While reaping the benefits of 5G telecom boom, three large real estate investment trusts (REITs) that are wireless communications infrastructure owners — American Tower, Crown Castle and SBA Communications — are also working to reduce their carbon footprints.
Although tower owners consume just a small fraction of the power telecom carriers and tech manufacturers do (see Sept. 9 and Sept. 14 eDigest stories), the three REITs have stepped up their green energy initiatives to help alleviate the power-hungry demands of 5G base stations, which can consume as much as three times more power than 4G and LTE equipment.
The REITs capitalized on this year’s 5G building boom, turning in stellar second-quarter 2021 results: American Tower, one of the world’s largest owners of wireless infrastructure, reported second quarter results that included revenue increasing 20.2 percent to $2.299 billion and net income increasing 66.8 percent to $748 million.
According to Crown Castle, the company owns, operates and leases more than 40,000 cell towers and 80,000 route miles of fiber-optic cable supporting small cells and other facilities. The REIT said it increased its expected 2021 growth 12 percent, with reported income from operations of $333 million in the second quarter — compared with $200 million for the second quarter of 2020.
SBA Communications reported a net income of $152.7 million or $1.37 per share, average funds from operations (AFFO) per share growth of 15.3 percent for the second quarter and revenue of $575.5 million for its second quarter.
The three REITs are as quick to boast of their environmental successes as their financial success. However, it is yet another large cell tower owner that claims to be the first wireless infrastructure company to become 100 percent carbon-neutral. According to Vertical Bridge, the company owns and master-leases more than 8,000 towers, which it said makes the company the largest private owner of towers in the United States.In June 2020, the Boca Raton, Florida-based Vertical company said that it was officially certified as carbon-neutral in accordance with The CarbonNeutral Protocol.
Last month, Vertical Bridge became part of DigitalBridge Group (for background, Digital Bridge was a company Colony Capital purchased in 2019, but now both Vertical Bridge and Colony Capital are part of DigitalBridge Group) — but the “bridged” company’s carbon-neutral green initiatives remain intact.
As part of Vertical Bridge’s carbon-lowering efforts, it is opting for more energy-efficient and environmentally safer technologies as it upgrades HVACs, aviation lighting systems (to LED lighting) and generators. It’s also guided field operations teams to be more efficient with travel route planning by completing multiple visits and inspections in a single trip rather than several.
Meanwhile, Houston-based Crown Castle, despite having the highest percentage among its peers of suburban and urban cellular towers and small cells — which tend to consume more energy — has a relatively limited carbon footprint. About 62 percent of Crown Castle’s towers are in the top 100 cities in the United States. Although its cell tower business is booming this year, Crown Castle said it believes its small-cell market will flourish. Typically, cell towers consume less energy than small cells, which consume little power individually but have a cumulative power consumption in urban areas.
According to Crown Castle’s environmental sustainability statement, “Our infrastructure and related assets, such as ground shelters, are primarily used to host our tenants’ assets and support their operations. While Crown Castle frequently contracts with utility companies to deliver electricity to our sites, the power is predominantly consumed by our tenants to operate their equipment, such as radios. Given that our assets are primarily U.S.-based, our operations are generally supported by a reliable power grid.”
The statement continues, “Where lighting beacons are mandated by law, we have transitioned 6,119, or nearly 50 percent, to efficient LED lighting to reduce energy consumption. In addition, all new vehicles in our service fleet are assessed for fuel efficiency, and our data center teams routinely evaluate the energy use of their equipment and make updates to improve efficiency. We also seek energy efficiency in our owned and leased offices, with 18 Energy Star-certified and seven LEED (Leadership in Energy and Environmental Design)-certified. For new office spaces, we make efficiency improvements a standard practice.”
Meanwhile, American Tower owns the most U.S. cell towers — about 42,000 — and also owns about 500 distributed antenna system (DAS) networks and 1,774 DAS nodes; 407 of these DAS nodes are in the United States.
According to American Tower’s environment statement, “Managing our environmental impact is an essential element of our value proposition to our tenants and our commitment to sustainability. By deploying the latest renewable energy technologies and advanced battery storage systems and reducing energy usage as much as practicable, we can offer our tenants a more stable, resilient and efficient platform for their equipment’s power requirements. In addition, with more than 214,000 sites worldwide, we are committed to expanding connectivity in a sustainable manner by working with our local communities to ensure protection of our surrounding land and ecosystems.”
American Tower also points to its more than 1,700 solar panels on the roof of its U.S. Tower division headquarters in Woburn, Massachusetts, offsetting approximately 16 percent of the building’s usage annually, adding “While our targeted diesel reduction program is our most impactful use of resources and efforts in sustainable operations, we also sponsor other programs focused on reducing, reusing and recycling under our companywide Green @American Tower initiative. We believe that weaving sustainability into our culture is essential to our success and this starts where employees work every day. We do this by investing in renewables and other energy efficiencies in our offices around the world.”
In 2018, American Tower announced its commitment to planting a million trees across the United States over the next decade. “Our Million Trees initiative is a new and creative approach to philanthropic giving that helps support our mission to connect to the communities where our teams live and work,” a statement from American Tower reads. “To implement this program, we are partnering with American Forests, the nation’s oldest conservation organization. Thus far, American Tower and American Forests have planted 200,000 trees.”
Ranked third among the large U.S. wireless infrastructure REITs with more than 17,000 towers in service, SBA Communications stated that one of its core corporate goals is to “mitigate the environmental impact and carbon footprint.” However, SBA is one of many S&P 500 companies that do not disclose their carbon data to the Carbon Disclosure Project (CDP).
Nevertheless, SBA has implemented various initiatives to reduce its carbon footprint and provide green solutions for its business, including stringent energy efficiency and recycling programs.
According to the Environment chapter of SBA Communications’ 2019 Sustainability Report, “As a leader in wireless communications infrastructure, SBA also strives to be a leader in corporate sustainability. We continuously look at ways to maximize the sustainability of our operations and reduce our environmental footprint across the markets in which we operate. Our neutral-host infrastructure assets have a relatively small geographic footprint, ranging from 2,000 to 10,000 square feet per tower site. They are built to host equipment from multiple tenants, thereby reducing the overlap and duplication of towers in our communities. We have developed sustainable energy solutions that reduce carbon emissions for our customers. We support post-disaster recovery efforts following hurricanes, such as the re-building of critical telecom networks and provisioning of emergency power.”
SBA said that its environmental measures include screening tower site locations that might be located in a wilderness or wildlife preserve, mitigating any potential effect on migratory birds and their habitats, and accelerating the replacement of all lighting systems on its towers from traditional incandescent and xenon models to new energy efficient LED lighting systems.
Mike Harrington is a contributing editor.
The book Fauxliage by Annette LeMay Burke contains 60 color photographs of disguised cell phone towers of the American West. Burke, a photographic artist, captured images of often-whimsical tower disguises during six years of travel. The photographs also are available in 17×22 and 30×44 prints, with individual commissions for larger sizes.
“I live in Silicon Valley,” Burke said, in an interview with AGL Magazine. “I used to work in tech, so I’m used to having a lot of technology around me. I first noticed these disguised trees in the early 2000s. Even in Silicon Valley, they stood out as a little odd. They amused me. Eventually, I started a photo project.”
Writing in her book, Burke said that the more she photographed the towers, the more disconcerted she felt about technology clandestinely modifying the environment.
“Would our children soon accept these towers as normal?” she asked. “I began to explore how this manufactured nature had imposed a contrived aesthetic in our neighborhoods. My photographs expose the towers’ idiosyncratic disguises, highlight the variety of forms and show how ubiquitous they are in our daily lives.” Because the towers are mostly fake trees, Burke called the photo series Fauxliage.
Some of Burke’s search for towers to photograph simply involved a lot of driving around.
“It’s much easier when you’re the passenger, just to look around,” she said. “Many times, I would take scouting shots with my cell phone just to get the GPS and then go back later. I would ask people who live in the area where good ones are. Also, the internet is just a great research tool.”
Burke said she has a degree in geology, and she is interested in the natural world and how people interact with it.
“I’m used to looking at the landscape,” she said. “I’m interested in artifacts that we leave behind. This could be something that technology has left behind, these cell towers.”
Despite the quirky disguises that can be entertaining to look at, Burke wrote in her book, the towers present privacy and environmental concerns. “The often-farcical pole disguises belie the equipment’s covert ability to collect all the personal data transmitted from our cell phones,” the book reads. “Our social media interactions, advertising clicks, location tracking pings, audio recordings by the always-listening Siri and Alexis, are all commoditized, sold and stored by Big Tech and the government. Surveillance capitalism, especially perfecting the algorithms that can predict our behavior to advertisers, is big business in the 21st century.”
Commenting about the cell towers disguised as saguaro cacti, Burke said, “They are my favorite. The ones I photographed are in the Phoenix area. They are very well disguised, I think, because they can be shorter. It helps them to fit in a little better. The designers go to great detail. The little cactus spines are all airbrushed individually. They have re-created the little birds’ nest burrows in there. They are really great.
Burke maintains a website at www.atelierlemay.com, where it is possible to obtain signed copies of the book. Daylight Books publishes Fauxliage by Annette LeMay Burke; visit www. daylightbooks.org/products/fauxliage.
Don Bishop is executive editor and associate publisher of AGL Magazine.
SBA Communications, through a new joint venture company, has agreed to purchase 1,400 towers in Tanzania for $175 million. In a statement filed with the U.S. Securities and Exchange Administration, SBA said that the seller, Airtel Tanzania, a subsidiary of Airtel Africa, would lease back space on each of the towers. Airtel Tanzania also would provide a fixed minimum number of build-to-suit towers during the first five years following the closing of the acquisition.
“The assets have a current tenancy ratio of just under 1.5 tenants per tower, including Airtel, and are expected to produce approximately $18 million of adjusted EBITDA during the first full year of operations under the joint venture,” the statement reads. “SBA will be the majority partner of the joint venture, and Paradigm Infrastructure, a UK company, will be the minority partner. The closing of the transaction is subject to a number of customary conditions, including the issuance to the joint venture of a tower company license in Tanzania.”
Information provided by Paradigm said that the company would be responsible for the joint venture’s day-to-day operations. “Paradigm will contribute its specific industry experience in establishing and operating new shared wireless infrastructure in African markets, complementing the extensive U.S. and international experience of SBA,” the information reads.
According to Paradigm, Tanzania represents a market with high demand for shared wireless infrastructure.
SBA is a Boca Raton, Florida-based real estate investment trust that owns and operates wireless infrastructure in the United States, Canada, Central America, South America and South Africa.
Paradigm is based in Northampton, United Kingdom, and focuses on developing, owning and operating shared passive wireless infrastructure in selected growth markets.
Don Bishop is executive editor and associate publisher of AGL Magazine.
SBA Communications has purchased the license agreements of wireless carriers to have equipment affixed on more than 700 towers owned by Pacific Gas and Electric Company (PG&E) for $973 million. PG&E will receive a portion of that future revenue.
Additionally, PG&E has entered into a strategic relationship with SBA to sublicense and market equipment at additional attachment locations on up to 28,000 transmission towers across PG&E’s network. Through this arrangement, PG&E will receive a portion of future revenues from these sublicensed equipment attachment locations.
“This transaction adds a significant portfolio of high quality, exclusive locations to our outstanding existing US macro tower portfolio and SBA expects these assets to generate approximately $39.5 million in Tower Cash Flow in their first full year in our portfolio,” said Jeff Stoops, president and CEO of SBA Communications.
Still singed by the wildfires of 2015, 2017 and 2018, PG&E emerged from bankruptcy mid-year 2020. It will use the proceeds from these agreements to strengthen its financial position and lower monthly bills in the future.
“When we emerged from Chapter 11, we made a commitment to achieve financial stability and bolster our overall financial health and we’re delivering on that objective,” said Chris Foster, PG&E Interim chief financial officer. “Strategically selling non-core assets like these is one way we’re continuing to follow through on that commitment, reduce our financing needs and strengthen our balance sheet.”
This transaction is expected to close in early 2021. PJT Partners acted as exclusive financial advisor to PG&E. Munger, Tolles & Olson acted as legal counsel to PG&E.
Wells Fargo Securities viewed the transaction as opportunistic on SBA’s part, because the 24.6x multiple paid is well below the 30x multiples seen in the market for other site portfolios, which were a mix of traditional macros and non-traditional sites, according to Eric Luebchow, senior analyst for the firm.
“Further, transmission towers historically are located in areas where zoning is more difficult for carriers, thus offering SBAC an opportunity to increase colocation by marketing in ways PG&E wasn’t able to prior,” Luebchow wrote in a Flash Comment. “Future colocation is subject to revenue splits with PG&E. While color was limited, we expect the splits would be comparable to what’s included in TCF split on the portfolio today, if not slightly better.”
It is not uncommon for electric companies to sell the rights to attach wireless antennas to their transmission towers. Although there have been some disagreements on access to the towers over the years, Florida Power & Light, Duke Energy, First Energy, Consumers Power have all sold access to their transmission towers in one way or another.
Licenses for wireless antennas are one of the secondary uses of transmission towers approved by the Federal Energy Regulatory Commission (FERC) and the California Public Utllities Commission (CPUC) and under this agreement, PG&E retains control over its safety protocols.
“It’s inconvenient for the power company to have to turn down the power to allow workers onto their transmission towers,” said. Clayton Funk, managing director, Houlihan Lokey. “It’s not their core business. Even if they have a communications division, it’s not ideal. There must be a strong monetary incentive.”
The tower industry is set for an upturn in the second half of 2020 with the resolution of the legal challenges to the Sprint/ T-Mobile merger and the birth of a new facilities-based nationwide carrier, said Jeffrey Stoops, president and CEO of SBA Communications during the fourth quarter 2019 earnings call.
“In order to meet their required 5G coverage goals, the new T-Mobile will require meaningful upgrades across their combined portfolio, deploying 2.5-GHz spectrum to legacy T-Mobile sites and 600-MHz spectrum to legacy Sprint sites. These efforts will drive amendment activity for SBA,” he said.
The Sprint/T-Mobile merger, however, still must get through the California Public Utilities Commission before the transaction closes. “I think they will go quickly [with tower deployment once the deal closes, but I think we’re going to have to wait and see as to when that happens,” Stoops said.
Another catalyst will be Dish’s heavy investment in a new 5G nationwide network. Stoops said Verizon and AT&T will respond with their own 5G initiatives, further driving additional collocation activity.
“We believe [AT&T and Verizon] will embrace the new competitive landscape and continue to invest significantly in their own [5G] networks,” Stoops said. The number towers built out by AT&T and Verizon, however, will not grow significantly year-to-year, he added.
The release of 5G-enabled handsets and new 5G apps will also spur the network investment required to support these technologies — not to mention the release of additional mid-band spectrum, which will make for a long deployment cycle.
“The initial 5G deployment cycle has really only just begun, particularly as it relates to macro sites and the deployment of mid-band spectrum and massive MIMO architecture,” Stoops said. “The anticipated auctions of CBRS [Citizens Broadband Radio Service] and C-band spectrum later this year will only serve to further support this upward investment trajectory over the next several years.”
Brendan Cavanagh, SBA executive VP and CFO, said SBA expects CBRS to be primarily a small cell indoor service but with some macrotower outdoor use, as well.
“But we don’t think, at least for SBA, the CBRS spectrum will be nearly as impactful as the C-band spectrum,” Cavanagh said.