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Tag Archives: Thomas Engel Milestone Media Partners

Smaller Deals Drive M&A Market

J. Sharpe Smith —

December 18, 2014 — While the deals are small in size, Milestone Media Partners experienced its best year ever in brokering tower deals in 2014. It participated in 30 transactions (including valuations) with 167 sites, and next year may even be better. In the first and second quarters of 2015 Milestone expects to close on eight transactions with 96 sites.

“The last four years have gotten progressively better for us,” Thomas Engel, Milestone principal, told AGL Link. “We entered the tower market in the mid-1990s and did eight to 10 transactions annually for the first 10 to 15 years, and that has grown to 30 transactions this year.”

The industry is being quickly consolidated into a dozen or so companies, and half of those companies will be consolidated into larger companies over time. The shrinking inventory of towers has forced buyers to look beyond cell towers to aggregate broadcast towers, according to Engel.

“It was difficult, three or four years ago, to sell a broadcast site,” he said. “Now we are seeing most of the larger to mid-size companies willing to acquire broadcast sites and even AM sites, which are difficult to collocate on. The AM sites are precious because of their locations, many of them are in areas where it is difficult to find places to develop a cell tower.”

Engel is seeing tower owners, especially broadcast and two-way radio companies, that in the past didn’t want to sell, begin to understand their ability to monetize these assets while they still need to use them by leasing back space. Two-way radio tower owners are selling their properties in parcels as they get ready to retire.
The multiples that Milestone Media saw in 2014 ranged from 14 to 23 on towers with multiple technologies and buyers with different levels creditworthiness.

“The multiples are high,” Engel said. “They are the highest I have ever seen them, partially because of interest rates and mostly because the inventory of towers is shrinking.”

Investment-grade carriers such as AT&T and Verizon have multiples going for as high as 24 to 29 on a single build to suit with room for multiple carriers in a good area.

“The buyer will pay a higher multiple, because they know there is additional collo revenue coming quickly,” Engel said. “The multiple goes down as it matures. As a tower gains carriers the multiple goes down by one to three.”

Sprint and T-Mobile are in the low 20s for multiples, while broadcast multiples range from six to 16. Multiples for WISPs run from eight to 14, multiples for government run in the nine to 16 range.

“The size of the multiple is impacted by the perceived future of the carrier. The broadcasting industry is in disarray. Some broadcasters are having trouble paying their tower rent, but others are strong players,” Engel said.

Bond Deal Keeps Capital Flowing at Verizon After Vodafone Acquisition

It has been a busy month at Verizon Communications, which acquired Vodafone’s 45 percent position in Verizon Wireless for $130 billion on Sept. 2.  A little more than a week later, the carrier rolled out a bond deal that netted $49 billion.

The Vodafone deal, which doubled Verizon’s debt load, might have sucked capital away areas such as infrastructure development if it weren’t for carrier’s blockbuster bond sale, Thomas Engel, principal, Milestone Media Partners, told AGL Bulletin.

“I would think that the amount of money Verizon is paying to Vodafone would cramp their capital budget and possibly slow their LTE build out, thereby slowing some revenue growth for the tower industry,” Engel said. “On the other hand, if the $49 billion bond sale goes through at today’s interest rates, Verizon will probably have sufficient funds to do both.”

Verizon will pay Vodafone $58.9 billion in cash, which it will fund with a $61 billion bridge credit agreement with J.P. Morgan Chase Bank, Morgan Stanley Senior Funding, Bank of America and Barclays.

The bond deal, which was the largest corporate debt sale in history dwarfing Apples’ $17 billion offering last spring, goes a long way to help pay some of that money back.

“This issue, combined with giving Vodafone holders $60 billion of newly issued Verizon shares, and various other transactions, gets the whole deal paid for before long-term interest rates rise even more…” wrote Allan Sloan in CNN Money.

As a wholly owned entity, Verizon Wireless should be better equipped to take advantage of the changing competitive dynamics in the market, according to Lowell McAdam, Verizon chairman and CEO.

“The capabilities to wirelessly stream video and broadband in 4G LTE complement our other assets in fiber, global IP and cloud. These assets position us for the rapidly increasing customer demand for video, machine to machine and big data. We are confident of further growth in wireless, and our business in its entirety,” he said.