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Industry Honors Mobile Infrastructure Hall of Fame Inductees

By J. Sharpe Smith, Senior Editor

Ray

Six weeks ago, few people knew there even was a Mobile Infrastructure Hall of Fame. But as WIA President and CEO Jonathan Adelstein took the stage for the first induction ceremony in a crowded room of 500 of the industry’s leaders, it felt like there has always been one. Or at least there was a pent-up demand for one.

“Today, these five honorees come from companies with a combined market cap of around $200 billion. They employ nearly 100,000 people and growing. And they’re driving the innovation economy with wireless broadband few dreamed possible in the flip phone era,” Adelstein said. “These five leaders are inducted tonight because of their foresight, their vision, and their tenacity. Each faced down challenges — and overcame them all.”

Gathering the top wireless CEOs and others at a ballroom in Washington D.C. on a Wednesday night in mid-November to honor its best had another altruistic goal. It raised $500 thousand for the WIA Foundation in support of training, education and apprenticeships.

Bernstein

“Tonight, the [inductees] lend us their presence because each believes — with us — that another challenge lies ahead for the wireless industry. To build world-class 5G networks — we need a world-class 5G workforce. Together, we’re taking steps to meet that challenge — building a workforce that’s worthy of this great industry,” Adelstein said.

The evening was attended by such notables as FCC Chairman Ajit Pai, Commissioners Michael O’Rielly and Brendan Carr, U.S. Sen. Steve Daines, and other guests from the FCC, Congress and the Administration.

The inaugural class of Hall of Fame inductees included: Neville Ray, CTO, T-Mobile; Steven Bernstein, founder, former CEO and current board member of SBA Communications; Steven Dodge, founder, former CEO, American Tower; John Kelly, former CEO, Crown Castle; and Jose Mas, CEO, MasTec Network Solutions.

Dodge

John Legere, president and CEO of T-Mobile, lent his star power and sense of humor in a heartfelt tribute to Ray, who has 25 years of wireless experience and has led the carrier through the LTE roll out, from the zero POPs in 2012 to 324 million POPs today. The first 200 million POPs were built in six months. He also pushed new technology into the field, including Wi-Fi calling, VoLTE, License Assisted Access and 4X4 MIMO and 256 QAM.

“Neville Ray is truly a genius,” Legere said. “This is a guy that gets things done. You give him the goal and the resources, and you just know that it will be done. You get out of the way.”  He joked that Ray’s budget of $50 billion also played a key role in the success. “Give the guy some cash and he makes it happen.” Ray later clarified that he only got $40 billion.

Jeffrey Stoops, president and CEO, SBA Communications, praised Bernstein’s decision-making ability and leadership qualities.

“He can quickly and incisively distill complex issues down to straightforward decisions has been a critical part of our success,” Stoops said. “More importantly, it’s his entrepreneurial spirit and his values, including honestly, integrity, fair play, quality, customer service and hard work, that Steve instilled in SBA that remains a driver of our continued growth and success.”

Kelly

Jim Taiclet, chairman, president and CEO, American Tower, said Dodge has been a “true trailblazer” for the tower industry, and has served as innovator throughout his 40-year career, which included banking, media and telecom.

“He founded and took public three pioneering companies. The first was American Cable Systems, which he grew into an industry leading position and sold to Continental Cable. Then he went on to American Radio Systems, which was sold to CBS, and then American Tower Corporation. The only flaw in Steve’s plan was an apparent lack of creativity with company names.”

Ben Moreland, former CEO of Crown Castle, introduced Kelly as the “most wonderful person” he has ever known. Kelly served as a mentor to Moreland and “set a high bar as a humble leader and a really nice guy,” Moreland said. Kelly was CEO of Crown from 2001 to 2008 and remained on the board for a number of years afterward.

“He inspires people to be the best they can be,” Moreland said. “He instilled a very customer-centric focus that required us to always think about a win-win situation with the carriers.”

Mas

After Mas became CEO of MasTec, the company grew to 22,000 professionals nationwide, quadrupled its revenues, increased earnings six-fold, and reached a ranking of 428 in the Fortune 500, O’Rielly said in his introduction.

Additionally, Mas diversified MasTec beyond telecom construction into renewable energy, oil & gas and electric transmission, among others.

“Mr. Mas is not just as successful businessman. He is a long-time leader in the Miami-Dade United Way’s Toqueville Society, which donated $15 million to improve lives last year. Most recently Mas and his brother Jorge joined a consortium with David Beckham to raise $25 million to bring a new Major League Soccer team to Miami,” O’Reilly said.

Spectrum Deployments and 5G Wireless Hold Promise for Growing the Tower Business

By Don Bishop, Exec. Editor, Assoc. Publisher, AGL Magazine

Regardless of the number of wireless carriers, tower companies will benefit from the release and development of RF spectrum and from vast increases in network traffic coming with 5G.


Brown (Photo by Don Bishop)

Wireless communications carriers are investing at least as much, if not more, in small cells than what they spend to deploy macro sites, according to Jay A. Brown, president and CEO of Crown Castle International. The company rents to carriers the wireless communications infrastructure that it owns, such as telecommunications towers, small cells, distributed antenna system (DAS) networks and routes of fiber-optic cable for connecting antenna sites with the carriers’ networks. All of the company’s assets are in the United States, although it has previously owned infrastructure in the United Kingdom and Australia.

Speaking at a plenary session at Connectivity Expo, conducted by the Wireless Infrastructure Association in Charlotte, North Carolina, Brown said he sees a diminishing opportunity to acquire macro sites while looking hard at the opportunity to acquire other kinds of infrastructure carriers need in the form of dark, dense, urban fiber. Dark fiber refers to installed fiber owned by one party and rented for use by another. He said Crown has dense fiber in 23 of the top 25 U.S. markets.
“We have invested $13 billion in fiber and small cells,” Brown said. “But our view is that there are no more assets of like kind of any substantial size to acquire.” He said increasing Crown’s inventory in fiber would involve building more dark, dense, urban fiber.


“The winning play on fiber and small cells is delivering a solution to wireless carriers to share at a much lower cost than if they deployed them by themselves.”
— Jay A. Brown, president and CEO of Crown Castle International


As for towers, Brown said the valuations of portfolios that remain with smaller, private owners — that may become what he called tuck-in acquisitions — have been steady for several years. For the past 20 years, he said, those valuations have almost always exceeded the valuations of towers owned by public companies.

“In most industries, the public players are afforded a higher multiple (valuation) because of diversification and other reasons,” Brown said. “In our industry, the private, smaller players have had valuation premiums. That probably argues that public companies are undervalued relative to the value of the assets.”

Spectrum Opportunity

Referring to Dish Network’s plan to spend $500 million to $1 billion to construct a narrowband wireless network to serve internet of things (IoT) customers, Brown said that any time a company has radio-frequency (RF) spectrum to deploy, it works really well for the wireless infrastructure business. He said previous spectrum deployments had afforded the tower owners a large opportunity. With Crown owning 40,000 towers, Brown said, the company is excited about what the Dish Network IoT construction could mean.

Beyond Dish Network’s system, which initially will use 4G wireless technology, lies the prospect of 5G wireless network construction by Dish and possibly all of the existing wireless carriers. The first phase of 5G construction will overlay new equipment at existing macro sites, according to Brown.

Next-generation Networks

“Macro sites are absolutely critical to 5G in the long term,” Brown said. “We don’t view small cells as a substitution for the macro sites. Carriers will design their next-generation networks around existing sites, which will, in time, become the hub sites as they design cloud-based radio access networks (C-RANs). As network traffic grows, it will exceed macro site capacity, and carriers will have to cell-split their networks and focus spectrum on specific areas. So, they’re using small cells to supplement existing macro networks.”

More Opportunity

Crown has seen more bookings for small cells during the first quarter of 2018 than for the entire year of 2016, Brown said. Orders are market-wide and for thousands of small cells at a time, he said. For the next 20 years, he said, the opportunity for small cells and the infrastructure associated with them may be greater than that of towers over the last two decades. In Brown’s view, Crown has been able to obtain a return on the capital deployed for small cells and fiber that has been both attractive and encouraging at the early stages. Brown said that macro sites continue to be an important part of the network, and he expects amendments and new leases for them. Meanwhile, he said, he expects a significant portion of capital will be invested by the carriers for small cells and fiber.

“Crown wants to maximize the dividend per share that it pays, which is the best indication of the long term value of the company,” Brown said. “Our investments in fiber and small cells will have the highest effect for long-term value creation. The incremental lease-up is about twice that of towers. The winning play on fiber and small cells is delivering a solution to wireless carriers to share at a much lower cost than if they deployed them by themselves.”

Dividend Growth

Crown pays about 75 percent of its cash flow in the form of dividends and still invests more than $1.5 billion in capital expenditures and acquisitions, according to Brown. “We make better decisions when we have limited resources, and by paying out the majority of our cash flow to shareholders, that makes us really disciplined capital allocators,” he said. “Not only do we have the long-term cost of the capital, we have the short-term cost of dilution from paying dividends on shares as we issue them.”

The company makes sure investments it makes include a portion of equity, not only to cover the cost of capital but to be additive to the long-term accretion of the business, Brown said. He said Crown would continue to grow its dividend, which now is growing it at 7 to 8 percent per year. “I like coming back to the market and explaining the value of the investments that we’re making, and then raising the capital as necessary,” he said.

Sprint and T-Mobile US Merger

Two decades ago, Brown said, Crown had 1.2 tenants per tower, and there were eight wireless carriers. Currently, the company has more than 2.5 tenants per tower, and its cash flow has grown. That happened, he said, during a period when the market went from eight to four carriers. With the merger of Sprint and T-Mobile US that is pending, subject to government approval, the market will go from four to three carriers.

Carrier Number Irrelevant

“Two decades from now, we will look back, and it will seem almost irrelevant how many carriers there are, because, ultimately, what drives the need for our infrastructure is consumers, the devices they use and the amount of traffic that they put onto the network,” Brown said. “Our infrastructure model has been driven largely by consumer need. 5G wireless communications’ lower latency and higher speed will open industrial opportunities that will place an enormous amount of traffic on the network. That will result in carriers using more equipment on infrastructure, whether fiber, small cells or macro sites.”


The next Connectivity Expo is set for May 20–23, 2019, in Orlando, Florida.

With Towers, Small Cells and Fiber, Crown Castle Says It’s All Good

Crown Castle International reported a strong third quarter with all major carriers contributing to its growth. The comm-infra company, which experienced growth across all of its segments: towers, small cells and fiber, also painted an upbeat picture of its 2019 expectations.

“We delivered another terrific quarter of results in the third quarter and increased our annualized common stock dividend by 7 percent to $4.50 per share based on accelerating leasing activity,”

CCI has portfolios of more than 40,000 towers, 35,000 small cells and 65,000 route miles of dense, high-capacity fiber in the top U.S. markets, in areas it foresees the greatest long-term demand from multiple customers. The triple play of towers, small cells and fiber are the key to the company’s growth now and in the future, said Jay Brown, Crown Castle’s CEO in a Seeking Alpha transcript of the third quarter earnings call. https://seekingalpha.com/article/4212546-crown-castle-international-corp-cci-ceo-jay-brown-q3-2018-results-earnings-call-transcript

“Our strategy to invest in towers and small cells and fiber has positioned us to capture accelerating leasing activity which is driving dividend growth,” Brown said “We believe our ability to offer towers, small cells and fiber solutions, which are all integral components of communications networks and are shared among multiple tenants, provides us the best opportunity to generate significant growth while delivering high returns for our shareholders.”

Small Cells
Small cells leasing growth will hockey stick up to $75 million in 2019, more than 35 percent higher than the $55 million expected in 2018. Small cell construction, which grew 40 percent from last year, is expected to continue during the next 18 to 24 months.

“This increased activity is a result of all four of our large customers investing in their networks through towers and small cells to both keep pace with the current 4G demand environment and position their networks for 5G,” Brown said.

Tower Rental Prospects
In 2019, new leasing activity is expected to be a $125 million for towers in 2019, up from a $110 million in 2018.

Fiber
CCI can increase the yield on its fiber investment by serving both small cells and enterprise fiber customers with the same outside plant. “The current utilization of our fiber portfolio is similar to that of a single tenant tower. Our current 8-percent yield is more than double what we saw when our towers had only one tenant,” Brown said.

Site Rental Revenue
Organic site rental revenues grew $52 million or 5.8 percent year over year, comprising 8.4 percent growth from new leasing activity and contracted tenant escalations, minus 2.6 percent from tenant non-renewals.

Crown Castle Sees Healthy Q2 Site Rental Growth

In the second quarter, Crown Castle International saw site rental revenue growth of 35 percent, or $300 million, year over year, but only $49 million of that was organic. Site rental revenues were increased by acquisitions, which totaled $231 million and $20 million came from straight-lined revenues, according to press release distributed after the market closed on Wednesday.

The Organic site rental revenues represent 5.6 percent growth, comprised of 8 percent growth from new leasing activity and contracted tenant escalations, minus 2.5 percent churn.

“No business model is entirely predictable, but tower leasing comes as close to being ‘locked in’ as one could realistically hope. Tower investors wake up each morning, brush their teeth, shower, and collect 1/365th of (domestic) annual gross growth of 6 percent to 8 percent,” wrote Nick Del Deo, MoffettNathanson senior analyst. “There’s obviously more to it than that – churn, guidance changes, sister businesses like international towers or fiber, carrier consolidation risk, and so on – but that’s a fair way to describe the business.”

Matthew Niknam with Deutsche Bank Research noted that Crown Castles site rental revenue and adjusted EBITDA were 1 percent ahead of estimates by his firm and Wall Street, as well as Crown Castle’s guidance, possibly due to AT&T lease extensions.

“Relative to expectations, upside in both stemmed from $9 million in additional straight-line revenues, tied to “term extensions associated with leasing activity,” Niknam wrote. “While the drivers of this are unclear, we note that the weighted average current term remaining for leases with AT&T increased to 6 years, from 5 years last quarter.”

 

Capital expenditures during the quarter were $393 million, comprised of $10 million of land purchases, $26 million of sustaining capital expenditures, $356 million of revenue generating capital expenditures and $1 million of integration capital expenditures.

The Q2 earnings call will take place tomorrow, providing more details.

AT&T, Crown Castle Expand Strategic Relationship

Tension between the carriers and the tower companies seems to be easing a bit. At least in the case of AT&T and Crown Castle International. The two have signed a new agreement simplifying and expanding their long-term leasing deal for wireless network infrastructure.

Under the new agreement, leasing management and operations are streamlined to improve the efficiency and flexibility under which AT&T can deploy new technologies and increase network capacity. These changes will enable AT&T to speed up the deployment of 5G technologies and the execution of our FirstNet build.

“This agreement marks a significant milestone in our relationship with Crown Castle,” said Susan Johnson, executive vice president – global connections and supply chain, AT&T. “It establishes a market-based framework and simplifies the lease management and administration process. This will allow us to streamline network projects to better serve our customers.”

The agreement aligns with AT&T’s commitment to provide customers with better speed, reliability and overall performance. In addition to macro sites, the new agreement covers small cell deployments. Small cells are necessary to improve wireless networks, keep up with increasing mobile data usage and lay the foundation for 5G.

“We are pleased to expand our longstanding strategic relationship with AT&T,” said Mike Kavanagh, chief commercial officer, Crown Castle. “We look forward to continuing to support AT&T’s growth by providing our infrastructure assets to meet their network needs for years to come.”