How Is the Current Economy Impacting the Tower Business?

By John Celentano, Inside Towers Business Editor

With the U.S. economy being buffeted by inflation and rising interest rates, we wanted to gauge the impact on the tower business, both in leasing operations and M&A activity. Inside Towers reached out to Michael DeMita, Chief Executive Officer at Tower Capital Advisors, LLC for his perspectives. We asked Clayton Funk, Managing Director at Houlihan Lokey to comment, as well. How does inflation affect tower growth revenues, i.e., fixed escalators in North America vs CPI-indexed escalators internationally? DeMita: Inflation certainly puts pressure on tower companies to find a way to increase profits as lease escalations are falling behind the current inflation rate. The average escalation in carrier leases and tower ground leases is just under 3 percent per year/15 percent per term and has been 2 percent per year/10 percent per term for new builds for several years. Without lease-up or amendment activity, though still quite active, existing revenue is losing ground every year. Continue Reading