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CoreSite Names Senior Leadership Following Acquisition by American Tower

Following its acquisition by American Tower, CoreSite has restructured its management, naming 10 individuals to executive positions, the company said. The hybrid IT solutions provider and subsidiary of American Tower said the management structure is designed to position the company for accelerated growth, while continuing to provide the native digital supply chain that it said its enterprise, network, cloud and service integrator customers have come to depend on.

With the changes, CoreSite is led by Juan Font, president of CoreSite and senior vice president of American Tower, reporting to Steve Vondran, an American Tower executive vice president and president of the tower company’s U.S. Tower Division of American Tower. CoreSite said Font is responsible for leading its strategy, innovation and growth while delivering value to the customers, partners, shareholders and communities where CoreSite and American Tower operate.

“The acquisition of CoreSite by American Tower enables us to create a differentiated, comprehensive, and interconnected communications real estate platform optimally positioned to benefit from the convergence of wireline and wireless networks amid accelerating global 5G deployments,” Font said. “This will allow us to continue to deliver on our commitment to future-proof our customers’ digital transformation strategies, now and well into the future.”

CoreSite said Font has held positions of increasing responsibility within the organization since 2010 and brings more than 20 years of experience in general management, direct sales, business operations and finance in the data center and telecommunications industries. It said Font will operate CoreSite as a standalone entity within the U.S. Tower division.

“In the short time that I’ve gotten to know Juan, I’ve been impressed by his passion for the CoreSite team and business, as well as the depth and breadth of his experience,” Vondran said.

Other CoreSite executives include Anthony Hatzenbuehler, senior vice president of data center operations; Maile Kaiser, senior vice president of sales and marketing; Aleks Krusko, senior vice president of IT and digitization; Leslie McIntosh, senior vice president of human resources; Brian Warren, senior vice president of development and product engineering; Matt Gleason, vice president of general management; Mark Jones, vice president and chief accounting officer; Adam Post, vice president of finance and acquisitions; and Janae Walker, vice president of legal.

Post and Jones are new to the leadership team and will take on leadership oversight for several functions, including acquisitions, investor relations, procurement and internal audit, CoreSite said..

Walker already was a member of the American Tower legal team, according to CoreSite. The company said Walker joins CoreSite’s senior leadership team with responsibility for the CoreSite legal function. She served as the lead attorney on the CoreSite transaction and brings experience with American Tower to the CoreSite team, the company said.

CoreSite said Matt Gleason is newly appointed to the leadership team and is responsible for the general management function as well as providing oversight for sales engineering and capacity inventory management functions.

Maile Kaiser broadens her responsibility on the leadership team with oversight of marketing, sales operations and the solutions architects in addition to maintaining responsibility for the CoreSite sales organization, the company said.

“The acquisition of CoreSite by American Tower enables us to create a differentiated, comprehensive, and interconnected communications real estate platform optimally positioned to benefit from the convergence of wireline and wireless networks amid accelerating global 5G deployments,” Font said. “This will allow us to continue to deliver on our commitment to future-proof our customers’ digital transformation strategies, now and well into the future.”

 

Bartlett Shares American Tower’s Strategies at Citi 2022 AppsEconomy Virtual

By Mike Harrington

For Tom Bartlett, American Tower’s president and CEO, growth is all about scaling up core business and sticking to a business model that has made his company profitable over the past decade.

American Tower, which became a real estate investment trust (REIT) in 2012, is valued at $127 billion. It generated revenue of slightly more than $8 billion last year. Its dividend has compounded at an annual rate of more than 20 percent.

Tom Bartlett, American Tower’s president and CEO.

Speaking in a virtual presentation at Citi’s 2022AppsEconomy Conference today, Bartlett summed up American Tower’s success with these two sentences: “It’s all about building a business franchise that had the ability to win now and also win in the future. It’s about scaling the core, accelerating the growth of the platform and, particularly, further developing that healthy cultural foundation that we’ve got in the business.”

Bartlett said he plans to continue this business model for the next few years.

“If you think about our business over the last 10 years, we’ve made heavy investments in the United States, acquiring the Verizon portfolio, acquiring the GTP [Global Tower Partners] portfolio and making major investments in Europe,” he said. “And now we’ve made a major investment in CoreSite, a data center operator.”

American Tower closed its acquisition of CoreSite Realty on Dec. 28, 2021, funded by borrowings under American Tower’s revolving credit facilities and term loans. The transaction involved a merger of one of American Tower’s wholly owned subsidiaries with and into CoreSite, following the completion of its previously announced tender offer for outstanding shares of CoreSite common stock. Consideration for the transaction, including the assumption or repayment of CoreSite’s debt, is $10.1 billion.

To put American Tower’s CoreSite purchase into financial perspective, for the third quarter of 2021, American Tower’s revenue increased 21.9 percent to $2.454 billion, with property revenue increasing 19.2 percent to $2.369 billion; for the second quarter of 2021, the company’s revenue increased 20.2 percent to $2.299 billion. These are heady days for American Tower, which is the world’s largest owner of wireless infrastructure. The rapid, continuing rollout of 5G technology in 2021 spurred a tower leasing and building boom in rural and suburban areas and a small-cell boom in dense urban areas.

So how does American Tower manage all this? At the Citi conference, Bartlett said his company’s overall tower model overall hasn’t changed over the past decade – “it’s multiservice, multitenant, which services our exclusive real estate.” He also said that there are several elements to American Tower’s successful business model, but that the key simply remains simultaneously planning for the present and the future.

“The first element is scaling the core,” Bartlett said. “That means continually driving more organic growth onto our sites globally. That’s the best way we can drive cash-flow growth. So, it’s about uniquely trying to find ways to do that. And that goes to positioning our operations in a way such that it makes it easier for our customers to do that. That’s clearly our number one driver in the business.”

Bartlett said the first element of American Tower’s core strategy also involves building new towers.

“We’ll set a record in 2021 in build-to-suits,” he said. “I’ll anticipate we’ll set another record in 2022. It’s our best use of capital. I would commit as much capital as I possibly can to build-to-suits. We don’t build them on spec; we build them under lease agreement to our existing customers. We’ve been very successful in terms of the program – and going forward I expect the same.”

Bartlett said that 2022 also would be about the further integration of and use of American Tower’s acquired assets over the past 12 months, including CoreSite.

“There’s really nobody who can compete with that kind of distribution. So, we’ve continually looking at ways to be able to leverage assets. Longer term, we’ll look to improve our overall margins within the business. And as you increase tenancy in a particular site, it’s a natural evolution to improve overall margins.”

The second element to American Tower’s core strategy is extending the growth of its platform expansion, Bartlett said.

“Whether it’s around power, sustainability, energy, the edge or wireless connectivity, being able to offer these elements to new and existing customers – even being able to bundle these elements together for new or existing customers to provide a broader value proposition – is really a critical component of our growth,” he said. “So, I would say in 2022 we’ll see an acceleration of that. Clearly now, in having CoreSite part of the family, that will absolutely accelerate some of the opportunities we have. I believe we’re going to start to see some of the edge in really developing that overall business model.”

Bartlett also talked about American Tower’s energy sustainability and corporate responsibility, including employing wind and solar power to reduce the company’s carbon footprint.

“We’re finding our customers are really getting very anxious about our ability to even take this to the next level,” he said. “So, we’ve had great success in bring down our carbon footprint, taking away from diesel generation – but there’s still a lot more I think that we can do.”

The third element of American Tower’s strategy is developing an overall team globally, according to Bartlett.

“The baseline is we’re moving to a hybrid type of environment,” he said. “How do we manage our way through that? Looking at additional skills to be able to build out our platform expansion. Providing connectivity to market that we’re servicing and being a good corporate citizen in those markets is also critical. We’ve talked about digital communities and some of those philanthropic type of initiatives that our really driving us to achieve our purpose in terms of connecting the unconnected. Ensuring that we’re an inclusive culture.  That we’re able to take advantage of leverage the diversity we have within the business. So, that whole element is also a critical component – not just in 2022 but the next several years.”

On the flipside, Bartlett talked about using what his company sees going on in the market and what they see happening from a technology perspective.

“We have visibility over the next few years to take it to 300,000 sites, terrific customer relationships around the globe, long-term contracts, over $60 billion in contractually committed revenue. I believe we have the best people on the planet. I think have a really strong culture.”

Bartlett said American Tower’s business has remained the same since 2012, when the company became an REIT.

“Our overall capital allocation ladder, if you will, that ladder of capital has not changed,” he said. “Our approach to looking at M&A as organic growth has not changed. We look at things over a very long period of time – really a 10-year model. We look at the discounted cash flows on a risk-adjusted basis – whether it’s the market, whether it’s a particular product, or a particular customer. So, there’s a risk element that’s added into the model. And once we determine what the value is, we then look at allocating that capital versus buying back shares of stock. And is it going to create value over time.”

Mike Harrington is a contributing editor.

American Tower Commences Cash Tender Offer for All Outstanding Shares of CoreSite

American Tower today filed a tender offer with the U.S. Securities and Exchange Commission (SEC) by its wholly owned indirect subsidiary, Appleseed Merger Sub LLC, for all outstanding shares of the common stock of CoreSite Realty at a price of $170 per share in cash.

Additionally, CoreSite filed with the SEC a solicitation/recommendation statement on Schedule 14D-9 that includes the recommendation of the CoreSite board of directors that CoreSite stockholders accept the tender offer and tender their shares.

The tender offer is being made in connection with the Agreement and Plan of Merger announced by American Tower and CoreSite on November 15, 2021 (see separate story). Consideration for the transaction, including the assumption or repayment of CoreSite’s debt, is $10.1 billion.

The tender offer is scheduled to expire one minute after 11:59 p.m. (Eastern Time) on Monday, December 27, 2021, unless extended. A successful consummation of the tender offer will be followed by a merger to acquire any untendered shares of CoreSite for the same price payable in the tender offer.

“The transaction is expected to create a differentiated, comprehensive and interconnected communications real estate platform optimally positioned to benefit from the convergence of wireline and wireless networks amid accelerating global 5G deployments,” according to a Nov. 15 statement from American Tower.

CoreSite, which has 25 data centers, 21 cloud on-ramps and more than 32,000 interconnections in eight U.S. markets, generated $655 million in annualized revenue and $343 million in adjusted EBITDA in the third quarter this year, according to American Tower. It said that CoreSite has averaged double-digit annual revenue growth over the past five years and is led by a management team that has established a presence with cloud service providers, positioning the business for organic growth. American Tower said it expects to use its financial position to accelerate CoreSite’s development pipeline in the United States, while also evaluating the potential for international expansion in the data center business.

“The transaction is also expected to be transformative for American Tower’s mobile edge compute business in advance of the proliferation of 5G low-latency applications throughout the cloud, enterprise and network ecosystems, establishing a converged communications and computing infrastructure offering with distributed points of presence across multiple edge layers,” the Nov. 15 American Tower statement reads.

The statement also said: “With increased scale and a broadened, more comprehensive offering, American Tower and CoreSite expect the combined company to be well-positioned to address evolving customer needs through an enhanced value proposition for network and cloud providers, service integrators and enterprise customers.”

American Tower Spends $10 Billion to Acquire CoreSite Realty

American Tower and CoreSite Realty have entered into an agreement for the tower company to acquire CoreSite for $170 per share in cash, according to a statement from American Tower. Consideration for the transaction, including the assumption or repayment of CoreSite’s debt, is $10.1 billion.

“The transaction is expected to create a differentiated, comprehensive and interconnected communications real estate platform optimally positioned to benefit from the convergence of wireline and wireless networks amid accelerating global 5G deployments,” the statement reads.

CoreSite, which has 25 data centers, 21 cloud on-ramps and more than 32,000 interconnections in eight U.S. markets, generated $655 million in annualized revenue and $343 million in adjusted EBITDA in the third quarter this year, according to American Tower. It said that CoreSite has averaged double-digit annual revenue growth over the past five years and is led by a management team that has established a presence with cloud service providers, positioning the business for organic growth. American Tower said it expects to use its financial position to accelerate CoreSite’s development pipeline in the United States, while also evaluating the potential for international expansion in the data center business.

“The transaction is also expected to be transformative for American Tower’s mobile edge compute business in advance of the proliferation of 5G low-latency applications throughout the cloud, enterprise and network ecosystems, establishing a converged communications and computing infrastructure offering with distributed points of presence across multiple edge layers,” the statement reads. “With increased scale and a broadened, more comprehensive offering, American Tower and CoreSite expect the combined company to be well-positioned to address evolving customer needs through an enhanced value proposition for network and cloud providers, service integrators and enterprise customers.”

Analysts Eric Luebchow and Caleb Stein at Wells Fargo Securities said that they would not favorably view a CoreSite acquisition at an approximately 30 times multiple that is only marginally accretive and strategically questionable. “Our perspective is that American Tower would be better served by engaging in additional international tower mergers and acquisitions in Europe, Southeast Asia or Africa, where they have a more proven operational history,” they said.

By combining their capabilities, talent and resources, American Tower and CoreSite would be better equipped to deliver superior service and expanded solutions to customers, the tower company said. The transaction brings together the tower company’s wireless connectivity at the mobile edge and CoreSite’s interconnected data center facilities at the core edge to create an extended edge for customers that can support high-performance, low-latency applications, American Tower said. It said that with American Tower’s global footprint, the combined company would be positioned to support customer’s needs in additional markets.

“We are in the early stages of a cloud-based, connected and globally distributed digital transformation that will evolve over the next decade and beyond,” said Tom Bartlett, American Tower’s CEO. “We expect the combination of our leading global distributed real estate portfolio and CoreSite’s high-quality, interconnection-focused data center business to help position American Tower to lead in the 5G world. As the convergence of wireless and wireline networks accelerates and classes of communications infrastructure further align, we anticipate the emergence of attractive value creation opportunities within the digital infrastructure ecosystem.”

CoreSite’s CEO, Paul Szurek, referred to collaborating with American Tower to expand its communications infrastructure ecosystem and accelerate its edge computing strategy through the addition of CoreSite’s differentiated portfolio of U.S. metro data center campuses. He said that the combined company would be positioned to address the growing need for convergence among mobile network providers, cloud service providers and other digital platforms as 5G deployments emerge and evolve.

“We expect the enhanced scale and further geographic reach to provide a platform for the combined company to accelerate its growth trajectory and expand into additional U.S. metro areas, as well as internationally, leveraging American Tower’s extensive presence across the globe,” Szurek said.

Szurek said that CoreSite’s team, interconnection platform and data center campus portfolio are a complementary fit with American Tower’s communications sites. He said he believes the acquisition delivers value to CoreSite’s stockholders and would create a new chapter for CoreSite’s customers, employees and partners.

The transaction is anticipated to be modestly accretive to American Tower’s average funds from operations per share initially, and increasingly accretive over time, and is expected to close by the end of 2021, or shortly thereafter, American Tower said. It said that under the terms of the agreement, American Tower, through a wholly owned subsidiary, would commence a tender offer for all of the shares of common stock of CoreSite, which will be followed by a merger to acquire any untendered shares for the same price payable in the tender offer. The tender offer is subject to the tender of at least a majority of the outstanding shares of common stock of CoreSite and certain other customary conditions, the company said. American Tower said that CoreSite plans to declare and pay its fourth-quarter dividend during the fourth quarter of 2021 and no later than the close of the transaction.

“American Tower intends to finance the transaction in a manner consistent with maintaining its investment-grade credit rating and has obtained committed financing from J.P. Morgan,” the tower company’s statement reads.

5G Nudges Edge Computing Toward Telecom’s Center Stage

By Mike Harrington

The global edge computing market will reach $17.8 billion by 2026, according to a new report released by Reportlinker. Released Oct. 27, the report asserts that edge computing is rapidly emerging as a technology innovation that can be widely adopted across industries.

ReportLinker estimates the U.S. edge computing market to be $2 Billion in 2021, while it predicts China’s market will reach $2.4 Billion by 2026.  Reportlinker believes that 5G cellular technologies — delivering massive bandwidths along with supporting a wide array of devices including smartphones, autonomous vehicles as well as large scale IoT — represents another prominent growth- promoting factor for the edge-computing market.

As the telecommunications industry evolves, 5G wireless communications and edge computing are redefining how business and consumers connect. According to a 2019 IBM report called “Edge computing changes everything,” by 2022, there will be an estimated 55 billion edge devices on the market. By 2025, the number of edge devices is expected to grow to 150 billion; even more when the impact of remote working practices in the COVID era are taken into account.

Growing emphasis on process automation and cost reduction combined with intensifying business competition, along with increased adoption of edge computing for datacenter application, is leading to market growth, the ReportLinker report says.

Edge datacenters are smaller datacenters that exist to support a geographic region. This edge segment saw strong growth since the pandemic started, the report says, with employees working from areas that needed a closer datacenter to support their remote activities.

According to a new white paper, “5G Edge Automation and Intelligence,” edge computing is a fundamental part of the 5G ecosystem that provides network data processing and storage close to the end users, typically within or at the boundary of operator enabled networks. Produced by 5G Americas, the white paper details the convergence of 5G, edge computing, and artificial intelligence (AI), allowing 5G networks to deliver new services and capabilities more efficiently.

Chris Pearson, president of 5G Americas

Chris Pearson, president of 5G Americas, said “Edge computing and AI are a dynamic duo of integral technologies for 5G that will enable a plethora of use cases, which enable 5G networks to reach their full potential. 5G reduces the radio network latency significantly, while edge computing places compute and storage within the telco infrastructure resulting in end-to-end latency reduction. This will positively impact the experience of enterprises and consumers alike.”

“5G Edge Automation and Intelligence” identifies optimization and automation strategies for both 5G network and edge computing, as well as the leveraging of Artificial Intelligence/Machine Learning capabilities, according to a prepared release from 5G Americas. Additionally, the white paper covers how 5G network and edge computing enable low latency, high reliable intelligence in edge applications.

Meryem Simsek, lead scientist, VMwar, and technical working group co-leader for the 5G Americas white paper said, “The ultimate goal of the unique symbiosis between 5G and edge involves increased performance guarantees, enhanced workload balancing, improved processing capabilities and performance via 5G edge automation and optimization, with greatly reduced human intervention.”

Clark Chen, senior staff engineer and research manager at Intel and co-leader for the white paper, agrees: “Carriers are embracing AI/ML technology to deliver the promise of 5G and increased levels of automation in the network. The convergence of communication and computing is creating innovative opportunities to deploy and integrate 5G, edge artificial intelligence and cloud capabilities. This can help address a diverse set of use cases that ultimately deliver better business outcomes across a range of industries.”

Although “edge computing” is a relatively new technology term, edge computing is already well established in U.S. businesses, which quickly realized the benefits of locating their computer services close to where the applications are running. Software works faster and more reliably when it does not have to reach back to a data center located hundreds, or thousands, of miles away.

As eDigest reported last week, innovations from IBM highlight the company’s role in helping the telecommunications industry evolve as 5G wireless communications and edge computing redefine how business and consumers connect.

“A recent study from the IBM Institute for Business Value on ‘‘The End of Communications Services as We Know Them” revealed that 59 percent of high-performing communications service providers surveyed agree they must become secure clouds infused with artificial intelligence and automation,” said Andrew Coward, general manager of software-defined networking at IBM.”

“The study also says that communications service providers are thinking more strategically about 5G-enabled edge computing more for its ability to building more revenue as 5G and edge computing usher in a new reality for businesses,” Coward said. “We are continuing to help communications service providers embrace secured technologies like automation, artificial intelligence and hybrid cloud, and we believe IBM is uniquely positioned to provide the software and consulting needed to evolve their digital architecture.”

Meanwhile, within the DigitalBridge portfolio, companies that provide data centers, optical fiber connectivity, macro cell towers and edge infrastructure have increasing roles to play in edge computing.  VerticalBridge says it believes the best location for the “physical” edge of the network is as close to the data as possible. That’s why VerticalBridge is developing a strategy called “edge to suit,” which means it works closely with customers to figure out the best location for their edge data centers, regardless of whether there is a tower nearby or not.

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.

Marc Ganzi, president and CEO of DigitalBridge Group,

Edge computing has two aspects and three sizes, according to Marc Ganzi, president and CEO of DigitalBridge Group, which has 23 portfolio companies, including several that are involved with edge computing.

Of the two aspects of edge computing, Ganzi said, one is the physical aspect of where infrastructure sits. The second part, he said, is the experience, how the customer ultimately participates in a low-latency environment and how its applications work. He said the two functions are consumer and geography.

“Let’s start with geography,” Ganzi said, in speaking about edge computing with Matt Niknam, director of equity research and communications infrastructure analyst at Deutsche Bank, during the bank’s 29th annual Leveraged Finance Conference on Oct. 4. “Geography is pretty easy to understand, because there are three layers to edge infrastructure: main edge workloads, mid-range and micro edge,” he said.

“Main edge workloads are secondary and tertiary markets, where you’re not in a primary hyperscale market, as in Ashburn, Virginia; or Goodyear, Arizona; or some of the other big areas such as Atlanta, where you have massive, hundreds of megawatts of power and compute,” Ganzi said. “And then you go to you go outside of that for what’s happening in markets like Salt Lake City; Austin, Texas; Cleveland; and Minneapolis. These are good edge markets.”

According to American web infrastructure and security company Cloudfare, edge computing optimizes internet devices and web applications by bringing computing closer to the source of the data. Edge computing minimizes the need for long-distance communications between client and server, which reduces latency and bandwidth use, as stated by Cloudfare.

Meanwhile, digital infrastructure giant American Tower — as it readies for C-band deployments and the start of Dish Network’s 5G buildout — is looking further ahead to mobile edge compute opportunities. “Scale deployment of a true mobile edge remains several years away, but in our view the TAM [total addressable market] could be quite significant, running well into the billions of dollars annually,” said American Tower CEO Tom Bartlett during the company first quarter earnings call in April 2021.

One caveat: As edge computing grows and evolves to provide solutions along with the booming 5G market, some businesses worry about the risks of edge computing — and how to balance those risks against edge computing irrefutable benefits. Many believe the solution simply involves “baking” security into the computer architecture from the start, and making the edge an extension of that architecture.

Mike Harrington is a contributing editor.