It has been a while since we checked in with Tower One (CSE: TO) (OTCQB: TOWTF) (Frankfurt: A2AFT9), and we are certainly glad we did. Tower One builds, owns, and leases a portfolio of cellular infrastructure assets to wireless carriers on long term contracts. In late August the stock was only $0.19, and a short six weeks later, it’s now trading in the $0.375 range. The Company, under the leadership of CEO Alex Ochoa, continues to make great strides building its cell tower and wireless infrastructure portfolio, including a big announcement today and more news to come in short order. Tower One has signed a Letter of Intent (LOI) to acquire an unnamed private tower company in Mexico which owns, builds, and leases cellular tower usage to the telecom industry. This transaction also includes a Master Lease Agreement (MLA) with AT&T, bringing the total MLA’s under the company’s control to three.
Tower One is in three major markets now, Colombia, Argentina and Mexico.
Expanding into Mexico
This new Mexican acquisition is part and parcel with Tower One’s strategy of entering into prime, underserved jurisdictions with strong projected growth. They have the opportunity to work with one of telecom’s global leaders, AT&T, which is expanding its worldwide business. AT&T plans to invest as much as $3 billion to upgrade their networks, improving LTE coverage to reach about 100 million users by 2018, up from around 51 million users currently.
AT&T entered Mexico in 2015 by purchasing a wireless operator and wireless assets for $4.4 billion dollars. AT&T Mexico has a presence throughout Mexico, serving approximately 13% of the Mexican wireless market with 13 million subscribers as at Q2 in 2017. Tower One is under-dogging its way into a huge cell tower market in Latin America through strategic acquisitions, real estate (site acquisition), construction of built-to-suit towers and through collocation — in other words, leasing the tower to multiple AAA telecom clients for recurring tenant revenue. With high barriers to entry in an industry mostly dominated by major names like American Tower, Telesites, or SBA Communications, Tower One is the “who the heck are they” making towers and search rings happen.
Tower One’s new COO, Luis Para, is a civil engineer who will be overseeing the built-to-suit operations in Latin America, while CEO Ochoa focuses on forging new market opportunities and on keeping the company well-capitalized in order to meet their steel requirements to construct more towers. They have 14 towers now, with three more by the end of the month, and 15 more coming online next month. Tower One can produce 15-20 towers a month when they are really rolling, with the cost of capital coming down significantly when they reach the 100 tower mark.
Collocation will be a big deal in terms of revenue and valuation in their scale up period— by leasing their towers to different telecom clients, income increases with limited incremental investment. Alex Ochoa commented: “In addition to that benefit, Tower One can transfer a discount to the cellular operators in the form of lower monthly rental payments, thereby strengthening our long-term business relationship.”
When Tower One catapults to 100-200 towers under their control, they might find themselves swirling in the mergers and acquisitions world where valuations are around 15-22 X Tower Cash Flow, or roughly $450,000 per tower. This is due to the triple A clientele with long lease terms (10+ years), collocation scalability, and the continuously increasing demand for cellular network coverage in all parts of the world. There are 3,000 new towers forecast for Argentina annually, 1,300 in Colombia, and 70,000 new towers are needed to achieve 90% coverage in Mexico. Governments and telecom giants are dumping money into improving networks, expanding 4G & 5G LTE coverage throughout the Americas. The actual cell towers are of course a major part of this trend.
In 2003, SBA Communications, with a similar business model, was trading at $0.19- they now have an $18 billion dollar market cap and are trading on the NASDAQ at $149.38. Tower One has a current market cap of roughly $24 million. You can play the manufacturer’s (Apple, Nokia), you can play the carriers, (Verizon, AT&T), you can even play the big $60 billion dollar tower companies like American Tower (NYSE: AMT) but have you considered the only smallcap tower company in the business? Check out Tower One today.
About Tower One Wireless Corp.
Tower One builds, owns, and leases a portfolio of wireless infrastructure assets to wireless carriers on long term contracts. Tower One is one of a few publicly traded small cap companies in the tower and wireless infrastructure industry. Tower One is operated by a team of telecom and finance professionals with a long history in the telecom and wireless infrastructure business. At Management’s election 30 million shares issued to Tower One Management cannot be sold for three years. Tower One Wireless is currently focused on 4G & 5G LTE infrastructure expansion in Latin America.
This is not in any way investment advice or any sort of stock recommendation. Please do your own due diligence and talk to a qualified investment advisor.
The contents of this article are for informational purposes only. Nothing in this article, in any way whatsoever, should be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy, hold or sell any security. Note the inherent risks when investing in microcap stocks.
Tower One Wireless Corp. is a client to an arm’s length party to one of the owners of the Stock Syndicate. One or more of the Stock Syndicate owners does own shares in Tower One Wireless Corp.