All panelists agreed that the business of developing towers, really in any scale, is alive and well, Jan. 24, during the AGL SoCal Summit roundtable, “The Business of Wireless Infrastructure: Forecast 2019.” The panel, moderated by Don Bishop, executive editor, AGL Magazine, discussed the continuing need for cell tower developers and some of the opportunities that exist out in the marketplace.
Demand for towers from carriers continues unabated, according to Don Van Splunteren, global VP of sales, Phoenix Tower International, whose company is growing through both building and buying towers. Allan Tantillo, VP of new technologies, Vertical Bridge, agreed that “tremendous opportunity” still exists to build towers.
Eliminating the digital divide in rural areas is a key driver have yet to be built out with cell towers. The fundamentals of the tower business model still work, according to Jason Caliento, executive VP – Network Strategy, Mobilitie.
“Building towers is still the most efficient way to get wireless broadband services deployed. It is the most efficient to get capital deployed in wireless networks. As we look at the fundamentals down the road, closing the digital divide and building out the rural areas, it will be incredibly tower based,” Caliento said.
The business model for a small company build towers and sell them to a larger tower company still works, but it is getting harder, Van Splunteren said.
“The valuations of towers are getting higher, which sounds like a great idea because you can sell the tower for a high value, but the buyers are not interested,” Van Splunteren said. PTI owns 6,500 towers internationally and 700 in the United States.
Caliento agreed that good towers will always have value but keeping multiples in line with the cost of capital is more of a challenge today. “Smaller companies just need to find opportunities and build out particularly in rural areas,” he said.
Vertical Bridge has an aggressive build-to-suit program, according to Tantillo, but it works with smaller tower companies to develop and purchase their towers.
“Small tower developers play a really crucial role, because they play a really crucial role,” Tantillo said. “They have a special expertise and relationships in the local jurisdictions that larger tower companies don’t have the time or bandwidth to develop.”
Small tower developers have a special niche in the marketplace, according to Joe Mullin, chief technology officer, inSite Wireless Group,which has grown to nearly 2,000 towers in North America, the Caribbean, and Australia through acquisition, tower development and working with tower developers to find opportunities.
“Just like Congressman ‘Tip’ O’Neill once wrote the book ‘All Politics are Local,” all cell towers are local,” Mullin said. “People who live in the communities, with relationships with the carriers and the municipalities, are tuned into the local scene. They can build up a very support structure to produce good towers.”
Driving demand for towers is ample spectrum that has not been deployed yet, including 600 MHz being built out by T-Mobile, millimeter wave and the Citizens Broadband Radio Service at 3.5 GHz Band. Mullin also believes that the Sprint/T-Mobile merger will actually be a big plus for cell tower developers. 5G, with its emphasis on small cell densification, will actually be good for towers, he added.
“With the merger with Sprint, T-Mobile is going to be a much stronger company. They are going to want to build out their technology throughout the network,” Mullin said. They say 5G is going to be a threat to towers, but not so. 5G will evolve as an enhancement similar to 4G LTE, where it makes sense. There are a lot of great things going on that will help the tower industry. More equipment on the tower; more ways to service the insatiable demand for wireless.”
Tantillo noted that his former employer, T-Mobile, T-Mobile has pledged to roll out 5G on 600 MHz spectrum across every inch of the country, which will be an opportunity for the tower industry. He also noted opportunities in the Citizen Broadband Radio Service and broadcast towers.
“There are companies talking about using CBRS to augment coverage outdoors in the rural areas,” Tantillo said. “There is a whole revolution on the broadcast side that could impact towers they are switching technologies to ATSC 3.0, which will broadcast a signal that be received by phones, tablets and laptops with a special chip. We are the largest broadcast tower owner. American Tower has a big portfolio, as well.”