Thursday, October 24, 2013 Volume 1 Issue 2

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1 Thursday, October 24, 2013 Volume 1 Issue 2 Consolidation in the Tower Industry Encourages Investment to go. There has been talk about the communications tower industry being a good sector to invest in because of the increase in demand for mobile and wireless services. While the demand for these services still steadily increases, there s also another factor that encourages investing in this market: consolidation. After American Tower Corporation announced their acquisition of Global Tower Partners and their 9,000 domestic sites back in September there was much discussion about how investing in this market is the way The cell phone business is hot and it s not going anywhere and without these cell sites, the cell phones would be useless. Now that Crown Castle has announced their acquisition of 9,700 towers that belong to AT&T, Jim Cramer of CNBC s Mad Money believes these stocks are ones to purchase. This cell tower operator [CCI] is on track for years of growth thanks to consolidation in the industry and a huge uptick in carrier spending, Cramer said. The cell carriers like AT&T, Verizon, T-Mobile, and Sprint are all spending billions of dollars to upgrade their equipment on cell towers to bring better reception to their customers. With the expansion of the 4G LTE network, upgrading the technology on towers as well as constructing new sites has become a major undertaking in the telecommunications industry. Crown Castle International Corporation is at $74.30, with 1,014,492 shares traded. Over the last four weeks they have had 4 up revisions for the earnings forecast, for the fiscal quarter ending December The consensus EPS forecast is $0.18. As reported by Zacks, the current mean recommendation for CCI is in the "buy range". (Source: NASDAQ) Crown Castle Announces Pricing of Public Offerings Crown Castle International (CCI) announced that is has priced its public offerings of common stock and mandatory convertible stock. The price of the 36,000,000 shares of common stock is $74.00 per share and 8,500,000 shares of its 4.50% mandatory convertible preferred stock, series A, is priced at $ per share. The underwriters in each respective offering have been granted an option to purchase up to an additional 5,400,000 shares of common stock and up to an additional 1,275,000 shares of mandatory convertible preferred stock. Dividends on the shares of mandatory convertible preferred stock will be payable on a cumulative basis when, as and if declared by Crown Castle's board of directors, at an annual rate of 4.50% on Inside Towers Page 1

2 the liquidation preference of $ per share. The dividends may be paid in cash, or subject to certain limitations, in shares of Crown Castle common stock or any combination of cash and shares of common stock on February 1, May 1, August 1 and November 1 of each year, commencing on February 1, 2014, and to, and including, November 1, 2016, Crown Castle explained in a press release. The proceeds from the common stock offering and the mandatory convertible preferred stock offering is expected to total approximately $2.95 billion and $825.5 million, respectively. Crown Castle expects to use these proceeds, along with cash on hand and additional debt financing, to pay AT&T and its affiliates for the recently announced transaction where CCI will operate 9,700 AT&T towers, leasing 9,100 of those towers and purchasing the other 600. Is Your Property Suitable For A Cell Tower? We have heard a lot of complaints about where residents of communities believe cell towers shouldn t be placed due to health or aesthetic reasons, but what makes a specific piece of property more desirable than one a couple hundred feet away? The first requirement for a property is that it must be inside what is commonly known as a search ring. A search ring is an area designated by a cell phone carrier that shows where they need to place a cell tower. The size and shape of a search ring varies depending upon many factors, including the topography of the area, the population density of the area, as well as any federal, state or local restrictions that surround the particular search area, Vertical Consultants explains. Before this even begins, the companies must take into account is whether or not there is a need in the area for a cell tower. When trying to determine the right property for a cell tower in a specific area the site acquisition specialist takes GPS coordinate readings of the property to confirm at the Radio Frequency Engineering department if the site works or not. Vertical Consultants compounded a list of characteristics a cell phone carrier or cell tower company will be looking for in a new potential cell tower site: Adequately Available Vacant Land: These companies normally look for a site that is going to have at least 1,000 square feet available and will sometimes want up to 10,000 square feet. Construction Expenses: When a cell phone carrier or cell tower company looks to choose a site for the placement of a cell tower, it must weigh the cost of construction based on the characteristics of an available property Access to the Tower: Cell phone carriers and tower companies are always concerned about access to a cell tower, so a parcel that has easy access to a public road is preferable. Zoning & Permitting: A correctly zoned property and a location being located in a cell tower friendly city or county can save a cell phone carrier time and money. Topography: As mentioned previously, you could potentially own a property that is the highest point in the city, county, or even state, but if that property is not in a search ring, it will not be selected, as location means more than elevation. Inside Towers Page 2

3 What Problems Could the Connected Car Cause Cell Phone Towers? At the PCIA s 2013 Wireless Infrastructure Show, the Connected Car was a topic of discussion in many panels. As the wireless industry continues to expand, industry leaders are looking for new ways to bring wireless technology to every aspect of our lives including time spent in the car. It s not news that people enjoy using their phones in the car. The Center for Disease Control and Prevention reported that, 31% of U.S. drivers ages reported that they had read or sent text messages or messages while driving at least once within the 30 days before they were surveyed. Many wireless carriers such as AT&T and Verizon, along with many insurance companies, have started campaigns to urge people to not text and drive. The Connected Car aims to lower the rate of texting and driving while bringing you access to more wireless technology while you are in your car. Iain Gillott of igr discussed the features of the Connected Car in a webinar. The Connected Car would have a built-in LTE connection to the macro network that can connect to a Wi-Fi hotspot that is within the vehicle. Passengers will be able to access a wireless signal over the LTE connection. Gillott noted that, We spend a lot of time in our cars as a society. He says in the webinar that approximately 20% of Americans spend more than 60 minutes per day in the car. While having access to technology like this on the road seems like a fantastic idea, what will it do to our networks and macro sites? In-car data use increases bandwidth demand at peak network times and it adds to the network congestion problem, Gillott explains. Because the vehicle is moving, small cells will not work for cars so our macro networks will become congested. This is a challenged that supporters of the Connected Car face. Although this new technology is an opportunity for our mobile network infrastructure to grow, it s not always easily achieved. It s possible that our networks will be slow and over-capacity because of the Connected Car before more cell sites can be built to accommodate the influx in demand. Verizon Continues Expanding 4G LTE Network Google s Ian Carrington says that more people on Earth have access to a mobile phone, than have access to a toothbrush. Now as disturbing as that fact may be, it illustrates the ever-increasing demand for cell phones and wireless network capabilities. This is why the major cell phone carriers have been working nonstop to upgrade equipment and build cell sites in new places in order to bring their customers the most reliable service they can offer. Verizon Wireless has now expanded in Columbus, Pennsylvania. Verizon launched their 4G LTE network in December 2010 and it is now available in more than 500 markets and to 97% of the population covering more than 303 million people in the US. "Our 4G LTE network provides customers across the country with the best wireless experience possible, enabling them to stay in touch like never before uploading, downloading and connecting online with speeds up to 10 times faster than 3G," said Mark Frazier, president Ohio/Pennsylvania/ West Virginia Region, Verizon Wireless. "We were the first to bring 4G LTE to Pennsylvania begin- Inside Towers Page 3

4 ning in As we continue to expand and enhance our 4G LTE network, our customers will be able to see, firsthand, the innovations that are being brought to market through 4G LTE technology." GME Supply Expands Facilities and is Committed to Tower Safety been required to grow as well. The National Association Tower of Erectors met with Beau Aero from GME Supply to talk about where the company is headed in the future. Aero serves on NATE s Trade Show Committee, is the founder of GME Supply and Field Sense, and is a long time NATE member. Aero shared with Todd Schlekeway, Executive Director of NATE, that because of the growth within the industry, they have Part of that is the expansion of our facilities, just a couple of weeks ago we opened up a new facility in Missouri a 26,000 square foot warehouse that we re stocking with a huge assortment of gear and equipment, Aero shared. And just this week we launched our fall 2013 catalog that features 148 pages of equipment and supplies geared specifically to the tower erectors and maintenance workers in our industry. GME Supply is a long time member of NATE and works to provide equipment and supplies that keeps tower workers safe. Founded in 2005, GME has quickly grown to service the needs of a variety of industries, including cell tower maintenance, tower and steel construction, oil and gas, wind generation, residential and commercial construction, manufacturing, maintenance, and more. Missouri Judge Dismisses Two New Cell Tower Laws Earlier this week, a Missouri Judge struck down two new laws that limited the ability of local officials to regulate cell phone towers. The judge felt that the lawmakers violated procedural requirements when passing the new legislation. While the judge may have felt these new laws were too strict, many local and state governments are passing new legislation to reduce the barriers tower companies face when attempting to build a new cell site. While this is the judge s opinion, it might not be the end of this discussion in Missouri. The representatives of cell phone service providers and cities could appeal this ruling to the Missouri Supreme Court forcing lawmakers to revisit the issue next year. Missouri s Governor, Jay Nixon, believes the new laws regarding cell tower construction would encourage high-speed Internet and wireless telephone service across Missouri. Many of the cell phone carriers and tower companies believe that reducing the limits on local regulations is good for telecommunications-related investments in Missouri. Inside Towers Page 4

5 However, some believe that these new laws violate constitutional requirements and should be declared invalid. The attorney general s office will review the judge s ruling and has until December 2nd to decide whether to appeal or not. LBA Group, Inc. Celebrates Its Golden Anniversary LBA Group, Inc., who provides RF consulting and program management services to a wide variety of clients, is celebrating their 50 year anniversary as a global provider of Radio Frequency asset solutions. The LBA Group began as Lawrence Behr Associates back in 1963 and has been based out of Greenville, North Carolina ever since. When LBA Group, Inc. first began they focused on providing consulting services in the radio/tv spectrum business along with consulting on other RF issues. on-site safety training. Today the focus more and more is on how we live with RF devices that are increasingly surrounding us, so that s why we are putting our emphasis in this area of RF risk management, added Behr. Since the company began, LBA has added LBA Technology, Inc., the manufacturing unit of the company and most recently LBA University, Inc., providing online and Earlier this year, the Greenville-Pitt County Chamber of Commerce honored Behr with the Small Business Leader of the Year Award. LBA also plans to continue growing and improving its expert consulting services to the wireless industry in the areas of regulatory compliance and interference remediation. Safety, compatibility, interference and security are all critical as it becomes more challenging than ever to address RF issues in an ever changing mobile world, LBA Group explained in a press release. LBA Group, Inc. has 50 years of experience in providing RF asset solutions and risk management for industrial and telecommunications infrastructure assets. They also post some pretty awesome pictures on Facebook! American Tower Identified as a Momo Momentum Stock Trade-Ideas LLC identified American Tower Corporation (AMT) as a momo momentum candidate, meaning the stock is valuable for a variable reason such as historical back testing and price action. The Street explained that Trade-Ideas identified AMT as such as stock due to the following factors: AMT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $213.2 million. Inside Towers Page 5

6 AMT has a PE ratio of AMT is currently in the upper 30% of its 1-year range. AMT is in the upper 25% of its 20-day range. AMT is in the upper 35% of its 5-day range. American Tower s revenue thus far for 2013 is $1,611,000 with an EPS of.68 and dividends of.53 compared to 2012 where they had a total revenue of $2,875,000 with EPS of 1.6 and dividends of.9. American Tower is a provider of wireless and broadcast towers, in-building and outdoor DAS, other right-of-way options, small cell and Wi-Fi networks, managed rooftops and services that speed network deployment for the wireless and broadcast communications industry. This is a 125 TUP-3 transportable AM broadcast tower made by LBA and deployed with the US Army. Inside Towers Page 6