Phoenix expands tower empire to Ireland

Phoenix Tower International has announced an agreement to purchase 650 wireless towers from Irish telco eir, expanding its infrastructure footprint to a new European nation.

With 9,000 towers spread across 15 countries, Phoenix is quickly turning into one of the major players in the telecom infrastructure game. The acquisition of these assets, 100% of eir’s tower portfolio, will further drive Phoenix into the European markets, following hot on the heels of a deal with Bouygues Telecom to acquire 4,000 sites in France.

“Ireland represents an important economic hub for Europe and the world, and we are proud to support eir on their ongoing build-outs across the country,” said Tim Culver, Executive Chairman of Phoenix Tower International. “This transaction further expands PTI’s global footprint and we are excited to be a long-term partner of eir.”

Although operations are primarily focused in the Americas, Phoenix is becoming a much more familiar name for European telcos, several of which are keen to explore ways to access more cash.

While it is certainly a more attractive position to own assets rather than lease off an outside party, the deployment of 5G networks and upgrading broadband to full fibre are two very expensive projects. With the price of connectivity contracts only going down, spreadsheets only tolerating so much debt and investors only able to cough up so much, alternative means to raise funds are needed. The sale of physical infrastructure, the passive part of the network is proving to be a popular way forward.

Phoenix Tower International is one company which realises the potential of asset with (theoretically) consistent demand and zero expiry date, but it is not alone. Cellnex is hoovering up assets across Europe, InfraVia is finding cash to invest, as is Brookfield, a Canadian alternative asset management company. All of these companies recognise that owning the passive infrastructure in a world which is increasingly defined by mobile connectivity is an attractive bet.

But what does this mean for the industry? The influence of the telco on the telco industry is being diluted.

If the telcos no-longer want to own or invest in passive infrastructure, they will have less influence on construction plans, as let’s not forget, companies like Phoenix will have multiple customers to consider. There are of course build-to-suit programmes, but new sites will have to be attractive to multiple telco customers, not just one.

This is a compromise which has to be made. The telcos need money, they have assets to sell, but they will have to accept that they are also trading a slither of control of their own fate. We suspect there will be criticism of this trend in decades to come, when the future leaders of telcos are finding their voices drowned out by other segments of the industry, but it is a case of needs must.


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Bouygues Telecom continues tower outsourcing mission with new JV

A new joint venture between Phoenix Tower International and Bouygues Telecom has been announced to develop approximately 4,000 new towers across France to its 5G prospects.

The deal will see the creation of a new company, controlled by Phoenix, will help Bouygues Telecom not only meet regulatory obligations for mobile coverage, but perhaps also accelerate a challenge to the market leaders in France.

“This agreement allows Bouygues Telecom to sustain its efforts in sites deployment in Less Dense Areas and also to meet the New Deal requirements,” said Jean Paul Arzel, Head of Network Division at Bouygues Telecom. “It will also contribute to considerably strengthen our Mobile network coverage in rural areas.”

Thanks to the deployment of 5G infrastructure, telcos are under financial strain to meet expectations and remain competitive, though regulatory obligations for 4G coverage in the rural environments are also placing stress on the spreadsheets.

In 2018, French regulator ARCEP announced new obligations for the spectrum licence-holders to improve mobile coverage across all regions in the country. Some of the obligations included forcing each operator deploying at least 5,000 new cell sites across the country, some of which will be shared infrastructure, as well as ubiquitous 4G coverage for the population and on transport networks.

As France is a large nation with very low population density in some regions, this could prove financially to be a difficult standard to meet, though joint ventures with tower companies is one way to achieve such objectives. It might mean that the telcos are ‘tenants’ on the infrastructure for the long-term, but it does levitate some of the financial pressures in the short-term.

Alongside this agreement with Phoenix, Bouygues Telecom announced a similar agreement with Cellnex, the Spanish tower company which is aggressively rolling out new infrastructure as well as purchasing assets from a variety of cash-strapped telcos.

As part of this agreement, Cellnex will contribute €1 billion to fund a 31,500km fibre optic network in France to provide mobile backhaul and fixed connectivity services. Bouygues Telecom will act as the anchor-tenant of the network, signing a signing a 30+5-year contract worth €4 billion, which will account for an estimated 80% of the joint ventures total revenues. Cellnex is free to offer services to other competitors, but Bouygues Telecom is the priority.

Although these agreements will benefit Bouygues Telecom in the short-term, it is handing over more control of its network to external parties. Bouygues Telecom still owns the active equipment, the 4G and 5G radios, though in not having complete ownership of its passive network, the towers and backhaul, it might have to compromise on some decision making.

For example, one proposed site might be excellent for Bouygues Telecom’s network needs, but as the tower companies will be thinking of other customers also, some compromises might have to be made. Bouygues Telecom will act as the anchor customer on these sites, so its demands will certainly be listened to, but as the tower companies have the controlling stakes in the joint ventures, Bouygues Telecom might not get its own way all the time.

This new set-up is of course a compromise, but it does have an eye on the bigger picture. A concession today might lead to greater profits tomorrow.

Telefonica sells 2,029 towers in Ecuador and Colombia

Telefonica has confirmed the sale of 2,029 towers in Ecuador and Colombia for €290 million to Phoenix Tower International.

This is one of the first signs we have seen of the Telefonica ‘Five Point Plan’ becoming a reality. Telefonica is a business which is seemingly drowning in debt, and one pillar of this new strategy has been to monetize tower assets around the world.

“We are honoured to expand our relationship with Telefonica in Ecuador and Colombia and look forward to working closely with them on their ongoing wireless build-out initiatives across the world,” said Phoenix Tower International (PTI) CEO Dagan Kasavana.

“These transactions are exciting for PTI and will allows us to become the market leader in Ecuador, a USD based market with three healthy wireless operators with significant 4-G build-out needs in the coming years. The transaction in Colombia solidifies PTI’s strong market position with over 1,800 owned towers. Colombia has been a great market for PTI, and we see continued growth from all of the carriers in the coming years.”

The Telefonica executive team has been under considerable pressure over the last few years to deliver additional value and drive down the debt. It seems this pressure has only intensified as the realities of 5G and fibre investments start to become a reality. The disposal of passive infrastructure is one-way numerous telcos are raising funds to fuel future ambition.