DigitalBridge Group, Inc. (DBRG) Earnings Call Transcript & Summary

Sorry for dialing in. This is Jon Atkin. I cover the communications infrastructure stocks at RBC. And I'm thrilled to have Marc Ganzi, the CEO of Digital Colony and starting July 1 the CEO of Colony Capital, participate in the focused interview session. Given, Marc, that you have had quite a career across a number of different -- in quite a number of different roles, your role now kind of spans a number of different regions and categories of infrastructure. We thought we would do a detailed kind of in-depth interview with you. And first of all, welcome. And maybe to kind of start things out, if you could maybe provide a little bit of personal background touching on your days back at Global Tower Partners and maybe even earlier and the history that you had with a number of different financial sponsors during that period.

Yes. Hey, Jonathan, how are you? Thank you for having me on your podcast today. Really appreciate it, and you've always been such a good friend and a good advocate of our industry and the companies that I've run. So I really appreciate the opportunity to talk with you today. So for me, Jonathan, my journey goes all the way back to the early '90s. Started out building a tower and rooftop management company in the '90s, ultimately merging that into SpectraSite. We took it public. Started building one of the early towercos in the '90s. Made a decision for my own reasons to go into the private equity space, where I spent 3 years working for Deutsche Bank and really looking at communications and communications infrastructure on behalf of the bank's balance sheet and got the opportunity to work on assets in Australia and Germany and Chile and Argentina and Brazil and Mexico, and it was pretty exciting. And it was good for me as an entrepreneur to cross over to that side of the space and understand the process for investing and what it takes to actually get an investment done from the principal side. And that really helped shape my view in 2003 when I made the decision to leave DB and start Global Tower Partners and had a new and fresh perspective on how hard it is to get to a yes in the investment committee. And we started that company with the help of Great Hill Partners and GE Capital as our lender, raised about $100 million, was able to cobble together about 28 acquisitions, built the business to approximately over -- close to 600 towers. And Blackstone came knocking, and that was a real seminal moment for us. We were able to take that $100 million, and Blackstone had bought the business for $485 million, which, at that time, I thought was mega dollars. And we did a great job building that business. And that's sort of where I got the chance to work with my partner today, Ben Jenkins. And we then proceeded to triple the size of the company again. And Macquarie came knocking to the tune of $1.4 billion, about 2 years later. And we consummated that transaction with Macquarie in 2007, ran the business with Macquarie for 6 years. And really kind of an interesting moment happened about a year away from when we sold it. In 2011, I got to know the Dutch pension fund, PGGM. And they came into our capital structure as a co-investor. And I was very curious as to what co-investment was and what were pension funds doing investing directly, why was a Dutch pension fund interested in a tower business in the United States. And what was becoming clear to me, Jonathan, is that particularly cell towers and digital infrastructure was starting to move away from private equity and was migrating towards infrastructure investors. And more importantly, infra investors had LPs and those LPs were very interested in direct investing. So in 2012, the Dutch pension fund, PGGM, made an investment in us. We cleared CFIUS. And all of a sudden, I had a massive multibillion-dollar pension system in my shareholder base. Got to know the guys at PGGM really well, and it proved to be an important moment because it would really shape how I would capitalize companies going forward. And also, it was really for me in 2011 that demarcation point for where towers and data centers and fiber started to move away from private equity and into infrastructure. And so the likes of Macquarie and Brookfield and other types of infra investors were starting to take a big interest in communications investing. So 2013 comes and goes. We sell Global Tower Partners for about $5 billion, once again, making 3x the money for our investors. So we made 3x the money for Great Hill, we made 3x the money for Blackstone, we made 3x the money for Macquarie. And all of a sudden I found myself in October of 2013 for the first time in my life unemployed, made the decision to very quickly get back in the business, spent about a week on the beach, opened Digital Bridge in the middle of October. And we made the decision that we wanted to take the capital that we had earned, the proceeds that we'd earned from the GTP closing and put it into digital infrastructure, reformed Digital Bridge. Digital Bridge went on to invest about $4 billion of equity. Some of that -- a little bit of that was myself and my partner, Ben Jenkins, and Alex Gellman and a few of our other operating partners from GTP. We formed a bunch of great companies, Mexico Tower Partners, Vertical Bridge, went on to go do ExteNet, then did DataBank. Then we did ATP down south in Latin America, we did Vantage. And next thing you know, we had about $11 billion of assets under management, and we did not have a fund. And what was becoming clear was a lot of the infra GPs were raising billions and billions of dollars to go do new infra funds of which all of them were overnight experts in digital infrastructure, and we're going to put 20% to 25% of their new $6 billion fund, $10 billion fund into digital. So Ben and I knew we had to arm the cannons and go out and find new capital. And so we did that in a joint venture with Colony in 2018. It turned out to be a fantastic partnership. We raised a $4 billion fund, we've now fully deployed that first fund, we ended up merging our investment management business, and it's been a fantastic journey. I mean hard to believe, Jonathan, last time I think you and I got together was at a conference in San Francisco. That was 6 years ago. I had to go check my calendar last time you [ had together ] personally. But what an absolute crazy 7 years has been for us at Digital Bridge and now Digital Colony and soon to be all under one roof as Colony Capital. So that's a little bit about my journey. I don't know if that took up too much time, but I thought I'd try to capture all the pieces of the journey for you, Jonathan.

Yes. No, that's a good way to capture the transition. And so as we look now with Digital Colony, could you maybe describe briefly what's unique about their approach towards digital infrastructure as a business? What differentiates it in your mind as that's the vehicle?

Well, look, I think at the end of the day, most of us here on the 61-person investment team from Singapore to L.A. to New York to London to Boca, about half of us have been operators. So I think that is what makes us unique. We have that operational expertise. We've kind of been to the war, so to speak, in terms of understanding tough negotiations with carriers, hard zoning battles dealing with supply chain issues, dealing with collecting rents from tenants, negotiating term loans, securitizations, recruiting great people to run companies. I mean, you really get battle-tested when you've had the chance to run a business, right? And until you've been to the fire and you've touched the fire, you really don't understand what that's like. And so we caution investors today that when you invest in digital infrastructure, look, from the outside of team, it's really easy, right? You buy cell towers, they have 25-year leases; you buy long-haul fiber, it's got 30-year IRUs; you buy hyperscale data centers, they have 15-year leases. All of that on surface seems really easy. Below that is a million details, as you know, because you spend enough time with some of the great CEOs in our sector. It's hard, it's hard work, and it is managing a million details. And so our team comes out from an operational bend that makes us pretty unique. But also one of the most unique things about Digital Colony is we have a great saying around here which is don't let the check size define the opportunity. Let the opportunity define the opportunity, and that opportunity is defined by people. So if you look across our investments, the last 10 investments we've made in Digital Colony I, we've literally had 1 business like FreshWave, which was a de novo business plan, totally white sheet. We backed the team. We've gone on to do a bunch of acquisitions. We had 100% growth in Q1. And so that's a situation where we initially put a $30 million check to work, which is really small for a $4 billion fund. And then you've got Zayo, $14.3 billion take-private, massive complexity, huge transaction, lots of investors and arguably buying one of the most valuable fiber platforms in the U.S. So I think that's pretty unique about us, that we were able to issue a $14 billion transaction and do a complete start-up in small cells in the U.K. that really defines the diversity of our firm, which is what I'm most proud of.

Got it. So both Greenfields as well as existing operating assets, kind of agnostic on that front. So what I'd like to do is maybe kind of go around the world starting with the Americas, getting on Europe and then Asia where you've recently done some hiring in terms of your investment staff and kind of crossover the different asset classes. But starting with the Americas and towers, I guess the first question I would have is what's been the most notable change that you've seen in the U.S. macro tower industry since selling GTP and starting Vertical Bridge?

Yes. Look, I think the U.S. cell tower industry continues to get more competitive. I think carriers are continuing to feel more pressure on ARPU. They're feeling more pressure than ever, Jonathan, on CapEx. You've been one of the first people. I give you a lot of credit. You were the -- you've been the bible in tracking carrier CapEx, and so I think you know what's happening at the carriers. It's hard, right? They have a model where their revenue per user is not really going up, and they're looking at the potential dinner bill for 5G, and it's huge, it's massive. And it's new spectrum, it's new radios, it's more hybrid, it's more C-RAN hubs, it's more small clouds, it's complicated. And so that's a real conundrum for carriers saying, and they're saying, okay, where is the return on investment? We were promised this great return on 4G, and we didn't get it. So that's the conundrum. And then they're looking at the tower companies. And all the success that we've had in the tower sector, they're looking at their share price, which is trading at 25 to 26x it, and they're saying, God, we're trading at 5 to 8x, something is wrong here. There's been a value transfer. And so they're looking at higher rents, they're looking at towercos to say, hey, look, we've done our part. You've done your part, but we need help. And that help is a direct way of saying we need better solutions. We need cheaper solutions, we need lower rents. We need to be able to figure out how we can survive in this cost structure. And so tower rents have come under fire. And so I think you see the carriers testing new vendors. They're testing new business models. So you see the likes of smaller players like Uniti and Tillman and other private cos of Vertical Bridge, by example, who aren't afraid to step up and provide that infrastructure and build de novo infrastructure at a cost basis that's going to be lower than where the legacy rents are sitting with some of the public guys. So that's caused some friction. And so what I would say is there's some testing going on here, right? So I think the carriers are trying to test the result of the public tower companies. The private tower companies are testing, some of that was resolved, too. I think it's a lot harder to make money in the tower business today as an entrepreneur than it used to be. I think just sort of white sheet opening up a brand-new tower company unless you've got some unique relationship with one of the RF engineers at the carriers on a regional basis. You're not going to win big national business unless you're prepared to write to a negative sort of cash-on-cash IRR on the first tenant. Maybe use some leverage, you get to a 3% to 6% IRR. But we just look at some of the deals that have been recently done, and we sort of scratch our heads that if you're going to build, you just got to be prepared to underwrite to a low core infrastructure return. So that's hard. And there's a lot of capital out there taking the space from a private perspective. And some of those private tower platforms are honestly rewarded because you see a price like, for example, what Uniti sold their towers to Melody Capital, and every developer now looks at that print and says, oh, okay, I should get 30-plus times for my towers now. So the dynamic is tough. It's very hard to make it the business today. Carriers want a lot more for less rent, and you've got a lot more competition out there. And so this is the sort of setup in towers today, and the public guys are going to come under more pressure as the carriers are going to look for more value from their tower partners.

Great. No, I think that's a good summary of some of the changes. Turning to data centers in North America, Vantage and DataBank have been kind of your primary exposure to date. Would you consider investing in more platforms? Or did that kind of ground you out in terms of your desired exposure to North American data centers?

Well, look, I think Vantage has proven to be an incredible platform. We've been able to take that platform into Europe now. We're in 6 different markets in Europe. Here in North America, we have been very successful in Quincy, Santa Clara, Ashburn, Quebec City, Montreal, and we continue to look at Goodyear, Arizona, as a market for us. And so those core markets have performed extremely well. And hyperscale has had, as you know, it has kind of a roller coaster effect on leasing. You get these moments where it's really robust and quite -- and you get moments where it's quite low. And we always tell people, if you're going to be in the hyperscale leasing business, be prepared for a lumpy experience in leasing. And so that requires long-term patient capital. Hyperscale data centers aren't for everybody, and you just have to have a certain level of resolve and patience to get to the right place. I think on the DataBank side, we're continuing to grow in the U.S., no sort of ambitions to move beyond U.S. borders yet, 21 data centers across 9 different markets. Most of those markets we're in, we own either the primary or the secondary NAP, which is the network access point, where we have a significant amount of cross-connects. And so that business today has close to 9,000 cross-connects. And then what we do is we obviously build data centers on the perimeter of those networks. So building data centers typically the 6, 8, 12, 14 miles outside the city core, tethered back with 200 to 400 strands of fiber, high-speed home LAN connectivity back to that network access point, where we can locate a data center on the periphery and the edge of the network, where we're seeing a lot of those workloads, Jonathan, shift to the edge. So there, we try to stay out of Equinix' way. We don't try to be directly in their markets where they tend to be in sort of Tier 1 markets. We tend to be more Tier 2, Tier 3. So Salt Lake City, Kansas City, Minneapolis, Pittsburgh, Cleveland, Atlanta, which is a big city, we go toe-to-toe with some of the bigger guys there; Dallas, we go toe-to-toe with some of the bigger guys there. But we've had a lot of success putting workloads out of the edge, and that's where DataBank has really been able to differentiate itself. We've built 7 new data centers in the last 3 years. We're building more data centers now. For example, we got Pittsburgh 3 coming online; we've got Salt Lake City 6 coming online. And so as long as we keep putting new footprint online, and we can continue to have capacity to lease to our customers. The edge is really hot right now because those sort of quarter to half megawatt deals, Jonathan, are really what's in demand right now and being able to help our customers shift some of those workloads out to the edge or the -- what I call the perimeter of the network. That's where networks are being tested, certainly encoded. We're seeing those workloads shift, we're seeing this smoothing out of peak versus nonpeak. You could arguably say everything is now peak, because all day long, our homes are lit up with Zoom and kids working online for their schools, and we're downloading content because we're going to watch something at night at home, or we're conducting e-commerce when we're online with Amazon ordering our groceries. I mean our homes have really become the epicenter or ground zero of broadband connectivity. It's really fascinating right now what's happening with the shift in workloads and where we're seeing customers ask for that incremental capacity. And I'm not just talking about data center workload capacity, I'm talking about web services, I'm talking about dark fiber, I'm talking about macro sites, small cells. The network topology is really changing quite fast.

And then maybe related to that, mobile edge computing and kind of the concept that there has to be compute, perhaps even to star out as the base of the cell tower, what potential do you see there? Certainly, it has attracted a fair amount of entrepreneurial interest over the last 2 or 3 years. Do you see possibilities there for new investments or leveraging your existing portfolios such as Vertical Bridge and DataBank in that manner?

So there on the edge side right now, it's DataBank. That's kind of been -- that's sort of been the key area for us. DataBank has been really -- they've really been a thought leader in that space. I mean, 3 years ago, they were doing edge computing, and nobody was talking about it. So I think from a -- from what I would call sort of an application-based definition of the edge and those primary workloads for content and where content sort of meets the applications, that ecosystem really sits at a DataBank data center. And really, the sophistication of those workloads, Jonathan, really don't make any sense at the bottom of the cell tower. So I know there's a lot of people that think the -- we can drop a container at the base of the cell tower, and that's going to be edge compute. Certainly, there's going to be limited instances where that will be the case. But we don't think that, that is the definition of edge computing going forward, I would say. So right now, the sort of hot action is that DataBank and the workloads are big and the customer requirements are quite sophisticated and -- no, look, when you get one of those major, call it, FAANG or FAANG-like providers in one of your edge data centers, what a lot of people don't understand is that, that ecosystem that comes with it, the folks that write the programs, that write the applications and all the support that goes behind one of those big logos, a lot of that traffic goes with it. So what we're finding that's quite interesting is when we do get one of those big FAANG or FAANG-like providers that their ecosystem, their application ecosystem comes along with it. So we're getting a second, a third and a fourth tenant that really thrives on being close to those workloads in that environment. So I think that's kind of interesting. That's one trend I would notice. Second, as we think about how edge computing impacts mobility and specifically looking down and around the corner on 5G, we really think this notion of a distributed network is the future for mobility. And so as a part of that, you've got to start rethinking the architecture of the RAN. So which is why you see Jeff Makal [ Fish and Hans ] and Neville Ray talking about either O-RAN or C-RAN. And really, this is just code for the old days of building a mass that's big switch in a place like Dallas and then having them backhauled to that switch and then backhauled from there to a central office or to an interconnection hub. That architecture, you have to rethink. And so what we are seeing is that we're seeing smaller radio access network deployments where you're beginning to see aggregations of 5 radios, 10 radios, 50 radios in the C-RAN hub and then taking that RAN hub and front-hauling that out to your macro sites into your small cells. That ultimately cross up and connect with another C-RAN application where you've got overlap, and you build redundancy in the network, where ultimately that network's fronthauled into an aggregation point where there's intelligence. And that intelligence obviously is SDN. And so if you can very effectively manage a significant amount of spectrum and a consolidated set of radios where you're intelligently using AI and FDN to push those workloads out to different parts of the network at different times to match up to different devices to different usage patterns whether it's data, whether it's e-commerce, whether it's applications, whether it's content, live streaming, it's so surgical today the demands of a network. And there's a very good reason for why you see the sophisticated carriers using 3 to 4 different bands in spectrum. It's because the radios, a, can accommodate it; b, the network can accommodate it; and three, the users demand it. Because you can literally be doing, as you know, Jonathan, 3 or 4 things from your device. So voice could be at 700 megahertz or 900 megahertz; you could have your e-mail running at 1,900 megahertz; you could have applications running at 900 or 19 and then you get to sort of like big applications where you've got -- you're either downloading content, you're live streaming content or you're watching live TV. And next thing you're using millimeter wave spectrum for that because it's just a better experience. So I find my journey personally from the '90s to today being really interesting because I've gotten to watch the progression of the network, I've gotten to watch the design progression of the network, I've gotten to watch the radio standards change, I've gotten to watch the vendor selections change, and ultimately, how RF engineering is happening and how the engineers, particularly at the big 3 carriers, are rethinking the network. This is probably the biggest step function change in networks, Jonathan, we've seen in our lives, this migration from sort of LTE plus to 5G and MIMO. So it's pretty exciting. Sorry to go deep and techie with you, but I think this is important. And I think people need to understand that when we talk about edge computing and net impact of the tower space, it may have a positive impact on tower companies, it may have a negative impact on tower companies. For example, if you don't have small cells as a part of your arsenal, that's a real problem. And carriers will say this from reflected big discussion point in understanding how those small cells fit with the macro and ultimately come back to that C-RAN hub or that O-RAN hub or that point of aggregation where the RAN meets applications and meets content from the cable guys or directly to the content guys. That's going to be sort of the magic of where network architecture is going and the towercos that understand that and sort of the simplistic notion of, oh, I'll drop a canister at the bottom of the cell tower and all of a sudden, I'm doing edge computing, means you don't understand edge computing. It's a very different architecture, it's a different game, and it's being played by different players. And the question is will towercos, particularly the big 3, will they have a seat at that table? We've seen American Tower dip their toe in data centers. But look, the data center that brought from nano, that's not an edge computing data center. That was Colo Atlanta as a small data center, has a little bit of interconnection, but that's really sticking your toe in the water. SBA has made an investment in one of the edge computing businesses, really no small cell business unit to speak of. If you look at American Tower, they've got a big indoor small cell business but no outdoor. And then you look at Crown, which has gone very deep on fiber and has an extensive small cell footprint and an investment in Vapor IO. So I really start -- we're beginning to see the towercos move in different directions as they think about 5G and edge computing and where the future of the business is going. And each of them is showing you right now, they're taking a slightly little bit of a different approach. But I think the days of just owning macro sites and that being sort of the core offering for a towerco, if you want to be relevant and you want to survive, you got to have more than that. Sorry, that was a long-winded answer to your question, edge computing. Maybe I tackled a couple of other subjects there.

Yes. No, and I think maybe the quick follow-on question is opportunities here that you're already seeing at the operating level between, say, ExteNet and Zayo, between ExteNet and Vertical Bridge, Zayo and Vertical Bridge. Is that -- clearly on paper, that would appear to be a really strong way to tackle the carriers' needs. These companies do have different ownership structures, and ultimately, they're not the same, but you had exposure to all 3. So how do we think about the combination of those and the power that you can exert on the market there?

Well, look, I mean, if you could smash Vertical Bridge, ExteNet and Zayo together, you'd have arguably probably one of the most powerful infrastructure companies in North America. But you're right, we do have different investors and that would be really hard for us to execute. But the great news is I have 3 really great CEOs. They all get along, they communicate well together. When they need to show up to a customer together, they'll do it. If they need to show up to a customer one-on-one, they'll do it. But the key is collaboration. I mean ExteNet and Zayo were already collaborating before we had done Zayo. So we had a very successful partnership with Dan Caruso in San Francisco at Zayo. We did a massive joint conduit agreement there. We built San Francisco with the help of Zayo. San Francisco is far and away our most successful outdoor network, and it wouldn't happen without Zayo and Dan's team. And I think Dan would tell you San Francisco has been very successful for them. And what we agreed there is that Zayo wouldn't do small cells and we wouldn't do enterprise fiber. And so both teams stuck to their strengths, and what do you know, they're 2 of the most high IRR projects at ExteNet and at Zayo, and it's a great, great example of how the 2 companies collaborate and work together. Since then, we've gone on to do more joint conduit agreements. We've had Zayo build fiber for ExteNet. We've been on projects together. And my hope is that Jim and Dan will continue to work together because when they do, both companies benefit from that. The project IRRs go up. And it's better to collaborate than to compete is what I always say. So collaboration is the key. Zayo -- Dan and Alex Gellman are working on a project together on a big state RFP to help with fiber and towers in certain states. So that's good. I like it when those guys collaborate. We've got collaborative projects going on with Zayo and Vertical Bridge for one of our key wireless customers. ExteNet and Zayo are working on a project with a major big 3 carrier right now. So the good thing is these guys know when there's a chance to collaborate, and 1 plus 1 equals 3, they do it. In the meantime, they also know they're going to have budgets and they kind of have to run their business and they got to hit the returns. So there's a nice blend of collaboration. There's certainly some sovereignty times where they're going to work for themselves and do it best for them. But ultimately, my job is to make sure that these companies continue to operate at a high level. And they perform. And they are performing, which is great. They all had a great first quarter, really happy with that. And then when it's time to collaborate, really push them to collaborate. When it's time for them to go it alone, they go it alone. But I couldn't be happier. I get -- we're fortunate in that regard, Jonathan. We get to make decisions where we can say, okay, this is a big opportunity. How do we put our best foot forward? If we put our best foot forward with bringing all those resources to bear, then everybody wins. And then there's situations that just does not make sense to collaborate. So we just got to be careful there and understand our guardrails and understand our fiduciary duty.

So I want to touch on the rest of the Americas, Canada and LATAM briefly, and then we can kind of turn to other regions. But Canada, you've got greenfields and Cogeco both very respectable fiber-based businesses in Toronto and elsewhere. Is that kind of a template for further expansion in Canada? Where does that kind of -- where does that geography and where does that asset class kind of play in your thinking in terms of how you want to grow going forward?

Yes. Well, look, the road map to get there was hard. The complexities of those 3 transactions, a lot of people don't understand what we did. But you're from Canada, so you get it. First and foremost, we identified a customer that needed our help, which was Cogeco. Really get along great with Philippe and the entire team there. They're such a great company, great culture, and we had the chance to help them carve their infrastructure out. We did that by forming Aptum, moving their data centers and fiber out of Cogeco and entered into a long-term relationship with Cogeco to help support their network growth. And that's worked out great. Long-term use of the data centers for them, long-term use of the fiber and us supplying the CapEx to build fiber wherever they want it. So that worked out really well. The second step to that was really partnering up with Dan Armstrong, who is just an incredible entrepreneur in Toronto and a guy who really gets culture and has built an amazing challenger brand to Rogers. And Rogers and Bell are so huge. So taking 1% market share from those guys is hard enough. But Dan has built a great business, really focused on high-quality network, building great plant, passing the right buildings and the right residential complexes and having the flexibility to deliver fiber-to-the-home, deliver fiber-to-the-enterprise and deliver dark fiber where we do carrier-to-carrier activity for some of Canada's biggest telcos and utility companies. So he really understands his product set. And then once we got Aptum spun out and it was operating for about a year, we're then able to carve the fiber out and move that into Beanfield and really expand Beanfield's plan from roughly that 600 miles to roughly about 4,600 miles of fiber in Montreal and Toronto. And then on top of that, Beanfield has gone on to do 2 small acquisitions, both in Montreal, and he's lining up another acquisition right now. So Beanfield has really been our Northeastern Canada's strategy for fiber, dark fiber lit services on it and providing fiber-to-the-home passes as well. And that's worked out great. And now we're working on fiber-to-the-tower and small cells, and I really like what Beanfield has been able to do. Aptum, on the other hand, now is solely focused on manage cloud, manage hybrid IT infrastructure. They own data centers. It provides that support to some of Canada's most important corporate logos, works with the web scalers, big relationships with some of the mobile interface companies, works with Akamai, and couldn't be happier there. We've got a great CEO, who's doing a great job for us, and she's spectacular. So having the right people to run these companies and having the right assets certainly works. I would say Susan Bowen and Dan Armstrong really represent our 2 Canadian CEOs, and they understand their customers and their market. And Canada has turned out to be a great market for us. I know people have often struggled on how to enter market -- enter Canada. How do you do it? And for us, it's just we think like Canadians, we act like Canadians, and we own 2 Canadian companies. And that was the best way for us to approach it. So Canada has been great. Moving down south to Brazil, we've got 2 logos down there, Scala and Highline, 2 very different companies. Highline is really predominantly a build-to-suit provider backing a great entrepreneur in Fernando Viotti, who's built already 3 portfolios and has sold them. He's been building towers for the better part of 15 years now. And now we're delighted to partner up with him on his fourth and go at the tower space. And there, we're kind of executing the GTP Vertical Bridge playbook, small-ball M&A, greenfield. That business grew at 22% in Q1 just in terms of organic cash flow growth. And so they're winning a lot of the jump balls, and they're getting a lot of new build-to-suit orders. And I think the carriers down there want alternatives to the public tower companies, and we have a full expectation that Highline will be that alternative should they want it. I would say on the data center side, Scala is a platform that once again we found Marcos Peigo, who's a great CEO, who was at IBM for a better part of a decade building their -- all of their infrastructure for soft layer. And [ TAM ], once again, a corporate carve out working with the family office at UOL, carves out their data centers, found some interesting land to go build some hyperscale facilities. We've signed a couple of new leases with some big folks. We know we've got a lot of hard work there to compete against DLR, but we want the web scalers from America to have a choice between us and Ascenty. And so we've done that. We've created a challenger brand. We like creating challenger brands. That's kind of one of the things we'd like to do here at Digital Colony, whether it was GTP back in 2003 or Vertical Bridge or ExteNet. Most of our businesses tend to be challenger brands to bigger public businesses, and it's good to be private where we can act quickly and make decisions quickly. And I think in this instance, Digital Realty is a great, great company. Have a lot of respect for Bill Stein. They've had a massive head start in Brazil, given [ Chris Tornow's ] great, great relationship with customers at Ascenty. But look, Marcos is up to the challenge. He knows he can fight for some of that turf, and we're going to grab market share. And hopefully, there'll be 2 strong hyperscale players in Latin America. Certainly, DLR is one of them. And we believe Scala will be one of them as well.

And then maybe just kind of rounding out with Mexico Tower Partners and then some of the smaller -- so there's some of the smaller South American countries where you've obviously been involved in the tower sector. You've been looking at it for quite some time, but maybe just kind of around the discussion before we head on to Europe. Yes.

Sure. Well, look, we're green-lighting Mexico, Peru, Chile and Colombia; MTP focused on Mexico; ATP focuses on Colombia, Chile and Peru. ATP is a great business. [ Daniel Steiner ] has built a nice business there. Colombia is going quite well now with WAM coming into that market and building after they built in Chile. WAM was one of our customers in Chile. We're now helping them build their network in Colombia. It's good to have a new entrant, that obviously fuels Colo and BTS. Chile has been obviously our stalwart market. We're the largest owner of towers down there. I think American Tower will pass us when they close the Intel transaction. But we've largely been the main and only operator down there. American Tower has been there, too. And it's been a great market. It's very orderly difficult zoning barrier to entry dynamics. And then Peru has been -- was a great market for us in '17, in '18. And then in '19, just some of the political corruption and the currency movements have really paralyzed that country. We see Peru coming back later this year, possibly next year. Currency has finally begun to stabilize. They've been in a 2.5-year recession. And these markets in Latin America, you've got to be careful. You got to know what you're doing. They're hard markets. You got to understand currency, you got to understand customers, you got to understand politics. And in Mexico, never before has that been more evident with AMLO. I mean, he's a definite man of the people. He campaigned on a very strong Mexico sort of first platform and bringing power back to Mexican people. But really what it did is it shifted more power back to Telcel. And Telcel is stronger than ever. The previous administration was focused on deregulating Mexico and bringing fair competition to that marketplace and seeing that Alpan and Telefónica and AT&T could start to push into Telcel's market share, but that just hasn't happened. And so that market is really tough now. We've got Telcel down there, they've got a captive tower company. Telcel sites is really well-run. They've got a good CEO running that business. So it's hard. Mexico is not a place where most people are going to want to invest in towers right now. Telefónica is turning their network off, AT&T is going to provide the network infrastructure for TEF. Alpan is still building out. They've got a real hard business ahead of them as being the sort of neutral host 700-megahertz nationwide network. We continue to support Alpan. We're hopeful that they can get there. It is interesting, I would say, the neutral host model of Alpan's building is a model for the future. I always tell people if you want to look at the future of what networks could look like, you got to look at Alpan. My hope is that Alpan can get enough capacity agreements from Telefónica and AT&T and Virgin Mobile to keep going. I think it's important that Alpan survives and that it provides nationwide public safety and provides rural connectivity for villages sub 2,500 people. So there's a role for Alpan, and I think the government has to step up and support it. It has to be a network that is for the common good of all Mexicans. And we've been helpful to them in building some of their C-RAN hubs and building some of their towers as does American Tower, and it's provided a lot of great business for us over the last 2 to 3 years. But the future and the health of Mexico as a wireless market is what investors really have to pay attention to.

That's a great overview, a lot of material. As we head to Europe, there's probably a little bit less to talk about, although your aspirations are obviously quite without bound here. But continuing on the tower theme in Europe, it's obviously a very differently structured industry. But with sub-6 gigahertz 5G starting to become a thing over there, how do you view the tower sector there and potential investment opportunities?

Well, look, Europe is hard. It's gotten harder because the investment bankers got together with the carriers, and they created all these captive towercos. And so if you're an investor, you really -- to play in it, you've got to figure out how to work with carriers and be prepared to take a minority stake in some of their tower assets. And that's just not what we do. That's just not our playbook. I've long been skeptical of captive towercos that sit inside of the balance sheet of carriers. I think having that independence and truly running it as a third-party towerco is what gets people comfortable in colocating. So a lot of these JVS, the Altice deals that got done, some of the pre deals that got done, I mean you see some of the things that are being discussed about now in terms of some of the other bigger operators. I think there's -- it's just a bit of a cautionary tale. And the reality is the returns are lower and if investors want low returns and they want to be passive as a carrier orchestrates a captive towerco, I think that's going to work for some people and it's not going to work for others. A lot of that return and a lot of that IRR is going to stay resonant with the carrier, but also those tower companies that are captive towercos are going to grow less because inevitably if they see a site that's strategic and a competitor wants to be on that site, they just won't allow you to permit a colo on it, and then you've just lost what's the best part of your IRR and towers is colos, right? You know that. So Europe is a challenging marketplace, and there's brand-sharing, there's passive infrastructure-sharing, there's active infrastructure-sharing. And it's a really hard place for investors to make money in towers. We haven't made a major tower investment in Europe just based on this. We've played in every auction. Every auction ends up getting run into the ground through an IRR that doesn't work for us. And so we've just pivoted away. And so we bought an independent tower company in Finland called Digita that's worked out reasonably well for us. We started a green sheet sort of white -- sorry, white sheet doing greenfield in the U.K., which is FreshWave, which has about 5,000 nodes now, got about 150 towers. We do build-to-suit [indiscernible] carriers. It's hard to get those search rings, it's hard to do build-to-suit there. I know Brookfield just made a major investment in WIG. Certainly, Telmex continues to be very aggressive in terms of how they're pricing things. And look, Europe, south of the U.S., you got to get ready for -- look at Telmex' numbers, you've got to look at 3% to 5% growth. And that's -- 5% is on a good year and above 3% is on a bad year. But it doesn't even come close to measuring up to the organic growth you get, for example, in Latin America, where you're getting 12% to 14% growth and certainly in private towercos in the U.S., where you've got guys like Vertical Bridge and Insight growing at 8% to 10%. So it's just the willingness to accept tighter IRRs if you're going to go to Europe and play the tower space. And so that's why you haven't seen us really dip our toe in the market. And I think 5G complicates it further. It's the same conundrum that folks are having in the U.S., which is it's a big dinner bill, who's going to pay for it. And I think you're looking at more network-sharing, you're looking at more cooperative business models. And actually, I think that's kind of where we get more excited because somebody like us can actually step in and provide the capital to build a 5G network and provide the expertise and understand how C-RAN is architected and understand the importance of dark fiber and understand how that ties into macro sites and small cells and indoor networks and CBRS. And so hopefully, 5G gives us a chance to have a seat at the table and work with multiple carriers to deploy the infrastructure in concert with them. So maybe there's a window there to reset the table on the mobile infrastructure in Europe.

On data centers with Vantage buying Etix and NGD, you now have a presence at a number of established markets as well as a number of emerging markets. Is that sufficient scale for now? Or do you foresee further investments into more countries that would make sense, say Southern Europe, Nordics? Or do you kind of digest from here and enjoy the growth in those markets?

Yes. Well, look, if you spend any time with Sureel Choksi, you have -- Sureel's a killer. He's always looking for the next market. And what I can say is he's got a lot of different boots on the ground, looking at different markets. I think the decision to go into Zurich and to Warsaw and Milan were good decisions that were well thought out, but very customer-centric decisions. And I think Sureel has got a very good touch with his customers. He's very, very good, delivering on time for his customers, and that's what customers value today. They want to know that you're going to show up and you're going to be there on time. And that's ultimately -- at the end of the day that's what matters, is showing up for your customers. So Vantage had a great reputation doing that. I like Wales. Wales is a very strategic play. It's an important beachhead market. It's got great fiber connectivity to other parts in the world. Offenbach is, as you know, is the Ashburn of Europe. We got the last big chunk of power there. So we're in a great spot. We've got a ton of land, got a great design for how we're building that complex. We've got 2 great customers anchoring it. And look, I think for us, being in kind of 6 markets day 1 at Berlin, that's a great start for us. I think there's another 5 to 6 markets we've identified in Europe that work for us. We've raised approximately about $2 billion of capital to support Vantage in Europe. They'll probably chew through all that capital by the end of next year, so we'll be back out raising more capital. In the U.S., we've put about a little over $2 billion of work in the U.S. So Vantage is a business in a very short period of time at Colony where in 2.5 years, we've deployed almost $4 billion of capital. And we've done that all on a greenfield basis, if you really think about it. So that's a great example of how we can back a great CEO, back a great management team, form a ton of capital around them and let them do their thing, and Sureel really has done quite well there. So I'm very bullish on the long-term opportunities that exist in Europe for Vantage.

So turning to fiber in Europe, and Zayo has, obviously, kind of a legacy presence of sorts in both London and Paris and then through acquisition and builds has kind of covered much of Western and Northern Europe. But it's a differently structured market as is fiber -- as is towers in Europe, right? So you've got a lot of different B2C models in Europe that aren't quite as prevalent in the U.S., Zayo obviously being more B2B focused. But what do you see as kind of the growth drivers for your European fiber platform at the moment?

Well, look, there's huge opportunity in fiber in Europe, I mean massively underbuilt as it relates to fiber-to-the-home. You've seen some of the initiatives that have happened there. We've kind of stayed clear to that. We just -- we think there's the potential for overbuilding, and we think returns can get compressed pretty fast. So I think as it relates to other things that are happening further down the road, we do like the B2B model. We do like the carrier's carrier model in particular. So we've had a lot of success on de novo routes, webscale routes that are crossing Europe and crossing countries and providing that data center connectivity. We've got a bunch of new routes we're building in Europe, we've got a bunch of new orders from carriers. We're having really good strategic conversations with customers that need a lot like the U.S. needed 3 to 5 years ago when you saw the real surge in fiber-to-the-tower activity, Jonathan. So I think Europe is starting to come into its own. And I think the old days of that legacy, big monopolistic telco that built most of the fiber in the country and the wireless carriers having to get that lit capacity from those folks now turning to dark. And having an alternative like us or having an alternative like Eurofiber, E-networks, which are both really well-run companies with good management teams. I think this is really going to be -- the next 5 years is going to be really interesting in European fiber, particularly for Zayo and particularly for some of the other companies I've mentioned. So I'm pretty bullish on that B2B fiber marketplace, and that's where we think the opportunity is going to exist in the future going forward.

Great. And finally, Asia, you're relatively less exposed there. You do have an investment team on the ground. But broadly speaking, how do you see the opportunities there across either established markets like Singapore, Hong Kong, Tokyo, Australia versus emerging markets? Any kind of bias from one towards the other? And just maybe from more of a data center perspective, but as you look at all the different asset classes that you've invested in, how do you view Asia emerging versus established fiber versus data centers versus mobile infrastructure?

Well, look, you can't paint Asia with one paint brush. I think we've learned that in the years that we've worked over there. We've had a couple of investments in towers that we did like 10 years ago that were sort of family office investments just to get ourselves acquainted with places like China, Myanmar, Vietnam. All those investments did really well for us going back in sort of 2012, 2013. We've now exited those investments. So we've had a little taste for what that's like. And we're tracking a bunch of different management teams. I think the thematics, you got to look at Asia as sort of -- there's sort of developed Asia and then there's emerging Asia, right? It's sort of the tails and then there's China, and so -- and then there's India. So for us, it's almost like 4 markets, and we look at those 4 opportunities very differently. So what I would call sort of investment-grade Asia being Japan, Korea, certainly, Singapore, New Zealand, Australia, we see really good opportunities in towers. We see opportunities in data centers. We see opportunities in sub oceanic cable route, and we're looking at all of those verticals. So I think for us, it first comes about building a team much like we did in Europe 4 years ago when we put our team in place. We put our team in place in Singapore last year. We've now got 3 investment professionals there aided by 2 analysts. So we've got 5 people on the ground, we've got 3 fundraisers. So there's a team of 8 people in Asia now for Colony, and that would probably be the biggest digital infrastructure dedicated team outside of Macquarie's just because that's -- in Sydney, that's home base for Macquarie. So we certainly don't have any aspirations of being bigger than Macquarie in terms of digital infrastructure in that part of the world. But we built a team, we've hired someone who's got deep expertise, we've got great limited partner relationships over there, we've got great C-suite relationships, we've got a pipeline of about 14 opportunities. And like I said, we can't for strategic reasons go any deeper. But I would say data centers, towers, sub oceanic cables, we've looked at some fiber stuff in India. We've kind of stayed out of China right now. We don't see the value proposition in China. But look, people have made money in China towers and data centers, and people will continue to make money in China. It's just not a place that Colony is going to invest in digital infrastructure at the moment. And I think on the emerging market side, once again, Asia emerging, like I said, I talked about places like Myanmar and Vietnam and Thailand, these are interesting markets. A lot of population, a lot of growth happening in mobile penetration and smartphone adaptation. So we're spending some time looking at those places. Probably not going to make an investment there at the moment, but it does require careful thought. And then last but not least, India is really interesting. I think the tower market is pretty close now. Brookfield did their big deal with our friend, Mr. Ambani. I think other tower operators have gotten hurt there pretty sizably. There's a lot of potential hyperscale data center activity. I think we've looked at it. You've got to be really careful with land laws in India. They have a feudal system for land laws, so you can't get clean title of the land, which is hard, which is an essential part of our data center strategy. And so I think we're dipping the toe in Asia. You've got to really be careful with counterparty credit risk. You got to be careful with the court system. Just ask people like Vodafone and American Tower. How people that don't have that Indian flag fare in that part of the world, and it's hard. The system is definitely oriented for sovereign flags to win, and outside investors have a very hard time. So we wish Brookfield a lot of luck. I think they'll do well with the Jio investment. And we're going to continue to look at fiber and data centers, but probably not look at towers in India for the moment.

Great. So we're coming up on nearly a full hour. A lot to think about, that was an absolutely fantastic overview. I appreciate your taking the time and for sharing your detailed perspectives on quite a wide variety of topics across essentially the entire globe. Thanks very much, Marc.

Jonathan, thank you. You're always asking the right questions, and I've always appreciated our partnership with RBC. So thank you.