February 20, 2015 – The tower industry will experience a strong site leasing environment in 2015, led by Verizon Wireless, but overall activity will slow down because of a drop in cell-splitting, according to RBC Capital Markets. Outside of the top carrier site-additions, infrastructure activity centers on rural fixed broadband networks and M2M Spectrum Networks.
“Adjustments to our prior forecast include fewer expected site additions at AT&T, offset by stronger expected contributions at T-Mobile (mostly coverage driven),” wrote Jonathan Atkin, senior analyst.
Verizon finished up strong in 2014 adding half of the total of 3,000 sites in the fourth quarter. The pace of capital spending on wireless was evenly distributed, however: $2.7 billion in the fourth quarter and $10.5 billion for the full year.
Separately, Verizon’s Fran Shammo recently said the carrier’s investments are focused on adding capacity to the 4G LTE network, thereby increasing network density. The carrier is also deploying existing AWS spectrum in addition to using small cell technology, in-building solutions and DAS.
“LTE deployments in the AWS and 1900-MHz bands have been augmented by capacity-driven cell splits. Verizon is also the most active carrier deploying small cells, driving benefit to Crown Castle among the public towercos,” Atkin wrote.
AT&T added 3,700 sites during 2014, including 630 during the fourth quarter 2014. RBC Capital Markets forecasts a slowing trend toward 1,000/2,000 towers in 2015/2016, which was previous forecast at 1,500/2,000).
“AT&T continues LTE overlays and capacity expansion. We believe the company is targeting less than 8,000 WCS deployments and more than 18,000 additional LTE carriers during 2015, while decommissioning the Leap Wireless CDMA network,” Atkin wrote.
Sprint’s projects have included LTE deployments at 2.5 GHz and 800 MHz, CDMA at 800 MHz, and LTE second-carrier deployments at 1,900 MHz as it refarms EVDO capacity. Site addition activity has been dormant at the carrier recently but that may change, according the RBC Capital Markets forecast.
“At Sprint, we are seeing the initial signs of a comprehensive densification effort that we expect to peak during 2016-2018,” Atkin wrote.
The pace of T-Mobile’s site additions has been increasing from nominal levels in the first half of 2014 to 600 for the full year. The carrier is increasing it LTE overlaying activity at 1900 MHz and new 700-MHz coverage site deployment is ramping up.
J. Braxton Carter, T-Mobile CFO, told the fourth quarter 2014 earnings call that the carrier expects to decommission all of the remaining CDMA markets by the second half of 2015.
“We expect to incur additional onetime network decommissioning costs in the range of $500 million to $600 million with substantially all the costs expected to be incurred in 2015,” Carter said.