The TowerCo model was created by asking what could be separated from the telecom operator. Perhaps the next opportunity begins by asking what the separated infrastructure could become.
For years, I have followed the telecom tower industry with a recurring question.
Why do so many TowerCos struggle to move the needle?
The question seems strange at first.
Telecommunications demand continues to grow. Mobile data consumption continues to expand. Networks require greater density, resilience and connectivity. Towers are physical infrastructure with long useful lives, difficult-to-replicate locations and customers that depend on them.
On the surface, the investment proposition should be straightforward.
Telecom towers represent a significant and often underestimated part of the communications infrastructure landscape. Their value extends well beyond the physical steel structure. Each established site can combine location, height, land or ground rights, power, connectivity, permitting and access—while supporting recurring revenues from infrastructure that multiple network operators may be able to share.
That makes the tower an unusual asset: its physical footprint can remain relatively fixed while its economic productivity can potentially increase.
Add another tenant, improve connectivity, expand power capability or introduce another productive use of the site, and the underlying infrastructure may generate greater value without requiring another tower to be built.
That is what makes TowerCos worth examining.
The question is not whether telecom towers have value.
They clearly do.
The more interesting question is whether we have fully understood where that value resides—and whether the traditional TowerCo model is capturing enough of it.
Yet when I dug deeper over the years—looking at operators, competitive structures and public filings—the picture became considerably more complicated.
Perhaps we have been looking at the tower through the wrong lens.
The TowerCo Was Born From Separation
TowerCos are rarely created from scratch.
Many emerged because Mobile Network Operators recognized that owning every component of the telecommunications infrastructure was no longer necessarily the most efficient use of capital.
For decades, the integrated telecom model made sense.
The operator acquired spectrum, secured sites, built towers, deployed network equipment, connected infrastructure, managed software and billing, and served the customer.
Everything lived within essentially one organization.
But as networks expanded and capital requirements increased, that model became increasingly expensive.
Fiber deployment, spectrum investment, network modernization and successive generations of mobile technology demanded enormous amounts of capital.
Something had to change.
One answer was separation.
Passive tower infrastructure could be carved out, sold or transferred into a specialized TowerCo. The telecom operator could concentrate its capital and organization on the areas where it believed competitive differentiation mattered most.
The TowerCo became the infrastructure owner.
The MNO became its tenant.
The Landlord and the Tenant
That relationship becomes easier to understand if we stop thinking about telecommunications for a moment and think about commercial real estate.
Imagine a corporation that owns the office building it occupies.
Eventually it decides that owning and maintaining the building isn’t central to its competitive advantage. It sells the property, releases capital and leases the space back from a specialized property owner.
- The company concentrates on its business.
- The landlord concentrates on the building.
That is remarkably similar to what happened with telecom towers.
But there is an important difference.
Telecom tenants can be extremely demanding. They don’t simply require floor space.
They need particular antenna positions, structural capacity, equipment space, reliable power, backup systems, fiber or backhaul connectivity, site access, permitting and continual accommodation as network technology evolves.
Add additional tenants and the economics of the tower can improve.
But so can its complexity.
The infrastructure may have been separated from the telecom operator.
The complexity wasn’t necessarily eliminated. It moved.
Separation Doesn’t Solve Everything
The financial logic behind infrastructure separation can be compelling.
Long-lived physical assets with recurring lease revenues can appeal to a different pool of capital than a telecom operator competing for subscribers, spectrum and technology leadership.
But separation creates another important distinction:
A valuable infrastructure asset does not automatically create a valuable equity investment.
Some TowerCos have accumulated substantial debt, often alongside acquisitions and expansion.
That matters.
Debt can sit between the productive infrastructure asset and the shareholder.
It can restrict operational flexibility, increase refinancing exposure and compete with the capital required to maintain, modernize and expand the underlying infrastructure.
This gives us three different things that are too easily treated as one:
Asset value.
Enterprise value.
Equity value.
They are related.
They are not identical.
A tower can remain strategically valuable even when the capital structure of the company owning it makes the equity proposition considerably more complicated.
More Towers?
This brings us to another assumption worth questioning.
If mobile data demand keeps growing, do we simply need more towers?
Sometimes, certainly.
Coverage gaps exist. Networks require densification. Geography, capacity and technology create legitimate requirements for additional infrastructure.
But more infrastructure is not automatically better infrastructure.
Once multiple operators can share passive infrastructure, unnecessary duplication becomes expensive from a broader economic perspective.
Every additional tower consumes capital, land, permitting capacity, construction resources, power infrastructure and management attention.
Capital committed there is capital unavailable somewhere else.
And we have seen versions of this pattern before.
Warehouses were built rapidly when logistics demand appeared almost unlimited.
Now we are asking similar questions about data centers.
- How many facilities are being announced?
- How many megawatts?
- How many GPUs?
- How much compute?
But counting infrastructure tells us surprisingly little about productive capability.
The important question is not simply: How much did we build?
It is: How effectively can what we built be used?
The Office Building Problem
This is where an old office building becomes useful. Imagine a twenty-year-old office property that is increasingly underutilized.
One response is to build another office building somewhere else.
Another is to ask a more interesting question:
What else could this property become?
Across many markets, buildings originally designed around a single purpose have been reconsidered as mixed-use environments incorporating offices, residential space, retail, hospitality and services.
The physical asset didn’t necessarily lose its usefulness.
Our understanding of its possible uses changed.
That raises an intriguing question for telecom infrastructure.
Perhaps a TowerCo shouldn’t be viewed solely as a company that owns vertical structures and leases antenna positions.
Perhaps we should look at the entire infrastructure footprint.
The site may contain something much more interesting:
- Land or long-term ground rights.
- Height.
- Power.
- Backup energy.
- Fiber connectivity.
- Secure equipment space.
- Network access.
- Permits and established rights of way.
Potential locations for sensing, private networks, edge infrastructure, energy systems and other digital services.
Not every tower site will support every function.
Nor should it. But that is precisely the point.
The opportunity may not come from forcing the same model onto thousands of sites.
It may come from understanding what each infrastructure location is capable of becoming.
From Infrastructure Ownership to Infrastructure Optimization
Tower separation reflected an important realization by mobile operators:
Owning passive infrastructure was not necessarily where their competitive differentiation resided.
- Network performance still matters.
- Coverage still matters.
- Customer experience matters.
- Execution matters.
But an operator doesn’t necessarily need to own every tower supporting those capabilities.
That raises the question I find considerably more interesting:
If infrastructure ownership is no longer the MNO’s primary source of differentiation, what becomes the TowerCo’s source of differentiation?
It cannot indefinitely be simply: We own towers.
Two landlords can own nearly identical buildings and generate very different economic outcomes.
The difference comes from how those properties are financed, operated, maintained, configured, occupied and adapted to changing demand.
Perhaps telecom infrastructure is entering a similar stage.
The progression could eventually look something like this:
Infrastructure ownership → infrastructure operation → infrastructure optimization → infrastructure platform.
That final step changes the question.
Instead of asking: How many more towers can we build?
we begin asking: How much more productive can the infrastructure we already have become?
Looking Beneath the Tower
For years, I wondered why an industry built around such essential physical infrastructure often seemed unable to unlock the value I expected to see.
Perhaps part of the answer is that we have continued to define the asset by what it was originally built to do.
- A tower was built to hold telecommunications equipment.
- An office building was built to contain offices.
- A warehouse was built to store goods.
- A data center was built to house computing equipment.
But infrastructure economics eventually forces a different question.
Not simply: What was this asset built for?
But: What capabilities does this asset actually contain?
That distinction may matter enormously. The TowerCo model was created by asking what could be separated from the telecom operator.
The next chapter may begin by asking what that separated infrastructure could become.
Before building more, perhaps we should first understand the hidden value of what we have already built.