Cell towers may not seem like pretty infrastructure, but they attract massive profits. The number of people relying on smart devices is ever-increasing. Being connected guides us through our daily routine, whether it’s a smartphone, watches, or autonomous vehicles. Telecom companies can only satisfy this growing demand by ensuring reliable and long-term access to necessary infrastructure, i.e. cell towers. Here, invoice factoring for telecom tower construction can help investors with instant access to cash for uninterrupted operations.
A study on mobile data traffic reveals that the global monthly average usage per smartphone is expected to be 19 GB in 2023, which is forecasted to reach 46 GB by the end of 2028. It shows that the demand for cellular infrastructure will keep getting stronger. New companies are building national networks and adding antenna locations along with the existing communication providers, especially since new 5G high-frequency antennas don’t reach as far as old 4G antennas.
Let’s understand cell towers as investment assets and reasons you should not miss on profiting from them.
Why are Cell Towers Considered Vertical Real Estate and Infrastructure Assets?
For any asset to be called a real estate or infrastructural asset, it has to meet the following two criteria:
- It has to be vital to the efficient functioning of a community.
- Earnings from the assets are not sensitive to commodity price movements or competition.
There are multiple ways in which cell towers satisfy these criteria. Cell towers are the backbone of modern society as they allow wireless carriers to provide mobile services to consumers regardless of economic market conditions. Cell towers usually generate a reliable revenue stream for several reasons. Given the regulatory and social hurdles, it is difficult to build cell towers, which implies limited competition. Towers rarely face regulatory or country risk, which ensures secure revenue through long-term contracts.
Furthermore, financing options like invoice factoring for telecom tower construction make it easy for investors and investment companies to free up working capital. It helps them to plan and forecast the cell tower construction process accurately.
6 Solid Reasons to Invest in Cell Towers
Maximizing Existing Commercial Real Estate Investments
If you are already investing in commercial real estate, cell towers can provide you with great means to maximize your profits. The growing number of telecom companies need access to cell phone towers, which presents new opportunities for real estate investors to build up big portfolios of cell phone towers. Investors can choose rooftop antennas that can be mounted easily on the existing property to save land space.
Minimal Upgradation and Maintenance Expenditure
The major cost for cell towers includes their installment cost and the payment for the land under them. The cost of operations, modifications, and maintenance is minimal. When carriers decide to upgrade 4G network components with 5G-compatible equipment, lease modifications are made. These improvements typically lead to increased rental rates and term extensions, benefitting the investors.
Besides staying on top of technology trends, the ongoing operational costs are minimal. The operating and maintenance price may include keeping the flashing lights running on top of the structure, maintaining fencing, and keeping the area under the tower free of debris or vegetation.
Multiple Tenants Per Tower
Multiple tenants per tower are the key revenue driver for cell tower investors. The number of tenants per tower and existing tenants adding new equipment escalate the contracted price. The surging growth in global wireless data traffic is forcing telecom providers to continue expanding their networks and capacity, which means more equipment on towers.
Additionally, tower companies are enhancing their portfolio through new constructions and acquisitions in the international market. Since the tower costs are largely fixed, each piece of additional equipment or an incremental tenant added to the tower generates a significant total profit margin.
Attractive Yield and Steady Revenue Stream
The steady income and yields from a portfolio of lease contracts to cell towers can be very attractive. Investors are increasingly interested in cell towers in recent years, leading to a significant increase in acquisitions. Strategies of these investors range from building mature portfolios with higher tenancy rates to serving built-to-suit providers.
Funding these assets is also becoming easier as more lenders are willing to make loans against rooftop assemblies and cell towers. Unlike bank loans, invoice factoring for telecom tower construction doesn’t rely on the quality of your credit score.
Little Risk on Signed Leases
The leading wireless carriers sign long-term contracts to lease space on a tower or a few square feet of space on the rooftops or buildings. Then, building owners sell these signed contracts and their income to investors. Once the cell tower or rooftop antenna has been leased to major telecom carriers, there is little risk of the long-term contract value being altered.
Since the competitive landscape has matured, the churn in the industry has been very low. Even as the generations of cell phone technology evolve, communication providers will replace the equipment at their cost, not affecting your contract.
5G Roll-out and Consequent Competition among Communication Companies
The extremely speedy 5G signals have a very short range, resulting in the growing need for cell sites as more companies deploy 5G services. The 5G mmWave technology provides access to the large bandwidth in the frequency band of 24-40 GHz. Its smaller coverage radius has led to the development of smaller cell tower modules that can be mounted on billboards and commercial buildings. This rapid expansion of the 5G network provides investors with more opportunities to boost their cell tower portfolio.
Unlock a Steady Revenue Stream by Investing in Cell Towers through Invoice Factoring
Cell tower construction, maintenance, and daily operations can pose enormous costs, requiring investors who either invest in communication tower infrastructure companies or partner with communication providers. There are chances that the investors may get caught up in the capital and operational expenditure due to long-term payment agreements typical of the telecom sector. In 2023, with invoice factoring for telecom tower construction at your disposal, cell tower investment is a matter of when not why.
Carriox provides cell tower infrastructure financing for telecom operators, sub-contractors, construction, and commissioning companies to keep their operations afloat and bridge any gaps in completing payment cycles.