I'd definitely appreciate your thinking on my rationale on these companies (SBA and AMT) in particular. First of all is it possible that the uptake on data, however off of rosy scenario forecasts- will be enough to make a difference over the next 2-3 years. In other words with some continued growth in voice subscribers and MOU combined with increasing average call length due to free long distance, don't these guys have a chance to get to 3-3.25 tennants by the end of 05?. It appears that if this isn't tax selling and total capitulation on the part of SBA in particular the market is saying that we're just headed down a continuing slippery slow of declining lease up. That there isn't any point of stabilization where at least we'll stop dropping sequentially. Is it totally wild to look for stabilization or even an uptick in leasing in the next three years? What do you think? The market is saying bankruptcy here in 6 months or less and I don't see that unless we drop to below .2 or less bbe lease up.
The probability of over 3 average tenants per tower by 05 is zero, for both AMT and SBAC. The SBAC miss tells me that the equity value, using a 25% discount rate to the equity and a conservative five and seven year exit multiple (two different analyses) is probably worthless. That doesn't mean the company will necessarily go bankrupt (that will be driven either by a cash crisis, which doesn't appear likely, or a voluntary management led restructuring, which would be great for management, and terrible for the equity). There could be substantial equity value remaining under the following scenario - the current capital market driven freeze on network capacity spending ends (possibly via a large merger), and the carriers close the gap that has been created by spending at a faster rate sometime in the next 24 months. The odds of that scenario happening are pretty slim. The SBAC equity is basically a lottery ticket. It may be an attractively priced lottery ticket, but the odds of a zero have gone way up with this miss, in my opinion.
I've heard investment banks are looking to do tower deals...as in go private cheap. I can see carrier mergers with little benefit and some risk to tower cos....rationalize tenant leases...pressure lease rates/terms down not up. Long ago I compared wireless to airlines...great product, no pricing power, excess capacity and NO PROFITS. Now I think we might compare to utilities and power plant builders. Guess these tower cos never thought to do "revenue"/lease swaps. What idiots underwrote these loans forcing all banks to underwrite and syndicate bad credits...compoundigncompetition and the long run problem. Stoops has always claimed "services" revenue was never a leading indicator of lease up revenues....I think he was wrong or dissembling. cheers, kash BTW..who the hell owns all these bad debt...not the major banks. eom