Inside Towers’ VP of Marketing Megan Reed catches up with Everest Infrastructure Partners’ executives Mike Mackey, President; Chris Davis, Chief Development Officer; Will Heapy, CEO of Everest Infrastructure ANZ; and Matt Newton, CEO to discuss trends in the tower marketplace and Everest’s expansion to-date.
Based on some recent headlines it sounds like Everest has continued to realize strong growth in the marketplace. How has 2021 unfolded for you and where have you seen growth?
“It’s actually been several consecutive years of strong growth across the board for us,” said Mackey. “We were somewhat cautious coming into the year given how strong 2020 was for Everest. But we’ve continued to see strong activity in new leasing, new tower development, and across our acquisition platform. 2021 will be our best year of growth and especially for leasing and new tower development.”
Chris Davis added, “We are seeing network growth from all four national operators. It’s really the first time all national operators have been expanding their networks at the same time for more than a decade. The Dish activity has clearly hit the ground running with the first nationwide commercial network buildout in the U.S. in nearly 20 years. We have some very strategic tower locations and leasing has been strong for us from all operators. However, where we’ve really been able to add value is with creative solutions around new tower development, especially in locations where siting and geographic issues are particularly challenging. 2021 is our biggest year yet in terms of new tower development and we expect that to continue as we broaden our ‘Partners’ program with 3rd-party developers.”
Everest seems to have one of the more unique acquisition programs in the wireless infrastructure industry. How has it performed in 2021?
“We’ve had the same approach with our acquisition program for almost two decades and it’s reached a scale that produces the broadest coverage in the U.S. and a consistent stream of actionable opportunities,” said Mackey. “The acquisitions market is extremely competitive and there continues to be new sources of capital entering the market all the time. Where Everest has a true competitive advantage is our in-house origination efforts that produce a substantial volume of opportunity that is predominantly off-market. This is a truly unique go-to-market strategy and one that our team has successfully executed to invest capital outside of significant competitive tension. In 2021, Everest will acquire more than 100 macro tower sites for the third consecutive year, and a majority of these assets were sourced in-house.”
How does your in-house platform compare to larger portfolio acquisitions?
“Portfolio acquisitions is certainly where we’ve seen the most aggressive valuations,” said Newton. “There are very few portfolios of scale remaining in the U.S., and there are more sources of capital than there are quality operating platforms. There are many financial investors that are seeking acquisitions without utilizing an existing tower platform or management team. The result is that stand-alone portfolio acquisitions are extremely expensive. However, all towers are definitely not the same in terms of future leasing potential and growth. Where Everest has been most active is with portfolios that complement our existing clusters of strategically located sites. In the past year, we completed portfolio acquisitions in the Midwest, several in the Rocky Mountain region, and several larger additions in California. In fact, we have a large portfolio acquisition we’ll be announcing shortly that will be complementary to our west coast footprint.”
In 2021 you expanded to Australia. How does that compare to the U.S. market?
“It is similar in that it’s a developed economy with an equivalent regulatory and legal framework and a strong multi-operator competitive environment,” said Mackey. “Market penetration is near 100% and the carriers are rolling out 4G and 5G services at the same pace as U.S. operators. Where the market is vastly different is the immature nature of the independent towerCo business model, given that the majority of tower assets have been carrier-owned up until this year. It’s more of a greenfield market for towerCos in Australia and we think that Everest will create substantial value in the marketplace as the operators divest existing tower assets and seek creative solutions from outsourced infrastructure platforms. It’s very early for us but 2021 was a great launch year for our business in that market.”
Will Heapy, CEO of Everest Infrastructure ANZ, added, “Everest’s innovative business model has resonated strongly in the Australian market over the past six months since launch. This has allowed Everest to differentiate itself from market peers with a new and compelling value proposition.”
You mentioned strong growth in new tower development. How is Everest positioned as a tower developer?
“We are building new towers for three of the four national operators right now and we hope to be building for all four soon,” said Davis. “2021 is our biggest year ever for new steel in the air. We are very active right now in New England, California, and select Rocky Mountain locations. We believe this momentum will continue into 2022. Our newest development initiative, and in fact one of the biggest areas of growth for Everest, is the launch of our “Partners” program to support other tower developers with access to our attractive cost-of-capital, extensive in-house resources, and larger customer marketing footprint. This past year we provided 3rd-party support to several tower developers utilizing different financing structures including tower completion financing and pay-point financing along the development cycle. We are also working on a JV structure with select partners that will enable us to efficiently scale our efforts and bring more sites to market. We are actively looking for new tower developer partners, especially if they can complement our existing portfolio footprint. As we look forward to Connect(X) in a few weeks, this is the area of greatest interest for Everest.”
Sounds like you see the U.S. wireless industry in a very healthy condition?
“Yes, absolutely,” said Newton. “The industry has substantial spectrum resources to be deployed across all operators including a new national operator that is establishing a 5G-only network and creating tremendous competition in the industry. We also have access to incredible amounts of attractive financing to support this growth, including numerous programs established by state and federal stimulus programs. Our collective experience of the past two years has highlighted the critical nature of broadband communications and we see the wireless industry as the primary method of bridging the ‘Digital Divide’ and making broadband service ubiquitous. There is a lot of work to do, but the outlook for 2022 and beyond is very exciting for our industry.”
Anything else you’d like to mention about this past year, or looking forward?
“We are hiring across the company,” said Mackey. “We are looking for talented individuals in roles across our organization who share our passion for growth and innovation.”
“Expect us to further leverage our U.S. platform with additional international expansion,” added Newton. “With the early success we’ve enjoyed with our Everest Infrastructure ANZ operation in Australia, we are actively looking at several opportunities to continue to grow our international capabilities and leverage our proven model in the U.S.”