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Acquisition By S&N, Diversification Help Tower 16 Weather Tough Year

By J. Sharpe Smith —

September 3, 2015 — It has been almost a year since Tower 16, which provides construction management services for wireless companies and its sister company SCE, which provides professional services to the wireless industry, were purchased by S&N Communications. The acquisition has helped the two companies weather this year’s wireless industry slowdown and come out stronger and ready for an uptick in wireless capital expenditures in 2016.

“When the slowdown occurred, it was difficult to achieve the revenue stream that we had enjoyed in the previous six years,” Ed Humes, president of Tower 16 and SCE, told AGL Link in a phone interview. “[Thanks to the S&N transaction] we have been able to stay relatively steady on our side of the house. Relative to the industry, we have been pretty successful this year.”

Tower 16 and SCE are good complements for S&N, which is a provider of infrastructure construction and utility locating services, with 52 field offices in 35 states, according to Humes. “We saw real value in S&N’s similar construction activities — some real synergies,” he said. “We thought we could take advantage of those relationships and grow our businesses jointly.”

S&N, which has several large fiber optic contracts, has installed more than 60 million feet of fiber optic cable and connected more than 1 million homes and businesses with telecom, cable and gas service. “We have been able to keep some of our key employees busy deploying fiber optics for S&N customers, while the wireless side was slow,” Humes said.

Another area where Tower 16 has seen growth is increasing the load-carrying capacity of towers. In the last year, it has added personnel, such as welders, to its structural modification division. The need for strengthening towers that are overloaded from LTE equipment deployment will be strong for the next few years, according the Humes.

Expansion in Chicago Market a Highlight

One of the major factors in the sale of the  business to S&N was to gain the ability to grow employee-wise and geographically, Humes said. As a matter of course, in July, Tower 16 was able to open an office in Plainfield, Illinois (a Chicago suburb, which is headed by Fred Teichman, Tower 16 central region director.

“We wanted to establish a presence in the Chicago area and provide the equipment and manpower needed to service the region more effectively,” Humes said. “Without S&N, we would not have been able to capture revenues in Chicago, which made up for other areas. Chicago is the one growth opportunity that we have been able to capitalize on this year.”

DAS Deployment Provides Growth

This year has been good for DAS deployment, and it has helped balance the workload for SCE, which has a DAS team that is focused on DAS deployment and testing.

“Fortunately we were a little bit diversified, and we quickly shifted gears to take care of our DAS customers. ExteNet has been s a great partner, and we have picked up some substantial DAS revenues in places that we didn’t expect it,” Humes said. “Macrocells are still the source of a majority of our revenues, but the DAS environment is definitely growing.”

In the future, Humes expects to find work with local DAS developers, such as real estate entrepreneurs, as they invest into expanding in broadband, along with other large deployments.

“There will be a ton of development in the broadband spectrum, providing ancillary opportunities beyond the big four carriers. In the next few years we expect to see an increase in local market DAS players,” Humes said.

Optimism for the Near Future

Tower 16 has tentative plans to grow into other markets in the future and is cultivating relationships at this point. But committing to a new region can pose something of a chicken and egg dilemma.

“We try to have two solid, committed clients in a region before we open an office there. But these days, the clients tend to want you to have a physical presence in a region before they will award you a construction contract,” Humes said.

Humes agrees with the general consensus that carrier capex is set to increase markedly in 2016, and he believes Tower 16 and SCE will be well positioned to take advantage of it.