Wharton grad Marc Ganzi, now the face of DigitalBridge, which is racing to build America’s 5G networks

As CEO of DigitalBridge Group, Marc Ganzi is the face of a public company that’s competing fiercely in America’s race to install 5G, the fastest-ever internet and cell phone network. DigitalBridge Group is run by Ganzi, along with friends Alex Gellman and Jeff Ginsberg, out of Boca Raton, Fla.

All three graduated from the University of Pennsylvania’s Wharton school in the late 1980s and early 1990s, and they’ve stuck together for nearly 30 years and built a company with more than $1 billion a year in revenue.

If you’re unfamiliar with a “digital” real estate investment trust, or REIT, that’s DigitalBridge’s chief business. The company transformed itself in recent years from a traditional bricks-and-mortar REIT owning offices, warehouses, and hotels to one focused on digital assets. These include cell towers, servers, data centers, fiberoptics to transmit data faster, and other infrastructure connections between them.

Somewhat like a traditional landlord, however, DigitalBridge charges carriers such as AT&T, Verizon, Comcast, T-Mobile and other customers for use of its information highway assets.

“It’s been a complete transformation of the company,” Ganzi said on the most recent earnings call, last month. In the last 12 months, the share price has nearly doubled from $4.21 to about $8, as the company moved from posting losses to eking out its first profitable quarter with net income for the period of $41 million, or 8 cents a share.

The firm’s pro forma debt — subject to the closing of legacy assets sales — has dropped from more than $7 billion “to just over $1 billion in the last year alone,” Ganzi said. ”Our corporate governance has also been completely overhauled with new senior leadership in place and a more digital, more focused and more diverse board, helping us navigate the DigitalBridge road map and ecosystem.”

DigitalBridge competes with giants such as American Tower REIT, with a $117 billion market cap, and Crown Castle, at $78 billion. But DigitalBridge’s size is a fraction — $4.5 billion — and its stock doesn’t pay a dividend.

DigitalBridge reorganized after a 2019 merger with Colony Capital that brought the firm $4 billion to buy assets along with unwanted headlines: Last July, Colony’s founder Tom Barrack was indicted for allegedly lobbying President Donald Trump on behalf of the United Arab Emirates. Barrack, a big Trump fund-raiser, has pleaded not guilty, and is no longer a company executive but still retains some shares.

Ganzi admits the Colony merger was a challenge and he has aimed to scrub the company of any taint following Barrack’s arrest.

Besides the Colony merger, DigitalBridge has acquired more than a dozen companies such as Vantage Towers, Agile Data Centers, and Boingo and taken private Zayo in an $8 billion plus deal to amass a portfolio of roughly $40 billion in assets.

In addition, DigitalBridge runs an asset management business as a second source of revenue, which invests in digital infrastructure.

Much like Apollo Global Management or KKR & Co. DigitalBridge is partly a publicly traded investment fund operator that derives fees from that. “Public shareholders get to be a part of my team. If you’re an owner of a DigitalBridge share of stock, you get to participate in our carry, or performance fees from the investment funds,” Ganzi said in a recent earnings call.

The company just started to turn a per-share profit, after at least six quarters of losing money. For the third quarter, reported consolidated revenues were $252 million, more than double the same period last year.

Why are companies such as DigitalBridge chasing 5G technology? Short for fifth-generation wireless, 5G would increase internet speeds 100 times faster than today’s 4G service, potentially paving the way for new applications, revenue, and jobs.

“Today’s 5G race is all about right of way,” said industry expert Jon Pelson, author of the book Wireless Wars, released this year. “With 5G, physical access becomes critical to carriers like Verizon, AT&T and T-Mobile.”

The reason: 5G is deployed at a frequency with a much shorter range so companies need to set up more sites to spread it around.

“Old-fashioned cellular, on a good day, in perfect conditions, can range 10 miles or farther,” Pelson said. “A lot of 5G operates at a medium frequency, a range of 1 to 2 miles, and some at a super-high frequency range at just 100 yards. So we need cell sites every few hundred yards.”

“When 5G is deployed, there’s going to be a need for a lot more towers and cell sites, everywhere from the sides of buildings to church steeples.”

» READ MORE: Tiny Doylestown Borough battled Verizon over 5G and won a big settlement

There are two main groups of customers in the 5G race: those buying equipment that 5G runs on, such as Samsung, Ericsson, Nokia, Huawei and ZTE. “The U.S. is out of the equipment manufacturing game. Legacy companies like Motorola and Bell went bankrupt,” Pelson noted.

The others are carriers deploying 5G networks: AT&T, T-Mobile, Verizon, China Mobile, China Unicom, Deutsche Telekom. “They put 5G to work and make it valuable. The U.S. is better at that,” Pelson said.

Still, there are obstacles to a quick buildout, like the supply crunch in semiconductor chips.

“Chips are like copper was 3,000 years ago. They are in everything. We need chips for 5G, for cars, for phones, for heating systems,” said Gad Allon, director of the management technology program at Penn’s Wharton School. “A significant fraction are made in Taiwan, South Korea and Japan, one of the most combustible political areas also produces the most important raw materials and equipment.”

In this highly competitive 5G marketplace, does DigitalBridge Group stand out from its competitors?

“Not really,” said longtime telco analyst Roger Entner, founder of Recon Analytics. “But right now, there’s so much money sloshing around looking for investment, and for someplace to put money that makes more than zero yield. Right now, Ganzi and DigitalBridge are profiting from that.”

“He is raising money at a low rate and buying companies we know will be needed in the future” as cell companies retire the older 3G and build out the new 5G network, Entner said.

American Tower and Crown Castle both pay a dividend of at least 2%, despite having billions of dollars in debt and much higher share prices.

DigitalBridge’s dividend ceased in March 2020, but Ganzi said he’s committed to restoring it next year.

Ganzi, Ginsberg and Gellman were all co-founders of Apex Site Management, which was a separate company and was the largest third-party manager of wireless and wireline communications sites in the U.S. when it was acquired by SpectraSite in 1999.

Today, Ganzi is DigitalBridge’s president and CEO, Ginsberg, is chief administrative officer of DigitalBridge Investment Management, and Gellman is senior adviser to the company and the CEO of Vertical Bridge, one of its portfolio companies.

In a Q&A, Ganzi addressed some of the questions and concerns about DigitalBridge’s place in the market.

On his ties to Wharton and Philly: “The Philadelphia investor community was kind to us back in the 1990s. Len Abramson, Ron Rubin and Lew Katz and Ira Lubert, these are folks who took a chance on us early and believed in our vision. I was a raw commodity out of Wharton, and Jeff and Alex still work with me today. Jeff is running our DEI [diversity] and ESG (social and environmental) programs. We’re still together today, 27 years later.”

Lubert, founder at LLR Partners, a private equity firm in Philadelphia, remembers a small passive investment with Gellman, but other than that, declined to comment.

On competitors and the fight to provide faster downloads: Ganzi said the company’s investment in 5G is important because of the rise of what’s called “edge computing.”

A data center is needed “at the edge, for instance, literally where the network doesn’t perform at its peak. The promise for 5G is lower latency,” or less drag in download speeds, Ganzi said.

Whether from a desktop or a cellphone, 5G promises better speeds in fewer milliseconds. He says that human eyes see at 25 milliseconds, and skin feels at 18 milliseconds. With 5G, latency drops to under 10 mls, estimates analyst Entner.

Streaming services such as Amazon Prime or Netflix “have to shift that computing power closer to the consumer with physical edge data centers. Anyone can build a tower, but to service 5G, you have to move closer to the consumer,” Ganzi said. ”We’re doing that. Our competitors are not.”

For example, “say I’m in Radnor, trying to download [the Netflix hit] Squid Game, it would take minutes to download. If we ultimately have an edge data center one mile or less from your home, you’ll download much faster.”

Traditional phone carriers such as AT&T, T-Mobile, Verizon, and satellite company Dish “must now pick a partner with cloud deployments. Given how much we’re invested in data, we have a closer relationship with those carriers. All of these folks are chasing the same thing: They want you as the loyal subscriber across everything. We want better, faster and on demand. COVID taught us that.”

The Biden administration’s infrastructure bill calls for $65 billion to improve broadband access. And that could “level the playing field for all Americans. There’s urban [and rural] inequality and I’d love to see that go away.”

On former partner Colony Capital’s Tom Barrack and his arrest: “Tom left our organization in July. We parted ways amicably. and we’ve been focused on the future. We rotated our entire board of directors. I believe he still owns 3%-4% [of the stock] and he’s kept his ownership stake, but it’s passive.”

Might Barrack sell out his DigitalBridge stake entirely? “I don’t spend a lot of time thinking about it. My job is stay focused on that we’re the fastest growing digital REIT in the world. I work for every shareholder. At the end of the day, if I put up results, then we’ll welcome new shareholders.” Barrack received better bail terms in October, allowing him to work as he awaits trial.

On restoring the dividend, which stopped in 2020: “We have so many places to put capital, what’s the right return profile? Today it doesn’t make sense to buy our shares. We suspended the dividend in the middle of COVID. We had real estate operations we felt might need capital to support old real estate as we sold it. We managed quite well. We’ve discussed turning back the dividend on early next year, and I remain committed to that, and growing it over time.”

On playing polo and other Philly ties: “Growing up in Colorado, my father and I rode horses. Ranching and horses were part of our family. We used to raise our own cattle for a steakhouse business. My dad picked up polo about 32 years ago, and myself and my wife started playing together as a hobby. My wife, Melissa, grew up in downtown Philly. We had kids in Bryn Mawr Hospital, and kept horses at Radnor Hunt. We also use it [polo] as a platform for charity.”

Ultimately, DigitalBridge’s acquisition binge may prove to be a smart play — not just because its cost of capital is low currently, but because DigitalBridge itself may one day be an acquisition target.