Monday, March 30, 2015

So, How Good is the Tower Business?

Colby Synesael, Jonathan Charbonneau, and Gregory Williams, CFA of Cowen and Company took a closer look at returns in the telecom services industry in their most recent research note. The team noted that while towers don’t have the highest ROIC (return on investment capital), they do have the lowest WACC (weighted average cost of capital), which means they have high value creation.“The low WACC is arguably a result of their lower risk profile driven by 1) blue chip customer bases, 2) Long-term contracts with escalators, and 3) high barriers of entry, which combined, provide a high level of predictability to equity and debt investors,” Cowen and Company explained. They also shared that wireless value creation is once again a case of “have and have-nots.” Continue reading here

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