By mid-2022, Phoenix Tower International owned telecommunication sites in 18 countries in the Americas and Europe. But there was one glaring hole in its portfolio.
By mid-2022, Phoenix Tower International (PTI) owned telecommunication sites in 18 countries in the Americas and Europe. But there was one glaring hole in its portfolio.
“Since our beginnings, a decade ago, we have seen Chile as an attractive market for our business,” CEO Dagan Kasavana says. “However, for years we could not find a good entry point for our operations there.”
This gap was closed in July 2022 when PTI forked out $930 million to acquire 3,800 telecommunication sites in the country that belonged to telecom WOM. The portfolio includes 2,334 tower sites already in place and 1,466 additional to be operational by 2024.
The deal, the winner of the Infrastructure Financing of the Year – Southern Cone, is the result of almost a decade of PTI monitoring developments in Chile’s telecommunications market on the lookout for an opportunity. During that period, PTI observed how WOM, which was founded in 2015, had become one of the largest mobile phone operators in the country.
“There are not many fast-growing MNOs [mobile network operators] in Latin America, so we worked hard on forging a relationship with WOM,” Kasavana points out. “The deal allows us to become a scale player in Chile. Once we build out the sites which are in process, we will be the largest independent tower company in the country.”
The acquisition – the largest telecommunications tower transaction in Chile’s history – was structured as a sale and lease back transaction. The funds for the acquisition were assembled via an innovative separate transaction whereby PTI refinanced five loans linked to assets in 14 jurisdictions, including the US, into a $2.0 billion senior secured multi-facility loan, upsized from $1 billion despite political and social upheaval at the time in Chile. The syndication process included 23 banks located across the U.S., Latin America, and Europe (seven local banks and 16 international banks).
According to Scotiabank, which acted as sole bookrunner and financial advisor, the deal also represented the largest syndicated transaction in Latin America in 2022, accounting for 30% of the total syndicated Media and Telecoms deal volume issued in the region during the year.
The refinancing was signed at the start of the Fed’s monetary tightening cycle, which meant that PTI was able to lock in attractive interest rates, says CFO Michael Bremer. It demonstrated the sector’s enduring appeal to lenders.
“There is an insatiable appetite everywhere in the world for more mobile bandwidth. Investors really woke up to the fact that we have locked in revenue for many, many years in the future, while the sector has a rapid upward trajectory,” Bremer says.
PTI’s business started in Latin America, and the company’s portfolio is now split in roughly equal parts between the region and developed economies in the US and Europe. The goal is to continue to expand the business in the region.
“5G is just starting in some Latin American markets, including Chile and Colombia. Spectrum auctions are planned for the end of this year. The Dominican Republic have had spectrum auctions, and so has Brazil. Many of the other Latin American countries have not had their 5G spectrum auctions yet,” Kasavana says.
“Our expectation is that we are going to be building towers all over Latin America for the time to come. We will acquire tower portfolios where we see them, and we will partner with developers that are building in their own markets. And we will focus on next generation solutions too.”
The transaction was also significant more broadly for the digital infrastructure market by increasing 5G network access to underserved communities across Chile. The partnership between PTI and WOM is expected to reduce the digital gap in rural communities by enhancing 5G networks from Arica to Punta Arenas as well as rural areas in Chile.
The 5G network upgrades will provide world-class connectivity quality for the communities in Chile at an affordable cost. The transaction also enables PTI to continue with ESG initiatives, facilitating the transition from traditional energy sources to renewable, clean energy sources especially in generators and lightings.
PTI was founded in 2013 and is currently owned by Blackstone (90%) and Wren House (10%).
Sponsors: Phoenix Tower International, Blackstone Group, Wren House
Banks: Banco General, Banistmo, Bank of America, Barclays, BD Capital, Bladex, BNParibas, Credit Agricole, Deutsche Bank, First Citizens, Global Bank, Goldman Sachs, ING, JPMorgan, Mizuho, Morgan Stanley, MUFG, Natixis, Santander, Scotiabank, SMBC, Societe Generale, Towerbank
Law Firms: Albagli Zaliasnik, Allen & Overy, Barros Silva Varela & Vigil Abogados, BLP, Choate Hill & Stewart, Greenberg Traurig, Locke Lord, Moreno Baldivieso, Payet, Rey, Cauvi, Pérez, Pérez Bustamante & Ponce, PPU, Simpson Thacher, White & Case
Financial Advisor and Sole Lead Arranger and Bookrunner: Scotiabank
All supporting financial institutions and law firms were transmitted to LatinFinance by the award category winners. For updates please email email@example.com