March 10, 2016 — In contrast to Wells Fargo Securities, which downgraded the tower sector from outperform to market perform last week, RBC Capital Markets continues to overweight tower stocks based on “historically attractive valuations and prospects for a modest second half of 2016, followed by 2017 acceleration in leasing.”
In its Wireless Network and Site Leasing Update, dated March 19, RBC projected a “modest uptick” in leasing in the second half of this year compared with 2015. Leasing catalysts include amendments by AT&T, with some contributions by T-Mobile and Verizon driven by “project/budget seasonality, spectrum refarming, and activity in the AWS-3 band.”
“Verizon and T-Mobile should remain the most active leasing contributors, as they were during 2015. Each should add slightly fewer macro sites vs. 2014 but increase their overlay activities and small-cell efforts,” wrote Jonathan Atkin, RBC analyst. “AT&T should remain mostly inactive on macro-site deployments but be noticeably more active on site overlays.” Sprint, however, remains a no-show on the site development radar, he added.
Details on 2016/2017 Site Activity
While AT&T’s 2016 site additions should remain below the 1,000, Atkin wrote, the carrier will touch more than 30,000 of its 66,500 sites with LTE carrier-additions (1900 MHz) or overlays (WCS, AWS-3). Up from 2015, but down from 2014, according to RBC.
T-Mobile will continue its 700 MHz coverage buildout with spectrum refarming at 1900 MHz and macro-site densification. Other areas of activity include initial AWS-3 overlay and small-cell densification at 5 GHz. Continued AWS-3 overlays, and 700 MHz densification in metro areas should highlight 2017.
Verizon’s macro site deployments in 2016 will be less than 2015, but it will continue refarming on 15,000 sites at 1900 MHz band and increase its small-cell deployments.
Sprint’s focus areas included LTE additional-carrier deployments at 1,900 MHz, conclusion of 800 MHz overlays, carrier aggregation at 2.5 GHz, and metro-specific projects.
“Earlier efforts [at Sprint] around organic small-cell deployments, BTS monopoles, and new municipal structures have made little apparent progress, though we believe Mobilitie has hired more than 700 staff to pursue permitting work,” Atkin wrote.