Why are Investments Flowing Into Private Cell Tower Companies?

INVESTMENT BANKS & TOWERS

“Cell tower acquisition & development in the U.S. has traditionally been the purview of large, public tower companies, such as American Tower (AMT), Crown Castle (CCI), and SBAC. In the last 2-3 years, Investment Banks have shown an increasing willingness to finance small to mid-sized, privately owned cell tower companies. The escalation of this trend to invest in new entrants is not coincidental to an increase in the multiples of cash flow that are paid for tower acquisitions and a dearth of active tower developers.”

WHY ARE CELL TOWER INVESTMENTS ON THE RISE?

A combination of low interest rates and exploding demand make communication towers a good addition to any portfolio.

THE DATA TSUNAMI HAS YET TO CRASH

• AT&T alone has seen a 100,000% increase in the amount of data transmitted across its network from 2007-2015.
• Additionally, consumer demand for mobile devices is expected to skyrocket. Industry studies forecast more than 200 Billion new Internet of Things devices will be connected to wireless networks by 2020.
• According to the CTIA, during the past few years, there has been a 57% year-over-year increase in wireless data consumption on mobile networks.

INFRASTRUCTURE DEVELOPMENT CAN’T KEEP UP

• Wireless providers in the U.S. have spent more than $134 billion in capital investments in the past five years.
• Industry analysts forecast increases in cell site deployment from all Big Four Wireless Carriers through 2016: 20-30K macro cell towers and ~250K small cells.
• All Big Four Wireless Carriers will be deploying new sites in sufficient quantities for the first time since 2008/2009.
• The industry extends far beyond traditional wireless carriers and involves equipment manufacturers, backhaul producers and more. Technological innovations require equipment upgrades, which happen systematically at existing cell sites across the U.S.
• Modifications to accommodate new frequencies from the recent 700MHz and AWS-3 Auctions are currently taking place, and require multiple lease amendments.

CELL TOWER INVESTMENTS HAVE A STABLE FOUNDATION

• Grade A “Blue Chip” Company Tenants AT&T, Sprint, T-Mobile, Verizon
• Prepaid Long Term Leases
• Fixed Escalations typically around 3%
• Incremental growth on existing towers require very low capital investment
• Limited operating expenses which do not increase linearly with revenue

STOCK STEADILY INCREASES FOR TOP 3 CELL TOWER COMPANIES  See Slide

MAJOR TOWER ACQUISITIONS FOR TOP 3 U.S. CELL TOWER COMPANIES

American Tower (AMT) 2015 – 11,448 sites from Verizon 2013 – 5,400 towers and 9,000 rooftop sites from Global Tower Partners Crown Castle (CCI) 2015 – 10,000 miles of Fiber for Small Cell builds 2013 – 9,700 towers from AT&T 2012 – 7,200 towers from T-Mobile SBA (SBAC) 2012 – 2,300 towers from Mobilitie 2012 – 3,256 towers from TowerCo

TOWERS OWNED BY TOP 3 U.S. CELL TOWER COMPANIES See Slide

TOTAL FUNDING RECEIVED BY 11 PRIVATE CELL TOWER COMPANIES See Slide

BLUE SKY TOWERS

CTI TOWERS (COMCAST)

HORVATH TOWERS, LLC

INSITE WIRELESS

LIBERTY TOWERS (CIG)

PEGASUS TOWER

PHOENIX TOWER

SKYWAY TOWERS

TARPON TOWERS II

VERTICAL BRIDGE