It’s not just the initial deal structure that defines the success of tower sharing transactions. Income from co-locations is the critical measure of success for towercos, and for their investors and partners.
Tenancy ratios, also known as lease up rates, remain the critical measure for success. But beware of the different means of presenting tenancy ratios – is an equipment upgrade from an anchor tenant counted as an additional tenant? Sometimes bartering may also be counted in tenancy ratios. Ultimately the best measure of success remains improvements to EBITDA margin.
Target tenancy ratios vary according to a variety of factors including the capacity of the market, volume of sharing before acquisition, rental rate and terms of the initial sale of the towers.