Small Cells Continue to Grow

During the first quarter conference calls of Crown Castle and SBA Communications, light was shed on the small cell sector. SBA noted that they have signed up for some small cell contracts on its towers, and received some rent revenue for those deployments, and that the opportunity for small cells is growing. Crown Castle has also been very active in the small cell market. Jay Brown, CFO at Crown Castle, reported on Thursday’s call, “Today, small cells represent 7% of our site rental revenue and site rental gross margin. Small cells offer a shareable model, similar to towers that provides wireless carriers with a solution to address network capacity constraints where a macro tower site is not available or is insufficient. Our investment in small cell anchored builds typically generates 6% to 8% initial yield and gross margins of 60 to 70%.” Brown went on to explain that the small cell leases have usually been long term, with 10 to 15 year contracts. “We believe small cells is a great investment and we are at the very early stages of this opportunity,” Crown Castle CEO, Ben Moreland, said. It’s likely that both companies will continue to invest heavily in the small cell market as data usage continues to rise.