Russia, the world’s largest country by land mass, has an offer some adventurous towerco titan might find inviting, a challenge too hard to resist. Across its vast expanse, thousands of wireless towers worth $1.5 billion are coming up for sale, a rare investment opportunity for foreign buyers as the country’s mobile carriers shed assets to raise funds.
PJSC MegaFon is expected to sell about 14,000 towers, VimpelCom Ltd. About 10,000 as soon as year’s end, and state-backed Tele2 Russia could peel off as many as 42,000 ground-based towers after spending years raising structures from St. Petersburg in the west to Vladivostok in the east. But, as Bloomberg.com reported, Russia is entering its second year of recession and all three cellular giants are preparing to divest their infrastructure.
While independent landlords in the rest of Europe and the United States have bought up thousands of towers only to rent them back to the previous owners, Russian operators until now have been reluctant to relinquish ownership. But President Vladimir Putin’s annexing of Crimea, coupled with a slump in oil prices and U.S. and EU sanctions limiting Russia’s access to capital markets, have crushed the strength of the ruble and sent the country into a economic tailspin that could force towercos to put as many as 30,000 towers on the market as the operators look to generate cash, Bloomberg.com said. All totaled, Russia has about 117,000 towers and rooftop masts, according to TowerXchange.
Investors from Australia’s Macquarie Group Ltd. and Abu Dhabi’s Mubadala Development Co. are reportedly backing local bidders while others in Europe and the U.S. are staying home, dissuaded by the potentially toxic blend of operational and political risk.
And political economics is just the tip of the iceberg, so to speak. Managing towers in Russia is a challenge. Consider that the gear has to withstand Siberia’s extreme winters. And then there are the criminals in sparsely populated areas who steal tower equipment to sell for scrap. And then there is the great symbol of Russia – bears – who impede construction sites and scratch their backs against the fences built to protect the tower sites.
Reader Interactions