5G and FTTH/B require telco investment in expanding, densifying, and future-proofing their networks – towercos and fibercos can help. These requirements can be significantly capital-intensive and not always commercially viable without government incentives (e.g., in sparsely populated areas).

As such, telcos must act strategically by sharing deployment costs, monetizing their assets and attracting new capital.

Telcos have a diverse set of options when it comes to monetizing their fiber and tower assets. They may consider selling/offloading part of their tower or fiber assets as Telefonica group did when it sold Telxius, or drawing them into a joint venture while co-investing in their extension.

They can sell off their assets entirely – a move that other towercos or fibercos can exploit to achieve larger scale. Towerco American Tower Corporation, for instance, has capitalized on this trend to grow from a minor towerco in the US in the mid 90s to the largest in the Americas. Telcos can also spin off part/all of their fiber assets and/or their tower asset into separate fiberco/towerco companies, as America Movil did with Telesites.

They can also go a step further by opening the capital of their fiberco/towerco to third party investors – e.g., pension funds and private equity – or by conducting an IPO. Fibercos/towercos can be attractive to institutional investors that consider network investments as long-term utility-like investments with reduced risks. An example of this is InfraCo, a Chilean fiberco created by Movistar Chile in June 2020 and sold in January 2021 to venture capital KKR for US$600 million for 60% of the company.

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Monetization may become more challenging in the future, though, as fibercos and towercos find themselves competing for the same pool of customers. As such, longer term growth strategies should consider capturing new revenue streams in areas including edge computing, IoT, private networks and attracting a new breed of customer – e.g., data center providers, the vertical industries for private networks, and utilities for IoT smart metering networks.