Tower companies are adding capacity to cellular networks by co-locating more than one carrier per tower, and many towers are feeling the strain. In addition, LTE architectures place electronics at the tops of towers instead of on the ground, further adding to the weight at the top. Many towers need structural modifications to support the extra weight, and now two of the companies that perform this work are joining forces.
Velocitel, a $200 million nationwide infrastructure services firm with 500 employees, is buying North Carolina’s FDH, which provides engineering, construction and field inspection services to the tower industry, employs roughly 250 people, and has approximately $100 million in annual revenue. The combined firm will be called FDH Velocitel and will be headquartered in Northbrook, Ill.
“FDH is one of the most respected engineering companies in the field, with a deep breadth of knowledge in civil and water, geotechnical, and structural engineering,” said Velocitel CEO Kevin Hostetler. Hostetler took on the CEO role at Velocitel late last year, bringing with him a strong mergers and acquisitions track record and an expectation that he would help Velocitel grow through acquisitions.
Velocitel Chairman James Estes said that for 20% to 25% of the 4G upgrades the company sees, tower modification is required in order to avoid exceeding the tower’s freighted capacity. When Velocitel evaluated strategic alternatives for growth, tower modification was a logical area for expansion, and FDH looked like an ideal fit.
“They are a leader in doing these tower modifications,” said Estes. “FDH is one of the largest, if not the largest, engineering firm in the wireless industry that does this type of analysis and modification design work. … They do mostly work for the tower owners, which is nice, because Velocitel historically has worked primarily for the carriers,” he said. Estes added that Crown Castle and SBA Communications are FDH’s biggest customers.
In recent years, carriers have been raising cash by selling towers to companies that focus primarily on wireless infrastructure, with Crown Castle and American Tower emerging as the biggest buyers. Crown Castle bought 9,700 towers from AT&T and American Tower recently said it will buy Verizon Wireless’ towers.
Patented technology
Velocitel’s Estes said that another big motivator for this acquisition is FDH’s intellectual property for nondestructive testing. FDH has developed ground-penetrating radar that can create an image of a tower’s underground structure, enabling crews to decide whether or not they need to break ground in order to reinforce the tower.
“It’s very efficient, very accurate,” said Estes. “When we went out to look and said: ‘What company would be a very good fit to fill this opportunity where there’s this aging infrastructure and a high degree of towers that need to be modified?’ FDH came out at the top of our list. We’re very excited to be able to finish the transaction.”
The acquisition was completed this month, and the purchase price was not disclosed. The FDH purchase is complementary to Velocitel’s last major acquisition, Doty Moore Tower Services, which put Velocitel into a potential leadership position in the move to standardize safety protocols for tower climbers. Doty Moore’s founders, Don Doty and Patrick Moore, helped establish many of the industry’s current safety protocols, and are presently VPs at Velocitel.
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