NATE Unite 2019
“Is euphoria around towers too high?” asked Jennifer Fritzsche, Managing Director at Wells Fargo Securities, yesterday at NATE Unite 2019 in Dallas. “We don’t think so.”
Fritzsche said she sees a number of tangible catalysts for the tower sector in 2019 which should drive U.S. carrier leasing activity up from year to year. Although the market focus is on small cells, fiber and 5G, she said it all won’t work without the core infrastructure of macros towers.
The market drivers, according to Fritzsche, are small cell and network densification accelerating ahead of 5G services, with small cell RFPs up significantly, along with RFPs for dark fiber to cell sites. With the additional impetus of FirstNet, which all 50 states opted into, AT&T started its first wave of amendments, with the towercos providing conservative guidance on deployment of the 700 MHz spectrum.
Fritzsche addressed the issue hanging over the heads of towercos: the proposed Sprint and T-Mobile merger. Driven by network synergies, she believes the near-term result will be positive for towercos.
“Irrespective of the merger, both carriers still have spectrum to light up,” she said “namely S’s 2.5 GHz spectrum and TMUS’s 600 MHz. Checks show Sprint messaging to vendors implies steep ramp in 2H18 spending related to Massive MIMO antennas and new site build.” Fritzsche said T-Mobile shows no slow down in network investment since the merger announcement and remains focused on clearing and lighting up its 600 MHz spectrum for deployment.
“After several years of y/y decline in wireless capex spend, all 3 tower companies poised to benefit from reacceleration of U.S. wireless capex in 2018E and 2019E ,” Fritzsche said.
Complimenting the major towercos for various reasons, she gave a quick character sketch of each:
- Crown Castle: Her favored pick, saying they “check a lot of boxes” needed for future infrastructure development, particularly in the small cell and fiber categories. She said Crown has “played nice in the sand box” with their tenants.
- SBA: Lauding the quality of their inventory, Fritzsche said they have followed a sound build out and acquisition strategy, staying away from buying carrier sites and making sure the vast majority of their towers can support four vendors.
- American Tower: It’s pursuit of international tower inventories, although forward thinking, has had mixed results. Their footprint in India has particular upside, she said, where broadband infrastructure only serves five percent of a market growing exponentially.
By Jim Fryer, Managing Editor, Inside Towers
February 6, 2019