June 4, 2015 — The tower industry appears to be taking a breather from its torrid pace of last year. But RBC Capital Markets expects it to pick up again next year.
“Despite a slower 2015 leasing environment in the United States and few apparent near-term operating catalysts, we believe the 2016 set-up for tower stocks is favorable,” Jonathan Atkin, senior analyst, wrote in a Tower Update.
The firm reduced its leasing forecast from 18,000 to 16,000 broadband equivalents (BBEs) for 2015, based on lower expectations for AT&T and for near term deployment on WCS spectrum.
“AT&T completed 3,700 site additions during 2014 (630 during 4Q14), with slowing trend (115 added during 1Q15). The carrier continues LTE carrier additions (targeting more than 18,000 carriers during 2015). We believe earlier target of [in excess of] 8,000 WCS deployments is not achievable and hence have reduced our overlay estimate,” Atkin wrote.
Sprint activity remains slow in most regions, with a few exceptions. Ongoing projects include LTE deployments at 2.5 GHz and 800 MHz, CDMA at 800 MHz and LTE second-carrier deployments at 1,900 MHz.
Verizon, T-Mobile Primary Leasing Drivers in 2015
Verizon should be more active on small cell deployments 2015 and outdoor DAS deployments will be flat. A decline in LTE deployments in the AWS band this year, should be offset by 1900-MHz LTE deployment.
“LTE overlays continue at T-Mobile, with new 700-MHz coverage sites ramping,” Atkin wrote. “We expect MetroPCS CDMA shut-off at mid-year, with decommissioning largely complete by YE15. The company added 113 new sites in 1Q15.”
2016: Improved Deployment Prospects at AT&T, Sprint
RBC is optimistic about 2016, primarily because of expectations that AT&Y will resume infill activity and begin overlays in the WCS or AWS-3 bands. Additionally, Sprint is expected to densify its networking using macrocells, helping all tower companies, and to deploy small cells, helping Crown Castle.
“Site additions [at Sprint] should ramp in the second half of 2015 as the company embarks on infill coverage, with activity likely to accelerate during 2016-2017, in our view,” Atkin wrote.