With 5G testing happening now and a full launch predicted within the next five years, upgrades and more mobile data needs are a necessity of our future in the United States. Bloomberg’s Gadfly column recently brought up a great point when it comes to mobile carriers—with so many quick changes in our industry, why buy when you can rent?
Cisco predicts global mobile data traffic should grow on average 53 percent annually through 5G’s predicted launch—2020. Ericsson said each Smartphone’s data traffic in North America by 2021 will be 22 GB a month—“bigger than the entirety of most current family data plans.” 5G also will help increase mobile download speeds of up to 10 to 100 times of today’s 4G LTE. Bloomberg Gadfly notes that in order to keep up, mobile carriers will “need access to more macro cell towers, small cells (less capital-intensive fiber connections used in urban spaces with high-data demand) and distributed antenna systems that spread wireless connections within a small area.” And, to save money, those carriers are looking into renting, not owning.
Bloomberg Gadfly further explained data transit networks from wireless infrastructure real estate investment trusts (or “tower REITs”), stating that they can “save tens of thousands of dollars a year in construction and maintenance costs per tower by leasing instead of building, according to American Tower.” American Tower said wireless infrastructure REITs are performing better than “regular” REITs. In short—renting out cellular infrastructure is easier on the wallet.
American Tower told Bloomberg Gadfly ‘single-tenant’ towers have gross margins of 40 percent from rentals, while towers with two tenants have 74 percent margins. Those with three tenants have 83 percent margins. As with anything, tower REITs will need to diversify and grow in any areas they can, possibly on an international scale. American Tower is looking into that aspect, as Crown Castle is focusing on building up on U.S. soil, before 5G comes to fruition.
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