Highline do Brasil today announced an agreement to acquire Phoenix Tower do Brasil (Phoenix Tower) from funds managed by Blackstone Tactical Opportunities. Phoenix Tower is Brazil’s fifth largest independent tower company, owning 2.5k tower sites. Additionally, Phoenix Tower is a leading developer of small cell and distributed antenna systems in Brazil.

Currently, Highline has 713 total tower sites across Brazil, of which the company owns 580 and manages the remainder. Following the transaction, Highline will own more than 3.2k tower sites, across its portfolio in Brazil. In turn, the company will be positioned as one of the largest privately-owned tower and small cell companies in Brazil.

Highline do Brasil – Rapid Growth Ahead

In December 2019, Digital Colony Partners I, which is the digital infrastructure private equity fund of Colony Capital (NYSE: CLNY), acquired Highline do Brasil from Patria Investments. At the time, Highline had 315 tower sites and 180 Build-to-Suit (BTS) towers in its backlog, making Highline more of greenfield business plan for Colony. Indeed, Colony is now using Highline as a vehicle to consolidate the Brazilian tower market further.

Highline’s acquisition of Phoenix Tower will enhance the company’s ability to meet carrier’s increasing need for telecom infrastructure. Specifically, Brazilian carriers need to densify their 4G networks and roll-out 5G in Brazil. Carriers require this densification to keep up with the rapid growth in data consumption across the country.

Beyond towers, Highline’s growth also focuses on partnerships with shopping malls, real estate owners and hospitals to provide indoor connectivity. Additionally, Highline is pursuing fiber-to-the-home initiatives. However, in these fiber investments, Highline is entering into long-term 15-year to 25-year contracts with investment-grade customers. Specifically, Highline sells fiber capacity on a wholesale basis to telecom customers, in Brazil, after building the network for them.

Brazil Tower Operators

Overall, Brazil has 64.8k towers, giving Highline, including Phoenix Tower, a market share of ~5% of the total towers across the country. The largest independent owners of towers in Brazil include American Tower (19.1k towers), SBA Communications (9.9k towers), Grupo TorreSur (5.2k towers), and Telxius (3.9k towers). Additionally, the carriers in Brazil own a further ~19k towers, in aggregate.

Highline and Phoenix Tower – Transaction Details

Equity financing for Highline’s acquisition of Phoenix Tower was provided by Digital Colony Partners I. Additionally, Linklaters and Stocche Forbes served as legal counsel to Digital Colony.

Citigroup served as financial advisor to Blackstone. Additionally, Akin Gump Strauss Hauer & Feld and Machado, Meyer, Sendacz e Opice Advogados served as legal counsel to Blackstone.

Investors in Phoenix Tower do Brasil

In 2014, Blackstone Tactical Opportunities invested in Phoenix Tower International, a wireless cellular infrastructure platform focused on the Americas. In 2015, Phoenix Tower acquired 529 towers sites and a pipeline of 250 Build-to-Suit (BTS) projects in Brazil, from T4U Holding Brasil. As part of the transaction, the two companies merged into a new entity called Phoenix Tower do Brasil.

Further, in July 2018, John Hancock Life Insurance purchased a minority stake in Phoenix Tower International from funds managed by Blackstone Tactical Opportunities.

Adam Simmons is the Founder & CEO of Dgtl Infra. He started his career with an S&P 500-listed big box retailer, in an operations management role. Adam's entrepreneurial "itch" led him to start a 5G-driven company, focused on innovative retail solutions using augmented reality and shoppable videos, which was eventually sold to an advertising and consulting group. After, realizing the potential of 5G, Adam shifted his efforts towards investing in the "building blocks" of 5G - known as digital infrastructure, completing a number of strategic investments, buying cellular towers, data centers and fiber networks.

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