our growth, is what what we call “expansion” revenue (the equivalent of “overlay” or “amendment” revenue in the U.S.), where existing carriers on our towers add additional equipment to an existing site. We also look to grow our company by acquisition of towers and we have been quite

active in this over the past three years. Right now, there aren’t many greenfield (BTS) projects in Brazil because carriers are very heavily involved in 3G expansions and colocations - the greenfield market will likely become more important to the carriers once they need to build in-fill and capacity sites for their 3G and 4G footprints.

TowerXchange: What factors could significantly change the shape of the tower market in Brazil?

Jim Eisenstein, Chairman and CEO, Grupo TorreSur: Carrier consolidation, the possibility of TIM selling their towers, towerco consolidation, and regulatory reform could all change the shape of the market. I think the market in Brazil will continue to evolve for the next few years.

TowerXchange: With almost 40% of towers in Brazil having already been sold to independent towercos, how many more towers could be sold?

Jim Eisenstein, Chairman and CEO, Grupo TorreSur: While Nextel has divested its entire tower portfolio, Telefonica has sold approximately 5,000 sites and Oi has sold close to 10,000 towers, there are still more towers to be sold. Both Oi and VIVO still own some of their towers and TIM may sell its sites. Historically Claro has viewed its towers as a strategic asset so it remains to be seen whether they will part with them.

TowerXchange: Out of the 6,094 towers that Grupo Torresur currently owns and operates in Brazil, how many are in urban areas and how

“ “

Right now, there aren’t many greenfield (BTS) projects in Brazil because carriers are very heavily involved in 3G expansions and colocations - the greenfield market will likely become more important to the carriers once they need to build in-fill and capacity sites for their 3G and 4G footprints.

many are in rural areas? And what role can towercos play in enhancing connectivity in rural areas?

Jim Eisenstein, Chairman and CEO, Grupo TorreSur: More than 70% of our towers are located in high density, urban areas. The remaining 30% are concentrated in suburban areas or along major


transport corridors. These towers are most often near highways or major secondary roads.

We feel very good about our portfolio and are working closely with the carriers to enhance connectivity in rural areas, in accordance with the plans set out by ANATEL.

TowerXchange: We hear financial analysts talk a lot about driving towercos to scale - what size of portfolio constitutes “scale” and how do economies of scale manifest for towercos?

Jim Eisenstein, Chairman and CEO, Grupo TorreSur:Every company, of course, sets its own parameters with regard to the notion of scale, but we feel we are in a good place at the moment. When we decided to begin operating in Brazil, our original business model required us to achieve a portfolio of 1,500 towers to operate efficiently. We’ve been fortunate, though, to grow our business considerably larger than that.

TowerXchange: How many people does Grupo Torresur employ? What functions are kept in-house and what is outsourced?

Jim Eisenstein, Chairman and CEO, Grupo TorreSur: Right now, we employ fewer than 40 people. We try to run a lean organisation, keeping sales, accounting and what we call LAPM - Lease Administration and Property Management, in house.

The other operational functions, such as repair and maintenance, are outsourced to highly reputable business partners.

TowerXchange: Is Grupo TorreSur focusing purely on towers, or is the company getting involved in rooftops, DAS, transmission and even active infrastructure sharing?

Jim Eisenstein, Chairman and CEO, Grupo TorreSur:


Right now, GTS is focused purely on towers. We have looked at DAS opportunities but for now we haven’t pursued it. And we aren’t active in transmission or active infrastructure sharing.As for rooftops, we’ve only acquired them where required in concert with buying towers - only a very small proportion of our portfolio is rooftops.

TowerXchange: What is your personal opinion about the potential synergies between DAS and towers?

Jim Eisenstein, Chairman and CEO, Grupo TorreSur: There are certainly some synergies, particularly on the sales side. The customer is still the wireless carrier, whether they’re deploying their network on towers or on indoor or outdoor DAS. But there is a lot of complexity in owning an active network.

In the United States, there are some areas where macro sites simply cannot be built, forcing carriers to use DAS to enhance their network. DAS is certainly an important complement to the tower industry; however, in Brazil there is a lot to be built in terms of macro-sites and carriers and towercos are more focused on that first.

TowerXchange: How attractive is Latin America for investment in the telecom tower business? Can you tell us about your attracting investment from Providence Equity?

Jim Eisenstein, Chairman and CEO, Grupo TorreSur: Brazil is a very attractive destination for investors due to the strong topline growth potential. Both U.S.

towercos and private equity firms have seen how the market is performing and look at the country with interest.

Providence Equity has significant expertise in investing internationally and understands the tower industry very well. For me, it is a great opportunity to partner with one of the preeminent private equity firms in the world.

TowerXchange: We know that tower transactions are a product of leaseback rate, term, tenancy ratio and a host of other factors, but in general are the prices being paid to acquire Brazilian towers justifiable? For example how do you see the relative Return on Capital Invested compared to BTS opportunities?

Jim Eisenstein, Chairman and CEO, Grupo TorreSur: I believe that prices being paid are justified. Assets are valued more than anything on the basis of their

growth potential. If you look at topline growth in Brazil, it is dramatically higher than in United States. Companies see Brazil as a good place to invest money because of the dramatic growth we have experienced to date and the anticipated growth to come.

If returns were only the same or only marginally better than in the US, then there would be no point in investing internationally, incurring the risks of doing business abroad. But so far returns have been quite strong and shown us continued very strong potential, and we are glad to be part of this industry.

TowerXchange: How interested is Grupo Torresur in pursuing opportunities beyond Brazil?

Jim Eisenstein, Chairman and CEO, Grupo TorreSur: We are very happy to have invested in the tower business in Brazil and are focused right now on the country’s tower industry growth and expansion.

That said, we are always looking at opportunities in other Latin American countries. We are assessing very carefully the key elements that make investments attractive for us, such as macro-economic factors, where the carriers are in their deployment of 3G and 4G, the regulatory environment, our ability to achieve scale and the expected returns.

If the right opportunity were to present itself, we’d look at it very closely

“ “Brazil is a very attractive destination for investors due to its strong topline growth potential

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Telefonica in talks with Iusacell?

Telefonica and Iusacell are reported to be in talks for a potential acquisition. Iusacell is the third Mexican mobile operator and is owned by Grupo Televisa and Grupo Salinas. A possible merger between the two or an acquisition by Telefonica - which currently has 20% market share - would place both the Spanish company and Iusacell in a stronger position against its major competitor, América Móvil (70% market share).

Brazilian subscriptions

With 271.1 million mobile subscriptions by the end of 2013, Anatel, the Brazilian telecom regulator, has reported a +3.6% increase compared to 2012 and penetration rate of 136.5%.

Current subscriptions are divided between 58.9% GSM, 35% 3G and approximately 1.3 million 4G LTE users with over 78% of them being pre-paid accounts.


The local market is currently led by Telefonica Vivo with 77.2 million customers (28.5% share), followed by TIM Brasil and its 73.4 million subscriptions (27.1% share) and Claro with 68.7 users (25.3% share). In fourth place, PT’s Oi achieves 50.2 million connections (18.5% share).

Telecom Italia: from Telefonica to Egyptian talks

Telecom Italia is rumoured to be in talks with Telefonica, Oi and América Móvil over a deal worth Euro 10 billion or more for the acquisition of its Brazilian branch, TIM Brasil.

While carriers haven’t confirmed, several banks including Citi, Morgan Stanley and Pactual seem to be actively involved in negotiations and talks between all players. In the meantime, the Italian telecom giant has worked to establish a committee to evaluate potential bids but the company isn’t likely to accept offers below Euro 9 billion.

While Telefonica has repeatedly denied any negotiation, speculation continues about its potential involvement and plans to buy and then split up TIM Brasil among Vivo, Oi and América Móvil’s Claro have appeared in several national and international media. However, the process to reduce the market form four to three players will need the backing of regulatory bodies that so far seem unlikely to support any initiative which would significantly increase Telefonica’s stake in Telco, the holding company controlling Telecom Italia, of which Telefonica is the largest shareholder.

At the same time, Egyptian telecom mogul and minor shareholder in Telecom Italia, Naguib Sawiris has expressed his interest in buying TIM Brasil. Mr Sawiris repeatedly spoke against the acquisition of TIM Brasil by Telefonica as a move that will devalue Telecom Italia.

Moreover, Mr Sawiris declared he could potentially invest further in Telecom Italia - which still needs a Euro 3 billion capital injection - but would do so if and when Telefonica exits and TIM Brasil doesn’t get sold.

Vodafone to become new Brazilian player?

Brazil might gain a new player if UK giant Vodafone decides to enter the Latin American M2M market, as rumoured.

While still finalising its exit from US Verizon

Brazil

Brazil

Mexico

Brazil UK

Regulatory changes and consolidation rumours in Latin AmericaFrom Mexico to Chile: crucial changes in the telecom scenario

Brazil

Brazil

Wireless, Vodafone has been focusing on signing deals in India and in the UK, among others, but has also finalised an agreement with Datora Telecom to set up a Vodafone Brasil M2M brand.

Vodafone’s full entrance in the Brazilian market might be facilitated by TIM Brasil’s potential sale, especially if the local regulatory body rules in favour of maintaining four active operators in the country.

Corpco to be created in April

Portugal Telecom and Brazilian’s Oi are set to merge towards the end of April. The new company will be called Corpco and will be listed in Brazil, Portugal and New York.

Corpco will reach out to more than 100 million customers between Europe and Latin America and its revenue will reach around US$19 billion.

Chilean 700MHz tender delayed

The Chilean competition watchdog (TDLC) is currently deciding whether the process for the 700MHz spectrum auction allows for free and open competition and, as a result, the auction is being delayed.

The rollout requirements are said to be so demanding as to imply the need that carrier that secures the license have a dominant position in


the market. Among the requirements, winning companies must provide broadband coverage in over 1,200 remote areas across the country.

Entel’s annual results and 4G timetable

A combined +6% in revenue from its domestic mobile services and +23% from the data and IT offerings have contributed to a 17% increase in revenue for Q4 2013 for Chilean Entel Group.Entel acquired Nextel del Peru last year and has since registered new revenues up to CLP 34 billion, while its additional Peruvian business, Americatel, focused on enterprise wholesale, has reported +22% increase in revenue to CLP 5.8 billion.

With decreasing EBITDA at CLP 107.4 billion for Q4 2013 - down 5% compared to 2012 - Entel still takes advantage from a reduction in depreciation costs and a relative increase in operating income (EBIT) to to CLP49.2 billion (+46%).

Entel also registered a 2% increase in mobile subscription to over 9 million and ARPU went from CLP 9,200 in Q4 2012 to CLP9,500 in Q4 2013.

At the same time, Entel’s General Manager, Antonio Buchi, has confirmed the company’s plans to launch its 4G LTE services in March. Mr Buchi has declared that the company is working on the 2014 plans for the newly acquired Nextel del Peru, which would include a change of name and rebranding campaign

BrazilPortugal

Peru Chile

Chile

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HIGH STANDARDSOLUTIONS - FOR YOUR TOP PERFORMANCE

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2014: a year of major events for the LatAm tower industryFrom the Brazilian World Cup to TowerXchange Meetup Americas - an exciting ten months ahead


What can the telecom tower industry expect from this new year? 2014 has just started but expectations are already high for yet another intense year for the Latin American telecom tower industry. 2013 closed with a few relevant news such as the acquisition from SBA of over 2000 towers from Brazilian carrier Oi, ANATEL ruling against Telefonica holding TIM Brasil’s stake while Telecom Italia kept denying any rumour regarding its sale of the Brazilian company and the announced Mexican secondary telecom reforms being postponed until Q1 2014.

We are now looking at how the market has been evolving in the past two months while updating on recent news regarding the LatAm tower industry.

Finally, we’re also pleased to unveil the first TowerXchange independent tower count for Latin America!

A few events are dominating diaries, with the Brazilian World Cup high up on the agenda of telecom companies involved in swiftly upgrading capacity to cope with thousands of visitors and an exponential growth in data traffic during the sport event of the year in June. At the same time, TowerXchange take a close look at Mexico and its constitutional reform and potential positive impact on the competitiveness of the local telecom industry. The expansion of Entel in Peru thanks to the acquisition of Nextel from NII Holdings is another interesting move and we will pay attention when the company releases its Peruvian plans later this year.

Another event to mark on your agenda is the TowerXchange Meetup Americas 2014. We are very proud to announce that the LatAm tower industry will gather from 20-22 May in Orlando, Florida, to host TowerXchange’s first Meetup for the region. So set aside some time in your diary for the most interactive and targeted event of the year, an invitation-only gathering of the top 200 decision makers in the Latin American telecom tower industry.

In addition to our closed door, exclusive Meetup, we offer our participants the unique occasion to

Read this article to learn:< TowerXchange Meetup Americas 2014 announced

< How the Mexican telecom industry could change thanks to the constitutional reform

< An exciting year for the Brazilian telecom sector

< Entel’s expansion into Peru

< From 2011 to 2013: the exponential growth of the regional tower industry in numbers

< The first Latin American tower count

Keywords: TowerXchange, Meetup Americas, Brazil, World Cup, Mexico, Entel, Peru, Chile, Nextel, NII Holdings, PCIA, Wireless Infrastructure Show, Colombia, Central America, South America, Editorial, Market Overview, Tower Count, Telcel, Consolidation, Het-NetArianna Neri, Head of Americas, TowerXchange

join PCIA Wireless Infrastructure Show, which will be taking place simultaneously. The PCIA Wireless Infrastructure Show attracts over 2,000 attendees, including senior representations from North American towercos and investors. This co-location is a great opportunity to offer TowerXchange attendees three days of focused, intense LatAm networking while also exposing them to key suppliers and lessons learned in the highly mature and profitable North American tower industry.

Tracking the growth of the independent tower sector in Latin America

In 2011, approximately 7,287 towers were sold in the region with key transactions taking place in Brazil, Mexico, Colombia and in Central America.


An interesting year for the regional industry mostly thanks to Telefonica actively divesting its portfolios across the region in continuation with the previous year.

2012 followed a very similar pattern with 6,378 towers divested. However, only 958 of them were sold outside of Brazil, with the remaining 5,420 Brazilian tower sales consisting of medium scale transactions of 800-1,900 towers each.

In 2013 the number of towers being sold reached double digits for the first time - with an astonishing 14,035 total towers divested, more than double the previous year. Again, Brazil ruled the way with 12,369 towers being sold and the remaining 1,666 in Mexico.

We are left wondering if 2014 is able to follow the same growing pattern and offer yet another eventful year for the industry. We expect that over the next few months we will talk more about consolidation and partnerships among carriers, network deployment and Het-Net in Brazil, in preparation for the World Cup. Other countries will keep pushing forward to adapt their industry model to the growing demand for innovation, and we predict tower companies being well placed to help. But the biggest wild card is represented by Mexico, its reform, and the potential for increased competition - see our Mexico case study for expert analysis.

While TowerXchange keep a close eye on the development of the LatAm industry, we are offering our readers a first snapshot of the regional tower count. We will keep updating this chart with new transactions in order to provide a comprehensive perspective on the tower portfolios of each independent towerco in the region.

This analysis is generated through consultation with the towercos, review of transaction coverage, quarterly reports and annual results. Different towercos count towers differently - for example, some include sites for which permits have been obtained but where no tower has yet been built, others do not. As such, this table should be treated as our best estimate. If your company owns or operates independent telecom towers in Latin America, I would be delighted to hear from you and to add your towers to the count

Estimated number of towers owned or managed by towercos in Latin AmericaSource: TowerXchange research, quarterly filings, site lists

Columbia

Chile

Peru

Panama

Costa Rica

Nicaragua

Guatemala

Mexico

El Salvador

BrazilAmerican Tower

5,0000 10,000 15,000 20,000

SBA Communications

Grupo Torresur

BR Towers

Torres Unidas

IIMT

T4U

Mexico Tower Partners

CSS

7,200

5,151

6,094

4,000

3,429 6,824

1,153

180

180

600

500

400

480 417 250 471 139

350

Contact me at: [email protected].

TowerXchange facilitates an open dialogue and shares knowledge between key stakeholders involved in the transformation of the Latin American telecom tower industry. With carriers actively involved in upgrading their network to meet growing demand for capacity and tower companies’ ever-increasing appetite to acquire towers, the industry needs information, transparency and clarity.

The TowerXchange community unlocks priceless insights enabling you to evaluate opportunities across Latin America for your business, through exclusive interviews, original research and live events.

A unique, invitation-only gathering of the top 200 decision makers in the Latin American tower industry

Meetup Americas 2014May 20-22, Rosen Shingle Creek, Orlando, Florida

Co-located with the PCIA Wireless Infrastructure Show

Register online at http://www.towerxchange.com/apply-to-attend. Questions? Call Annabelle on +44 7423 512588

Bronze Sponsor:Silver Sponsor:Gold Sponsor: Co-located with:

Media Partners:Association Partner:

Created and hosted by:

Featuring a roundtable and a panel on African towers

Tower Xchange

12:20 Networking lunch

1:40 Second structured networking roundtable

< The regulation of the tower industry

< How to structure a tower transaction to

meet your needs

< Build to suit opportunities in major

metropolitan areas

< The investibility of the Latin American

telecom tower industry

< The impact of LTE on cell site densification

3:00 Afternoon coffee and networking

3:20 Strategic partners panel part I: the

importance of partner selection for ROI

optimisation and opex reduction

3:40 Investors keynote panel

4:40 Closing remarks from day one

5:00 Close of day one

TowerXchange Meetup AmericasOrlando, Florida | 20-22 May 2014


Draft ProgrammeDay One

From 8:00 Registration and coffee

9:00 Welcome and opening remarks

9:10 The status of the Central and South

American tower industry and forecasts for the

mid-term

9:40 Mobile network operator tower decision

makers panel

10:40 Morning coffee and networking

11:00 First structured networking roundtable:

< Country focus: Brazil

< Country focus: Mexico

< Country focus: Peru

< Country focus: Chile

< Country focus: Colombia

< Regional focus: Central America

< Regional focus: Caribbean

< Regional focus: Africa

Jonathan Atkin, Managing Director, RBC Capital MarketsKurt Bagwell, President - International, SBA CommunicationsBill Bates, Vice President - Business Development, SBA CommunicationsPat Casey, Group Human Resources Director, DigicelMarco Cordoni, Senior Partner, Analysys MasonJim Eisenstein, Chairman & CEO, Grupo TorreSurMarc Ganzi, President, Digital Bridge Holdings and Mexico Tower PartnersEdgar Geidans, Group CTO, Trilogy InternationalMauricio Giusti, CEO, BR TowersChuck Green, CEO, Helios Towers AfricaMark Johnson, Managing Director, The Carlyle GroupPhil Kelley, SVP Corporate Development, Crown CastleDan Lee, Managing Director, Intrepid Advisory PartnersRyan Lepene, Managing Director, Peppertree CapitalArianna Neri, Head of Americas, TowerXchangeKieron Osmotherly, Founder & CEO, TowerXchangeDavid Porte, Vice President - International, SBA CommunicationsWilliam Ritchey, President, IIMTAlex Sepehri-Nik, President, Brazil Tower CompanyTodd Schlekeway, Executive Director, National Association of Tower Erectors (NATE)Daniel Seiner, CEO, Torres UnidasNina Triantis, Managing Director, Global, Head of Telecoms & Media, Standard Bank

Confirmed Speakers include:


2:50 Afternoon coffee and networking

3:10 Fourth structured networking round tableRepeat of most popular roundtable topics

4:30 Summary and closing remarks from day two

9:00 An analysis of the telecom tower industry in Latin America: from international towercos making portfolio acquisitions to local build to suit ventures

9:30 Third structured networking roundtable:< How to survey, evaluate and upgrade towers for multiple tenants< How towercos achieve SLAs< How to raise capital for tower transactions< Opportunities for towercos to expand beyond the macro network into DAS and small cells< Health and Safety principles in the tower industry

10:50 Morning coffee and networking

11:10 Strategic partners panel part II: the importance of partner selection for ROI optimisation and opex reduction

11:30 Towerco keynote panel

12:30 Networking lunch

1:30 International focus: Africa keynote panel

2:30 Strategic partners panel part III: the importance of partner selection for ROI optimisation and opex reduction

Day Two Draft Programme

TowerXchange Meetup AmericasOrlando, Florida | 20-22 May 2014

Expert-led, small group interactive workshops provide practical, actionable advice

< The impact of 4G on cell site densification in Latin America< How to raise capital and structure tower transactions in Latin America< How to conduct financial, commercial and structural due diligence on towers

TowerXchange workshops run from 10am through 4pm on May 22 and include refreshments and a networking lunch.

Day Three - Post Meetup Workshops

TowerXchange’s unique structured networking round tables

200 Director, VP and C-level Decision makers broken down as follows:

Mobile Network Operators

Towercos

Investors and Investment Management Advisors

Lawyers and Strategic Consultants

Energy Equipment Providers

OEMs & Managed Service Providers

Static Assets, Access Control & Monitoring and Management

TowerXchange roundtables bring together 8-10 representatives

of different segments of the tower industry ecosystem, brought

together by a common geographical focus or hot topic. There

are 3 roundtable sessions at the Meetup, each new roundtable

“reshuffles” the decision maker-level participants at your table so

you will meet several different prospective partners.

| TowerXchange Issue 7 | www.towerxchange.com19 www.towerxchange.com | TowerXchange Issue 7 | 19

Meetup Americas Exhibition

Companies involved in the regional telecom tower industry have a unique opportunity to be part of the most focused regional gathering of the year and exhibit in the TowerXchange Latin American pavilion, placed at the very heart of PCIA’s exhibition hall where 100+ international companies will showcase their solutions to the largest, most qualified and concentrated audience of tower industry decision makers in the world.

Discuss your requirements today and find out all the available options for your participation by contacting Annabelle Mayhew at [email protected] or via phone at +44 (0) 7423 512 588.

Contact us today to sponsor or exhibit at the TowerXchange Meetup Americas 2014.


TowerXchange Pavillion

331131

129

127

228

KeeganWireless230

Food & Drinks

Overhead DoorOverhead

Door

ConnectionsCafe

Small Cell PavillionElectro

-Wire623

CommScope520

Slatercom421

AmiritTechnologies

423

TEConnectivity

520/620

Huada621

Product Showcase

Ericsson 20x20

20x2020x20

C D

A B

CS

-S S

ervi

ce D

esk

Food & Drinks

Food & Drinks

226

C SquaredSystems322CLCLodging320

Galtronics221/223

130

128

126

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122

120

118

116

114

112

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106

104

102

100

430

329 428

327 426

431 530

429 528

427 526

531 630

529 628

527 626

731

729

727

725

723

721

717

715

NATE713

711

709

707

705

703

701

129

127

228

226

105

103

101

KGP202/204

Unimar200

11’ 11’ 11’ 11’ 11’ 11’ 11’

20’

GMESupply

205

MosaikSolutions

203

AFL201

MaxCell304

SBA

Com

mu

nic

taio

ns

Hughey &Phillips302

CDMI300 401

Fibrebond405

ValmontSite Pro 1

403

ValmontStructures

401

MaxCell304

Hughey &Phillips302

CDMI300

Terracon505

NelloCorp.

503

Deltanode501

SabreIndustries604

Graybar602

3ZTelecom600

ITL, LLC605

Skyhawk601

704

603Accruent700/702

117

115

113

214

Eastpointe216

212

TUFTUG217

Lattice213

Amphenol316/314

TestEquity211

EhresmannEngineering

209tarantula308

Trans-American308

111

109

210

CellphoneMate208

722622523323Wideband

Antennas422/420

Shive-Hattery

321

522

720

TWRLighting

615

716617

714BB&T

Atlantic Risk515

TP Electric616

DynamicEnviromental

517

EMSS614

Oldcastle609

710PCTEL611

OTL Solution708

Henkles & McCoy610

FidelityNational

511

TectonicTelecom509/508

631

529

527

228

228

226

ENTRANCE ENTRANCE


331131

129

127

228

KeeganWireless230

Food & Drinks


Door

ConnectionsCafe


-Wire623

CommScope520

Slatercom421

AmiritTechnologies

423

TEConnectivity

520/620

Huada621

Product Showcase

Ericsson 20x20

20x2020x20

C D

A B

CS

-S S

ervi

ce D

esk

Food & Drinks

Food & Drinks

226


Galtronics221/223

130

128

126

124

122

120

118

116

114

112

110

108

106

104

102

100

430Azeti

KARAM

MerTelecom

Metalogalva

AIOSystems

HMSIndustrialNetworks

GangesInt.

ACSYS

Telemisis329 428

327 426

431 530

429 528

427 526

531630

529 628

527 626

731

729

727

725

723

721

717

715

NATE713

711

709

707

705

703

701

129

127

228

226

105

103

101

KGP202/204

Unimar200

11’ 11’ 11’ 11’ 11’ 11’ 11’

20’

GMESupply

205

MosaikSolutions

203

AFL201

MaxCell304

SBA

Com

mu

nic

taio

ns

Hughey &Phillips302

CDMI300 401

Fibrebond405

ValmontSite Pro 1

403

ValmontStructures

401

MaxCell304

Hughey &Phillips302

CDMI300

Terracon505

NelloCorp.

503

Deltanode501

SabreIndustries604

Graybar602

3ZTelecom600

ITL, LLC605

Skyhawk601

704

603Accruent700/702

117

115

113

214

Eastpointe216

212

TUFTUG217

Lattice213

Amphenol316/314

TestEquity211


209tarantula308

Trans-American308

111

109

210

CellphoneMate208


Antennas422/420

Shive-Hattery

321

522

720

TWRLighting

615

716617

714BB&T

Atlantic Risk515

TP Electric616

DynamicEnviromental

517

EMSS614

Oldcastle609

710PCTEL611

OTL Solution708

Henkles & McCoy610

FidelityNational

511


631

529

527

228

228

226

ENTRANCE ENTRANCE

www.towerxchange.com | TowerXchange Issue 7 | 21

Tower Industry Value Chain

Backhaul, FTTT, Core Network Active equipment

Tier 1 OEMs

Mobile Network Operators

Investors: private equity, debt finance, infrastructure funds

Law firms

Group level strategistsC-suite & network planners at local OpCos

Outsourceto

Strategic consultancyDue diligenceDemand forecastsValuations

Independent TowercosSell co-locationsUpgrade capacityBuild-to-suitMaximise uptimeReduce opexInvest in network

Transfer assets to

Construction servicesTurnkey infrastructure rolloutManufacture of steelworkImport, customs & deliveryLeasing & permittingInstallation of towersUpgrades for capacityO&M services

Dynamic assets

Energy equipmentDiesel gensetSolarWindFuel cell

BatteriesRectifiersInvertersLine conditioningPIUs

Air conditioning Lightning protectionControllerVoltage regulator

Managed service providers

ESCOs

Static assetsTowers & mastsSheltersBracketsEnclosuresLightingFencing

O&M servicesMaintenanceStaffingSpare partsVMI?Refueling

Energy as a service

Monitoring & managementRMSIntelligence/analysisSite managementJob ticketingAsset lifecycle platform

Access control

Subcontract

MicrogenerationCommunity power

Subcontract or in-house

Outsourceto

Som

e be

com

e to

wer

co

Investment management advisors

TowerXchange serves the Latin American tower community along two intersecting axes. On a horizontal axis we facilitate relationships between MNOs, towercos, investors and their advisers, aiding the structuring of deals and the transfer of assets. On a vertical axis, we examine the impact on, and opportunities for, the passive infrastructure supply chain, whether they sell to MNOs, towercos or through OEMs.

How TowerXchange ensure an audience of decision makers

TowerXchange successfully launched its first live event for the emerging market telecom tower industry in 2013. Since then, we have gained a strong reputation for delivering a high quality, meaningful platform for our selected audience of tower professionals.

The TowerXchange Meetup is exclusively for Director, VP and C-level decision makers. If registrants are substituted, we will only accept replacement registrants of equal or greater seniority than those pre-approved.

Through our passive infrastructure focused journal publication and research, TowerXchange have cultivated relationships with 4200 (at time of press) decision makers active in the Latin American tower industry, 85% of whom are at Director, VP or C-level.

By co-locating our event with the highly successful North American PCIA’s 2014 Wireless Infrastructure Show, we will offer our audience a unique chance of exposure to the most mature tower industry in the world and its poll of top telecom professionals.

Who will you meet

| TowerXchange Issue 7 | www.towerxchange.com21

28 guaranteed, qualified introductions‘How to’ advice from proven practitioners

Your trusted community host and commentator

Dedicated to passive infrastructureDecision makers only An aid to shortlisting / receiving RFPs

4 structured networking sessions assemble participants in groups of 8, brought together by a common regional or topic matter interest, and arranged so each group includes 2 MNOs, a towerco, investor, advisor, OEM or managed service provider, energy equipment and a static asset or RMS manufacturer

The main TowerXchange Meetup is supplemented by ‘how to’ workshops, tackling topics from how to structure a tower transaction to the implications of 4G, while the business leaders from MNOs, towercos and investors will debate hot topics in unmissable panel discussions

The TowerXchange Meetup draws on the credibility, original research and comprehensive relationships with Latin American telecoms infrastructure decision makers who read our renowned journal

While other events increasingly focus on devices and VAS, TowerXchange maintains a laser-beam focus on passive infrastructure

Access to the TowerXchange Meetup is by invitation-only. Our 200 attendees are vetted for decision making authority (Director, VP and C-level only), and the ratio of buyers to sellers is carefully managed

Strategic Partners Panels: dynamic panel sessions offering an opportunity to key solution providers and king buyers to interact. A unique way to accelerate partner selection due diligence and shortlist RFP recipients

What makes TowerXchange Meetups uniqueJoin the TowerXchange community at our exclusive executive retreat in Orlando where our unique, networking-driven “unconference” will facilitate tower transaction deal-making, accelerate buyers’ partner selection due diligence, and provide passive infrastructure equipment and service providers with dozens of highly qualified new prospects.


Respecting confidentiality yet revealing what’s really going on

Enjoy networking with 200 VIPs

Tower transactions are highly confidential, so the TowerXchange Meetup is held under “Chatham House Rule” and our unique roundtables, private meeting space and informal receptions will enable you to discreetly discuss and advance strategic partnerships

Thanks to the co-location with US’ PCIA, our Meetup will be hosted at the Rosen Shingle Creek in Orlando, Florida. Our ideal location is just a short distance to a variety of Orlando’s best attractions, restaurants, shopping and entertainment venues and will be the perfect address for three days of intensive learning and networking.

The must-attend event for tower industry decision makersAttending, exhibiting or sponsoring our Meetup Americas represents a unique opportunity to be exposed and interact with the entire value chain of Latin American tower professionals in addition to key professionals from the leading North American tower market.

Our attendees will enjoy three days of knowledge sharing thanks to our closed-door, highly interactive Meetup format, which will focus purely on the Latin American tower industry. At the same time, our audience can experience the advantages of meeting and gathering with over 2000 attendees joining the Wireless Infrastructure Show from all over the world in the networking and exhibition areas.

For our exhibitors, “all booths are created equal” at TowerXchange – you won’t be swallowed up into the shadow of the huge exhibits of deep-pocketed big brands – at TowerXchange everyone gets the same size turnkey booth, which means vendors are shortlisted to receive RFPs purely on the basis of their ability to

TowerXchange Passive

Infrastructure footprint

Futurecom:5% passive infrastructure

Mobile World Congress: 1% passive infrastructure

Devices & VAS footprint

Mobile World Congress footprint

Futurecom footprint

TowerXchange: 100% passive infrastructure

www.towerxchange.com | TowerXchange Issue 7 | 23

meet buyer requirements. The TowerXchange Meetup has been designed to incur low logistics costs – there’s no need to ship anything to the event – all the materials you will need will fit in the hold of the plane you fly in on.

Futurecom and Mobile World Congress are great events for general networking, but they increasingly focus on devices and VAS, not towers and passive infrastructure. The TowerXchange Meetup is 100% devoted to passive infrastructure. It’s 100% decision maker level: only Director, VP and C-level are permitted to attend. And our ratio of buyers to sellers is carefully controlled.

| TowerXchange Issue 7 | www.towerxchange.com23


331131

129

127

228

KeeganWireless230

Food & Drinks


Door

ConnectionsCafe


-Wire623

CommScope520

Slatercom421

AmiritTechnologies

423

TEConnectivity

520/620

Huada621

Product Showcase

Ericsson 20x20

20x2020x20

C D

A B

CS

-S S

ervi

ce D

esk

Food & Drinks

Food & Drinks

226


Galtronics221/223

130

128

126

124

122

120

118

116

114

112

110

108

106

104

102

100

430

329 428

327 426

431 530

429 528

427 526

531 630

529 628

527 626

731

729

727

725

723

721

717

715

NATE713

711

709

707

705

703

701

129

127

228

226

105

103

101

KGP202/204

Unimar200

11’ 11’ 11’ 11’ 11’ 11’ 11’

20’

GMESupply

205

MosaikSolutions

203

AFL201

MaxCell304

SBA

Com

mu

nic

taio

ns

Hughey &Phillips302

CDMI300 401

Fibrebond405

ValmontSite Pro 1

403

ValmontStructures

401

MaxCell304

Hughey &Phillips302

CDMI300

Terracon505

NelloCorp.

503

Deltanode501

SabreIndustries604

Graybar602

3ZTelecom600

ITL, LLC605

Skyhawk601

704

603Accruent700/702

117

115

113

214

Eastpointe216

212

TUFTUG217

Lattice213

Amphenol316/314

TestEquity211


209tarantula308

Trans-American308

111

109

210

CellphoneMate208


Antennas422/420

Shive-Hattery

321

522

720

TWRLighting

615

716617

714BB&T

Atlantic Risk515

TP Electric616

DynamicEnviromental

517

EMSS614

Oldcastle609

710PCTEL611

OTL Solution708

Henkles & McCoy610

FidelityNational

511


631

529

527

228

228

226

ENTRANCE ENTRANCE

TowerXchange have co-located our Latin American Meetup with the premier national event for mobile network solutions-produced for the industry, by the industry; The Wireless Infrastructure Show, organised by the PCIA.

Your registration for the TowerXchange Meetup Americas includes a full access pass to The Wireless Infrastructure Show, which means

that throughout the event you can choose to attend sessions in the TowerXchange Meetup or you can visit The Wireless Infrastructure Show opening reception, general and tracked sessions and keynotes.

The Wireless Infrastructure Show attracts more than 2,000 thought leaders and industry innovators from across the wireless

infrastructure ecosystem. Network within the primary forum for infrastructure owners and operators, carriers, investment community representatives, government officials, equipment manufacturers and service providers, and other integrally involved in shaping the future of the industry. This market defining Show features over 35 lectures, panels, round-tables, and special events on a comprehensive selection of industry topics taught by leading industry experts.

The TowerXchange Pavilion is located on The Wireless Infrastructure Show exhibition floor, so you have access not just to our 18 Latin America-focused exhibitors, but over 100 exhibitors showcasing all of the most relevant infrastructure development tools, platforms and services helping to drive the industry forward across North, Central and South America!


PCIA Wireless Infrastructure Show

Your TowerXchange Meetup Americas registration includes a full access pass to the co-located PCIA Wireless Infrastructure Show!

Job functions at The Wireless Infrastructure Show: Industry composition at The Wireless Infrastructure Show:

C-Level

Engineering/Technical Operations

Investor/Financial Analyst

Business Development

Infrastructure Providers

Carriers

Professional Services

Consultant

Legal

IT

Financial

Other

28%

17%

8%

30%

10%

4%3%

40%

20%

20%

10%

10%

Our sponsors


Site One

SiteOne, developed by azeti in collaboration with NeXsysOne, is the most comprehensive solution to monitor and manage remote Sites. The 360° approach enables businesses to centralize the management of traditional IP-based systems with operational processes, creating a unique and centralized platform to improve the operational efficiency, reduce OPEX costs and consolidate multiple technologies in a single interface. With state-of-the-art appliances made in Germany and software designed by experienced telecom and network engineers, operators will be able to remotely manage the most extensive number of components and devices than any other solution could offer, like Environmental Control parameters (temperature, humidity, power consumption etc.), Security (video surveillance, theft detection for fuel, assets and other elements etc.), Access Management (access via camera, pin-pad solutions etc.) and Passive Monitoring (battery and rectifier monitoring, fuel status, energy logging etc.). SiteOne. Site Management. Made Intelligent.

www.azeti.net www.nexsysone.com

Acsys

Acsys is a global leader in tower access control solutions. Our patented, military-grade solutions based on our unique, programmable locks and keys facilitate intelligent access control while avoiding the bottlenecks associated with wired systems, including lengthy and expensive installation, maintenance, external power dependency, etc.

European-rooted, with an innovative team from around the globe, and the benefits of China-based production, Acsys stays at the forefront in designing cutting-edge security and staff management solutions at a competitive price. World unique solutions like our Code Generating System are changing the face of tower access and are utilized by many of the industry’s biggest names.

www.acsys.com

Silver Sponsor:Gold Sponsor:

Our sponsors


AIO Systems

AIO Systems is a solution provider of next generation of remote management, monitoring and control systems for critical unmanned sites. Offering customized infrastructure management solutions, AIO’s products are designed for telecom, power and water utilities, Oil & Gas industry, and others.

AIO’s total site efficiency solution offer ~34% OPEX reduction to telecom tower operators by reducing power and diesel consumption, preventing theft and loss of fuel and equipment, and allowing them to manage every asset and every tenant individually.

Our unique controllers and peripheral devices allow for a fully integrated remote site security, which includes site surveillance and access control, perimeter security, CCTV, active security elements and more.

AIO Systems manages a modular configuration fit for the clients’ needs, in full automation, and providing timely alerts via a variety of communication channels.

HMS Industrial Networks

HMS Industrial Networks is the leading independent supplier of products for industrial communication and remote management. Products are marketed under the brands Anybus®, IXXAT and Netbiter®. Headquartered in Halmstad, Sweden, HMS is represented by branch offices in 10 countries plus distributors in more than 50. HMS employs over 350 people and reported sales of 60+ million EUR 2013.

Telco site support equipment has become smart, which offers the opportunity to have full remote control of all support equipment on Radio and Core sites and benefit from reducing the OPEX without major investments. With the Netbiter® concept we have developed a vendor independent solution that fits into all kind of systems and takes care of all hassles with different communication protocols, different sizes of diesel tanks, tampering etc.

Bronze Sponsor:Bronze Sponsor:

Mer Group Telecom Division

Mer Group Telecom Division provides end-to-end Wireless Infrastructure Turnkey Solutions – from network planning, site design and provision of towers, to site construction, equipment installation, network optimization and maintenance. Combining cost effectiveness, short lead times and advanced engineering techniques, we are strongly committed to client satisfaction. With a highly developed logistics chain, advanced tower manufacturing facilities and an extensive network of warehouses, our solutions are flexible and scalable, providing measurable benefits for customers. Our strong presence in Latin America enables us to leverage the combined in-depth regional knowledge of local partners with our industry acknowledged engineering expertise for our customers’ benefit.

The division leverages its proven global track record, comprehensive knowledge and accumulated expertise to seamlessly deliver technologically innovative and best-of-breed solutions including M2M enablement and vertical market applications, mobile financial services, cloud billing, MVNO enablement, as well as on/off board and remote/contactless payment solutions for public transport operators.

www.mer-group.com/solutions/wireless-infrastructure

Bronze Sponsor:

www.aiosystems.com www.hms.se

Our exhibitors


Telemisis

Telemisis manufactures the SitePro® system for remote monitoring and automation solution for all business sectors; our specialisation being mobile operators and tower owners. We have delivered full site management systems, including power optimisation, fuel management, electricity metering, environmental management and machine/equipment control in harsh and demanding locations since 2000.

Telemisis manufactures the industry’s smallest, most flexible and cost-effective remote telemetry node “SiteNode®”. SiteNode® units provide interfacing and data collection capabilities from a wide range of standard devices and sensors that may already be deployed or will be added. Coupled with Telemisis’ back-end server systems we offer standard or bespoke solutions.

www.telemisis.com/products

Metalogalva

TELECOM TOWERS MANUFACTURER

Quality products at fair prices. Company

with 42 years experience. Young and flexible

team. 400 employees; 30 engineers. 100 000

tons galvanizing capacity (year). 14 welding

and plasma robots. 6.6M€ Investment on new

equipments.

Qualifications:

<QUALITY MANAGEMENT SYSTEM ISO 9001

<RDI MANAGEMENT SYSTEM CERTIFICATE

NP 4457 <ENVIRONMENTAL

MANAGEMENT SYSTEM ISO 14001

<MANAGEMENT SYSTEM CERTIFICATE

OCCUPATIONAL HEALTH AND SAFETY OHSAS

18001<SPECIAL

CERTIFICATION FOR GALVANIZATION for

German Norm DASt - GUIDELINE 022

Verification:

<QUALIFICATION OFMANUFACTURES TO WELD

STEEL STRUCTURES according to DIN 18800-7

Level “E” <EC CERTIFICATE

FACTORY PRODUCTION CONTROL (FPC) EN 1090

- 1/2 - EXC3

www.metalogalva.pt

Karam

KARAM specializes in field of Fall Protection & manufactures the highest quality equipment, leading the way with innovative products & solutions for safe working at height.

Our complete vertically integrated manufacturing set-up is spread over a span of around 325,000 square feet area with work force of above 1500 highly skilled people.

KARAM provides a range of Solution to the user working at Height on variety of towers, masts, monopoles and lattice structures that are used in Telecom industry.

Our commitment to quality is reaffirmed by our ISO 9001-2008 certification. All our products are certified as per EN also meets American & other International

standards.

www.karam.in

Ganges International Private Ltd.

GIPL (Ganges Internationale Pvt Ltd), started

in 1991 manufactures and supplies Tower

for Telecommunications, Windmills, Power

Transmission & Distribution and Railway

Electrification. GIPL has a reputation for timely

delivery, quality and total reliability of tower

supplies. GIPL’s team of committed, skilled and

experience professionals will oversee the A-Z of

your tower supplies.

GIPL has a production capacity of 50,000 MTPA

(Metric Tons Per Annum) and galvanising

capacity of 54,000 MTPA.

Expertise:

Tower design, Manufacturing & Supply

100% own manufacturing for all products

ISO 9001: 2000 certified

We provide all types of Towers

Products:

Poles–3m to 9m

Roof Top Towers–9m to 30m

Ground Based Tower/Green Field Tower 20m to

100m

Rapid Deployment Towers & Structures

Palisade Fences

www.gangesintl.com

Your TowerXchange Meetup Americas registration includes a full access pass to the co-located PCIA Wireless Infrastructure Show!

Delegate RegistrationTowerXchange Meetup Americas 2014, May 20-22, Rosen Shingle Creek, Orlando, Florida

For BACS payment, please remit to:Site Seven Media Ltd

Bank name: Lloyds TSBSort code: 30-90-89

Account number: 21593660

I agree to the terms of this registration Date

For IBAN payment, please remit to:Site Seven Media Ltd

Bank name: Lloyds TSBSwift /BIC: LOYDGB21256

IBAN: GB29 LOYD 3090 8921 5936 60

The following terms and conditions apply:< Site Seven Media reserves the right to refuse admission to the event if full payment of the Registration Fee has not been received.< In the event of the Site Seven Media cancelling the TowerXchange Meetup Americas 2014, the parties agree that Site Seven Media will offer to transfer the registrant’s attendance of the Event to an acceptable alternative event. If Site Seven Media cannot offer an acceptable event, we will refund the Registration Fee to the Client in full.< Substitution policy: you may substitute subscribers registered delegates for colleagues, as long as alternate attendees are also Department Heads, Director, VP or C-level Regrettably no cancellations can be accepted.

Payment terms: Within 14 days of receipt of invoice, or in advance of the event, whichever comes first.

Payment per person

Registration Details

Discount Codes

Carriers

Government

Investors

Towercos

PCIA Members PCIA Non-Members

Company Name:

Delegate 1 Name: Delegate 1 Email:

Delegate 2 Name:

Address:Tel:

Delegate 1 Email:

PO Number:

Package Description

Vendors

Special rates are available for full time employees of towercos, carriers, government and regulators ONLY. Contact [email protected] to request a discount code.

Package description: TowerXchange Subscription and Delegate Pass for Meetup Americas 2014. Package includes daytime catering, participation in 3 round table sessions, after hours networking receptions. Package does NOT include accommodation or evening meals.

Note that delegates must be Department Heads, Director, VP or C-level, unless special permission is granted. Companies are also restricted to a maximum of 2 delegates unless sponsoring or unless special permission is granted – contact [email protected] if you wish to apply for 3 or more passes or for an exception to our Director, VP or C-level rule.

Discount Code:

Free

$1500

$1500

$1500

$3000

Free

$1575

$1575

$1575

$3150

Invoice address & payment contact (if different):

Register at www.towerxchange.com/apply-to-attend or complete, scan and email this form to [email protected]

Exhibition access to PCIA

Access to TowerXchange Meetup

Daytime Catering

TowerXchange after hours networking receptions & catering

Access toTowerXchange VIP lounge

TowerXchange Round table interactions

10ft x10ft Turnkey booth

TowerXchange Panel sessions

Profile and ad in journal & TowerXchange Meetup Special edition

Video on TowerXchange TV

One time dedicated post event emailshot to all TowerXchange attendees

Roundtable host

Logo on backdrop, podium, signage, fliers & invites for TowerXchange

Meetup

Private meeting room

Your choice of bronze sponsorship benefit

Your choice of silver sponsorship quality benefit

Your choice of gold sponsorship premium benefit

Your choice of platinum business-class benefit

Your choice of diamond first-class benefit

TowerXchange Meetup Americas Sponsorship and Exhibition Benefits and Packages

Bronze Sponsorship Stationary sponsor (provided by client)Gift drop (provided by client)USB sponsor (provided by client)

Silver Sponsorship Totes Bags (provided by client)Lanyards (provided by client)Business card wallet (provided by client)Sponsorship of coffee break day 1 amSponsorship of coffee break day 1 pmSponsorship of coffee break day 2 am Sponsorship of coffee break day 2 pm

Gold SponsorshipSponsorship of breakfast (Open) day 1Sponsorship of breakfast (Open) day 2Sponsorship of Lunch Day 1Sponsorship of Lunch Day 2Sponsorship of icebreaker drinks

Platinum Sponsor Host of private Lunch Day 1Host of private Lunch Day 2Host of private breakfast day 2

Diamond SponsorSponsorship of Drinks Reception / Opening reception

**100% discounts for qualifying Director to C-level execs from MNOs

Bronze, Silver, Gold and Platinum Sponsorship Benefit Options Target Attendee Breakdown

$1,500*/$3,000

Delegate pass

$11,500

Exhibitor

$16,500

BronzeSponsor

$25,000

SilverSponsor

$30,000

GoldSponsor

$40,000

Platinum Sponsor

Diamond Sponsor

1 pass

1 pass

1 pass

1 pass

1 pass

1 pass

2 passes

2 passes

3 passes

3 passes

4 passes

4 passes

5 passes

5 passes

Benefits

* Discounted rate available to Towercos, Government and Regulator representatives only

CarriersTowercosManaged Service ProvidersInvestors and AdvisorsSolution providersGovernment and Regulators

AttendeesPass

discount405040303010

**100%50%0%0%0%

50%

For prices, please contact [email protected]

MTN announces sale of 1,228 towers to IHS in Rwanda and Zambia


MTN Group Limited announced that it has agreed to sell its tower portfolios in Rwanda and Zambia to IHS. MTN will sell a total of 1,228 mobile network towers to IHS’s subsidiaries in Rwanda and Zambia, comprised of 524 and 704 towers respectively, for undisclosed amounts. The sale of the towers is in line with MTN’s asset optimisation strategy which is encompassed in

Initial anchor tenancy term is ten years, BTS programme included - IHS now operates 10,500 towers in Africa

MTN’s new strategic framework and builds on two previous deals with IHS in Cameroon and Côté d’Ivoire, for a total of 1,758 towers. “In addition to unlocking value in our passive infrastructure, we remain cognizant of the need to contain and efficiently manage our cost structures across the Group as our markets mature and become more competitive. We are confident these transactions are a positive step towards freeing up management time to focus on products and services, thereby fulfilling our mission of ‘making our customers’ lives a whole lot brighter’” said Sifiso Dabengwa, Group President and CEO of MTN Group. Mr. Dabengwa added, “MTN is pleased to be broadening our partnership with IHS, a leading tower operator with proven expertise across Africa, to our operations in Rwanda and Zambia.” Issam Darwish, Group CEO of IHS commented: “We are delighted to be extending our relationship with MTN in Rwanda and Zambia. These latest deals are testament to our commitment to client service, enabling the most efficient, effective and reliable networks for our clients. Our strong and trusted relationship with MTN is important to us and we remain committed to reinforcing their focus on customer service excellence.”

Under the agreements, IHS will acquire and operate the towers and related passive infrastructure and will invest in a build-to-suit program to support MTN’s future requirements in both countries. MTN Rwanda and MTN Zambia will become the respective anchor tenants on the towers for an initial term of ten years. The transactions bring the total number of towers in IHS’s portfolio to 10,500 extending its leadership in the African market. IHS will market services on the towers in Rwanda and Zambia, promoting tower sharing and colocation to help drive network improvements, better service to subscribers and economic growth. Each transaction is expected to close independently during the first half of 2014, subject to customary closing conditions. TowerXchange’s analysis of IHS’s latest deal with MTNSecuring MTN’s towers in Rwanda and Zambia continues Issam Darwish and IHS’s record of bidding aggressively and winning deals against Africa’s other ‘Big Four’ towercos. This is the second time IHS has partnered with Africa’s leading operator, having acquired MTN’s 1,758 towers in Cameroon and Cote d’Ivoire for US$284mn in late 2012. It’s difficult to assess a tower deal without knowing the acquisition price and lease rate, but the Rwandan and Zambian markets are certainly attractive.With MTN’s tower assets in South Africa apparently off the table, at least for now, the 1,228 towers they

Issam Darwish, Group CEO, IHS


January 2014, starting with selected locations in Lusaka, Kitwe, Ndola and Livingstone, with additional locations to follow is the second stage of deployment. When an independent towerco enters a new country, they often secure substantial BTS opportunities, although the scale of such opportunities in Zambia and Rwanda has not yet been confirmed by IHS. IHS reaches scaleThis latest transaction brings IHS’s tower count beyond the 10,000 tower ‘magic number’, which many analysts figure to represent ‘scale’ for the independent towerco business model. IHS now has a total of approximately 10,500 towers in Africa (5,750 owned, 4,750 managed), making IHS Africa’s largest towerco. In addition to Rwanda and Zambia, IHS also has towers in Nigeria, Cote d’Ivoire, Cameroon, Sudan and South Sudan. IHS is unlikely to rest on its laurels. The towerco has raised over US$1bn in capital to date from investors such as the IFC, Wendel, ECP, FMO, Investec and one of Asia’s premier sovereign wealth funds, and is expected to continue to be an aggressive bidder for the further 38,500 African towers are believed to be currently on the market. Recommended further reading: BMI’s view of the tower market in Rwanda and Zambia (page 19, issue 5), and “How IHS creates shared value” (page 30, issue 3) published exclusively in the TowerXchange Journal

have sold in Rwanda and Zambia were considered one of the most investible telecoms infrastructure assets in Africa. The two countries have relatively low political risk, and have solid GDP growth in the 7-8.5% range. Potential for further tower deals in RwandaMTN is the market leading operator in Rwanda, with 56.1% market share in June 2012 (Source: BMI, RURA, Operators). Almost as important as the strength of IHS’s anchor tenant is the credit worthiness of Rwanda’s other licensed operators and prospective tenants, Tigo and Airtel. IHS’s last deal with MTN in Cameroon and Cote d’Ivoire was followed not long after by the same towerco securing Orange’s towers (on a managed services deal), and IHS is now well positioned to take a similarly dominant position in Rwanda should additional towers come to market. There have been unconfirmed rumours of Tigo’s interest in selling their towers in Rwanda, while Airtel is believed to be selling all 15,000 of their towers across Africa, including Rwanda. Independent towers could ease capacity challenges in ZambiaZICTA reports that mobile penetration in Zambia is at 78%. Airtel and MTN vie for market leadership in Zambia. Cell Z, mobile arm of Zamtel and subject of a legal dispute between the Zambian government and LAP Green Networks, follow as the third ranked operator.

A fourth MNO license has been mooted for some time. The availability of independent towers has accelerated new market entrants in the past, as we saw with Africell leveraging Helios Towers in the DRC, so the establishment of an independent tower market in Zambia is likely to be good news for whichever operator wins the fourth license. Earlier in 2013 the Zambian government threatened the existing three operators with legal action due to QoS problems, which points to the opportunity for IHS to help operators ease capacity challenges. MTN launched Zambia’s first LTE network in

Airtel MTN Zamtel

Source: ZICTA, Dec 2012

45%

39%

16%

2.5%

Africa’s multi-billion dollar wave of tower sales gains pace

TowerXchange is tracking almost 40,000 African towers at various stages of progression toward sale or outsourcing to independent towercos. With a pipeline of over US$3bn worth of assets coming to market, and with the independent tower model increasingly proven in Africa, a new class of investor that only wants to write substantial cheques is being attracted to the market.


18,000+ towers for sale in Nigeria This unprecedented wave of African tower opportunities is headlined by the sale of 15,000 towers across 15 countries by Airtel, with Reuters reporting the sale is most advanced in Nigeria, where TowerXchange sources also suggest MTN Nigeria’s coveted portfolio of over 10,000 towers may be back on the block. With Etisalat having hired Standard Bank to secure a buyer for their Nigerian towers too, upwards of 80% of Nigeria’s towers may be owned and operated by independent towercos by the end of 2014 (currently around 13% of Nigeria’s towers are independently owned). Nigeria may be the crown jewel of the African telecom sector in terms of profitability, yet it’s a pretty rough diamond when one considers the power and security challenges of operating a Nigerian tower network. At the recent GSMA Green Power for Mobile Working Group in Lagos, fuel security was a hot topic, and it was reported that an average of five hours of power was available

MTN may be joining the sale in Nigeria, update on the Airtel transaction

per day at Nigerian cell sites, with only 60% of that usable due to poor quality. Last year, the GSMA counted 12,560 of Nigeria’s 24,242 towers to be off grid, with another 10,645 on an unreliable grid. Only 2-3% of Nigerian cell sites run 100% green power, although around 40% are battery hybrids. The GSMA has identified 10,890 sites than have a business case to be converted to hybrid or renewable power, which would require US$1bn of investment by 2015. There’s plenty of room for growth in Nigeria, which already boasts over 100mn subscribers, double digit growth year on year, 68.6% mobile penetration (NCC, March 2013) and coverage greater than 80%. However, QoS problems are common, and Nigeria is thought to need another 50,000+ towers to optimise coverage and capacity. For more contextual information on the Nigerian tower market, check out the Nigeria case study in issue 4 of the TowerXchange Journal

Nigerian mobile operator market share, March 2013

Source: BMI, NCC, operators

43.9%

20.4%

20.3%

12.9%

MTN Airtel

Globalcom Etisalat

CDMA

Even more Africa towers on the market As if Nigeria and Airtel weren’t enough to keep the analysts, advisors and lawyers busy, there are still over 5,000 Orange OpCo towers coming to market in Egypt, Senegal, Mali, Guinea Conakry and Guinea Bissau, and rumours of potential further transactions involving Millicom, Zantel and out of DRC and Burundi


Airtel Africa map

Airtel are still not able to comment ‘on the record’ about their African tower sale, except to reiterate that sharing infrastructure is a core strategy for the group, is seen as a critical means of lowering costs in emerging markets, and has delivered operational efficiency in India. TowerXchange sources suggest that Airtel have accepted that it’s not feasible to sell all their African towers in one tranche. IHS, Helios and Eaton are each believed to have their own list of Airtel tower portfolios they want to acquire, while TMT Finance report that American Tower has

dropped any interest in the Airtel Africa portfolio. Airtel’s recent Q3 results revealed a fall in net profit from 10.11bn rupees last year to 2.84bn rupees (around US$53mn). However, Airtel is taking steps to turn around Africa operations, including hiring Christian de Feria as CEO of Africa and increasing its customer base by 21%. Airtel has improved their quarterly revenue run rate by 39% and EBITDA run rate by 55% since it acquired Zain’s African business, and the sale of Airtel’s African towers will deleverage its balance sheet in Africa

Airtel Africa towers to be carved up among IHS, Helios and Eaton

Tower People

Laurentius Human, a valued member of TowerXchange’s Inner Circle informal advisory board, has moved on from Inala to join Jabil as Senior Director, Corporate Finance. Howard Earley, formerly COO of Plessey, succeeds Laurentius as CEO of Inala, with Louw Cilliers assuming operational responsibility for telecommunications. We missed this appointment at the time: Georges Alain-Rubio was appointed CEO of IHS Cote d’Ivoire late last year. Georges has extensive Technical and Network Direction experience within the Telcel/Zain/Airtel organisation, having served in senior positions in Kenya, Tanzania, Madagascar and Gabon


Sonatel’s 3,000 tower sale reportedly launched As reported in TowerXchange for several months, Orange has an active mandate to outsource Sonatel’s towers across Senegal (approximately 1,600 towers), Mali (1,000), Guinea (400) and Guinea-Bissau (85). TMT Finance reports that a formal process has started under the guidance of Lazard, who helped Orange sell their towers in Uganda last year, and who are also reportedly advising on MobiNil’s sale of 2,500 towers in Egypt.

$100mn upgrade for Helios Towers DRC

Helios Towers Africa has secured a US$100mn loan facility for the operation and upgrade, reactivation and expansion of their tower network in the DRC. The US$100mn loan facility consists of a commercial loan arranged by Standard Bank, development finance from the German Investment and Development Corporation and the Belgian Investment Company for Developing Countries, and a guarantee from the World Bank’s Multilateral Investment Guarantee Agency (MIGA).

Helios Towers Africa is the sole independent towerco in the DRC, having acquired 729 towers from Tigo in 2010 paying US$45mn, with Millicom retaining 40% equity. Helios has achieved a very healthy tenancy ratio in the DRC, and securing this loan further proves the robustness of their business. However, conflict in the East has contributed to a small number of Helios Towers DRC’s

sites being offline, while the limited extent and poor quality of grid power makes for a challenging operating model, compounded by poor transport infrastructure which makes the delivered cost of equipment significantly higher than the landed cost. Doubtless this injection of debt finance will help. TowerXchange forecasts that further tower transactions will occur in the DRC in the short to medium term, with Airtel’s network, believed to be the most pervasive in DRC, up for grabs, and rumours suggesting Orange may be interested in outsourcing their towers in DRC.

IHS to delist from the Nigerian stock exchange

TMT Finance reports that IHS shareholders have voted to take the company private, and will pay US$0.03 per share to buy out stockholders. Only a small proportion of the equity in IHS was believed to be part of IHS’ initial public offering, and the decision to take the company private is unlikely to have any impact on IHS’ current round of capital raising, with reports linking IHS with Macquarie-backed African Infrastructure Investment Managers (AIIM).

Vodafone Ghana to add over 400 new sites, and who wants to buy an Expresso?

Agence Ecofin reports that Vodafone Ghana are investing US$22.9mn in a massive extension operation, deploying over 400 new sites to improve coverage and capacity. The

report quotes CTO Patricia Obo-Nai as saying “Over the past years, we have invested more than USD700 million in the expansion of our sites, (which have) increased from 300 in 2009 to 2000 across the country.” Vodafone Ghana outsourced the management of 750 towers to Eaton Towers in 2010 under an operational lease deal structure. Meanwhile, we’re reading that the on-off sale for an estimated US$150mn of CDMA operator Expresso Telecom, Ghana’s sixth ranked operator, to Jospong Group is currently off. Expresso’s current owners Sudatel are believed to be considering selling their telecoms assets in Ghana, Guinea, Mauritania, Senegal and South Sudan.

Viettel keen on Burkina Faso, Burundi and Tanzania

Vietnamese military-run Viettel are in the midst of an acquisition and expansion drive into Africa. Despite delays to the launch of their Cameroon operation until mid-2014, Viettel has acquired the sixth mobile license in Burundi, and is pressing ahead with expansion into Burkina Faso and Tanzania. Viettel are believed to be the sole bidder for the fourth license in Burkina Faso, where they would join Onatel, Telecel Faso and Airtel. Mobile penetration in Burkina Faso is believed to be just over 60%. Viettel are also reported to have applied for a license in the crowded Tanzanian market. Helios Towers operates almost 2,500 towers in Tanzania having acquired the infrastructure assets of Tigo and Vodacom.

African telecom tower industry newsEgypt

DRCNigeria

Ghana

Senegal Mali GuineaGuineaBissau

Burkina Faso Burundi Tanzania


Frontier Tower Solutions closes on tower deal with Niel Telecom

Our friends at Frontier Tower Solutions (FTS) are believed to be closing in on their first African deal, acquiring towers from Niel Telecom in Burundi and the Central African Republic. FTS have built and manage over 1,200 towers in Iraq and Afghanistan, where a further deal has also been suggested, and have activity pending in Bolivia.

Telkom Mobile denies tower deal imminent, MTN extends LTE rollout

Telkom denied unsourced media speculation that it had received a bid for the sale of 1,600 mobile towers. “Telkom would like to correct statements that have been widely published regarding the sale of its tower infrastructure,” the company said in a statement. “The company has not received any proposal from a Southeast Asian company for the sale of its mobile towers business or an investment of $3bn.” Telkom Mobile are believed to own over 6,000 shareable structures which, in the highly attractive South African tower market, could potentially be divested for between half a billion and a billion dollars, depending on the structure of any tower deal. Meanwhile MTN announced that LTE has been extended to 3mn South Africans, with 1,000 LTE-enabled BTS now deployed.

Leasing programme announced by Apollo Solar for power systems on remote towers

Apollo Solar, the leading US-based provider of off-grid solar power systems, has announced an agreement with Green Power Leasing (GPL) to enable MNOs, towercos and ESCOs to lease solar power systems. GPL offers Apollo Solar Power Systems to qualified companies with a financial leasing package that offers the economic benefits of eliminating the high capex and locking in operating costs for the term of the lease. GPL establishes a monthly lease payment that is lower than the current monthly cost of the diesel generated power. The flat monthly payment relieves the carrier or tower operator from the increases in diesel cost, fuel transportation, diesel maintenance and fuel theft.

Flexenclosure partners with Helios Towers Nigeria for its eSite hybrid power system

Flexenclosure announced the expansion of its eSite hybrid power system portfolio with a new version specifically developed for tower companies and multi-tenant scenarios. eSite now has the capability to provide power to up to four tenants with a combined power load of up to 10kW. Separate energy metering is also provided for each tenant, who can monitor their own site power-related data via eSite’s web based eManager client, while eSite’s intelligent control system Diriflex has an adaptive charging strategy for batteries, ensuring minimsed opex through the best use of available grid,

renewable energy and/or genset. “Tower companies are becoming increasingly important players in the telecom markets in Africa and around the world due to operators outsourcing their base station sites to them,” said David King, CEO, Flexenclosure. “As infrastructure owners, the tower companies have an acute focus on managing the operational costs of their sites, so eSite is a key solution for them. ”

Burnundi USA

South Africa

CAR

Nigeria

First eSite order from HTN in Nigeria

Helios Towers Nigeria (HTN) has ordered eSite for deployment during January 2014 in the Oyo, Ondo and Ekiti states of western Nigeria. Flexenclosure will be responsible for their complete management, including security, diesel supply, genset maintenance and overall maintenance of the equipment. “Our mission is to deliver the highest quality of service and network uptime in the industry, in an environmentally friendly manner, and we believe Flexenclosure’s eSite can help us on both those counts,” said Chandrakant Modi, CTO, HTN.

“Nigeria is the biggest telecom market in Africa and HTN was the first tower company to be established there. To continue building footprint in this market is very important to us, as is proving the reliability, functionality, performance and overall peace of mind that tower companies require,” concludes David King

www.flexenclosure.com/tower

Providing new power to the ICT industry

eManager by Flexenclosure

Operation

Property

Site logistics Engineering

Local server Dew Point 0.1 Normal

Local Server Humidity 22.8 Low

Local Server Pressure 991.8 Rather Low

Local Server Humidity 23.1 Low

Local Server Temperature 21.6 Rather low

Local Server Temperature 22 Low

Local Server CPU 1 Load 43 High

Local Server CPU 2 Load 40 Moderate

Local Server Physical Memory 31815

Info=Job execution started Information Discover and Connect Info

Info=Device is online Information Local Server (SNMP) Notice

Status=21, Comment=Online Status Changed Local Server (SNMP) Notice

Info=Device is offline Information Local Server (SNMP) Notice

Status=20, Comment=Offline Status Changed Local Server (SNMP) Notice

Info=Disconnection detected Information Local Server (SNMP) Warning

Temperature 21.8

Humidity 24.4

Computed value 0.6

Temperature Limit low -200.0

Temperature Limit High 300.0

Humidity Limit Low 5.0

Humidity Limit High 100.0

Computed Value Limit Low -50.0

Computed Value Limit High 80.0

Temperature alarm delay 20

Humidity alarm delay 30

Computed value alarm delay 30

Temperature hysteresis 1.0

Humidity hysteresis 1.0

Computed value hysteresis 0.1

Temperature *10 218

Data Event Level

Network Overview

0.25

20.00 00.00 04.00 08.00 12.00 16.00

0.50

0.75

1.00

1.25

1.50Business Control

0.25

20.00 00.00 04.00 08.00 12.00 16.00

0.50

0.75

1.00

1.25

1.50

d Connect Info

rver (SNMP) Notice

Server rver (SNMP) Notice

al Server (SNMP) MP) Notice

ocal Server (SNMP) Notice

LoLocal Server (SNMP) Warning

L lLevelvel

00.00 04.00 08.0008.00 12.00 16.00

in

eSite hybrid power for shared sites• IndustryleadingOPEXreduction

• Optimisedsinglecabinetsolution

• Fullremotenetworkmanagement

Flexenclosure’s eSiteTM is a diesel-battery hybrid power system for telecom sites that cuts diesel costs, CO2 emissions and energy related OPEX by up to 90%.

eSite delivers the best sustained performance over time versus any competing hybrid power system.

Updated independent tower counts and transaction history for Africa


2010 Millicom / Tigo Ghana Helios 750 $54m for 60% Joint venture2010 Vodafone Ghana Eaton 750 Not applicable Operational lease2010 Cell C South Africa American 1,400* $430m Sale and leaseback2010 MTN Ghana American 1,876 $218.5m for 51% Joint venture2010 Starcomms Nigeria SWAP 407 $81m Sale and leaseback2010 Millicom / Tigo DRC Helios 729 $45m for 60% Joint venture2011 Millicom / Tigo Tanzania Helios 1,020 $80m for 60%** Joint venture2011 MTN Uganda American 1,000 $89m for 51% Joint venture2012 Orange Uganda Eaton 300 Unknown Sale and leaseback2012

2013

Warid

Orange

Uganda

Cameroon & Cote d’Ivoire

Eaton

IHS Africa

400

2,000+

Unknown

Unknown

Sale and leaseback

Managed services

2012

2013

2013

MTN

Orange/Telkom Kenya

MTN

Cameroon

Kenya

Rwanda & Zambia

IHS Africa

Eaton

IHS Africa

827

1,000+

1,228

$143m

Unknown

Unknown

Sale and leaseback

Managed services

Sale and leaseback

2012

2013

MTN

Vodacom

Cote d’Ivoire

Tanzania

IHS Africa

Helios

931

1,149

$141m

“$50-75m for 75.5%”

Sale and leaseback

Joint venture

*Cell C deal included 1,400 existing towers plus additional towers under construction**Millicom/Tigo’s stake in Helios Towers Tanzania reduced to 24.5% after Helios acquired towers from Vodacom Tanzania in 2013

Year Operator Country TowerCo Est. # of towers Publicly stated purchase price Deal structure


TowerXchange tower transaction heatmap - current state

123456

No tower transaction completed or rumoured

Either rumours of a tower transaction

(unconfirmed), or the country is known to be

on at least one towerco’s hit list, or there is a

registered Africa Towers subsidiary in the country

Rumours of a potential tower transaction have

been confirmed by TowerXchange

Tower transaction believed to be imminent

One or more tower transactions have taken place,

no more transactions expected imminently

One or more tower transactions have taken place,

more transactions are expected imminently

Number of tower deals in this market if more

than one

Source: TowerXchange

Legend

Index of countries

Malawi

Mali

Mauritania

Mauritius

Mayotte

Morocco

Mozambique

Namibia

Niger

Nigeria 2

Rwanda

Réunion

Senegal

Seychelles

Sierra Leone

Somalia

South Africa

South Sudan

Sudan

Swaziland

São Tomé and Prí ncipe

Tanzania 2

Togo

Tunisia

Uganda 2

Zambia

Zimbabwe

Algeria

Angola

Benin

Botswana

Burkina Faso

Burundi

Cameroon 2

Cape Verde

Central African Republic

Chad

Comoros

Congo Brazzaville

Cote d’Ivoire 2

Democratic Republic of the Congo

Djibouti

Egypt

Equatorial Guinea

Eritrea

Ethiopia

Gabon

Gambia

Ghana 3

Guinea

Guinea-Bissau

Kenya

Lesotho

Liberia

Libya

Madagascar

Accelerate your sales cycle and close your next major deal in emerging market towersAdvertise in the TowerXchange Journal, circulated to a highly targeted community of the 5,131 most influential tower decision makers

To book your advertisement, contact: Annabelle Mayhew | [email protected] | M. +44 (0) 7423 512588

OperatorTowercoEnergy equipment & ESCOManaged service/ turnkey infrastructureStatic asset manufacturerStrategic or legal advisorActive equipment or IBSInvestorRMS, ILM & access controlRegulator or governmentOther

C-levelVP, SVP or Dept HeadDirector-levelSenior managerMiddle management

100

80

60

40

20

0

SSA

In which region are readers interested?

MENA

North America

Asia

Europe

South & Central Americas & The Caribbean

76%

59%

40%32% 29%

18%

33.7%

11.7%

9.1%8.8%

7.2%

6.9%

6%

5.7%

4.4%

1.4%5%

39.8%

23.1%

19.7%

14.8%

2.5%

Ghana: the most competitive tower market in AfricaGuest columnist Kenechi Okeleke finds competition among operators driving strong towerco performance in Ghana

Kenechi Okeleke, Senior Analyst, BMI

Ghana’s towers market is arguably the most competitive in Africa considering the number of active wireless communication service providers and independent tower management firms. Ghana has six mobile operators and many more wireless broadband providers, while three of the four biggest independent tower management firms in Africa operate in the country. These are Helios Towers Africa, American Tower Corporation (ATC) and Eaton Towers. Although the last major tower deal was in 2010, the telecoms market dynamics suggest that tower outsourcing will remain a key part of operators’ strategies and the next major deal may not be too far off. Crowded market whets competition Ghana’s six mobile network operators - MTN, Vodafone, Tigo, Airtel, Globacom (Glo) and Expresso - serve a population of just 26mn. This is one of the highest operator/population ratios in the region and a major factor in competition dynamics and operators’ growth strategies. Furthermore, the country’s mobile penetration rate of 105.4% at the end of September 2013, according to BMI data, is high by regional standards and portends slower subscriptions growth in the mobile market. This means that operators must find new ways to sustain revenue growth and, very importantly, improve cost efficiencies in order to maintain their competitiveness.

Read this article to learn:< How the high operator/population ratio and subscriber penetration in Ghana are driving cost-

cutting strategies

< BMI’s view of towerco performance to date in Ghana

< The potential impact of Airtel’s tower outsourcing strategy

< QoS and coverage challenges

< The macroeconomic outlook for Ghana: a stable political environment and ongoing GDP growth

tempered by currency risk and electricity shortages

Keywords: BMI Analysis, Research, Market Overview, Opex Reduction, Urban vs Rural, Tenancy Ratios, Co-locations, Market Forecasts, QoS, Country Risk, Off-Grid, Infrastructure Sharing, West Africa, Africa, Ghana, Helios Towers Africa, Eaton Towers, American Tower, Airtel, MTN, Expresso, Globacom, Vodafone, Tigo, Sudatel, JGC, Business Monitor International


Tower outsourcing has in the last three years become a major cost-cutting strategy, with the country’s three biggest mobile operators by subscribers signing major deals with independent tower firms. Third-ranked mobile operator Tigo signed the first major tower deal in January 2010, involving the sale of 750 towers to Helios. The operator’s bigger rivals, Vodafone and MTN, also signed deals with Eaton and ATC respectively later that year. Some of the other operators and some wireless service providers have rented spaces from independent tower firms, indicating a favourable disposition towards third-party tower site management and raising the prospect of outsourcing their own towers in the future.

Towers market performance - so far so good It is hard to compare the key performance indicators of the three independent tower firms in Ghana as two of them are privately owned and do not publish those indicators. However, indicators published by ATC for its African operations show strong performance. The company manages approximately 2,000 tower sites, including the 1,876 towers acquired by its joint venture company with MTN, TowerCo Ghana, in a deal valued at US$428.3mn in 2010. In addition to anchor tenant MTN, ATC also has Vodafone, Tigo and Airtel as tenants in Ghana. This contributed to the firm’s impressive tenancy ratio of 1.3 as of September 30 2013, compared with 1.8 in South Africa and 1.5 in Brazil and Mexico. Despite a lower tenancy rate, the Ghanaian market performed better than Brazil and Mexico in terms of revenue per site. ATC reported a 3% revenue contribution from its Ghana unit to the group rental and management revenue of US$797mn in Q313. BMI calculates this as equivalent to revenue of US $23.9mn or approximately US$3,998 per site per month. Using the same method, we calculate that only South Africa and Uganda generated higher revenue per site for ATC than Ghana across its entire international portfolio. This underscores the importance of the Ghanaian market and, by extension, the African towers market to ATC and other firms with exposure to the region.


Crowded market

High yield ATC average monthly revenue per site (US$), Q313

Source: BMI, NCA, operators

Expresso

21.1%

12.2%

5.9%

0.6%

46.3%

13.9%

Glo

Airtel

Tigo

Vodafone

MTN

*= Chile, Colombia, Peru, Costa Rica, Peru Source: BMI, ATC

5,000

4,000

3,000

2,000

1,000

Other LatAm*

Brazil Mexico Ghana South Africa Uganda0

Ghana Mobile Market Shares (%), September 2013

1,4232,125

2,813

3,9984,428

4,830


Looking ahead In addition to the competition dynamics mentioned earlier, there are other factors and potential developments expected to sustain long-term growth in Ghana’s towers market. While the growth prospect may not attract a fourth player into the market, we expect it to boost competition among the existing players. The outcome of this could include fundraising to buy more towers, investment in new tower deployments, investment in new power solutions to improve operating cost efficiencies and greater price competition in tenancy rates. Some of these market developments are highlighted below. Airtel tower outsourcing strategy After many months of speculation, Airtel has finally confirmed that it is planning to outsource the management of its African towers. Although details of the operator’s plans were still sketchy at the time of writing, especially in relation to priority markets and the outsourcing model it will adopt, it is safe to assume that Ghana will be on top of the list of markets where it plans to implement the strategy. BMI expects Airtel to prioritise markets where its main rivals are already gaining a cost advantage from tower outsourcing. These include Ghana, Uganda and Tanzania. In its FY11 and FY12 financial results, MTN reported considerable capex savings as well as EBITDA margin appreciation owing to its tower outsourcing strategy. We believe Vodafone and Tigo have seen similar results in their key

financial indicators, a performance Airtel would be keen to replicate.

Glo and Expresso could consider outsourcing The two smallest wireless service providers Glo and Expresso would be the only operators managing their portfolio of towers after Airtel’s expected outsourcing move. In January, it was reported that Sudatel was in advanced discussions with local firm Jospong Group of Companies (JGC) to sell its stake in Expresso, which shed around 50.2% of its subscriber base in the four years to September 2013. Although the operator’s CDMA

technology is partly responsible for its weak performance, it could leverage lower capex and opex as a result of tower outsourcing to increase its network coverage and offer more competitive prices. Although we do not expect any major move from Expresso until parent company Sudatel completes its planned exit, we believe a change of ownership of the operator could usher in new marketing and operational strategies, which may include tower outsourcing. Meanwhile, Glo is unlikely to resist tower outsourcing for too long given the intensity of price competition in the market. The operator’s initial growth momentum has worn out, indicated by its quarterly net subscription loss in Q313. BMI believes that the operator must find new ways to sustain its competitiveness considering the huge resources, experience and superior market share of its bigger rivals. QoS and coverage requirements Ghana, like many other countries in the region, has stepped up pressure on mobile operators to improve their service quality amid growing consumer complaints. In 2013, Ghana’s six mobile operators received fines totalling more than US$500,000 for poor quality of service (QoS), while MTN was forced to announce a compensation for subscribers in the form of discounts and bonus credits for missing key QoS targets. In addition to QoS obligations, Ghana’s telecoms regulator has expressed concern about poor network coverage in rural areas. We expect

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“

After many months of speculation, Airtel has finally confirmed that it is planning to outsource the management of its African towers... BMI expects Airtel to prioritise markets where its main rivals are already gaining a cost advantage from tower outsourcing. These include Ghana, Uganda and Tanzania


demand for greater rural coverage to increase in the coming months, especially as the government, through the minister of communications, has made a case for network coverage expansion to under-served areas. These factors work in favour of tower sharing as a means of expanding coverage as well as freeing up capital to invest in other areas of network development and customer satisfaction.

Risks to outlook Ghana has a more stable political risk outlook than many countries in the region. The decision by Ghana’s Supreme Court on August 29

2013 to uphold the results of the December 2012 presidential election largely doused any uncertainty surrounding the political environment. However, the country is grappling with a number of macroeconomic issues, which may be of concern to network operators, independent tower firms and other telecoms equipment vendors in the market. The first major concern is the local currency weakness. The Ghanaian Cedi has been under heavy selling pressure in recent years, resulting in depreciation of 16.2% in 2012 and 15% in 2013, owing to the wide current account deficit and various investor concerns surrounding macroeconomic stability. BMI’s Country Risk team expects more of the same over the short term in view of the widening current account deficit, which grew to US$2.3bn in Q313 from US$1.1bn in the previous quarter. Secondly, Ghana has been experiencing electricity shortages in recent years. Supply disruptions to the West Africa Gas Pipeline (WAGP) resulted in a temporary gas shortage for the region. The pipeline closed for almost a year owing to damage caused by pirates off the coast of Togo in August 2012. Although the WAGP pipeline came back onstream in July 2013, further disruptions or vandalism cannot be discounted. This increases the likelihood of continued reliance on off-grid sources to power tower sites, of which the most widely used is the diesel generator. BMI notes that the cost of running diesel generators in Ghana is susceptible to currency movements and could increase considerably with further depreciation of the Cedi.

Despite these challenges, BMI maintains a positive outlook on Ghana’s economy, forecasting strong economic growth over the coming years on the back of booms in key sectors, including oil and gas, infrastructure and retail. We forecast real GDP growth of 6.4% in 2014 and 7.2% in 2015, following an estimated 7.0% in 2013. The marginal dip in 2014 is predicated on our expectation for oil production to flatline temporarily. In terms of the drivers of the medium-term growth path, we expect private consumption, private investment and exports to all make strong positive contributions

www.businessmonitor.com/bmo

“ “BMI notes that the cost of running diesel generators in Ghana is susceptible to currency movements and could increase considerably with further depreciation of the Cedi

Special feature:

How to raise capital for, and conduct due diligence on, emerging market tower transactions A rarefied and select breed of advisors has the right combination of contacts, capabilities and experience necessary to raise capital for, and conduct due diligence work on, emerging market tower transactions.

We’re grateful that four such expert advisors have contributed to this unique special feature, in which TowerXchange takes readers behind the scenes of tower transactions to understand how capital is raised, and the analyses used to ensure capital is optimally deployed within the fast-growing emerging market independent towerco segment.

A great companion piece to this special feature is our interview with Neil Taylor, Chief Legal Officer at Helios Towers Africa and former General Counsel at Millicom, which you’ll find on pages 38-42 of issue 2 of TowerXchange.

The TowerXchange due diligence dossier

Featuring:47 Daniel Lee on how to raise capital

51 Enda Hardiman compares the investibility of African,

Southeast Asian, Russian and Indian towers

56 Citi’s Gulfraz Qayyum explains the sell side perspective

59 Marco Cordoni explains how Analysys Mason conducts due

diligence work, mainly on the buy side


Create credible towerco

Legal and tax due dilligence

Technical due dilligence

Commercial due dilligence

Lose Win

Start again! Capital call

Final close Initial close

Simplified tower transaction process map

Define objectives

Secure buy-in

Update asset register

Appoint advisor

IM: solicit bidders

Data room

Financial due dilligence

Negotiation & conditional offers

Novation of leases & transfer assets

Identity opportunity Approach investors


How to raise capital for tower transactionsRapid fire Q&A with the rainmaker of emerging market towers

Daniel Lee, MD, Intrepid Advisory Partners


TowerXchange: How would you characterise investors’ appetite for emerging market towers now compared to five years ago? Daniel Lee, Managing Director, Intrepid Advisory Partners: Investor appetite has increased significantly. While everybody obviously saw the success of the independent tower model in the US, there were a lot of questions whether mobile operators would allow the model to grow in the emerging markets. That is no longer the case and investors don’t have the same concerns regarding proof of concept. Now it is a question of which team to back and who will be more successful. TowerXchange: Is there a finite universe of investors with an intersecting interest in both telecoms infrastructure and emerging markets? Daniel Lee, Managing Director, Intrepid Advisory Partners: The investor pool has evolved. While the pool is still finite, it has broadened as towercos have matured and established a track record. Additionally, the pipeline of opportunities is robust which gives comfort to investors only looking to deploy a significant amount of capital. That being said, investors appreciate that the model is very different in Africa with much more operational risk. Some investors view this as a significant upside, while others are more comforted by a pure real estate model. TowerXchange: How long does it take to raise capital?

Daniel Lee, the ‘rainmaker’ of emerging market towers, helped Africa’s private equity backed towercos raise their early rounds of capital. He also led the sale of the vast majority of tower transactions in Africa to date, advising mobile operators such as MTN, Millicom and Cell C, whilst working at Citi, whom he left last year to form Intrepid Advisory Partners - an independent advisory firm focused on the tower industry. Daniel has recently been appointed Chairman of the TowerXchange “Inner Circle” network of advisers.

Read this article to learn:< How country risk and reduced ‘proof of concept’ concerns defines the pool of investors with an appetite for

emerging market towers

< What investors are looking for in terms of returns and management experience

< Is there pressure to deploy capital?

< Factors that determine leaseback rates

< Comparing the investibility of sale and leaseback with BTS opportunities, and comparing Africa and LatAm

Keywords: How to Guide, Lawyers & Advisors, Investment, Deal Structure, Rental Rates, Valuation, Build-to-Suit, Business Model, Exit Strategy, Bankability, New Market Entrant, Country Risk, ROI, Sale & Leaseback, Private Equity, Africa, South America, Intrepid Advisory Partners

Daniel Lee, Managing Director, Intrepid Advisory Partners: In any capital raising, it is always easier to raise capital when the use of proceeds is clear. It is much harder to raise capital for a “war chest” which has limited visibility today. To the extent there is limited visibility, it is much harder as it is generally harder to capture any investor’s attention and drive focus. Again, given the volume of opportunities expected in 2014 and beyond it is much easier to raise capital in this environment than previously. TowerXchange: What are investors looking for in an investible towerco platform? Daniel Lee, Managing Director, Intrepid Advisory Partners: First and foremost, investors are focused on selecting the team they believe are the most capable tower operators. The advantage of selecting the most capable team is two-fold. First, these tower operators (in the minds of their supporters) will have the most credibility with mobile operators and be better positioned for potential transactions. Secondly, these tower operators will be able to generate the most value from the same set of assets by maximising collocation while doing a better job of managing expenses. Additionally, there are meaningful differences between the independent towerco platforms today. While there is some overlap between the African players (such as in Ghana), the reality is the overlap is fairly limited. For example, IHS and Helios Towers Africa do not overlap in any market

today. Some of the tower operators also only own sites versus others that manage sites so again there are pretty meaningful differences between the various platforms. TowerXchange: Do investors expect to see the management team themselves invest? Daniel Lee, Managing Director, Intrepid Advisory Partners: It’s always comforting for any investor to see a management team with “skin in the game”. Otherwise, the risk versus reward profile


is asymmetric. Investors have capital at risk with a potential reward. Absent any capital risk, the management team (notwithstanding an opportunity cost which maybe significant), only has a potential reward. This dynamic can be concerning as it has the potential to create unhealthy incentives for management to be more aggressive and play for an option value. TowerXchange: Is there pressure to deploy the capital once it has been raised?

Helios Towers Africa

Helios Towers Africa

Eaton Towers

American Tower

HTN & SWAP

IHS

Tanzania

DRC

HTN & SWAP

Nigeria

Sudan

South SudanCameroon

Cote d’Ivoire

Rwanda

Zambia

IHS

GhanaSouth Africa

Uganda

American Tower


Eaton Towers

Limited overlap between African towercos

Kenya


Daniel Lee, Managing Director, Intrepid Advisory Partners: Yes - investors typically only commit capital for a certain time period. So in some way, there is urgency for towercos to “use it or lose it”. That being said, investors will typically have strong rights regarding capital calls - sophisticated investors do not want to be a blank cheque that blindly funds any capital call. The trade-off for towercos is that they do not necessarily want to sell more equity than they can deploy. Every towerco has the belief that even just by harvesting what they may have today they are generating incremental value.

TowerXchange: What is the impact of country risk on investors’ appetite for emerging market towers? Daniel Lee, Managing Director, Intrepid Advisory Partners: Country risk is a significant issue that investors have different perspectives on. More stable markets have lower return thresholds. Conversely, riskier markets need to generate a higher return to compensate for the risk of operating in a certain market. While currency risk can be mitigated with the potential of dollar based contracts, there are certain country risks that can not be mitigated such as political risk, corruption, et cetera. These risks impact both willingness to deploy capital and valuation. A tower company operating in riskier markets is not valued the same as one operating in more stable markets. TowerXchange: Given the maturation of the emerging market tower industry, is there still room for new market entrant towercos? Daniel Lee, Managing Director, Intrepid Advisory Partners: Yes. The “Big Four” towercos are only currently active in 13 of 56 countries across Africa. (TowerXchange: the 13 countries being Cameroon, Cote d’Ivoire, DRC, Ghana, Kenya, Nigeria, Rwanda, South Africa, South Sudan, Sudan, Tanzania, Uganda and Zambia). Compare Africa to the more mature North American market, where American Tower, SBA and Crown Castle each all have sizable portfolios of over

14,000 towers - none of the African towercos has achieved that scale yet. Up until recently, you had a second tier of towercos that had significant scale such as TowerCo and Global Tower Partners whose North American assets were recently acquired by the top US players. Thereafter, there’s a layer of regional ‘middle market’ towercos with ten to a thousand sites that is highly fragmented. Clearly, there is an opportunity for new entrants in Africa. The challenge for these operators will be competing in sale-leasebacks against the “Big Four” absent any operating experience in Africa. That is a meaningful obstacle, but not an insurmountable one for new entrants - particularly if they are focused on alternative ways of entering a market such as build-to-suit versus a sale-leaseback. TowerXchange: When preparing towerco business plans and negotiating deals, one of the most important factors is the leaseback rate. What are the main factors that determine the leaseback rate that can be achieved? Daniel Lee, Managing Director, Intrepid Advisory Partners: There are a number of key factors that impact an operator’s preference. The key consideration is understanding the operator’s main objective of pursuing a sale-leaseback. To the extent it is to release capital, that will generally yield a higher leaseback rate. To the extent it is to realise cost efficiencies, that will result in a much lower leaseback rate.

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there is urgency for towercos to “use it or lose it”. That being said, investors will typically have strong rights regarding capital calls - sophisticated investors do not want to be a blank cheque that blindly funds any capital call

No two operators are the same and most have very different perspectives on this issue. The value creation potential for an operator may not be linear with the leaseback rate given tax considerations and a whole range of other issues that complicate things. TowerXchange: Is there a minimum deal size to be attractive to investors? Daniel Lee, Managing Director, Intrepid Advisory Partners: The tower model is highly scaleable. A similar sized fixed cost base can support 500 or 1,000 towers. Conversely, you wouldn’t want to invest in the same fixed cost base to support only 100 towers. I think the scale of the platform is more important than the actual deal size. It’s worth noting that some of Millicom’s deals across

Africa had very low headline values given lease-back considerations. These deals were highly coveted despite the small deal size. TowerXchange: How would you contrast the investibility of sale and leaseback compared with build-to-suit opportunities?

Daniel Lee, Managing Director, Intrepid Advisory Partners: Theoretically, a build-to-suit portfolio should outperform a sale-lease back portfolio given the ability to “cherry pick” sites. In general, the tower sales across Africa have involved a carrier’s entire portfolio which does not provide an ability for the buyer to do the same sort of cherry picking. That being said, there is much greater uncertainty about achieving scale given the highly leverageable nature of the model. It’s worth noting that most of the towercos in Africa today are focused on a sale-leaseback strategy to enter a new market. The downside being, the decision for a mobile operator to pursue a sale-leaseback is generally outside of a towerco’s control and success is contingent on winning an auction. TowerXchange: How does investors’ appetite for towers in Latin America compare to Africa? Daniel Lee, Managing Director, Intrepid Advisory Partners: Investors are highly interested in the Latin America. Deal activity in Latin America has been incredibly robust with significant activity also expected in 2014. It’s worth noting that the


tower model in Latin America differs from Africa and is actually more aligned with the US model. In some ways, that provides more comfort to more traditional tower investors. Additionally, the ability to back a management teams they might have known previously from the US and had success with, is also another important consideration

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“Theoretically, a build-to-suit portfolio should outperform a sale-lease back portfolio given the ability to “cherry pick” sites

the tower model in Latin America differs from Africa and is actually more aligned with the US model. In some ways, that provides more comfort to more traditional tower investors. Additionally, the ability to back a management teams they might have known previously from the US and had success with, is also another important consideration

He’s got the whole world in his handsEngineering and corporate finance due diligence expert Enda Hardiman compares investment opportunities in global tower markets


TowerXchange: What is your background and where does Hardiman Telecommunications fit in the telecoms infrastructure ecosystem?

Enda Hardiman, Managing Partner, Hardiman Telecommunications: I started Hardiman Telecommunications in 1994, prior to which I had spent 16 years in the line in multinationals in various sales, marketing, business development, engineering and general management roles. I first worked in Africa and the Middle East in the early 1980s. Asia followed in the mid-80s.

I had been on the commissioning and receiving end of consultancy from the Tier One majors. While I thought that they were very good on macroeconomic and broad-brush developments, I thought that they became progressively less sure when dealing with real-world issues of strategy implementation, realistic planning, risk mitigation, and most notably engineering and capex. There was a clear gap in the market for a consultancy adept in engineering and operations, but that could with equal depth span the continuum across commercial operations to private equity and corporate finance. We now have two principal locations, being London and Hong Kong, from which we address the world. Our business mix features M&A, strategy and planning. In the towers sector, we have been involved in one way or another, buy-side or sell-side, in most major transactions in EMEA and Asia. We have worked across site inspections, network inspections, consolidation, RAN / spectrum planning and

The independent tower company business model is adapting and spreading from one emerging market to the next. Enda Hardiman has been advising some of the world’s leading operators, towercos and investors on opportunities in the global tower industry for many years. TowerXchange met Enda for a coffee and a chat to compare opportunities in the tower industry worldwide...

Read this article to learn:< What is the typical divergence between asset registers and what is actually on sites?

< African towers: the legitimisation of private-equity investment, and a view of Airtel’s tower sale

< How operator consolidation is affecting tower valuations in Indonesia and India

< The attractiveness of Myanmar: well funded anchor tenants rolling out into virgin territory

< The importance of risk identification and containment for parties interested in Russian towers

Keywords: Lawyers & Advisors, Strategic Consultancy, Investment, 4G, EBITDA, Valuation, Due Diligence, Tenancy Ratios, Densification, Asset Register, Sale & Leaseback, Private Equity, Infrastructure Sharing, Africa, Asia, Europe, South Africa, Nigeria, Myanmar, Indonesia, India, Malaysia, Vietnam, Cambodia, Bangladesh, Pakistan, Russia, CIS, Airtel, Hardiman TelecommunicationsEnda Hardiman, Hardiman Telecommunications

power. We’ve worked for most of the world’s largest towercos, carriers and private equity firms, including several boutique telecom funds, across Asia, Europe and Africa.

TowerXchange: In your experience, what is the typical divergence between what’s in the asset register what’s actually on sites?

Enda Hardiman, Managing Partner, Hardiman Telecommunications: It varies markedly by region. In Europe and in the more developed regions of Asia correlation tends to be pretty good. In emerging markets differences can be quite substantial. We have seen instances of divergence up to 10%. Sometimes this is simply a result of very rapid growth, and sometimes substantial issues of governance are raised. If the latter is the case, it is usually a good indicator that other issues require detailed risk analysis. Requirements for effective due diligence are underlined.

TowerXchange: Given your broad experience of due diligence on tower transactions across the world, how would you compare the different regions’ maturity and investibility? If you had US$500mn to invest in towers, where would you invest it? Enda Hardiman, Managing Partner, Hardiman Telecommunications: As in all areas of investment, risk balancing is advisable. The sector is very vibrant at this time. The European scene was pretty moribund when operator planning focused on 2G and 3G voice, with some consideration of data. That

was because major operators, by and large, had built out similar facilities. The explosion of demand for data, and the advent of LTE have been major disruptors. So has DTT planning by broadcasters. Precise tower locations are much more important now than previously, so economic cases for consolidation have strengthened. Europe is now very vibrant. In Africa landing of submarine cables has increased available bandwidth in coastal regions, and access to that is now being built out inland. Africa is on the cusp of a quantum increase in data use, and the same arguments apply regarding tower locations and consolidation. Furthermore, in Africa, tower sharing is a prerequisite for economic extension of coverage outside of dense urban regions. Rationalisation of overlap, thus freeing up capital for more productive use, is also a major consideration. Asia has in common with Africa that radio is often the only realistic mechanism of last-mile connectivity. Data is a major driver of consolidation in developed Asia - which mirrors Europe. Economic coverage and overlap considerations in lesser-developed Asia are similar to those of Africa, as are overlap considerations. TowerXchange: What’s your view of the prospective sale of Airtel’s 15,000 towers in Africa? Enda Hardiman, Managing Partner, Hardiman Telecommunications: Very positive. There was


some initial speculation that Airtel would seek to encompass towers in all operating countries in a single transaction. That seems less likely now - correctly so. A single transaction, as various parties discovered during the Millicom rationalisation, would be very complex from a legal perspective. Airtel African assets have been under-invested against the somewhat turbulent history of ownership changes. Bharti has however put some very smart people in. Manoj Kohli did a terrific job in getting matters under initial control. The recent appointment of Christian de Feria as CEO for Airtel Africa is another positive step. He really understands African telecoms. Airtel is a strengthening force in Africa, and the capital released by the imminent tower transactions will, I do not doubt, be put to good use. The selloff provides excellent opportunity for the independent

“ “There was some initial speculation that Airtel would seek to encompass towers in all operating countries in a single transaction. That seems less likely now - correctly so


towercos to reach major critical mass against a coherent process.

TowerXchange: What appetite do investors currently have for opportunities in African telecoms infrastructure?

Enda Hardiman, Managing Partner, Hardiman Telecommunications: Rollout of African telecoms to date has been funded mainly by debt. The total is substantial - US$70-75bn deployed since 1998. This has been largely funded by leveraging of balance sheets by international MNOs and, in the case of smaller operators, by European, US and locally syndicated debt.

Private Equity until recently was circumspect about African TMT. That has changed. There had, I think, been something of a tendency to cast all of Africa in the mould of regions in which egregious political and economic events captured the attention of the Western media. There is now a much better understanding that there are more than a few African countries in which political and economic vistas can be cast forward with some confidence. Private Equity sentiment has improved accordingly, and, according as acceptance of the independent tower company business model spread from the US to Europe, and thence to Africa people have become a lot more comfortable with drivers, and much more comfortable with mechanisms of risk quantification and mitigation. One might cite the investment in Helios Towers Africa of Madeleine Albright’s operation, together with those of George Soros and Jacob Rothschild as a “legtimising”

bellwether. We’re starting to see deep-pocketed investors, able to write US$200m+ cheques, attracted to African towers. With that said, the larger Private Equity investors are hard-headed business people, and are very far from naive. Compelling business cases need to be made. There is funding accessible to African towercos, but only on the right terms. Ops people in Private Equity Firms still need to make cases to Investment Committees who will consider African investments against competing opportunities. While that is of course fully appreciated by towerco people - industry veterans with dust on their boots - I am not sure that African regulators always share appreciation to an adequate degree. Some regulatory thinking is still distressingly parochial.

TowerXchange: We’ve seen encouraging tenancy ratios of 1.5-1.7 in Africa (seldom in the public domain) that suggest that pent up demand for tenancies on previously unavailable towers drives an initial uptick in tenancy ratios post transaction. How proven is the tower industry in Africa?

Enda Hardiman, Managing Partner, Hardiman Telecommunications: I agree that there’s often a surge in tenancies post-deal. Most of the business plans I’ve seen make money at a tenancy ratio of 1.6 to 1.7. But I have also seen “pure” outsourcing deals, involving taking over facilities of a single operator, that also made sense. Networks in Africa were built for coverage, not capacity, so as urban demand intensifies, capacity increases are necessary, especially with regard to provision of adequate quality data services. Mobile remains the only viable option in the absence of copper or fibre infrastructure. It is also often the case that tower sharing is a prerequisite for economic extension of coverage outside of major conurbations. As data demand intensifies, we see increasing demand for lower base station sites. The relatively low tower density required at 900 MHz is not the same as the much greater density required at 2,100 or 2,600 MHz. Thus simple “superimposition” of further facilities on towers designed for long-distance propagation at 900 MHz can result in coverage black spots, driving demand for low towers, rooftops and new BTS, which is all good

“ “there’s often a surge in tenancies post-deal. Most of the business plans I’ve seen make money at a tenancy ratio of 1.6 to 1.7. But I have also seen “pure” outsourcing deals, involving taking over facilities of a single operator, that also made sense

news for towercos. As a general answer to your question, though, I would state that the case is very well proven, as evidenced by the successes of Eaton, Helios Towers Africa, IHS and American Tower. Proven models include sale and lease-back and joint ventures, and within both, build-to-suit. So tenancy ratios, while important, are not the exclusive determinant of success.

TowerXchange: Why are some leading operators hanging on to their towers?

Enda Hardiman, Managing Partner, Hardiman Telecommunications: There are still instances in which ownership of all infrastructure can yield competitive advantage. This can be the case in regions in which one operator has much better coverage in the absolute than others. It can also be the case with regard to operators who seek competitive advantage on quality of service rather than price. In the long term, however, those advantages tend to erode. It should be added in this context that consolidation is coming on the operator front. Outside of South Africa and Nigeria, it has hard to see many countries in which more than three, and in some instance two operators can be viable. Fragmentation against sub-US$5 ARPUs has as inevitable consequence that the smaller operators simply will not be able to make the ongoing network investments required in order to remain competitive. We thus expect to see a flurry of towers

now owned by operators who will be constrained to exit coming on the market. It is to be hoped that regulators will take an enlightened view of spectrum re-allocation when this occurs.

TowerXchange: How would you compare the tower market in Southeast Asia with Africa?

Enda Hardiman, Managing Partner, Hardiman Telecommunications: The tower industry in Southeast Asia, particularly Indonesia, is two to


three years ahead of Africa. Indonesia licensed about 12 operators, and, as in India, unrealistic expectations regarding tower demand resulted. Inevitably, and as foreseen by informed commentators, the Indonesian operator sector is now consolidating. This has led to more realistic valuation of towers, and also has the welcome concomitant of freeing up capital for investment in initiatives that have a realistic chance of yielding good financial returns. LTE is starting to be rolled out regionally.


Without straying in to too much detail, Vietnam and Cambodia will follow the Indonesian pattern of consolidation. So will Bangladesh and Pakistan. There are interesting initiatives afoot in Malaysia too. The Malaysian sector overall is both well-managed and well-regulated. Malaysia may yet overtake Indonesia as a paradigm of consolidation giving rise to much more effective deployment of capital. Myanmar is unique, in that, pretty well uniquely in the world, there is little meaningful mobile infrastructure in place, at all. Telenor and Ooredoo are cooperating, sensibly, to roll out to virgin

territory. Expansion in to Myanmar by Indian, Indonesian and international towercos is highly probable – in fact some of the Indonesians are there already. One might state without exaggeration that Myanmar is at this time characterised by a single large build-to-suit market, with two guaranteed high-quality and well-funded anchor tenants on the preponderance of sites. It is hard to believe that the close attention of the independent towerco sector will not be engaged. TowerXchange: What’s the status of the potential tower transaction in Russia? We understand Vimpelcom has 7-10,000 towers for sale - could a successful tower transaction trigger further deals across Russia and the CIS?

Enda Hardiman, Managing Partner, Hardiman Telecommunications: Without doubt. Major industry drivers are as evident in Russia and the CIS as elsewhere. Russia is not a place to be approached starry-eyed, though. Drivers are clear, and opportunities very significant, but anyone seeking to enter Russian markets will be well-advised to have thorough familiarity with Russian preoccupations and business practice. It was against this that we brought fluent Russian speakers with experience of line operations in Russia on to our own staff. Correct risk identification and containment, while important in all markets, are particularly important in Russia. The Russian regulatory regime is evolving, and not all participants, at all levels, have adequate insights in to key industry drivers. We have seen much time-wasting against superficially plausible propositions

that were never going to see the light of day.

TowerXchange: Is there now value to be found in the Indian tower industry? What will it take for a new wave of tower transactions to start up again in India?

Enda Hardiman, Managing Partner, Hardiman Telecommunications: Until three years ago, Indian towercos were over-valued against unrealistic expectations that 10-12 mobile operators could be viable in each circle. 3-4 is more realistic, even against the scale of the Indian market. High profile operator withdrawals, including withdrawals by some very well-funded entities, stand testament. The towerco sector is now much more rationally valued - perhaps even under-valued - in consequence. Current towerco valuations of 5.5X - 6X on EBITDA have piqued Private Equity interest. We expect to see ferment - consolidation and fund-raising - at the higher end of the market, and significant consolidation at the lower end of the market, which is very fragmented at this time. I think that the Indian regulators have learned some tough but ultimately positive lessons. Excessive regulation is never a good thing, and neither is any perception that decisions are being made against other than transparently stated objectives. It can be challenging to deal with Indian bureaucracy on occasion. However, one of the major strengths that India possesses is that public service structures and accountabilities are well-defined. An overlay of transparency and efficiency, long overdue, is now encouragingly in some prospect

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Myanmar is at this time characterised by a single large build-to-suit market, with two guaranteed high-quality and well-funded anchor tenants on the preponderance of sites. It is hard to believe that the close attention of the independent towerco sector will not be engaged

How to evaluate emerging market towersA conversation with Citi’s veteran emerging market tower deal advisor Gulfraz Qayyum


TowerXchange: What can you tell our readers about the kinds of companies and transactions Citi has advised on in emerging market towers? Gulfraz Qayyum, Managing Director, Citigroup: Citi has leveraged its early leadership in the tower space and combined that with our strong industry banking franchise and global footprint to become a leading advisor. We’ve completed close to a dozen transactions in Africa alone and we’ve been similarly active in other emerging market regions. The vast majority of our advisory mandates are on the sellside, which have given us unique windows not only on how operators think about their passive infrastructure, but also into the broad buyside landscape and the financing environment. TowerXchange: If an operator is considering bringing a portfolio of towers to market, how should they prepare, and how long should they anticipate it taking to have a comprehensive IM to bring to market? Gulfraz Qayyum, Managing Director, Citigroup: Obviously this will vary from operator to operator. Assuming internal buy in is secure, key preparation steps relate to compiling and/or validating a comprehensive tower database, establishing a clear picture on the passive infrastructure cost base, how transition will work, for example, employee transfers, and having views on key deal economics. The time line will depend largely on internal systems and the availability of data, but anticipate

Gulfraz Qayyum is a Managing Director in Citi’s TMT investment banking practice, covering the EMEA region, with responsibility for their business in the Middle East and Africa. He has been advising telecom companies on M&A and capital raising deals for over 15 years, and he has worked on a number of sellside, buyside and financing transactions in the towers space.

Read this article to learn:< How to retain buyer confidence: ensure buy in, validate your tower database and separate passive from active infrastructure costs< Overcoming challenges around land leases and titles< How towercos identify which sites have wind-load capacity for colocation, and calibrate this against augmentation capex< Why the unique cash flow and risk characteristics of each deal are more important inputs into valuations than multiples of TCF< Why the MENA tower market has been nascent and where the first deals may take place in the region

Keywords: How to Guide, Lawyers & Advisors, Deal Structure, Rental Rates, Valuation, Transfer Assets, Due Diligence, Opex Reduction, Co-locations, Capacity Enhancements, Loading, Data Room, Novation of Leases, Regulation, Anchor Tenant, Asset Register, Sale & Leaseback, Stakeholder Buy-In, Africa, Middle East, Citigroup

Gulfraz Qayyum, Managing Director, Citigroup

2-4 months, potentially more. Getting the preparation right is key to running an efficient process, retaining the confidence of buyers and ultimately maximising value for the seller. I would add that going live isn’t predicated only on the IM but we would advise an equal focus in having other key buyer interface content in place or on track. This includes the data room and transaction documentation. TowerXchange: What are the challenges for operators creating a data room given the pragmatic way African networks have been rolled out, and the resultant incomplete paperwork? Gulfraz Qayyum, Managing Director, Citigroup: It’s far from an easy exercise and many man hours can be lost trying piece together information and reconcile systems, often manual ones. We typically find there is a lack of internal split between the passive and active infrastructure costs which complicates matters when trying to demonstrate the value proposition to buyers. There is also a major challenge around land leases and titles. Often land title is unclear and established verbally, which means clear language stipulating lease periods, pricing and rights of the landlord and tenant are missing or incomplete. There are signs of improvement though with many countries having undertaken an exercise to register land. TowerXchange: What are the key data points required to conduct towerco’s and investors’

financial, commercial and structural due diligence on a potential tower transaction in Africa? Gulfraz Qayyum, Managing Director, Citigroup: The viability of tower investments is critically linked to marketing and lease-up potential. Get a feel for the market rate and potential tower overlaps. The top tower operators have become highly sophisticated in identifying sites with potential for colocations and this sort of tool is invaluable. Ensure there is enough wind-loading capacity to meet your colocation targets and calibrate this with expected augmentation capex. Likewise, getting a grip on and being able to reduce operating costs, particularly energy costs, is crucial. It is also key to understand the specifics around the ground leases (maturity profile, escalation


etc.) to gain comfort around one of the larger cost components. Sometimes taken for granted, make sure you have a solid anchor tenant counterparty. Lastly, regulation remains an understated risk. Governments are increasingly active in managing the local telecom industry and understanding the idiosyncrasies of local regulation can be a key risk mitigant for all stakeholders. In fact it is probably advisable to establish a relationship with the regulator prior to investing to get a view on the direction of regulation. TowerXchange: How does the perspective of a potential investor differ from that of the potential towerco buyer - do they emphasise different data points? Gulfraz Qayyum, Managing Director, Citigroup: At the risk of generalising and over-simplifying, towerco operators exercise a standard of rigour in excess of what a non specialist buyer or financial investor would. For example, gritty details such as quality of tower structures, fuel theft, fencing, battery standards and access / proximity to grid et cetera. We like the combination of sophisticated and well capitalised financial sponsors with the tower operators who have amassed significant expertise and have the pragmatism and can-do attitude required to be successful in Africa. TowerXchange: For what typical multiples of Tower Cash Flow have we seen towers changing

“ “The viability of tower investments is critically linked to marketing and lease-up potential. Get a feel for the market rate and potential tower overlaps


hands in Africa? Is there an upper threshold that will ‘price out’ the ‘Big Four’ African towercos, and is there a lower threshold below which operators are reluctant to part with the assets? Gulfraz Qayyum, Managing Director, Citigroup: Multiples are not an established input into the valuation exercise in many emerging markets. The reason is deal parameters such as anchor lease rates and prevailing market clearing rates vary significantly. There are also no (or a limited number of) disclosed private or relevant public market benchmarks. Buyers and sellers pay attention to the often unique cash flow and risk characteristics of each deal and therefore rely on DCF analysis. The price at which any trade is struck is clearly a function of the buyer’s return/value targets and the fit of any asset within its portfolio, whereas for the operators there are several aspects of the sale which are important other than the price, including the ability of the towerco to deliver reliable service and up time. Nevertheless, there is definitely a reserve price at which selling the towers becomes unattractive compared to other solutions such as services agreements or the status quo. TowerXchange: Africa is effectively in competition for towercos’ capital with other global tower markets - how do opportunities in Africa compare with opportunities in other emerging markets, or indeed with mature tower markets? Gulfraz Qayyum, Managing Director, Citigroup:

Africa, and some other emerging markets, for example in developing Asia, are unique in thata) there is a pressing need for cost rationalisation and more efficient ways of doing business;b) the markets are still underpenetrated and we foresee growth, both subscriber and technology driven andc) there are ample opportunities for capital to be put to work in the tower segment. We are also seeing specialist Africa money invested in or looking seriously at tower opportunities. On a more general note, passive infrastructure outsourcing is a proven strategy in most geographies and we expect capital to continue to be available for the right opportunities regardless of where - subject of course to risk adjustments. American Towers is a good case in point, where the company continues to invest in its developed home market and has more than dipped its toes in Latam and Africa. TowerXchange: The tower market has been relatively nascent in MENA compared to SSA - why and do you forsee that changing in the next 12-18 months? Gulfraz Qayyum, Managing Director, Citigroup: You’re right. In fact, whilst there have been several attempted deals in MENA, none have come to fruition to date. I would say its because the operators don’t need them as much as they do in Africa, where large coverage requirements, ever declining ARPUs and continuing strong competition

are motivating operators to seek out more effective business solutions. Many operators in MENA have not felt it necessary from an operational or financial point of view. They have either been happy to sit on the sidelines or adopt tough negotiating positions which cause deals to collapse. Is the situation likely to change? I think it will, but not uniformly. In some of the larger markets like Egypt, Iraq and possibly Saudi, we can expect tower initiatives. The market reality, one where growth has tapered and capex budgets are stretched as operators respond to an explosion in data traffic, is ripe as far as sharing or monetising tower assets is concerned. In the smaller markets, or markets with limited competition, I think tower sharing is still quite some time away, unless mandated by regulation. TowerXchange: What’s your personal view of the transaction volume likely in Africa in the coming 12-18 months? TowerXchange forecasts that up to 30,000 African towers are currently for sale or coming imminently to market - does the tower industry have the ‘digestive capacity’ to almost treble in size in the next year or so? Gulfraz Qayyum, Managing Director, Citigroup: There are undoubtedly willing sellers and willing buyers and investors. The key question for me is whether there are sufficient industry resources within the towercos to handle this magnitude of towers. In other words, if there is a bottle neck in the short term, it will be more operational than financial

A guide to tower transaction due diligenceAnalysys Mason have conducted due diligence on 25-30 tower deals

Marco Cordoni, Senior Partner, Analysys Mason


TowerXchange: Please introduce Analysys Mason, explaining the role you typically play in advising on tower transactions, and your experiences of working with the emerging market tower industry.

Marco Cordoni, Senior Partner, Analysys Mason: Established 30 years ago, Analysys Mason is a strategic consultancy and research firm dedicated to the TMT sector.

Over the last 10-15 years, we have worked on TMT assignments in all but four African countries, advising on operators’ strategy, regulation, spectrum, mobile and fixed licence support, privatisations, financing, and M&A transactions.

We have extensive experience of advising on and conducting commercial and technical due diligence on tower transactions in Europe, Africa, the Middle East and Asia, and we’re seeing more and more tower deals in South America.

Tower sales and leaseback transactions are a relatively recent development in Africa, and Analysys Mason has been involved in a large proportion of the African tower deals to date. In Africa, we have covered 15 different countries specifically for tower due diligence or market sizing exercises, and we’ve conducted due diligence reviews on 25-30 tower transactions worldwide. While we have offered strategic support to a number of operators considering tower spin-offs, a significant proportion of our work to date has

Marco Cordoni is a Partner with Analysys Mason and the Head of the London office. Marco has been advising on strategic, operational and corporate finance matters within TMT for more than 16 years. Since joining Analysys Mason in 2006, Marco has supported numerous M&A and debt financing transactions on behalf of TMT players, investment banks and private equity groups in Europe, Africa, Middle East and the Asia-Pacific region. He has directed more than 60 of Analysys Mason’s due diligence and valuation assignments for such transactions. He has also undertaken various strategy and business planning assignments on behalf of major international telecoms operators, infrastructure players and media groups.

Read this article to learn:< What is included in the financial, legal, technical and commercial due diligence work underpinning tower transactions

< What is evaluated in a technical due diligence review: the structure and capacity of towers; maintenance and energy

opex; monitoring systems and fuel theft; and uptime

< How Analysys Mason assesses potential demand in a market to forecast tenancy ratios, BTS opportunities and lease rates

< The value of small rooftop installations and other sites with limited upside potential

< Mitigating against exchange rate and inflation risk through hedging and indexation

Keywords: How to Guide, Lawyers & Advisors, Strategic Consultancy, Investment, Capex, Deal Structure, Rental Rates, Valuation, Transfer Assets, Due Diligence, Opex Reduction, Tenancy Ratios, Co-locations, Data Room, Build-to-Suit, Business Case, Country Risk, Tax, Uptime, Site Surveys, Rooftop, Masts & Towers, Asset Register, Sales & Leaseback, Private Equity, Debt Finance, Africa, Asia, Europe, Middle East, Analysys Mason

been on the buy-side. We’ve worked for most of the major African tower companies and/or for their shareholders and lenders - advising on M&A and debt and equity raising.

We’ve also supported operators in developing their business cases for, and implementations of, network sharing. TowerXchange: What does the due diligence on a tower transaction consist of? Marco Cordoni, Senior Partner, Analysys Mason: It requires similar processes and documentation as for any other M&A due diligence assignment. The main components are typically financial, tax, legal, technical and commercial due diligence reports. The financial due diligence team - usually a Big Four accountancy firm - will audit accounts to understand historical financial performance or to build a pro-forma P&L statement for the towerco. There may also be a tax due diligence, to determine the most tax efficient structure of a new towerco. Again, this is typically undertaken by the same, or sometimes a different, Big Four accountancy. A law firm with experience of tower transactions will typically conduct the legal due diligence aspect, which can be very complex for towers in emerging markets, since property rights might not be well established and documented. The law firm will need to look at ownership titles and legal documentation on a tower-by-tower basis. It may also establish the ownership structure of the towerco and draft

the share purchasing agreement. It will also draft several other commercial documents, such as the master lease agreement and service level agreements. Analysys Mason’s usual role in tower deals is to undertake the commercial and technical due diligence. On the technical side, we typically review: < The structure of towers to determine how sound they are and whether any remedial capex is required< The availability of space for additional tenants and any augmentation capex required< Ongoing structural maintenance requirements and associated costs< Other opex with a particular focus on energy costs (considering both diesel and electricity costs)< Capex, such as the upgrade or replacement cycles for generator sets, batteries, solar panels, and any other hybrid energy equipment< The status of monitoring systems and access control systems< Uptime TowerXchange: What’s the typical sample size, and how long does it take to conduct the technical due diligence on an emerging market tower transaction? Marco Cordoni, Senior Partner, Analysys Mason: Depending on the investor, the sample size for a


technical due diligence can be anything from a few dozen sites, up to perhaps 10% of the portfolio. There have been examples of a full technical due diligence on all sites, but that’s more often done on the sell-side. Frequently, to expedite closing, technical due diligence is conducted on a sample of towers and continues after an initial close with a conditional offer. This includes legal mechanisms to recover some value, if the towers’ condition deviates significantly from the asset register. The time required for due diligence depends on how many people you put on the ground, the size of the country, and ease of access and the number of towers. For example, it can take six months or more to visit every tower in a big portfolio, while a few hundred site visits take much less time.

“ “

Frequently, to expedite closing, technical due diligence is conducted on a sample of towers and continues after an initial close with a conditional offer. This includes legal mechanisms to recover some value, if the towers’ condition deviates significantly from the asset register


There are also situations where investors don’t need a technical review and only require commercial due diligence. TowerXchange: What are the key measures of value in the tower industry - what is Analysys Mason evaluating in commercial due diligence? Marco Cordoni, Senior Partner, Analysys Mason: On the revenue side, we evaluate three key metrics: the potential tenancy ratio on the existing portfolio; build-to-suit (BTS) opportunities; and the potential lease price. The most important metric is the potential tenancy ratio on the existing portfolio to be acquired. We evaluate the co-location revenue that can be achieved from the portfolio as it stands - which depends on structural factors revealed in the technical due diligence - as well as the attractiveness and uniqueness of locations, and the size of the network compared to the tower market in the country. It’s also important to consider operators’ roll-out plans for coverage extension and densification for capacity requirements, and what other independent towers are available for lease. Major mobile telecoms trends are also important, such as the prospects for increased mobile penetration and the progress of 3G and 4G roll-outs.Most tower transactions also include a BTS agreement, defining pricing for the towerco to build new towers for the anchor tenant on the back of the towerco owning the portfolio, or for another mobile player. BTS opportunities are typically more capital-intensive, with lower return on investment

than buying and co-locating towers, but they still contribute positively to the valuation. Lease rate pricing is less risky to forecast than BTS and tenancy ratios, as contracts are much more transparent and stringent. Nonetheless, lease rates have come down in Africa - in Nigeria, for example, the initial tower lease rates were as high as US$8000 per month, but are now closer to US$3000-4000.

The commercial due diligence will also establish the current opex and potential future opex savings, as energy opex is particularly important in Africa. We also assess the capex for any BTS programme. If a technical due diligence has been performed, this part of the commercial due diligence will be informed by the output of the technical review.

Alternatively, the analysis of opex and capex is typically at a higher level. TowerXchange: How important is it that a culture of tower sharing exists and there is an established ‘market rate’ for lease pricing? Marco Cordoni, Senior Partner, Analysys Mason: Whether operators were used to sharing towers was a key driver of tenancy ratios a few years ago, when there were few towercos outside of the US and India. But now, most operators are used to the cashflow benefits of selling tower assets and the role that independent towers play in network planning. There are still a few operators who don’t seem to see tower sharing as a viable model, but they are becoming the exception rather than the rule. TowerXchange: Do you encounter a significant deviation between tower databases and what is actually on the site? And does this data accuracy represent the most significant challenge to closing an emerging market tower transaction? Marco Cordoni, Senior Partner, Analysys Mason: Tower databases are often inaccurate in any country, not just in emerging markets. Operators hire advisers like us to collect documentation internally. It just takes a bit of time to perfect the database. If time is of the essence, a typical workaround is for towercos to make a conditional offer, subject to a survey of each tower to check they are in the advertised condition. So it’s only a

“ “On the revenue side, we evaluate three key metrics: the potential tenancy ratio on the existing portfolio; build-to-suit (BTS) opportunities; and the potential lease price

question of time, not really a challenge to closing deals. The single most important item is a site database with accurate co-ordinates of all sites to be sold. For most transactions, we can obtain the locations of all the other operators’ and towercos’ sites, which helps assess the attractiveness of the tower locations and enables us to construct a detailed model of the potential upside in terms of co-locations. TowerXchange: How do you assess potential total demand in a market?

Marco Cordoni, Senior Partner, Analysys Mason: We build forecasts of expected mobile penetration and traffic (voice, data and broadband access on connected devices). This builds into a forecast of


the number of sites each operator will roll out by technology for capacity reasons. We also talk to the operators themselves to understand their roll-out plans, examining their starting points, appetites and timelines to close any coverage gaps, while considering the impact of competition on network extensions.

We also evaluate the potential for new market

entrants and new spectrum auctions, as well as any potential consolidation among operators. We combine all these analyses to build an understanding of total site demand by operator and by technology, based on which we can forecast co-locations (tenancy ratios) and BTS requirements. This is a complex model. While we can build a solid forecast of the pipeline for co-locations and BTS for the next two years, the further into the future you

“ “We combine all these analyses to build an understanding of total site demand by operator and by technology, based on which we can forecast co-locations (tenancy ratios) and BTS requirement

Analysys Mason’s projections for the numbers of towers and the co-location ratio are determined using a series of interconnected modelsAssessment of demand

< The market subscriber and traffic parameters are used to drive the incremental 2G and 3G sites required for each operator within the markets by region (regions and cities)

< This incremental site demand is then allocated to towers through the co-location model. This depends on the available capacity, weighted by appropriateness, of other operator.towerco tower portfolios and the operators’ propensity to self build vs. using build to suit

Mobile penetration

Current and site situation for each

operator and towerco

3G take-up

Voice and data usage

Operator market share

Economic population

Data and MBB penetration

Input into coverage and capacity (demand) modelsCalculation

Model outputModel

Incremental demand

Co-location ratio

Capacity model

Coverage modelCo-location

model

Number of subscribers BTS or self buid %

Traffic Capacity of towers and sites

Site capacity Upgrade of sites and towers


forecast, the more assumptions you have to make. If there’s no existing independent tower market in place, there’s no established pipeline to compare it to, so it can be trickier to derive a robust understanding of short-term demand for co-locations. TowerXchange: Are there ‘bad towers’ that towercos don’t want? Marco Cordoni, Senior Partner, Analysys Mason: Within a portfolio there are always some sites with limited upside potential because they are close to other towers that are available for rent; they are worth less to an investor than a tower that is likely to have two or three tenants. There is still potential return on those poorly located towers through ongoing anchor tenant lease revenue, and the valuation model is simpler, so we adjust the valuation accordingly. For example, you can sell small rooftop sites with 1-2m poles and no space for additional equipment, but towercos are likely to pay only a small price for them, because they require limited capex to be built and they have limited co-location potential. In general, you can sell just about any kind of rooftop, mast or tower, but they go for different prices according to the expected duration of the income, and the potential upside from investing in additional capacity and attracting co-locations. TowerXchange: How does country risk factor into towercos’ valuations of assets?

Marco Cordoni, Senior Partner, Analysys Mason: We leverage forecasts and analyses by referring to third-party sources (such as the Economist Intelligence Unit, Euromonitor and the World Bank) to evaluate country risk. Sophisticated investors are increasingly willing to invest almost anywhere, taking into account the specific country risk. Exchange rate risk and inflation remain key drivers for co-location and BTS pricing. Towercos and their investors can protect themselves through indexation - having inflation factored into co-location and BTS contracts. Exchange rate

fluctuations can be especially impactful on costs, so provisions are often made to account for the cost of diesel price fluctuations, given that the cost of fuel is significantly affected by US dollar exchange rates. This doesn’t protect you from risks related to the repatriation of revenue, but banks offer various options to hedge against forex risk, although this may not be available for smaller and more developing countries. TowerXchange: Investors’ first questions to us are usually about the potential consolidation of operators and impact on potential tenancy ratios, yet there remains recognition that the creditworthiness of tenants, particularly anchor tenants, is critical. Does operator consolidation ultimately make the tower sector more or less attractive as an investment opportunity? Marco Cordoni, Senior Partner, Analysys Mason: In general, large mobile operators are typically fairly creditworthy and, in the unlikely event that they did collapse, it is highly likely their assets would be bought by other parties with a relatively limited effect on long-term demand. Operator consolidation is a downside - fewer operators means a lower co-location ceiling and makes the towerco financially dependent on a smaller number of customers. This applies to network sharing as well, as it reduces the overall demand for new sites. But I agree that if tenants are not financially viable in the long term (possibly the case for some small subscale operators) there is an upside to consolidation

“ “

you can sell just about any kind of rooftop, mast or tower, but they go for different prices according to the expected duration of the income, and the potential upside from investing in additional capacity and attracting co-locations

Special feature:

In 2013, President Enrique Peña Nieto issued a constitutional amend aimed at transforming the Mexican telecommunications industry. As part of the reform, a new regulatory agency was created - IFETEL - with constitutional status and a mandate to ensure economic competition and universal coverage. The new body is independent from the executive and legislative powers, unlike COFETEL, the previous acting agency.

By looking at the current status of the market, the rationale behind the reform is evident. Out of the four carriers active in Mexico, América Móvil’s Telcel, is the most powerful actor with market share beyond 70%, with the remaining market being split among Movistar, Iusacell and Nextel.

Changing the status quo in a country heavily dominated by one company is not an easy task and we will have to wait until the secondary legislation comes into place, later this year, to fully evaluate the practical impact of the reform.

The Mexican tower industry is also being transformed. Out of the 22,500-23,000 Mexican telecom towers, 14,000 are owned by Telcel and 8,000 by American Tower but it has been estimated that 70,000 towers are needed in Mexico to reach 90% coverage. An astounding figure especially if we take into consideration that Mexico has one of the highest costs per tower in the region.

Mexico case study

Don’t miss:

65 The Mott MacDonald Share Square for Mexico

69 BMI: perfect storm for investment in Mexican towers

73 Mexico Tower Partners: Marc Ganzi’s “poster child for data”

76 IIMT: 70,000 towers needed to achieve 90% coverage

80 Ve Por Más: could infrastructure sharing be mandated?


Share Square: MexicoMexico Mobile OperatorsAt the end of Q2 2013 there were 31.3m 3G subscriptions in Mexico (30% of subscribers) and around 495,000 4G subscriptions. Axtel has been offering 4G services since 2009 – using WiMAX to serve voice and broadband subscribers – and had 347,000 subscribers (70% of the 4G market).

In terms of LTE, Telcel had 122,000 subscribers with the remaining 25,000 pertaining to Movistar. Telcel launched LTE services in 9 cities in November 2012 – and planned to spend US$3.95bn on network upgrades between 2012 and 2014 - with least US$1bn of this on 4G equipment, enabling coverage expansion to 26 cities covering 65% of the population by April 2013. Movistar launched around the same time in three cities, planning to spend over US$234m on its LTE rollout by year-end 2013. According to newspaper El Universal, Nextel plans to launch LTE services in mid-2014. The report cites Gustavo Cantu, Nextel de Mexico COO, as saying that the 4G network will be available in Monterrey, Guadalajara and the Federal District initially, before later being expanded nationwide.

Mobile Market competitionTelcel’s large market share of 69% is a highly significant factor when considering the dynamics of the Mexican mobile market – being particularly high for a market with such a large number of subscribers. This has implications both for


Mexico has a population of 116.2m and had 103.7 million mobile subscribers in Q2 2013, giving mobile penetration of 89% - up from around 85% a year previously. 83% of mobile subscribers had a pre-paid account.

There are five mobile operators serving the market, with Telcel (America Móvil) enjoying a dominant position with 69% market share, significantly ahead of ahead of Movistar (Telefónica) with 19%.

Opportunity for TowerCo entry with focus on high Lease Up Rate (LUR)

Opportunity for Outsourcing by MNO to TowerCo

Limited opportunity for new entrant TowerCo

3G 4G

Cu

rren

t Sh

arin

g

Non

ePa

ssiv

eA

ctiv

e

Technology Deployment

Telcel

Movistar

Iusacell

Nextel

Axtel

Mexico Mobile Operators

69%

19%

8%4%

4 MNOs: Telcel, Movistar, Iusacell, Nextel

Subscriber penetration at ~89% - with 30% 3G. LTE launched in late 2012 – c 150,000 subscribers as of Q2 2013.

Sharing not mandated by regulator – although some sharing is taking place.

Three towercos established, lead by American Tower – with less that a third of towers in towerco hands at present

Marketing opportunity dictated by on-going 3G (and to a lesser extent 4G) rollout - meaning demand for significant increase on existing tower stock of c.25,000 towers. Will be aided if new regulator’s efforts to reduce dominance of Telcel succeed.

Potential for consolidation or acquisition of smaller towercos

Mexico

separately in order to provide competing services.

On the downside, NII announced that it has recently modified its customer disconnection policy for inactive pre-paid subscribers, and as a result now expects a net subscriber loss of approximately 400,000 in Mexico for the fourth quarter of 2013 (thus reducing its market share).

Government moves to address market dominanceThe government has also taken steps which may result in Telcel’s dominance being reduced, although historically its efforts have had limited effect. Most recently, in June 2013 Mexican President Enrique Pena Nieto signed legislation designed to enhance competition, as part of which a new regulatory agency, Instituto Federal de Telecomunicaciones (Ifetel), was created – replacing former regulator Cofetel.

In the past Cofetel also used spectrum auctions as an opportunity to help adjust market imbalance. This is particularly important given the fact that data traffic is predicted to grow exponentially and that the incomplete coverage of fixed networks means wireless technologies will have a critical role to play in the delivery of broadband. The straightforward release of spectrum to existing players thus risks shoring up Telcel’s position. In this regard, past spectrum tenders have produced

some positive results, with Tenders 20 and 21 in 2010 leading to Telefónica and in particular Nextel gaining significant holdings in MHz.

Ifetel is also reportedly examining a number of different options for the creation of an independent operator that would use the 700MHz band to provide wholesale broadband services. According to BNamericas, which cites Ifetel’s head of regulatory policy Luis Lucatero, it is understood that the new operator could offer services using 700MHz spectrum as well as the dark fibre infrastructure belonging to state-owned power company Comision Federal de Electricidad (CFE). It remains unclear whether 2.5GHz spectrum would be incorporated in plans for the shared network. TeleGeography notes that as part of telecoms reforms approved in April 2013 it was revealed that a 90MHz block of 700MHz spectrum would be handed to state-owned Telecomunicaciones de Mexico (Telecomm Telegrafos). The company is expected to use the frequencies to deploy a wholesale network once the spectrum in question is freed up after the analogue switch-off, planned for 2016.

In October 2013, Mexico’s government was reported to have agreed to a deal with those companies holding spectrum in the 2.5GHz band under which it will recover a significant portion of such frequencies. According to Reuters, the state has struck an agreement with concession holders,


competition in general and the tower sharing market.

Former telecoms regulator Cofetel’s attempts to attract a new international player into the market were not successful, perhaps owing to the very dominance of that player and a perception that attempts to counter it have so far failed. However, other market players are making notable efforts to make gains. For example, in November 2013 Bloomberg claimed Telefónica had approached potential acquisition targets and partners in Mexico – and it is understood that Telefónica may have held discussions with companies including Grupo Iusacell, Grupo Televisa and Megacable. According to Reuters, Telefónica has also said that its Mexican subsidiary aims to ink deals with between five and ten MVNOs by the end of 2014 – on the back of MVNO deals signed in 2013 with Virgin Mobile and supermarket retailer Coppel.

It was also reported in January 2014 that Telefónica and NII Holdings have signed an agreement under which the former will provide wholesale nationwide voice and data coverage services to the latter’s Nextel-branded units in Mexico (as well as Brazil). NII Holdings has commented that this will expand the areas in which Nextel customers using 3G services can access voice and data services. It was noted, however, that the two companies will continue to manage their spectrum and network assets

Whilst tower sharing has not been directly mandated, there some are legal provisions designed – albeit unsuccessfully – to promote the sharing of infrastructure. For example, the 1995 Federal Telecommunications Law (FTL) requires that public rights of way are made available to a licensee on a non-discriminatory basis – including ducts and poles on which public networks are installed. The FTL also requires dominant carriers to meet requests for sharing such facilities. However, this requires the designation of a carrier as being “dominant” – something which it has not been possible to achieve to date. 2009’s Technical Plan on Interconnection and Interoperability put forward proposals for sharing ducts, poles and towers – but these proposals were suspended as a result of legal action taken by Telcel, Telefónica and Telmex.

As it stands, there is currently no requirement for operators to share passive infrastructure. This is particularly pertinent, given the labyrinthine and time-consuming procedures for securing the permits and rights-of-way required to deploy masts and towers. A 2012 report by the OECD implies, for example, that there are several issues Mexico could address to make it easier to secure rights of way, including: a) reducing the high number of procedures and permits required; b) tackling the differences in written and unwritten rules and the variation in these

rules from county to county; and c) reducing the incidence of extortion / corruption in application processes. The difficulty in obtaining the permissions required in a timely manner has historically played into the hands of Telcel, which already owns a national network of facilities, as the incumbent, and has thus needed to apply for fewer permits for rights of way. This has helped Telcel to expand its coverage more quickly that its rivals.

Ifitel announced in December 2013 that it had started fresh proceedings to determine whether America Móvil (via subsidiaries Telcel and Telmex) and Televisa are dominant players. In time this may lead to structural changes; nevertheless, in the short term the status quo is likely to continue regarding the imbalance of the market.

The tower sharing marketWhilst tower sharing has not been effectively mandated, tower companies are active in Mexico. Indeed there are three main towercos in operation: American Tower Corporation (ATC), Inversiones e Infraestructura Mexicana en Telecommunicaciones (IIMT), and Mexico Tower Partners.

ATC established American Tower de Mexico in 1999 and its site database for Mexico lists 7,559 sites. In November 2013, NII Holdings

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including MVS Comunicaciones, which holds a significant portion of the disputed spectrum, to reclaim 68% of the available space in the 2.5GHz band. The intention is to allow the frequencies to be refarmed for the deployment of 4G. At that time it was said that nine of the eleven licence holders had voluntarily given up at least a portion of their spectrum holdings, while the Secretario de Comunicaciones y Transportes (SCT) was said to have confirmed that the concessions for the remaining 60MHz of spectrum that was not being returned had been extended for 15 years.

However, subsequently cable operator Megacable has reportedly called for ‘just compensation’ in return for surrendering a portion of the spectrum it holds in the 2.5GHz band – stating, according to BNAmericas, that the government ‘can’t just come along and take the band without some sort of compensation’. Such a position comes as the operator has said it has invested money in using the disputed spectrum to offer pay-TV services. In addition, Iusacell is said to have also filed a lawsuit against the SCT for its decision to renew licences for the 2.5GHz spectrum that are not being returned. The operator is said to have argued that the extension of the concessions violates a number of constitutional articles.

Another way in which the government has sought to stimulate competition has been through encouraging infrastructure sharing.

www.towerxchange.com | TowerXchange Issue 7 | XX| TowerXchange Issue 7 | www.towerxchange.com68

announced completion of the sale of a number of communications sites in Mexico to ATC – with 1,483 towers divested for MXN4.95 billion (US$374.3m). Under the terms of the deal, Nextel de Mexico is understood to have agreed to lease back the sites from ATC for a minimum twelve-year initial lease term, while it also has the option to extend the lease for additional renewal periods. NII Holdings also noted that its agreement with American Tower provides for a post-closing adjustment period, after which it will recognise the sale of the sites and any associated gain, which will be recognised over the lease term. At that time NII Holdings has said it will record a capital lease liability of approximately US$80m to US$125m, while it says it expects to complete the sale of the remaining communications sites in Mexico that were agreed to be sold once closing conditions are met.

IIMT is notable for signing an agreement with the CFE – the Mexican state-owned electrical utility – which gives IIMT the right to utilise CFE’s infrastructure and therefore to install telecoms equipment on CFE’s towers. IIMT is working with all four main mobile operators and owns or manages around 250 towers.

Mexico Tower Partners was formed after the 2013 acquisition of Global Tower Partners (GTP) by ATC. ATC acquired all GTP’s assets and operations with the exception of those in Mexico – with the

Ed Siegle is a Principal Consultant in Mott MacDonald’s Technology & Communications Division. He has 20 years of experience as a consultant, primarily focused on the telecommunications industry, working for operators, vendors, investors, regulators and public sector organisations. His particular expertise lies in market analysis, commercial due diligence, product and market strategy development, demand forecasting and business case production. In the course of his career he has worked for clients in the UK, Europe, the USA, Africa and Latin America. He has spent over 2 years living and working in Latin America, including 18 months in Brazil where he helped establish new offices for two consultancies. Over the past 3 years he has been part of a Mott MacDonald team commissioned to execute a series of advisory projects for towercos looking to invest in developing markets

Guest columnist Ed Siegleremaining business becoming Mexico Tower Partners. It owns and operates approximately 600 towers in Mexico.

Whilst sharing has not been mandated, operators in Mexico are sharing infrastructure, driven by common strategic and commercial concerns. In 2012, for example, Movistar announced a sharing deal with Iusacell - with the five-year deal expected to cover the sharing of cell sites as well as fibre-optics. The agreement between the pair was expected to see Telefónica benefit from an improved level of coverage in larger cities, where Iusacell has a more developed network, while for its part Iusacell will be able to benefit from Movistar’s rural network.

Whilst the issue of market dominance is addressed, sharing is likely to be stimulated by a need for competing operators to roll-out as quickly as possible without lengthy individual permit applications. It will also be driven by the fact that there is likely to be a shortage in the tower stock – with around 25,000 towers in existence, against a forecast market requirement for 70,000 towers. This is likely to mean there will be some good opportunities for tower companies considering entering the market. Whilst some difficult market conditions remain to be negotiated, the creation of Ifitel and moves to address the dominance of Telcel give hope that the full potential of the market will be unlocked

Perfect storm for investment in Mexican towersOpening market should see the cost of individual towers drop and push for further tower sharing among key players

Jake Grant, ICT Industry Analyst, BMI

The next two years could prove to be a huge boon for the towers industry in Mexico, as regulatory, economic and business environment factors contrive to create a perfect storm for investment in the country. It is one of the more attractive markets from a telecoms perspective as it is the second most populous country in Latin America, with a population of over 111mn. However, it records one of the lowest mobile penetration rates in the region at 92.1%, according to BMI data as of September 2013. While most other Latin American markets are well over 100%, growth in Mexico has been held back by the dominant presence of América Móvil. Telecoms reforms signed into law in June 2013, combined with an increasingly strong private consumer, favourable demographics and a stronger peso due to an improvement in trade and investment dynamics, points to opportunities for growth in the Mexican towers industry.

Peña Nieto’s Reform Agenda To Encourage Competition

Growing social discontent seems to have forced the government under President Enrique Peña Nieto to address the multitude of monopolies and duopolies operating in the country and aims to reform the telecoms, energy and oil sectors. Monopolistic business practices in Mexico have long elevated consumer prices in sectors such as telecoms, television, energy and food manufacturing, weighing on middle class growth and exacerbating income inequality. For example, the OECD claimed telecoms giant América Móvil, which we believe serves around 80% of the country’s fixed-line

Read this article to learn:< The status of the Mexican telecom industry: key players, ARPU, EBIDTA data and penetration rate

< The new telecom reform agenda and its potential impact on the local sector’s growth

< Latest tower deals in Mexico and their comparison with other regional countries

< Ifetel’s new role and its possible impact on the current telecom scenario

< The macroeconomics of Mexico and related expectations for the future of the telecom industry

The next two years could prove to be a huge boon for the towers industry in Mexico, as regulatory, economic and business environment factors contrive to create a perfect storm for investment in the country. It is one of the more attractive markets from a telecoms perspective as it is the second most populous country in Latin America, with a population of over 111mn.

Keywords: BMI Analysis, News, Mexico, MarketWatch, Central America, Market Overview, América Móvil, Ifetel, Penetration Rate, Towercos, ARPU, EBIDTA, Telcel, Axtel, Iusacell, Telefónica, Telmex, NII Holdings, American Tower, Nextel, GDP, 3G, 4G, Co-locations, Infrastructure Sharing, Market Forecasts, Regulation, Investment, Site Level Profitability


market and 70.7% of its mobile phone market as of Q313, has regularly overcharged its clients by a total of nearly US$13.4bn annually.

BMI believes the dominance of América Móvil has led to a subdued tower sharing industry in Mexico, especially compared to the strong activity in Brazil and given Mexico’s close proximity to the US. Since end-2011 there have been nine major tower transactions in Brazil and only four in Mexico during the same period. Throughout Latin America, operators have generally reported falling ARPU levels and saturated penetration rates as they look for growth opportunities in rural regions. The costs of expanding infrastructure to these areas can be prohibitively expensive as a low return on investment and the cost of tower management makes it unattractive for telecoms companies. This has contributed to a rise in tower sharing through sale and lease arrangements that allow independent owners to run the communications infrastructure more efficiently, renting out access to all mobile operators at lower costs.

Mexico differs from the rest of the region because it is not characterised by market saturation due to penetration being at 92.1% and Telcel’s ARPU has remained fairly stable at about MXN167 since 2008. In Q313 its EBITDA margin was at 43.9%, far exceeding the 32.6% it posts for its total group operations and demonstrating the superior profitability of its Mexican unit. Of the four major tower transactions in Mexico since 2011, none involve the sale of towers by Telcel, with its smaller rivals Axtel, Telefónica and Iusacell instead being

the selling party. Telcel’s dominant position allows it to be insulated from the industry and competitive trends, which are negatively affecting its rivals and therefore has no need to sell communication towers. Further, its dominant position is maintained by the national network it built through its fixed-line incumbent sister company Telmex, also owned by América Móvil. The lack of an effective policy has forced América Móvil to share infrastructure, selling towers to independent providers should allow Telefónica to access strategic sites outside of its coverage and this will therefore deteriorate América Móvil’s position. This limits the supply of communication infrastructure available for purchase by independent tower companies.


10.2%

Telcel

Nextel

Movistar

Iusacell

Source: BMI, operators

Mexican Tower Industry To BenefitIn a Q413 transaction between NII Holdings and American Tower, the mobile operator agreed to the sale of 1,483 towers in Mexico and 2,790 in Brazil. Despite there being a 1,300 difference in the number of towers, the price paid by American Tower was fairly similar at US$323.3mn in Mexico and US$413mn in Brazil. This works out to an average price per tower of roughly US$148,000 in Brazil and US$252,000 in Mexico. The price of individual towers can vary depending on factors such as foreign exchange rates, the strategic value of the tower location and coverage, as well as the type of technology utilised and the quality it provides. However, BMI data show towers in Mexico fetched a higher price than other major countries in Latin America, dating back to 2011. Selected data from major transactions in Colombia, Chile and Peru show prices for towers in the region vary from US$85,000 (Colombia 2011) up to US$280,000 (Mexico 2013). We believe this is again result of América Móvil’s monopoly, and the limited supply of available towers, but also the bureaucratic difficulties operators face when obtaining permits to deploy network infrastructure in Mexico and the lack of infrastructure sharing policy.

With telecoms reforms set to come into effect during 2014, the dynamics of the mobile market in Mexico could undergo a significant transformation and therefore present opportunities for the tower industry. The new regulatory authority, Ifetel, has been granted more power than its predecessor and will have the authority to order infrastructure

Telcel Dominates The Mobile Market

70.7%

18.7%

7.1%

3.5%

Market Share (%), Q313


sharing and even the break-up of Telmex and Telcel. Both scenarios present opportunities for tower companies as América Móvil’s superior national coverage will become less of an advantage. Rather than be able to set its own prices and charge excessively high mobile tariffs, it will be more exposed to competitive pressures and therefore more willing to sell infrastructure. Simplifying the process of obtaining permits for network deployment, combined with these reforms, should lead to more investment in the telecoms industry and see the average prices of towers in Mexico decrease.

In December 2013, Ifetel identified América Móvil as a dominant company in a preliminary filing, but will continue to investigate before pursuing tougher regulations. The decision was widely expected, but requires secondary legislation to liberalise the telecoms market, which has been delayed because Congress missed its deadline to implement them. News that the second round of legislation has been delayed does not bode well for the reform timeline as it will be pushed back until February 2014. The companies will then have until March to respond to the notifications and decide whether to challenge them. BMI still expects the secondary reforms to be passed, as the delay was due to a backlog of other legislation, rather than lobbying from special interests or a lack of political support from opposition parties. Mexico performs reasonably well in our short-term political risk ratings, owing to a relatively stable external profile and a benign inflationary outlook. Overall we do not expect a substantial deterioration in the country’s

long-term political risk rating, which remains one of the strongest in the region due to a relatively stable constitutional framework and system of government.

Encouraging Macroeconomic Growth In 2014We forecast Mexican real GDP growth to rise from 1.5% in 2013 to 3.5% in 2014, amid acceleration in household spending growth and an improvement in investment, bolstered by the successful reform drive in 2013. Exports will also pick up this year as US demand for manufacturing exports strengthens. We forecast a gradual appreciation of the peso to follow suit. Our expectation that monetary policy will normalise is predicated on a strengthening US economy, which will in turn bolster demand for Mexican exports and increase inbound investment.

The combination of regulatory developments and the forecast growth of the Mexican economy bodes well for the towers industry over 2014. Further, mobile operators are continuing their drive into next generation technologies. Nextel has pledged to invest US$3bn during 2014 to deploy LTE services, while Telefónica plans to increase its LTE subscriber base by 25%. We expect to see strong growth in 3G and 4G connections over 2014, helped by the undervalued Mexican peso, which looks set for a period of substantial appreciation and will bolster consumer purchasing power. Pending spectrum auctions for the 700MHz and 2.5GHz frequency bands will also contribute to advancing mobile broadband technologies and the need for continued investment and upgrade in network infrastructure should present more opportunities for tower companies in Mexico.

Possible downside risks that could impact this view, relate to the lengthy nature of these policy

Weighted Average Price Per Tower (US$), 2010-2013

Mexican Towers The Most Expensive In The Region

Source: BMI, operators, tower companies

500,00

100,000

150,000

200,000

250,000

Brazil

Chile

Colum

biaPer

u

Mex

ico0


procedures, which have already been delayed to February 2014. Further setbacks will push the impact of the reform into 2015, with the possibility of appeals by the affected companies and spectrum auction organisation and rules needing to be addressed. If these scenarios can be resolved

in a timely manner, the opening up of the telecoms market should see the cost of individual towers drop and allow América Móvil to participate in tower sharing during the next two years

http://businessmonitor.com/bmo

Mobile & 3G/4G Forecasts, 2011-2018Strong Growth Prospects Following Liberalisation

e/f=BMI estimate/forecast, Source: BMI

1020,000

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

20

30

40

50

60

70

80

90

100

40,000

60,000

80,000

100,000

120,000

140,000

3G & 4G phone subscribers, ‘000 (LHS) Mobile Phone Subscribers/100 Inhabi (RHS)

Cellular Mobile Phone Subscribers, (LHS) 3G & 4G phone subscribers/100 inhabitants (RHS)

Have you missed one of the past six editions of TowerXchange?

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Don’t miss TowerXchange’s checklist of the data you need to buy and sell towers

ISSUE 2 | FEBRUARY 2013 | www.towerxchange.com

The front lines of the African Tower IndustryWho’s who in the telecoms infrastructure supply chain

Standard Bank: aggressive bids likely to continue Helios take you inside the due diligence process Who’s who: turnkey infrastructure and law firms TowerPower: reducing Africa’s reliance on diesel

Africa’s New telecoms infrastructure journal

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Top 200 decision makers in African towers invited to TowerXchange Meetup

ISSUE 3 | April 2013 | www.towerxchange.com

Marc Rennard: Why Orange is sharing towersStructuring deals to meet the requirements of each affiliate

Why IHS invested in Cameroon and Cote d’Ivoire

Eaton CTO Thomas Jonell’s procurement priorities

Egypt’s 4 companies licensed to lease infrastructure

Growth stock ATC vs the PE-backed towercos


Tower Xchange

Tower Xchange

Join 200 African tower decision makers at the TowerXchange Meetup

ISSUE 4 | June 2013 | www.towerxchange.com

African tower market heats up

TowerXchange maps past, current and future tower transactions


< HTN, SWAP and BMI on the Nigerian tower market

< Tower deal news from Egypt, Mali, Senegal & Rwanda

< Who’s whos in Managed Services, RMS & TowerPower

< A closer look at Telkom Kenya’s deal with Eaton

Tower Xchange

Tower Xchange

TowerXchange forecasts the growth of African towercos from 23k towers today to 54k by the end of 2014

ISSUE 5 | September 2013 | www.towerxchange.com

Let’s meet up!Top 200 decision makers in African Towers converge at TowerXchange Meetup

< Vodacom and Etisalat’s tower strategy

< MTN’s tower strategy in Rwanda and Zambia

< Tanzania case study with exclusive HTA interview

< TowerCo of Madagascar, FTS and Eaton interviewsThe journal for the emerging market telecom tower industry

Tower Xchange

Tower Xchange

TowerXchange extends our coverage to include Africa and the Americas!

ISSUE 6 | December 2013 | www.towerxchange.com

The drivers of SBA Communications’ expansionExclusive interview with Kurt Bagwell, President - International, SBA Communications

The journal for the emerging market telecom tower industry

TowerXchange Africa:< Airtel’s 15,000 African towers may be sold country by country

< The risks and rewards of operating towers in DRC

< Rural infraco pioneers Connect Africa and AMN

< Insights and images from the TowerXchange Meetup Africa

TowerXchange Americas:< Brazil case study: 9,000 new towers needed for World Cup

< Accelerating new tower construction - the Lei das Antennas

< Brazil’s Ministry of Communications’ view of the tower industry

< LatAm transactions to date, plus new deals by AMT and SBAC

For a limited period, you can download back issues FREE at:

www.towerxchange.com/publicationsEnsure you have the entire back catalogue of TowerXchange, which provides a record of emerging market tower industry evolution, and a comprehensive index of proven solution and service providers in Africa, LatAm and, soon, Asia.

Mexico: a “poster child for data adaptation”Marc Ganzi of Mexico Tower Partners explains the attractiveness of the Mexican tower market

TowerXchange: What attracted you to invest in Latin America, particularly the Mexican market? Marc Ganzi, CEO, Digital Bridge Holdings, owners of Mexico Tower Partners: I have always liked the dynamics of the Latin American tower market; it really is a “poster child” for wireline replacement, as well as explosive wireless internet and data consumption. I’m particularly keen on the Mexican market, and feel we can grow our business there significantly. It can take investors quite a long time to get comfortable with the operational norms, currency, political and sovereign risks inherent in Mexico, but I’ve been there for over 15 years, which gives our investors comfort in backing us, and means we’re given the autonomy to run the business as we see fit. There’s a lot of demand for new sites in Mexico, with significant capital being deployed by Telcel and Telefónica in their desire to cover the entire population - it’s a big country with lots of rural communities and an extremely fast growing middle class. The need for coverage and capacity sites make Mexico an ideal tower market, as it clearly will need future new builds and collocation. TowerXchange: What is the current state of the tower industry in Mexico in terms of transfer of assets from operator-captive to independent towercos? Marc Ganzi, CEO, Digital Bridge Holdings, owners of Mexico Tower Partners: We are really in the middle stages of this transfer of assets now. Movistar

Read this article to learn:< The current state of the Mexican tower market and LTE rollout

< The appetite for smaller sites, DAS and small cells in Mexico

< Key metrics that define the attractiveness of a market: data growth, carrier willingness to collocate,

and a strong regulatory regime

< Comparing those metrics in Latin America and Africa

Marc Ganzi has been operating towercos in Mexico for over two decades, initially through DB Capital Partners, which owned a small towerco there, and latterly through Mexico Tower Partners, which was formed late last year as the spin out from Global Tower Partners’ Mexico operations. Today Mexico Tower Partners owns, operates and markets over 600 sites in Mexico. Fresh from closing the transaction which saw Ganzi sell his GTP towers business in the US for US$4.8bn to American Tower, TowerXchange caught up with Marc for some rapid fire Q&A on what is next for the wireless infrastructure entrepreneur and the Mexican tower market.

Keywords: C-Level Perspective, Towercos, O&M, Construction, 4G, Transfer Assets, Co-locations, Pass-Through, Regulation, Private Equity, Small Cells, IBS, DAS, Infrastructure Sharing, Americas (South), Africa, Mexico, Telcel, Movistar, Telefónica, Unefon, Nextel, Iusacell, Digital Bridge Holdings, Mexcio Tower Partners


(Telefónica), Unefon, Nextel and Iusacell have all sold their towers, only Telcel (América Móvil) still have their tower assets. The key distinction here is carriers have sold towers and that is one of the critical path items we need to see for a tower market to evolve and ultimately mature. TowerXchange: Do you think América Móvil will ever sell their towers, or do they see their network as a strategic asset? Marc Ganzi, CEO, Digital Bridge Holdings, owners of Mexico Tower Partners: Well we never say never in the tower business, but I think it would be very challenging today. Telcel has a significant coverage superiority over their peers and they have plenty of capital. This is very akin to Verizon in the United States. Personally I don’t see the value in carriers retaining towers, but in this instance Telcel has a very strategic asset in their existing towers. TowerXchange: With American Tower (which had 6,824 Mexican towers in Q3 2013), Mexico Tower Partners’ 600 sites and IIMT’s 250 towers, is there a healthy competition between towercos in Mexico? Marc Ganzi, CEO, Digital Bridge Holdings, owners of Mexico Tower Partners: The reality is that pricing is brutally competitive in Mexico for co-locations and BTS sites. When one provider controls a significant portion of market, you have to be able to provide value, rapid turnaround on new leases and give your carrier partners speed to market. We have to try harder and be more nimble to compete

effectively. Despite that market dynamic, we are growing the portfolio through core lease-up, BTS and M&A. TowerXchange: Tell us about the structure of your business in Mexico - is it a “steel and grass” model with power passed through to the tenant? Marc Ganzi, CEO, Digital Bridge Holdings, owners of Mexico Tower Partners: We’re in the business of managing the steel and the capacity therein. Yes, we also maintain the sites and keep them tiddy, but that is where our obligations end. We don’t maintain generators, that only happens in Africa (and limited parts of the United States) and our carrier partners pay their own electrcity. In Latin America towercos maintain the site, the road and the physical structure - the rest is up to the carrier. TowerXchange: Do you outsource construction, O&M or keep it in-house? Marc Ganzi, CEO, Digital Bridge Holdings, owners of Mexico Tower Partners: We outsource site maintenance in some regions, in others we do project management of new construction in-house. It’s a question of economics - if a supplier is cheaper and more efficient in a certain part of the country, we’ll use them. If we can deliver the service with our own staff more effectively, then we will handle the work directly. Our model is all about efficiency and giving our customers the best possible site leasing and new build experience. TowerXchange: What is the current progress of

LTE deployment in Mexico?

Marc Ganzi, CEO, Digital Bridge Holdings, owners of Mexico Tower Partners: To use an American baseball analogy, if we’re in the fifth or sixth inning of LTE rollout in the US, then we’re in first or second inning of LTE rollout in Mexico, with vendor selection, spectrum clearing and trials still happening. This is what makes us most excited about Mexico - that the best lease-up and new build opportunities are yet to be realized and we feel we are best positioned to realize them. TowerXchange: Are in-building solutions and small cells part of towerco business plans in Latin America? Marc Ganzi, CEO, Digital Bridge Holdings, owners of Mexico Tower Partners: Towercos haven’t focused on deployment of small cell solutions in Latin America like they have in the United States. A significant deployment remains far off for Mexico. Carriers are not proactively chasing DAS around some of the dense urban bottlenecks like here in the United States - they are currently focused on limited DAS systems like subway stations, airports and futball stadiums. These are congestion areas for 3G networks; which when moved to 4G this will be a far larger issue for the carriers. We are starting to see some smaller sites that are only 40-50’ above ground level being built in Mexico City, Monterrey, Guadalajara, and a few smaller cites, or every 400-500 yards along highways to meet specific coverage objectives.


TowerXchange: How do you see the investibility of the Mexican market, for example in terms of the value of assets in multiples of Tower Cash Flow (TCF)? Marc Ganzi, CEO, Digital Bridge Holdings, owners of Mexico Tower Partners: I don’t think of the market in these terms - transaction comps is the language used by bankers. I have always focused first and foremost on the assets themselves and the key attributes and metrics of those assets. For me, the attractiveness of a tower market on a macro basis is defined by data growth, the regulatory regime, and whether the independent tower model already exists; if carriers are willing to co-locate and if there is an efficient market for colocation. I’m less motivated by the size of the multiple; I won’t buy into a market unless I know I have customers who are willing to collocate with us. The thing we like about Mexico is that we have six substantial and willing tenants in Mexico. This is the key, to have healthy carriers willing to do business with you. The next matter is whether there is a good regulatory regime resident, this being an organized governing body that stands behind zoning requirements. In Mexico, COFETEL and the Ministry do a good job governing spectrum and competition. Privity around towers is really important and to have local and national governments willing to close the zoning door behind you. In Mexico we have some of this in place and it gets better each day, with local municipalities and states willing to stand behind their building permit approvals and processes.


Lastly it is important that we have a growing number of consumers willing to buy smartphones and tablets. We need wireless data usage and smartphone penetration (currently around 18% in Mexcio) to grow fast at the same time. Mexico has both of these metrics growing quite fast at the same time which is the tailwind we used in the United States the last 4 years to grow our business. TowerXchange: Based on those criteria, how do opportunities in Latin America compare to Africa? Marc Ganzi, CEO, Digital Bridge Holdings, owners of Mexico Tower Partners: Africa is an interesting market with many similar attributes of Latin America, that being said there are nuances here. Carriers’ adaptation to colocation hasn’t been as strong in Africa as in other parts of the world, but that takes time. The lack of collocation really stems from a lack of transparency in obtaining new building permits and zoning restrictions in rural Africa. This allows carriers and towerco’s to build on top of each other. In addition, there is a high reliance on fuel delivery to the site and this is not resident at all in Latin America. This is somewhat problematic as you then move from being in the real estate business to the fuel distribution business in Africa and that is not our core business. Wireless data consumption has yet to take off in Africa, like it has in Latin America. We need African consumers to buy more smart phones, tablets and air

cards which translates into higher wireless adoption (aka: wireline replacement). This has not happened in Africa as fast as Latin America, but that’s going to change fast. That being said, on the plus side of slower data network build outs, there is a need for cell site densification in modern parts of Africa, particularly in countries where governments are making spectrum available for LTE. This is increasing the need for cell splitting and more capacity sites, which will be a boom for tower companies over the next few years. Lastly, on sovereign risk, this is far less pronounced in Africa than people might think. In countries that have investment grade tenants, businesses with modest leverage, decent organic growth and equity IRRs in the mid-twenties, this attracts real institutional and private equity sponsors for private towercos. In this respect, Africa and Latin America are at parity for a private capital out-flow perspective

“ “For me, the attractiveness of a market is defined by data growth, the regulatory regime, and whether the independent tower model already exists

70,000 towers needed to achieve 90% coverage in MexicoWith mobile subscriptions growing exponentially, Mexico needs towers, players and regulation

William Ritchey, President, IIMT

TowerXchange: Tell us about IIMT and its evolution over the past 10 years.

William Ritchey, President, IIMT: I used to work in investment banking and helped American Tower enter the Mexican market back in the late nineties. AMT was the first tower company in Mexico and started acquiring towers when carriers decided to divest their passive infrastructure portfolios.

Then we decided to start our own company, IIMT, and since then we have been building our own towers. Moreover, we signed an agreement with the Federal Electricity Commission - or Comisión Federal de Electricidad - which is the Mexican state-owned electric utility company, widely known as CFE. Thanks to this agreement, we have the right to utilise CFE’s infrastructure and therefore are able to fit telecom equipment on their towers. This process is obviously much faster than building new sites as it allows us to fully equip a tower with the necessary network equipment in approximately 1-2 months.

To date, we are working with all four main carriers in Mexico: América Móvil’s Telcel, Telefonica’s Movistar, NII Holding’s Nextel and Grupo Salinas’ Iusacell.

TowerXchange: Can you describe the Mexican tower market and its main characteristics and challenges? At what rate is subscriber penetration growing? Are ARPUs declining or stable?

William Ritchey, President, IIMT: There is a huge

Read this article to learn:< The Mexican tower and telecom industries, and how many towers are needed to ensure 90% coverage

< Details about Mexican ARPU and subscriber penetration growth

< The role of the government in the local telecom tower sector

< The creation of the new Mexican telecom regulatory body - IFETEL

< The status of the Mexican rural tower industry

William Ritchey considers himself a Mexican adoptee after more than twenty years in the country. With a background in investment banking and a wealth of experience in the local tower industry, William agreed to offer TowerXchange an exclusive perspective on the Mexican telecom and tower scenario.

Mexico is the second largest telecom market of Latin America, behind Brazil. But can the country cope with its own growth in spite of the lack of infrastructure?

Keywords: Who’s who, Interview, Tower People, Towercos, Central America, IIMT, IFETEL, CFE, American Tower,

Mexico Tower Partners, América Móvil, Telcel, Telefonica, Movistar, Nextel, Iusacell, 3G, 4G, LTE, ARPU, World Bank, Infrastructure sharing, Co-locations, Urban vs Rural, Rooftops, DAS, Active Infrastructure Sharing, Het-net, Leasing & Permitting, Regulation


demand for towers in Mexico. In fact, according to a World Bank study, the country needs approximately 70,000 new towers to reach 90% coverage.

Telcel owns approximately 14,000 towers. American Tower owns another 8,000. In addition, Mexico Tower Partners’ portfolio includes approximately 600 towers. From our side, we have approximately 250 towers between owned and managed.

Therefore, there’s less than 25,000 towers to date in Mexico and a long way to go to achieve the 90% coverage goal as described by the World Bank.

With over 120 million people, Mexico is still behind in terms of coverage. In fact, the overall performance of the networks isn’t really keeping up with demand. Users still experience bad and weak coverage and there are a lot of areas still to be connected.

The market has attracted the attention of international and local players - such as American Tower and ourselves - and a lot can be done in the near future. We don’t have enough towers, it’s as simple as that.

That said, the ARPU is growing and is currently averaging 200 pesos/month or approximately US$15.

In terms of mobile subscribers, we reached 103 million this year with a penetration rate just above 86%. Subscriber growth is still up but somehow stabilising.

TowerXchange: What impact will LTE have on cellsite densification and demand for tenancies in Mexico?

William Ritchey, President, IIMT: LTE is already active in Mexico and that is surely the main driver of tower industry expansion.

It is a very simple equation; we need to have more towers to ensure coverage and, while existing sites can be retrofitted, we still need to ensure 3G coverage. In fact, not every customer will switch to LTE in the near future. Systems will have to co-exist and a lot of work has to be done to achieve that. At the same time, we predict densification to increase


“ “There is a huge demand for towers in Mexico. In fact, according to a World Bank study, the country needs approximately 70,000 new towers to reach 90% coverage

Panorama of Mexico City by night

significantly because of the specific characteristics and requirements of the LTE network.

TowerXchange: Can you give us some details about the key characteristics of the electrical towers in comparison with telecom ones?

William Ritchey, President, IIMT: Cellular and high tension electrical towers follow the same guidelines for stress and wind factors. In both cases each tower has its specific engineering guidelines which we need to be aware of. We are carefully following specific safety guidelines too.

Considering the fact that electrical towers already exist, this gives us a unique opportunity for fast deployment and at the same time, additional revenue for the utility company.

TowerXchange: What proportion of towers are owned by independent towercos? Are most independent towers acquired from operators or are towercos simply building their own sites? Who are the market leaders?

William Ritchey, President, IIMT: As previously mentioned, América Móvil (Telcel) and American Tower own the majority of towers and are to be considered the Mexican market leaders.

Other active tower companies are Mexico Tower Partners and ourselves. In terms of carriers, Telcel is the leading the market, followed by Movistar, Iusacell and Nextel. To my knowledge, only Telcel owns towers.


TowerXchange: Are towercos focusing purely on towers, or are they getting involved in transmission, rooftops, DAS and even active infrastructure sharing?

William Ritchey, President, IIMT: While transmission is being done by carriers we are seeing a big growth in demand for rooftops, DAS and active infrastructure sharing.

The het-net business is developing at a fast pace. Coverage and revenues are driving its expansion.In Mexico, there aren’t many “intelligent buildings” beside new builds, so there is an immense potential for new projects to be developed.

TowerXchange: How has the Mexican market changed since IIMT started its operations?

William Ritchey, President, IIMT: IIMT started operations when Iusacell decided to build their own towers and we did the construction for them. Since then, the market has continued to expand. While carriers have been entering agreement to either share their network infrastructure or sell their towers to tower companies, the demand for network enhancement has grown exponentially.

We are following the model of other countries, with most carriers focusing on their network development and tower companies seizing the moment.

TowerXchange: How do you think the market will evolve over the next 3-5 years? Torre Latino Americana in Mexico City

William Ritchey, President, IIMT: I foresee the tower industry to grow further. There is still lots to be done in Mexico and the next few years will be crucial to the development of the tower industry.

Although we cannot give too many details, we are seeing lots of growth potential and the pipeline of new projects is quite healthy.

TowerXchange: Tell us about the Mexican regulation for greenfield tower projects, how easy is it to get permits and build new infrastructures?

William Ritchey, President, IIMT: I don’t think that the permitting process is much different from other countries in the region. Bureaucracy can take a

while just like anywhere else and we did experience some issues and protests to protect the landscape and to limit the visual impact of towers. But overall, Mexico is a very good place to do business and I think it’s actually cheaper and possibly faster to get projects done here that in the States.

Mexico is still an underdeveloped market and therefore there is a huge need for infrastructure and we are lacking specific regulation for wireless tower companies. We always need to keep in mind that we are far from reaching 90% coverage therefore this might change in the future - when those 70,000 towers get built.

Enrique Peña Nieto took office as Mexican President in December 2012 and formed a new entity called IFETEL, the new Federal Telecommunications Institute - or Instituto Federal de Telecomunicaciones - which will serve as the regulatory body for the Mexican telecom sector.

IFETEL will have the power to grant and revoke broadcast and telecommunications concessions and will start ruling in 2014. The plan is for IFETEL to guarantee economic competition and content plurality, therefore we need to wait and see which developments follow its establishment.

TowerXchange: What is the government doing - if anything - to push towards co-locations and infrastructure sharing?

William Ritchey, President, IIMT: Beside the creation of IFETEL, whose role will involve some

ruling regarding the wireless tower industry, the government isn’t pushing towards co-locations. I’d say that so far, market demand has been the biggest driver towards companies’ interest in sharing infrastructure. In fact , all carriers in Mexico are now sharing infrastructure.

I don’t think we will move towards a law like the proposed Brazilian Lei das Antenas but the Mexican government maintains a good relationship with the local businesses and will do what is necessary to enhance growth and industrial development.

TowerXchange: What is the balance of your portfolio of towers between urban and rural sites?

William Ritchey, President, IIMT: We own and operate towers exclusively in urban areas. But that is true for the majority of towers in the country.

There isn’t a big drive yet to cover less dense areas with so much that needs to be done in urban areas. We are still very concentrated in ensuring coverage in high density areas but we are also looking at providing highway coverage in rural areas.

The government has tried to push to cover some remote areas especially for security reasons. But that is an expensive proposition. Companies will look into the next logical step - rural, less dense hence less profitable areas - when the work is complete in those parts of the country that are naturally more attractive for their profitability potential


“ “

Enrique Peña Nieto took office as Mexican President in December 2012 and formed a new entity called IFETEL, the new Federal Telecommunications Institute - or Instituto Federal de Telecomunicaciones - which will serve as the regulatory body for the Mexican telecom sector

Could infrastructure sharing be mandated in Mexico?Constitutional reform could open up Mexico to new players and to new investments and accelerate the expansion of América Móvil’s international footprint


TowerXchange: Please tell us about Ve por Más, its activities and focus with specific attention to the Mexican telecom sector.

Andrés Audiffred Alvarado, Equity Analyst, Ve por Más: Ve por Más is a Mexican brokerage firm. Along with its financial service, Ve por Más runs its own equity research unit and I am specifically involved as analyst in the TMT sector.

TowerXchange: Can you give us an overview of the public telecom companies you are paying attention to in your activities?

Andrés Audiffred Alvarado, Equity Analyst, Ve por Más: Currently, I am working on a recommendation for Maxcom, which is a local provider of fixed line services, voice IP and pay TV. The company has undergone a restructuring process and has created a stronger financial structure with the goal of increase its operational income and users.

In the mobile sector, I have been analysing trends regarding América Móvil with specific attention to its Mexican operations.

The recent Constitutional reform is looking at changing the dynamics of the telecom sector and we have been paying attention to see how this might affect América Móvil, among others.

TowerXchange: Many of TowerXchange’s interviewees have hinted that some players might have a dominant position in the telecom

While Mexico is undergoing relevant changes to its legal framework for the telecom sector, brokerage and analyst firm Ve por Más discuss the possible outcome of the reform, the impact on leading telecom companies and the implications for a potential wave of new players entering the Mexican market.

Read this article to learn:< The potential impact of Constitutional reform on the Mexican telecom industry

< América Móvil’s expansion beyond Latin America

< How mandated infrastructure sharing might open up Mexico to new players

< Rural coverage and the impact of infrastructure sharing legislation on service improvement

Keywords: Ve por Más, América Móvil, Maxcom, Mexico, News, Central America, Investment, Regulation, Infrastructure Sharing, Urban vs Rural, TMT, IFETEL, Market Share, Start Wireless, MVNO, Dominant Position, Telefonica, Virgin Mobile

Andrés Audiffred Alvarado, Equity Analyst, Ve por Más:

sector in Mexico. What is likely to happen in the near future due to changes in the national regulation?

Andrés Audiffred Alvarado, Equity Analyst, Ve por Más: The recent reform is looking at avoiding the presence of dominant players in the telecom sector with regards to both their market share and their infrastructure. However, the changes have occurred at a Constitutional level only which means that we need to wait for the actual secondary legislation to be in place to fully understand the practical impact of these changes.

For now, we can say that the goal of IFT, the new telecom regulatory body, is to improve competition in the sector and to allow new players to enter the market, not only in terms of mobile services but also fixed line, data and TV offerings.

In a recent statement, Gerardo Ruiz Esparza, the Mexican Secretary of Communications and Transport, has declared that news regarding the implementation phase and secondary legislation would be available during the first week of March.

Therefore, we cannot comment on the extent of these changes until we receive news regarding the practical measures that will be adopted.

TowerXchange: América Móvil has recently announced its acquisition of the US based Start Wireless Group. Can you give us some details with regards to the deal and how it’s likely to impact the Mexican company?

Andrés Audiffred Alvarado, Equity Analyst, Ve por Más: Start Wireless is a U.S. based MVNO with approximately 1.4 million subscribers. This opens up new business scenarios and helps the company diversifying its activities.

Mexico represents approximately 35% of América Móvil’s total revenue and it’s been estimated that the newly acquired U.S. operations will sum up to 10% of the company’s revenue. Therefore, I can foresee financial benefits for América Móvil and a new source of income.

So far, we haven’t gathered any detail regarding the deal and the structure of the transaction (Amounts, Multiples, etc).

TowerXchange: From a financial perspective, does it make business sense for America Movil to keep hold of its passive infrastructure portfolio in Mexico and internationally?

Andrés Audiffred Alvarado, Equity Analyst, Ve por Más: In light of the fact that there is no legislation that mandates passive infrastructure sharing, América Móvil has greatly benefitted from retaining its own portfolio of towers. This factor has helped the company retain a considerable portion of the market while charging other carriers to use its infrastructure.

However, it’s been hinted that the telecom sector reform might include an obligation to share passive infrastructure. Considering that América Móvil owns more than half of the towers in



Mexico, this new ruling would aim at stopping the company from holding a dominant position on the infrastructure side.

Some local newspapers have reported that América Móvil is considering divesting its tower portfolios but the company has firmly denied the rumours.

I think we need to wait for the legislation to come into place to fully analyse its consequences and assessing América Móvil’s next moves.

TowerXchange: How are local and international investors looking at the Mexican telecom sector?

Andrés Audiffred Alvarado, Equity Analyst, Ve por Más: While the Constitution was being modified to open up to a more competitive telecom sector, there have been rumours about Telefonica’s interest in the Mexican market as well as Virgin Mobile’s intention to enter the local sector.

This would be great news for the local market and

a step forward towards the creation of a highly competitive and modern telecom sector.

TowerXchange: Are there any programmes or incentives to encourage rural coverage extension?

Andrés Audiffred Alvarado, Equity Analyst, Ve por Más: To date, Mexico doesn’t have any formal programme to push rural coverage extension.

However, I believe that a move towards mandatory infrastructure sharing would be a great incentive for companies to extend their services beyond urban areas. In fact, there is a lot of infrastructure in place outside of metropolitan areas which is part of América Móvil’s portfolio. With a pro-sharing law in place, new carriers are more likely to be able to start utilising these assets and, as a result, coverage in these areas would be enhanced

“ “it’s been hinted that the telecom sector reform might include an obligation to share passive infrastructure

Landscape of the city of Monterrey, Mexico

Special feature:

TowerXchange has started our preliminary research into the tower industry in Southeast Asia to find out whether we could add value by extending our coverage to the region. Since then we’ve been inundated with enquiries about Indonesia, Myanmar, Malaysia, Vietnam, Cambodia and beyond, even before we had published a word of research!

Indonesia is the crown jewel in the Southeast Asian tower industry. Protelindo, Tower Bersama, Mitratel and STP each has substantial portfolios, and some impressive tenancy ratios and EBITDA margins are being achieved. Indonesia also has an opportunity for the consolidation of over 40 ‘middle market’ towercos. There remains growth potential in a market where 25-30,000 of 75,000 towers are independently owned.

Meanwhile, we also take our first look at the virgin tower market that is Myanmar, where Apollo Towers, Digicel Towers, Golden Towers, Protelindo and (possibly) an affiliate of Tower Bersama are each building tranches of towers for anchor tenants Ooredoo, Telenor, YTP and MPT.

A sneak preview of the tower industry in Southeast Asia

Don’t miss:84 An introduction to the tower industry in Indonesia

91 A first look at the tower industry in Myanmar

95 Myanmar: the last frontier - Enda Hardiman

97 GSM TP on the unique challenges of deployment in Myanmar


An introduction to the thrivingtower industry in IndonesiaPlus a view on other opportunities in Southeast Asian towers: Myanmar, Cambodia and The Philippines

David Burke, Co-founder & CEO, Wellington Capital Advisory


TowerXchange: Please introduce yourself and your experience in the telecom tower industry. David Burke, Co-founder and CEO, Wellington Capital Advisory: I’ve been in TMT since 1995, starting on the banking side of the industry before progressing through C-level positions at M-Web and Kabelvision, Indonesia’s largest cable television provider, eventually becoming EVP for Strategic Investment and Corporate Planning at Telkom Indonesia, where I led the strategy to set up Mitratel, Telkom’s towerco. Subsequently, I co-founded and currently serve as CEO of PT Wellington Capital Advisory, a strategic advisory firm with extensive experience in helping clients find value through the re-alignment of the TMT value chain. We’ve advised a number of operators and towercos on their tower strategy. Following the creation of our strategy for an Indonesian towerco, we were fortunate enough to find the right investors to bring the towerco strategy to fruition. I’m also Co-GP of the Ananse TMT South East Asia Fund, and soon to be, on behalf of the investors, the CEO of the towerco, PT Komet Infra Nusantara. However, Wellington Capital Advisory will continue to provide services to regional towercos, mobile network operators and investment groups looking to invest in the TMT space within SE Asia. We have a strong team of partners led by Geoff Simms, Dave Shuker and Paul Hemming. TowerXchange: What have been Wellington

Wellington Capital Advisory CEO, David Burke, takes us on a tour of the Indonesian tower market, which is among the most developed and profitable in the world. Tenancy ratios in many cases exceed 1.7, EBITDA margins reach 60 to 80% and there is the potential for additional transactions through the consolidation of middle market towercos and further operator sale and leaseback arrangements. What are the prospects for Indonesia’s towercos to export their expertise elsewhere in Southeast Asia, and how do opportunities for the tower industry in Myanmar, Cambodia and The Philippines compare?

Read this article to learn:< Why is Indonesia perfect for towercos - multiple operators, mandated infrastructure sharing,

burgeoning data demand and a growing middle class

< The future of the Indonesian tower market; from 30% to >50% of towers independently owned, 4 to 5

towercos achieve scale, consolidation of 40 ‘middle market towercos’

< Why did Wellington Capital Advisory build a strategy for a towerco in Indonesia

< The investibility of Indonesian towercos - EBITDA margins of 60 to 80%

< The Myanmar ‘gold rush’, and prospects for towercos in The Philippines, Vietnam and Malaysia

Keywords: Towercos, O&M, Acquisition, Market Overview, 3G, 4G, EBITDA, Due Diligence, Tenancy Ratios, Fuel Security, Build-to-Suit, Exit Strategy, Bankability, Pass-Through, Densification, Regulation, Off-Grid, Skilled Workforces, Rooftop, Middle Market Towercos, Sale & Leaseback, Private Equity, C-Level Perspective, Infrastructure Sharing, Asia, Indonesia, Myanmar, Malaysia, Singapore, The Philippines, Cambodia, Mitratel, Tower Bersama, Protelindo, STP, Komet Infra Nusantara, Wellington Capital Advisory

Capital Advisory’s experiences in the tower industry? David Burke, Co-founder and CEO, Wellington Capital Advisory: In parallel with advising clients in the tower industry, we had built our own strategy for a towerco in Indonesia. We have become very excited about the sector over the last three years, having conducted a number of due diligence exercises on prospective tower sale and leaseback arrangements and other tower-related investment opportunities. We considered raising our own private equity fund, but eventually brought in third party investors, raising US$50mn in our first tranche, with access to

a further US$250mn, from equity investors and debt providers. Komet Infra Nusantara currently owns 500 towers, and is targeting a portfolio of 1200 to 1400 towers by end of 2014 through a combination of organic growth and acquisitions. TowerXchange: Please introduce us to the Indonesian telecom tower industry.


David Burke, Co-founder and CEO, Wellington Capital Advisory: There are four or five towercos of scale in Indonesia and over forty ‘mom and pop shops’ and middle market towercos in Indonesia, ranging from local community managed assets to substantial regional entities, owning anything from a handful to 1,000 towers each. Indonesia is a very diverse tower market, comprising dense metropolitan environments and

“ “

There are four or five towercos of scale in Indonesia and over forty ‘mom and pop shops’ and middle market towercos in Indonesia, ranging from local community managed assets to substantial regional entities, owning anything from a handful to 1,000 towers each


very remote rural areas. There is a population of 28 million in the Greater Jakarta metropolitan area alone at peak, and mobile data demand is accelerating, which in turn is firing demand for towers. 3G will morph into 4G, and smartphone penetration will jump from 15 to 30% in the next year. To visualize this demand for data, there are over 60 million Facebook users in Indonesia and Twitter recognises Jakarta as the Tweet capital of the world! GDP per capita has surpassed the US$3,000 threshold, indicating the emergence of a fast-growing middle class. A healthy 60% of GDP goes on local consumption - Indonesia has very little dependence on imports. During the 2008 global financial crisis, Indonesia was one of a handful of countries whose GDP growth remained positive. TowerXchange: What proportion of Indonesia’s towers has transferred from operator-captive to independent towercos? David Burke, Co-founder and CEO, Wellington Capital Advisory: Indonesia has around 75,000 towers, most of which are still operator-captive. The towercos own 25,000 to 30,000 towers, and there are still around 10,000 new towers being built every year. Over the last few years, operators such as Bakrie Telecom, Indosat and Hutchison have sold around 3,000 towers collectively to the independent tower providers. There is significant cell site densification occurring in Indonesia driven by consumer demand for

mobile data services, and the tower industry hasn’t grasped the heterogeneous networks (‘HetNet’) opportunity yet. Rooftop installations make up a significant chunk of the assets of Indonesia’s ‘Big 3’ towercos, namely PT Tower Bersama Infrastructure (‘TBIG’), PT Profesional Telekomunikasi Indonesia (‘Protelindo’) and PT Solusi Tunas Pratama Tbk (STP). We’ve seen innovations such as ‘BTS Hotels’ running fibre up the street with transmission equipment sited several miles away or hidden away in a basement.

TowerXchange: Do you anticipate further substantial tower sale and leaseback transactions in Indonesia?

David Burke, Co-founder and CEO, Wellington Capital Advisory: Our view is that Indosat, XL Axiata and others may potentially divest more towers, in pursuit of an ‘asset-light’ strategy. Currently, Axiata’s e.co infrastructure business unit does not include XL in Indonesia as part of the plan to mount a cross-border IPO. This is something XL Axiata has been very public about over the last few years. Indosat is also expected to release some towers in the future, but the management have yet to make a formal announcement. During my tenure at Telkom, I helped set up their towerco, Mitratel. At the time my strategy was to progress towards an IPO. This may still be the case and is under discussion at the board level in conjunction with the regulators. TowerXchange: Do you anticipate further consolidation of ‘middle market’ towercos? David Burke, Co-founder and CEO, Wellington Capital Advisory: Some of the middle market towercos are making good margins and are reluctant to sell. Indonesia is an economy where business is conducted through relationships and many regional towercos have very strong local government and carrier connections. Other middle market towercos are run on a more entrepreneurial basis, and we’ve done due

diligence on five to six towercos looking for exit opportunities. Some are excited by the multiples at which Indonesia’s Big 3 towercos are trading, and if they choose to sell they will want to retain a stake to benefit from any subsequent listing. In our experience, most investors are open to this model. TowerXchange: How profitable are Indonesian towercos? David Burke, Co-founder and CEO, Wellington Capital Advisory: The two largest towercos, Tower Bersama and Protelindo are operating at about an 80% EBITDA margin. But profitability isn’t confined to Indonesia’s largest tower providers - the two middle market towercos that came together to form Komet Infra Nusantara generated margins of 60% to 70%, even with relatively modest portfolios of about 200 towers each. In comparison, following aggressive price wars, most of the mobile network operators are operating at EBITDA margins in the mid-40s range. At the moment, Indonesia has ten operators, but should consolidate to four to five over time. For example the merger of PT Axis and XL Axiata will be completed in 2014. TowerXchange: Will there be a ‘correction’ to towerco margins in the light of operator consolidation? David Burke, Co-founder and CEO, Wellington Capital Advisory: There was always going to be rationalisation as technology moves on - much

of the operator consolidation is driven by the migration from CDMA to GSM, and I don’t believe operator consolidation will have much impact on towerco profitability because data demand is driving network densification. RAN sharing is not currently permitted, which is why there is no law governing the formation of MVNOs. However, there is growing awareness among the regulatory bodies of the benefits of allowing MVNO licenses in the future.


TowerXchange: How would you characterise the investibility of the Asian telecom tower sector?

David Burke, Co-founder and CEO, Wellington Capital Advisory: Indonesia’s mobile network operators have attracted significant international investment, namely Telkom Indonesia is 35% owned by SingTel, Axiata Berhad has a 67% stake in XL and Ooredoo owns 65% of Indosat. Indonesian towers currently provide better returns than Brazil and India; construction costs are sensible, passive infrastructure sharing is mandated by the regulator, and lease rates are still good - in the US$1,200 to 1,400 range per calendar month. Komet Infra Nusantara has achieved an average tenancy ratio of 1.7 from day one, having acquired portfolios with tenancy ratios of 1.3 and 2.2 respectively. TowerXchange: How do you foresee the medium term future for the Indonesian tower industry? David Burke, Co-founder and CEO, Wellington Capital Advisory: Indonesia has the most mature and robust tower industry in Southeast Asia - and it still has ‘legs’ for further growth. With a high number of smaller players within the tower market, the opportunity for ‘mom and pop’ companies to consolidate is high. Towers with just a single anchor tenant may yield an EBITDA margin of 40 to 50%. As the tenancy ratio is incrementally built up between 1.4 and 2.0, EBITDA increases to 80%. Tenancy ratios

““The two largest towercos, Tower Bersama and Protelindo are operating at circa 80% EBITDA margins. But profitability isn’t confined to Indonesia’s largest tower providers - the two middle market towercos that came together in the formation of Komet Infra Nusantara generated margins of 60% to 70%, even with relatively modest counts of about 200 towers each


tend to grow in 0.2 to 0.3 increments per year in Indonesia, and we forecast they’ll reach a long term equilibrium between 2.5 and 3.0. Less than 50% of revenue comes from amendment revenue. 3G rollouts are ongoing, 4G will be concentrated in urban areas, and 2G networks will need to be maintained for ten years for voice and M2M. WiMAX has mostly flamed out. Street furniture is becoming a highly prized asset, as Jakarta begins to evolve as a smart, mobile-enabled city.

Indonesia will support four to five good-sized towercos, each with over 10,000 towers - the regulator is doing a fine job to sustain competition by ensuring an equilibrium between the towercos,

which balances consolidation to four or five large mobile network operators, plus the potential for MVNOs.

TowerXchange: What is the quality and extent of the grid in Indonesia? Is power passed through to the anchor tenant? And is pilferage a problem?

David Burke, Co-founder and CEO, Wellington Capital Advisory: Power provision and associated costs are stripped out of Indonesian tower deals and handled by the mobile network operator through power pass-through clauses in most contracts. As such, the towerco has responsibility only for backup power and security. Currently, Indonesian towercos are more of a real estate company than a service provision business. However, we don’t see this situation enduring in the future.

Around 25% of cell sites are off grid, 15 to 20% are on unreliable grids, with a little over 50% with access to good grid connections. In all emerging markets in South East Asia, every tower needs a back-up power source - and in some cases primary power sourced off-grid - typically via diesel generators or solar technology.

It’s the early days for renewables - we see more usage of biomass than other alternative energy sources but at this point, the economics remain marginal.

Security remains an issue and pilferage is probably in double-digit percentages for most

tower portfolios. It’s not just an issue of fuel theft - we’ve seen generators, batteries, steel and cables all being stolen. It’s a good idea to engage the heads of local communities to help improve security and in return, providing social benefits such as maintaining a mosque or school, providing additional road access, etc. Viettel’s ‘Village’ model is a great example; they provide incentives to the local community such that they assume responsibility for the tower, as well as configuring the community’s wellbeing around service continuity.

As a side note, during one recent due diligence exercise, we found a company using wild geese as the ‘security system’ for one of their towers - it was very effective! TowerXchange: Are build-to-suit (BTS) projects and O&M generally outsourced by Indonesian towercos? David Burke, Co-founder and CEO, Wellington Capital Advisory: O&M is sometimes managed in-house, sometimes subcontracted. In our case Komet Infra Nusantara has three regional offices, and O&M is outsourced for half of the current tower inventory.

You can tell from the headcount numbers as to which towercos have maintenance in-house and which are using outsourced contractors. In general the market is moving towards an outsourcing model as a more efficient way of managing costs,

“ “In all emerging markets in South East Asia, every tower needs a back-up power source - and in some cases primary power sourced off-grid - typically via diesel generators or solar technology

while avoiding the liabilities of employment. BTS projects are generally sub-contracted. There are few established turnkey infrastructure and managed service providers, but we often run into regional protectionism. Some contractors have a strong local mindset and have no ambition to cross into new regions. The same companies that execute BTS projects also compete for O&M outsourcing contracts. TowerXchange: What is your view of the tower industry in Southeast Asia beyond Indonesia - are there any prospects for a pan-Asian towerco?

David Burke, Co-founder and CEO, Wellington Capital Advisory: I doubt whether the idea of a pan-regional towerco in Southeast Asia has any legs.

The towerco business is conducted locally in Asia; negotiations are held with individual operators and regional governments, there are local licensing variations from city to city, and domestically-sourced steel is generally used to manufacture towers - I can’t see significant benefits of an aggressive pan-Asian expansion.


It’s the early days for the Southeast Asian tower industry beyond Indonesia. There is a ‘gold rush’ into Myanmar at the moment, and it is a market we continue to look at. However, intensive due diligence is required for opportunities in Myanmar - as the saying goes, ‘the large print giveth, but the small print taketh away!’

“ “intensive due diligence is required for opportunities in Myanmar - as the saying goes, ‘the large print giveth, but the small print taketh away!’


Digicel is in a strong position with their towerco proposition, given their close relationship with Yoma Strategic Holdings, a major real estate company in Myanmar. There is no established eco-system of site design, build and maintenance contractors in Myanmar, so foreign towercos like Protelindo have to bring in managed services from Indonesia, Vietnam and China. The macro network in Singapore is mature, so there are few opportunities for towercos in that lucrative but finite market. There are no independent towercos yet in The Philippines, and only two dominant prospective anchor tenants, neither of which seems motivated to sell their towers. While The Philippines could be interesting, I don’t foresee that market opening up in the near future. Political pressure might create an opportunity for towercos in Cambodia, but I wouldn’t anticipate the returns that we can realise from Indonesia.

In Malaysia, as part of the award of the LTE (2.6GHz) licences in December 2012, the regulator (MCMC) included an implicit condition for licensees to share spectrum. This led to a few operators making spectrum sharing agreements e.g. Maxis-Redtone and Celcom-Altel. More recently, DiGi Telecom and Celcom Axiata announced a three-year extension to their existing network collaboration agreement (NCA). Overall we think that there is limited scope for a new entrant towerco play in Malaysia within the short-to-medium term. It is a relatively small market with the national population being roughly the equivalent of the Jakarta metropolitan area alone. As the wireless network infrastructure in Vietnam continues to mature and as competition among the ‘Big 3’ mobile operators (Viettel, MobiFone and Vinaphone) remains intense, we see an opportunity for the development of an independent towerco sector if and when the necessary regulatory change takes place. The Vietnamese market has many similar characteristics to Indonesia and hence is an interesting prospect. The establishment of the Southeast Asian Economic Community in 2015 will facilitate cross- border trading, but there’s a big enough domestic market growth to keep Indonesian towercos busy. Indonesia is a trillion dollar economy and, as labour costs increase in China, Indonesia is becoming a destination for outsourced low cost

manufacturing and accelerating inbound rather than outbound investment.

However, Indonesian tower industry experience and skillsets travel well - we’re in a ‘one of us’ position as far as tower opportunities in Myanmar and Cambodia are concerned, so Indonesian towercos are welcomed as subject matter experts. All in all we believe that well over half of the Southeast Asian tower market sits in Indonesia, and there is still significant organic growth to come. The balance of the tower market in the rest of Southeast Asia is split between new markets such as Cambodia, Myanmar, Vietnam, maybe Malaysia and, eventually, The Philippines

“

““

“We believe that well over half of the Southeast Asian tower market sits in Indonesia, and there is still significant organic growth to come. The balance of the tower market in the rest of SE Asia is split between new markets such as Cambodia, Myanmar, Vietnam, maybe Malaysia and, eventually, The Philippines

The Vietnamese market has many similar characteristics to Indonesia and hence is an interesting prospect

A first look at the tower industry in MyanmarFour operators, at least four towercos, and five years to achieve 60% coverage from a very low baseline… Ready steady go!


The attractiveness of Myanmar, one of the last green field mobile markets in the world, led to a fierce battle for two recently issued mobile licenses. And a similarly fierce battle is brewing among towercos. 91 parties registered interest in securing a mobile license in Myanmar. 11 operators were shortlisted, and the process eventually yielded 15-year mobile licenses for Telenor and Ooredoo, confirmed in early 2014. They will soon be joined by incumbent operator Myanmar Post & Telecommunication (MPT) and Wi-MAX operator Yandanarpon Teleport (YTP), which both intend to expand toward national coverage when they receive their license. The attraction of Myanmar is obvious. With a population estimated at 60mn (a census this year should give a more accurate number), there is a lengthy runway for growth in a country estimated to have only 1,500 towers. Mobile penetration is currently less than 10%, largely due to the staggering cost of SIM cards before market liberalisation. A 2013 Analysys Mason study found SIM cards costing US$450, but surprisingly also high mobile penetration of 50% among adults in urban areas - an indication of pent-up demand. With only 32.6%* of Myanmar’s population in urban areas, and 45.3%* aged under 25, it’s clear achievement of the government’s aggressive penetration targets will not be dependent on serving affluent adults in Yangon, Mandalay

The race is on to deliver coverage and capacity to the virgin territory of Myanmar. Multiple towercos are jostling for clusters of towers handed out by two international and two local operators. Local telecoms implementation experience is scarce; a lot of knowledge and equipment must be imported. Electricity and transport infrastructure are under-developed. Myanmar is not a tower market for the feint-hearted, but the opportunity may be as great as any in the global tower industry. TowerXchange takes a first look...

Read this article to learn:< Alliances among Myanmar’s four MNOs and four+ towercos

< How many towers does Myanmar need and when?

< Risks: lack of proven partners, poor electricity and transport infrastructure, a weak land registry

and slow permitting

< A snapshot of the Golden Towers / Viom Networks joint venture towerco

Keywords: Editorial, Towercos, Leasing & Permitting, Construction, 3G, New License, Capex, Urban vs Rural, Risk, Network Rollout, Off-Grid, Solar, Greenfield, Logistics, Skilled Workforces, Infrastructure Sharing, Asia, Southeast Asia, Myanmar, Vietnam , Telenor Myanmar, Ooredoo, MPT, YTP, Golden Towers, Alcazar Capital, Apollo Towers, Protelindo, Digicel Myanmar Tower Company, Tower BersamaBy Kieron Osmotherly, CEO, TowerXchange

and Naypyidaw, but on improving coverage and affordability in rural areas.

The CIA Factbook describes Myanmar as a “resource-rich country,” but also as the “poorest country in Southeast Asia” where “corruption is prevalent.” GDP per capital was estimated as US$1,600* in 2012. (*Source: CIA Factbook) Aggressive rollout timetable Telenor expects to have 1,000 towers at launch, and close to 8,000 by the end of the rollout period in five years time. The majority of towers are expected to be owned and operated by towercos. Even with many towers shared, if Ooredoo’s rollout were of a similar scale, and with MPT and YTP sites also to be added, you can start to see why a target of 60% coverage within five years is considered by most commentators to be extremely aggressive.

3G services will mainly be focused on the heavy data traffic urban areas, while in villages 2G will provide mass coverage in more scarcely populated areas. Sharing costs by sharing towers The capex burden of the rollout is expected to be eased by what Jon Fredrik Baksaas, CEO of Telenor Group called “deep cooperation with tower companies and other suppliers that will deliver both IT services and rental services.”


“ “Telenor expects to have 1,000 towers at launch, and close to 8,000 by the end of the rollout period in five years time

Baksaas describes a “cost efficient operation which will give us affordable prices to the market,” having stated that Telenor’s peak funding in Myanmar would be around US$1bn.

“The regulator and the government has encouraged passive infrastructure sharing,” continued Petter Furberg, CEO of Telenor Myanmar. “We believe that in Myanmar we can avoid making the same mistakes that we’ve done in many other markets where we have been building multiple towers to cover one particular

Karim Dakki is a Vice President at Alcazar Capital, currently serving as CFO of Golden Towers, one of Alcazar’s TowerCo investments. Alcazar was initially setup as the private equity arm of Agility Logistics, subsequently separated by an MBO, and was managing Agility’s telecom assets of over US$400mn in equity investment, with a market value of over US$2bn. Alcazar has active investments including Telkom Kenya - a privatisation done together with Orange; Korek Telecom - the third mobile license in Iraq, which subsequently became Orange Iraq; and Heliocentris - a provider of clean energy solutions for telecom and tower companies. “We saw a play in telecom infrastructure very early on and have been focusing on this since 2008” said Alcazar’s Karim Dakki. “Having explored several opportunities in Africa, we decided to focus on Southeast Asia, given the growth prospects. Golden Towers is up and running in Vietnam where we recently secured our investment certificate and expect to own a portfolio of around 500 towers before the end of the year. Our strategy in Vietnam is mainly an acquisition and consolidation play. It’s an asset management business in Vietnam - the grid is fairly good so energy is not part of our service proposition there.” Alcazar has also seeded and arranged the financing of the largest towerco in Myanmar, a joint venture between Golden Towers and an established Indian towerco, which has an understanding with one operator to build and operate 1,500 towers, including operating power infrastructure. “We can’t say too much about our activity in Myanmar yet as our initial commitment is only phase one, and we hope to secure further allocations,” continues Dakki. “The Myanmar market is particularly attractive for towercos as from day one the network will be designed to maximise sharing, with all the towers built by towercos. Transport and energy infrastructure is not very developed in Myanmar, and not everyone is taking energy risk. However, we are able to leverage our knowledge of cell site energy through our investment in Heliocentris, an innovative hybrid and renewable energy solutions provider. This effectively gives us a proven in-house green power R&D team, invaluable expertise when it comes to dimensioning and optimising energy efficiency at cell sites. We anticipate that a large proportion of the towers in Myanmar will use energy efficient and renewable energy configurations,” concludes Alcazar Capital’s Karim Dakki, who also serves at Golden Towers’ CFO


“ “We anticipate that a large proportion of the towers in Myanmar will use energy efficient and renewable energy configurations

village. It will be good for the country because it will secure a faster rollout, it will secure lower cost overall and of course it is significantly better for the environment.” “We will outsource energy to tower companies,” added Telenor Myanmar’s Furberg. “Because of this we believe we will be able to keep a capex light model and still a long term opex to sales ratio similar to what we see in other Asian operations, but because we are using tower companies you can also see that tower lease becomes a significant part of our opex in this operation.” Operator - towerco alliances formed At least four towercos have already formed partnerships in Myanmar, with a fifth believed to

A snapshot of one of Myanmar’s towercos

“ “Five substantial risks await Myanmar’s towercos: a lack of proven partners; a weak land registry and slow permitting process; potential unrest; and an under developed transport and power infrastructure

be imminent. Operators are assigning clusters of around 1,000 to 1,500 sites at a time. Telenor has formed partnerships with Apollo Towers and Golden Towers. Apollo’s management team and ownership has strong ties with Eaton Towers. Golden Towers is a joint venture between Alcazar Capital-backed Golden Towers and Viom Networks.

Ooredoo are working with Digicel Myanmar Tower Company and Protelindo. In February 2014, TMT Finance reported that investors with links to Tower Bersama were in discussion with MPT about fulfilling their requirement for a towerco to head up their rollout. YTP are also believed to be in negotiations with several towercos. Having narrowly missed out on a mobile network operator license in, Digicel have accumulated three years of experience in Myanmar, and have built a substantial team on the ground. With an already-written radio plan and a relationship with Myanmar real estate leaders Yoma Strategic Holding, Digicel Myanmar Tower Company promises to be a formidable player. Digicel has partnered with Magellan, a proven Philippine contractor. Risks concentrated at the towerco layer of the value chain Five substantial risks await Myanmar’s towercos:

a lack of proven partners; a weak land registry and slow permitting process; potential unrest; and an under developed transport and power infrastructure. Given the immaturity of the ICT sector, there’s no proven ecosystem of tower product and service suppliers in Myanmar, so towercos are going to have to import a lot of goods and services. The land registry is weak in Myanmar, so establishing ownership of real estate will be one challenge to acquiring cell sites, compounded by an apparent lack of capacity to process building permits in a timely manner, something the government is currently addressing. While the CIA Factbook reports that in 2012

preliminary peace agreements with 10 of the 11 major armed ethnic groups were reached, simmering violence between Buddhists and the Muslim Rohingya erupted in 2013, emphasising that isolated instances of conflict could still be a challenge to tower operations in Myanmar. Transport infrastructure is very poor beyond Myanmar’s major cities, with half the roads impassable during the rainy reason. With just 25% of Myanmar’s population having access to electricity, the energy logistics challenges, and security risks, familiar from Africa will be another issue for towercos. The World Bank estimates that Myanmar needs to double its energy production capacity, so outages and rationing are commonplace. Telenor have already hinted that they expect Myanmar to have the highest proportion of solar powered base stations in their global portfolio. To conclude, we’ll go back to the race analogy. Deploying thousands of towers in Myanmar will be a marathon not a sprint. A five year plus marathon, wading through a lot of literal mud and metaphorical bureaucratic mud. In five years time, we could be holding up Myanmar as an example of how to co-ordinate the accelerated rollout of a shared tower network into a very challenging environment. Now that TowerXchange has embarked upon our own Southeast Asian journey, we look forward to recording, and sharing, the evolution of the Myanmar tower market


Myanmar - The Last FrontierRollout timetables and sparse spectrum allocation suggest rich rewards for towercos


Myanmar is unique in that it boasts a population of 60m and mobile penetration of less than 5%. As the country reforms and re-enters the international economic and financial system, significant opportunities present. Commitment to reform is not in doubt. A mobile licensing competition conducted in 2013 attracted interest from major regional and global operators. The competition, managed by consultants Roland Berger, was viewed by the industry as fair, transparent and efficient. Ooredoo and Telenor emerged as winners. Formal licensing is now in process. Rollout requirements mandated by the Myanmar government are aggressive. Geographic coverage of 25% of the national territory is required within 12 months of launch, 40% within 24 months, and 75% within 60 months. As a conservative estimate, perhaps 5,000 sites per operator will be required to provide minimally acceptable quality of service. This will be augmented by rooftops and by masts / towers in urban regions. Myanmar terrain is complex. All geographic types feature. These include mountains, highland plains, lowland plains, delta / wetlands, flood plains and forest. As evidenced by current very low mobile penetration, little infrastructure is currently in place. Tower build is an urgent requirement, as is transmission network build. Both of the newly licensed operators have engaged with independent towercos. These include Apollo, which, hailing from the same stable as Eaton Towers, brings extensive operating knowledge and rich

Two mobile communications licences have been awarded in Myanmar, respectively to Ooredoo and Telenor. Two others will also be issued to local companies, which are now seeking to partner with international operators. Myanmar is virgin territory for towers. Little infrastructure exists at this time. Significant buildout is thus required. Enda Hardiman, Managing Partner of consultancy Hardiman Telecommunications Ltd., looks at opportunities and challenges for towercos.

Read this article to learn:< The huge potential for the tower industry in Myanmar; a 60mn population with less than 5% mobile

penetration and aggressive rollout requirements

< Terrain and transport infrastructure challenges

< Why sparse spectrum allocation creates build-to-suit and tower sharing opportunities

< Engagement to date of Apollo Towers, Protelindo and Digicel

Keywords: Towercos, Strategic Consultancy, Construction, Market Overview, Investment, 4G, New License, Co-locations, Network Rollout, Build-to-Suit, New Market Entrant, Densification, Regulation, Country Risk, Logistics, Masts & Towers, Infrastructure Sharing, Asia, Myanmar, Telenor, Ooredoo, Eaton Towers, Apollo Towers, Protelindo, Digicel, MPT, Yatanarpon, Hardiman Telecommunications

Enda Hardiman, Hardiman Telecommunications

African experience of diverse terrain. They also include Protelindo, which brings similarly rich experience of the highly competitive Indonesian market. Digicel, the Caribbean / Pacific operator which raised significant profile in unsuccessfully bidding for a mobile licence, is also active. Indian towercos are not yet in significant evidence. This may be ascribed to current uncertainties and volatilities in the Indian market. As stability returns to India, and there are encouraging signs that such is the case, entry to the Myanmar market may be expected. Global operators have been somewhat more cautious. EU countries have significantly relaxed sanctions previously in force with regard to Myanmar trade and investment. However, the U.S., while doubtless maintaining a benevolent overall stance, has yet to mirror the European initiative in full. Companies with significant US exposure are thus in lesser evidence overall than European and Southeast Asian regional entities. Spectrum allocated to the two new operators was surprisingly sparse. Each received 2 X 5 MHz in the 900 MHz band, and 2 X 10 MHz in the 2100 MHz band. This is notwithstanding significant requirements for rollout of data services. Data service is to be provided to 20% of national territory within 24 months, and 40% of national territory within 48 months. Specific regional requirements for data coverage are more aggressive. 40% of the key regions of Yangon, Mandalay and Nay Pyi Taw are to be covered within 12 months. While capex estimates by operators were correspondingly increased, sparse allocation of spectrum is of course good news for

towercos. That there is an inverse relationship between amount of spectrum allocated and site density. As a general point, however, one might compare the spectrum allocated with the 100 MHz credibly cited by operators of repute for the purposes of dense deployment of LTE. The incumbent, MPT, undertook trials of LTE, using 20 MHz in the 1800 MHz band during the course of 2013. Another independent operator, Yatanarpon, currently operates WiMax, claims 40 MHz in the 2600 MHz band and has announced plans to migrate to LTE. MPT is in advanced discussions with KDDI, the Japanese operator, with regard to partnership. Yatanarpon, subject of a recent competitive process, has narrowed partnership options to two South East Asian operators. If MPT and Yatanarpon, in concert with their respective new partners, fully capitalise on their current spectrum holdings, then the two newly licensed operators will need to build urban networks


that feature great density of sites. It will otherwise be difficult to compete meaningfully in data markets. No firm plans have as yet been announced for further allocation of spectrum in the 2600 MHz band, or in the other LTE-favoured bands of 700 MHz and 800 MHz, or, indeed, 1800 MHz. As is frequently the case in emerging markets, issues of clearance present, notably with regard to clearance by the military. It may however be anticipated with confidence that according as the industry gains momentum, significant pressure toward further allocation of spectrum will be forthcoming from all operators. The current summary position is that build-to-suit opportunities are clear and immediate. So are tower sharing opportunities. While buildout for capacity in urban regions may encourage independent stances, it is to be doubted that replication of either coverage or capacity elsewhere would be considered good strategy by any of the operators. The scenario forward thus features major build-to-suit deployments on behalf of individual operators combined with significant sharing of independent facilities by multiple tenants

“ “build-to-suit opportunities are clear and immediate. So are tower sharing opportunities

Enda Hardiman ([email protected]) is

Managing Partner of Hardiman Telecommunications

Ltd. (http://www.telecoms.net), a boutique consultancy

with offices in London and Hong Kong. Hardiman

Telecommunications Ltd. advises operators, towercos,

investment banks and PE funds on strategy, operations

and M&A.

How to adapt tower design and packaging to the unique challenges of deployment in MyanmarGSM Telecom Products take us from import challenges to hand-carrying components to remote cell sites in Myanmar

TowerXchange: What’s your view of the opportunity for tower manufacturers in Myanmar? Christian Strømme, CEO, GSM Telecom Products: Myanmar is a great opportunity for all parts of the Telecom industry, but for tower manufacturing it is one of the last real golden opportunities. There are only a few of these type of green field markets left, and when the rumours started that the legislations would soften in Myanmar we quickly found partners in order to start positioning ourselves. There are a lot of different estimates of the number of towers that will be built, ranging from 5,000 and upwards towers over the next five years - the only thing they have in common is that the numbers are big, and that it will take time to reach the targeted number, hence Myanmar will be an important market for the coming four to seven years for most of the tower manufactures. The time pressure that is included in the license agreements are also extremely strict which enforces that more players will be part of the rollout. TowerXchange: What are the practicalities of importing towers into Myanmar - where are they typically shipped to, what are the customs costs and procedures, and who handles inland logistics, given the relatively under developed transport infrastructure in Myanmar? Christian Strømme, CEO, GSM Telecom Products: I think that most of the towers will be sold CIF Yangon (Costs, Insurance and Freight through to

Read this article to learn:< The size of the opportunity in Myanmar and the timescales for deployment

< What you need to know about customs and importing towers into Myanmar

< The importance of helping local contractors with the challenges of transporting and installing towers

< Adapting foundations to the challenging of rolling out during the rainy season

< Using modular designs to enable maintenance of flexible inventory while still meeting the

requirements of Ooredoo, Telenor and MPT

Myanmar needs 10,000 towers - maybe more. And Myanmar needs towers fast! However, importing towers into Myanmar is not easy, and inland logistics are a huge challenge in the context of the country’s under-developed transport network. This all adds up to a tremendous opportunity and a tremendous challenge for telecom tower manufacturers. TowerXchange first spoke to GSM Telecom Products about their activities in West Africa. We revisited CEO Christian Strømme to hear how they got into Myanmar early and developed the local contacts necessary to tailor their designs and packaging to meet local requirements.

Keywords: Who’s Who, How to Guide, Steelwork, Passive Equipment, Construction, New License, Capacity Enhancements, Network Rollout, Greenfield, Logistics, Warehousing, Masts & Towers, Customs, Spare Parts, Infrastructure Sharing, Southeast Asia, Myanmar, Telenor Myanmar, Ooredoo, MPT, GSM Telecom Products


Christian Strømme, CEO, GSM Telecom Products

Yangon), and that the local companies will handle it from there. Already that will give trouble to some of the suppliers that do not have a strong local network. For the importers we already see several difficulties, firstly the increased business in Myanmar is already now leading to congestion on the ports, then you have a finite holding capacity at the ports, and the final difficulty is the challenge creating enough capacity to get things out of the ports. Customs is also an issue. Towercos are believed to be allowed to import tax free when they get their licenses, but seeing the time it has taken for the operators, I believe that there will be some import problems. As far as I’ve understood the rate for towers is not a problem, which for steel towers is in the neighborhood of 1.5% (the rate is higher for other products in the telecom supply chain like energy solutions). The problem is rather one of securing permission to be allowed to import telecom towers.

For our bids we have offered CIF Yangon for most of the towers, but as mentioned we started focusing on Myanmar early, and we stated very clearly that we wanted to help and be part of the local activities for our customers. So since May last year we have had two local transport agents working with us, both for internal freight and imports - with all the challenges we have had to overcome, I am happy that we started early! We are also investigating alternative routes, via Thailand or China, in to Myanmar, in order to get around the port congestion, but also

that has its own challenges. I think that our local network will be what helps our clients in the end.

TowerXchange: How do the aggressive rollout timetables affect the urgency of tower production and delivery? Is there an opportunity to hold inventory in Myanmar? Christian Strømme, CEO, GSM Telecom Products: The rollout timetables are actually really aggressive. Production is not an issue; the capacities at tower manufacturers’ factories will handle the demand, however, I believe that there might be more


capacity issues at the local construction level. Demand will exceed the experience in the start of the project. What we have seen before is that there is a steep learning curve when a country starts a mass rollout, and we are therefore offering to be part of the process also after the tower is supplied. This local presence from our side helps our customer in streamlining the rollout, minimising warehouse time, ensuring minimum material loss and of course helping with the tower building, training et cetera. Most important for us is that we will be there to find solutions which are helpful in Myanmar.


We have therefore developed a strong relationship with several of the local construction companies, both to help them develop to our towers, but also to exchange insights from the rollout. In a big rollout we did a few years back, we saw that there were a lot of problems with the foundations, so we standardised the foundations for the towers between certain heights, and made three types of foundations, in order to keep things simple. In this specific project we also saw that the rainy season became a problem for the rollout, so we progressed to develop these three foundations to be a single raft foundation placed on top of the soil, saving both time and money. We do not yet know what will be the biggest problems in the Myanmar rollout, but we have already started to develop some small special features based on working with our local contact network. Due to the special modular design we are using in Myanmar, we feel confident about the possibility to build a good and flexible inventory over time. The main idea of our modular design is that it allows us to minimise the number of different towers and still cover all the Ooredoo and Telenor heights, and also the last MPT tender. So we plan to start with a small but flexible inventory, and increase it if there is a demand for it. Currently we are on the brink of sending our first sites to Myanmar, and as part of that we plan send a few sites to our warehouse facility.

TowerXchange: Given that the majority of Myanmar’s tower network will be shared from the outset, how does that affect tower design?

Are almost all the towers you’re sending to Myanmar heavier, multi-tenant towers? Christian Strømme, CEO, GSM Telecom Products: You are dead on, most of the towers are multi tenant towers, however there’s two strategies to this; either upgradable towers or buying multitenant towers at the outset.

An upgradable tower is a tower which is already made ready for later upgrades, with pre-punched holes and pre-designed upgrade kits. We are usually advising the latter, as the short term capex saving is not close to the costs of upgrading later, but here it is a question about how reasonable the operator demands are, and how many sites would need upgrades when one, two or even three extra tenants are added - this is then a strategic discussion that the towercos will have to calculate the effect of.

TowerXchange: Finally, please sum up how GSM Products have adapted your designs and logistics to meet the unique requirements of rolling out towers into Myanmar. Christian Strømme, CEO, GSM Telecom Products: As with any project, we are tailoring every tower uniquely for each wind zone and antenna load, and optimising everything for the client. Our local presence in Myanmar has suggested two specific features we have focused on in our designs for Myanmar: 1) easiness of build and 2) easiness of local transportation.

With easiness of build I mean that as an addition to our standard packages of documentation and detailed building guides, we have designed the towers with as few members as possible. This is done to keep the chances for building errors and material loss at a minimum. With easiness of local transportation I mean that we have designed all pieces to be as small as possible, as several of the sites will be in areas where transport is almost impossible with trucks or boats, so we need to consider “carryability”. We have set a maximum weight for the members and will pack smaller pieces in maximum weight bundles. The maximum weight was set together with the local contractors, to whom we also offer hand carrying kits (straps and hooks) together with each tower. We have therefore adapted our SmartPack system for the challenges in Myanmar

“ “Our local presence in Myanmar has suggested two specific features we have focused on in our designs for Myanmar: 1) easiness of build and 2) easiness of local transportation

Special feature:

The Caribbean region is made of over 700 islands and continental nations including the Dominican Republic, Barbados, The Bahamas, Antigua, Puerto Rico, Jamaica and Trinidad & Tobago.

Most countries in the region have undergone liberalisation processes with Puerto Rico being among the first to de-nationalise the telecom sector in the eighties. Other countries like Barbados, Trinidad & Tobago and Jamaica opened their telecom markets from 2000 on. Therefore, the regional telecom industry is a relatively mature sector characterised by generally high penetration rates and strong competition among players.

Cable & Wireless is the key carrier in the region, operating under the LIME brand, and other players offering effective competition include Digicel, Trilogy International Partners, operating as Viva, and América Móvil’s Claro.

On the passive infrastructure side, SBA Communications, QMC Telecom International and Continental Towers Corp are active in the region.

In this first part of TowerXchange’s Caribbean special feature we chat with regionally focused Cizmic Consulting and gain an exclusive insights from Trilogy International Partners, active in the Dominican Republic as Viva.

Caribbean case study, part one


In part one of our Caribbean special feature:101 Trilogy International’s success story and tower strategy in Bolivia,

Dominican Republic and New Zealand

107 Cizmic Consulting call for a change of midset to open up the tower

market

A change of mindset will open the tower market in the Caribbean and Central AmericaFrom strategic assets to cashing-in opportunities

Richard St. John, VP Business Development, Cizmic Consulting


TowerXchange: Richard, tell us about Cizmic Consulting, its footprint and key clients/projects.

Richard St. John, VP Business Development, Cizmic Consulting: Cizmic is an independent technology firm whose core competency is offering consulting services for telecommunications and utilities companies. In addition to our key services, we provide assistance in gaining access to capital as well as system integration, security and project management for large networks’ build-outs.

Our region of focus is the Caribbean and Latin America. We are active in Trinidad and Tobago, Barbados, Haiti, the Bahamas, Belize and Suriname among others.

We mainly work for independent telcos. Specifically, we assist companies that are not part of large global groups and who are either local incumbents or emerging carriers that have just won concessions to run local operations. Some of our clients are joint ventures between the local government and private initiatives. For example, we have assisted TSTT in Trinidad which is a private-public partnership between the local government and Cable and Wireless.

TowerXchange: What are the most challenging requests you get from your clients? What is currently on top of their agendas?

Richard St. John, VP Business Development, Cizmic Consulting: One of the key challenges our clients face is being an independent company and entering

Cizmic Consulting was created in 2001 with the goal to support telecom companies in the Caribbean and Latin America to achieve better financial and business results. The company has since developed into a full service consulting firm with a focus on assisting clients in their transformational process at a time of increased technology demands.

In this interview, Richard St. John, Vice President of Business Development, shares his views on the current status of the Latin America market, its key features and future challenges.

Read this article to learn:< What is on top of regional telecom companies’ business agendas

< The perception of carriers towards their passive infrastructure

< Key considerations to be made when making decisions regarding tower portfolios

< 3G-4G adoption and penetration rates in the Caribbean and Latin America

< Privatisation and its role in opening doors to tower companies in the region

Keywords: Cizmic Consulting, Caribbean, Latin America, Central America, South America, Trinidad and Tobago, Barbados, Haiti, Bahamas, Belize, Suriname, Puerto Rico, Panama, Dominican Republic, Cable & Wireless, Digicel, América Móvil, AT&T, Claro, T-Mobile, Sprint Corporation, Interview, Market Overview, 3G, 4G, Opex Reduction, Co-locations, Infrastructure Sharing, Business Case, CFO, New Market Entrants, Network, Privatisation, Penetration Rate

markets which are already mature and hyper-competitive.

Moreover, if a relatively small independent telco decides to expand internationally, it will need to acquire new competencies, enlarge its offering and ensure its ability to acquire market share in a new country. This is one core area where we are able to assist carriers: expanding their footprint and gaining credibility in other countries.

As you can imagine, if a telco partially owned by a government tries to expand into another country, there are quite a few delicate, political considerations to take into account. And again, this is one of our areas of expertise.

The telecom sector is moving at great speed and there is always something new to offer - technology,

services, devices... Our clients might be struggling to keep up with innovation, especially because our region is experiencing a swift rush to develop 4G services. Not everyone is able to keep up with this pace. In a very short period of time carriers are required to acquire new skill-sets, IP-centric personnel, and new marketing messaging.

In summary, I’d say that our clients are very focused on diversifying their revenue stream and launching


new products. These are among the key priorities on their agenda and our focus when assisting them in the execution of their strategic plans.

TowerXchange: With operations mainly focused in the Caribbean and Central America, can you give us an overview of those telecom markets, the key players and their characteristics?

Richard St. John, VP Business Development, Cizmic

“ “Carriers are required to acquire in a very short period of time new skill-sets, IP-centric personnel, new marketing messaging

San Juan, Puerto Rico


Consulting: There are three major players in our region: Cable & Wireless, Digicel and América Móvil and a variety of smaller, independent telcos.

A high majority of customers opt for pre-paid services. Therefore, carriers need to pay extra-attention in diversifying their bundled offerings. For example, we have been working in creating micro-bundles, daily passes and other flexible options to meet demand.

Many countries have recently released 700 MHz spectrum auctions for LTE which will facilitate the entrance of new players focused only on offering mobile broadband services instead of becoming a full service telecom operator.

In terms of penetration, the rates are pretty high across the region with some areas of the Caribbean reaching rates around 160%.

Most people in the region have two handsets from different providers. Customers are very selective and will make calls using one phone or the other, depending on the rate offered by each carrier. This results in competition among carriers being fierce.

In general, mobile penetration rates range between 125 and 160% depending on the countries, with the exception of Puerto Rico, which is an anomaly in the region and much closer to the U.S. standards. Its penetration rate is around 85% and mostly focused on post-paid offerings. Puerto Rico also has a more developed fixed line market than in the rest of the region.

TowerXchange: Is the role of tower companies widely accepted in those countries? What is the status of passive infrastructure - still in the hands of carriers or have they started to divest their portfolios?

Richard St. John, VP Business Development, Cizmic Consulting: I believe that the tower industry is just beginning to develop in the Caribbean.

We had the opportunity to evaluate the perception that carriers have of tower companies and I’d say that two opposite points of view coexist to date.

Some companies are starting to realise that divesting their portfolio of towers is a great opportunity to raise capital - much needed to upgrade their network to LTE. And I believe that this view will win out, eventually.

But in such a hyper-competitive market, there are also companies that see their passive infrastructure portfolios as a key advantage against competition. For example, think about a small island with 25 strategically placed cell sites. By owning them, the carrier retains a massive advantage against competition, ensures coverage where no one else can, blocks the entrance of new players and is the only one able to acquire customers in that area.

This might be an old school thought process but is still the reality in most areas of the region.

On the other hand, there are exceptions such as Panama and Puerto Rico, whose tower markets are definitely more advanced. SBA Communications has opened the market in Panama, Costa Rica and Guatemala for example, but the tower industry is far from developed.

Another aspect, from the perspective of tower companies, is that it’s quite hard to achieve economies of scale in areas where portfolios consist of just 40-50 towers. Towercos can hardly justify the investment and my feeling is that in the future, we might see tower portfolios in different islands being bundled and consolidated to then be sold jointly in order to make them more attractive.

That said, we are excited to be part of this wave. As carriers focus on innovation, the management of passive infrastructure will eventually become a burden they won’t be able to afford. I think it’s a matter of the speed of change, not if change will occur.

“ “Mobile penetration rates range between 125 and 160% depending on the countries, with the exception of Puerto Rico, which is an anomaly in the region and much closer to the U.S. standards

Carriers are considering a range of outsourcing options such as the possibility of utilising LTE core providers rather than building their own network in each country where they operate. This transformation process involves a change of mindset and selling tower assets will be considered as an option when companies are ready.

TowerXchange: How would you advise a carrier with regards to the possibility of outsourcing the management of passive infrastructure to towercos? Which key factors are to be taken into consideration?

Richard St. John, VP Business Development, Cizmic Consulting: The first step would be to assess the real cost of ownership of their tower portfolio.

Interestingly, when we start diving into the P&L of a carrier, they’d only have a few items related to tower management. However, when we start digging, we realise they have additional tower-related costs which they didn’t account for. Or we’d find out that 50% of the CTO time is spent on issues related to passive infrastructure. When we put together the final cost of ownership, we often get a different scenario from the one they’d have originally thought.

The second step is looking at the cost-benefit ratio of owning towers. Which means we’d compare what they would give up in terms of asset control versus the benefit of reducing opex and, furthermore, analyse the benefit of reducing OpEx and having cash in hand versus the potential monthly lease fee.

This equation is usually pretty attractive once carriers realise the management simplification that occurs once they divest their passive infrastructure. However, the key to change is in the mindset. Are towers a strategic asset or not? Although we see that the economics work out quite favourably towards divesting, there is still a lot of emphasis on the strategic role of towers.

In addition, regulators play a very big role in pushing the change. With very soft laws in place with respect to tower sharing, companies are still free to build and operate single tenant towers without offering capacity to other operators. In


countries like the Dominican Republic, each carrier owns most of their towers - a move that I wouldn’t consider the best use of their resources and investments.

If new regulations mandating sharing are enforced, we will start seeing changes happening at a much faster pace. New players will consider entering Caribbean and Central American markets and towers won’t be seen as such a strategic asset anymore. At present, carriers aren’t really enticed to enter a new market when the business case requires building their own infrastructure. Maybe they can try and strike deals to share infrastructure


with other players but without a firm regulation in place, such arrangements aren’t that common.

It’s likely that regulators will start getting involved in the telecom infrastructure sector also to preserve the natural landscape and avoid allowing too many new greenfield tower sites being developed.

TowerXchange: How is the telecom market evolving in the countries you operate? Do you think the industry is shifting towards consolidation?

Richard St. John, VP Business Development, Cizmic Consulting: Central America and the Caribbean aren’t really moving towards consolidation. In fact, most countries in the area are in a duopoly and might see the entrance of a third player thanks to

the newly available LTE spectrum.

One growing trend is MVNOs and we might see more of them entering the market. New players will mean more choices for end users and even more pressure on traditionally strong carriers to innovate and keep up with the competition.

TowerXchange: What is the status of 3G and 4G deployment in the Caribbean and Central America?

Richard St. John, VP Business Development, Cizmic Consulting: The region has been able to keep up with technology and network development and I’d say we are two to three years behind North America. All the countries where we are active have at least HSPA+ networks in place and its adoption

led to an exponential improvement in terms of customer experience - smartphone usage has boomed.

Now companies are already moving towards LTE which is an impressive and quite bold development. In fact, HSPA+ was deployed two to three years ago and now, over 50% of the countries in the region either have or are committed to adopting LTE. While technology cycles have usually taken four to five years, we are now seeing carriers moving forward faster than usual. This is a short turnaround and I believe that devices have driven this revolution.

In spite of this excitement, it is very important to determine the expected ROI with our clients and define their targets and payback timing.

Panama City, Panama

CFOs don’t like to make new investments when they are still in the red from previous major capital projects. So it’s key to clearly map out the expected returns and timeline before committing. Currently, the payback is three to five years. Whereas initially companies were starting to see returns five years after the investment, now the payback trend is closer to three years.

Carriers are becoming much smarter in the way they do business. While data usage is actually higher with new devices, they are ensuring there are data caps on a lot of plans they offer. They are much more careful in creating additional capacity now than they used to. I think it’s a learning experience for them as well, as in the past quite a few experienced players got burned by acting too fast, without taking into consideration all factors behind an investment.

TowerXchange: You have advised some clients during the privatisation of the telecom sector. How has the market changed in the countries where the telecom industry is now liberalised?

Richard St. John, VP Business Development, Cizmic Consulting: Privatisation is an old topic for a lot of countries but not in our region as there still are quite a few government owned telcos. Governments benefit from privatisation as they are able to monetise assets such as telecom companies and, usually, very few of them are profitable. These moves are particularly good at times of fiscal prudence as they allow governments to cash in.

It is also particularly good for consumers as private companies tend to be more agile in offering products, adapting to innovation and bringing new services to market. Customers become more exposed to new options and this can only benefit the population.

Usually, along with privatisations, comes the commitment from the government to liberalise and facilitate market access to new competitors. This will eventually lead to more licenses being granted, lower prices offered and higher penetration rates. A win-win situation for everyone beside employees of former public companies. In fact, privatisations usually lead to a contraction of the workforce as private companies realign to become more competitive.

A few years ago we consulted one of our clients which was a public company on the possibility of


selling their telecom towers. During a meeting, our client very openly told us that if they were to start selling their portfolio of towers, the local population as well as neighbouring countries might perceive it as a sign of weakness. I then realised it’s all a matter of mindset and privatisation can only be a positive factor for the tower management industry - it will take time, but it’s a move towards accepting it.

TowerXchange: Out of the markets where you operate, which one looks more advanced in terms of its telecom/passive infrastructure industry?

Richard St. John, VP Business Development, Cizmic Consulting: Puerto Rico is definitely quite advanced compared to other countries in the region. As previously mentioned, the country is very much aligned with North America in terms of products and services and its telecom market is quite cutting edge with five active carriers (notably AT&T, Claro, T-Mobile, Sprint Corporation and Open Mobile).

The Dominican Republic is another relatively modern market. It is a size which would allow tower companies to achieve economy of scale. To date, I believe there are approximately 1,500 towers in the country. With two major carriers - Claro and Orange (recently sold to Altice) - and Viva as third player, it’s a relatively well served and quite competitive market. I think we might see some levels of consolidation taking place in the next 12-18 months and this might lead to some openness towards tower companies and their entrance in the country

“ “The Dominican Republic is another relatively modern market and this is also due to its size which would allow tower companies to achieve economy of scale

A carrier’s success story: establishing network services in underserved countriesFrom the Dominican Republic to Bolivia and New Zealand: Trilogy’s challenging path to success

Edgar Geidans, Group CTO, Trilogy International Partners


TowerXchange: Edgar, please tell us about Trilogy International Partners, its operations and plans for the future.

Edgar Geidans, Group CTO, Trilogy International Partners: Trilogy was founded in 2005. However, our heritage dates back to the nineties with our first venture, Western Wireless Corporation, founded by John W. Stanton and Theresa Gillespie in 1994.

Western Wireless was a mobile network operator that offered telecom services in 19 western US states and several foreign countries under the brands Cellular One and VoiceStream. VoiceStream was then sold to Deutsche Telekom, now known as T-Mobile USA.

While Western Wireless was focusing on the domestic US market, Western Wireless International offered mobile services in Austria, Ireland, Slovenia, Latvia, Bolivia, Haiti, Iceland, Croatia, Georgia, Ghana and Cote d’Ivoire, counting almost two million subscribers in its portfolio.

When Alltel acquired Western Wireless, some of Western’s founding members and executives went on to create Trilogy International, by acquiring several of Western Wireless’ operations in Haiti and Bolivia from Alltel. So, although new, Trilogy has a very strong pedigree in wireless both in the US and internationally spanning over 30 years.

Today Trilogy is active in New Zealand, under the brand 2degrees, and in Bolivia and Dominican

Edgar Geidans is an internationally experienced CTO who puts his customers first. That has been the key for Trilogy International Partners to become a strong player in its chosen countries, along with deploying capex sensibly to maximise return on investment.

A smart carrier is one able to offer excellent services to its customer base, understand its strengths and weaknesses and ensure good returns to its investors. And Trilogy’s solid heritage and experience have helped this mid-sized company to keep its promises and continue expanding.

Read this article to learn:< The current state of the tower industry in Bolivia and the Dominican Republic

< Infrastructure sharing partnerships and tower sale opportunities

< A snapshot of Trilogy’s New Zealand operations

< The role of regulators in Trilogy’s countries of operations

< Trilogy’s key to customer satisfaction and ROI

Keywords: Who’s Who, Interview, Trilogy International Partners, Claro, Orange, Digicel, Viva, 2degrees, New Zealand, Bolivia, Dominican Republic, Haiti, WiMAX, LTE, 4G, 3G, Tricom, Altice Group, Hautaki, Millicom, ENTEL, North America, Central America, South America, Investment, Providence Equity, Capex, Opex, Co-locations, Infrastructure Sharing, Build-to-Suit, Consolidation, Penetration, Regulation, Country Risk

Republic as Viva. Voilá, our Haitian brand, was sold to Digicel in 2012.

Trilogy is an entrepreneurial business and as such, we like to seek opportunities in emerging markets where we feel we can put our expertise to work. As markets shrink due to consolidation, there are less possibilities to expand but most of those opportunities will be in underserved countries where we see the most potential for growth. We would also investigate other opportunistic ventures should they present themselves.

As part of our commitment to the growth of these countries, Trilogy is also involved in social responsibility programmes. In 2009, Trilogy was granted the “Award for Corporate Excellence” by then Secretary of State Hillary Clinton for our efforts in Haiti.

TowerXchange: Can you introduce us to the telecom market in Bolivia, its main characteristics and key challenges you face?

Edgar Geidans, Group CTO, Trilogy International Partners: We started operating in Bolivia in the late nineties and we have been active there for over 15 years. To date, we count over 2 million subscribers and our offering has evolved from GPRS and Wimax to an ever growing national 4G coverage.

Our plans in Bolivia are to keep growing our network and focusing on enhancing our range of offerings. As the market becomes more mature and penetration grows, including data adoption,

we will be ready to extend our services. For now, the Bolivian mobile penetration has been under-performing compared to the rest of the region, at approximately 77%.

TowerXchange: Can you introduce us to the telecom market in the Dominican Republic?

Edgar Geidans, Group CTO, Trilogy International Partners: We have been active in the Dominican Republic since 2006, when we acquired 100% of Centennial Dominicana from Centennial


Communications, a wireless communication company which operated in North America, Puerto Rico and the US Virgin Islands.

In Q4 2013, both Tricom and Orange were sold to the Altice Group, a multinational cable and telecommunications company. So, as I mentioned earlier, market consolidation continues even in our served markets, there will be just three active carriers in the DR. So for now we are just watching how the consolidation unfolds.

La Paz, Bolivia


TowerXchange: Please introduce us to Trilogy’s operations in New Zealand.

Edgar Geidans, Group CTO, Trilogy International Partners: We started operations in New Zealand in 2009, thanks to our partnership with the local spectrum holder, Hautaki Trust. The local market used to be led by two dominant players, Vodafone and Telecom New Zealand, which both sat in a comfortable duopoly and didn’t provide compelling offers to their customers.

Since our entry in the market, we have been able to provide a variety of options and fair prices to our customers, and we have been extremely successful. You could say we liberated the market by creating a more competitive environment and in three years we have acquired over 1.2million subscribers and changed the status quo. This has been for us a tremendous accomplishment in a very mature market with over 120% penetration. We are now planning our LTE launch, scheduled in 2014, and offer a high quality 4G network.

TowerXchange: Tell us about Trilogy’s tower strategy.

Edgar Geidans, Group CTO, Trilogy International Partners: Trilogy has always been and are very open and willing to co-location and infrastructure sharing. In fact, back in the United States, we frequently used to share our infrastructure and lease tower spaces where we operated as Western Wireless.

However, the culture is different in Latin America and other carriers are rarely open to infrastructure sharing. There is a perceived advantage still felt by carriers owning their infrastructure and we haven’t had many opportunities to agree to such tower sharing deals. However, we are curious to see what happens with the consolidation of Orange and Tricom in the Dominican Republic, as this might open up discussions regarding infrastructure sharing. We would start discussions with the passive side, then possibly move to the active network.

Towards the end of 2013, there have been renewed discussions between Trilogy and another Bolivian operator about the possibility of active and passive infrastructure sharing. But for now, these are just exploratory talks.

It’s important to underline that in Bolivia and Dominican Republic, there isn’t an existing regulation in favour of infrastructure sharing. Therefore, for now, carriers are not really pushed to seek this option. As a result, we typically own 95% of the towers we operate. We adopted a very classic model of leasing land space via long term agreements and building our own steelwork, power plants and antennas. We currently own over 95% of the 500+ towers we operate in the Dominican Republic and of the 700+ we run in Bolivia.

TowerXchange: Have you ever considered selling your passive infrastructure?

Edgar Geidans, Group CTO, Trilogy International Partners: Yes, we did have internal discussions about the possibility of selling our tower portfolios. Trilogy wouldn’t exclude this option under the right circumstances and with a sound business model. We are aware that partnering with towercos is a growing operational model among carriers and we are open to it. The US is a prime example. Being an entrepreneurial company, Trilogy always seek the best option for our growth.

Carriers are starting to realise that site and tower management operated by tower companies are a positive way forward, as it leaves them to focus on their core business and releases them from the related costs, maintenance and management.

TowerXchange: Moody’s has recently changed the company’s rating outlook to stable from negative in light of the positive indicators in

“ “we did have internal discussions about the possibility of selling our tower portfolios. Trilogy wouldn’t exclude this option under the right circumstances

EBITDA and reduced leverage. Can you tell us the key components of Trilogy’s path to success?

Edgar Geidans, Group CTO, Trilogy International Partners: Our strategy is working well because we are strongly focused on providing ROI to our investors while ensuring a very high quality of service to our customers.

We have historically provided good returns to our investors and that is a key to succeed. On the other hand, I am aware that we operate in several countries deemed challenging by many investors.Bolivia is a key market for us; a country with a very strong political structure and a recently nationalised telecom company, ENTEL (nationalised in 2008). We have been active in Bolivia since 1999 and have endured the country politics and policies since then and we work with our investor community to keep them regularly informed.

We have deployed significant capital in New Zealand to enter a mature market with over 120% penetration. It was a challenge, but it’s now giving the expected returns. In fact, our operations in New Zealand have delivered positive EBITDA over the last 5 quarters, a tremendous performance.

TowerXchange: As CTO of the group, what are your priorities in terms of network enhancement and further improvements to each company?

Edgar Geidans, Group CTO, Trilogy International Partners: My priority is, and always will be, our

customers. Without happy customers, we wouldn’t have good revenues to generate an ROI. This is our core business and has to be the focus of our activities.

I am also focused on ensuring that our networks operate efficiently, exceeding quality criteria by default. It’s very important that our customer base enjoys a good service but at the same time, we have to be cost efficient. Being a mid-sized company, we must keep a very close eye on opex and balance it with the requirements of our core business.

I classify Trilogy as a nimble follower, not necessarily the technology leader. So if our competitors plan to offer certain service, we will very rapidly adapt. We may not be the first but we will respond swiftly to the market needs. And that has been a very successful model for us.

Thinking back to early 3G, I feel that companies invested massive amounts of money to deploy the new technology when the market wasn’t ready. Smartphones didn’t exist and high end devices were prohibitively expensive . We now have a very solid ecosystem of devices in place, available to virtually anyone across the globe. So I can foresee 4G being implemented with much greater and immediate success. With the price point of bundles coming down drastically, the 3G networks began filling up and returns were eventually delivered. But the process was way too slow. With 4G, we have the ability to predict the ROI because devices are already available and people are more aware of their options.


One of our key target groups are the “Millennials”. They are the best equipped in terms of devices. They are the ones we always need to keep happy as they are the future drivers of our financial returns.

TowerXchange: Your Bolivian company, Viva, launched a wireless public telephone service called ”Puntos Viva”. Can you give us more details about it?

Edgar Geidans, Group CTO, Trilogy International Partners: We were pioneers in launching Puntos Viva in Bolivia.

Bolivia has its own GDP challenges and many people still cannot afford to own a mobile phone due to lack of electricity, money etc. Over ten years ago, we recognised this reality and provided a custom designed desk telephone, operating on GSM wireless network, in street shops. We offered the devices to the shopkeepers who would top them up at discounted prices and sell calls by the minute to their customers. A margin would stay with the shopkeepers, hence providing an additional source of income. We now have over 50,000 Puntos Viva across the country and, in addition to the income for these small business, we are offering a tremendous service for the portion of the population without access to mobile phone services.

We used to run a similar service in Haiti which is now part of the Digicel offering.

Moreover, this has been an amazing branding opportunity for us as it made our brand highly


recognisable across Bolivia and help connect our company with the people of Bolivia.

TowerXchange: How is telecom regulation impacting your international operations?

Edgar Geidans, Group CTO, Trilogy International Partners: One lesson learnt in our years of international business is that each country is unique, and we see that at the regulatory level. New Zealand is a mature market with an independent, high quality regulator, ComCom, which is not only internationally savvy but has a good understanding of dominant market power and internal market dynamics too. So we enjoy a constructive regulatory environment for our 2degrees operations.

The Dominican Republic’s regulator, Indotel, works to keep a level playing field, independence and fairness in the market and strives to replicate successful models such as those found in North America. In my opinion they sometimes lack international exposure to best Regulatory trends and practices, but Indotel generally adopts US FCC recommendations and is a fair player in their activities and market consultations.

The situation is different in Bolivia. We are operating in an environment where the largest telecommunications company was recently nationalised and the government regulator, ATT, is in charge of all the major ICT policies as well as transparency and quality control by telecommunications service providers.

TowerXchange: How would you like Trilogy to look like in 3-5 years?

Edgar Geidans, Group CTO, Trilogy International Partners: LTE and LTE Advanced will be a firm reality and data subscriber numbers will grow by the day. We now have LTE trials in planning, but in 3 to 5 years, we will experience mature LTE deployed in most markets. We will live in a highly penetrated world of multi-device users and users with multiple subscriptions.

New advancements will lead to M2M communications being increasingly implemented in the automotive industry. That will represent a tremendous opportunity for wireless operators but also a challenge as networks will need to keep expanding to cover new solutions and applications.

Electronics will play another big role with smart TVs being connected with embedded LTE.

I anticipate continuous growth in the number of devices and volume of data being consumed. So we will need to provide higher quality and bandwidth to an expanding customer base in our markets. In summary “continued rapid data growth”.

TowerXchange: Can you tell us about the group’s experience in raising capital and who are the investors involved in Trilogy?

Edgar Geidans, Group CTO, Trilogy International Partners: We have an excellent reputation among the investment community for providing a solid ROI. Thanks to that, we generally have had access capital to when needed.

Trilogy has a long standing relationship with Providence Equity, one of our stronger backers.

On the other hand, it is very important for us to be able to raise capital at a local market level and we’ve been successful in that, too, with local banks and investors. It helps to build our local business relationships and local awareness. I would consider this one of our core commercial strengths

Special feature:

Frustrated by complaints of broken maintenance and refueling workflows, TowerXchange reviews the RMS and ILM platforms with the potential to improve visibility and accountability at distributed cell sites, closing the loop on job ticketing and keeping asset registers up to date. We also visit with Accruent, who take a project management-oriented approach to introducing their Siterra platform, used by all four major US carriers. We also take a look at Infozech, who combine cloud-based analytics with a managed services approach to manage over 150,000 sites in India. LatAm ILM leaders NAAP Global Solutions advocate the importance of a single data set and a standard site list to underpin network modernisations such as the rollout of LTE, while calling attention to the re-use value of 3D laser scans. Finally, we also revisit Westell, who acquired Kentrox last year, to review the use of Intelligent Site Management in LatAm.

From RMS to ILM and Site Management platforms, part six


Don’t miss:113 Editorial: how to unlock energy opex efficiencies

116 Accruent improve quality and time to project completion

121 Infozech’s applied analytics

125 NAAP on infrastructure lifecycle management

129 Westell on Intelligent Site Management in LatAm

How to unlock energy opex efficienciesReviewing the proposition and providers of infrastructure lifecycle management systems


At the GPM Working Group we heard that full green power solutions are in use at less than 3% of West African cell sites. A key challenge for the propagation of green power was identified as a lack of skills and processes in the field to optimise and maintain performance of complex green power systems post-installation. On paper and in test environments, green power might promise spectacular reductions in energy opex, but too often those results are not delivered in the field. Why? Misalignment of incentives

One problem, it seems, is that incentives are often mis-aligned within the supply chain. It’s a workflow problem. Carriers want 99.7% uptime from towercos. Towercos back-to-back those Service Level Agreements (SLAs) to managed services contractors. These managed service providers might subcontract to local field maintenance firms and refueling agencies. The refueling agencies are paid per litre of diesel pumped and for the diesel they burn in delivery. Within this supply chain, the KPI almost everyone is most worried about is uptime. The towerco and it’s subcontractors they want to maintain client satisfaction and avoid SLA penalties, while back in the c-suite at the carrier they want to protect QoS, Customer Experience and safeguard revenues. It sounds like everyone’s pulling in the same direction, right? Well, it turns out that’s not the case.First, let’s be honest; it’s not in the interests of

I’m writing this editorial on a delayed flight back from speaking at the excellent GSMA Green Power for Mobile (GPM) Working Group in Lagos. My plane was delayed because of a failure of workflow - the plane had been sitting on the runway for seven hours, but nobody refueled it until we were due to board. Problems with airline workflows have inspired me to write about tower industry workflows, which can suffer similar hiccups from time to time!

Read this article to learn:< How misalignment of incentives within the maintenance and energy supply chain harms the green

power value proposition

< How a combination of RMS, ILM and access control systems can close the loop, creating accountability

in workflows

< An index of RMS, ILM and access control systems profiled in TowerXchange

< Illustrative case study of cell site maintenance with and without intelligent data analytics

Keywords: Who’s Who, How to Guide, Access Control, Monitoring & Management, O&M, Opex Reduction, Fuel Security, SLA, Hybrid Power, Renewables, DG Runtime, Logistics, Site Visits, Skilled Workforces, RMS, Site Management System, Asset Lifecycle Platform, Job Ticketing, Spare Parts, AIO Systems, AKCP, azeti, Broadnet Telecom, Galooli, HMS Industrial Networks, Inala, Infozech, InfraSTAT, Invendis, NAAP Global Solutions, Qowisio, Quintica, Tarantula, Telemisis, WestellKieron Osmotherly, CEO, TowerXchange

a refueling agency, paid by the litre of diesel dispensed, to help reduce diesel consumption. Secondly, focusing purely on uptime can be dangerous. Here’s an illustrative example. A field technician, let’s call him Bob, receives an emergency callout to a remote cell site that has gone down. Bob has an over-riding priority - uptime, so he throws his quick fix kit in the back of his 4x4 and starts driving. But when he departs for the site, Bob has little idea what might be causing the outage. When Bob reaches the site after a long drive over a lousy ‘road’, the site is still down but the DG looks fine and Bob’s usual ‘quick fixes’ haven’t restored service. Bob notices that another piece of new equipment has been added to the site. This is common as there

are multiple tenants on this tower. Maybe Bob has been trained on this new equipment and forgotten it, maybe he hasn’t been trained at all. But here and now, to this field technician, this new piece of equipment is a suspect. Bob decides to just bypass the new equipment. Great - site back up! And just in time to avoid the SLA penalty - everyone’s happy! ...Except Bob just bypassed an expensive new energy storage innovation, which only needed a simple filter change. The site is back up, but now it’s burning diesel at a hugely increased rate, burning the green power solution provider’s value proposition with it. Familiar problem?

Before we move on to one potential solution, we need to make the problem more complicated. There’s another huge distortion to the supply chain in Africa, and anywhere else where a significant proportion of cell sites are dependent on diesel: theft. Overlay a virulent diesel mafia on top of the supply chain for a cell site (let’s be honest, sometimes the diesel mafia is very much part of the supply chain), and you have parties with a strong incentive for green power to not work. Parties with a strong incentive for supply chains to remain broken and for more and more diesel to be poured into cell sites to maintain uptime. Parties that are literally siphoning off 30% or more of that diesel.

So, we’ve got a lack of visibility into the causes of outages, a frontline skills shortage, mis-alignment of incentives, compounded by pilferage, and the result is that a large proportion of remote cell sites


“ “

Overlay a virulent diesel mafia on top of the supply chain for a cell site (let’s be honest, sometimes the diesel mafia is very much part of the supply chain), and you have parties with a strong incentive for green power not to work... Parties that are literally siphoning off 30% or more of that diesel

continue to run noisy, polluting and expensive diesel generators 24/7.

At TowerXchange, we’re hoping to share some case studies and interviews that might offer solutions to this dilemma. It’s clear that we need more visibility and accountability within our supply chains and workflows. We have all this data coming from remote monitoring systems on our cell sites, but it’s just data, it’s not intelligence. Intelligence platforms may offer a solution

This month we’ve completed interviews with a number of leading Infrastructure Lifecycle Management solution providers. In fact, over the last year TowerXchange have built a comprehensive library of profiles of intelligence platforms purpose-built for the tower industry. These different platforms share a common three-phase objective: 1. Collect and integrate remote monitoring and performance data from cell sites and supply chains 2. Analyse data to identify opportunities to improve efficiency 3. Integrate that intelligence into maintenance job ticketing workflows, creating a feedback loop with field maintenance teams, enabling a reduction in MTBF and ultimately a progression from reactive to preventative maintenance.

So, let’s install one of these solutions and replay Bob’s story.


“ “Can these intelligence platforms really bring the transparency and alignment within the supply chain that will unlock those hypothetical energy opex savings?

Bob receives an emergency callout to a remote cell site that has gone down, except this time the job ticket tells him that there’s a filter that needs changing on that new energy storage device. The device needs so little maintenance that Bob had forgotten it was there! Bob grabs a replacement filter from the warehouse, grabs his mechatronic site access key, and drives out to the site. A bumpy drive later, Bob types into his key a unique, time-limited code given to him by SMS, and accesses the site. Five minutes later, Bob takes a picture of the replaced filter, uploads it to the NOC via an app on his smart phone, and receives approval that he has completed of the task. Before he leaves the site, he gets two further tasks from the NOC, including taking another photo to confirm the addition of a second tenant’s equipment to the site. The site is back up, the SLA penalty has still been avoided, the backup generator remains silent, and the green power vendor is making serene progress toward a successful trial and a big order that will ease the pressure of those debts built up by all that expensive R&D! This time everyone really is happy. Well, everyone except the diesel mafia. Their ‘guy on the inside’ got fired last month because something called a ‘time attendance monitoring system’ identified that whenever he got the call to fill the diesel tank, 30L of fuel went missing or it was cut with water.

Is this solution a mirage or a reality? Can these intelligence platforms really bring the transparency and alignment within the supply chain that will

unlock those hypothetical energy opex savings? It’s early days, but we have some success stories of broken supply chains and workflows that have been fixed by the intelligence these platforms provide. If you have a case study you can share with our readers, please give me a call or drop me an email! Best of luck! Kieron Osmotherly, Founder, CEO and Head of AfricaTowerXchange M. +44 7771 148001E. [email protected]

< Accruent, see page 116 of this issue

< Acsys (access control), see page 101 of

issue 4

< AIO Systems, see page 55 of issue 4

< AKCP, see page 77 of issue 6

< azeti, see page 71 of issue 5

< Broadnet Telecom, see page 113 of issue 3

< Galooli, see page 59 of issue 4

< HMS Industrial Networks, see page 82 of

issue 5

< Inala Infrastructure Intelligence, see page

109 of issue 3

< Infozech, see page 121 of this issue

< InfraSTAT, see page 85 of issue 6

< Invendis, see page 50 of issue 4

< NAAP Global Solutions, see page 125 of

this issue

< Qowisio, see page 63 of issue 4

< Quintica, see pages 66 of issue 4

< Tarantula, see page 77 of issue 5

< Telemisis, see page 103 of issue 3

< Westell, see page 129 of this issue

RMS, ILM and intelligent site management platforms for the tower industry

How to improve time to project completion and quality of task completionLeading infrastructure lifecycle management solution provider, used by all four major US carriers, targets international markets

Laith Dahiyat, Accruent


TowerXchange: Where does Accruent fit into the telecom tower industry ecosystem? Laith Dahiyat, Director, Product Management, Accruent: Accruent helps infrastructure, facilities and real estate leaders optimise their operations, delivering ROI and best in class financial performance. Accruent was founded over 18 years ago, and we are active in a number of different industry verticals, including wireless in which we have 13 years of experience. Siterra is our flagship product for telecoms which, having been through various iterations is now considered best in class for wireless infrastructure lifecycle management in North America. Siterra hits all the different points in the infrastructure lifecycle. We’re probably best known for our project management capabilities. We have 1.5 million projects in our system across all of our customers, and we specialise in large scale network build outs and upgrades, connecting wireless carriers, tower companies, and the service providers who do the work. It took just two and a half years for LTE to reach 90 percent of the US population, and a large chunk of those LTE network investments were managed in Siterra. We are proud to be a big part of the LTE success story. Siterra provides a holistic tool to manage all aspects of the infrastructure lifecycle, creating a central system of record for all assets (towers, cell sites,

Accruent is a trusted partner of all four major US carriers, who leverage their infrastructure lifecycle management solutions, including Siterra, to manage assets, leases, tasks and projects, creating a central system of record - a “single source of the truth.” Siterra has proved particularly indispensable when managing the complexity of major networks rollouts and upgrades, and has played a critical role in making LTE accessible to 90 percent of the US population in just two and a half years. Accruent is expanding into international markets, with new clients in Latin America and Europe.

Read this article to learn:< How Siterra delivers massive ROI by creating a central system of record for all assets, tasks and projects

< The need for centralised yet flexible control of projects to manage the complexity of rolling out 3G and LTE

< Customising reporting to meet the different needs of the C-suite, functional heads and site development

organisations

< The criticality of mobile access to information and fulfillment of deliverables for approval

< How to maintain comprehensive asset registers by integrating lease and document management with

project workflows and approvals

Keywords: Who’s Who, Monitoring & Management, 4G, Network Rollout, Permits, Novation of Leases, ROI, Asset Register, Site Management System, Asset Lifecycle Platform, Americas (South), Americas (North), Europe, Siterra, Accruent

active equipment, lighting, backhaul, RF data and more), giving a top-down view of the state of the network. The value of Siterra becomes apparent very quickly because we deliver massive ROI through our platform. Pre-deployment, we’ll often encounter a very fragmented information management environment, with multiple point solutions that each manage a little piece of the pie, but which don’t feed into a consolidated view of the network. In parallel to the complexity of legacy information management systems, the complexity of networks and deployments are growing to meet growing demands for wireless data, which in turn leads to growing complexity of financial and project management requirements.

As networks in the US and international markets progress from 3G to LTE and LTE Advanced, and with the introduction of heterogeneous networks, complexity grows, and carriers need a purpose-built tool to manage the network. Siterra is purpose built for wireless. TowerXchange: Are Accruent’s solutions offered on a license or SAAS basis? Laith Dahiyat, Director, Product Management, Accruent: Over the last four years, Accruent has transformed its business model and products from on-premise software to cloud-based solutions that are easier and less expensive for customers to implement. One hundred percent of our new software revenue is now derived from cloud products.

TowerXchange: I understand that your Siterra product is used to manage over 750,000 sites globally - can you tell us about some of your typical use-cases in telecoms? Laith Dahiyat, Director, Product Management, Accruent: We’ve cultivated deep partnerships with all four carriers in North America, who use Accruent for a multitude of use-cases; to manage site selection, assets, project management, maintenance, financials and lease administration (as landlords and payees).


However, the US market pales in comparison to the size of the global telecoms industry, so a big focus for Accruent now is the international market, especially Latin America and Western Europe. Across the business, Accruent has 1,200 customers in 56 countries. We recently signed on two companies that are aggressively investing in infrastructure, both buying and building towers, in Central and South America. We are also in talks with some major Western European players. We’re finding that in markets where LTE is gaining traction, project complexity creates an even greater need for a proven

The Siterra Dashboard


tool like Siterra. We’ve been a trusted partner during the evolution to 3G, 4G LTE and the future of LTE-A and heterogeneous networks. TowerXchange: Readers always want to know about the financial stability of potential strategic partners - what is Accruent’s financial status? Laith Dahiyat, Director, Product Management, Accruent: At the end of 2013 Accruent was acquired by TA Associates, a private equity firm that specialises in growth markets and which owns a number of wireless companies across the world, giving us a great opportunity to leverage their relationships to accelerate our own international growth. Our existing investor, Vista Equity Partners, has retained a significant ownership position. Accruent represents an extremely strong financial foundation for investors and clients, as evidenced by our track record of profitability and revenue growth and a customer retention rate of over 95 percent. We are consolidating the best people and products in the industry and will continue to do so.

TowerXchange: Is price a barrier for potential customers of enterprise-grade software in emerging markets?

Laith Dahiyat, Director, Product Management, Accruent: Price isn’t really a barrier for becoming a Siterra customer. Whether you’re a carrier or towerco, once the size of the network reaches a certain point you need a management tool for to help manage growth. Once we start conversations with a

new prospect, the ROI of investing in infrastructure lifecycle management far outweighs the cost even for a 50 site startup pushing to 250 sites; we structure the partnership to grow with them. Ultimately, it’s the same tool whether you’re managing 50,000 or 250 sites. TowerXchange: How can site management systems help carriers and towercos identify potential new sites and new technologies that will add the most value to their networks? Laith Dahiyat, Director, Product Management, Accruent: We’re proud of our business intelligence suite, which provides reporting fully integrated with MicroStrategy, an enterprise class business intelligence tool. This means every piece of

information, every activity and every asset is stored in a secure, consolidated customer data warehouse, which makes it easy for stakeholders to create and consume reports even if you’re not a trained data analyst. Siterra enables the C-suite to have a top down view of project status, network status, and vendor performance. The C-suite cares about the bottom line, not the nitty gritty, and prefers a rolled up view. Functional heads and senior management have different dashboards showing more granular aspects of the network, for example an SVP at one of our US carrier clients created a custom report summarising the status of LTE deployment in the Northeast region, showing the number of sites on air in last 24 hours and a ‘task late’ report, providing transparency into any delays and why they are occurring.

Moving away from senior management, site development organisations responsible for the build out of networks and the deployment of new technologies need tools that make it easy to manage up to 80,000 concurrent projects. Complex projects, such as the rollout of LTE, require standardisation and templatisation, coupled with the flexibility to deal with real world scenarios such as adapting to local zoning regulations. With Siterra, you can implement centralised control of projects, retaining dynamic variability so that rollouts are standardised except in regions with exceptional zoning requirements, where we might need to add three additional tasks to the process, for example. One of our US carrier clients had become highly

“ “Every piece of information, every activity and every asset is stored in a secure single data warehouse, which makes it easy for people to create and consume reports even if you’re not a trained data analyst

fragmented regionally - they had started acting autonomously like franchises. With a multitude of different projects and procedures, everyone was doing similar tasks in a different way, so it was tough for management to “compare apples to apples.” Now with the rate of investment and network growth, the carrier has leveraged Siterra to re-centralise control. This is an example of how standardisation, with flexibility, gives the client the ability to roll up to a clear picture of programmes at HQ level. TowerXchange: How do site management systems support the day to day maintenance and management of existing sites?

Laith Dahiyat, Director, Product Management, Accruent: There’s huge value in having a single source of the truth for all attributes and all assets.

Mobile access to infrastructure management information is increasingly critical. An engineer in the field in Peru might have specific and time sensitive needs - from a mountainside, he can pull up information about the site, and examine specific assets and attributes. Our workflow can assign tasks and deliverables to our field engineer in Peru, so he can fulfill deliverables for approval, such as take a photo to prove installation - our system captures the longitude and latitude and can reject or approve based on location. Upload is instantaneous, and triggers any next steps in the workflow.

Project management results in improved time to project completion, but also results in a dramatic increase in the quality of task completion. Delays are

often due to human factor errors, which themselves are due to a lack of controls, causing delays and cost over-runs. Mobile access is governed by various permissions. Depending who you are, you see different information, which assists with compliance and security, while streamlining the experience for users.

TowerXchange: TowerXchange focuses on emerging markets where asset registers and lease


documentation can be notoriously incomplete. How can carriers and towercos accelerate the process of surveying and evaluating towers, and how can they ensure asset registers are kept up to date in a multi-tenant context? Laith Dahiyat, Director, Product Management, Accruent: The functionally that’s delivered with our robust lease and financial management function is tailored for both towercos and carriers. Our lease and financial management capability integrates


with our robust document management system - of course maintaining comprehensive asset registers is all about ensuring you have complete lease documentation. With our predefined libraries, you can configure a requirement that specific types of documentation be uploaded. When that’s combined with our project management module, a 50 task LTE rollout can include a 10 step approval workflow to generate a complete set of documentation. You can also add reporting and notification, and complete tasks like sending a supervisor an email anytime a specific group of users uploads a lease. This allows for proactive management, and the workflow forces compliance - every task is audited and logged, every

task has an owner, and tasks must be completed in the right order. This also enables management access to a granular view of uploads, versions and approvals. A combination of workflows, financials, and document libraries is critical to ensuring compliance and consistency of execution. TowerXchange: Finally, please sum up how you would differentiate Accruent from competitive infrastructure lifecycle management platforms.

Laith Dahiyat, Director, Product Management, Accruent: Our credibility comes first and foremost from our partnerships with leading wireless carriers,

originally in North America but now also in Latin America and in Europe. Accruent is a trusted partner of some of the largest wireless companies in the world, which has enabled us to develop solutions to important problems in collaboration with the industry. We often find our solution compared to ERP platforms which were not purpose built for the wireless industry. Accruent developed a holistic, complete solution, purpose built for the wireless industry across the world. Many of our competitors don’t have our depth of implementation experience - our Senior Director of Services has been with us since 2001, and has implemented infrastructure lifecycle management solutions across all parts of the industry. We are proud that we’ve never had a failed implementation, and that’s thanks to our deep industry knowledge and expertise

“ “We are proud that we’ve never had a failed implementation, and that’s thanks to our deep industry knowledge and expertise

Applied AnalyticsInfozech leverage applied analytics to deliver a definite outcome, improving efficiency and RoI

Infozech CEO Ankur Lal (Centre) receiving an Economic Times award for Innovative Managed Services


TowerXchange: Where does Infozech fit in the telecoms infrastructure ecosystem? Ankur Lal, CEO, Infozech: Infozech is a 15 year old company which initially focused on BSS but which pivoted to focus on towers five years ago when the first shared passive infrastructure companies were started up in India. We manage over 150,000 sites, including all of Indus Towers, and have worked with most of the towercos in India. Like TowerXchange, Infozech is focused on passive infrastructure, and we’re making a significant push into Africa, Southeast Asia and the Americas. Infozech provides data aggregation and intelligence. We don’t provide hardware - Infozech is a cloud-based applied analytics company, also offering consulting and managed services to plug the gap between data insights and alarms, and ground-level O&M. In terms of operational data, we are the glue between the towerco or operator and the field maintenance team. For our BSS business, we manage around two billion transactions daily.

We started by capturing diesel data and communicating that via SMS, through a mobile app or automated sensors. Over time, we developed a substantial data farm, providing a comprehensive energy database, enabling us to move beyond monitoring and analysis, to prediction and control. With data on electricity, battery, and renewable power consumption too, our farm has all the data to derive the insights necessary to drive predictive

Infozech combine cloud-based analytics with a managed services approach, applying intelligence to improve the efficiency of telecom operations and energy management. Infozech is a proven solution, managing over 150,000 sites in India, including all of the Indus Towers.

Read this article to learn:< How Infozech translate data into actionable intelligence: collection, analysis, benchmarking, configuration and presentation< Supplementing analyses with managed services and mobility to bring management closer to field operations< Leveraging the data farm to drive predictive energy consumption and optimise use of energy< Integrating new tower acquisitions, new people and processes, new KPIs and SLAs

Keywords: Who’s Who, Monitoring & Management, Opex Reduction, SLA, ROI, Procurement, KPIs, Change Management, RMS, Site Management System, Job Ticketing, Energy Tracking, Managed Service, Tower Management, Africa, Americas (South), Southeast Asia, India, Indus Towers, Infozech

maintenance and cost efficiency, and to minimise carbon emissions and optimise energy opex. We integrate with RM sensors from multiple vendors and provide a hardware independent converged view to the towerco for their central control and monitoring. TowerXchange: How does Infozech’s managed services approach improve control and visibility of the O&M field force? Ankur Lal, CEO, Infozech: We are a lean company; we don’t employ field O&M teams, but we have regional partners where we work with their field O&M teams. We take charge and take on responsibility to meet Service Level Agreements (SLAs). We also use field behavior / human behavior analysis to improve people, process and automation. This helped us win a recent prestigious Economic Times Global Telecom Award for Managed Services! For one of our customers, we operate 40,000 sites across 20 states, working with 20 different operational units in the field. For that customer we have 20 staff on our helpdesk, plus in-location business consultants and developers. On a 24/7 basis we collect, analyse and report data. The impact of providing the larger, integrated view of cell sites has been to dramatically reduce the mean time to respond to alarms and job tickets.

TowerXchange: How does Infozech adapt its service as tower portfolios change and expand?

Ankur Lal, CEO, Infozech: Managing passive infrastructure, especially when you’re acquiring assets from different companies, often results in lots of silos and data islands, which we’re able to integrate - we can upload all your existing Excel spreadsheets and data stored in different islands including databases. To quote one of our customers, the “Infozech team has made tremendous effort in closing costs on-time


and streamlining the entire process. Key data is easily accessible online on the Infozech ETS portal. We can now say goodbye to spreadsheets and PowerPoint presentations and utilise our time on analysing business critical data.” A cloud-based analytics platform like ours, designed for the tower industry, does not have the same rigidity as a large ERP platform; we’re much more open, we understand and can swiftly accommodate


changes. For example, we can easily integrate new towerco acquisitions, new people and processes, supporting change management as everyone adjusts to a common terminology and new ways of working. Our integrated analytics platform provides the language to talk to different RMS and communicate that to various acquired cultures. And we can accommodate the range of different KPIs and SLAs that come from having built portfolios through acquisitions, adapting to changes in grid-power availability, and the changing requirements that come with the addition of new tenancies. Passive infrastructure providers need easy to use, nimble tools to help them adapt and change. TowerXchange: There’s a case study of a passive infrastructure provider using your Energy Tracking Service on your website - tell us a bit more about that. Ankur Lal, CEO, Infozech: Towercos and operators have invested a lot in hardware and remote monitoring vendor solutions which provide data from their cell sites - meters, fuel gauges, RMS - when they receive data it’s not coherent, there is no set frequency, so it’s tough to take forward and analyse to predict and minimise breakages and outages. We take over the operation of data for our customers. Step one, collection, involves us interfacing with any sensors the customer has onsite, whether delivered in a data feed, SMS or Excel. In step two, we analyse the data - validation

and sanitisation; essentially we look for what looks right and what looks incorrect and evaluate performance against benchmarks and targets aligned with the customer’s KPIs and SLA. In step three, we preset filters that expose the data to the customer the way they want, so we configure reports and alarms to the needs of different users. To again quote one of our customers: “Infozech is going to change the way for us. Thank you for bringing the transparency in power and fuel billing and helping us in achieving our power and fuel KPIs and targets.” TowerXchange: Talk to us about your strategy to enable the field force with mobile applications to ensure comprehensive data is collected in real time from the actual sites. Ankur Lal, CEO, Infozech: We live in an era when technology exists to automate every part of the site

management process, but many of these sites are located in areas where the technology hasn’t caught up. Automation doesn’t always work as prescribed, so you need a contingency plan. At remote sites where the asset register and the raw RMS data doesn’t give you the whole picture, a field worker’s mobile app can collect a photo, with an accurate longitude, latitude and meter readings and send that information back to the analytics platform. Equipping field engineers with mobile apps is very cost effective in developing countries. Themobile app is intuitive and very visual. Mobility allows management to get closer to field data, incorporating front-line insights into reports, which in turn can be accessed through smart phones or tablets. TowerXchange: How do you translate insights from your analytics into actionable strategy plans that reduce opex? Ankur Lal, CEO, Infozech: When we collect data, it comes to us in a raw form. The real insights come from benchmarking that data against another source, that’s when the learning starts happening. For example it might be a simple case of comparing data from the same site last week or to the same week last year, or comparing with another similar site. We slice and dice data to benchmark against all sites with similar gensets, similar tenants or which are serviced by the same maintenance teams. It’s our experience that the people who collect data are not necessarily comfortable slicing and

“ “Passive infrastructure providers need easy to use, nimble tools to help them adapt and change

dicing that data. The data slicers are often based in the corporate headquarters and can be somewhat separated from the reality in the field. Infozech’s managed services enable data analysts to slice and dice as they want, to store and reconfigure analyses for future actions. To give you a couple of real life examples. One customer was withdrawing diesel through state owned gas stations, where fuel was charged through a prepaid card. In the words of that customer: “Earlier we were able to reconcile 90,000 litres for every 100,000 litres of IOCL withdrawal. Today we are able to reconcile 95,000 litres. Leading to an improvement of 5% on reconciliation.” Customers spend a lot of resources on reconciliation; one customer told us their analysts spent 27 days of every month consolidating data, and just 3 days planning and taking corrective actions! We flipped that so they spent the majority of their time planning and improving the network, which has resulted in 10% year on year savings over the last three years - and we think we can keep that up for another two years to achieve total savings of over 50%!

TowerXchange: Who are your target customers, tower operators or their O&M subcontractors? Ankur Lal, CEO, Infozech: We are talking to the O&M contractors, as they are responsible for RMS and for day to day operations. We can strengthen the value proposition of O&M subcontractors, providing transparency into what the O&M team is

doing, and a mechanism to determine performance against SLAs. Towercos are excited by these insights, but their field force is often subcontracted, so we maintain a three way relationship - we stretch the performance of O&M subcontractors, and we interface with towercos and large power equipment providers, who also generate intelligence which is seldom integrated into analyses and responded to.

TowerXchange: How would you compare how customers’ analytics requirements vary between India and Africa. Ankur Lal, CEO, Infozech: The diversity of different


cell site scenarios in Africa is far greater than in India, but the scale of operations is not as large. So it makes economic sense for customers to choose cloud based analytics. The need for trained manpower is also much greater in Africa than in India, so a solution like ours helps training by reducing cost of knowledge transfer through centralisation, and by localising and adapting to the customer’s specific needs. The rollout of LTE in Africa is ahead of India, which makes accessing the cloud easier. India also has a legacy of non-cloud based infrastructure, so there is more inertia. Customers need to get more comfortable with software, intelligence and analytics; they’re very centred on hardware. As much of this infrastructure and analysis is new in Africa, we get less resistance to the concept of using the cloud. TowerXchange: Please sum up how you would differentiate Infozech from other cloud based analytics platforms. Ankur Lal, CEO, Infozech: How customers use our platform is how we are differentiated from competitors. The keyword is applied - Infozech leverage applied analytics to deliver a definite outcome, improving efficiency and RoI. We are agnostic to technologies and data models; it’s all about the outcomes. Our managed services team uses a lot of different frameworks to conduct their analyses and help customers solve their operational problems

“ “

Customers spend a lot of energy on reconciliation; one customer told us their analysts spent 27 days of every month consolidating data, and just 3 days planning and taking corrective actions! We flipped that

Infrastructure lifecycle managementHow to increase efficiency, save opex and enhance business intelligence

Don van Splunteren, NAAP Global Solutions


TowerXchange: Where does NAAP Global Solutions fit in the telecoms infrastructure ecosystem? Don van Splunteren, VP Sales, NAAP Global Solutions: NAAP Global Solutions was launched eight years ago and focuses exclusively on the telecom sector. We help customers deal with the vast amounts of information coming from sites, towers, access control systems, generators and all other equipment on cell sites. We provide modular infrastructure lifecycle management software and services to help carriers, towercos and regulators manage operational business processes, increasing efficiency, lowering opex and enhancing business intelligence. We are able to leverage over four decades of tower manufacturing and site installation experience of Neptuno, which is a different company in the same group as NAAP Global Solutions. Our solution is available under software as a service (SAAS) or license. We provide an integrated solution to manage many infrastructure-related processes - not just O&M, but also compliance with regulations and company policies, and lease management. Our full suite of lease management functionality supports property owners and tenants with billing, reporting and forecasting - everything you need for revenue and cost management. We also provide 3D laser scanning of sites, which

“It’s like a telecom industry specific ERP,” says NAAP Global Solutions’ Don van Splunteren, urging carriers and towercos to take a look at the new functionality of their infrastructure lifecycle management solution. NAAP has leveraged being part of the same investment group as 42 year old tower manufacturer Neptuno, and from the lessons learned from gathering and analysing data from over 5,000 cell sites in South and Central America and the Caribbean.

Read this article to learn:< The importance of a single data set, and a standard site list, plus a platform to access and modify data

on the fly

< The role of infrastructure lifecycle management in network modernisations such as LTE

< Integrating infrastructure lifecycle management with third party access control and RMS

< Using and re-using 3D laser scans to understand the value and capacity of towers without having to

visit sites

Keywords: Who’s Who, Monitoring & Management, 4G, Opex Reduction, Loading, ROI, Change Management, Site Visits, Asset Register, 3D Laser Scanning, RMS, Site Management System, Asset Lifecycle Platform, South America, Central America, The Caribbean, New Zealand, Venezuela, Haiti, Bolivia, Guatemala, the French West Indies, Dutch Antilles, The Dominican Republic, Mexico, Puerto Rico, Africa, Digicel, Neptuno, NAAP Global Solutions

is especially relevant when towercos buy new towers. Capturing a site in 3D not only helps you understand what sites look like, understand their capacity, and how many antennas are on there, but it also provides a baseline information set to start managing the infrastructure from there on. Finally, NAAP Global Solutions also provides an inventory and barcoding service, helping tower operators physically label and inventory their assets, see which parts on a shared site are theirs, which again is invaluable baseline management information. TowerXchange: Who are your target customers and how do their requirements differ?

Don van Splunteren, VP Sales, NAAP Global Solutions: We provide solutions and services for carriers, towercos and regulators. The tower sharing model is only around 15 years old, and the independent towerco sector has only been at scale for around 10 years, so this is a newer segment to us. Our initial customer base was solely carriers, but for the last three years we’ve evolved to serve towercos as carriers divest towers to large towercos and subcontract BTS to large and smaller regional towercos.

The biggest difference in requirements is that carriers want more detail about active equipment than towercos, whereas towercos use our operational tools to manage maintenance regimes, genset performance and refuelling, and of course to

know what tenants have installed, which is key to revenue assurance.

We’ve also seen a number of regulators come to us to help them improve the visibility of network performance and ultimately QoS. TowerXchange: Our readers’ first question is always ‘how proven is the solution?’ So please tell us about some of your client deployments to date - I understand you have an extensive client base in Latin America?

Don van Splunteren, VP Sales, NAAP Global Solutions: NAAP Global Solutions is focused on South and Central America and the Caribbean,


where we work with three of the seven largest carriers in the region, plus many smaller carriers, as well as towercos and regulators. Each client uses NAAP in a different way that best serves their needs, and we provide integration services with other information and asset identification systems. Our systems gather data from over 5,000 cell sites currently in New Zealand, Venezuela, Haiti, Bolivia, Guatemala, the French West Indies, Dutch Antilles, The Dominican Republic, Mexico and Puerto Rico. Given our experience supporting networks in under-developed regions of the Caribbean, we’re interested in opportunities in Africa too.

TowerXchange: What are the compelling events that prompt clients to consider investing in infrastructure lifecycle management solutions? Don van Splunteren, VP Sales, NAAP Global Solutions: There are three compelling events that bring prospects to NAAP Global Solutions. The first is M&A. When an operator, towerco or portfolio of tower assets is being acquired, one often finds that not all the tools and information are in place to operate efficiently. When you’re buying a new network you want to know what you’re buying, and you often don’t know what is on each cell site. So operators of recently acquired networks will often call us to help them understand the current status of sites, towers and gensets. By implementing a telecoms infrastructure asset

“ “

carriers want more detail about active equipment than towercos, whereas towercos use our operational tools to manage maintenance regimes, genset performance and refuelling, and of course to know what tenants have installed, which is key to revenue assurance


lifecycle management system, our services team can inventory sites with or without 3D laser scans, generating a baseline data set onto which we can overlay business processes to ensure that information is kept up to date and that insights are acted upon. For example, we recently undertook a survey of over 400 sites in the Caribbean for Digicel. The second compelling event is a network

modernisation - the rollout of a new technology overlay, or even a greenfield rollout. For example, LTE requires a level of engineering to determine where the antennas go, equipment installation and cable placement. This is typically undertaken by an OEM vendor, who are also our partners, and often require up to seven different surveys (such as electrical, site mapping, tower mapping, RF audits and shelter mapping). With 3D Laser Technology,

we bring the number of site surveys needed to two or three at the most, generating immediate savings. Sometimes it’s the carrier and sometimes it’s the vendor who comes to NAAP for pre-rollout 3D laser scan of the sites, enabling engineers to use virtual data in NAAP to plan ahead - without ever climbing the tower! The third compelling event that prompts investment in infrastructure lifecycle management is when new management comes in and wants to get things in order. Our platform can help them get things under control operationally and financially, for example understanding the value and depreciation of the network, where to target capex investment, reduce opex spending, and the returns on that investment.

TowerXchange: Given the trend toward co-location, and the addition of new technologies, new antennas and new equipment to towers and shelters, what is the typical divergence between carriers’ asset registers and what is actually on sites?

Don van Splunteren, VP Sales, NAAP Global Solutions: It’s surprising that in many cases the tower operator has little or no accurate information. Don’t get me wrong, there’s a lot of information, but little or no accurate information, which can be even worse! Network modernisation happens so fast that if you use 30 or 40 Excel sheets owned by different people, both permanent staff and contractors, you soon find

you have an inaccurate data set. I’ve asked the CTOs of some of the largest carriers in Latin America, “if I were to ask 3 guys of your team for a site list, will they be identical?” Even something as simple as a standard site list is tough to generate unless you have a single data set, and a platform from which you can access and modify data on the fly. Most carriers still don’t have a system in place to manage information dynamically and at the speed needed to keep up to date. Many carriers remain focused on generating revenue, they don’t see cost of not having accurate information. It’s tough to create a compelling business case - how much would you save with up to date site list based on which you could manage day to day processes? Creating new revenues may be sexier, but cost savings are more controllable and sustainable.

The reality is that in most cases the management teams who make the strategic decisions don’t often go to cell sites. The NAAP platform in combination with 3D laser scanning allows the sites to come to you, and to make more intelligent decisions than allowing your subcontractors to make site modification decisions on the fly.

TowerXchange: Is there an opportunity for effective inventory tracking and asset lifecycle management to accelerate the surveying and evaluation of cell sites for those selling towers, adding to their value?

Don van Splunteren, VP Sales, NAAP Global Solutions: I think this is a great opportunity; carriers and towercos alike should inventory their assets, and in some cases even roll out new technologies, before selling in order to maximise value. When you divest towers, employees, vendors and subcontractors often change, and when they are gone, their information goes with them on their laptops and spreadsheets. The resultant operational inefficiency can make a big dent in site level profitability and may prove to be very costly

TowerXchange: How do users information requirements vary between management, finance, purchasing, installation and O&M field crews?


Don van Splunteren, VP Sales, NAAP Global Solutions: As our platform is modular, there is a dedicated module for each function. It’s all the same information of course, just viewed through a different prism - finance, leasing, field workforce, NOC, asset management, inventory, spares management - different users have access to different processes, but we maintain synergy because it’s all based on the same data. Security restricts financial or other specific information to authorised users only of course. The current strategy for many operators, where each function has their own Excel spreadsheet, has its limitations. It’s a 2D matrix, there’s no data synergy, and too many orphaned files. A platform like ours creates business intelligence value, and shares custom reports across different functions.

TowerXchange: What are the typical information flows between the field and the NOC?

Don van Splunteren, VP Sales, NAAP Global Solutions: Our platform also integrates with third party access control, diesel, electrical, temperature and other monitoring systems - we didn’t want to create another RMS, rather we extract information from these systems. We’ve worked with several RMS companies such as Inala, Kentrox (Westell) and CMS Circuit Management Systems to provide an integrated solution. The NAAP platform also provides a Service Order/Task Management module that allows the NOC and other operational departments to create and

“ “the NAAP platform, in combination with 3D laser scanning, allows the sites to come to you, and to make more intelligent decisions than allowing your subcontractors to make site modification decisions on the fly


automate trouble tickets. By integrating with access control systems we can issue site access permits, see who accessed a site and integrate with video over IP. TowerXchange: What is the business case for investing in 3D laser scanning a cell site? Don van Splunteren, VP Sales, NAAP Global Solutions: Some towercos do more in-depth due diligence than others, but they all do a site visit to

survey the asset, because tower mapping is key to revenue assurance. 3D laser scanning doesn’t require tower climbing - tower climbers are very expensive in the US and are in high demand. A tower climb site survey can take a few hours, depending on scope of work and level of detail required. While 3D scanning takes a similar time, it yields human error free data- an exportable CAD of the real tower as well as a 3D model of the site which can be reused for additional surveys - without having to re-visit the site. The real difference comes later when you need to know site layout, perhaps to re-cable a genset, and you don’t have to go back. So while 3D scanning might be slightly more expensive initially, re-use and accuracy of data will save money in the long run. Some of our customers have realised up to 40% savings on site re-visits. For example, you can make quicker decisions on where to site a generator for a new client, or how to save space for LTE equipment.

TowerXchange: Finally, please sum up how you would differentiate NAAP Global Solutions from competitive site management and asset lifecycle management tools. Don van Splunteren, VP Sales, NAAP Global Solutions: On the one hand there are smaller asset management and lifecycle management solutions, and on the other hand there are big ERP vendors with inventory modules that don’t come close to the functionality and level of detail we can provide for telecoms. We understand the nuances of azimuths

and tilts, and we have a built in tool that estimates tower loading. So if a tenant on a tower needs to add LTE and needs a structural analysis, NAAP can provide a quick understanding of tower loading. Our other differentiators include our laser scanning and barcoding services. Also, we provide SAAS as well as license sale options. Some clients consume NAAP from our data center, they only need a web client to log on, while others don’t like information being in the cloud, so we offer an on-premise license. NAAP offers professional services to help with implementation and change management. We’ll do a gap analysis between your current state and where you want to be, selecting modules and customising our solution to your required processes, then training users on the new processes. NAAP offers a high level of customisation and integration - we’re small enough to be agile, but large enough to manage different versions and integrations. We have successful integrated with SAP and other widely known systems. While our competitors are focused purely on the software platform, we come from the telecommunications industry, which means we know how to operate the network. We have lived first hand the pain of an installation crew stranded on the field because of innacurate site information - we’re a pureplay telecom company that decided to package our know-how into a software platform and make it available to others

““

while 3D scanning might be slightly more expensive initially, re-use and accuracy of data will save money in the long run. Some of our customers have realised up to 40% savings on site re-visits. For example, you can make quicker decisions on where to site generator for a new client, or how to save space for LTE equipment

How carriers and towercos use Intelligent Site Management in the Caribbean and Latin AmericaTowerXchange revisits Kentrox after their acquisition by Westell

Ricardo Diaz, VP of Latin America, Westell Technologies


TowerXchange: It’s been a year since we last spoke to Kentrox, during which time the company has been acquired by Westell. What were the drivers behind that acquisition and what are the benefits? Ricardo Diaz, VP of Latin America, Westell Technologies: Kentrox’s acquisition by Westell has been very positive - the two companies have a complementary suite of products, so it’s been a coherent merger with substantial benefits for everyone. Our intelligent site management (ISM) solution retains the Kentrox brand. As a global market leader, the Kentrox intelligent site management capabilities complement Westell’s RF signal performance, distributed antenna systems (DAS), and outside plant solutions which include intelligent enclosures, DAS interface panels, Ethernet connectivity, and tower mounted amplifiers. The merger has enabled accelerated development for the ISM solution offering. For example, our customers were asking for the capability to access the Kentrox Optima Management System® through their native iOS (iPads and iPhones) and Android devices. We were able to make that a priority and have an app ready and available for download very quickly with quality development. While the two companies had a similar customer base among tier one and tier two carriers and towercos, our contacts within these organisations were often different. The merger has enabled us

Ricardo Diaz has worked in international telecoms for over 20 years, focusing on Latin America since 2000. Ricardo moved from core networks to the asset side of telecoms when he joined Kentrox two years ago, helping this internationally renowned market leading Intelligent Site Management (ISM) provider enter new markets in the Caribbean and Latin America. TowerXchange interviewed Kentrox’s Managing Director for MEA a year ago, so we wanted to compare Kentrox’s experiences in the Americas with those in Africa and to discuss the company’s acquisition by Westell.

Read this article to learn:< The drivers and benefits of Kentrox’s acquisition by Westell Technologies

< The current state of site monitoring and management in Latin American telecoms

< Pain points that motivate local carriers and towercos to invest in ISM

< The KPIs that define maintenance regimes and SLAs

< How Kentrox differentiates itself from remote management system (RMS) solution providers

Keywords: Who’s Who, Access Control, Monitoring & Management, Opex Reduction, Batteries, Fuel Security, QoS, SLA, Unreliable Grid, DG Runtime, KPIs, Site Visits, Shelters, RMS, Site Management System, Infrastructure Sharing, Americas (South), Argentina, Brazil, Caribbean, Colombia, Mexico, Paraguay, Claro Argentina, Lemcon, Planex, TCRP, GBM, Kentrox, Westell

to open up to new people and regions, expanding ISM to Westell customers who had not previously been aware of our intelligent site management capabilities. TowerXchange: When we were looking at the African market, we heard reports that many telecom towers’ remote monitoring alarms were not functioning, or not installed at all. It seemed that a relatively small proportion of sites had carrier-grade RMS and ISM systems. How does the current state of site monitoring compare in South and Central America? Ricardo Diaz, VP of Latin America, Westell Technologies: The use of intelligent site management in Latin America is quite country dependent. Some countries still have many old, legacy sites, the

majority of which are not monitored due to focusing on buying and building new assets. With the rapid growth of tower infrastructure in Brazil, for example, many of the newer sites have equipment with built-in proprietary management systems and controllers. The NOC may receive some alarms, but management systems aren’t coherent. They might not be able to tell whether an outage is due to equipment failure or theft, which slows their field maintenance team’s ability to restore the site swiftly.

One of the key benefits of ISM is to unify the management of information from multiple sources,


drawing together data from all the different elements that make a site work efficiently, and when issues do exist, to provide the relevant data to see exactly where the issues reside. This ultimately improves technician efficiency and network availability.

TowerXchange: What are the typical pain points that motivate Latin American carriers and towercos to invest in ISM? Ricardo Diaz, VP of Latin America, Westell Technologies: There are a broad range of pain points and requirements depending on the Latin American country.

“ “many of the newer sites have equipment with built-in proprietary management systems and controllers. The NOC may receive some alarms, but management systems aren’t coherent. They might not be able to tell whether an outage is due to equipment failure or theft

Theft is always a risk at remote cell sites


In Mexico, there are typically two major pains. Firstly, site security. Vandalism, copper theft and battery theft are big problems, as is battery management in general because battery replacement costs are very high. Brazil is a tremendously fast growing market for us. With the rapid growth of independent towercos, their focus is currently on getting major contracts in place, rather than on intelligently managing sites. Security and power will become big problems because energy is expensive and higher tariffs are charged at premium times of day. There is an incentive to optimise power consumption to minimise energy costs.

In Argentina and Paraguay, fuel theft is a major

problem, and fuel is quite expensive, prompting local tower operators to consider ISM for fuel management. In the Andean region, security, access control, and the ability to monitor sites and move from reactive to just in time maintenance are major drivers. Finally, in the Caribbean, ISM provides visibility into cell sites that can extend mean time before failure (MTBF) and avoid lengthy and costly trips between islands. TowerXchange: Is grid power generally reliable in Latin America? Ricardo Diaz, VP of Latin America, Westell Technologies: The power grid is relatively stable in

most countries. In some countries, such as Colombia, tower operators may lose one phase of power, so power quality can be an issue. They need to monitor power to react quickly and switch to backup generators when necessary. TowerXchange: Can you give us some examples of Westell’s client engagements in Latin America? Ricardo Diaz, VP of Latin America, Westell Technologies: One major towerco, who prefers we didn’t name them, uses our ISM solution in multiple countries to handle several applications such as power, environmental, and security management. We’re also working with several of the region’s leading carriers. For example, America Movil’s local operating company, Claro Argentina, uses our intelligent site management solution primarily to monitor and manage generators, fuel consumption and power. America Movil has different pain points in different countries - it might be security in one country and legislative requirements in others, for example in Mexico where the regulator is mandating infrastructure sharing. TowerXchange: What are the typical Key Performance Indicators (KPIs) that define maintenance regimes and Service Level Agreements (SLAs) for carriers and towercos in Latin America? Ricardo Diaz, VP of Latin America, Westell Technologies: There are different internal KPIs for every operator, but every operator measures O&M

costs, such as repair costs, battery replacements, vandalism and theft. There may also be legislative and contractual KPIs. For example, towercos have stringent SLAs with their tenants which mean they need ISM to report KPIs to their clients. In other cases, the government might keep a close watch on operator performance, issuing fines for substandard performance, so ISM can help carriers get up to par. TowerXchange: Finally, please sum up the differentiators that separate Kentrox from other

ISM and RMS vendors when responding to RFPs. Ricardo Diaz, VP of Latin America, Westell Technologies: The Kentrox intelligent site management solution can integrate and correlate all requirements and data into a unified management platform. Many management systems lose visibility of a site when the connection is lost. We have redundancies in place and can manage a site autonomously until the connection is re-established. We have a network of local partners in Latin America for installation services and support. For


example, we work with Lemcon Americas, Planex Technologies, TCRP and GBM among others. As the market leader, everyone knows the Kentrox intelligent site management solution. We can provide many important benefits to customers, such as reducing operating costs, minimising energy consumption, improving site security, and very importantly, enhancing network quality and availability. Now that we are integrated into Westell, we have an expanded yet complementary solution portfolio to enable us to provide a strong and compelling response to any RFP

Special Feature:

TowerXchange starts outlining the profiles of leading infrastructure partners involved in the Latin America telecom tower industry.

With its competitive and regionalised market, Latin America is host to a variety of experienced firms able to offer design, permitting, installation, construction and maintenance services to carriers and tower companies. While there are a few multi-country, substantial service providers, turnkey infrastructure and cell site maintenance is a more fragmented ecosystem than in Africa, with a number of smaller, local providers playing a critical role.

In this issue, we cover AJ Ingenieros, a Chilean based integrated service providers which expanded its footprint into Guatemala, Dominican Republic and Panama among others. We spoke with Grid Rental Site, also based in Chile, which has long standing experience in deploying new infrastructure, small cell installation and maintenance. We also found out more about Jtel, a Brazilian based service provider whose expertise focuses on the Northeast and jungle regions of the country. Finally, we also feature Leadcom, a global managed service provider with over 500 members of staff active all over Latin America.

Who’s who in turnkey infrastructure and cell site maintenance in Latin America

New this month:135 Leadcom on the structure of TI in LatAm140 Grid Rental Sites on rooftops and DAS143 Jtel serve Northeast and jungle regions of Brazil147 Integrated solutions provider AJ Ingenieros


Image courtesy of Camusat

The structure of the managed services market in Latin AmericaIncluding a case study of Leadcom’s 2,000 site managed services contract in Ecuador

Yamil Franco, Americas Regional Manager, Leadcom

TowerXchange: We’ve read about Leadcom’s capabilities and experiences in Africa, so please introduce our readers to Leadcom’s operations and capabilities in the Americas. Yamil Franco, Americas Regional Manager, Leadcom Integrated Solutions: Leadcom’s Americas operation started in 2000. By the time I joined the business in 2002, we had expanded to nineteen countries including the Caribbean, driven by the migration from TDMA to GSM. Leadcom currently has offices in Costa Rica, Panama, Colombia, Ecuador, Peru, Bolivia and Guatemala. From Guatemala we attend the CA4 countries (Guatemala, Nicaragua, El Salvador and Honduras). We manage projects in The Caribbean from our office in Miami, as we don’t need local entities to secure and execute projects such as a telecom implementation or sell towers, power solutions and other VAR Products. Leadcom’s initial engagements in Latin America were as a telecom implementation company implementing on a TK mode access, transmission and core network, We completed major projects and rollouts for leading regional carriers such as América Móvil, Telefonica, Tigo, Trilogy International Partners, Cable and Wireless, and Digicel. Leadcom increasingly added civil work, site design and construction, engineering projects and VAR (Value Added Reseller) services for leading OEMs. Our portfolio of capabilities now extends from

Read this article to learn:< Leadcom’s footprint, capabilities and experience in Latin America

< A case study of Leadcom’s management of 2,000 cell sites in Ecuador

< The impact of towercos entering the Latin American market

< Adoption of IBS and DAS in Latin America

< The LatAm managed services market; turnkey vs smaller contracts, central vs local decision making,

local vs international partners

Yamil Franco is a veteran leader of dozens of network deployment and maintenance projects across just about every country in Latin America. He started out with CONECEL in Ecuador, moved to Nuevatel Bolivia as Regional Manager and in Europe working for Western Wireless International as Regional Deployment Manager at Slovenia. For the last 11 years, Yamil has been an invaluable member of Leadcom’s team, and he currently heads their operations in Americas, where Leadcom has over 500 staff.

Keywords: Who’s Who, Managed Services, O&M, Construction, Capacity Enhancements, Loading, Network Rollout, SLA, Greenfield, Procurement, Site Surveys, Warehousing, Multi-Country Partner, IBS, DAS, Masts & Towers, RMS, Infrastructure Sharing, The Caribbean, South America, Central America, Africa, Peru, Ecuador, Brazil, Mexico, Argentina, Costa Rica, Panama, Colombia, Bolivia, Guatemala, América Móvil, Leadcom Integrated Solutions


implementation, rollout, and turnkey solutions to hybrid power solutions for the improvement of energy opex and other products not just limited to the telecommunication industry. We also provide camouflage and innovative site solutions and extensive maintenance and managed services. We are market leaders in DAS design and deployments to improve indoor and outdoor coverage. Leadcom gained experience in fiber optic projects, maintenance of POP (point of presence), and implementing FTH. Leadcom proved our capability to operate the network and manage maintenance through our experience in the Americas, Caribbean and Haiti, which is a logistically difficult market in which to operate. We began our work doing the maintenance of the Point of Presence (POP) from the Submarine Fiber Optics Nautilus, subsequently delivering Comcel/Voila with a turnkey network deployment, helping them swap technologies in 2004. After the success of that initial engagement, Comcel/Voila asked us to take over maintenance of 164 sites. RFPs and maintenance contracts in Latin America only tend to go to companies with experience in the region, so our initial project in the Caribbean led to other opportunities and the Centro America region, and eventually to a major engagement with América Móvil in Ecuador and other countries including Panama, Colombia and Bolivia.

Leadcom started maintenance work with América Móvil in Ecuador in 2009, and by 2011 we were managing 100% of their 2,000+ site network, including managing the passive and active network including the AC/DC Power and SDH. This illustrates the capabilities of Leadcom from rollout to maintenance. One of the reasons that Leadcom were selected for all these maintenance projects in Latin America,

often in preference to major OEMs, is that we don’t subcontract the work - we deliver the service ourselves. We leverage different tools such as trouble ticket software, call centers and access control. TowerXchange: Can you tell us more about the scope of your work with América Móvil and your experience of maintaining a substantial tower network in Ecuador.


Transmission Site built by Leadcom

Yamil Franco, Americas Regional Manager, Leadcom Integrated Solutions: Leadcom employs directly more than 350 people in Ecuador. We deliver all the core maintenance services ourselves, only subcontracting non-core services such as test of AC Power trafos and generator overhaul. When we started the project in 2009, there were power shortages and the electricity grid was restricted to certain hours in Ecuador due to a drought’s impact on the main power; hydroelectric. This necessitated lots of extra planned site visits for refuelling and maintenance. We implemented monitoring systems and controls on sites so we could tell remotely whether the genset and other systems were working or not. It’s all automated so


our control centre receives genset failure alerts. You can never eliminate site opex, but RMS minimises truck rolls. The grid is improving now and Ecuador has become one of the more developed grids in Latin America in terms of uptime. Generally the access roads are good in Latin America, and Ecuador is no exception, because the government has deployed brand new roads in Ecuador including in the Jungle Amazonia region. There are problematic BTS and microwave transmission sites in the highlands and in the jungle on the border with Peru, some with double gensets. Leadcom’s ability to access these difficult sites was key to us getting project. It was critical that we were using our own people, who sometimes had to hire special animals to get to these problematic sites! We also implemented power systems so that even if the BTS went down, the microwave link would be protected for the hub sites. In many instances, the carrier didn’t have their own engineers in these difficult areas, including on the Galapagos Islands, but Leadcom had people on the island, which was particularly important to the carrier because the main business on the Galapagos Islands is tourism, which generates excellent ARPU. Leadcom were able to send our people everywhere, optimising our response time and ensuring we achieved our SLA with the carrier. TowerXchange: Are there many green field rollout projects still available in Latin America?

Yamil Franco, Americas Regional Manager, Leadcom Integrated Solutions: Most of the greenfield rollouts are complete in Latin America in the cities up to 10,000 population. One of the remaining substantial rollouts is currently in Peru, where Nextel was acquired by Entel Chile, where 2,000+ sites are planned. In other countries, projects tend to be smaller; 50-100 sites per operator a year. We see that governments are motivating the operators with incentives to expand coverage and telecom services to rural areas via funds such Fitel in Peru and Fonatel in Costa Rica. This trend will continue in the comings years. TowerXchange: How has the entry of independent tower companies into Latin America affected your business? Yamil Franco, Americas Regional Manager, Leadcom Integrated Solutions: The entry of the towercos have created more opportunities for us in Latin America. There’s a good synergy between turnkey infrastructure companies and towercos - we’re attracted to similar markets for similar reasons, such as Peru, Colombia, Costa Rica, Guatemala and we’re entering to other Central America countries. Towercos have contracted Leadcom for services such as tower mapping, site construction, tower strengthening and also DAS. The towercos are also creating opportunities for carriers. For example, in the recent auction for LTE

“ “

One of the remaining substantial rollouts is currently in Peru, where Nextel was acquired by Entel Chile, where 2,000+ sites are planned. In other countries, projects tend to be smaller; 50-100 sites per operator a year

frequencies in Colombia, more licenses could be issued because there were towercos able to make shared sites available quickly, reducing the capital costs of rolling out a new network, and giving new carriers the flexibility to launch. While the majority of our business in Latin America still comes from carriers rather than towercos, the trend is shifting. TowerXchange: Can towercos play a role in the development of DAS? Yamil Franco, Americas Regional Manager, Leadcom Integrated Solutions: Towercos can play a key role in the development of DAS to the benefit of the carriers, buildings owners and the subscribers. Spots such as airports, hotels, malls, stadiums, metro, hospitals and office complexes don’t want to install different antennas to boost indoor coverage and capacity; at the end they would rather to have one infrastructure but good services from different cellular providers. Quality cellular service is becoming an expected service especially now in high traffic buildings and that will increase demand for this type of project. As long ago as 2006, the IBS market started in Chile, where we’re working directly with the biggest operator. Now the towercos are now entering to do multitenant DAS projects. We are currently designing and implanting DAS ultitenant projects for towercos in Peru and Costa Rica and we are negotiating other opportunities in the other countries.

While DAS might not be towerco’s core business, they are investing in DAS for customer satisfaction and with time this will be important part of their business. American Tower has a dedicated DAS unit and SBA Communications recently acquired a DAS company. Technology innovations such as DAS tend to be adopted in South America first, and then move to

Central America and The Caribbean. It’s useful for us to be able to replicate the experience we’ve had in the South and transfer best practices to Central America and the Caribbean. TowerXchange: Are there a lot of single tenant towers in Latin America? Yamil Franco, Americas Regional Manager, Leadcom Integrated Solutions: There are less single tenant towers in Latin America than in Africa, where the original towers were much smaller and lighter. Wind speed means much heavier towers were generally installed in Latin America in the 1990s, and American Tower and SBA Communications have bought a lot of those original towers. The towercos have added strong new towers, often with capacity for three or even four tenants. Regulations also have an effect, for example in Chile where it is the norm to build stronger towers ready with extra capacity for a second tenant. Also the towercos are doing build-to-suit for certain operators but always thinking at least to have the second tenant. TowerXchange: How would you compare opportunities for Leadcom in Brazil, Mexico and Argentina with the other LatAm countries in which you’re currently more active? Yamil Franco, Americas Regional Manager, Leadcom Integrated Solutions: Leadcom used to be in Brazil, Mexico and Argentina, partnering with the OEMs, but once these big projects were complete we concentrated our resources where we had longer term projects. Leadcom can still quickly re-enter


Indoor Antenna - DAS Solution

those markets if the right opportunity arises especially if that opportunity combines integration of products and services. However, at the moment we find that price competition among carriers, and the total cost of labour including all the local taxes and benefits, means projects in Brazil, Mexico and Argentina yield less attractive margins. Turnkey infrastructure projects in the smaller countries tend to be more profitable. TowerXchange: Tell us about the structure of the ‘managed services’ market, companies like Leadcom who specialise in construction and maintenance, in Latin America. Yamil Franco, Americas Regional Manager, Leadcom Integrated Solutions: Every carrier in a market makes its own decision about SOW, partner selection and contract structure for new build projects and outsourcing maintenance. Claro tend to select service partners at local OpCo level, Telefónica’s strategy seems to be largely driven from head office in Spain. The key decision makers at Digicel are in the Caribbean and Ireland. There are local construction and installation companies in every country, but they aren’t really offering the same end-to-end services as companies like Leadcom. With many of the big deployments done, local suppliers are winning small contracts for perhaps 5-20 sites at a time. Remaining big projects are best undertaken on a turnkey basis - carriers in The Caribbean tend to prefer efficient turnkey contracts, but some carriers in Central and


South America prefer to buy their own towers and to break down contracts into smaller components. In Latin America I feel the best contract structure is turnkey - smaller projects don’t take into account significant hidden costs such as people, and administrative costs incurred to control different contractors. Therefore they lose out on benefits of scale. So managed services is a much more fragmented value chain in Latin America, unlike Africa where a smaller number of multi-country managed service providers win most of the contracts on a turnkey basis. TowerXchange: Finally, how would you sum up how you would differentiate Leadcom from other managed services providers in the Americas?

Yamil Franco, Americas Regional Manager, Leadcom Integrated Solutions: Leadcom’s key differentiators and values are our footprint, commitment, quality, knowledge experience and flexibility, As part of our commitment to international standards all our subsidiaries are ISO9001 certified as well as ISO14001 and OHSAS1800 and therefore we comply with the Health & Safety and Environmental regulations. The big difference when working with Leadcom is our tremendous flexibility. We are a vendor agnostic, single supplier able to deliver complete end-to-end projects and solutions quickly.

Leadcom has excellent local knowledge of different markets across Latin America and Africa. We have knowledge beyond the countries in which we are currently based as we’ve completed projects, and have legal entities, in many more. If we have to move our people with one day’s notice, we can do it! We can be in a new country and start a project within a matter of days! Leadcom does the work ourselves; we don’t subcontract our core business. This ensures we offer a competitive price and maintain the control of projects - critical to achieving SLAs. Another differentiator is the quality of our certified work in the field, and our commitment to our projects - we ‘go the extra mile’ for our clients to keep them happy doing the project once, doing it right

“ “Leadcom does the work ourselves; we don’t subcontract our core business. This ensures we offer a competitive price and maintain the control of projects - critical to achieving SLAs

The role of macro sites, DAS &small cells in supporting Chile’s booming mobile marketChile’s 142% mobile penetration rate and 5% 4G coverage suggest a need for new towers, small cells and a possible look at the existing regulation

Maximo Parraguez Diaz, CEO, Grid Rental Sites


TowerXchange: Maximo, tell us about your company and its activities in Chile

Maximo Parraguez Diaz, CEO, Grid Rental Sites: Grid Rental Sites was created in 2009 and has since been very active in site acquisition, housing of cell sites, facilities management, engineering services and development of infrastructure for major carriers in Chile. We offer housing services for radio installation in areas with coverage problems and affected by traffic saturation. We mainly operate on rooftops thanks to co-location rental agreements.

Our primary customers are carriers such as Claro Chile, Telefonica Moviles, Nextel Chile, VTR Wireless and tower companies such as Torres Unidas.

TowerXchange: Please introduce us to the telecom market in Chile - who are the leading operators, how mature is the coverage, how fast is the number of subscribers and volume of traffic growing?

Maximo Parraguez Diaz, CEO, Grid Rental Sites: The leading carriers in Chile are Entel PCS which holds 38% of the market share and Movistar with 35%, followed by Claro (27%). Nextel and VTR Wireless both hold small shares of the market. 75% of the total market is currently prepaid.

With mobile penetration reaching 142%, the market has witnessed an unprecedented growth in the past few years. While our 2G and 3G coverage is very close to 100%, we are still behind in terms of 4G. In fact, Claro launched the first 4G LTE network

Maximo Parraguez Diaz started his career in telecoms with Claro Chile where he was in charge of the company’s site acquisition projects. Since then, he has gained further experience in companies like Swedcom and NSN. He is currently CEO of Grid Rental Sites, a Chilean company actively involved in the deployment of new infrastructure, installation of small cell and DAS and site maintenance.

Thanks to Maximo’s long standing experience in the country, we are able to offer our readers a snapshot of the Chilean wireless market, its challenges and the many opportunities ahead.

Read this article to learn:< The status of the Chilean telecom market

< Key carriers and tower companies involved in the development of the local market

< The maturity of the 3G overlay and the growth opportunities afforded by 4G

< How can Het-Net solutions help network planners respond to growing coverage and capacity requirements?

Keywords: Who’s Who, Interview, Managed Services, South America, Chile, Grid Rental Sites, Claro Chile, Telefonica Moviles, Nextel Chile, VTR Wireless, Torres Unidas, American Tower, 3G, 4G, New License, Co-locations, Towercos, Rooftop, Small Cells, DAS, Het-Net

in June 2013 and Movistar and Entel are planning their launch in 2014. I believe 4G coverage is around 5% at the moment.

TowerXchange: How many rooftops and DAS sites do you currently have in your portfolio?

Maximo Parraguez Diaz, CEO, Grid Rental Sites: Our portfolio counts 400 rooftops and 45 cell sites. Moreover, we have access to a portfolio of 1,800 15 metre high street poles for the installation of DAS micro sites in the South area of Chile.

TowerXchange: Out of the 8,000 towers in Chile, how many are currently shared? Which operators in Chile are embracing co-location or selling their passive infrastructures to companies like yours?

Maximo Parraguez Diaz, CEO, Grid Rental Sites: Currently, American Tower owns and operates about 1,150 co-located sites and Torres Unidas Chile an additional 500.

Nextel, VTR Wireless and Movistar are all interested in selling their passive infrastructure and this creates an opportunity for tower companies like AMT and Torres Unidas further expand their portfolios.

TowerXchange: Can you tell us more about your upcoming projects and partnerships?

Maximo Parraguez Diaz, CEO, Grid Rental Sites: Currently, we are selling our rooftop portfolio to

Torres Unidas while exploring some new business opportunities such as creating charging systems for electrical vehicles.

During the first phase of the sale, we will sell 32 sites and we will then release between 60 and 80 sites in the second phase.

Our technical services offered to wireless telecom companies are in demand because they respond to the need to ensure additional coverage at a key developmental time for the local market.

The current legislation of greenfield projects entails a very slow process in terms of licensing. This is where rooftop services become very important to fill the existing coverage gap.


TowerXchange: What is the role of DAS and small cells versus macro cells in network planning in dense metropolitan areas?

Maximo Parraguez Diaz, CEO, Grid Rental Sites: The importance of DAS and small cells will keep increasing because of their size and due to the fact that it is relatively easy to source pre-existing locations for their installation. I refer to rooftops, advertising billboards, poles and other similar sites located in dense metropolitan areas.

When assessing the importance of Heterogeneous Networks, we need to realise that the installation of a new 12 meter high tower can take anything between 18 and 24 months. Whereas, a DAS solution requires approximately 6 months. This isn’t only

Santiago de Chile by night


due to technical requirements and processes but also and most importantly due to the current legal scenario and zoning and permitting requirements. TowerXchange: What is the status of 4G adoption in Chile? Is it driving substantial demand for cell site densification? How can companies like yours help this growth?

Maximo Parraguez Diaz, CEO, Grid Rental Sites: Considering that 4G coverage is about 5%, Chile still has a long way to go but carriers are very actively involved in the deployment of 4G network.

Our site procurement services greatly help to create new coverage opportunities utilising DAS and other Het-Net solutions such as in-building coverage projects and Wi-Fi offload in dense metropolitan areas. We have been partnering with several rooftop administration companies to keep expanding in this field.

We are also strongly involved in the rollout of radio frequency engineering systems and have a long standing experience in this field.

TowerXchange: How do you see the passive infrastructure market evolving in the next 3-5 years?

Maximo Parraguez Diaz, CEO, Grid Rental Sites: The market will keep expanding and is already shifting towards a pure real estate model. I believe we will see more companies offering tower-related services entering the local market in the near future

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The tower industry in the Northeast and Amazon regions of BrazilLocal telecom service provider Jtel introduce the logistical challenges of maintaining towers along the coastline and in the jungle

Frazao Gomes, Director, Jtel

TowerXchange: Please introduce us to yourself, to Jtel and your role in the telecoms infrastructure ecosystem. Frazao Gomes, Director, Jtel Telecom Services: I have an MBA and have been a telecoms executive for over 22 years. For 17 years I worked for a big services contractor completing projects for Brazil’s leading carriers. During this time I identified pent-up demand for a structured telecom services in the Northeast of Brazil. So we moved to the beautiful city of Fortaleza and two years ago we opened our own company, Jtel. Jtel currently has ten clients, mostly bigger services contractors in Southeast who subcontract to Jtel to cover the Northeast. We’re also starting to develop direct contracts from carriers. Jtel is a young company; last year we turned over US$1mn. We have seven teams, with 21 technicians plus five staff personnel, so 26 in total. It’s a very lean business, but we have a good database of telecom professionals to enable us to expand when needed. Our goal is to secure long term maintenance contracts - so far we’ve completed about a hundred ad hoc engagements. The scope of Jtel’s projects to date has included power maintenance, installations, tower maintenance, and tower reinforcement for multiple tenants - we’re expecting this service to grow as the tower sharing model becomes more widespread in Brazil.

Read this article to learn:< Overcoming the challenges of oxidisation at coastal towers< The need for local know-how and logistics expertise to service an estimated 10% of Brazil’s towers that are in the jungle, many off-grid< Why Brazil’s telecom and tower industry is so fragmented< Brazil’s capacity for domestic production of towers and accessories

The Brazilian tower industry is not just about the major cities in the Southeast, where growth is driven by burgeoning demand for data capacity and there is an impending need for cell site densification driven by LTE. There is another market for towers and telecom services in the Northeast of the country and in the Brazilian jungle. While there are three cities populated by over 3mn in the Northeast, the jungle regions are characterised by some of the logistical complexities that readers might recognise from remote cell sites in Africa and Southeast Asia. To learn more, TowerXchange spoke to an exciting new telecom service provider which focuses on these regions - Jtel.

Keywords: Who’s Who, Managed Services, O&M, Construction, Installation, Capacity Enhancements, Off-Grid, Logistics, Corrosion, Masts & Towers, Infrastructure Sharing, South America, Brazil, Jtel


Jtel leverages project management tools and techniques to provide our customers with information as quickly as we can, so they can see how the project is progressing. There are three large cities in Northeast Brazil; Fortaleza with 3.2mn population, plus 3mn each living in Salvador and Recife area. TowerXchange: Tell us about the unique challenges of maintaining coastal towers in Northeastern Brazil. Frazao Gomes, Director, Jtel Telecom Services: The Northeast coast of Brazil is very windy, and the sea is almost as salty as the Dead Sea. This means that corrosion is a problem, and within two years of the installation of a tower, you have to start checking joints for oxidisation. A lot of the older towers along the coast, towers that were installed before the privatisation of telecoms, have been under-maintained and require replacement or significant upgrade. Jtel has a specialised team to deal with oxidisation. TowerXchange: I understand that Jtel has also recently opened an office to cover the Amazon area, please tell us about that. Frazao Gomes, Director, Jtel Telecom Services: Again we felt there was lots of pent-up demand for telecom services along the Amazon, with few competitors for us in the region. Therefore Jtel has opened a small office at end of Amazon river, in a city called Belem. From that base we fulfil various contracts

for a carrier. We’re being asked to provide similar services as in the Northeast - restoring towers, painting and sometimes removing towers.

While approximately 90% of Brazil’s cell sites are in areas with well developed transport infrastructure and reliable power, around 10% are in the jungle where logistics can be much more challenging. Jtel has unique experience of helping our clients

overcome these challenges and we have developed specialised personnel able to deliver logistics at a reasonable cost. The Amazon region is used to depending on the river for everything, but logistics are not always as simple as hiring a boat to transport equipment. I recall one instance where we had an emergency call to remove a tower from a remote location. The call came during


Oxidisation of coastal towers means they need to be checked within two years of installation


a religious holiday, and all the boats had been hired for a parade! But we got the job done in a timely manner. In some locations we might have to fly in equipment if delivery needs to be expedited.

Grid power is not good in the Amazon region, so cell sites need generators and all kinds of specialist equipment to ensure uptime. TowerXchange: Tell us about the structure of the telecoms supply chain in Brazil - why is it so fragmented and regionalised?

Frazao Gomes, Director, Jtel Telecom Services: A lot of telecom equipment and service suppliers come to Brazil with a one-size-fits-all approach, but the market is too fragmented for that to work. This is due to the history of Brazilian telecoms; there used to be a separate telco in each state, subject to state regulations, so expertise and relationships developed in local areas.

TowerXchange: What impact has the entry of the independent towercos into Brazil had on your business? Frazao Gomes, Director, Jtel Telecom Services: The acquisition of towers from carriers by independent towercos has been good news for us; we’ve received some interesting assignments to upgrade towers for multiple tenants. We’re looking forward to working with the TowerXchange community to help Jtel identify potential towerco and solution provider partners.

TowerXchange: Are tower structures and accessories generally manufactured locally or imported into Brazil? Frazao Gomes, Director, Jtel Telecom Services: Brazil has a very strong local steel market, so we produce the majority of our own towers and accessories. However, most of the good Brazilian tower manufacturers are based in the Southeast, which presents a logistical challenge to ship to the Northeast. However, I recently discovered a small tower manufacturer in our area.

TowerXchange: Does Jtel have any interest in markets beyond Brazil?

Frazao Gomes, Director, Jtel Telecom Services: I’m in the process of opening a commercial office in Florida, which will help deepen our relationships with the international towercos and investors. We’d like to extend our growth and expand into other countries such as Colombia and the Guyanas.

We believe that Jtel can continue to learn at a fast pace and deliver cost effective services in high demand areas of Latin America. There are around 15,000 towers in the Northeast and Amazon regions we serve, with a further 9,000 towers that need to be installed. Towercos and carriers need regional service providers like Jtel with local expertise, logistics and project management experience to provide high quality, cost effective services in these challenging regions


Towercos: an increasingly relevant client for LatAm integrated solution providersFrom television data networks to 4G LTE: the path to innovation of a Chilean solution provider

Francisco Briceño, Vice President, Operations, AJ Ingenieros


TowerXchange: Tell us about your company, its operation and offerings

Francisco Briceño, Vice President, Operations, AJ Ingenieros: AJ Ingenieros was founded in Santiago de Chile in 1986, by Gabriel Olavarría and Félix Olavarrí a, both engineers. Since then, the company has always been active as a provider of solutions for the infrastructure sector and started by focusing on television data transmission networks.

To date, we are a fully integrated solution provider, offering services to the mobile sector such as tower design and installation, engineering, construction and due diligence, among others.

Originally based in Chile, AJ Ingenieros is now active in the Dominican Republic, Guatemala, Mexico, Peru, Colombia, Panama and Costa Rica among others. We count more than 1,200 employees regionally with 500 of them based in our Headquarters in Chile.

TowerXchange: Who are your key clients in the region? In which countries do you operate?

Francisco Briceño, Vice President, Operations, AJ Ingenieros: The majority of our business comes from carriers such as Movistar, Claro and Entel which represent 60% of our operations.

Our second group of clients and almost 30% of our business is represented by OEMs such as Ericsson, Huawei and others due to existing contracts they have with carriers whereby some of our services are required.

AJ Ingenieros was set up in Chile before mobiles even penetrated the market. Initially active in setting up data transmission networks, the company quickly entered the mobile industry in the nineties and has since then offered its services to the growing Latin American telecom industry.

In this exclusive interview, Francisco Briceño, Vice President, Operations for the company, shares his views on the evolution of the regional telecom industry, how regulatory changes have impacted the telecom tower sector and how towercos are becoming an increasingly relevant player in the region.

Read this article to learn:< How important are towercos for an integrated solution provider?

< The importance of strengthening and upgrading projects on towerco-owned portfolios

< The new Chilean telecommunication law and its impact on tower construction

< Key success factors when selecting an integrated solution provider

< The growth potential of the Chilean and Peruvian telecom markets

Keywords: AJ Ingenieros, Interview, Chile, Peru, Dominican Republic, Guatemala, Mexico, Colombia, Panama, Costa Rica, Movistar, Claro, Entel, Nextel, OEM, Huawei, Ericsson, Towercos, Managed Services, Central America, South America, 4G, LTE, Construction, Installation, Due Diligence, Infrastructure Sharing, Regulation

We are now actively working with tower companies which represent the additional 10% of our business. With the exception of Mexico - where we have been working with towercos for quite some time - I’d say that this client is a relatively new category for us. We have been working with tower companies for the past three to four years. However, this area is growing fast and the demand for our services by towercos is expanding.

Whereas it is a completely accepted model in North America and Europe, towercos are still establishing their presence in Latin America. Therefore, I can foresee their role becoming increasingly important over the next few years as carriers divest their tower portfolios and towercos become the direct owner of passive infrastructure. However, we need to keep in mind that for some carriers towers are still an extremely strategic asset.

The region still lacks maturity to fully accept towercos but I can see the perception shifting - it’s a matter of time.

TowerXchange: Tower transactions tend to unlock pent up maintenance work and tower strengthening projects - have you seen much demand for these kind of projects? If so, please share an example or two.

Francisco Briceño, Vice President, Operations, AJ Ingenieros: We have definitely experienced a growth in demand for strengthening projects since towercos came into play.

First of all, since we have been active for thirty years, a lot of the existing towers we are asked to work on have been built and installed by us. This industry tends to favour continuity when it comes to business relationships and we have been working on several strengthening projects on infrastructure we built several years ago.

To date, the majority of these projects focus on strengthening and upgrading existing towers to


host multiple tenants. We haven’t done a lot of maintenance projects yet as some of the facilities we work on are relatively new.

Moreover, tower companies are increasingly contracting us to develop due diligence projects prior to portfolio acquisition. We analyse and evaluate portfolios tower by tower, asset by asset, and we deliver a full report. Our engineering department has been very active with engagements

Image courtesy of AJ Ingenieros


such as this lately, much more than in the past.

TowerXchange: Regulators often need to protect the environment when permitting building new towers. How are your products helping to preserve the environment? Is there a growing demand for camouflaged towers?

Francisco Briceño, Vice President, Operations, AJ Ingenieros: In 2012, the Chilean Senate approved a new law establishing clear rules regarding telecom tower installation. Specifically, the law sets parameters with regards to towers spacing in sensitive areas near schools, hospitals, gardens etc. The law favours tower sharing and the installation of camouflaged towers in order to preserve the landscape and reduce the visual impact of greenfield projects.

We have had a camouflaged tower offering for the past six years with a portfolio of products including tree-like towers, totems, advertisement boards and rooftops. We have various solutions which depend on the area chosen for the new project but all of them respond to the need to reduce the visual impact of telecom towers.

Clients tend to opt for these solutions in order to comply with law but also to maintain a positive relationship with the community. Although the price is somewhat higher than for standard towers, as it must take into consideration ornamental factor as well as technical ones, some clients have no choice but selecting these solutions as it allows them to establish service in areas otherwise unreachable to due legal restrictions.

TowerXchange: How do you ensure your services are delivered on time and within budget?

Francisco Briceño, Vice President, Operations, AJ Ingenieros: First of all, we allocate one project manager for each specific client in order to create an open relationship between the two with clear communication and understanding of deadlines, key milestones and requirements. Therefore, our clients have one point of contact within AJ Ingenieros throughout the duration of the project. This is a highly efficient system which has allowed us to create long standing, successful relationships with our clients.

Moreover, there is only one company - AJ

Ingenieros - responsible for the entire project, from design to completion. This model has been adopted in Chile and is the preferred model throughout the region as it has so far ensured optimal communication between parties as well as success in meeting deadlines and working within budget.

By establishing offices in each country where we operate, our project managers and teams have direct, on the ground relationships with each client. The only centralised aspect is production which is entirely undertaken by our Chilean factory.

TowerXchange: What are the critical success factors tower operators should consider when selecting a design and manufacturing partner?

Francisco Briceño, Vice President, Operations, AJ Ingenieros: I’d say that the key factor is experience. We have been active for more almost thirty years and have installed over 7,000 towers across the region. It’s safe to say we know our business inside out and experience is the main reason for our success.

Manpower, quality and standards of design and services as well as local presence are other critical aspects I’d recommend each company takes into consideration when selecting a business partner.

We don’t offer standardised solutions. Our products are fully customised and we work with clients to find the perfect solution depending on their requirements. This is the most efficient

“ “We have been active for almost thirty years and have installed over 7,000 towers across the region

solution to ensure we deliver products within budget.

TowerXchange: Are contracts in Latin America typically just for the manufacture and supply of towers, or are they end-to-end “turnkey” projects from manufacture to installation and maintenance?

Francisco Briceño, Vice President, Operations, AJ Ingenieros: We do work with some subcontractors

which we have been partnering with for several years. We use them for certain services such as site acquisition, installation and drive tests.

However, it’s important to note that we resort to outsourced partners when and if needed as we are able to offer all these services in-house. When the demand for services peaks, we employ our team first and then contract trusted external companies for projects we cannot fully cover with our own employees.


The telecom market is cyclic and has its own peaks which usually correspond with the launch of new technology. During those hectic times, we are able to cover a high volume of projects thanks to our internal resources and to a network of highly experienced subcontractors.

TowerXchange: Out of the countries where you are currently active, which are the ones with the biggest potential in terms of the growth of their telecom tower sector?

Francisco Briceño, Vice President, Operations, AJ Ingenieros: This is quite a positive time for the Chilean telecom market and we have several projects in the pipeline. Since two frequency auctions were successfully completed, we are now very busy with the installation phase.

The same can be said about Peru with the arrival of a new player - Entel - that has recently acquired Nextel and a subsequent growth in projects.

Both markets went from the legal phase of auctions and bids to the executional phase which for us correspond with a very active and promising time. That said, the volume of business we are able to generate very much depends on how the market responds to new offerings. 4G LTE is a new technology and the demand for it will set the pace for our workload.

Beside Chile and Peru, we see very good opportunities in Colombia due to its size and demand growth

Image courtesy of AJ Ingenieros

Special feature:

TowerXchange’s TowerPower special feature follows the journal in expanding our focus beyond Africa to include Southeast Asia and Latin America. In this edition we hear from three leading and innovative genset manufacturers. ELTEK share their experiences of the opportunities for hybrid and renewable energy in Latin America. Additional power is often required as next generation equipment is added to cell sites in dense urban areas, while the drive to improve operating efficiency results in demand for hybrid energy in more remote areas.

Controllis make the case for DC over AC generators on the basis of their fuel efficiency and site footprint advantages, delivering fuel savings of 70% and more. Controllis’ solutions have been proven in the field in Brunei, Peru, South Africa and Nigeria.

SDMO compare the total cost of ownership of standard versus long running gen sets, and battery hybrid versus solar hybrid gen sets, while emphasising the importance of the local expertise and after sales service provided by SDMO’s extensive dealer network.

TowerPower - reducing energy opex for emerging market telecom tower operators, part six

149 Controlls on the advantages of DC over AC generators

153 SDMO - more than just a diesel genset manufacturer

157 ELTEK: Is LatAm ready for hybrid energy?


The advantages of DC over AC generatorsControllis also offers a remote site management solution

Simon Albury, CEO, Controllis


TowerXchange: Where does Controllis fit in the telecoms infrastructure ecosystem? Simon Albury, CEO, Controllis: We provide solutions to save telcos opex and maintenance costs. Controllis manufactures DC generators and remote management systems in the UK for telecoms sites globally. Our team has extensive experience in the telecoms sector working around the world for operators, equipment vendors and on the business side of the sector. Controllis was set up five years ago to solve site power problems in particular. Since then we have developed a range of DC generators primarily focused on providing back-up power and primary power for cell sites.

TowerXchange: Our readers always want to know how proven the solution is in the field - can you tell us how many units you have installed and where they are. Simon Albury, CEO, Controllis: We have equipment deployed in live networks in Brunei. Controllis equipment was recently used for a huge multinational government disaster relief exercise - in a communication network linking government entities inland and ships at the shore. In South America, we have systems deployed by a local telco in Peru, and we’ve exported equipment to Colombia, as we’re about to start a trial there with a large towerco.

Controllis CEO Simon Albury has extensive experience in telecoms engineering dating back to the 1980s. Prior to setting up Controllis, Simon founded 3Way Networks, a base station company sold to Airvana in 2007. He also has experience heading up sales for ip.access, has been a telecoms analyst and strategy consultant, and deployed GSM and CDMA networks respectively for Sprint and for Bell South in New Zealand. Now Simon is turning his expertise to the challenge of reducing energy opex for operators and towercos worldwide.

Read this article to learn:< The fuel efficiency and site footprint advantages of DC over AC generators

< Controllis deployments in Africa, South America and the Middle East

< Achieving >70% fuel savings and fuel consumption of 0.36L/kWh

< The potential impact of newer battery technologies on replacement cycles and TCO

< The costs and capabilities of Controllis’ site monitoring solution

Keywords: Who’s Who, Energy, Monitoring & Management, Opex Reduction, Batteries, Hybrid Power, Solar, DG Runtime, Shelters, Rectifiers, RMS, Site Management System, Africa, Americas (South), Middle East, Controllis

In Africa, we’re coming off the back of trial deployments with a number of operators in South Africa. We have equipment on several sites in Nigeria, and at time of writing are in process of executing large OEM order in excess of 1,000 units to Central Africa.

TowerXchange: What can you tell us about the performance of Controllis’ solutions in hybrid battery projects to date? Simon Albury, CEO, Controllis: The fuel savings we have recorded from the hybrid system trials have been very encouraging. On one operator site the benefit compared to their existing system was greater than 70% with our average specific fuel consumption running around 0.36 l/kWh. This was with a lead acid battery bank, with a lithium bank we see an improvement of another 10% due to the very high efficiency of the lithium batteries compared to their lead acid counterparts.

TowerXchange: Tell us about the fuel efficiency and site footprint advantages of DC generators and why such considerations are critical for towercos? Simon Albury, CEO, Controllis: DC generators have a number of technical advantages over their AC counterparts. The fuel efficiency benefits arise from a number of factors. Firstly, the alternators themselves are more efficient multipole solutions using rear earth permanent magnets - they are generating low voltage three phase current which is then internally rectified and filtered. Secondly,

the alternators are mounted on the flywheel itself; this negates the need for couplings and alternator bearings and also means the units are physically shorter. Also the units do not need to run at a constant speed like AC generators, as a result of this at lower loads the units can run at lower speeds and consume less fuel. There are a lot of wild claims on the market regarding DC generators efficiency we see a benefit in like for like operation of between 15% and 20% compared to AC generators. In a hybrid battery operation, this benefit adds to the hybrid benefit itself so the fuel savings using a DC generator in hybrid mode compared to running an AC generator in constant mode are 65% or more.


The space savings within Controllis units allow us to incorporate mains recrifiers internally within the equipment itself. This negates the need for additional cabinets for mains rectifying equipment. Saving space is critical at shared sites because it allows tower operators to provide more space to tenants.

TowerXchange: How do operators and towercos determine the optimum mix of batteries and, where appropriate, renewables, especially where the number of tenants and power requirements aren’t predictable? Simon Albury, CEO, Controllis: This is the hundred million dollar question that every operator in the industry is facing! Solar has become so cost effective that the incremental cost of adding panels to a site that is already configured for a battery plus generator hybrid solution is now very low. Most of the projects we are currently working on have a solar element - the only reason solar panels might not be used is because of concerns over theft and vandalism. For me the most exciting development at the moment is from newer battery technologies. With the costs of lithium ion coming down, and molten sodium solutions emerging, the need for frequent battery bank replacements is diminishing and the total cost of ownership of hybrid systems is coming down.

TowerXchange: How are Controllis’ solutions designed to be ready to support co-locations?


Simon Albury, CEO, Controllis: For multi-tenant sites, Controllis can provide individual DC metering for each tenant. This can be remotely read and billed by the towerco, while the tenant also has local visibility of DC kWh used. The two numbers will agree, which gives more transparency to energy bills. TowerXchange: What is the extent of Controllis’ RMS capabilities? Are we talking about integrated sensors build into your own units, or a full set of sensors, controllers and communication back to a site management system? Simon Albury, CEO, Controllis: Both. We have built and integrated sensors into own units. We can pull in data from third party sensors and or we can monitor third party equipment such as generators, rectifiers, air conditioning units, and we can integrate data from site security. Our site monitoring systems report back to our remote management servers via an encrypted link - the background of our RMS capability is in defence and law enforcement so it’s extremely secure. We’re now focusing on telecoms. Our site monitoring systems are scalable to tens of thousands of deployed sites, with full redundancies.Each of our local controllers also has full SMS capabilities to enable controllers to send alarm messages direct to service personnel at same time as communicating with the management server. TowerXchange: What’s the typical cost per site of Controllis’ RMS solution?

Simon Albury, CEO, Controllis: Our site management solutions typically range US$2-3,000 per site, depending on quantity of sensors and number of devices monitored. TowerXchange: What impact does remote management of power solutions have on Mean Time Between Failures (MTBF)? Simon Albury, CEO, Controllis: Remote management has a huge positive impact on the MTBF of site power solutions. Finding issues before they become problems means preventative maintenance can avoid field failures. A very simple example is our parameter logging; we

actively log all parameters to look at trends. Perhaps the most important of these is the starter battery voltage drop on start - as soon as the starter battery starts to drop below a critical threshold during start-up it is an indicator its on the way out. Our management system sends replacement advisories out before the battery fails.

TowerXchange: Finally, how would you differentiate Controllis from other telecom power and RMS solution providers? Simon Albury, CEO, Controllis: Our focus is almost entirely on the telecoms sector with around 90% specifically on telecoms power solutions. We have a highly experienced team of software and electronic hardware engineers who have developed solutions that from the ground up are dedicated to the purpose of providing reliable, clean DC power. A lot of other companies marketing DC generators have taken a parts bin approach and tried to make a range of third party devices work together, we don’t do that. A good example of this is in-sump oil level monitoring. We use the ultra reliable Perkins Engines, also made in England, and they don’t come with an oil level monitoring system as standard. So we developed an electronic dipstick in-house that enables us to retrofit a solution on the production line without needing to modify the Perkins sump. We are also very agile being able to add in features to the software and sensors at customers requests without a lot of fuss

“ “as soon as the starter battery starts to drop below a critical threshold during start-up it is an indicator its on the way out. Our management system sends replacement advisories out before the battery fails

Saving your telecoms business millions

SDMO - more than just a diesel genset manufacturerA comparison of the TCO running dual DGs versus hybrid energy

SDMO’s LR16 long running gen set


TowerXchange: Please introduce us to SDMO - where do you fit in the telecoms infrastructure supply chain? Romain Treguer, EMEA Telecom Sales Manager, SDMO: SDMO is an industrial company manufacturing genset solutions. While SDMO design gensets up to 3300kVA, my focus is on smaller units for BTS sites. Our customers include operators and, increasingly, independent tower companies, which tend to be more concerned with financial output rather than the technical output of gensets. SDMO is focused on reducing Total Cost of Ownership (TCO), we have extensive experience and familiarity with telecom energy requirements in Africa and in the Middle East, and we’re able to adjust our products to the changing demands of the market. Telcos and towercos still see SDMO as primarily a DG manufacturer, so we welcome the opportunity in TowerXchange to say that we offer hybrids too. We have only sold a few hybrids so far, but they have been very successful, whereas our DG sales remain in the thousands. TowerXchange: SDMO is probably best known as one of the world’s foremost diesel genset manufacturers, but tell us about your hybrid power solutions and Smart Energy Centre - what does the solution consist of? Romain Treguer, EMEA Telecom Sales Manager, SDMO: We believe that cell site energy solutions

SDMOs diesel gensets provide backup power for thousands of cellsites in emerging markets, with dual DGs providing primary power at many off grid sites. But SDMO also offers a containerised hybrid energy solution which can cut DG runtime to six hours per day, extending site visits from every 10 days to every two months.

Read this article to learn:< How investing in hybrid energy with a little higher initial capex can reduce TCO and deliver ROI in six months

< Maximising autonomy by matching the capacity of the DG, battery bank and fuel tank

< Why installing full hybrid solutions unlocks greater energy opex savings than investing in smaller incremental

amendments

< Leveraging SDMOs network of 187 dealers worldwide to deliver local knowledge and rapid response after

sales service

Keywords: Who’s Who, Energy, Opex Reduction, Batteries, Off-Grid, ROI, Hybrid Power, Solar, DG Runtime, Dimensioning, Site Visits, Rectifiers, RMS, Spare Parts, South America, Africa, Asia, Europe, Middle East, SDMO

have evolved to the point where, for a little higher initial capex, you can make massive opex savings, achieving better TCO in the long run. In parallel, towercos and operators are increasingly thinking about green power - reducing their carbon footprint and emissions while cutting opex. This thinking has led SDMO to develop our own hybrid solution. The SDMO hybrid solution consists of a deep cycle battery plus diesel genset and an optional solar panel. It’s a containerised turnkey solution, which means it’s quick and easy to install, and we have units ready to ship right away. Our hybrid range can be adapted, but comes in two different sizes. One solution fits in a 20ft shipping container, split into two parts; in one section is a GSM genset without canopy, and a 1000L capacity fuel tank. In the other part of the container is a deep cycle battery and the Smart Energy Centre, both manufactured by reputable companies. We offer an option to mount a solar panel array on the roof. Inside this 20ft container there is sufficient space to put the BTS inside, enabling tower operators to optimise space on site and protect against robbery. We also have another hybrid solution which fits inside a 10ft shipping container. SDMO’s hybrid solar system is unique in that solar power is used as a booster and complementary source of supply to supplement the battery. When the DG is not running and the site is powered by the battery, it can be charged by the solar panels, but the site cannot run just on solar.

We are able to be flexible to accommodate requests from clients. For example if they want to upgrade energy storage capacity so the site can run for 48 hours on battery - of course, more batteries adds capital expense. In order to optimise energy efficiency, performance and autonomy to the specific load requirements of each site, you need to match the size of the battery bank and any PV panels to the size of the DG and the fuel tank. For maximum autonomy, we can upgrade the fuel tank to 2000L.


Our Smart Energy Centre manages the energy supply cycle on a cell site to ensure continuity of operation 24/7 while minimising energy opex. The Smart Energy Centre also provides seven alarm reports - genset faults, low fuel, battery status, customer charge, solar charge controller, Smartpack and rectifiers. TowerXchange: What is the ‘sweet spot’ in terms of the load requirements of a typical BTS site?

SDMO’s containerised hybrid solution


Romain Treguer, EMEA Telecom Sales Manager, SDMO: Most clients are looking for a load of 1.8-2.5kW. Power consumption is significantly affected by air conditioning systems as well as BTS equipment. Engines running at a higher altitude above sea level also require more power. If our customers are interested in hybrids, we can link them with our local agent who can assist with site surveys to assess ground space, load and current energy consumption. Monitoring a site for 48 hours enables us to get to know the conditions and select the right solution to match the situation. TowerXchange: How does the TCO of hybrid power compare to running dual DGs at off grid sites?

Romain Treguer, EMEA Telecom Sales Manager, SDMO: Hybrid power can yield huge opex savings compared to running dual DGs for twelve hours each. With hybrid power, DG runtime can be reduced to five to eight hours. It’s not just the reduced diesel consumption that delivers the TCO savings - with each running hour a DG moves closer to needing its filters swapped, a change of oil or simply a refuelling visit. In order to optimise energy efficiency, performance and autonomy to the specific load requirements of each site, you need to match the size of the battery bank and any PV panels to the size of the DG and the fuel tank. At a classic off grid BTS site with dual DGs, a site visit is required every 500 hours, i.e. every 10 days. Cutting DG runtime to six hours using hybrid power reduces site visits to every two months. Given the

difficulties accessing remote cell sites, it is critical to monitor fuel consumption per day so you can match the fuel tank size to the gap between maintenance visits. Hybrid power requires higher initial capex of course, but the significant reductions in opex, both in terms of diesel consumption and site visits, means the TCO compared to dual diesel generators quickly catches up, so ROI can be achieved within two years, and I’ve seen some instances where it ROI is achieved in just six months. It’s still tough to make the business case at a higher level for more efficient hybrid energy solutions, so SDMO still sell a lot of diesel generators! With the global economic crisis, a number of operators’ capex investments were frozen, and buyers focused more on optimisation, so they tended to swap equipment to make incremental improvements to TCO, rather than replacing dual DG sites with hybrid. Instead of investing in full hybrid solutions, telecoms operators often try to modify sites for hybrid power, adding extra deep cycle batteries. It requires less capex, but doesn’t deliver full TCO benefits. Towerchange: Whether the customer wants diesel gensets or hybrid energy, how does SDMO offer made-to-measure power solutions tailored the specific needs of each site? Romain Treguer, EMEA Telecom Sales Manager, SDMO: SDMO’s engineering department will strive to accommodate all requests, regardless of energy

2 K16 generating sets

2 LR16 Long Running generating sets

Years

Battery hybrid: HPG 22-1200 with Long Running generating set

Solar Hybrid HPG 22-1200-3.52 with Long Running generating set

Combined annual costs

requirements. Our expert technicians use advanced 3D modeling software with a precise structural calculation module, and techniques for analysing sound intensity and vibrational frequencies. Each project follows a proven process; preliminary review, where the customer’s needs are analysed; costing, proposal and order validation; then the study phase involves setting up project plans, diagrams, calculations, scheduling and technical documentation; this is followed by manufacturing, testing and delivery; and finally commissioning, monitoring and maintenance. TowerXchange: What are the advantages of SDMO’s substantial worldwide dealer network, particularly for after-sales service? Romain Treguer, EMEA Telecom Sales Manager, SDMO: SDMO has 187 agents worldwide. Given how long it can take to import equipment into Africa, it’s important that SDMO has two agents in many African countries, even three in Nigeria. The telecom market is always an important part of our agent’s turnover, so our agency network has local knowledge of market requirements and distribution logistics. Many of our agents are already maintenance and refueling subcontractors to telcos and towercos - some even build telecom sites. Having a standardised product range is an advantage because all our dealers maintain inventory and spare parts so our clients can receive

equipment and maintenance service in a very short time. Today you cannot just sell equipment if you cannot support with after sale services. Without agents on ground, we could sell a single DG in Africa. Our agents are SDMO’s front office in the field - they can commission DGs, they have stock of DGs and spare parts, but most importantly they have the local knowledge. Once a year our agents come to our new factory with it’s dedicated dealer training centre in Brest, France to ensure they remain familiar with the latest updates to our products and our new product launches. TowerXchange: How can tower operators maximise the lifecycle of their gensets? Romain Treguer, EMEA Telecom Sales Manager, SDMO: It’s important to use a reputable company, like one of our agents, to ensure installation is optimised and that maintenance operations are kept up. It’s also critical to monitor the quality of the inputs - fuel quality, oil quality, and original spare parts quality are essential to maximising genset lifetime. TowerXchange: How do SDMO refine your products to improve MTBF? Romain Treguer, EMEA Telecom Sales Manager, SDMO: It’s important that we have close alignment


between our upstream and downstream business, monitoring the whole supply chain. We listen to feedback from the field, and examine data from our fleet monitoring systems that monitor fuel levels and alarms, to customise and adapt our products to client requirements. It’s also important that we maintain a close relationship with our engine providers - Mitsubishi, John Deere, and Volvo, and of course all their engines are tested before our equipment leaves the factory. TowerXchange: Finally, please sum up how you would differentiate SDMO from competitive energy equipment providers. Romain Treguer, EMEA Telecom Sales Manager, SDMO: SDMO is a French company, and everything is produced in Europe with a commitment to quality guaranteed by an ISO 9001 certification, ensuring high-performance for all products. We’re known for our innovation. Our outstanding R&D team are regularly securing patents for new technology developments to reduce sound levels and develop new control panels. Finally, our extensive global dealer network in 180 countries is key to ensuring we “think globally, act locally” and deliver on-time. We leverage our purpose-built dealer training centre at our new factory in Brest to make our customer-facing dealers aware of how to sell and service our latest innovations

Is Latin America ready for hybrid and renewable energy?A power system supplier’s insight into the regional energy dynamics

Allen Pitts, President, Americas, ELTEK


TowerXchange: Tell us about your experience in Latin America and the services you currently offer.

Allen Pitts, President, Americas Region, ELTEK: ELTEK has been active in Latin America for 20 years. Our offering is focused on DC power systems, solutions and services for telecom and industrial applications. ELTEK operates worldwide and we have a long history of supporting OEMs and carriers and their power needs.

TowerXchange: In which countries are you active? And who are your main clients?

Allen Pitts, President, Americas Region, ELTEK: In Latin America, ELTEK operates through its offices in Mexico, Peru, Argentina, Colombia and Brazil. Moreover, we have a complete production facility in São Paulo, Brazil.

Our main clients are all the major carriers in the region and a selection of OEMs.

TowerXchange: Which countries don’t have reliable grid systems in the region?

Allen Pitts, President, Americas Region, ELTEK: Most countries have a reasonably reliable grid system, but as carriers reach out to serve new and remote areas, power might not always be available. That is where the main challenge for them lies in terms of power supply.

Moreover, carriers are adding extra equipment in

As the Latin American telecom industry develops, the carriers’ energy requirements will keep rising. But how much conventional energy can the region supply? While new sources of power - from hybrid and renewable solutions - are being implemented widely in Africa, Latin America is just starting to take a closer look at its options.

In this interview, Allen Pitts, President for the Americas at ELTEK, shares his views on the future of energy consumption in the Latin American telecom industry.

Read this article to learn:< The status of the Latin American power supply industry< How new technology is affecting energy consumption< The dynamics of power supply in the telecom industry: who buys power?< How ELTEK reduces its logistics and shipping related costs for the advantage of its customers

Keywords: ELTEK, Latin America, OEM, Mexico, Peru, Argentina, Colombia, Brazil, Energy, South America, Central America, 3G, 4G, LTE, O&M, Pass-Through, Tax, Off-Grid, Hybrid Power, Renewables, Logistics, Power Supply, Technology, Landed Cost

some of their existing locations in major cities and in dense urban areas. In those instances, additional power may be required as the existing supply might not be enough to support the new technology.

In fact, as technology advances, the size of equipment shrinks and carriers are installing more services at each location than they used

to. Therefore, very congested sites can often have issues with power availability and heat management.

TowerXchange: With the majority of towerco deals structured to pass through responsibility for power to the tenant, do tower sale and leaseback transactions in Latin America have


much impact on the energy equipment and services supply chain?

Allen Pitts, President, Americas Region, ELTEK: So far, we have not seen tower companies in Latin America operating in the same way they do in other regions such as Africa. As you mentioned, the power supply component remains in the hands of the carriers in most instances.

We have dealt with a few tower companies in specific markets where the dynamics are different but in general, carriers remain our key customers.

TowerXchange: Is the market for energy solutions in Latin America primarily driven by backup power solutions? In which regions is the business case for hybrid and renewable energy strongest? Is there a stronger business case for your solutions in Central America and the Caribbean than in South America?

Allen Pitts, President, Americas Region, ELTEK: I believe there are two key drivers that are pushing for more hybrid and renewable energy in the region.

The first is new technology. Specifically, new applications for networks such as LTE / 4G are being added to mobile infrastructure at a feverish pace to keep up with the consumer’s thirst for bandwidth and additional services.

The second pertains to operations and maintenance. There is a constant need to replace, improve and


maintain equipment to ensure their efficiency, reduce energy consumption and to be aligned with environmental guidelines.

These factors contribute to the growing need to improve the way we use available power and to reduce heat production within equipment and cabinets. High efficiency products are an answer to the problem.

Hybrid options are becoming increasingly popular in the entire region and we are seeing new business opportunities in most of the major areas in Latin America.

The number of new carriers entering the field is limited and in those areas, the opportunities are greater as existing carriers are installing more greenfield sites and need more power for new construction.

TowerXchange: What are the import costs and logistics challenges for international suppliers selling into Latin America? How do local taxes and duties affect your competitiveness with local suppliers? Do you manufacture locally or partner with local distributors to reduce time to market?

Allen Pitts, President, Americas Region, ELTEK: Logistics is a major factor for us, especially as we do business in several foreign countries. The real key is to be as competitive as possible at a landed cost basis. We have major production hubs in the USA, Brazil, China and Slovakia that we draw from to

supply into the region. We combine the production of key components with partnerships with local companies to reduce shipping and import tax costs.

The advantage of being able to pull items from a variety of production hubs is that we can benefit from any tax partnership programme that exists between countries. Whether it’s a South American, European or U.S. treaty, we are able to take advantage of it and reduce the landed cost.

Moreover, our local partners help us to deliver DDP (Delivery Duty Paid) products throughout the region, even in those areas where ELTEK is not directly present.

TowerXchange: Can you give us a quick comparison between Americas and Africa in terms of how the two industries operate?

Allen Pitts, President, Americas Region, ELTEK: Being focused exclusively on the Americas, I can only summarise the main differences I am aware of through our African operations.

One of the key issues is the existing infrastructures which in the Americas is more developed than in Africa. The market is at a different stage but quite a few new operators are entering the game in Africa and doing significant upgrades and new installations. Therefore, the new network investments are much higher in Africa than in the Americas. That aspect seems to put more pressure on all the complimentary infrastructure aspects such as power.

In South America there are a variety of established carriers in each country. That said, in almost every country you will find that América Móvil and Telefónica are part of the game and are among the three top carriers. That definitely offers some consistency and helps us streamline our work.

I’d say that while in the Americas we are very focused on upgrading existing networks, the African market is very busy adding new ones.

TowerXchange: How do you foresee the Latin American market changing in the next 3-5 years?

Allen Pitts, President, Americas Region, ELTEK: The region is growing exponentially, especially in terms of upgrades to LTE networks and core data infrastructure.

I believe we will see more growth in data traffic, hence an expansion of all the technologies that contribute to that.

Over the next few years, Brazil will be very busy with all the various events such as the World Cup and the Olympics, and the investments in infrastructure are definitely increasing in preparation.

On the carriers’ side, I think they will start deploying more and more hybrid solutions as energy becomes increasingly strained and companies have to start switching to alternative sources to supplement the traditional grid system


Special Feature:

Presenting three diverse perspectives on tower design and manufacture in this latest installment of TowerXchange’s “Rooftops, masts and towers” special feature. First, in case you missed it, let me redirect you to page 97 where Christian Strǿmme, CEO of GSM Telecom Products shares some fascinating insights into the practicalities of selling and importing towers in Myanmar. TowerXchange also checks in with Peter Chojnacki, President of Tower Numerics, whose tnxTower (formerly RISATower) is the industry standard software for tower analysis and design. Essential reading for anyone who manufactures, installs, upgrades or sells tenancies on towers... which is pretty much everyone who reads TowerXchange! Finally, we also chat with Evelyn Torres, award-winning CEO of Solaris Technologies, who make the renowned ToughTower, a rugged, user-friendly Cell On Wheels (COW), to discuss the market and use-cases for mobile towers.

Rooftops, masts and towers, part 3

Don’t miss:97 GSM TP adapt tower design for Myanmar

161 Tower Numerics on the art of tower design

165 ToughTower - the world’s strongest mobile tower?

The art of tower designWhy tower design should be “as simple as it can be but no simpler”

Peter Chojnacki, President, TNX

TowerXchange: Tower Numerics’ tnxTower software is described as developed from the ground up for the tower industry - what does that mean in practice? Peter Chojnacki, President, TNX: tnxTower is the most popular tower design program in the US. Our software is used for the analysis and design of new and existing towers, since any equipment changes made for co-locations require structural evaluation, and possibly strengthening of the tower. Our software implements standards that govern telecom tower design, enabling practitioners to run analyses to determine if the structure can carry the load. What is unique about tnxTower is that our software was designed exclusively for the telecom tower industry. Before the telecom towers sector was as hot as it is now, general purpose design software, traditionally used to model buildings, industrial facilities or bridges, would be used for towers. You can try to design a tower in these general purpose programs, but in the tower industry you need to be fast and efficient - speed of turnaround is very important - so you need a streamlined system tailored to telecom towers with utilities to create and modify models very quickly. Software not specifically meant for towers lacks many essential features, such as automated bracing generation, load application based on ancillary input, ancillary databases, and many others. Such software may contain a lot of superfluous elements that distract from the main objectives and complicate the design process. Tower design

Read this article to learn:< How TNX calculates whether tower structures can withstand additional loads< How to create different load cases so the same tower can support one, two or more tenants< How to analyse and manage tower reinforcement schemes< The critical role of tower mapping in tower capacity evaluation< How advanced TNX algorithms help maximise tower capacity by reducing wind loading to the full extent permitted by the design standard

Tower Numerics (TNX) is the developer of industry standard software for tower analysis and design. Their software is built from the ground up for the tower industry, and has been proven and refined over twelve years. The program started as ERI Tower, when it was written by the industry pioneer Dan Horn in response to the need for a dedicated and powerful, yet easy to use package for tower analysis and design. Peter Chojnacki was working at RISA Technologies when they acquired ERI Tower. He wrote numerous features of what became known as RISATower as users came up with design issues that required advanced modelling techniques. In September 2010 Peter’s company Tower Numerics acquired the rights to RISATower, changed the name to tnxTower, and focused exclusively on providing tools for design of communication and wind turbine towers.

Keywords: How to Guide, Steelwork, Passive Equipment, Co-locations, Capacity Enhancements, Loading, Site Visits, Capacity Evaluation, Masts & Towers, Infrastructure Sharing, Americas (North), Americas (South), Africa, RISATower, tnxTower, Tower Numerics


standards, which codify loading and strength requirements, are not usually implemented in those packages. Simplicity is the key to tnxTower - we have a simple, streamlined user interface, easy to understand inputs, with no cryptic commands, and clear and concise outputs. Nonetheless, tnxTower can handle virtually all complexities of tower analysis, such as load optimization and non-linear cable analysis. The program is not a black box, however, and users have access to detailed output data for verification purposes. In addition to being a software publisher, we do our best to be an educational resource for the industry as well. Our website includes materials on topics related to tower design for the benefit of our users and anyone else who is interested. We work with equipment manufacturers on expanding the range

of items we include in TNX equipment databases distributed with the program. TowerXchange: What is unique about the design requirements of telecom towers? Peter Chojnacki, President, TNX: Telecom tower design combines principles of structural mechanics with elements of aerodynamics. One of the main objectives is to properly associate geometry of the structure and attached ancillaries with forces generated by wind from varying directions. Wind forces need to be amplified due to the height of the

structure and topography of the site. Presence of ice and escalation of its thickness with height or wind load reduction due to components shielding each other are important considerations. Further, dynamic effects of uneven wind action need to be accounted for. It is a fascinating area of engineering, but like all engineering disciplines requires simplifications. Design standards, such as TIA-222-G, help engineers create practical and viable designs by simplifying the rules. This largely eliminates the need to undertake substantial “academic” work every time a new design is made or an existing tower configuration is modified.


“ “Telecom tower design combines principles of structural mechanics with elements of aerodynamics


TowerXchange: For our less technically inclined readers, please introduce us to the key information you need to know about a piece of equipment to determine what effect adding it to a structure will have on the capacity of that tower. Peter Chojnacki, President, TNX: At a minimum, the software input for a given piece of equipment must include its weight, front and side areas, shape, and position on the tower. Except for the position on the tower, all other parameters are stored in tnxTower database, enabling reuse of pre-defined equipment on other projects. Different shapes of antennas result in different forces, even if the antennas have the same outline (projected) area. For instance, flat panels attract greater force than circular shapes of the same projected area. Height to width ratio of an antenna is also a factor. These parameters are automatically accounted for either in the tnxTower database values or at the analysis runtime. Another aspect to consider are multiple, adjacent ancillaries. In such cases the total loads tributary to these items may be reduced due to shielding effects. tnxTower handles all calculations automatically, and includes additional important considerations, such as ice accretion, air flow characteristics, wind speed increases, and others. There are many different aspects of the antenna and feed line placement that influence the stresses in the structural members of a tower. Repositioning of the ancillaries on the tower, if practicable, can have a beneficial effect, when the altered, combined effect of wind pressure results in a reduction of member forces.

TowerXchange: Tell us how your users can calculate the effect of additional tenancies on the most stressed component of a tower. Peter Chojnacki, President, TNX: We help our users handle additional equipment in a staged manner. First, let’s have a look at what is involved in a standard structural calculation for a tower. Normally you would consider 12 different wind directions for calculations based on different, code mandated criteria, and need to generate up to 38 independent load combinations, which in turn will require running 38 analyses. For many towers additional, dynamic considerations are required, which may double the number of the load combinations and analyses. This is before any equipment variances are considered. Any change of the equipment configuration will require running all of the analyses again. It is a very large number of calculations, but it can be very efficiently handled with our software.

If the equipment mounted on a tower is added to or removed, then you have to rebuild your computer models with different equipment sets. tnxTower has a facility to specify all the equipment on a tower and assign classification categories to different equipment types, such as antennas, feed lines, or dishes. The user can then model existing, reserve, future, or other equipment combinations and loading, driven by the policies and agreements of the tower owner. With tnxTower you can create different load cases for different scenarios, for example for two, three or five tenants. Our program automatically runs the multiple analyses for different scenarios and gives reports for different situations. We help engineers who work in a multi-tenant environment use a single model - one file that contains all the current information and future load scenarios for a tower. tnxTower makes it easy to add information about tower reinforcement and to manage reinforcement schemes. For example, users can define members with different sizes or as reinforced members, or they can modify bracing patterns. We recently introduced a monopole reinforcement module, which is important to help squeeze the maximum capacity form existing monopoles in regions where tower owners are running out of capacity on existing towers and where zoning restrictions make permitting and building new towers difficult. TowerXchange: One of the challenges facing telecom tower operators in emerging markets is that towers may lack their original drawings.

“ “With tnxTower you can create different load cases for different scenarios, for example for two, three or five tenants

What can be done to evaluate such towers and make them suitable for structural upgrades to increase capacity? Peter Chojnacki, President, TNX: There’s no magical way to recreate drawings. Member sizes, lengths, and other geometry data as well as steel properties are critical in assessing the capacity of the structure. In addition, bolt numbers and their patterns or the extent of corrosion can make a big difference. For those reasons there is no substitute for a proper tower mapping. Tower mapping report is usually prepared following a site visit, during which an extensive survey of the structure is performed. Technicians need to climb the tower to gather information on which the tnxTower input can later be based. 3D tower evaluation surveys are occasionally used, but most of the time it’s done through visual inspection and photography. Since telecom towers are tall, slender structures, 3D scans are cost prohibitive in many cases, and their accuracy may often be insufficient. TowerXchange: How does tnxTower help tower manufacturers integrate design and manufacturing processes?

Peter Chojnacki, President, TNX: tnxTower is used by most of the big US manufacturers. Some of them use our software in their workflow - they have front-end facilities that prepare input data and then run tnxTower analyses to obtain parameters

for the manufacturing process. So in a way we provide an interface between structural design and manufacturing. There are ways to provide an even tighter integration of the manufacturing with tnxTower, and we are looking into them as well. TowerXchange: Finally, please sum up how you would differentiate TNX from your competitors. Peter Chojnacki, President, TNX: Tower Numerics specializes in the tower design software - this is our only business. tnxTower has been conceived for telecom tower design from the outset and this focus shows throughout. It is a single, stable package, capable of designing monopoles, self-supporting and guyed towers, or any hybrid types. tnxTower is a sophisticated finite element analysis program, with advanced capabilities, such as non-linear cable analysis, yet we aim to make our data entry simple and understandable. All user data is channelled through self-explanatory input pages, and graphic feedback is present at all stages. The straightforward input does not prevent tnxTower from being able to handle the most complex tower projects, as the interface permits a great deal of flexibility in the tower model definition. tnxTower output is unquestionably the best in the industry. Our presentation of information to the user is clear, concise and on target. For instance, most users need only a specific subset of the whole output. More extensive reports that provide the whole picture are always available, however, in case users need to do additional diagnostics or verifications.

Our loading optimization algorithms reduce tnxTower wind forces to the full extent permitted by the TIA Standard. The program includes facilities to manage equipment loading scenarios, which can be an enormous time saver for multiple tenant tower projects. On the design side, the program not only checks strength of members and connections, but is also able to optimize member sizes to automatically produce the most economical structures. Monopoles can be designed and reinforced, providing a way to increase the often critically important capacity for additional tenants. In a nutshell, we give our users extra leverage that provides cost and efficiency benefits


“ “

Our loading optimization algorithms reduce tnxTower wind forces to the full extent permitted by the TIA Standard. The program includes facilities to manage equipment loading scenarios, which can be an enormous time saver for multiple tenant tower projects

The world’s strongest mobile tower?ToughTowers™ fill a gap in the market for robust, high quality mobile towers for disaster recovery, events and interim service replacement


TowerXchange: Where does Solaris Technologies fit in the telecoms infrastructure ecosystem? Evelyn Torres, CEO, Solaris Technologies: Based in Texas, Solaris design and manufacture the unique ToughTowers™ Cell On Wheels (COW). When I was working at Nokia and NSN for nine years, I found there was a void in the marketplace for a tough, high quality, quick deployment tower solution for disaster response, events and to bridge gaps in network rollout. With no good inventory to go to, I decided to build it myself! So I launched my own company, Solaris Technologies, and developed the ToughTower™ range, which we believe to be the most robust and rugged, off-road tower solution in the world. ToughTower™ is certainly the strongest tower structure available in the US in terms of weight limitations and wind speeds - we have designs that are genuinely hurricane-proof. ToughTower™ is high quality product range designed to be safe, user-friendly, technology agnostic and competitively priced. In addition to our main focus on ToughTower™ mobile, fixed and mini towers, Solaris Technologies also have a repair centre for telecom equipment, we build our own fibre optics, and we manufacture transceivers. TowerXchange: What is the market size and use cases for mobile towers or COWs?

Steve Clark, COO, Solaris Technologies: It’s an event

You don’t have to spend long talking to Evelyn Torres for it to become apparent that she has a contagious passion for robust mobile towers! Evelyn and her management team at Solaris Technologies have over a century of field experience, and when they saw a gap in the market for a rugged, safe, user-friendly Cell On Wheels (COW), the renowned ToughTowers™ range was born. TowerXchange caught up with Evelyn and COO Steve Clark to find out more...

Read this article to learn:< Identifying a gap in the market for robust, high quality, high capacity mobile towers

< The size of the market for mobile towers

< Use cases: disaster recovery, events and interim service replacement

< Solaris Technologies’ hand-holding process throughout the lifecycle of the unit

< Just in time culture: how Solaris ensures ToughTowers™ can be ready for delivery within 24 hours

Keywords: Who’s Who, Steelwork, Rapid Deployment Towers, Co-locations, Capacity Enhancements, Loading, Health & Safety, Retrofitting, Logistics, Decommissioning, VMI, Masts & Towers, Americas (South), Americas (North), ToughTower, Solaris Technologies

driven market. There are three main use cases: disaster recovery, supplementary capacity at live events, and interim replacement service provision when towers are damaged or upgraded. ToughTower™ has been deployed in several disaster recovery contexts, such as in response to the recent hurricane, fires and tornadoes in the Philippines. ToughTower™ is also used to provide overflow capacity when fixed assets can’t cope with the additional traffic generated by live events, for example when the Pope visited the Americas there were millions of people along the route, and you can imagine what that did to the mobile network - we provided a solution to provide supplementary bandwidth.

In another example, we deployed ToughTowers™ at the Texas Motor Speedway to supplement carrier networks for the big Nascar event - ToughTowers™ were the only units big enough to handle upwards of 900lbs of antennas. In fact, we’ve developed even stronger towers for American Tower. Evelyn Torres, CEO, Solaris Technologies: In terms of the size of the market for mobile towers, we’ve been told that AT&T has hundreds of such structures just for events, and T-Mobile has a similar inventory. TowerXchange: How can ToughTower™ enable network extension and backhaul links where there’s no fibre? Steve Clark, COO, Solaris Technologies: In mountainous regions such as in Brazil, there may not be an opportunity to tie into physical fibre networks. Because ToughTower™ is head and shoulders above the competition in terms of robustness, it’s a great choice for microwave backhaul links, which have a small aperture (1% or less) for connectivity. ToughTower™ provides a direct point to point microwave link as well applications or AP options where there’s no fibre. TowerXchange: Are ToughTowers™ available to lease or purchase? Steve Clark, COO, Solaris Technologies: We recognise that capex budgets are tight, so we’ve developed options to flex budgets. While preferences between capital purchase and lease options vary between


geographies, we’re increasingly shifting to leasing models with towercos and turnkey infrastructure builders.

TowerXchange: Tell us about the logistics of deploying ToughTowers™. Evelyn Torres, CEO, Solaris Technologies: We are a global partner, we’ll ship anywhere and we’ll respond fast! Solaris has all of Latin America and

“ “

we deployed ToughTowers™ at the Texas Motor Speedway to supplement carrier networks for the big Nascar event - ToughTowers™ were the only units big enough to handle upwards of 900lbs of antennas


the US covered - we have agreements with all the wireless service providers and leading integrators - ToughTower™ is the go-to solution for any complicated site. We have a hand holding process throughout the lifecycle of the unit. We may start with some custom design modifications, and we provide tech support through our 24 hour support line. We never deliver a unit without certification and

training; education is critical to safety and to understanding the different usage applications of ToughTower™. I like to use a luxury vehicle analogy - when you go to the dealership they know your name, they have backup units if you need one right away. We’re very hands on, and everyone is involved - we don’t just sell units and look to the next deal. Because my leadership team have been in the

industry for over 100 years between us, we have real field experience, we understand the technology, how it’s changing, and the challenges of cash, location and timing. Solaris understands the applications and locations in which carriers, towercos and integrators use our solutions, we’re happy to make customisations, which is why we’re the first people our clients call. Steve Clark, COO, Solaris Technologies: Tier one carriers have deep and wide talent; loads of RF engineers and cabling experts and NOC engineers, but they don’t always have portable tower expertise. We don’t make any assumptions about deployment, so Solaris provide the initial deployment, as well as rigorous certification and training. Safety is at the heart of everything we do. I’ve heard some horror stories from the deployment of quick, inexpensive towers - there’s a risk of seeing these as disposable assets, and of not paying due attention to safety. That’s not the case with Solaris. We have redundancies and patented, proprietary safety features. Logistically all you need is a Ford F350 and you can drive a ToughTower™ up the side of a mountain, into the desert, wherever - deployment logistics are simple. The key is understanding in advance the nuances of the location and environment in which it’s to be deployed - the geography, application and security requirements, enabling us to take measures to prevent vandalism and theft and keep it safe.

TowerXchange: What can you tell us about the cost of ToughTower™. Steve Clark, COO, Solaris Technologies: We’re not the most expensive and not cheapest solution on the market! To understand the real costs of deploying ToughTowers™, our clients would have to give you that number, as corporate overheads and real estate acquisition costs are also key components of any deployment. To give you an example, we were able to respond within a week to use a ToughTower™ to replace a non-functioning tower, but the biggest challenge was the limited real estate available in this urban area and finding the distance necessary for guying - such deployments are very different from applications in the remote hinterland. So while the total cost of deployment depends on the application and real estate, basic unit prices are available on our website, and we’re very competitive! If there were a means of quantifying safety, we’d have the best ratio of dollars to safety units in the business! TowerXchange: Response time must be a critical factor in your business. Evelyn Torres, CEO, Solaris Technologies: Response time is essential to our clients, and we’re extremely passionate about this - we’re all about creating value for our clients.

There are a lot of people touting rapid deployment towers, but by the time you factor in time delays, and the cost of them nickel and diming you for different use cases, they can work out a lot more costly. We invite our clients to call us in the middle of the night if they’ve had an emergency - we always have ToughTowers™ in inventory, we’ll do our compulsory standard safety check, and they’ll be ready for delivery in 24 hours. We have drivers and utility vehicles ready to driver anywhere on the North or South American continent. Solaris has a ‘just in time’ culture; we have a different attitude and we understand our customers because we’ve all been in their shoes. TowerXchange: Can ToughTowers™ be used in multi-tenant contexts? Evelyn Torres, CEO, Solaris Technologies: ToughTowers™ can handle two to three tenants, even four tenants on some models, without any problems. ToughTower™ has a better wind-load capacity than competitive cell on wheels solutions. TowerXchange: Finally, how would you differentiate Solaris Technologies from competitive rapid deployment towers? Steve Clark, COO, Solaris Technologies: Most companies that design and sell mobile towers think about tower mechanics, design, lease costs, and efficient structural engineering. Solaris is different - we are former network engineers ourselves, so our solution is driven by the needs and Service Level


Agreements of our customers. We design products to perform in the field. Our team have spent years at Nokia and Lucent beta test sites - we know what goes wrong, and we knew there was a need for a robust solution; ToughTower™ - there’s nothing quite like it on the market. Evelyn Torres, CEO, Solaris Technologies: We eat, breathe and (occasionally!) sleep the application of our mobile towers. Most companies make a product then try to match it to a market need - I was motivated by the market’s needs then made a product to meet those needs!

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we invite our clients to call us in the middle of the night if they’ve had an emergency - we always have ToughTowers™ in inventory, we’ll do our compulsory standard safety check, and they’ll be ready for delivery in 24 hours”

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