Jan. 8, 2015 — Network densification, which drove up new tower builds by 20 percent last year, will continue into the new year, but new tower builds may be less than in 2014, according to analysts at Wells Fargo Securities. Even so, wireless capex is not expected to slow down.
“We disagree with the thought there will be a meaningful slowdown in wireless carrier capex given the prices paid in AWS-3 auction,” wrote Jennifer Fritzsche, senior analyst. “Rather, we expect the capital to shift from densification activity back toward more amendment-related revenue for tower companies — especially in the densest U.S. cities with small cells playing a key role.”
Coverage vs. Capacity Spend
In 2014, densification activity was driven by AT&T and Verizon Wireless, which have more or less filled in their LTE networks. Sprint and T-Mobile are more focused on coverage than capacity today and shouldn’t be expected to begin densification of their networks until 2016.
In 2015, the winners of the AWS-3 auction will waste no time deploying their new spectrum in the urban areas with the most subscriber traffic.
“Rather, given that there likely will be more of a sense of urgency about fine-turning the capacity needs in the most dense U.S. cities where usage is the highest, we expect the capital to shift from densification activity back toward more amendment-related revenue for tower companies,” Fritzsche wrote.
Additionally, the industry will need time to absorb the influx of new towers that were built last year, which could put additional drag on new tower builds in the near future.
J. Sharpe Smith is the editor of AGL Link and Small Cell Link newsletters.