The success of the tower industry is leading to an increase in the number of companies owning towers. Outside of the big three public tower companies, Peppertree Capital Management estimates that the tower ownership industry has grown to include around a dozen mid-sized firms, a couple of dozen additional companies that build 10 to 15 towers a year and more than 60 companies that build to own less than 10 towers annually.
Even though more towers are being built by more companies, it appears that the great majority of the structures end up, eventually, being owned by the big three public companies. But although tower portfolios are bundled and sold, tower companies do not necessarily have to consolidate. In fact, in the case of Global Tower Partners, numerous wireless infrastructure startups have resulted from the sale of the company’s assets.
One of those companies is Blue Sky Towers, which gained debt and equity funding from Peppertree Capital Management to accumulate 700 to 800 cellular sites in the next five years, focusing on the top 20 metros for rooftops and the peripheral markets for tower deployment. It is headed by former GTP vice president of development Jim Rech and Tom Remillard, (formerly Wireless Realty Advisors).
Mandel believes the current business atmosphere can support the new entrants into the tower industry.
“The carriers are competing very vigorously against each other, and, obviously, there are more towers needed,” he said. “We don’t see any shortage of opportunity.”
Increased Interest in Investing Offshore
Domestic success has not kept U.S. companies from looking abroad for more opportunities. An increasing number of groups are seeking funding for tower projects outside the country, according to Mandel.
“As for geography, many U.S. investors will look at opportunities in the more Western-leaning countries of Europe. A subset of those investors is willing to consider Mexico, followed by an even smaller subset willing to go further into Latin America than Mexico,” he said. “As for the remainder of Europe, Africa and Asia, it’s a country-by-country analysis. It’s easy for an entrepreneur to say that ‘the wireless market feels like the U.S. in the 1990s,’ but it’s another thing for an investor to get comfortable with writing a check.”