Canadian Towers Attract U.S. Interest

Article originally posted on Inside Towers:

https://insidetowers.com/cell-tower-news-canadian-towers-attract-u-s-interest/

March 18, 2021

The Canadian communications infrastructure market is different from the U.S. In Canada, tower assets are primarily built and tightly-held by the three major mobile network operators – Rogers (NYSE: RCI), Bell (NYSE: BCE), and Telus (NYSE: TU). Often, the only opportunity for independent tower developers to construct carrier-grade towers is in the so-called “network gap,” that is, in locations where the wireless carriers need a new tower but for various reasons, have not built one.

Filling that network gap, however, requires a company with a deep understanding of the network, strong relationships with the carriers, and an expert ability to acquire sites and procure new builds. 

SIGNUM Wireless, based in Toronto, Ontario, is one such company that is up to the task. Founded in 2011, and led by a team of seasoned telecom industry executives, SIGNUM Wireless is one of only a handful of independent tower developers and owners in Canada.  

With its team’s unique expertise in site acquisition, network analytics and tower construction procurement, SIGNUM Wireless built and acquired over 60 towers.

Tower builds typically were financed through a combination of tower cash flow and loans from Canadian banks that, for the most part, have less experience in financing tower development than their U.S. counterparts.

In 2020, the SIGNUM Wireless management team recognized that demand for communications infrastructure was as robust as ever. As a reference, recent tower transactions in the U.S. were reportedly based on valuations around 30 times the annualized tower cash flow. With that in mind, the SIGNUM Wireless owners retained Pinpoint Capital Advisors to manage a competitive process to sell their portfolio.

SIGNUM Wireless’ team had achieved impressive lease up with average tower tenant occupancy and approximately 90 percent of the portfolio’s tower revenue generated from Canada’s major investment-grade wireless carriers: Bell, Rogers and Freedom Mobile, the wireless division of Shaw Communications, a Canadian cable company (Rogers has just this week announced that it has agreed to acquire Shaw for CAD$26B. The deal requires approval from Canadian regulators). 

Key selling points included strong tenant quality and the hard-to-replicate locations of SIGNUM Wireless’ towers, the majority of which were in populous southern Ontario. Together, these features made these towers attractive assets for U.S. tower companies seeking to enter or expand in the Canadian market.

The future lease-up potential of the portfolio provided, fueled the process. Such lease up potential provided the opportunity for bidders to achieve substantial site rental growth and enhance their returns. As a result, SIGNUM Wireless’ portfolio was highly sought after, according to Pinpoint Capital Advisors.  

“Selling in the current market was a highly attractive option particularly when, through a well-run process, potential acquirers were likely to ‘bid-up’ the growth potential of the portfolio,” commented Pinpoint Capital Advisors’ AVP Jonathan Lawrence.

Pinpoint Capital worked with SIGNUM Wireless to prepare a detailed portfolio “data tape” that captured the unique characteristics and specific details of each tower in the portfolio as well as a thorough lease-up analysis and forecast.

“Understanding the SIGNUM Wireless portfolio on a tower-by-tower basis helped our team to understand and highlight the unique value drivers of the assets in our efforts to achieve maximum value in the market,” said Pinpoint Capital Advisors’ Managing Director Andrew Semenak.

The SIGNUM Wireless assets sold after several rounds of bidding at a valuation in line with transaction multiples on recent tower deals in the U.S. 

Insite Wireless was the eventual acquirer of the SIGNUM Wireless assets. During transaction negotiations, Insite Wireless itself was being acquired by American Tower (NYSE: AMT). The SIGNUM Wireless portfolio acquisition together with InSite’s existing Canadian tower assets gives American Tower a significant new presence in Canada.

The Canadian tower market overall is seeing increasing interest from U.S. tower companies. Speculation still overhanging the market, though, is whether, and when, the major Canadian carriers will seek to divest their tower assets.

Our  latest news

Press Release

Blue Ridge Towers Sells Certain Wireless Tower Assets 2023

Read Post
News

Midwest Fiber Internet: Illinois and Indiana are Leading the Way

Read Post
Press Release

Joink LLC, a DIF Capital Partners Portfolio Company will Acquire CTI Fiber

Read Post