Small tower companies often find it difficult to obtain loans with reasonable terms from a traditional lender, and many tower owners resort to selling off their existing towers to get capital. The Arizona Nevada Tower Corporation (ANTC), however, did not have to go this route. The company grew its portfolio from four towers to eight towers along an underserved highway in Nevada with the help of Wireless Capital. The partnership of these two companies has brought ANTC opportunities for long-term wealth and reinvestment.
The Arizona Nevada Tower Corporation (ANTC) faced several challenges in acquiring funding to build additional towers in rural Nevada. Having personally funded the construction of ANTC’s first four towers, President, George Peel, wanted to build additional towers, but was unable to obtain adequate financing. ANTC needed a telecom savvy debt partner to assist in the challenging task of furthering their business potential. Mr. Peel started ANTC in 2003 with the goal of building towers in rural areas.
At the start, he used his private funds to finance his business venture, but did not have adequate funding to build the number of towers that he desired. ANTC faced two main challenges. First, their loan application was rejected by the Small Business Administration (SBA) because the towers were on federal land, owned by the Bureau of Land Management; these sorts of transactions fell outside of the SBA’s guidelines due to the fact that there was no recorded fee interest. Second, Mr. Peel was aware that he would have difficulty getting a loan from the bank because the cash flow from telecommunication towers tenant leases are cancellable assets and therefore not a risk that these traditional financial institutions are interested in undertaking.
In February of 2005, Mr. Peel was referred by his broker to Jarred Saba, Vice President of Corporate Finance at Wireless Capital. “From our first conversation, Mr. Saba impressed me not only with his professionalism, but with his extensive knowledge and expertise about the telecom industry. It was clear that he took a genuine interest in my goals and challenges, and consistently strove to maximize the value of our cell tower leases,” explained Mr. Peel. Using the ANTC’s current tenant lease income as collateral, Wireless Capital was able to close a Non-Recourse Loan in the sum of $500K-plus within ninety days of their initial contact. The capital from this transaction made it possible for ANTC to build an additional four towers. “We now own eight towers and currently hold the rights to build an additional five. Our business plan is to have fifteen towers by the year 2007,” said Mr. Peel. With the debt partnership of Wireless Capital, ANTC has a virtual monopoly along Highway 95, providing the much-needed coverage along an otherwise underserved highway.
The economics of the tower business is such that usually, two tenants on a tower will cover the financing, maintenance, utilities and taxes. The key to financing cancellable tenant leases is to find a debt partner willing to advance funds, using solely the tower cash flow as collateral, and Wireless Capital is exactly the debt provider that ANTC needed. Using one tower to finance the building of another tower allowed ANTC to expand its portfolio while not having to utilize or pledge Mr. Peel’s personal assets. Further, ANTC did not have to give up the upside of future co-location revenue. These transactions can best be characterized as a domino effect of profitable business dealings. Using the revenue from ANTC’s first transaction, ANTC was able to finance the construction of four more towers. By leveraging the newly built tower, ANTC was able to construct four additional towers, and so on and so forth. This domino effect virtually provides ANTC with a limitless supply of capital for future transactions. Each transaction ANTC completes with Wireless Capital not only expands their growth potential, but also diversifies ANTC’s risk, thus creating a more securitized asset. With three to four tenants on each tower, ANTC will have maximized the telecom potential on an otherwise underserved highway. Wireless Capital is available for ANTC to advance capital when needed. In order for ANTC to build additional towers, they need only make a quick call to Mr. Saba, complete a minimal amount of paperwork, and they are all set to receive funding.
ANTC has now completed three additional transactions with Wireless Capital totaling well over $1 million, and have turned the funding provided into endless opportunities for future long-term wealth and reinvestment. “Doing business with Wireless Capital is one of the best business decisions I have ever made. Not only has my experience been financially lucrative, I also consider myself lucky to know Jarred Saba as a partner in business and as a friend. Over the last few years, our business relationship has blossomed into a great friendship and I look forward to knowing him and working with WCP for years to come,” said Mr. Peel.
Wireless Capital helped ANTC achieve their goals through creating innovative strategies to meet the company’s specific needs. This partnership and friendship between Wireless Capital, ANTC and Mr. Peel has propelled ANTC into a future of growth and has allowed them to succeed in monopolizing an otherwise untapped market.