It may not feel like it right now, but towers are about to enter a “golden age,” according to a New Street Research Industry Note. The firm, which has been neutral on towers for the last year, forecasts growth in the next five years that towers have not seen since the deployment of LTE, thanks to the T-Mobile/Sprint merger, Dish’s entry into the wireless market and the deployment of the C-Band.
“Our base case assumes domestic organic growth accelerates to 6 percent to 7 percent. If the New T-Mobile triggers a response from AT&T and Verizon, we think growth could accelerate to more than 8 percent,” wrote Spence Kurn, NSR research analyst.
The integration of T-Mobile and Sprint will accelerate growth through 2022. The decommissioning of Sprint’s towers will be offset as Dish’s new network build will drive wireless buildout. The build out of mid-band spectrum should sustain elevated levels of growth in the later years of the forecast.
“We expect Verizon, AT&T, T-Mobile, and Dish to deploy C-Band spectrum, propelling growth even higher in 2022 and beyond,” Kurn wrote.
Master lease agreements (MLAs) with New T-Mobile will also represent catalysts for growth, according to New Street Research. Although its base case growth forecast does not assume the tower companies strike MLAs with New T-Mobile, the firm believes it will likely happen.
“MLAs make a ton of sense: they typically allow carriers to deploy their network initiatives faster, and at the same time afford tower companies greater visibility on the timing and magnitude of their cashflows,” Kurn wrote.
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