Communications mast specialist Phoenix Tower International could spend €75 million in the Republic over the next five years as demand for wireless infrastructure continues growing, according to its chief executive, Dagan Kasavana.
The Florida, US-based multinational recently completed a €937 million deal to take over rival Cellnex’s Irish network. It formally opened an office here, serving as a local base and hub for elements of its European operations.
Now that it has secured Competition and Consumer Protection Commission (CCPC) approval for the Cellnex deal, Kasavana predicts that Phoenix will continue investing in the Republic where it is now the biggest player in its industry.
“We probably have designs for a couple of hundred [new towers] in the next five years,” he says. “We think we’ll spend about €75 million. That will be a combination of new towers that are coming in as well as buying land under our towers and potentially investing in networks.”
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There is a “massive” need here for new tower sites, he believes. Artificial intelligence and its growing list of allied technologies will need “significant wireless density” and towers will provide the hubs for the necessary infrastructure to support that.
“So, we think we’re an important business that will only get more important as more entertainment, education, health and transportation are all delivered wirelessly.”
Telecoms networks including Eir, Three Ireland and Vodafone are among Phoenix’s biggest customers. However, Kasavana stresses that the company is open to doing business with any organisation licensed to use the State’s wireless communications spectrum. In other territories, it provides space on its masts to undertakings including broadcasters and emergency services.
“It is steel masts, generally poles, a terrestrial network of steel infrastructure that ultimately you can hang anything on,” he explains. “We are open access. We put as many users as want to use our towers on our towers.”
Phoenix builds the towers on which its customers hang the equipment that facilitates wireless communications. The company owns the towers and often the real estate where they are located but its customers are responsible for the operation, maintenance and upkeep of their own equipment.
“That is our customers’ business; they should have full control over their equipment,” says Kasavana.
Established by its chief executive in 2013, with private equity giant Blackstone as its majority shareholder, Phoenix has 29,000 towers located in 23 countries across the US, Latin America, the Caribbean and Europe, where it operates in six EU member states. It generally occupies a top-three position in the territories where it does business. It is number seven in the US.
Mobile networks account for 80 per cent of revenues, which Kasavana calculates will hit $1 billion this year. That will generate about $500 million in cash. “It’s a high-margin business,” he notes.
Phoenix is one of 10 such companies in the Republic, although Kasavana notes that five of these account for much of the market, as several operators do not have national coverage. Vodafone spin-off Vantage is the second-largest player. Nevertheless, the market here is competitive, he acknowledges.
The Phoenix chief executive would at this stage be very familiar with the level of commercial rivalry in his business in the Republic. Phoenix spent a year obtaining CCPC approval for the Cellnex takeover and had to sell 300 masts as a condition of getting it over the line.
The commission also imposed guidelines that Phoenix must follow when building new towers, so Kasavana expects to continue dealing with the regulator.
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“It was a long process and, candidly, the CCPC wanted to get it right so we certainly co-operated with them throughout,” he says. The competition regulator needed time as it had little in the way of precedent to aid decision-making.
While clearing the deal took time, Kasavana does not see this as unusual. “We do business in 23 countries across the world. We respect the countries we do business in. Ultimately, we wanted to make sure that there was positive outcome for all parties,” he says.
Planning permission and electricity supply are key issues for the company. “In terms of the permitting, it’s gone faster than some markets that we’re in, and slower than others. It’s not an outlier in any way shape or form.
“Usually in developed markets such as Ireland, where land can be scarce in some parts of the country, it takes longer to get permits. We certainly have that issue in the US as well; it’s not something that has slowed us down significantly.”
Dealing with electricity suppliers to get power to its sites can be “cumbersome and bureaucratic” at times, he concedes, “but are there other countries where it’s cumbersome and bureaucratic? Absolutely. It’s something we continue to work on.”
Phoenix now employs 40 people here, mostly accountants, asset managers and other professionals, all of whom Kasavana says are “outstanding”. The Dublin office has responsibility for elements of its European businesses also, including regional strategy, human resources and general counsel. The company has operations in Cyprus, France, Germany, Italy and Malta.
Establishing a base here was very easy, he says. He feels Irish business culture is transparent. The fact that it is an EU member is also important, particularly as Phoenix is keen to invest in the bloc.
“The regulatory environment in the EU is helpful for investment, both as we enter EU markets and if we were to look to exit any market,” he says. “Definitely, as an American investor, we thought that that was a better, safer place to invest in.
The EU gets a lot of flak, including from the White House, for being overly bureaucratic and anticompetitive. Does he agree?
“I think, in general, any entrepreneur will say we want to go faster. If there was any type of concern, it would be on the speed of decision making. However, the EU has been incredibly welcoming.
“All of those markets I just mentioned, we were able to set up shop quickly. Would we like decisions to be made quicker? Would we like the regulatory bodies to promote the industry? Absolutely. Have they done that? Yes.”
