AT&T, Verizon Wireless to Lead 2014 Tower Adds: RBC

March 6, 2014

AT&T and Verizon Wireless will drive a robust market this year for wireless infrastructure, according to the Wireless Retail and Network Update by RBC Capital Markets, while T-Mobile and Sprint will surge next year. The firm projects site additions and new lease equivalents will rise as high as 25,000, compared to just under 23,000 in 2013.

“For the wireless sector, 2014 demand drivers will likely feature an increased mix shift toward new leases, driven by capacity/infill requirements at AT&T and Verizon,” wrote Jonathan Atkin, RBC analyst.

The drivers of leasing and amendment demand this year, according to RBC Capital Markets, reflect continued LTE overlay work, including Verizon’s deployment of LTE in the Advanced Wireless Service (AWS) band, and a robust pace of new site additions.

Last year AT&T and Verizon added 2,000 and 2,600 sites, respectively. Around half of those adds came in the fourth quarter, according to RBC stats.

“We believe each carrier plans to continue that late-year run rate through 2014,” Atkin wrote. “As it pertains to AWS [band] activity at Verizon, we believe the carrier will add 12,000-13,000 sites in 2014, with a similar pace plausible in 2015 as the company completes its coverage at that frequency.”

In the second-half 2014 and 2015, Atkins expects Sprint will accelerate its 2.5 GHz LTE deployments, which may have been delayed due to equipment shortages. T-Mobile will increase to its LTE coverage footprint at 1900 MHz to reach 250 million in population and deploy of LTE at 700 MHz covering 158 million in population. RBC estimates 7,000-8,000 sites will be slated for LTE deployment at both 700 MHz and 1900 MHz.

“We believe Sprint continues to be challenged in its network improvement initiatives, due to equipment availability constraints for its 2.5 GHz LTE deployment, using 8T8R [eight transmitter/eight receiver] technology, and it is facing greater competitive challenges at retail than anticipated earlier in the year from T-Mobile and AT&T, with its tablet-centric postpaid growth a pressure on ARPU,” Atkin wrote.

Sprint plans to deploy Sprint Spark, which uses 8T8R carrier aggregation technology, in 100 largest metro areas in the next three years, with initial availability in five markets beginning last fall. A company press release stated that Sprint 4G LTE service will be available by mid-2014 to approximately 250 million Americans, and Sprint expects 100 million Americans will have Sprint Spark or 2.5 GHz coverage by the end of 2014.

Sprint is still behind Verizon’s LTE speeds and has not made much progress in its network upgrade initiatives recently, according to RBC’s analysis.

“We believe activity levels will ramp further in 2015 at Sprint and T-Mobile as we believe the 8T8R 2.5 GHz deployments (Sprint) and 700 MHz and 1900 MHz LTE overlays and coverage expansion (T-Mobile) will gain momentum,” Atkin wrote.