TowerCos Diversify into Small Cells, DAS, Fiber

December 28, 2015

2015 in Review

By J. Sharpe Smith —

Wireless infrastructure providers should take advantage of technological and network convergence. That was the message of Digital Bridge CEO Marc Ganzi’s keynote address in September at the Tower and Small Cell Summit, and it captured one of the important trends of 2015.

While the tower or macrosite side of the business is very healthy, Ganzi said to remain relevant to the carriers and the investment community the wireless infrastructure industry must not only think about macrosites, but also small cells, interconnectivity, backhaul, collocation, and the Cloud and hosted services.

For example, Ganzi mentioned the merger of Sunesys, a fiber-optic networks provider, with tower/DAS provider Crown Castle International, and fiber-optic provider Zayo’s entrance into wholesale collocation through the purchase of infrastructure-as-a-service provider Latisys. Additionally, Ganzi’s Digital Bridge invested in distributed network provider ExteNet.

The acquisition of Sunesys’ fiber footprint more than doubled Crown Castle’s fiber footprint for small cell deployment, according to Jay Brown, Crown Castle chief financial officer. Sunesys is expected to contribute as much as $85 million to site rental gross margin during the first full year of ownership, according to Brown.

“We believe that as mobile demand continues to grow, carriers will need to deploy small cells in conjunction with macro towers to address network congestion. And while it’s still early days, we are seeing evidence that support our investment pieces,” he said.

The importance of small cells to the Crown Castle’s bottom line is on the increase. Site rental revenues from small cells grew more than 30 percent in the second quarter, year over year and now represent 8 percent of site rental revenue. In the third quarter, revenue generating capital expenditures consisted of $92 million on existing sites and $98 million on the construction of new sites, primarily small cell construction activity.

“We are investing in and building a team around our small cell capabilities, which we believe will strengthen our leadership position in U.S. wireless infrastructure and extend our runway of growth,” Brown said during the third quarter earnings call.

The small cell network currently comprises 7,000 miles of fiber supporting 15,000 nodes. Another 2,300-nodes have been awarded but are not yet under construction.

Link to the Article:
Aussie Asset Sale Fuels Crown Castle Fiber/Small Cell Rollouts