September 4, 2014 — While AT&T throttles back, site additions are increasing at T-Mobile and M2M Spectrum Networks, and Sprint may be on the cusp of a new network densification campaign, according to RBC Capital Markets. The investment bank also noted that new leases driven by capacity requirements at Verizon and AT&T, and initial in-fill work at T-Mobile, will drive leasing growth in the second half of this year.
Looking forward to next year, leasing growth will be sustained by Sprint through 2.5-GHz band overlays and by T-Mobile through 700-MHz overlays. The possibility of slowing site additions at AT&T will be offset by site additions at T-Mobile and Sprint, according to Jonathan Atkin, RBC analyst.
Atkin confirmed media reports that site additions at AT&T, which added 1,900 sites in the first half of this year, will slow down to between 1,500 and 2,000 sites in the 2015/2016 time frame. Primary work at the carrier will include LTE overlays, capacity expansion and the air-to-ground network in the 2.3-GHz Wireless Communications Service band.
“We believe possible reasons for slower site additions include: retention of 220 Leap sites, diversion of capex to gigabit Internet/fiber projects, and maintenance of 2014 capex and free cash flow targets. WCS deployment for video delivery, post DirecTV closing, may be a consideration,” Atkin wrote.
Sprint’s 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.
“We believe Sprint’s equipment availability delays for 8T8R LTE deployment at 2.5 GHz have started to lift, with regional differences depending on vendor, driving increased activity in the second half of 2014,” Atkin wrote. “Site additions remain dormant with no search rings active, but we believe preliminary design preparations are under way.”
Verizon added 1,236 sites in the first half of 2014, highlighted by LTE deployments in the Advanced Wireless Service and 1900-MHz bands augmented by capacity-driven cell splits.
“Verizon is also active on small cell deployments, driving in some cases a small benefit to tower leasing volumes (and not displacing macro sites), Atkin wrote.
T-Mobile is growing its LTE overlays in the 700-MHz band and 1900-MHz band, with initial signs of in-fill site additions. T-Mobile continues to decommission the MetroPCS CDMA network, but the pace depends on the age of the market.
“MetroPCS LTE gear is being redeployed to rural T-Mobile sites to enhance rural coverage, but the work is ground-based and not a driver of incremental tower revenues,” Atkin wrote.
M2M Spectrum Networks is constructing a purpose-built network for machine-to-machine communications. Network rollout began in the second quarter of 2014, with the objective of covering 75 percent of the U.S. population by the end of 2015 and 95 percent by the end of 2016.
“Non-Big-Four site-addition activity includes fixed broadband networks (mostly rural) and M2M Spectrum Networks,” Atkin wrote.