IHS Global Insight Perspective | |
Significance | American Tower sees Chile as a ripe market for investment. |
Implications | Following a recent deal with Telefónica Chile, American Tower plans to invest US$100 million in the Chilean market over the next five years. |
Outlook | IHS Global Insight expects to see tower companies continue their expansion into emerging markets, targeting both established operators and new entrants. |
America Tower plans to invest some US$100 million in Chile over the next five years, reports Diario Financiero. The news comes shortly after a deal to acquire 287 tower sites from Telefónica Chile (see Chile: 8 July 2010: American Tower Acquires Tower Assets from Telefónica's Chile Unit). American Tower sees recent spectrum auctions in Chile as a driver of its business. In September2009, VTR won 30 MHz and Nextel-Centennial Cayman Corp Chile 60 MHz of spectrum to develop 3G services (see Chile: 9 September 2010: Nextel and VTR Win 3G Spectrum Tender in Chile). According to Subtel (the regulator), at the end of March 2010 Movistar had 41.7% of mobile subscriptions in the country to Entel PCS’s 37.5% and Claro’s 20.7%. Nextel, a trunking operator, had 0.1% out of a total mobile subscriber base of 17.1 million.
The fresh influx of competition from Nextel and VTR will bring to bear greater competitive pressure on Telefónica’s Movistar, Entel PCS, and America Móvil’s Claro, in turn putting further pressure on ARPU. In the second quarter of 2010, Claro Chile posted ARPU of 4,850 pesos (US$9.1), down from 6,570 pesos in the second quarter of 2008, while Entel PCS’s ARPU fell from 10,800 pesos (US$23.4) in the first quarter of 2008 to 9,200 pesos in the first quarter of 2010. In light of such competitive pressure, both the incumbent and new entrants are showing a willingness to divest tower assets in order to better manage investment and operator costs.
Outlook and Implications
- Emerging Markets Yield Opportunities for Tower Companies: In the past few months, tower companies have won a series of deals in emerging markets. It is not solely about monetisation: the likes of Helios are seeing as much success in winning deals with new players as with incumbent operators. It is significant that GTL, the owner of Reliance Communication’s former tower business, is part of Qualcomm’s new joint venture in India.
Recent Deals |
India: 30 July 2010: Qualcomm Forms Wireless Broadband Joint-Venture in India India: 28 June 2010: Reliance Communications Sells Tower Business to GTL Nigeria: 20 May 2010: Gateway Business Nigeria Partners with Helios Towers for Network Roll-Out Nigeria: 22 February 2010: MultiLinks Signs Agreement with Helios Towers Nigeria Ghana: 26 January 2010: TiGo Ghana Sells 750 Towers to Helios Towers Ghana |
- Tower Operators See Strong Revenues: In the first quarter of 2010 to 31 March 2010, American Tower posted revenues of US$454.4 million, up 11.2% year-on-year, while in the second quarter of 2010 Crown Castle, its major competitor, noted a 9% increase in site rental revenues. Such growth is in excess of what most mainstream telecoms operators and equipment vendors are reporting, reflecting the fact that tower companies are well-positioned to expand their businesses in more straitened economic times. While American Tower’s 164 tower acquisitions in the first quarter of 2010 were all in the United States, we expect to see increasing diversification away from North American markets.