AMP Capital targets digital ‘third wave’ with telecom site leasing

The fund manager is launching TIP, a company that will acquire and aggregate telecom site leases, focusing initially on Europe and Latin America.

AMP Capital has partnered with Eric Overman, founder and former chief executive of APWireless, a cell tower lease investment firm based in San Diego, to establish Telecom Infrastructure Partners.

The fund manager will invest up to $350 million from its Global Infrastructure Fund II to grow the company whose mission is to acquire, own and manage long-term lease contracts of mobile telecom sites, according to a statement.

“We believe there is huge market opportunity globally to build a diversified, multi-country portfolio of scale,” Adam Ringer, partner, infrastructure equity at AMP Capital, told Infrastructure Investor.

The new company, in which AMP Capital holds a “significant majority stake”, according to a spokeswoman, will be based in London and will initially focus on Europe and Latin America.

“Some of the markets we have identified as having strong growth potential include France, Spain, Peru and Chile,” Ringer commented.

TIP will act as an intermediary between the owner of a site where telecom infrastructure assets are located and the tenant – a mobile network operator or towers business.

Site owners benefit from a company such as TIP, by receiving an upfront payment and removing the risk of a tenant terminating a contract on short notice, according to AMP Capital. TIP then benefits from long-term contracted revenues and the scale and diversification of its portfolio. The aggregation of a large number of small leases means that an individual site termination becomes a negligible risk.

“There are around 400,000 cell sites in the US with several lease aggregation businesses bidding for them, whereas outside the US, there are millions of cell sites with very limited competition,” Ringer explained.

According to the statement, there are around five million sites – ground and rooftop – and less than 10,000 cell site lease buyouts outside the US, representing less than 0.2 percent penetration.

“[AMP Capital’s] valuable support will allow this new venture to take full advantage of what we consider to be the ‘Third Wave’ in telecom and digital infrastructure: ground lease aggregation at a global level,” Overman, who has been appointed TIP’s chief executive, said in the statement.

APWireless, which he founded in 2010, now has roughly 6,000 site leases across 19 countries.

According to an AMP Capital spokeswoman, TIP aims to become a multi-country business and Overman “is commencing recruitment for his senior management and regional teams now”.