Brazil’s economy shrank by 1.9% in the year’s second quarter, the International Business Times reported. This downturn sent the world’s seventh-largest economy into a recession. Experts believe the country’s growth fell due low commodity prices, slow global growth, and high interest rates. American Tower owns 16,000 towers in Brazil, and SBA Communications owns about 7,000. While this market shows promise for the future, as it is ripe for consolidation, the weakening of the Brazilian real [currency] is affecting the tower companies. American Tower and SBA projected weakness in their guidance for the Brazilian market.
On the second quarter conference call, James Taiclet Jr., American Tower chairman, president and CEO, noted that he’s had the opportunity to interact with top officials in the Brazilian government, and hopes that the Brazilian president and finance minister will support mobile operations and encourage the deployment of 3G and 4G despite the economic struggles. “One of the government’s major goals as was portrayed to us was that they didn’t want backsliding from people who had made it in the middle class to backslide into a lower socioeconomic situation,” Taiclet said on the conference call. “I think with the new Finance Minister in place and government policies that he and President Rousseff are implementing, you’re going to see a comeback by Brazil over the next few years sort of on a larger scale.” If correct, the tower companies are well positioned for massive growth throughout the country.
Reader Interactions