Tower activity up with new funding and new player

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Investors gave tower companies a thumbs up last week as plans for augmenting or expanding their facilities were greeted with a slew of new financing options.

SBA Communications Corp., the nation’s fifth-largest tower company, said it obtained a new $160 million credit facility. SBA noted that the new facility replaces its prior facility, which became the mortgage loan underlying its recent $405 million mortgage-backed securities issuance. SBA said the new facility is set to mature Dec. 21, 2007, and provides more flexibility than the old one. The $160 million facility consists of a revolving loan that can be borrowed, repaid and redrawn.

“We are pleased to put in place a senior credit facility that will serve as an additional source of liquidity and provide us with more flexibility as we continue to grow our company,” commented Jeffrey Stoops, president and chief executive officer of SBA.

SBA is an independent owner and operator of about 3,200 towers located mostly in the eastern United States.

Optasite Inc. announced it obtained a $65 million credit facility and would likely use it to acquire and develop additional towers and sites. Today the company owns about 200 towers in the Northeast, Midwest and Mid Atlantic regions, but the company said it aims to eventually serve the eastern half of the United States.

“With its attractive portfolio of towers, Optasite is well positioned for future growth,” said Mark Bernier, senior vice president of GE Commercial Finance, Global Media and Communications. GE Capital Markets was the lead financier of both SBA’s and Optisite’s credit facilities.

Brand spankin’ new Skyway Towers L.L.C. said it secured an initial equity commitment of $30 million from Tinicum Capital Partners II L.P. and Permit Capital Private Equity Fund L.P. The startup tower company is headed by Daniel Behuniak, former Unisite president and CEO, and Ricardo Loor, who has held executive positions at SpectraSite Inc., Unisite, Verizon Wireless and Nextel Communications Inc.

Behuniak said the company plans to use the capital to complete construction projects, the first of which is located in the southeastern United States, and is expected to be up and running late in the first quarter. Behuniak added that Skyway aims to construct facilities anywhere in the country-wherever carriers deem necessary.

“Skyway Towers was created to help wireless carriers improve the quality of their existing networks and provide new services for their customers,” stated Behuniak.

Another $30 million in financing went to TowerCo L.L.C. from Soros Fund management L.L.C., bringing TowerCo’s total equity capital to $60 million.

“The additional equity will help us accelerate our tower development activities,” said Richard Byrne, CEO of TowerCo. “Including our current pipeline of towers, we are more than half-way towards our longer-term plan of owning 1,000 towers by 2009. It is extremely rewarding to deliver to all of our constituents-carriers, contractors and investors-beyond what we said we would.”

Based in Cary, N.C., TowerCo said it has the exclusive right to build and buy towers for Nextel Partners Inc. The company announced previously that is expects to purchase or develop 300 wireless towers for Nextel Partners through 2008. In 2005, the company achieved strong collocation growth from leasing space on its towers to wireless carriers.

Jonathan Atkin of RBC Capital Markets said the financing spur reflects a high comfort level for tower companies among investors.

“Demand for cell sites is strong. Both national carriers and regional, independent carriers are very active in augmenting their current networks or in expanding their footprint,” said Atkin.

Will there be more mergers within the industry, as the industry experienced in 2005? Atkin said it’s not likely, but added that the large public operators will continue acquiring sites opportunistically, when they feel they can pick up a desirable facility for a good price.

“We believe new site deployments in 2006 should be similar to, if not slightly higher than, 2005 levels-in the low 15,000 range,” Atkin wrote in a recent report. “We expect new-site deployments from the national carriers to decline slightly during 2006, perhaps by 15 percent, but this could be offset by increased overlay activity at Sprint Nextel (Corp.). Meanwhile, the contribution from regional/independent carriers should increase significantly, largely as the result of Auction 58 and Clearwire (Corp.)-buildouts that are proving to be even more robust than our initial forecasts from early 2005.”

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