What Distinguishes Patriot from Our Peers
Recently, I was asked by one of our clients about revenue generated in the rooftop/tower industry and what the market share is for the hospitality industry in terms of this.
There are approximately 400,000 cellular telecommunications sites in the US. Roughly 200,000 of those sites are towers (40,000 owned by American Tower, 40,000 owned by Crown Castle, 25,000 owned by SBA Towers and so on through the list of smaller tower companies and the carriers themselves). Eighty to ninety percent of current and future expansion of cellular networks is and will be made up of rooftops and small cell sites.
The initial launch of Cellular in the US began in the early 1980’s. The first network consisted of very tall towers (500 plus feet tall) that broadcast signal for 30 to 50 miles). The goal was simply to have coverage. The current issue is no longer one of coverage but of capacity. When you lose a call these days it is because the switch or brain of the system is making a calculation on which calls to keep and which calls to drop based upon efficiency.
We now have a network or networks that have effectively achieved coverage everywhere. When you drive around look at where the cellular equipment is mounted on towers. In more densely populated areas and corridors you will see a tower with the top portion unoccupied and the antennas lower down at a lower rad-center. This is done because the carrier has split their cells, lowered their power output, and physically lowered their rad-center to enable the system to carry more callers. The nature of this type of expansion of the network makes the utilization of existing structures and rooftops ideal. We have sites in urban areas that cover no more than a city block.
I give you all of that background in an effort to give some color to the answers to your challenging question. The top 3 tower companies had annual revenue in 2019 of around 16 billion dollars. If we just stick with those core companies, we are looking at revenue from cellular leases of at a minimum 13 billion dollars per year (I would give it a range of 13 billion to 25 billion).
- American Tower 8 billion
- Crown Castle 6 billion
- SBA Towers 2 billion
The potential “share” for the hospitality industry is tremendous and is only going to expand as capacity issues continue to be a challenge. The average tower/ rooftop rent is approximately $1600/ month. Patriot’s average rent is $4200/ month.
The number of sites in the US jumped from around 100,000 in 2000 to around 400,000 in 2019. If we continue to see that level of expansion and growth, then I think we can expect to see somewhere in the realm of 80,000 new rooftop and small cell sites in the next 4 to 5 years. At even the non-Patriot average rental rate $19,200 per year times 80,000 sites that is annual revenue of around 1.5 billion. I would guess that at least ½ of that annual revenue figure could go to the hospitality industry with some effort (meaning that historically hotels and hospitality properties have not been receptive to cellular installs and the carriers need to know that a specific chain or ownership group is receptive and easy to work with).