42497 - Phoenix Tower B4

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Summary of Investment Information

Project Number

42497

Company Name

PHOENIX TOWERS PARTICIPACOES S.A.

Date SPI Disclosed

Mar 20, 2019

Country

Brazil

Region

Latin America and the Caribbean

Projected Board Date

Apr 26, 2019

Environmental Category

B - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Gbl Infrastructure & Natural Resources

Industry

Telecommunications and Technology

Previous Events

Approved : Jul 9, 2019
Signed : Jul 25, 2019
Invested : Aug 13, 2019

Sector

Engineering Services

Project Description

Phoenix Tower do Brasil (“PTB” or “Phoenix” or the “Company”), an existing IFC investee company, has invited IFC to upsize its senior secured loan exposure from BRL150 million (~US$40 million) to BRL225 million (~US$60 million) to fund the expansion of its operations in Brazil.

Having recently acquired a competitor in Brazil, K2 Towers Brazil, the Company is seeking to “future-proof” its operations to meet the coverage densification requirements for Fourth Generation (“4G”) and future generations through small cells. The Company is also planning to build new Built-to-Suit (“BTS”) towers to meet the network expansion requirements of mobile network operators in Brazil (the “Project”).

IFC’s interest in the IFC’s interest in the Project is premised not just on supporting the growth of a performing client with a solid operational track-record, but also future-proofing Phoenix for the coverage densification required for the deployment of 4G and future generation networks in Brazil.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	19.64
Equity

Development Impact

Enhanced and expanded mobile telecommunications access: This Project expands tower sharing and enables mobile operators and internet service providers to share infrastructure cost and improve the quality and reach of their networks. In particular, the expansion will be achieved through the deployment of BTS sites for traditional coverage as well as small cell infrastructure which is an innovative technology in its nascent stage that brings better coverage to support data traffic in high density areas such as office towers and shopping malls. Expanded access to ICT technologies: The expected impact is on market competitiveness by supporting the growth of a second-tier provider deploying the innovation of small cell infrastructure that could potentially advance the market by pushing the incumbents to adopt the technology. While the tower sharing economy is moderately developed in Brazil with about 75,000 cell sites and 60,000 base stations deployed in Brazil with about 65% of the towers being independently owned, the tower sharing market is dominated by 3 large players who do not seem to be deploying the towers that are needed to support the higher data traffic densities required for 4G and 5G, or to be investing in small cell technology.

i. Long Term Partnership: The Project will further enforce IFC's long-term support to Phoenix as it seeks to consolidate its market position and evolve its tower sharing business model in the Brazil. Blackstone, the Sponsor, is pursuing a global digital infrastructure strategy and this Project will help strengthen this global relationship. ii. Financing Structure: IFC will support the client through the extension of a long tenor (8-year) local currency long term debt that is needed to support the client's CapEx program. This long tenor financing would be difficult to raise in the market for a mid-cap company.

E&S Category Rationale / Risks and Mitigation

IFC’s appraisal considered PTB’s record of E&S performance under IFC’s existing investment in the company. As noted above, PTB’s record of E&S performance is satisfactory. Under IFC’s proposed investment, PTB will implement and develop, as discussed under PS1, its existing E&S management system with respect to its acquired operations. Through continued implementation of PTB’s E&S management system, along with the application of any improvements as needed, the project is expected to be designed and operated in accordance with Performance Standard objectives.

As there are no major adverse environmental or social impacts expected to result from the proposed project, and it is possible to avoid or mitigate any limited adverse impacts that might result, the proposed investment has been classified as a Category B project according to IFC’s Policy on Environmental and Social Sustainability.

Contacts

For Inquiries About the Project, Contact

Phoenix Towers Participações
Helcio Squillante
Chief Financial Officer
+55 11 981381045
hsquillante@phoenixtower.com.br
Av. Engenheiro Luis Carlos Berini, n0 105, 32 , andar Ed. Berrini One-Sao Paulo/BR
http://www.phoenixtower.com.br/

For Inquiries and Comments About IFC, Contact

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IFC Communications
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

Local Access of Project Documentation

Phoenix Tower Participações

c/o AV; Luis Carlos Berrini N. 106 – 32 Floor

São Paulo – SP - Brasil 04571-900

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. Its purpose is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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