All the drama may not affect the largest tower companies much. Some of the smaller ones, maybe. Factors that bubbled out during the Wireless Infrastructure Association’s Connectivity Expo last month involve disruptive infrastructure investors who are acquiring towers and building new towers. In this context, disruptive means an something that creates a new market and value network and significantly affects the way a market or industry functions.
What it means for the tower business is that some new infrastructure investors are — in the view of seasoned tower operators — paying too much for towers they buy and not charging enough rent for towers they build. Some of these investors have had hot hands when they invested in other markets. Having a hot hand means that success in one endeavor tends to be repeated in the next endeavor. Believing in hot hands is human nature and a fallacy and maybe some business babble — sorry about that.
“An infrastructure investor is primarily focused upon preserving value and providing moderate returns,” according to Joel Moser, CEO of Acquamarine Investment Partners, who writes about infrastructure investing for Forbes.
When an investor pays too much for a tower, the return may be slim to none, and that puts an investor in a jam.
According to Ron Bizick, CEO of Tarpon Towers — let’s call him one of the seasoned investors — “The only thing that gets you out of a jam is lease-up, right? So if you can last long enough and capture some lease-up, you should be fine.” That’s what he had to say about it at Connectivity Expo.
But maybe not if you don’t charge enough rent.