Stock Analysis: Jennifer Fritzsche, Senior Analyst Wells Fargo Securities
According to Wells Fargo Senior Analyst Jennifer Fritzsche, telecom infrastructure providers will face a myriad of challenges and opportunities in the coming year.
Multi-year Plans In Place For Broadband Expansion. “Many telcos and cable companies have plans in place to accelerate high-speed broadband deployments, with a particular emphasis on fiber penetration. AT&T has aggressive fiber deployment plans, with plans to reach about 9.5MM additional customer locations by mid-2019. The cable operators also have aggressive broadband expansion initiatives, with the near-term focus to drive fiber closer to customer locations. We expect these plans to accelerate in 2017,” Fritzsche said.
M&A Should Further Converge Infrastructure Assets. “We expect further convergence of fiber, data center, and tower assets in 2017, with valuations remaining robust and inexpensive debt financing still available. In the fiber space, we believe ZAYO, VZ, and CCI will be opportunistic in densifying their footprints to support both wireless and enterprise customers,” she said.
Towers Preparing For Densification, 5G. “We expect the towers to benefit from higher wireless capex in 2017 relative to 2016. This will likely be driven by increased spending by Sprint to deploy 2.5GHz spectrum, the initiation of AWS-3 spectrum rollouts, and the award of the FirstNet spectrum. Despite unhappiness from certain carriers around the economics of the model, we believe the tower companies still have significant negotiating leverage,” according to Fritzsche.
January 4, 2017
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