Wary of the Carriers, Go for the Towers

Jonathan Chaplin at New Street Research explained that Verizon provided a 4Q update that their consolidated and wireless margins will be pressure. Chaplin and his team believe this means they will miss their guidance of first year consolidate margin expansion. “Management had previously guided to margin expansion in wireless, wireline and consolidated at the beginning of the year; however, they warned on the 3Q14 call that wireless margins may face pressure,” Chaplin explained. Chaplin reiterated that they have been wary of the carriers in general due to rising competition and would rather own the “arms dealers than any of the carriers”: towers (SBAC & AMT) and spectrum (DISH).