DigitalBridge Group said today that funding from DigitalBridge Investment Management, the company’s investment management platform, has been used to complete the acquisition of a controlling stake in Vertical Bridge Holdings. According to DigitalBridge Group, Vertical Bridge Holdings is the largest private owner and operator of wireless communication infrastructure in the United States.
Since its founding in 2014, Vertical Bridge has rapidly expanded its portfolio to include more than 308,000 owned or master-leased sites, including over 8,000 towers in the United States. DigitalBridge said it will continue this trend as it addresses the growing need for 5G services created by the continued popularity of next-generation digital devices in the U.S. telecom infrastructure market.
J.P. Morgan Securities served as financial advisor to DigitalBridge Investment Management in connection with the transaction, and Vinson & Elkins served as legal counsel. Goldman Sachs & Co. acted as financial advisor to Vertical Bridge, and Greenberg Traurig served as legal advisor.
“We are pleased to extend our longstanding relationship with Vertical Bridge, the industry’s leading independent tower platform led by the preeminent tower management team,” said Steven Sonnenstein, senior managing director of DigitalBridge Investment Management. “The rapidly increasing demand for telecommunications infrastructure in the United States has created exciting and meaningful opportunities for long-term growth. Our ownership position in Vertical Bridge is representative of our conviction in its future.”
With a heritage of more than 25 years investing in and operating businesses across the digital ecosystem including towers, data centers, fiber, small cells and edge infrastructure, DigitalBridge Group, formerly named Colony Capital, has had a complicated — albeit lucrative — financial history.
In July 2019, Colony Capital purchased for $325 million a company Marc Ganzi, DigitalBridge president and CEO, founded and led as CEO, a company called Digital Bridge, with a space between the two words in the company name. Digital Bridge owned a broad range of communications infrastructure including Vertical Bridge and ExteNet Systems, and Colony Capital was primarily a global real-estate investment firm. At the time, Colony Capital reported that during the next two years, Ganzi would transition into the role of CEO of Colony Capital, succeeding Thomas J. Barrack Jr. Ganzi also was a managing partner at Digital Colony, which Colony Capital acquired in 2019.
Prior to being purchased by Colony Capital, Digital Bridge was a holding company that invested in telecommunications infrastructure. Founded in 2013 by Ganzi and Ben Jenkins, the holding company initially focused on cellular infrastructure, but later expanded to data centers, fiber networks, and other areas. In 2017, it bought data center company Vantage Data Centers Management for more than $1 billion.
The book Fauxliage by Annette LeMay Burke contains 60 color photographs of disguised cell phone towers of the American West. Burke, a photographic artist, captured images of often-whimsical tower disguises during six years of travel. The photographs also are available in 17×22 and 30×44 prints, with individual commissions for larger sizes.
“I live in Silicon Valley,” Burke said, in an interview with AGL Magazine. “I used to work in tech, so I’m used to having a lot of technology around me. I first noticed these disguised trees in the early 2000s. Even in Silicon Valley, they stood out as a little odd. They amused me. Eventually, I started a photo project.”
Writing in her book, Burke said that the more she photographed the towers, the more disconcerted she felt about technology clandestinely modifying the environment.
“Would our children soon accept these towers as normal?” she asked. “I began to explore how this manufactured nature had imposed a contrived aesthetic in our neighborhoods. My photographs expose the towers’ idiosyncratic disguises, highlight the variety of forms and show how ubiquitous they are in our daily lives.” Because the towers are mostly fake trees, Burke called the photo series Fauxliage.
Some of Burke’s search for towers to photograph simply involved a lot of driving around.
“It’s much easier when you’re the passenger, just to look around,” she said. “Many times, I would take scouting shots with my cell phone just to get the GPS and then go back later. I would ask people who live in the area where good ones are. Also, the internet is just a great research tool.”
Burke said she has a degree in geology, and she is interested in the natural world and how people interact with it.
“I’m used to looking at the landscape,” she said. “I’m interested in artifacts that we leave behind. This could be something that technology has left behind, these cell towers.”
Despite the quirky disguises that can be entertaining to look at, Burke wrote in her book, the towers present privacy and environmental concerns. “The often-farcical pole disguises belie the equipment’s covert ability to collect all the personal data transmitted from our cell phones,” the book reads. “Our social media interactions, advertising clicks, location tracking pings, audio recordings by the always-listening Siri and Alexis, are all commoditized, sold and stored by Big Tech and the government. Surveillance capitalism, especially perfecting the algorithms that can predict our behavior to advertisers, is big business in the 21st century.”
Commenting about the cell towers disguised as saguaro cacti, Burke said, “They are my favorite. The ones I photographed are in the Phoenix area. They are very well disguised, I think, because they can be shorter. It helps them to fit in a little better. The designers go to great detail. The little cactus spines are all airbrushed individually. They have re-created the little birds’ nest burrows in there. They are really great.
Burke maintains a website at www.atelierlemay.com, where it is possible to obtain signed copies of the book. Daylight Books publishes Fauxliage by Annette LeMay Burke; visit www. daylightbooks.org/products/fauxliage.
Don Bishop is executive editor and associate publisher of AGL Magazine.
The largest private owner and operator of communications infrastructure in the United States, by its own account, Vertical Bridge manages more than 300,000 properties. The company’s vice president of tower development, Ariel Rubin, said that Vertical Bridge builds towers with a focus on increasing its return on investment (ROI). Rubin spoke during an AGL Virtual Summit in June at the session, “Increasing ROI at the Tower,” moderated by Spencer Kurn, an analyst who leads coverage of U.S. towers for New Street Research.
Tower construction affects Vertical Bridge’s capital expense (capex), as reflected in the cost to build the sites, and affects the company’s operating expense (opex), Rubin said. Controlling those expenses helps to raise the company’s ROI.
“On the capex side, we have a great network nationwide of partners that help us not only with the services side, which include everything from site acquisition to engineering services and environmental services, but also one of our largest costs, steel and the towers we procure,” Rubin said. “The network of vendors that provide us with steel and being able to have ready access to sites anywhere in the country have been helpful at keeping some of those costs down.”
Construction is another large capex component, Rubin explained. He said Vertical Bridge has networks of regional contractors and nationwide contractors that help the company when it needs more volume in certain regions or when it needs more specialized contractors in some other markets.
When it comes to capex, Rubin said, “the less you spend, the better your returns will be. More importantly, as we look at ROI and how it’s tied to tower cash flow, the more we can keep of the rent we collect on a site is directly reflected on the return on that particular site. Thus, the operating expenses that each site incurs are one place where we looked and made sure to focus on as we build new sites.”
Rubin identified six items of opex that primarily affect tower cash flow: ground rent, maintenance, utilities, monitoring, insurance and taxes.
“The largest is ground rent,” Rubin said. “We always look to have long-term rights, or purchase the land, or have long-term easements on a property. That helps us control some of the ground rent costs that we incur.”
Vertical Bridge must maintain its sites properly, and it acquires sites with maintenance in mind. Although sites with long access roads or otherwise designing sites that would be expensive to maintain, although perhaps not costing significantly more initially, affect the company’s cash flow because those sites would need to be maintained for years and years, Rubin said. As a result, Vertical Bridge takes maintenance into consideration when designing and building the sites.
As for utilities, Rubin said Vertical Bridge typically does not have high utility costs, but it pays for tower lighting and some power accounts.
“We’ve worked with federal agencies on eliminating nonflashing lights,” Rubin said. “As an example, we were going to LED lights that not only help us reduce some of our opex costs and bring down our utility bills, we’re also helping reduce bird collisions and reducing some of the effects that our towers have in the environment. We’ve seen cost savings from $500 to $1200 to $1300 a year in power bills. We make sure that as sites are being put up, utility costs are minimized for years to come.”
Rubin said that monitoring and insurance costs are somewhat more difficult to control on a site-by-site basis. He said Vertical Bridge’s size helps the company to negotiate, because of the volume of sites.
“If somebody could figure out how to pay less taxes . . .” Rubin mused. “That’s something that we’re subject to. That’s another expense that affects our tax control framework and our return on a particular site.”
Session moderator Kurn said that controlling expenses is one side of the ROI equation — the other, improving tower lease-up.
Rubin then spoke about Vertical Bridge’s large portfolio of broadcast towers and tall towers, aside from what would be called the traditional towers for carriers. He said Vertical Bridge has been able to make the broadcast towers available for use by wireless carriers.
Meanwhile, Rubin said, the broadcast towers typically have a significant amount of land beneath them, and that is where edge data centers come in as additional lease-up.
“We have enough ground space to not only offer for edge computing, but also solar and some other applications,” Rubin said. “We to work with government entities and wireless internet service providers (WISPs). WISP rollouts are more regional, and we see groups of activity here and there. It’s a mix that continues to grow, but nothing significant at least on the new tower development side. Once the towers are up, this is where a lot of these new opportunities are coming into play.”
Vertical Bridge capitalizes on the edge computing opportunity with existing infrastructure and with what Rubin called edge-to-suit.
“We work not only with the direct carrier contacts that we have at Vertical Bridge, but also we have partnered with our sister companies. DataBank and EdgePresence, and are able to use our existing infrastructure and leverage that from some of the contacts that they bring where we can find some synergies in optimizing the use of our assets,” Rubin said.
“The second part is what we like to call edge-to-suit, which is leveraging our site acquisition teams and development teams to identify, lease, permit and build out to your power and fiber-ready location. It’s kind of like a build-to-suit, but just for edge services. We have the team in place. We think about longer term, making sure we have the ability to put up a tower if needed, but providing that service to our carrier, contacts, just for the edge solution that they need. We have the knowledge.We don’t necessarily have to go put up a tower on day one, but it’s a lot of the same skill set that we already have that we’re using on a daily basis. Using our existing infrastructure and our existing knowledge —that’s where the opportunity for us is key.”
For the June 8 AGL Virtual Summit, Total Tech sponsors included Raycap, Valmont Site Pro 1, Vertical Bridge and B+T Group. Tech sponsors included Alden Systems and Aurora Insight. Viavi Solutions sponsored the keynote address. Additional sponsors included Gap Wireless, NATE, VoltServer and WIA.
J. Sharpe Smith programmed the Summit, and Kari Willis hosted. AGL Media Group has scheduled the next AGL Virtual Summit for Sept. 8. To register, click here.
Don Bishop is executive editor and associate publisher of AGL Magazine.
Dish Network and Vertical Bridge REIT have reached a long-term agreement granting Dish access to Vertical Bridge’s portfolio of towers, rooftops, utility transmission structures, billboards, convenience stores and other sites used for wireless infrastructure deployment. Vertical Bridge has a portfolio of more than 300,000 sites in 50 states and Puerto Rico.
“Building a national 5G network requires an extensive presence across urban, suburban and rural areas, and Vertical Bridge’s portfolio offers Dish the array of coverage that we need,” said Dave Mayo, Dish executive vice president of network development. “As we continue to deploy Dish’s 5G network, Vertical Bridge’s assets, experience and commitment make them an invaluable partner.”
Alex Gellman, CEO and cofounder of Vertical Bridge, said that the tower company is committed to assisting Dish in its effort to build “a truly unique” 5G network. Just a couple days after the signing of the lease agreement, Dish had already begun signing lease agreements.
“It’s nice to get this important step behind us, so that we can really get to work on identifying sites, vetting them, leasing them and helping them get them built,” Gellman said.
In 2020, Dish became a nationwide U.S. wireless carrier through the acquisition of Boost Mobile. The company is building a cloud-native, Open RAN-based 5G broadband network. Now it is under pressure to build out a 5G network before FCC deadlines that require it to use its spectrum.
It is the second tower leasing agreement that Dish has signed. Crown Castle announced a long-term agreement with Dish last November through which the tower company will lease Dish space on up to 20,000 cell towers. Gellman said he believed Dish was drawn by the fact that Vertical Bridge is the largest private tower company and growing quickly, as well as the relationships developed over the years.
Vertical Bridge added more the 1,000 owned towers to its portfolio in 2020, including those from its acquisition of towers from Cumulus Media, its merger with Eco-Site and with newly built towers.
“Dave Mayo and I have known each other for a long time, since back when he was with T-Mobile and I was with Global Tower Partners. And a lot of his staff are known to us at Vertical Bridge,” Gellman said. “We are growing really fast. We are private, so we can be pretty flexible on some things that help them get going.”
One point of flexibility is amendments. With Vertical Bridge, the carrier can install whatever equipment it likes on a RAD center within certain wind loading criteria, as opposed to paying for each amendment to the tower.
“Bucket loading, to me, makes more sense, because it’s a real estate structure. It’s more of a square-footage play,” Gellman said. “We’re a real estate company. Our job is to deploy capital, buying and building assets, and then renting them to customers who are healthy and are happy being there. So, I don’t mind at all, a structure that allows tenants to operate efficiently in the space. It’s easy for them, and that’s good for me.”
Gellman admitted that Dish has a “gargantuan” task when it comes to building out a nationwide 5G network from scratch. He said that Vertical Bridge’s philosophy of being “fast, flexible and friendly” will help the carrier move quickly.
“We respond very, very quickly and are cognizant of how important timeliness is for them, which is important for any of our customers but especially for Dish,” Gellman said. We must be flexible with what they need so that we can help them get things done, and then the friendly part is, really, to keep an open line of communication so that we can deal with whatever may come along.”
After their company was acquired by Vertical Bridge, Eco-Site’s co-founders Dale Carey, Bob Glosson and Rich Stern joined the tower company’s executive team. Carey serves as executive vice president of strategy and convergence. Glosson is senior vice president of real estate solutions, and Stern is senior vice president of real estate.
“The other thing that’s really beneficial for us is, with the recently completed merger with Eco-Site, we added a lot of talent to our team,” Gellman said. “So we’re in a good position to really bear-hug the Dish opportunity and really apply a lot of resources to it.”
Gellman doesn’t believe the Dish agreement will result in a lot of growth for his company in 2021. “This year they’re going to be identifying and doing a lot of work on leasing sites,” he said. “I don’t think their rent will commence for until next year. So I think it’s going to be a build over time in terms of the impact on our income statement.”
Mid-year 2022 is Dish’s deadline to cover 20 percent of the population. A year later, mid-year 2013, that coverage requirement jumps to 70 percent, but Dish can get an extension if it reaches 50 percent population coverage.
Bernard Borghei, executive VP of operations and co-founder of Vertical Bridge, spoke with eDigest on the key issues and trends facing the tower industry as we end 2019 and set off on the new year.
How did Vertical Bridge perform in 2019?
Despite the pause in activity from some of the carriers, we still had a very good year. The business grew at a very attractive rate, from a leasing standpoint.
We had a tremendous year when it came to building new towers. We set another record in terms of new towers built. It was in the hundreds. Some were capacity fill-ins in suburban areas. A majority of the sites were in what I call new frontiers, areas where their coverage was being expanded.
We will carry that momentum from the fourth quarter 2019 into the first quarter of this year. Our fourth quarter was pretty active and ended up pretty strong, because we had a lots of projects that had already begun earlier in the year.
The effects of a pause and pull back are usually not felt until the following months.
What is your take on the Sprint/T-Mobile merger?
Final arguments are scheduled for Jan. 15 and the judge will take three to four weeks to render a decision. It is hard to say. We have spoken to people who attended the court case and they all walked away with different reads.
If it goes through, we are very positive about the merger. We believe it will make the industry more competitive. You will see some integration activities between TMO and Sprint to begin with, but then the focus will turn to building out the new TMO network based on their commitments made as part of the merger. One thing is for sure, if it goes through, you will see a stronger T-Mobile come out and push hard to meet all the promises that it has made to the FCC and the DoJ.
If the merger doesn’t go through, some say the pressure will be off AT&T and Verizon. I don’t know if they can relax. We saw T-Mobile add 7 million new subscribers in the fourth quarter, despite the pending merger.
It would break my heart if the Sprint/T-Mobile merger did not go through, because they have made such strong commitments to expand rural coverage, which I really think is needed for all of our citizens in those areas to gain access to broadband services. All carriers have plenty to do to expand their footprints in rural areas.
One thing is for certain. The fate of this merger should not have taken this long to be decided. No industry can flourish in an environment of uncertainty and this merger has brought an extended cloud of uncertainty that was not necessary. I just hope that we get finality in this case as quickly as possible so we can move forward, one way or another.
In 2020, the FCC’s attention will shift to mid-band spectrum. How will that impact towers?
I think the C Band auction will be very critical for the carriers, knowing how important it will be for 5G networks, and the bidding may be very hotly contested. Depending on how much money the carriers will need to bid in order to get the spectrum in the markets that they need, that may have an impact on their network expenditures in 2020. After the awarding of spectrum to the carriers, historically there is a lag time of nine to 12 months before the new spectrum is deployed in the marketplace.
The C Band is the last attractive band for macro-tower buildings in the foreseeable future. The CBRS auction is going to be important, too, but with all the coordination with the Naval radar stations and the division between the general-access and the priority-access licenses, it will not be as straight forward for the carriers to use it. But the C Band frequencies are perfect spectrum where they sit. Unless we start taking away other parts of spectrum from the military or other sectors, C Band may be the last piece of attractive spectrum made available to carriers for a long while, which can be used on macrotowers.
Will we see any impact on macrotowers from the millimeter wave auctions?
There is a lot of technical debate about how effective millimeter wave frequencies will be in a macrotowers environment or whether they should be considered only for small cells.
What deployment trends from 2019 will carry over to this year?
T-Mobile has been aggressive about its 600 MHz buildout. There is a decent level of activity that we continue to see from T-Mobile. AT&T has continued to deploy FirstNet sites and upgrades to existing sites. They continue to add capacity in various markets. There is a steady level of investment from Verizon. They never get too hot or too cold.
Are you optimistic about future growth of towers in a 5G world?
If 5G is going to consist of broadband, ultra-low latency networks, with the speed the 5G standard is requiring, a lot more sites are needed to accommodate the promise of 5G. I think the U.S. tower sector can easily bank on 30,000 to 40,000 more towers in the next five to 10 years. I see plenty of growth opportunities for new sites. Our sector will remain extremely attractive.