Born to Provide the Best Site-acquisition Service in the West

April 19, 2016

J5 Infrastructure Partners, recently formed through the acquisitions of Cortel and TowerCom Technologies, focuses on wireless deployment services.

Profile

By Mike Harrington

AGL Magazine May Issue — Jerry Elliott has a simple objective for his company: He wants it to be the premier medium-sized service provider to the wireless carriers in the western United States.

Elliott is the CEO of J5 Infrastructure Partners, an Orange County, California-based telecommunications service company formed in January 2016 through the acquisitions of Cortel and TowerCom Technologies, two wireless deployment companies that served the western United States. J5, which has offices in several western states, was created through backing from Ridgemont Equity Partners, a Dallas-based middle-market buy out and growth equity investor.

Through Cortel and TowerCom, J5 Infrastructure provides site acquisition, leasing, permitting, zoning, structural engineering, utility coordination and equipment installation services to the four largest wireless carriers in the United States and to other tower and infrastructure owners, and state and local governments.

Elliott, whose background includes stints as president and chief operating officer of Leap Wireless (San Diego) and chief administrative officer and chief financial officer of the Weather Company (Atlanta), has an LL.M. degree in taxation from the New York University School of Law. He says that site acquisition and architecture and engineering (A&E) are key to his company’s success.

“We don’t own towers, and we mostly don’t build towers,” Eliott said. “The vast majority of our work is site acquisition for new sites, and A&E for both new sites and changes and modifications to existing sites. About 90 percent of our business comes from leasing and zoning, real-estate work, and A&E. We want to add some additional service lines — such as RF engineering, network design and more construction management and compliance EPA work — but that’s the foundation we’re going to build on.”

Though still a brand-new company, J5 is already drawing on the synergy of Cortel and TowerCom to do site acquisition, new builds, zoning, real-estate amendments, new leases for a rooftop owner and A&E, as well as doing city, county and municipality approvals for both new builds and modifications. “We employ licensed professional structural engineers, civil engineers and electrical engineers who offer a range of services,” he said.

According to Elliott, one of the reasons that the service subsector of the telecommunications industry is attractive to J5 was that the industry is fragmented, with many companies providing services. “There are a few big contractors that do this work — Black & Veatch, Bechtel, General Dynamics — but they all subcontract work to different firms,” he said. “We do some work building towers in Idaho and surrounding areas, but it’s not the type of work that Cortel has historically done. Basically, our company serves as the project manager or construction manager, and we generally let other folks actually raise the steel up into the air.”

The Cortel/TowerCom Fit

Elliott believes that one of the great things about the Cortel and TowerCom acquisitions is that there is practically no overlap between the two companies. For example, one of the companies performs exclusively A&E services, and the other primarily performs real estate and site-acquisition services.

One of the companies does only work in California; the other doesn’t do any work in California, but has California virtually surrounded in terms of geography. Although one of the companies does work almost exclusively for Verizon, the other does almost all of its work for the other three carriers and very little for Verizon. “One of the reasons it was so advantageous for us to buy these two companies was because there’s such a complementary fit and because there’s very little overlap or duplication between the companies,” he said.

Elliott seems particularly excited about the principals of Cortel and TowerCom staying with J5 and continuing to run their respective businesses. “Actually, as a condition of doing the deal, we made sure they are staying, so we’re thrilled that they’re with us. And we’re going to integrate the two companies with any future acquisitions that we do,” he said.

It will be a process over time to integrate the two companies, so for Cortel and TowerCom people it will be business as usual for a while. “We are already doing some cross-selling and cross-marketing services,” he said.

J5 will continue to integrate the two companies during 2016 so that they’re not just two companies that happen to be owned by the same parent company, but are instead integrated and run as one company.
Meanwhile, J5 already seems to have the site-acquisition and A&E side of the business covered in-house, in both the Cortel and TowerCom arms of the company. “It seems like every week we’re hiring more people,” Elliott said. “We have more than enough work to do just in-house. It’s a better business model if we can keep it in-house as opposed to outsourcing. We’re going to continue to hire because of what seems like ever-increasing volumes of work from the carriers. All you have to do is watch 20 minutes of TV and you know that they all compete, saying their network is the best. Well, that competition creates work for firms like ours.”

The Road Ahead

During the next few years Elliott plans to expand J5 into the Pacific Northwest and particularly into the Seattle and Portland areas. He also plans to grow the company even more in Arizona, California and Colorado. “We’d like to continue to grow organically as strongly as the companies we acquired,” he said. “They’ve been growing very strongly and organically. But on top of that, we’d like to accelerate the number and series of our acquisitions, making quite a number of additional acquisitions. That’s where we’d like to be in five years.”

J5’s grand scheme is developing a bigger presence nationally. “We’d like to get more Verizon work in California,” Elliott said. “We could probably pick up some more firms in our footprint today, and Phoenix and Denver would be good candidates. We’re already in those markets, but we’d like to have a higher presence because they’re big markets. And I’d say the other big geographic area would be Texas. We’d love to get into Dallas, Houston, San Antonio and Austin. Texas is a gigantic wireless market. For the first few years we’re really going to focus on the area west of the Mississippi. We’re in the Southwest today, but we’d like to get a lot more business there.”

In the technical and infrastructure areas, Elliott plans to add some service lines and develop more expertise and skillsets involving small cells and DAS. “We’d also like to get more capabilities in the fronthaul and backhaul part of the wireless business,” he said. “Most people don’t think about the fact that there’s a huge wireline part of the wireless business. But there is. So we’d like to get more capabilities and resources around the wireline part of the business, particularly backhaul.”

When asked if growing a company into new markets and regions becomes easier after developing a large presence and knowing the ins and outs and rules and regulations of various areas, Elliott said, “It depends on what part of the business you’re talking about. The site acquisition business is a local real-estate business, so you need a local presence. The A&E work can be more centralized in different geographic areas. Our engineers are generally in a couple of locations when they’re doing work for towers and rooftops all over the western United States. So that’s not local, but the site-acquisition side of the revenue stream is local.”

J5 has no definite plans to expand eastward. “Whether we cross east of the Mississippi, I don’t know,” Elliott said. But the company remains confident, not only about its future expansion, but about the telecom industry in general. “There’s good visibility for the future of the industry,” Elliott said, citing 5G networks and the proliferation of small cells.

“It’s going to be really important for us to continue to build out — to acquire and grow our small cell and DAS capabilities,” Elliott said. “That has a big future. We see some of that work today; we’d like to do a lot more going forward.”

Mike Harrington is a freelance writer in Prairie Village, Kansas.