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Tag Archives: Mike Belski

Tower Company/Carrier Economics Must Change – Panelists Say

By J. Sharpe Smith

April 26, 2016 — T-Mobile’s Allan Tantillo proposed and Vertical Bridge’s Mike Belski agreed that the current system of tower rent escalators and other amendment-related price increases will need to change in the future, during a panel at the Inaugural Wireless West Conference (WWC), held last week, in Anaheim.

WWC was presented by five state wireless associations, representing California, Arizona, Nevada, Colorado and the Northwest. AGL Media Group assisted with programming and the moderating of the panels at the two-day conference.

During the panel, “The New Economics of Wireless Infrastructure,” which was moderated by Pat Troxell-Tant, Solution Seven, industry experts agreed that the state of the wireless infrastructure industry is healthy, but it will have to adjust to the carriers’ dramatically changing economics.

The cost of spectrum is one of the factors that have changed the economics of wireless infrastructure, according Clayton Funk, managing director, MVP Capital. The AWS-3 auction brought a whopping $45 billion in bids in 2015, and this year the 600 MHz Broadcast Incentive Auction is estimated to bring either $25 billion to $30 billion, according to JP Morgan, or $60 billion to $80 billion, according to Kagan Media Appraisals.

“Because it has gotten so expensive to buy spectrum, the carriers have to become more creative in making their spectrum use more efficient, such as network densification and MIMO,” Funk said.
Other factors in carrier economics are infrastructure build out costs, which globally between 3G and 4G were $700 billion, and falling revenue growth.

“The model of spending significant capex dollars and not getting the same return on their investment doesn’t work,” Funk said. “Whatever 5G becomes, carriers will need to make it more profitable.”
As new technologies roll out, carriers will look for ways to use spectrum more efficiently, according to Tantillo, but carriers’ cost cutting will also extend to current macrocell infrastructure as their economic model shifts. As the carriers attempt to drive down the costs, especially in tower rent, tower companies will need to reevaluate their prices if they want the carriers’ business, he said.

“It is incumbent upon those tower operators that are seeing their business threatened to adapt to new ways to do business and to find more efficient ways to serve us,” he said. “We want to go on to those old macrosites, but maybe their model needs to change. Maybe that can’t come and say, ‘Every time you add a TMA [tower mounted amplifier] on a tower it is a $150 a month increase in your rent.’”

Tantillo believes that competition among the tower companies will drive down the prices for rent and escalators, as well as amendments.

“Who wants to keep my lease? Can I put it out to auction?” he asked. “There are some very aggressive tower companies out there that are looking to be fantastic partners with us.”

Tantillo wasn’t talking chump change, either. He spoke of offers to cut leases from $3,000 to $1,500 a month and to lower escalators from 3.5 percent to 2 percent.

“They are saying, ‘give us your list of sites, and we will make it worth your while,’” he said. “We will work with you today so that when the lease expires, we will be ready for you to go on to our site and we will lower the cost curve for you.”

Mike Belski, senior vice president of leasing and marketing, Vertical Bridge, acknowledged that some leases had become unsustainable after escalating for an extended period of time, and he pledged to work with the carriers to develop a new business model.

“So the challenge for us is the paradigm shift. We have to think about leasing differently. We never thought we would add so much equipment to these towers. Vertical Bridge wants to be a part of the solution and not part of the problem,” he said.

Carriers will aggressively take advantage of opportunities to lower their tower costs and tower companies will feel direct pressure, Tantillo said.

“The challenge to the major tower companies that have most of the tower portfolios is, do you want to lose $3,000 and possibly future business or give me a deal that makes me want to stay there,” he said. “Tower companies are going to be faced with some pressure to bring their cost structures in line.”

Gellman Hopes to Produce Sequel to GTP Success

Former Global Tower Partners executives Alex Gellman, Mike Belski and Bernard Borghei just couldn’t walk away from the cell tower industry. Less than a year after the sale of their towers to American Tower, the three have emerged as co-founders of Vertical Bridge Holdings, a privately-owned tower company headquartered in Boca Raton, Florida, that will focus on owning, operating and managing cell towers and rooftop sites in the U.S. Market.

Alex Gellman

Gellman

“When we sold GTP, we felt like we had unfinished business,” Gellman, company CEO, told AGL Link. “We saw the rapid emergence of new sites at levels that we have not seen in our industry for quite a while. We wanted to be a part of it.”

With the pipeline shifting from amendments to new leases, tower building is on the rise, according to Gellman. “The opportunities are to acquire as well as build. We are looking to do both,” he said. “We have good people, a good market and access to capital. Why wouldn’t we do this?”

Vertical Bridge recently completed two acquisitions expanding its sites portfolio in several states including Pennsylvania, New Jersey, Delaware, Florida, Georgia, Illinois and Texas.

“We acquired premium locations: some roof tops and some towers, well-tenanted (Verizon, Sprint, T-Mobile, AT&T) locations in good markets,” Gellman said. “It is a good start for us and we have an active pipeline for additional transactions queued up. More to come.”

Vertical Bridge plans to function very similarly to GTP, but will probably grow faster than that company did in the early years because of its established relationships with carriers and increased access to capital.

“We are going to grow pretty quickly. We are going to focus on building towers more than GTP did, but that is more of a function of the current market. Prices are pretty high right now,” Gellman said.

GTP was in business for 10 years and had a financial relationship with the Macquarie Group that lasted seven years. Gellman said the new company has no exit strategy.

“We are looking to build Vertical Bridge for the long haul. We believe the market is strong and it is a good, stable business,” he said. “Where we see our short term opportunities for growth is predominantly macrocell driven.”

Building the Team

Vertical Bridge has also announced the formation of its executive team. Along with Gellman, Borghei is senior vice president of operations and Belski is senior vice president of leasing and development.

Formerly with Brown Brothers Harriman, Bob Paige joined Vertical Bridge as senior vice president of mergers and acquisitions. Daniel Marinberg, previously with the international law firm Greenberg Traurig, is vice president and general counsel. Johnny Crawford, who was with SBA Communications, is vice president of development. Suzanne Docobo, a tax consultant for GTP, joined the company as vice president and corporate controller.