AT&T and Verizon have jointly agreed to build hundreds of new cell towers with Tillman Infrastructure, a company founded last year by Sanjiv Ahuja’s Tillman Global Holdings. Ahuja is the former CEO of Orange and also the founder of Lightsquared, a company that tried unsuccessfully to launch a satellite-based wireless network.
Tillman Infrastructure will build to-suit with AT&T and Verizon, and both carriers have agreed to co-anchor the co-located towers. In addition, the companies said they may move some equipment off existing towers and onto the new ones.
“We need more alternatives to the traditional tower leasing model with the large incumbents. It’s not cost-effective or sustainable,” said Susan Johnson, SVP of AT&T’s global supply chain. “We’re creating a diverse community of suppliers and tower companies who will help increase market competition while reducing our overhead. We look forward to working with Verizon as we establish site locations and sign new lease agreements with additional suppliers in the coming years.”
Nicola Palmer, Verizon’s chief network officer, said the carrier reviews all its contracts as they come up for renewal, and is excited to have a new tower partner in the mix. The companies are not commenting on pricing, except to say that Tillman’s prices will be “competitive.” Verizon has the highest operating margin of any of the nationwide carriers, and Palmer said that continued cuts in operating costs are “imperative.” Tower and site rents are one of the biggest components of network operating costs for the carriers.
For several years the nationwide carriers have been pushing the existing tower companies to reduce their rents, but the tower companies are under pressure from Wall Street to maintain historically high rates of return. Often, the tower companies build price escalations into their contracts with the carriers. AT&T and Verizon sold their tower portfolios to Crown Castle and American Tower, respectively, leaving them with limited negotiating leverage until now.
This is the second time this fall that a new company has announced plans to enter the U.S. cell tower business. Last month, SoftBank said it will form a U.S. tower venture in partnership with Australia’s Lendlease. Lendlease Towers will focus on developing new sites and acquiring existing ones.
Tillman Infrastructure’s partnership with AT&T and Verizon will focus on tower construction as opposed to acquisition. The companies will begin planning the construction of the new towers in early 2018. A spokesman for Tillman said the company is likely to work with some of the industry’s traditional providers of construction services and may recruit some new providers as well. He described the plan as a “national build-out,” but said construction would begin in “fewer than 30 states” during the first phase.
The alliance with Tillman could impact other parts of the carriers’ infrastructure deployment plans. In addition to Tillman Infrastructure, Ahuja’s holding company owns JCDecaux-Link, a joint venture with outdoor advertising giant JCDecaux to provide small cell sites to carriers.
Follow me on Twitter.
The post Verizon, AT&T to build hundreds of towers with Lightsquared founder appeared first on RCR Wireless News.