An old story, “Acres of Diamonds,” became popular thanks to a lecture by Earl Nightingale about a South African farmer who exhausted his entire net worth looking for diamonds. He had sold his farm to pay for his prospecting, and the buyer later discovered that the farm contained massive deposits of diamonds. The same storehouse of value is contained within the municipal, county and state communications networks in the form of wireless infrastructure.
Wire and fiber are being left behind as interpersonal communications, entertainment and information, data for transportation and services and even power delivery are rapidly transitioning to wireless technology. The ownership and management of the wireless infrastructure — macro tower sites, fiber and microwave back haul, small cells and data centers — are rapidly being consolidated by a few companies. Because of their size and footprint, these companies have built relationships with major regional and national wireless customers: broadband providers, broadcasters, utilities, and first responders.
These few companies’ relationships with the tenants, their revenue source, depend upon the size and coverage of their wireless infrastructure footprint. The consolidation of the universe of wireless infrastructure has passed its tipping point, because there is only so much wireless infrastructure left to acquire. During the past eight to 10 years, these companies have acquired privately owned infrastructure. Meanwhile, the larger companies are swallowing up the smaller companies. This activity is good for the infrastructure owners, because the feeding frenzy has driven values to an all-time high. It is good for the tenants, too, because they have the benefit of experienced, resourceful providers that can offer ubiquitous coverage.
This is where the diamonds come in.
All of the government-owned, expensive wireless infrastructure can be sold or leased to the private sector for record high values, providing municipalities and counties with significant capital to deploy as needed. By negotiating the right terms and conditions in the sale agreement, the government entities can continue to enjoy the same use of the wireless infrastructure as ever with little or no operating costs. Because of the timing of this transition from wireline to wireless technology, municipalities, counties and states can capitalize on the market frenzy by extracting significant value from their existing resources while still having the ability to use those assets for their unique needs.
Tom Engel is a director at Strategic Tower Advisors. The core business at STA is to represent tower site sellers or buyers. Engel’s email address is [email protected] Engel will be speaking at IWCE 2021 in Las Vegas on Sept. 28 at 4 p.m., together with Bob and Tom Duchen of River Oaks Communications. IWCE has set aside an hour for Engel’s session, “Acres of Diamonds,” as part of the conference’s funding track. Click here for details.