Continental Towers Expansion Beneficial To Region
The International Finance Corporation (IFC), a member of the World Bank Group, announced in July that it is providing a US$120mn package to Guatemala's Continental Towers, which will aid the firm's expansion plans in Central America. Tower sharing is already a common theme in Africa and Asia Pacific, and it is our long-held view that the practice will increasingly become prevalent in Lain America as operators look to minimising cost when accelerating network coverage.
Besides Guatemala, Continental Towers, a joint venture between Terra Projects and Credit Suisse, also has a presence in Costa Rica, El Salvador, Honduras, Nicaragua and Panama. The investment, comprising a US$40mn loan and an US$80mn syndicated loan, will go towards Continental Towers' financial expansion into Nicaragua as well as doubling of the number of towers the firm has in the region.
While mobile operators could simply share their infrastructure with peers, the process is seldom smooth-sailing since they are competing on the same landscape with concerns such as subscriber data being leaked further hampering collaboration. Consequently, independent tower companies provide an alternative, in addition to allowing mobile operators to reduce the amount of fixed assets on their balance sheet, and channel resources into their core business of providing telecoms services. Tower companies should have a more efficient operating model due to specialisation and economies of scale, and save mobile operators the trouble of making decisions such as where to build their base transceiver stations in order to maximise coverage.
|Sharing Will Aid Subscriber Growth|
|Latin America Mobile Penetration Forecasts (%), 2009-2016|