Melody Investment Advisors just closed on the purchase of 1,150 cell towers from CTI Towers, a shareholder group led by Comcast's venture investment arm.

The deal comes just a few months after Melody acquired roughly 500 towers from Uniti Towers for around $220 million.

The deals have helped make Melody one of the largest private owners of wireless infrastructure properties in the US.

Omar Jaffrey is co-founder and managing partner of Melody Investment Advisors, and he describes the company today as an alternative asset manager that is laser-focused on digital communications infrastructure. He said he previously focused on loans and other financial activities with companies in a wide variety of industries, but is now specializing in telecommunications.

Jaffrey said Melody is now moving forward with a private equity focus on private equity middle-market transactions in the telecom industry in the hundreds-of-millions-of-dollars range. He said the company evaluates roughly 100 deals per year, and has been inking at least a handful annually.

So what kinds of deals is Jaffrey looking at?

The below conversation has been edited for brevity and clarity.

Figure 1: Omar Jaffrey
(Source: Melody Investment Advisors)

Light Reading: Let's start at the beginning. Why are you focusing specifically on the telecom market?

Jaffrey: When you think about the investment landscape, energy has been devastated. Real estate, in many markets, has been devastated. Travel and leisure has been devastated. Infrastructure broadly – toll roads, airports – devastated.

Digital infrastructure is one of these really unique areas which is benefiting from a tremendous amount of global growth, which we've seen for decades.

Every investor is trying to find a safe place with growth. And I think folks are coming to the conclusion: it's digital infrastructure. And so for all those reasons, we focus on it.

Partly it's our heritage, and partly it's our expertise – partly it's what we see as the best place to deploy capital.

Light Reading: How would you break down your investment opportunities?

Jaffrey: So in digital infrastructure, to enable all of connectivity, you have to play in wireless spectrum, you have to play in towers, you have to play in fiber, you have to play in small cells and DAS [distributed antenna system] networks, you have to play in data centers. And you have to play in satellites.

Those are the opportunities that are there in digital infrastructure. In our opinion, that's the broad ecosystem that's available.

Light Reading: What do you think about edge computing?

Jaffrey: Edge computing is super interesting. But there's no infrastructure company for edge computing, as an example. It's the next evolution of data centers. It's the next evolution of towers.

So we own land assets, we own tower assets, we own rooftop assets. Edge computing is a growth opportunity for all of our assets. So when we invest in these assets, one of the things we look forward to is edge computing. We look forward to enabling our clients and customers to have access to the location, which is putting things to the edge. So as part of our investment thesis there is a play on edge computing, but we wouldn't make a direct investment in an edge computing company, per se, because those would be fairly young and fairly growth-oriented, much more of a kind of venture capital, growth equity risk type of specific investment opportunity.

So I want to distinguish between investing directly in an edge computing company, versus taking advantage in enabling that as an opportunity set for the ecosystem.

Light Reading: And what are your thoughts around 5G?

Jaffrey: To enable 5G, you need real, true broadband connectivity everywhere. Well, how are you going to get that? You're going to get that by having better towers, better small cells, better fiber, better data centers closer to the edge, to break down the 100 millisecond-plus latency world that we live in today, down to below 20 milliseconds of latency.

Every one of those investment elements has a place in 5G.

So we're just at the dawn of 5G, and every investment we make benefits from 5G.

We're playing in it from the infrastructure stable of properties. We're all-in on 5G, but from an infrastructure angle. There's an enormous amount of build to do.

Light Reading: Let me ask you about small cells, because there's certainly been a huge amount of debate about the size of that opportunity.

Jaffrey: I think small cells are just like towers: You have to do it.

Why do we have to do it? Because the traditional, macro spectrum – something that runs a mile or two, something that runs through glass windows and two inside walls – that's your classic wireless macro cellular spectrum. The world's out of that. Out.

All that spectrum was below 2GHz. Out.

So where do you go? You have to go to higher-band spectrum.

C-band, higher-band spectrum, millimeter wave spectrum: All of this doesn't run as far, and therefore you have to deploy it in small cell configurations.

So we view the world as a het-net world, a heterogeneous structure. You've got a macro tower dome, providing broad coverage, but it's not going to be sufficient to provide the 500Mbit/s-plus type connectivity speeds to people everywhere inside that dome.

From an investment perspective, we are shy on small cells, because they are a little younger in their investment thesis. We look for things that are super stable, the 60-70-year type assets. We haven't done any small scale deals yet. But we definitely see this as a very interesting and evolving opportunity set.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano