Optasite Inc., a Westborough, Mass.-based cellular tower company, today announced that it has secured a $150 million credit facility from Morgan Stanley. This brings the company’s total private capitalization to over a quarter-billion dollars (including $65m of pure VC funding).
So let’s play Five Questions with company CEO Jim Eisenstein, whose past gigs include CEO of Concourse Communications Group and Chief Development Officer of American Tower Corp.
1. Is the tower business like real estate, in that it’s all about location, location, location?
This is definitely a real estate-driven business. The most important aspect of locating a tower is the local zoning surrounding the tower. What makes the tower valuable is not having a competing structure nearby and zoning limits competing structures. But, in terms of any specific location, the second thing you look at is if it’s a desirable place like a heavily-populated area or a heavily-traveled thoroughfare. It’s also important to see where other carriers have already deployed.
2. Are you technology-agnostic, outside of the general umbrella of cellular?
Yes. In my former life we used to describe ourselves as arms providers to the wireless world. Our job is to provide infrastructure to wireless providers… So long as there is no-interference on the tower, we’re technology agnostic.
3. There has been a lot of M&A activity lately in the tower space. Is this new credit facility a reflection that you need to be very-well capitalized in order to compete?
Let me answer slightly differently. There clearly are advantages in the tower industry to having scale, and growing revenue and EBITDA do not have to mean you add bodies. For example, we will go from 114 towers at the beginning of the year to around 450 towers by the end of the year, and will not add any bodies. The key is having a management team in place that can operate a fast-growing portfolio.
But clearly there is an advantage to being a larger tower company, and with all the mergers that have occurred, were now number five or six in the industry.
4. Your previous credit facility was with GE, but this one is with Morgan Stanley. Why the change?
GE has been a great partner for us, and I also had great experiences working with GE while I was at American Tower. But this is a space where Morgan Stanley is very strong, and they have the capacity to do this sort of deal. They also were very aggressive. But both are Class A organizations.
5. Your company is based in Westborough, Mass. Have you eaten at Harry’s?
I stopped there once with a buddy and had a basket of fried clams with fries. The clams were very crisp, and they had good tartar sauce. I judge clam shacks not only by their claims, but also by their tartar sauce.