CTI Towers’ CEO, Tony Peduto, said he is hopeful about his company’s future with a new owner and a new sister company in an interview with AGL eDigest, now that Melody Investment Advisors has purchased his company.
Peduto explained that during the past two years, its backer, Comcast Ventures, was anticipating an end to its investment. For that reason, he said, CTI Towers was not allowed to make too many acquisitions, instead taking the time to increase its valuation multiple with lease-up. Now, CTI Towers should see renewed activity in the mergers and acquisitions market.
“We have a new pool of capital, and Melody is certainly looking to put money to work through new acquisitions,” Peduto said.
CTI Towers was formed in 2011 with an investment from Comcast Ventures. When Comcast Ventures’ investment was four and a half years old, CTI Towers sold 294 towers to InSite Wireless Group to provide a return for Comcast Ventures shareholders, Peduto said. Comcast Ventures took money from that sale and reinvested it in CTI Towers, which rebuilt the portfolio through acquisitions and build-to-suits through a joint venture with SCI Towers to more than 1,150 towers.
“And now, five years later, the market is still good for sellers,” Peduto said. “The multiples are good. Comcast Ventures decided to exit the market.”
Peduto said CTI’s management will remain in place. CTI’s joint venture with SCI Towers, which builds towers, is still in place. “Melody invests in management teams,” Peduto said. “They asked all members of the management team to stay on.”
In the spring of this year, Uniti Group sold 90 percent of Uniti Towers to Melody Investment Advisors, including 500 towers. The $220 million price tag was funded by Melody Communications Infrastructure Fund II, which is the same fund that will cover the purchase of CTI Towers. That makes CTI a sister company with Uniti (now Harmoni Towers).
“You have seen where Peppertree Capital Management invests in different companies out of different funds and those companies operate autonomously,” Peduto said. “CTI and Harmoni Towers combined will be trying to get the best returns for the investors of Melody. At the end of the day, it is all about leasing towers and working with our customers to get them to deploy quickly in a cost-efficient manner.”
CTI and Harmoni have had initial discussions about coordinating their operations, and Peduto said they plan to keep the communications lines open. “I have known Lawrence Gleason Jr. [president of Harmoni Towers] for years, ever since we both worked for American Tower. He is a good guy, and tremendous operator. In addition, Sonny Peterman, Harmoni’s VP of Sales, was one of the first people I ever met when I came to the tower industry from cable TV. I look forward to working with my colleagues to build first class companies under Melody,” he said.
Building towers for the purpose of relocating tenants from other towers that have higher rent continues, Peduto said. He said CTI Towers will be talking with the Harmoni Towers management team about coordinating tower builds, if someone wants Harmoni to build a tower to move a tenant from a CTI tower that has higher rent.