Tower Talk: a guide to the week’s major cell site developments

26 Apr 2016

Italian Tower operator EI Towers has ruled out a takeover bid for Telecom Italia’s tower division, Infrastrutture Wireless Italiane (INWIT) and has two other potential projects lined up should its bid for a minority stake in INWIT fall through. Reuters cites the company’s CEO as saying that the company could also make a second attempt to acquire state-owned infrastructure operator Rai Way, after its previous offer faltered. As previously reported by CommsUpdate, Telecom Italia has received binding offers for a portion of its stake in INWIT, with EI Towers understood to have submitted a bid for less than 30%, whilst a consortium of Spain’s Cellnex Telecom and F2i of Italy have reportedly entered an offer for a 45% stake in INWIT. In a related development, meanwhile, INWIT has approved the merger of fully owned units Revi Immobili, Gestion Due and Gestion Immobili into INWIT, Capacity Media reports. The trio of towercos were acquired by INWIT in January this year.

For its part, Cellnex Telecom booked revenue of EUR165 million (USD185.6 million) in Q1 2016, up from EUR115 million twelve months earlier, fuelled by the company’s acquisitions and organic growth. Operating costs also grew, however, rising to EUR102 million from EUR67 million in the previous year, leading to a EUR3 million increase in net profit to EUR11 million. The company claimed a total of 20,954 PoPs compared to 20,740 in December 2015 and 19,896 in March 2015. Tenancy ratio also improved, reaching 1.54 at end-March 2016, compared to 1.53 three months earlier and 1.46 in the year-ago period.

US-based tower firm American Tower Corporation (ATC) has completed its acquisition of a 51% stake in Viom Networks, adding 42,000 communication sites in India to its existing global portfolio of more than 100,000 owned or managed sites. The acquisition consisted of a cash payment of INR76 billion (USD1.14 billion) plus the assumption of around INR51 billion in INR-denominated debt.

In Germany, meanwhile, Telefonica Deutschland has signed a contract to offload around 2,350 of its towers to Telxius, the newly-formed infrastructure provider of its Spanish parent, for EUR587 million. The towers account for less than 10% of the cellco’s passive infrastructure portfolio, Capacity Media writes, adding that Telefonica will continue to use the towers, most of which are in rural areas, through lease agreements. The proceeds of the sale will be reinvested in supporting infrastructure development.

The Municipal Corporation of Delhi (MCD) has ceased granting operators permission to set up telecom towers in the capital following a notification from the Ministry of Urban Development forbidding the installation of such sites in residential areas, the Economic Times writes. The paper quotes Rajan Matthews, the director general of industry group the Cellular Operator Association of India (COAI) as saying that: ‘We have learnt that the authorities are in the process of issuing notices for pulling down the sites in residential areas.’ If implemented, the plans are expected to cripple services in the capital, as an estimated 80%-90% of the city’s 18,000 sites could be affected by the order. In an effort to resolve the matter, telecom secretary JS Deepak wrote to his counterpart in the Ministry of Urban Development to request an amendment to the gazette notification – which only affects Delhi – and pointed out that the issue falls under the jurisdiction of the Department of Telecommunications (DoT). The nation’s cellcos have been at odds with local authorities over the installation and maintenance of towers in recent months, with municipal bodies in several cities reportedly sealing mobile towers for a variety of reasons – in September 2015, the MCD claimed that more than 4,000 sites had been installed illegally – impacting service quality in the affected areas. Operators have ramped up their rollouts in a bit to maintain services but a ban on new sites, combined with the closure of existing towers, could have a substantial impact on services in Delhi.

Operators in India are not the only ones struggling through red tape, however, and British tower company Arqiva has called on legislators to make it easier to build networks in the UK, warning that drawn out application processes are holding up rural rollouts. TechWeekEurope quotes Arqiva’s managing director of M2M and telecoms, Nicolas Ott, as saying that: ‘In rural areas, we have to contact the local authorities who quite often require a full planning application. That process is quite time consuming and expensive.’ As an illustration, Mr Ott noted that in one case the company had withdrawn its application to install a mast in one village after local authorities failed to agree what colour the mast should be. In addition to limiting rural coverage, the official argued that current legislation would prevent the UK from becoming a leader in the 5G sector. The new technology will require a large number of masts and small cells, but Ott notes that installing small cells is a time consuming process, as the application process varies between local authorities.

On a more positive note, in Costa Rica, the Coordination Commission for the Installation or Expansion of Telecommunications Infrastructure (CCIAIT) has presented its first Action Plan for Telecommunications Infrastructure. The action plan sets out four objectives: to optimise the use of existing infrastructure through the creation of a comprehensive national record of telecommunications infrastructure; to use state resources to deploy infrastructure to provide greater redundancy and scalability; to build the capacity of officials of state institutions; and to establish mechanisms for interagency coordination. The action plan sets out the regulatory measures needed to achieve these goals, including the introduction of new regulations and the clarification and modification of a number of existing rules. The full action plan (in Spanish) is available from the Ministry of Science, Technology and Telecommunications (Ministerio de Ciencia, Tecnologia y Telecomunicaciones, MICITT).

Malaysia’s Axiata Group is considering a plan to list its tower division, edotco Group on the local bourse. The Star Online cites the group’s head of investor relations Clare Chin Kit Ching, speaking at Invest Malaysia 2016, as saying that an initial public offering (IPO) was subject to a final decision, but could take place within the next twelve to 18 months. edotco has a portfolio of more than 16,000 towers across five countries with an average tenancy ratio of around 1.5, and booked turnover of MYR1.2 billion (USD307.5 million) in 2015.

In a similar development, India’s largest cellco by subscribers, Bharti Airtel, is reportedly considering the sale of a more than 5% stake in its infrastructure arm Bharti Infratel. Zee News writes that the operator is looking to reduce its 71.7% stake in the tower firm to reduce its debts. A 5% stake in Infratel is estimated to be worth around INR37.5 billion based on current valuations.

Finally, in Indonesia, Sarana Menara Nusantara (SMN) is looking to raise IDR4.18 trillion (USD316.0 million) through a rights shares offering to fund expansion and strengthen capital structure. Deal Street Asia writes that SMN intends to release 1.02 billion shares at a price of IDR4.105 per share and the company is expecting to get shareholder approval for the offering by 20 May. The proceeds from the sale will be invested in the group’s subsidiary Profesional Telekomunikasi Indonesia (Protelindo), which will use the funds to build new towers and invest in supporting services companies whilst a small portion will be used to repay Protelindo’s debts.

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