Studying Abroad: American Tower Brings Lessons Learned in Europe to the U.S.

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Despite its name, American Tower owns many more towers outside the U.S. than within the country. That number will increase significantly as the company closes its acquisition of Telxius Towers, adding 31,000 towers to its portfolio. Almost 24,000 of those sites are in Germany and Spain, making American Tower Europe’s second largest independent tower owner, after Cellnex. 

Telefónica is the sole tenant on most of those sites. With an average tenancy of 1.3, American Tower clearly sees an opportunity to increase lease-up on its new portfolio. 

In addition, the company could see other important benefits from the European market. According to Cellnex, operators in Europe are increasingly interested in leasing “adjacent assets,” like fiber and small cells, from towercos.  

Jose Antonio Aranda Legazpe, Product Strategy and Innovation Director at Cellnex, said European carriers like the economics of shared fiber to the tower. He added that operators are starting to see Cellnex as an “infraco” rather than simply a “towerco.” That means they’re looking to Cellnex to manage central offices, and even asking the company for proposals when they build new central office facilities in metropolitan areas. 

Could American Tower enjoy the same opportunities? Possibly, as Telefónica already separated its infrastructure division from the rest of the company in 2019, and has stated that it wants to continue to reduce debt. If the company sells more infrastructure, American Tower could be a logical buyer.

Telefónica has said it sees its central offices as prime locations for edge compute nodes, and this could also represent an opportunity for American Tower, which has already dipped its toe into edge computing in the U.S. by installing a handful of edge data centers at select cell sites. 

Europe will also give American Tower exposure to OpenRAN trials being conducted by existing MNOs, complementing its experience with DISH Network, which does not currently operate a network and is building a greenfield 5G network using OpenRAN. Telefónica, Vodafone, Orange and Deutsche Telekom are cooperating on OpenRAN development, and except for DT, all of those operators are Telxius tenants.

Telefónica Deutschland has already committed to start OpenRAN deployments in Germany, where the Telxius towers are. The operator plans to convert 1,000 sites to OpenRAN in a deployment scheduled to start this year.

Telefónica has also partnered with Rakuten Mobile to jointly develop OpenRAN technology. Rakuten Mobile is arguably further along with OpenRAN than any other operator, having already launched an OpenRAN network that covers roughly 75 percent of the population in Japan.

OpenRAN, edge computational, and shared infrastructure are all likely to be important themes in the U.S. tower industry over the next few years. American Tower’s deep exposure to the European market should position it well to understand the technologies and market dynamics driving these trends. 

Veteran telecom industry editor and journalist Martha DeGrasse is an Inside Towers Contributing Analyst with features appearing twice per month. DeGrasse owns Network Builder Reports and contributes regularly to several publications. She was formerly a writer and editor with RCR Wireless and a TV business news producer.

By Martha DeGrasse, Inside Towers Contributing Analyst

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