Tuesday, December 10, 2013 Volume 1 | Issue 32 What Does the Future of the Tall Tower Industry Look Like to a Seasoned Professional? Part 2 Gary Hess, co-founder of American Tower Corporation and current Di- rector of Vertical Real Estate at Clear Channel, took the time to talk to us about where he sees the tall tower industry going. There is always the question of whether or not towers will be replaced by a smaller tech- nology. “When American Tower was being put together. Steve Dodge and I would meet with the lenders and the questions were always so predictable. ‘Are satellites going to put towers out of business?’ ‘Why do we need towers in the future, because isn’t everything going to be run- ning off of satellites?’” Gary explained. “I’m starting to sense that the real tall tower days are behind us. I’ve witnessed this because the big manufacturing companies have folded their tents.”
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FCC Reschedules Spectrum Auction for 2015
After a month in office, FCC Chairman Tom Wheeler believes that in order to have the most suc- cessful spectrum auction it’s best to reschedule it for 2015. “As any responsible manager knows, managing a complex undertaking such as this also requires an ongoing commitment to continuously and honestly assess its readiness and its project plan. I believe we can conduct a successful auction in the middle of 2015. To achieve that goal, there will be a number of important milestones along the way. The Task Force will provide more details about the timeline and milestones in a presenta- tion at the January 2014 Commission meeting,” Wheeler wrote in an FCC blog post last Friday. Dur- ing this time, the Task Force will develop the actual procedures for how the auction will be con- ducted. There are other aspects of the auction that the chairman and the Task Force will have to take into consideration during this extra time. According to AdWeek, “In addition to all the logistical challenges of the auction, Wheeler is also facing a very tough decision about whether to limit the two biggest wireless companies, AT&T and Verizon, from gobbling up all the spectrum. The Department of Justice, some public interest groups and wireless firms such as T-Mobile and Sprint would like to see the FCC put some limits in place. But that could run afoul of both the House GOP and the lan- guage in the law that says the FCC may not restrict bidders.”
NII Holdings Announces Closing of Sale of Communications Sites in Brazil
Yesterday, NII Holdings announced the completion of the transaction to sell certain communications sites in Brazil to American Tower Corporation. As part of the trans- action, the company sold 1,940 communications sites to American Tower for total proceeds of BRL$813.8 million, which is equivalent to USD$348 million based on current foreign currency exchange rates. As part of the transaction, Nextel Brazil agreed to lease back the communications sites from American Tower for a minimum 12-year initial lease term and has the option to extend the lease for additional renewal periods. Ac-
Inside Towers Page 1 cording to NII Holdings, “The agreement with American Tower provides for a post-closing adjustment period, after which the company will recognize the sale of the sites and any associated gain, which will be recognized over the lease term. At that time, the company expects to record a capital lease liability of up to $240 million relating to the sale of the Brazil communications sites.”
Is American Tower Corporation a Hot Stock?
According to the analyst’s at PennyStockEarnings, American Tower Corporation is a hot stock. The analysts explained, “American Tower Corp traded up on a volume of 1.47 million, lower than its stan- dard daily volume. Shares have gained 0.42% to $78.08. Over the last twelve months, the stock has gained 30.11% and faced a worst price of $67.89. American Tower Corporation is a holding com- pany.” However, analysts at Zacks downgraded the stock from a neutral rating to an underperform rating. They currently have a $70.00 target price on the stock and analysts wrote, “American Tower reported tepid third-quarter 2013 results with both the top and the bottom line missing the Zacks Consensus Estimate. Despite increased deployment of 3G/4G network by carriers across the world and aggressive buyouts of towers in emerging markets, the company is exposed to stiff competition and new technologies. Moreover, foreign exchange rate risk, less customer concentration, integra- tion risk, rising operating expenses and a highly leveraged balance sheet may act as headwinds for the company going forward. Nevertheless, the stock is currently trading at a 52-week high range. We believe it is overvalued at current level and therefore downgraded American Tower to an Under- perform recommendation.”
SBAC September 2014 Options Begin Trading
Investors in SBA Communications saw new options begin trading on Thursday, December 5th, for the September 2014 expiration. According to Forbes, “One of the key data points that goes into the price an option buyer is willing to pay, is the time value, so with 289 days until expiration the newly trading contracts represent a possible opportunity for sellers of puts or calls to achieve a higher pre- mium than would be available for the contracts with a closer expiration. The put contract at the
Inside Towers Page 2 $85.00 strike price has a current bid of $5.50. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $85.00, but will also collect the premium, putting the cost basis of the shares at $79.50 (before broker commissions). To an investor already interested in purchasing shares of SBAC, that could represent an attractive alternative to paying $86.07/share today.”
Zacks Explains Their ‘Neutral’ Rating for Crown Castle International
On Wednesday, December 4th, Zacks announced that they would retain their neutral recommenda- tion of Crown Castle International. The company explained why they decided to reiterate their rating for the company. “Higher usage of smartphones and tablets and increased deployment of 4G LTE networks have propelled demand for tower requirement by large carriers. Moreover, the acquisition of NextG Networks Inc. (which comprises 7,000 Distributed Antenna Systems) and the purchase of 7,200 wireless towers from T-Mobile USA have made it the largest wireless tower operator in the U.S. Furthermore, the company has entered into a definitive agreement with telecom giant AT&T Inc. to acquire exclusive rights of 9,700 wireless towers of the latter for a total consideration of $4.85 billion. As transporting equipment from one tower to another is cumbersome, carriers normally renew contracts upon expiration. This implies that a high percentage of Crown Castle’s revenue is recur- ring,” Zacks’ analysts explained.
Consultant Says Florida County Will Need 200+ Cell Antennas in Next 12 Years
It’s become quite clear that demand for cell service is increasing at a rapid pace and in order for counties to handle that demand more cell towers and antennas will need to be built. The Florida Today reported that, “A county consultant says Brevard County will need more than 200 new cell phone antennas, atop roughly 100 or so towers, in the next 12 years to handle increasing customer demand.” This new information en- couraged the County Commission to lease county-owned land for new tower sites. The County Commission is working with experts from City- Scape Consultants Inc. to develop new rules for tower placement. County Commission Vice Chair Robin Fisher said it makes sense for the county to explore such options to boost revenue, saying the potential financial return could be “very impressive. I think we need to get in it.” (Source: Florida To- day)
Ohio Township Establishes New Zoning Regulations for Towers
The officials in Liberty Township, Ohio are working hard to make it more difficult for cell towers to be constructed in the backyards of residents. Ohio state law stipulates that a township cannot prohibit a telecommunications tower from building a tower, but they can make it more difficult for the compa- nies to achieve their goals. The condition that is being added to the process is that a company must justify the location of the device. “Otherwise, based upon the current law, they could literally put a tower on every piece of land and have six towers along your property line, and you wouldn’t be happy with that when they could in fact have one tower with six antennas on top of it,” Trustee Tom Farrell said. “That’s all we’re trying to do, is to add a little due diligence to it within the law’s capabili- ties to make sure they’re at least justifying that that’s the only place that antennae can be put in or- der to cover. That’s the only change.” (Source: Journal-News)
Inside Towers Page 3 Osprey Nest Couldn't Be Moved Until Birds Migrated South
Sometimes animals find the most inconvenient places to build their home whether it’s a squirrel making a home in your attic, a turtle burying itself underneath your air conditioning system, or an osprey nesting on a cell tower. On North Plains Industrial Road in Wallingford, Connecticut there sits a 220-foot cell tower where an osprey nest used to live. Al- though it would have made the most sense to just relocate the nest of birds, ospreys are protected by both state and federal law so the nest had to remain on the tower until they migrated south. "Osprey nests can be removed with little fanfare outside of nesting season, which is roughly late April through August," says Dwayne Gardner, a Department of Energy and Environmental Protection spokesman. "They can even be removed during the nesting season under special circumstances . . . if the United States Fish and Wildlife Service gives permission and DEEP is notified." (Source: The Courant) While this nest caused problems for Sprint customers in the area, the company removed the nest during the first week of October after the birds had finally migrated.
OSHA Cites Custom Tower LLC for Safety Violation Following Fatality
The U.S. Department of Labor’s Occupational Safety and Health Administration cited Custom Tower LLC after the death of a worker who had fallen125-feet while trying to install a microwave dish on a cellular tower. On November 24th, Douglas Klein fell from a cell tower in Wichita, Kansas and passed away due to injuries the following day. "This preventable tragedy underscores the legal re- sponsibility of employers to follow OSHA standards and procedures to ensure workers use fall pro- tection equipment correctly," said Clyde Payne, director of OSHA's Jackson Area Office. "Employers must ensure a safe and healthful workplace for their workers." Custom Tower LLC is a privately owned company located in Scott, Louisiana and the proposed penalties against the company total $50,400.
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