Average Tower Tenants (#)
Average tower tenants are the average number of tenants leasing space on a tower company’s towers.
Guide to Tower Industry KPIs
This guide highlights the key performance indicators for the tower industry and where investors should look to find an investment edge. While this guide is not a fully integrated tower industry primer, as the market leader in granular consensus estimates data, Visible Alpha works with partners and clients to determine the key performance indicators in the tower industry. This guide will aid market participants in identifying industry trends and the future performance of tower companies, by region and service type.
Industry Business Model
Revenue
Tower company’s revenue growth is significantly driven by the growth in data usage as a result of rising smartphone penetration across different markets. This guide divides the tower industry into two main categories based on their business models. These categories include:
- Pure-play towers
- Qualified tower REITs
Analysts model pure-play towers based on users/tenants or infrastructure/sites. For simplicity, we explain the business model of the tower industry by diving into three business models; Pure-play Towers – Users/Tenants, Pure-play Towers – Infrastructure/Sites, and Qualified Tower REITs.
Pure-play Towers – Users/Tenants
Pure-play towers generate revenue by leasing vertical spaces on the towers to tenants, who pay rent either monthly or annually. The rent is based on multiple factors including the location, square foot area of the tower leased, and the weight of the equipment placed on the tower. Revenue generated by tower companies can be bifurcated into tower revenue and non-tower revenue. Tower revenue is the sum of tower rental revenue, distributed antenna system (DAS) revenue, other rental revenue, and other revenue. Tower rental revenue is the product of the average number of tower tenants and the monthly or annualized revenue per tenant. DAS revenue is computed as the product of the average number of DAS tenants and the monthly or annualized revenue per DAS tenant. DAS systems are essentially signal boosters, much smaller than traditional cell towers, making them better alternatives for congested, high-volume locations.
Alternatively, tower revenue is also computed as the product of the average number of points of presence (PoPs) and the monthly or annualized revenue per PoPs. The point of presence (PoP) is the point at which two or more different networks or communication devices build a connection with each other. POP mainly refers to an access point, location, or facility that connects to and helps other devices establish a connection with the internet.
Pure-play Towers – Infrastructure/Sites
Similar to the tenant-based business model, revenue generated by pure-play tower companies modeled based on infrastructure, can also be bifurcated into tower revenue and non-tower revenue. Tower revenue is the sum of tower rental revenue, other rental revenue, and other revenue. Unlike the tenant-based business model, here, tower rental revenue is computed as the product of the average number of sites and the monthly or annualized revenue per site.
Qualified Tower REITs
Qualified tower REITs, where REIT stands for real estate investment trusts, generate revenue through long-term tenant leases. Here, revenue is the sum of total tower revenue and network services and other revenues. Further, total tower revenue is the product of the average number of towers and the monthly site leasing revenue per site or tower. The average number of towers is computed as the sum of starting and ending towers over a set period of time (generally monthly, quarterly, or annually), divided by two. Ending towers is an important metric in the computation of tower revenue and is calculated as the sum of beginning towers and net tower additions.
Tower Industry Business Models
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Expenses
Expenses for pure-play and tower REITs include utility costs, rental expenses, real estate taxes, electricity, site maintenance, and insurance, among others. Some major expenses include:
- Selling, general, and administrative expenses – Major expenses under this category are:
- Property maintenance and repair expenses – Expenses related to repairs and maintenance of the tower property, management fees, utilities, and insurance costs
- Rent, electricity, and other expenses – Expenses related to rental costs, electricity charges, professional fees, and other general operational expenses.
- Capital expenditures (Capex) – The tower industry is a capital-intensive industry that requires a substantial amount of capex for the development and overall maintenance and upkeep of towers. This makes capex a major expense for the tower industry.
Other Key Operational and Business Metrics
Qualified Tower REITs
Some key metrics applicable to qualified tower REITs include:
- Funds from operations (FFO) is a measure of operating and financial performance and profitability of tower companies. It is calculated as net income applicable to common stockholders excluding non-cash adjustments.
- FFO payout ratio helps investors understand dividend payment as a percentage of earnings and is calculated as total dividends paid divided by funds from operations.
- Adjusted funds from operations (AFFO) is a financial measure used to estimate the value of a real estate investment trust (REIT) and is calculated as FFO excluding capital expenditures and maintenance capex.
- AFFO payout ratio helps investors understand dividend payment as a percentage of earnings and is calculated as total dividends paid divided by adjusted funds from operations over the same period.
Key performance indicators (KPIs) are the most important business metrics for a particular industry. When understanding market expectations for the tower industry, whether at a company or industry level, some industry KPIs to consider are:
Pure-play Towers – By Users/Tenants
Pure-Play Towers – By Infrastructure/Sites
Qualified Tower REITs
Visible Alpha’s Standardized Industry Metrics
To understand market expectations for the tower industry, a key information source is sell-side analyst estimates and consensus forecast data. The buy-side, sell-side, and public companies leverage this type of data to conduct competitive analysis, a type of analysis conducted by professional analysts that involves comparing standardized metrics of one company with those of similar companies. Because companies report metrics differently – and sometimes report on different metrics altogether – standardizing the key metrics for each company can be a cumbersome process.
Visible Alpha Insights includes analyst data, company data, and industry data at a level of granularity unparalleled in the market. Our industry data – Standardized Industry Metrics – enables market participants to quantify and compare market expectations for companies across 150+ industries.
Data as of January 2023
13
Global Tickers
186
Current Analyst Excel Models
186
Proprietary line items in our standardized operating metrics data
69
Contributing Brokers
225
Proprietary line items in our standardized financials data
411
Total standardized line items
Visible Alpha offers two tower industry-related comp tables, comparing forecasts for key financial and operating metrics, to make it easy to quickly conduct relative analysis, whether you are interested in looking at key values for global tower companies, Americas, or Europe. Every pre-built, customizable comp table is based on region, sub-industry, or key operating metrics.
PURE-PLAY TOWER
- China Tower Corporation Limited (788_HK)
- Sarana Menara Nusantara Tbk PT (TOWR_IJ)
- PT TOWER BERSAMA INFRASTRUCTURE Tbk (TBIG_IJ)
- Telesites, SAB. de CV. (SITESB1_MX)
- Infrastrutture Wireless Italiane SpA (INW_IT)
- Cellnex Telecom (CLNX_ES)
- INDUS TOWERS Ltd (INDUSTOW_IN)
- Helios Towers Plc (HTWS_GB)
- Vantage Towers AG (VTWR_DE)
- IHS Holding Ltd (IHS_US)
- PT Dayamitra Telekomunikasi Tbk (MTEL_ID)
QUALIFIED TOWER REITs
- AMERICAN TOWER CORPORATION (AMT)
- CROWN CASTLE INTERNATIONAL CORP (CCI)
- SBA COMMUNICATIONS CORPORATION (SBAC)
Industry KPI Terms & Definitions
Visible Alpha offers an innovative, integrated experience through real-time, granular consensus estimates and historical data created directly from the world’s leading equity analysts. Using a subset of the below KPIs, this data can help investors hone in on the key drivers of companies to uncover investment opportunities.
Towers
Towers or cell towers are cellular base stations, in-building solutions, rooftop or wall-mounted solutions that house electronic communication equipment, and antennas to support cellular communication.
Tenants
Tenants are the total number of customers of a tower company that have leased vertical spaces on a cell tower owned or operated by the company.
Tenancy Ratio
Tenancy ratio is the average number of tenants per tower.
Lease Liabilities
Lease liability is the obligation to make lease payments, measured at the present value of future lease payments.
Gross Debt
Gross debt is the sum of borrowings and lease liabilities.
Net Debt
Net debt is the difference between gross debt and cash.
Pure-play Towers
Average Tower Tenants (#)
Average tower tenants are the average number of tenants leasing space on a tower company’s towers.
Monthly/Annualized Revenue Per Tenant
Monthly/annualized revenue per tenant is the monthly or annual revenue generated by a tower company per tenant.
Average DAS Tenant (#)
Average DAS tenant is the average number of tenants leasing DAS systems.
Monthly/Annualized Revenue Per DAS Tenant
Monthly/annualized revenue per DAS tenant is the monthly or annual revenue generated by a tower company per DAS tenant.
Average Point of Presence (PoP) (#)
Average point of presence (PoP) is the point at which two or more different networks or communication devices build a connection with each other. PoP mainly refers to an access point location, or facility that connects to and helps other devices establish a connection with the Internet.
Monthly/Annualized Revenue Per PoP
Monthly/annualized revenue per PoP is the monthly or annual revenue generated by a tower company per point of presence.
Tenancy Ratio (#)
Tenancy ratio is the average number of tenants per tower.
Average Sites (#)
Average sites are the average number of sites owned or operated by a tower company.
Monthly/Annualized Revenue Per Site
Monthly/annualized revenue per site is the monthly or annual revenue generated by a tower company per point of site or tower.
Qualified Tower REITs
Beginning Towers (#)
Beginning towers is the number of towers at the beginning of a reporting period.
Net Tower Additions (#)
Net tower addition is the acquisition or cancellation of tenant leases in a given period.
Ending Towers (#)
Ending towers is the number of towers at the end of a reporting period.
Average Total Sites/Towers (#)
Average total sites/towers is the sum of the current period ending tower and the previous period ending tower divided by 2.
Monthly Site Leasing Revenue Per Site/Tower
Monthly site leasing revenue per site is the monthly or annual revenue generated by a tower company per tower leased.
Funds From Operations (FFO)
Funds from operations (FFO) is a measure of profitability and is calculated as net income applicable to common stockholders excluding non-cash adjustments.
FFO Payout Ratio
FFO payout ratio helps investors understand dividend payment as a percentage of earnings and is calculated as total dividends paid divided by funds from operations.
Adjusted Funds From Operations (FFO)
Adjusted funds from operations (AFFO) is a financial measure used to estimate the value of a REIT. It is calculated as FFO excluding capital expenditures and maintenance capex.
AFFO Payout Ratio
AFFO payout ratio helps investors understand dividend payment as a percentage of earnings and is calculated as total dividends paid divided by adjusted funds from operations over the same period.
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Guide to Tower Industry KPIs for Investment Professionals
This guide highlights the key performance indicators for the tower industry and where investors should look to find an investment edge, including:
- Tower Industry Business Model & Diagram
- Key Tower Industry Metrics PLUS Visible Alpha’s Standardized Industry Metrics
- Available Comp Tables
- Industry KPI Terms & Definitions
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