Big 3 TowerCo CapEx Allocations

SHARE THIS ARTICLE

The U.S. Big 3 tower companies – American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), and SBA Communications (NASDAQ: SBAC) – spent a collective $2.8 billion in capital expenditures in 2020 to expand, upgrade and maintain their global wireless infrastructure assets.

Note that this number does not include capital for acquisitions of existing assets. Moreover, this capex is distinct from mobile network operator investments for active RAN and Core equipment that are expected to exceed $30 billion in 2021. (see, Wireless CapEx Confidential)

Towerco capex breaks down into two main categories. Discretionary capex, also referred to as cash flow-generating capex, includes new tower construction, tower modifications and upgrades, and ground lease purchases where the towerco does not already own the land on which the tower sits. Non-discretionary or sustaining capex involves tower maintenance and corporate facility investments that typically are not cash flow generators.  

AMT invested nearly $1.1 billion in 2020. That investment supported top-line site leasing revenues of $8.0 billion. Of that capex total, close to $900 million was for discretionary spending. Over $400 million went towards new tower construction mainly in Asia and African markets.

The company built nearly 4,000 towers in India and another 1,500 in Africa. In its home North American market, AMT constructed only 20 new towers. However, it bought nearly 2,200 existing towers with its Insite Wireless acquisition in November.

For the year, AMT built a total of 5,800 new towers and acquired 3,400 towers to bring its global base to almost 184,000 towers, up 3 percent over the 2019 count. About 41,000 towers are located in the U.S. although AMT derives over 60 percent of its site leasing revenues from the Tier 1 MNOs – AT&T (NYSE: T), T-Mobile (NASDAQ: TMUS) and Verizon (NYSE: VZ).

AMT is guiding to $1.2 billion in 2021 discretionary capex and close to $10 billion in acquisition costs for the 31,000 towers it wins in the Telxius Towers deal, as Inside Towers reported.

CCI differentiates itself from AMT and SBAC two ways. First, it operates only in the U.S. Secondly, it has extensive fiber and small cell infrastructure assets that neither AMT nor SBAC have. The company garnered $5.3 billion in site rental revenues in 2020. Of that total, nearly three-quarters comes from the Tier 1 MNOs.

Two-thirds of the revenues were derived from towers and the balance from fiber. Capital investments were $1.5 billion of discretionary capex and $86 million of sustaining capex. Of the discretionary capex, nearly $1.2 billion was allocated to fiber/small cell operations and roughly $321 million attributable to towers.

CCI finished 2020 with more than 40,000 towers and 80,000 fiber route miles concentrated in the top U.S. markets. In addition, the company has roughly 50,000 small cells on air with a backlog of 30,000 small cells already committed or under construction. That tally includes a 15,000 5G small cell four-year agreement with VZ that was inked in January.

Yesterday, VZ announced an extended deal with CCI (see top story) to build out its C-band licenses on existing CCI assets as part of VZ’s 5G Nationwide and 5G Ultra-Wideband deployment. (see, Rockin’ the C-Band). CCI is maintaining its 2021 capex guidance at approximately $1.5 billion.

SBAC’s tower assets are divided almost equally between the U.S. and international markets. At year-end 2020, SBA owned or operated over 32,900 communication sites with roughly 16,500 in the U.S. and its territories, and 16,400 located internationally mainly in Latin America and South Africa. It is noteworthy that 80 percent of the company’s $2.0 billion in 2020 site leasing revenues were generated in the U.S. market. The Tier1 MNOs together accounted for 90 percent of SBAC’s 2020 site leasing revenues.

The company spent about $1.1 billion in 2020 for discretionary and sustaining capex and tower acquisitions. For 2021, SBAC expects to incur discretionary capex of over $1.2 billion and sustaining capex for tower maintenance and general corporate expenditures of about $42 million.

Along with CCI in yesterday’s announcement, SBAC was also selected to help VZ rapidly expand its C-band deployments.

Despite the concentration of revenues from the Tier 1 MNOs, all three towercos have expressed optimism that meaningful network capital deployments by these top customers will drive site leasing revenue growth, and their own infrastructure investments, for some time.

By John Celentano, Inside Towers Business Editor

Reader Interactions

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.