Crown Castle recently acquired Next G (a private company similar to towerstream). Next G has 7000 nodes built. Crown Castle paid $1 billion to acquire Next G. So to find a value for tower we can should determine what the going rate is for a node. From here we can get a rough estimate of what Tower might be worth. Knowing this helps us determine how to handle our position. Applying some simple math to Next G $994,000,000/7000nodes give us the price per node of $142,000.
When we apply this to Towerstream, we can determine its current value of 1500 nodes @ $142,000 gives us a market cap of $213,000. Since Tower has 55 millions shares, we can value them at about $3.87 (213/55).
Towers said they will build an additional 3000 nodes at a minimum over the next 12 months. So the market cap based on the price paid by Crown Castle for Next G would be 4500*142,000=$639,000,000. Divide this by 55 million shares and we arrive at $11.61.
Now we know what an acquisition price is for the company, we need to see if the contract they have signed is inline with tower industry metrics. If they are, then these prices are great points of reference. Should the contract come with different metrics, then we will have to regroup and do a little more math.
Assuming the contract is within the norm, I think we will see shares in the neighborhood of $7 next week before taking a bit of a breather, then we should see shares begin to climb towards the low teens sometime in the fall.
This could all change very quickly though. Jeff Thomson, CEO of Towerstream said that talks with all carriers are fluid. So any additional contracts with other carriers will certainly be a positive. But, he said the cable companies are being equally aggressive, yet not quite as far along (I suspect).
We could be sitting on a real rocket ship with this one.
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