American Tower Corporation

Uh, we ran that business, uh, four years.

Uh, we had a, uh, had an exit with American Tower in 2013, uh, for a deal size of, uh, you know, five and a half, uh, billion dollars.

And, uh, we worked out our non-compete with American in 2014.

The few of us came back, myself, Alex, Mark, and Mike Belsky, and we co-founded Vertical Bridge.

The ticker is DTCR.

The fund's top holdings include Digital Realty Trust, American Tower, Equinix.

DTCR got off to a pretty hard hot start this year, but is now down around 15% from its peak in June.

Kind of similar to the trend for the viral AI-focused DRAM ETF, which exploded higher since it's launched in April, but has since pulled back since late June on some of the AI skepticism and certainly the political pushback.

So I'm happy with this holding is probably one of my favorite, but it's nice to kind of get your viewpoint on it as well.

The next one in my portfolio is AMT American tower.

So I have that one in one of my retirement accounts.

Can you talk about the pros and cons of that one? This would probably be that

So hopefully we can get to see that, you know, capital appreciation over time.

One of my biggest concerns with this is the potential of there being satellite, you know, cell phone, what would be called cell phone at that point, but satellite phones instead of having the towers.

Do you see that as a risk to American Tower?

Yeah, but I think there's more important things to focus on first before the satellite's

This is Uptime Now, a Norton Rose-Fulbright podcast dedicated to conversations about data centers, from development and construction to cutting-edge technology and operational breakthroughs and the people driving it all.

Joining us today is Juan Font, President and CEO of Coresight and Senior Vice President of American Tower, where he leads the strategy, innovation, and growth.

He brings more than 25 years of experience in general management, direct sales, and business operations and finance in the data center and telecommunications industries.

Welcome to the show, Juan.

Glad to have you.

I'm sure folks would love to know.

Can you tell us a little bit about your path here? How did you end up at CoreSight and American Tower and as a president and CEO of your company?

Yeah.

So, thankfully, that was one area we weren't hit.

But also, it hit the towers where we do own American Tower, which is a very different business, clearly, to the telecoms companies, and we'll come back to that.

So it's been a very weak sector outside of Alphabet.

Meta's been very weak, interestingly, as well, but I don't want to talk about Meta today.

It's a sector unloved.

We've not really looked at it that much as an opportunity recently.

In fact, we were very nervous about American Tower.

All disruption.

Well, they don't.

But there are giant independent tower companies like American Tower and Crown Castle whose business is basically this vertical real estate.

They control a site and then they lease different sections of the tower to different wireless carriers.

Think of it as like an apartment building for antennas.

Verizon might rent the space at the top and AT&T rents beneath them and T-Mobile rents another section down.

And this is where the economics get super interesting because American Tower alone has published illustrative examples of a U.S. macro tower that cost them $275,000 to build.

And with one tenant, that example produces $20K a year in revenue and around $8,000 in gross margins.

You might be thinking, dude, Jack, that honestly sucks.

So the renters refused to pay, arguing the entire purpose of the rental was frustrated, and the courts agreed because without the parade, the balcony was just a normal overpriced room.

So applying that to Dish, they are arguing that they only leased space on American Tower's massive structures for the singular purpose of building an independent nationwide 5G network.

Exactly.

But because they sold their spectrum to AT&T, they physically cannot operate that network anymore.

That's their argument.

They are arguing that because the lease facilities are no longer useful to an independent Dish Network, they should be let out of billions in long-term obligations without severe penalties.

I cannot imagine American Tower and Crown Castle are accepting that argument quietly.

Oh, they are fighting it tooth and nail.

So as people might have heard, we had two bids for Axtell in a week.

Axtell is the fixed line telephony company based in Monterey.

Interesting because it's basically been on the block for six years and we had no bids and then we suddenly get two in a week.

It's a bit like London buses.

Anyway, so Thomas Milmo, who founded Axtell and is the co-chair of its board, announced that his group was called 4Tech Plus is bidding 3 pesos 86 which is a hefty 39% premium on the average of the previous 30 days and valuing Accel at 632 million dollars and then a few days later Flow Networks which is the legal entity, I think it's called TransTelco, said it wanted Axtel for itself and it was bidding 100% for Axtel and its holding company called Axtel Controladora, which confusingly is also listed, which is related to the unlocking value strategy at Alpha.

They basically spun out the holding companies of their different assets like Alpec and and then they were going to merge the holding company with the operating company, which they did in the case of Alpec and they hadn't yet done, although they were never going to do in the case of Axtell because control was especially important in that case.

Now, it's quite interesting in different ways because first of all, Axtell has has struggled, until very recently at least, struggled to compete, like many companies have struggled against Telmex, American Mobile, and doesn't obviously have their deep pockets in the fixed line telephony.

It's for the most part a scale business.

And I say that because, yeah, the, their 5G.mil strategy has been up and running for years now.

Lockheed Martin is the largest defense contractor to the Pentago- Pentagon, and Lockheed Martin's CEO is James, I think you say it's Taslit, is his, how to say this last name, but he used to be the CEO of American Tower.

And so who better to understand both 5G drone detection and the defense capabilities than, than an executive who cut his teeth at one of the nation's biggest tower companies, and is now the CEO of the nation's biggest defense contractor? I just, yeah, this is, this is, this certainly sounds like the right solution at the right time, given what we talked about with drones and everything.

Yeah.

It also probably does really well for his stock that he owns in American Tower, because I have a feeling that American Tower will probably benefit from this service being deployed.

[laughs]

Yeah.

provide cell tower space to all the telecommunications providers.

Same like American Towers.

Like American Towers, exactly.

So they have cell tower lease space and lease deals all over the world.

for all the carriers.