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Category Archives: Georgia
BPV portfolio company Tower Cloud has been acquired by Communications Sales & Leasing, Inc (NASDAQ: CSAL) in a stock and cash deal valued at $230 million plus milestone payments.
Here is today’s write up from the Tampa Bay Business Journal:
St. Petersburg-based Tower Cloud is being acquired by Communications Sales & Leasing Inc. (NASDAQ: CSAL) in a stock and cash deal valued at $230 million.
Tower Cloud, founded in 2006 and backed by private equity investors, operates a fiber optic network in 15 markets in the Southeast United States, with nearly 6,000 route miles connecting large markets and Internet hubs with smaller markets and rural areas.
“Tower Cloud significantly expands our backhaul network and greatly accelerates our entry into the high growth small cell and dark fiber businesses,”Kenny Gunderman, president and CEO of Little Rock, Arkansas-based CS&L, said in a statement. “We continue to grow our wireless carrier relationships across all asset classes and are seeing an increasing number of opportunities arise as carriers densify their networks and look toward the deployment of 5G and related technologies.”
In an investor conference call about the deal Monday morning, Gunderman said, “Tower Cloud is very complementary to our strategy of acquiring and building mission critical communications infrastructure and becoming more and more relevant to the national wireless carriers in particular. The deal makes CS&L one of the largest owners of fiber in the country,” Gunderman said.
“We think that fiber is and will be the most critical component of the communications network going forward and Tower Cloud is an established provider of two of the biggest growth areas within fiber including dark fiber deployments and small cells,” Gunderman said in the call.
The acquisition expands CS&L’s national wireless carrier relationships because more than 90 percent of Tower Cloud’s revenues are from national wireless carriers. The deal also advances CS&L’s diversification strategy by increasing its exposure to the national wireless carriers with long-term contractual revenues.
Tower Cloud’s recent dark fiber and small cell awards with national wireless carriers will accelerate the company’s initiatives, the company said in a statement. Tower Cloud is currently constructing dark fiber routes in Florida and Georgia with total contractual revenues of $175 million.
Last November, Tower Cloud signed a contract with one of the “big 4” mobile carriers to expand its fiber network infrastructure and bring high-speed connectivity and capacity to Augusta, Georgia. It also announced last September that it would expand its fiber network into Jacksonville.
With 3-Year Sales Growth of 964%, the BPV portfolio company ranked #478 on the 2013 Inc. 500 List of America’s Fastest-Growing Private Companies.
The 2013 Inc. 500, unveiled in the September issue of Inc., is the most competitive crop in the list’s history. To make the cut, companies had to have achieved a staggering minimum of 918.59% in sales growth.
“We are honored to be recognized by the 2013 Inc. 500 for the tremendous growth Tower Cloud has achieved over the last three years,” said Ronald Mudry, Tower Cloud’s founder and CEO. “Our placement as the 7th fastest growing telecommunication company in the nation, and the fastest growing wireless backhaul provider is a testament to all the hard work, dedication and customer focus of the Tower Cloud team.”
New evidence from the dismal science confirms what social science has already shown: the love of taxes is the root of unhappiness.
The original social science, from the December 2009 issue of Science, indicated that states with the highest taxes also have the least happy residents. Residents of high tax states not only have less money to spend on other things that make them happy, they don’t enjoy many benefits in exchange for all their hard-earned tax dollars. Roads, schools, and crime are no better (and in many cases worse) while their state governments borrow even more and spend disproportionately on public employee pensions and entitlement programs. Their needs ignored at the expense of entrenched special interests, taxpayers get unhappy. And then they get out.
From this one might argue causation; high taxes = unhappiness. While we are certainly sympathetic to that point of view, we also have to wonder if it runs vice-versa, or at least cuts both ways: unhappy people like to raise taxes.
We are… happy. And happy to report that’s true for our region as well. NVSE readers already know that the Southeast’s advantages extend well beyond the matter of taxes and include lower public sector debt burdens, stronger job creation, the best climate for entrepreneurs, and a superior overall business climate. (The actual climate happens to be conducive to a great quality of life as well.)
The more recent dismal science is courtesy of The Red-State Path to Prosperity, from Arthur B. Laffer and Stephen Moore in last week’s Wall Street Journal:
Consider the South. We predict that within a decade five or six states in Dixie could entirely eliminate their income taxes. This would mean that the region stretching from Florida through Texas and Louisiana could become a vast state income-tax free zone. Three of these states—Florida, Texas and Tennessee—already impose no income tax. Louisiana and North Carolina… are moving quickly ahead with plans to eliminate theirs. Just to the west, Kansas and Oklahoma are also devising plans to replace their income taxes with more growth-friendly expanded sales taxes and energy extraction taxes…
All the empirical evidence shows that raising a state’s tax burden weakens its tax base. Still, too many blue-state lawmakers believe that a primary purpose of government is to redistribute income from rich to poor, even if those policies make everyone, including the poor, less well off. The obsession with “fairness” puts growth secondary. Meanwhile, in the South, watch for a zero-income-tax domino effect.
Here Mr. Laffer further discusses how blue states are struggling to compete for businesses and workers with the Journal‘s Mary Kissel:
For the eighth consecutive year, Texas has been voted the best state for business by Chief Executive magazine.
The Top 10 looks familiar to us, as it constitutes most of the geography in which we have focused our investment efforts for over twenty years now, and adds to the growing list of evidence that some states understand job creation better than others. The 2012 edition of their annual survey of CEOs includes a feature on What Keeps Texas on Top:
The state is growing its own companies but also is displaying remarkable success in luring investments from other states, particularly California, which once again ranks last in our survey. A raft of small, technology companies have either relocated to Texas or moved key operations there. Bigger California companies, such as Facebook, eBay and PetCo also have recently opened operations in Texas, and major manufacturers from different states, such as General Electric’s transportation unit and Caterpillar have located big new plants in Fort Worth and Victoria, respectively. “Employers from around the nation and all over the world continue to look to Texas as the premier location for business expansion, relocation and job growth thanks to our low taxes, reasonable and predictable regulations, fair legal system and skilled workforce,” Gov. Rick Perry told Chief Executive.
Texas has powerful momentum and it’s difficult to see what could halt it… The sheer diversification in its economy—all the way from wheat farming to semiconductors—suggests that the state could absorb many punches and keep on rolling.
When confronted with the argument that higher taxes = unhappiness, we wonder, even while remaining sympathetic to the point of view, whether or not it runs vice-versa, or at least cuts both ways: unhappy people like to raise taxes.
Another factor in the Southeast’s attractive growth potential – and one clearly related to taxes – is lower state debt burdens. Some state governments, when faced with crushing budget deficits, respond with growth-stalling tax increases on the businesses that operate in their states. (The problem worsens dramatically when one considers many states’ unfunded pension liabilities.)
Two states whose budget woes have garnered recent headlines include Illinois, which pushed through a 45% increase in corporate taxes – apparently triggering an exodus; and California, which is on the verge of running out of money – again.
Some states, like the aforementioned California, respond in other “desperate ways” which further undermine investor confidence and entrepreneurial spirits: accounting gimmicks, delayed payments, issuing IOUs, or even more borrowing. As we’ve written before, only one non-Southeastern state – Nebraska – has a lower debt-to-GDP ratio than FL (5th), GA (4th), TN (2nd), NC (3rd), TX and VA (tied for 6th).
- 85% of mobile backhaul bandwidth is in non-NFL cities or rural areas
- Individual sites in those areas have lower cell-site density and require more bandwidth
- Existing dark fiber is available to lease from other carriers, utility companies, and municipalities – even if slightly harder to find than in large cities
- The same networks that deliver fiber to cell towers can also reach other business locations, helping to amortize the cost of fiber
Tower Cloud operates backhaul networks throughout Georgia, Florida, Alabama and South Carolina and is building additional networks to support national and regional wireless carriers. Speaking about his company’s expanded capacity in Atlanta, Mudry explained, “With the explosive growth of iPhones, Blackberries and Android Smart phones, wireless carriers are rushing to upgrade and enhance their networks to meet today’s demand. Atlanta is a prime example of our ability to quickly and efficiently turn up a network to help bring real-time 4G to consumers.”
Tower Cloud’s recently completed $49 million round of financing is mentioned here in the WSJ’s Venture Capital Dispatch.
Below you can see Mudry discuss wireless backhaul at COMPTEL Plus in Orlando:
The Top 10 looks familiar to us, as it constitutes most of the geography in which we have focused our investment efforts for over twenty years now, and adds to the growing list of evidence that some states understand job creation better than others.
Wells Fargo has released a study entitled “Employment Dynamics and State Competitiveness” which predicts 25 industries will drive employment growth in the next few years, and ranks states according to their likely ability to capitalize on those trends. As with previous related studies – see here, here, here, here, here, here, here, and here – our region performs very well.
The team of economists in their Securities Economics Group credit (among other things) the availability of skilled workers in our region – both homegrown and those drawn to the quality of life.
States with a large number of high-growth industries that also have a large skilled workforce will be at a greater competitive advantage. This would tend to favor states, such as Georgia, North Carolina, Arizona, Virginia and Texas, which not only have a large supply of skilled workers but have also been successful at attracting such workers from other parts of the nation. Florida, which has more high-growth industries than any other state, would be in a stronger position if not for the weakened housing market, which has cut into worker mobility. The Sunshine State is making important enhancements to its university system to bring in more cutting-edge research, and this should pay off with an even better mix of high-growth industries in future years.
The Chicago Tribune urges Illinois not to become a “New Michigan” or “New California” but instead mimic states such as FL, GA, VA, TN, TX, and NC. In an April 11 op-ed entitled The Illinois Spiral they reference the third edition of Rich States, Poor States (from the American Legislative Exchange Council) in which our region scores very well:
ALEC ranked states’ economic outlook vs. their 10 year (1998-2008) economic performance based on 15 policy variables which influence the overall business climate. The results look vaguely familiar to us, and are another vote of confidence in the Southeast as a preferred region in which to work, live, and invest:
21. North Carolina
50. New York
As the Tribune puts it:
Employers tend to be harder-headed in deciding where to invest their money than our lawmakers are in spending other people’s money. The employers see Illinois pols dithering through a crisis, inviting an even more bleak future with their refusal to reform government spending and reduce what it costs to have a payroll in Illinois:
• Nor have you heard Illinois leaders, in their to and fro over an income tax hike, confront a 2009 report by the American Legislative Exchange Council: A decade’s worth of hard data suggests that states with no individual income tax created 89 percent more jobs, and had 32 percent faster personal income growth, than did states with the highest income tax rates. The report also analyzed 15 policy factors that influence a state’s growth prospects — tax burdens, debt service, tort climate, mandated minimum wage, spending limits if any — and ranked Illinois’ economic outlook as an alarming 44th in the U.S.
• Nor have you heard Illinois leaders confront this state’s devastating rank in job creation, 48th, and ask how they can be friendlier to present and potential employers. Illinois — with its overspending, its borrowing and its worst-in-America pension crisis — faces massive obligations that give potential employers pause. Add to this toxic mix Illinois’ high cost of workers compensation and its 49th-in-the-U.S. bond ratings. How surprised, then, are we that since 1990 Illinois has underperformed the U.S. in job growth?
The New York Times confirms another reason for the Southeast’s attractive growth potential and why increasing numbers of entrepreneurs are deciding to build their businesses in the region: lower state debt burdens. As the attached graph shows, the problem worsens dramatically when one considers many states’ unfunded pension liabilities. (Click thumbnail for “top” 25 states for debt-to-GDP, “Overloaded with Debts Unseen”.)
Not only will such debt levels likely lead to growth-stalling tax increases on the businesses that operate in those states, but some of the states are also responding in “desperate ways” which could undermine investor confidence and result in a credit squeeze similar to that currently experienced by Greece (and perhaps someday by other PIGS.)
State Debt Woes Grow Too Big to Camouflage
By MARY WILLIAMS WALSH
California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.
Complete NYTimes article here
Original American Enterprise Institute white paper here
UPDATE (3/31/10, 3:08PM):
Having had a chance to digest the original white paper, we are even more pleased than before to report that only one state – NE – has a lower debt-to-GDP % than FL (5th), GA (4th), TN (2nd), NC (3rd), TX and VA (tied for 6th).