3Q19 Towers Preview: “Incrementally Cautious” Heading Into 2020

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The market analysts at Cowen are “incrementally cautious” about the big three Tower operators and expect them to experience a modest deceleration (i.e. <100bp) in U.S. organic tower revenue growth next year that will drive 2020 AFFO/shares slightly below current Street estimates. 

“We are maintaining our Outperform ratings on all three but expect pressure/limited upside through 4Q18 earnings season,” according to analyst Colby Synesael. “Our current favorite tower ideas in order are AMT, CCI, and SBAC.”

Synesael said CCI will provide initial 2020 guidance when it reports 3Q19 earnings later this week although it will be for organic site rental growth which includes its enterprise fiber, small cell, and macro tower segments. “It will be dependent on them to further separate this out as they have for us this year to gain more visibility,” Synesael said.  

He continued: “Importantly, we don’t think the issues leading to the slower growth related to T-Mobile/Sprint (and Dish) are/will be permanent. Even if the deal with Sprint does not happen, as we now believe is most likely, T-Mobile will still need to attain more mid-band spectrum (perhaps through a purchase/lease with Sprint or Dish) which it would deploy fairly quickly,” he said. “At the same time, we believe Sprint would still end up as part of another more financially strong company, however it’s less clear how quickly and if that would occur while Sprint remains a going concern, or if it would require the company to file for BK.”

October 16, 2019

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