Macro Cells Remain Core of Network

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By Jody McCoy

Senior Telecom / Media High Yield Analyst Davis Hebert at Wells Fargo shared some takeaways from the company’s 4th annual telecom symposium, “The Wireless Supply Chain—Soup to Nuts,” that happened in New York last week. While there was much to say about small cells, Herbert noted that macro cells remain the “core of the network.” “One operator noted that the most activity has been coming from Verizon and T-Mobile, with AT&T and Sprint rather quiet,” Hebert wrote. “He expected activity to resume for the latter two, as each carrier tends to go through up-and-down spending cycles. The tower M&A environment has been a great sellers’ market. There is more capital chasing tower assets than one panelist had seen since 1997. Verizon certainly took advantage of tower multiples, selling its portfolio to American Tower, but said control and priority on the existing towers had to remain in place.” Another takeaway from one panel was that there is no reason why there shouldn’t be 3-4 tenants per tower over the long term, especially with the short supply of spectrum. The analyst also explained that most of the large tower portfolios are non-carrier owned and operated so instead of pursing small cell densification, the carriers could easily justify adding capacity to existing cell sites rather than financing new tower bids.

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