Regional Mobile Backhaul Leader Reaches Another FTTT Milestone
SEPTEMBER 23, 2013 —
CHARLOTTE, NC — (Marketwired) — 09/23/13 — DukeNet Communications, a leading regional fiber provider of high-bandwidth connectivity solutions for enterprise, data center and carrier businesses in the Southeast, proudly announces today that its Fiber-To-The-Tower (FTTT) initiative has reached another key milestone with more than 3,500 cell sites now connected with DukeNet-provided high bandwidth facilities. DukeNet operates more than 9,000 route miles of fiber optic capacity in the Southeast, and offers a wide range of solutions to meet carrier, wholesale and enterprise customers’ bandwidth needs.
“This milestone demonstrates DukeNet’s commitment to providing carrier grade network solutions that mobile operators expect to successfully deliver 4G and other enhanced services to their customers,” said Tony Cockerham, COO for DukeNet Communications. “We will continue to expand our next generation network to meet growing demands, and we’re already contracting to provide fiber connectivity to additional towers throughout 2013 and 2014.”
DukeNet currently provides FTTT services to all of the major wireless providers, most prominently in North and South Carolina but also including Tennessee, Georgia and Alabama.
“Our goal will always be to ensure our customers’ overall experience with DukeNet on Fiber-To-The Tower projects is excellent,” adds Cockerham. “DukeNet prides itself on providing reliable service while delivering sites efficiently. When it comes to mobile backhaul, we have a reputation for delivering positive results for customers with very high expectations. We seek innovative solutions for these demanding customer needs, and work around the clock to get the job done for them.”
According to Telecom Ramblings, DukeNet Communications is one of the top 10 FTTT providers in the United States and the largest in the southeast, based on number of towers in service.
About DukeNet Communications
Headquartered in Charlotte, N.C., DukeNet is a leading regional fiber network provider offering advanced data and high-capacity bandwidth services to enterprise, data center, government and carrier customers. Primarily serving the southeastern United States, DukeNet controls a 9,000 route mile fiber-optic network capable of delivering 100 Gbps services, enabling cloud computing and high-bandwidth applications for enterprise business. More information about DukeNet is available at www.dukenet.com. Follow us on Twitter @DukeNetComm.
If you look at a map of the railway lines, they look like the arteries that keep this country’s commerce alive. To companies like Parallel Infrastructure, a right of way (ROW) management and infrastructure development company, those lines snaking from city to city look like potential sites for cell towers or fiber-optic backhaul.
Parallel Infrastructure has expanded its client portfolio with ROW agreements in Pennsylvania. Contracts with SEDA-COG Joint Rail Authority, a regional freight service that serves central Pennsylvania, and Pioneer Railcorp, which operates the Gettysburg & Northern Railroad, add 207 miles of corridor. Parallel Infrastructure has agreements with 32 railroads that have a total of 2,100 miles of ROW running across 20 states. Eight of those railroads are in Pennsylvania.
Last year, the company signed 21 short-line and regional railroad agreements, bringing its total amount of managed right-of-way property to nearly 1,700 miles spanning 17 states across the country.
Parallel Infrastructure is on track to build 25 towers in railroad ROWs by the end of this year, and it has a goal of eventually building and operating 1,000 towers, according to Frank Chechile, company CEO. The landowners benefit through receiving a share of the gross revenue from the carriers.
“There continues to be strong demand for improving telecommunications infrastructure, and that means growth opportunities abound for right of way property owners,” Chechile said. “By entering into innovative revenue-share agreements, we help monetize our clients’ underutilized real estate without interrupting their core operations.”
Before Parallel Infrastructure will sign up a railroad, it evaluates the land assets of the right of way owner to determine what type of opportunities those assets represent.
“In every one of these railroads, we saw voids in the carriers’ coverage that could be served by the rights of way,” Chechile said. “In other cases, working with the carriers, we identify places where they would like to invest in their network, and then we see if we can fill that need by partnering with a right of way owner.”
Along with railroad ROWs, Chechile is seeing more opportunities to develop land owned by state and local governments. Allegheny County awarded Parallel Infrastructure the telecommunications facility development rights on 14 parcels, totaling more than 3 million square feet of underutilized county-owned land. By partnering with Jacobs Engineering, Parallel Infrastructure scouted and assessed sites that could be developed.
“With tightening budgets, government entities are making efforts to capture additional revenue by unlocking the value of their real estate,” he said. Along with telecom development, Parallel Infrastructure will also provide the county with access to its communications facilities to allow it to develop emergency management systems.
Parallel Infrastructure is is a subsidiary of Florida East Coast Industries (FECI), the commercial real estate, transportation and infrastructure sister company to Florida East Coast (FEC) Railway, and manages 470 route miles of FEC’s right of way land, which runs continuously for 351 miles from Miami to Jacksonville, Florida, traversing 28 cities. By the end of this year, the company will begin providing fiber-based backhaul and long-haul infrastructure along this corridor.
“It’s been more than a decade since the last fiber cables were installed along this 351-mile corridor,” Chechile said. “These new, low-latency strands can transfer large amounts of data faster and are in high demand.”
The fiber-optic network will be marketed to telephone and wireless carriers, utility companies, cable companies, data centers, municipalities, and other educational and healthcare businesses that transmit large amounts of data on a regular basis.
The sale of AT&T’s towers was predicted Jonathan Atkin, RBC Capital Markets last spring. The drums are again beating for a sale, according to Bloomberg, which reported that TAP Advisors and JPMorgan Chase & Co. are working on the sale.
The sale of the AT&T’s towers is an obvious way for the carrier to raise cash to fund its network upgrades, said to have a price tag of $14 billion.
In March, Atkin estimated that a deal could bring in mid-$5 billion or more for AT&T’s assets which include 14,500 sites, assuming roughly $400,000 per site. The portfolio includes 10,500 wireless tower sites plus additional assets such as wireline towers, distributed antennas systems and other infrastructure.
“We believe the AT&T towers and related assets have a tenancy level of >1.5 and could generate total cash flow in the low- to mid-$200 million range, although this depends on the specifics associated with the potential sales/leaseback terms,” Atkin wrote in March. Other analysts put the cash generated by the towers at more than $326 million in annual revenues.
Possible buyers are probably limited to Crown Castle International, SBA Communications and American Tower, which just purchased Global Tower Partners for $4.8 billion and NII Holdings’ 2,790 towers in Brazil and 1,666 towers in Mexico for $413 million and $398 million, respectively. SBA Communications expanded operations in Brazil with 2,113 towers to the tune of $302.6 million in July and 800 towers for $362.8 million in December 2012.
Because of those acquisitions, Jennifer Fritzsche, Wells Fargo senior analyst, said SBAC and American Towers are too heavily leveraged or otherwise too busy at this time to purchase the AT&T towers. That leaves Crown Castle as the logical buyer, according to Fritzsche. It has been almost a year since Crown Castle purchased T-Mobile’s portfolio of 7,180 towers for $2.4 billion.
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.
Jay Brown, Crown Castle’s chief financial officer, told an audience at the Bank of America Merrill Lynch 2013 Media, Communications & Entertainment Conference, Sept. 11, in Houston that the recent market volatility surrounding tower company stocks is the result of investor misconceptions about the nature of the wireless infrastructure market.
Brown warned against putting too much stock in beliefs that the carriers are going to dramatically increase money infused into infrastructure build out or that build out is going to grind to a halt.
“We take a much longer-term view of how the carriers are spending capital on their networks,” he said. “The reality is there is a balanced conversation that carriers have around allocation of funds from dividends, deploying sites and upgrading sites. Our experience has been that carriers tend to spend capital on a relatively steady basis.”
To divine the future of towers, Brown suggested that the audience should follow the movement of spectrum.
“Carriers have deployed about 300 megahertz of spectrum that is in the hands of the carriers and being used by consumers,” he said. “That has driven, across the industry, about three tenants per tower. That is the case with Crown Castle.”
Another 200 megahertz of spectrum is in the hands of carriers that have not deployed it yet, including spectrum owned by DISH, LightSquared and some of the 2.5 GHz spectrum. Additionally, the FCC is working on reallocating another 500 megahertz to mobile.
“People are saying there is a need for a lot more wireless service, and they want to get spectrum into the hands of the carriers. I think ultimately it will get deployed, and they are going to need towers,” Brown said. “I am not inclined to say that any one of the big four carriers is nearing the end of their build outs. There is a very long runway of steady growth. Trying to predict any decreases or increases is very hard to do.”
When asked about whether the growth of small cells is a threat to the growth of towers, Brown responded that small cells are complementary to tower development.
“We are incredibly excited about [small cells]. Both of our acquisitions of NextG and NewPath have done very well. It has allowed us to invest a lot of capital in an area that is growing with lease up demand from the wireless operators,” he said. “For the most part those small cells are being constructed where macrocells can’t reach. They are filling in the network and providing extra coverage and capacity that macro-towers simply cannot, but that doesn’t mean there is less of a need for the macro-towers.”