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Brazil’s Telefónica sells towers, takes lead on infrastructure sharing

Although Brazilian telecom companies signed a commitment statement to enhance infrastructure sharing when deploying LTE networks, this subject is still hotly debated when it comes to 2G and 3G networks. Telefónica’s Brazil mobile unit Vivo appears to have taken the lead on the issue, since the company has already sold 80% of its towers. The remaining 20% are considered strategic.

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Last week, the Administrative Council for Economic Defense (Cade) approved Vivo’s sale of 1,500 towers to American Tower, an infrastructure provider that builds, manages and operates a network of wireless communication towers in the Brazil. Back in July, Cade  also approved the transfer of 300 towers from Telefónica to American Tower.

In total, Telefónica has sold 1,800 towers to American Tower, which now has approximately 4,500 towers in Brazil. Across the Latin American region, the U.S.-based company has over 13,000 communications sites including about 5,200 in Mexico; 1,100 in Chile; 2,700 in Colombia and almost 500 in Peru.

The latest exchange follow the September sale of approximately 2,000 Vivo mobile telephone towers to the private-equity firm GP Investments for about U.S.$250 million (R$503 million).

With the purchase, GP Investments created a tower management company named BR Towers, with a total capital commitment ranging from U.S.$90 million to U.S.$164 million. The company said it aims for BR Towers to become the leading owner and operator of mobile telephone towers in Brazil.

According to GP Investments, with telecom companies having to meet 3G and 4G coverage goals during the next 5-10 years, the tower market will inevitably face a considerable expansion through both amendment (adding antennas on existing towers) and cell splitting (constructing new towers). “The increasing tower related Capex, coupled with large investments expected from telecom operators in the coming years, create an opportunity for BR Towers to expand its operations at a fast pace through both built-to-suit contracts and the acquisition of additional portfolios of towers,” the company said in a statement.

From Telefónica’s perspective, selling 80% of its towers represents an opportunity to focus efforts on developing its core business, through transferring the ownership, management and operation of infrastructure assets to a specialized company and thus, removing the costs related to those assets.


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