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FirstNet Picks up Speed as Industry Ponders Impact

By J. Sharpe Smith

States opting in for the First Responders Broadband Network (FirstNet) surged past the halfway point earlier this month, with the addition of Pennsylvania, Oklahoma and Utah. Even with the momentum FirstNet is gaining, the tower industry is still uncertain of when or where the buildout will occur.

For now, 29 states and two territories have signed on. States that haven’t already opted in have until Dec. 28 to make their decisions.

With an opt-in decision, first responders can begin signing up for service, and thousands of connections on the network. First responder subscribers will have priority access to interoperable voice and data across the existing nationwide AT&T LTE network.

Both AT&T and FirstNet have committed resources to improve public safety communications. With each opt-in decision, FirstNet and AT&T bear the financial risk associated with the network build in that state or territory. FirstNet will also drive public-safety-focused infrastructure build out first on existing towers through modifications and then through collocations. And eventually through new builds.

“We expect to hit the ground running and issue work orders in January after the opt-in period closes. We’ve already committed more than $200 million in capital to the project in preparation for its start,” John J. Stephens, AT&T CFO.

“The needs of public safety demand more than what commercial offerings provide today. FirstNet will be a force for good, forever changing the way first responders think about and use communications,” said Chris Sambar, senior vice president, AT&T – FirstNet.

The 31 states and territories that have opted in, including Alabama, Montana, Alaska, Nebraska, Arizona, Nevada, Arkansas, New Jersey, Hawaii, New Mexico, Idaho, Oklahoma, Indiana, Pennsylvania, Iowa, Puerto Rico, Kansas, South Carolina, Kentucky, Tennessee, Louisiana, Texas, Maine, U.S. Virgin Islands, Maryland, Virginia, Michigan, West Virginia, Minnesota, Utah and Wyoming.

“We’ve had a tremendous response [to the FirstNet opt-in process] so far. Already, 31 states and territories have opted in, and we are just a month into the 90-day opt-in window,” Stephens said.

AT&T must meet a timeline of 20 percent geographic coverage annually starting in April 2018, until it is finished.

“So we do think this is going to be constructive to the tower industry next year and for many years to come,” James Taiclet Jr., American Tower president, CEO and chairman, said in a Q3 2017 earnings call. Daniel Schlanger, American Tower CFO, also expressed his optimism about the potential for growth associated with FirstNet.

Smaller Tower Companies Less Optimistic

During the AGL Local Summit in Fort Worth last month, Ron Bizick, CEO of Tarpon Towers, said that FirstNet is currently the biggest catalyst for growth on the horizon for towers but the speed of the process has not been without some frustration. The large public tower companies stand to benefit the most, he added.

“It is slow coming. We all expected more activity sooner, but it is coming,” Bizick said. “From a revenue standpoint, Crown Castle International will benefit the most, because they have the AT&T portfolio, followed by the rest of the public tower companies. You can kill the most birds with one stone by going to the [bigger tower companies], if you can get a good deal done.”

Bizick has seen applications for tri-band antennas that would utilize the AWS, WCS as well as FirstNet frequencies. “What that suggests is that AT&T, true to its mission, is going to deploy one time, one truck roll,” he said. “It looks like they will have equipment deployed in the field ready to be turned on when a state opts in.”

AT&T plans to roll out FirstNet service to around a total of 45,000 towers, with 15,000 seeing new equipment in the first five year. There will be plenty of room for negotiation between AT&T and the public safety agencies concerning where that buildout occurs, according to Bizick.

“The public safety agencies will want coverage where they current don’t have it, and AT&T wants to deploy coverage where they don’t have to build towers,” he said. “I think the mixture should include coverage where there it currently is not available to public safety.”

Bernard Borghei, co-founder of Vertical Bridge, sees FirstNet as the last, best hope of getting broadband wireless deployed in rural areas. Collocating on existing towers will be essential for AT&T to achieve a return on its invest on its investment.

“A lot of us have rural towers and there is the possibility for a partnership there. We have a healthy relationship with AT&T. It is a timing issue. How aggressive they will be; how fast they will deploy; I don’t know,” Borghei said.

Collocating FirstNet Antennas May Not be That Simple

Not surprisingly, the FirstNet antennas covering multiple spectrum bands are bigger than the LTE ones.

“They are trying to go with one antenna per sector. Under Rev. H [of ANSI/TIA 222), the new tower engineering standard, a lot of the mounts are going to be stressed with the FirstNet antennas,” Borghei said.

Tony Peduto, CTI Towers CEO, said AT&T is looking for additional height beyond the standard 10 feet in the FirstNet rad centers, which may lead to reconfiguring the tower. He was not confident, however, that the Dec. 28 deadline for states to opt-in would hold.

“You have Oregon and Washington with a joint RFP out there which is due in mid-November. With the holidays, I think you are going to see an extension of time granted for states to opt-in as they try to figure it out,” he said. “It’s a tailwind. Just a matter of when.”

States opting out could lead to a FirstNet network with multiple providers, Peduto said

“A network will be built, but it may mean multiple players. Verizon has gone to states and lobbied them to build their network. Ultimately you are still going to need interoperability across the country, even if has Verizon in Washington state and AT&T in Oregon. I am not sure what it will look like in the end.”

Vertical Bridge Purchases Highlight Tower M&A for 2014

By J. Sharpe Smith —

December 18, 2014 — No sooner had Vertical Bridge announced raising copious amounts of capital than it put those funds to work last week with two major tower purchases. It paid $400 million for a portfolio of tower assets owned by iHeartMedia, a radio broadcasting giant, and it bought 595 towers from U.S. Cellular for $159 million.

Unless a deal is struck by the end of the year (for Verizon Wireless’ 12,000 towers?), the iHeartMedia tower sale will stand out as the largest deal in 2014.

iHeartRadio will enter into a lease arrangement with Vertical Bridge with respect to the sold tower assets and continue its broadcast operations.

“In addition to being a premier broadcast portfolio, these sites already have many broadband telephony and data tenants and the capacity and potential to add many more,” said Alexander Gellman, CEO of Vertical Bridge Holdings. “With this latest transaction, Vertical Bridge now has 2,000 revenue-producing sites that are owned or under definitive agreement.”

The sale of U.S. Cellular’s towers has been expected for some time. The carrier placed its towers in Chicago and St. Louis and four Midwest markets on the block in October, after it sold the spectrum, network and subscribers that used those towers to Sprint in November 2012.

This November, we reported that Vertical Bridge had raised more than $1 billion in private equity. At that time, company CEO Marc Ganzi said the company had plans to close 22 acquisitions by the end of the year. Two down.

The tower aggregator is approaching a milestone of 2,500 towers, which according to Ganzi, may allow it to get debt pricing similar to a public company.

American Towers Purchases Tall Towers

Another significant domestic deal occurred in April when American Towers purchased 60 tall towers, primarily used for radio and TV, from Richland Towers for $450 million in total consideration plus the assumption of $197 million in secured debt.

International M&A Proves to Be Hot Market

While AGL Link almost exclusively covers the domestic tower market, it is hard not to notice the number of international mergers and acquisitions. Global tower buys dwarfed the domestic M&A activity.

The number of international deals announced in 2014 and the number of U.S. companies looking to purchase towers in other countries was one of the big stories of 2014, according to Clayton Funk, managing director, Media Venture Partners.

“There weren’t that many [domestic] deals announced in 2014. There was a lack of inventory and a lot of competition. It was a slow deal year for everybody. I think small deals are getting done, but there were not the big headline deals,” Funk said. “These tower companies want to deploy capital into accretive assets. The international markets, they will tell you, are 10 years by the United States in the development of wireless infrastructure, so they will have higher growth in their networks.”

Late in November, American Tower purchased 4,800 communications towers in Nigeria from Bharti Airtel International (Netherlands), which will be the anchor tenant. American Tower also purchased two portfolios from TIM Celular in Brazil, totaling 6,480 towers for $1.2 billion. In June, a Brazilian company with 4,640 towers was purchased by American Tower for $978 million.

In September, Phoenix Tower International acquired American Tower’s Panamanian business, which consists of 60 telecommunications sites. The sites represent a mix of towers in urban and suburban locations across the country occupied by all of the major Panamanian wireless carriers.

Digital Bridge has made two international investments so far, forming a joint venture with Macquarie Mexico to develop towers under the name Mexico Tower Partners and making a small investment in a Chinese tower company.