Network Wireless Solutions (NWS) is a full-service distributor of mission-critical materials and logistics solutions for constructing, maintaining, and upgrading cellular towers in the wireless telecommunications industry. Harris Williams recently advised NWS on its sale to Grain Management, LLC.
Here, professionals from the Harris Williams Specialty Distribution Group and Energy, Power & Infrastructure Group share insights on what made NWS an exceptional investment opportunity, as well as their advice for buyers and investors interested in telecommunications and specialty distribution.
What makes the telecommunications sector an appealing space for buyers and investors interested in distribution businesses?
Baltimore: There are many attractive tailwinds underpinning the telecommunications industry and the demand for services related to cellular infrastructure. One factor is that consumer data use is growing exponentially. High-definition content consumption and emerging data-intensive use cases, such as the internet of things, are driving carriers to invest in mobile infrastructure to keep pace with data demand. Competition is also pressuring carriers to increase site coverage, particularly in rural areas, and expand overall capacity. COVID-19 accelerated these trends, pushing more of the workforce to work remotely and consumers to spend more time at home consuming digital content.
White: 5G is also a big driver of new tower builds, equipment installations, and upgrades. Carriers have made significant investments in 5G spectrum licenses and now need cell sites and cell site upgrades to deliver 5G capabilities. This will require a massive, multi-year investment that is still in the early stages and is expected to continue over the next ten years. Beyond 5G, there will likely be new investment cycles as carriers continue to compete head-to-head to satisfy demand. The volume and complexity of infrastructure build-outs and maintenance will drive strong demand for materials and services, which are good indicators of growth for distributors and others in the supply chain.
What made NWS particularly appealing to its investors?
Gillam: NWS has two primary lines of business, both aligned with this demand. It provides custom fiber optic, copper or hybrid connectivity technology solutions to connect radios and other equipment. It also distributes a broad array of mission-critical consumable construction materials required for cell tower maintenance, upgrades, and new builds. Underpinning these solutions are several core tenets that have enabled the company to succeed and grow. These include reducing complexity in customer supply chains, rapidly fulfilling complex orders on short notice, and providing exceptional quality and highly dependable service.
With its expertise and ability to develop and deliver solutions and equipment exactly when needed, NWS has established itself as a critical partner to carriers, project managers, and general contractors. The company's ability to reliably, quickly, and efficiently provide the solutions needed at the job site has bolstered its growth.
Baltimore: The focus of NWS is less about products and more about the solution it provides to customers, which has led to strong margins and growth. NWS was founded and is led by industry veterans. They know exactly the pain points customers face because they have lived them. The team understands a customer pain point and creates a solution in a high-touch, solution-oriented, and highly agile way. It’s a very focused and customer-centric organization, and as a result of this approach, NWS has become integral to the operations of its customers and to their ability to meet build schedules.
Gillam: NWS’s in-house engineering capability is another important differentiator. Its expertise and experience are core to its ability to solve the challenges customers face with building networks, upgrading equipment, or bringing on new OEM equipment. NWS engineers are often in the lab with the customer designing the optimal solution. They then procure and source all the raw materials, manufacture and assemble through a third-party manufacturer, and get the solution to the customer. NWS stands out from competitors that don't have the same focus on service and solutions.
What advice do you have for prospective buyers interested in this space?
Gillam: Distributors such as NWS have multiple avenues for growth in the sector. They can gain significant organic growth in core products and services as telecom customers scale their networks. They can leverage their entrenched position with existing customers to expand their scope and deploy new services. And they can expand geographically within the U.S. and to other regions.
White: It’s important to understand that in the telecom space, there will be an inherent level of customer concentration. But unlike other industries where this may be a red flag for investors, it's far less concerning here. These are massive, well-diversified companies. Their focus is on expanding the network and gaining customers, creating tremendous opportunities for the likes of NWS to become invaluable partners and provide services that are non-core to their business.
Baltimore: To win in this market, it's crucial to have a well-informed solutions-selling approach. Companies need to identify true customer pain points and address them more effectively than a larger telecom company can. If an organization has a good understanding of its customers and technical expertise, it can solve problems. Once the company demonstrates it can be relied upon, it’s hard to imagine a customer wanting to go another way rather than have an incredibly nimble, problem-solving partner on its side.
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Published July 2021