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The masts that carry the mobile network, owned not by the carriers but by independent tower companies that lease space on each tower to multiple operators. Everything turns on the tenancy ratio: per-tower cost is fixed, so every added tenant drops to EBITDA at close to 100% incremental margin. Long, indexed leases and near-zero churn make this a prized, high-multiple annuity. Work through a real towerco below: the scene, the model and a working returns model.
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Drag the sliders to see what earns the money: the number of towers, the rent on each tenancy, and the tenancy ratio (tenants per tower). Each added tenant is almost pure margin.
A tower company owns the passive infrastructure (the mast, the platform, the power and the ground lease) and leases space on each tower to the mobile operators as tenants. The magic is the tenancy ratio: the number of tenants per tower. Because the cost of running a tower (ground lease, power, maintenance) is largely fixed per tower, the first tenant covers the site and every additional tenant drops to EBITDA at close to 100% incremental margin. So revenue is simply towers × tenancy ratio × rent, and the value engine is lifting the ratio: lease-up (adding tenants to existing towers) is the high-margin growth, while build-to-suit (new towers against anchor commitments) extends the base. Leases run for years, are indexed to inflation, and churn is near zero because moving a network off a mast is painful. Revenue that long, indexed, sticky and high-margin is why towercos are a prized annuity and trade at very high EBITDA multiples.
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See also the tower lease-up simulator (colocation and the tenancy ratio in motion) and the Cash-flow & DCF model.