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View the entire newsletter for more articles:  2025 – NJAC County Biz – September

by Matt Watkins, VP Development & Operations, ACE Telecom Consulting

As the ancient Greek philosopher Plutarch said (So I’m told, I wasn’t there), “A bird in the hand is worth two in the bush.” Why does this matter to my county or town?

Let’s consider the potentially-lucrative world of owning wireless infrastructure, or lease revenue rights to someone else’s. Let’s also consider the historic and future lifespan of such assets.

Wireless carriers are constantly vying for their competitors’ customers, as well as customers of new products. Having multiple connected devices (phones, tablets, laptops) is the norm these days.  Driving demand for wireless capacity is the addition of new devices and the introduction of new technologies, which are exponentially increasing demand for capacity.

IOT (Internet-of-things) devices (environmental, traffic, air-quality sensors, smart cameras, license plate readers, autonomous vehicles) are using wireless network data at a rate not seen in the traditional end-user phone model. This is why carriers and tower companies are not yet done building macro sites (150’ towers) and not close to done building small wireless facilities sites (typically poles in the right-of-way).  Yet the macro tower model has been in use since the 1980s.

There continues to be immediate demand for wireless infrastructure. Carriers rely on it, municipalities and private landlords enjoy the (mostly) passive revenue, and tower companies and private equity firms are hungry for more revenue-generating assets. So, when does it all end and how do we plan for it?

The typical macro tower lease runs for a total of 25 years including renewal terms. A lease commencing today would run through mid-2050. These installations usually support technologies that transmit between ½ mile and a mile.  Do we believe technology that advances as quickly as it has will continue to rely on a three-quarter of a century old infrastructure model?  Maybe, but here are some reasons it might not:

• 5G – Very broad but very short signal (many antennas are good for <500’). These are typically installed in the right-of-way, where public entities typically have very limited revenue rights ($270/site/year).
• 6G – Already being explored and tested, this is expected to be direct-to-the home or end user
• Satellite – Still very new but being explored by new technology-market entrants as well as existing wireless carriers.

Industry groups promoting traditional infrastructure will tell you 5G and 6G are not robust enough and satellites are too expensive to replace cell towers, and maybe they’re right to an extent, but ruling it out would be shortsighted. Just look at the technological advances we’ve witnessed in AI, robotic surgery, and autonomous vehicles just in the last few years. These are things we never imagined could replace our old ways just a decade or so ago.

In 1977, Ken Olsen, founder of Digital Equipment Corporation (computer industry pioneer), declared there is “no reason anyone would want a computer in their home.” Even the most qualified among us make some of the most wildly inaccurate predictions. Does that mean all the wireless industry groups are wrong? We don’t yet know, but history is replete with experts being as wrong as one can be.

So, we have many public entities enjoying the very appealing passive telecom infrastructure revenue, industry experts declaring macro towers are here to stay, and none of us truly knows if the revenue will continue or the towers will remain in the long-term.

On this author’s first day of Macroeconomics at Fordham many years ago on his way to a Finance degree many years later, the lesson was taught that there is no subjectivity in a financial decision being based on the best guaranteed return. If Investment “A” has a chance to make 10% a year or lose 10% a year, and Investment “B” has a chance to make 7% a year or lose 1% a year, always chose Investment “B.”

What are some other ways to guarantee the best overall revenue for your county or town?

1. Ensure the highest possible number of bidders. Relying on public notices and electronic bid platforms will get you limited exposure.  You need a consultant with industry contacts making investors aware of opportunities and helping them understand the value
2. Understand market and industry news
   1. Tower companies have recently sold off numerous tangential lines of business that strayed from their core competency, liquidating small cell assets, fiber assets, services and more. They are reinvesting that money into what they perform well – operating cell towers. The low-hanging fruit are existing sites and they are paying a premium
   2. Individual tower purchases have been in the 16x-19x annual revenue range for years (add 2x+ when selling a portfolio). Free capital on the tower company/PE side is driving that up into the 21x-24x annual revenue range, with some recent sales seeing the 27x range
   3. Declining interest rates make capital cheaper, providing even more free capital for these purchases.

Potential buyers in this space are all benefitting from this newly-available capital, and they are all competing to outbid each other to obtain assets.  ACE Telecom Consulting makes sure you know your portfolio’s value, all potential buyers are aware of the opportunity, writes the bid and manages responses and submissions.

The appeal of ongoing revenue is known.  Opportunities to take 25 years’ worth of revenue exist now. With future technology trends for traditional wireless infrastructure being as unpredictable as they are, is the bird of One-Time Revenue in our Hands a better option than the two birds in the Bush of Unknown Futures?

ACE Telecom Consulting welcomes your inquiries about this and all telecom infrastructure matters.  Feel free to contact us at www.acetelecomconsulting.com,  info@acetelecomconsulting.com or 201.927.7660.