If there?s one thing a venture capitalist loathes more than having a failed dotcom in his portfolio, it?s having a cell phone call dropped in the middle of a conversation.
Perhaps with such frustrations in mind, the VC community last week pumped $50 million into TrinTel Communications Inc., one of the nation?s largest wireless tower operators.
This latest infusion is the Irving, Texas-based company?s second round of private equity financing, bringing its total venture capitalization to $70 million. As the business of building and leasing communications towers can be rather capital-intensive, however, TrinTel has also stored away $125 million worth of debt.
TrinTel originally went out to the VC market at the end of last year looking for between $25 million and $30 million, and despite a sharp dip in telecom stocks in February, garnered more investor interest than originally anticipated. It ended up turning a few interested parties away in the end.
Prior investor Austin Ventures led the oversubscribed Series B deal, and was joined by GE Capital Telecom, Capital Resource Partners and three other large private equity funds that asked not to be identified, according to TrinTel CEO John Day.
Warm VC Welcome
The warm reception in the midst of general VC concern over telecom plays didn?t surprise Austin Ventures, which has endorsed the company almost since day one.
“We are primarily an early-stage technology investor, and because [of that], we often see sectors that [include] services businesses built around those technologies that we think represent return opportunities, and TrinTel is one of those,” said Blaine Wesner, a general partner with the Austin, Texas-based VC firm. “It?s a way to participate in the growth and expansion of wireless communications without taking a substantial amount of tech risk. And it generates recurring revenue and cash flow from its towers, which makes it as good a franchise investment opportunity as [any] we have in our portfolio.”
Indeed, the domestic wireless communications space has seen explosive growth despite a pervasive economic downturn, and there is still much potential for future expansion into Europe, where wireless adoption continues to grow by leaps and bounds.
Beating Public Panic
While TrinTel?s prestigious customer roster includes AT&T Corp., Sprint PCS affiliate PCS Wireless Inc., Nextel Communications and VoiceStream Wireless Corp., the company has had to deal with widespread public questions and concerns about the safety of its towers.
“We all want our cell phones to work without getting dropped, but we don?t want to see the towers next to our homes, either,” Wesner explained. “So according to basic economics, wireless carriers migrated to a model whereby their towers were owned by outside organizations [like TrinTel], and they could hang their connections all on the same tower.”
As such, TrinTel works closely with about 18 to 20 wireless carriers and maintains, constructs and leases towers for them. The company owns about 400 wireless communications towers and has approximately 500 additional towers in build-to-suit or lease arrangements in 25 states. It plans to use the proceeds from this round to continue to build its network and lease property to house its towers.
TrinTel has approximately 20 offices and 450 employees located throughout the U.S.
Contact Robyn Kurdek: Robyn.Kurdek@tfn.com