In economics, division of labor is the distribution of tasks in any economic system or organization so that participants can specialize. Specialization in telecommunications infrastructure first emerged in the United States in the mid-1990s, when executives of three companies (American Radio, Castle Towers and Steve Bernstein Associates) saw the value of exploiting the potential of antenna tower assets by selling space to multiple tenants. These three companies founded the tower companies still known today: American Tower, Crown Castle and SBA Communications.
In the United States, mobile network operators (MNOs) have quickly realized that their business is selling voice and data services, and that passive telecom infrastructure is not fundamental to their operations. Independent tower companies, which actually manage passive telecom infrastructure, have more experience in identifying efficiencies and reducing operating costs (OPEX). In addition, tower companies tend to have a lower cost of capital than MNOs and a higher percentage of co-location (location sharing) on their masts. EY-Parthenon showed that a typical point of presence (PoP) managed by an independent tower administration company is 46% more efficient than one managed by an MNO.
As a result, all major US mobile operators have sold (or leased) their masts to infrastructure companies. In recent years, European mobile network operators have begun to follow suit. Some started with the (less successful) step of creating companies that control MNO masts (Deutsche Funkturm, Telxius, TOTEM, Vantage). But others made the “leap” to full specialization.
One can imagine these changes as “waves.” The first wave is the initial development of the network by the MNOs themselves. The second wave is the sale of passive infrastructure to tower companies.
The third wave also began in the United States. Wireless Capital Partners (WCP), the first U.S. aggregator of land leases for telecommunications infrastructure, was founded in 2001. Shortly after, in 2003. Unison Site Management (Unison) was established. The third wave gained momentum when, in 2009. I founded Wireless Infrastructure Partners (WIP, now commonly known as APWireless), which led to international investment in US-style telecom site leasing (I oversaw investment in 6,000 sites in 19 countries). The third wave is still nascent: there are about 5 million antenna sites worldwide, and of the approximately 25,000 investments made in these sites, two-thirds are in the United States!
Buying existing portfolios is easy. Aggregating thousands of individual sites across multiple jurisdictions is difficult. But that’s where the long-term value lies. Get to it!
