Morgan Stanley Reports on Telecom Infrastructure Activity

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(Editor’s Note: Morgan Stanley & Co. is a financial advisor to Deutsche Telekom and provider of financing services in relation to T-Mobile.  Fees to to Morgan Stanley from T-Mobile are contingent upon the occurrence and consummation of the Sprint/T-Mobile merger. “Investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research,” according to Morgan Stanley Research.)

Highlights of the Morgan Stanley 4Q18 AlphaWise ‘Tower Talk’ Owner Survey, show tower owners remain, “in a strong negotiating position with carriers although there remains some concern about alternative tower providers like Tillman and Lendlease. Overall, we are encouraged by these continued signs of increased leasing activity across most of the tenant base, given the strength already reported for much of 2018,” the survey said. The survey also indicated that relationships are generally stable between towercos and carriers, though carriers are slightly more focused on controlling network costs and scrutinizing lease terms.  

Amongst carriers, the survey said T-Mobile and AT&T are seeing the most consistent increases in activity in recent months, with Sprint seeing a flattened demand.  

“About 65-75 percent of owners with T-Mobile and AT&T in their portfolios saw increased leasing activity from the carriers in the last three months, which shows some moderation from ~70-90 percent in our last survey. Verizon saw a slightly larger drop to 50 percent seeing an increase vs ~80 percent last round. Looking forward to 1Q19, ~95 percent of respondents expect an increase in sequential leasing activity from T-Mobile with ~80 percent expecting an increase from AT&T and ~60 percent from Verizon,” the survey said.

No respondent expects a decrease in activity from T-Mobile or Verizon and just one expects a modest drop from AT&T. AT&T recently noted that they have achieved 40 percent of their FirstNet coverage targets.  Demand from other tenants like US Cellular and governments also appears to be increasing/steady, while ~15 percent reported DISH as a tenant according to the report.

January 29, 2019

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