Crown Castle to Benefit from Sprint Upgrade?  


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By Jody McCoy

Investor’s Business Daily noted that there could be an upside for Crown Castle now that Sprint has announced their network upgrade. “The next phase in Sprint’s 4G network upgrade will likely use small-cell technology, an approach Verizon Communications has also taken,” IBD explained. Crown Castle has stepped up their small cell game. “Similar to towers built in the late 1990s and early 2000s, we are focused on building small cell networks in the most attractive locations in the US, in places like Manhattan, Washington DC, Southern California and Chicago. As mobile data demand grows, the necessity of small cells increase as evidenced by our growing pipeline of over 2500 anchor builds and colocations on existing systems, which have been awarded to us, but are not yet in construction,” Jay Brown CFO at Crown Castle said on the April 23 conference call. “Today, inclusive of our acquisition of NextG in 2012, we have invested approximately $1.7 billion in small cells. Our current yield on investment is 7%, inclusive of our $1 billion investment in NextG at an initial yield of approximately 4%. With our leadership position of over 14,000 nodes on air or under construction, and 7000 miles of fibre, we are winning new opportunities and driving yields up on our existing investments in small cell networks.”

Verizon and Crown Castle have worked together to deploy a number of small cell networks across the country, so is it safe to assume Sprint will use Crown Castle too? “We believe Sprint is pursuing a 70,000 small-cell densification, with the initial phase slated for completion by the end of 2016,” said Jonathan Atkin, an analyst at RBC Capital, in a research report. “Absent an accompanying macro-site project, we are unclear on the benefit to tower companies from Sprint’s densification, as the new infrastructure could be deployed principally on street-level infrastructure, though CCI could potentially see new tenancies on its small-cell infrastructure.” (IBD) Kevin Smithen at Macquarie capital agrees that Sprint’s small cell build out will boost CCI in the second half of 2015. “However, since CCI reports (Q2 earnings) well ahead of Sprint, we do not think that CCI will be in a position to include Sprint in its guidance on its earnings call,” Smithen wrote in a research note. (IBD)

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