Monday’s Crown-DISH anchor tenant leasing arrangement is being seen as a key to achieving network buildout milestones, according to Wells Fargo Securities Senior Analyst, Eric Luebchow.
“We view this as a positive for CCI and the other towercos,” Luebchow said, “DISH has historically been a wild card with the tower companies with plans to build an IoT network but no real activity to date. We view this agreement with CCI as the first evidence of DISH proverbially putting its money where its mouth is.”
Luebchow said DISH’s coverage requirements are for 20 percent of the U.S. population by June 2022, and 70 percent by June 2023. The company has estimated it will require 15,000 sites to achieve its near-term targets, but has said it will look to exceed those.
“DISH also has access to 20,000 TMUS/S sites as they’re decommissioned,” he said. “Most agreements are structured with 5-15 year initial terms and multiple renewal periods thereafter, and we would expect this to be toward the longer end of the range.”
The agreement suggests that the addressable market for DISH tower sites is larger than previously estimated, according to Luebchow, likely +50K over time to reach nationwide coverage.
“We estimate that by FY2027E, DISH could contribute $1-1.2B in annual tower revenues. While the announcement highlighted tower sites and fiber transport, it did not mention small cells. Over time, there will likely be small cell opportunities with DISH to appropriately densify its 5G network,” he said.
Zacks Equity Research analysts said Crown’s “unmatched and extensive portfolio” of towers in the U.S., with a significant presence in the Top 100 basic trading areas and significant investment in the fiber segment, “has likely enabled the company to bag the lease.” Crown Castle is now likely to reap benefits from such investments in the fiber market, according to Zacks. “Moreover, the lease is likely to indicate that the company will support a significant part of DISH’s network buildout. This will likely drive its rental revenues in the upcoming period,” the analyst firm stated.
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