It has been a week since the Wireless Infrastructure Association folded its tent in Dallas and went home to the nation’s capital to prepare for next year’s Wireless Infrastructure Show in Orlando, May 22-25. So there’s been some time since to ponder what exactly was the take away message for the tower industry from the 2016 gathering.
First, 2016 is a “trough year”, the year that buffers the truly slow down period from the go-go years. It ‘s a time to catch your breath, find your wallet and keys, and recharge for the coming busy season that is expected over the next decade.
During a lunch panel session of industry titans, several CEOs made it clear that the carriers’ 2016 capital expenditures of $28 billion is part of a cycle that the industry goes through periodically. And that theme continued during the always-popular “Wireless Investors Conference” afternoon session on May 24, moderated skillfully as always by MVP Capital Managing Director Clayton Funk. For more than 90 minutes, he guided the all-star cast of panelists that included Tarpon Towers’ LLC COO Ron Bizick, Raymond James and Associates’ Managing Director Ric Prentiss, InSite Wireless Group’s President/CEO David Weisman, SBA Communications CFO’s Brendan Cavanagh, American Tower SVP & CFO Rodney Smith, Digital Bridge Holdings’ CEO Marc Ganzi, and MoffettNathanson analyst Nick Del Deo. And they agreed this period is a calming period but still otherwise hot. Funk yesterday told Inside Towers that while tower companies face the usual pricing pressures from carriers, “there is still a very bullish view of the industry in both macro and micro sites.”
Funk recapped American Tower’s Rod Smith who used basic math for his cycle theory, arguing that the tower business is really tied to carrier cycles more than anything else: “in 2013, an average of $31 billion was spent in capex, then it dropped to $28 billion in 2014; $27 billion last year, back up to $28 billion in 2016, and up to $33 billion by 2022.”
And while the panel clearly enjoyed its discussion about the small cells rush that has kept most companies busy – “it’s a lot like drinking from a fire hose,” cracked Digital Bridge CEO/Co-Founder Marc Ganzi, they really are only a small portion of the tower business. Funk yesterday put it in perspective; however, recalling that small cell expenditures discussed during the session “were just five percent of the total business over the next four years and the rest on towers!”
Funk added that the long-term view of the tower industry is even better. While there is so much chatter about the oncoming of 5G service, Americans have been enjoying 4G only since 2010. And, only 40-to-50 percent of this country has 4G, the rest are still using 3G service and there are still plenty of build out and equipment upgrades coming.
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