By J. Sharpe Smith —
July 2, 2015 — Verizon and T-Mobile (TMUS) continue to lead in tower leasing activity, with Sprint entering a more active phase and AT&T mostly focused on LTE capacity in the United States and coverage/modernization in Mexico, according to RBC Capital Markets’ Wireless Network & Tower Leasing Update.
“We continue to believe the 2016 set-up is favorable for towercos, with a Y/Y ramp in leasing becoming noticeable in the first half of 2016. We favor Crown Castle International (CCI) versus its peers based on strong prospects for macro and small-cell leasing and improved churn,” writes Jonathan Atkin, RBC analyst.
AT&T appears inactive on new leasing but fairly active on LTE carrier additions, but with minimal benefit for towers, according to Atkin.
“We believe AT&T is moving relatively slowly with the turn-down of legacy Leap sites. AT&T announced $3B of incremental capex in Mexico for modernization and coverage expansion, spread out from 2015 through 2018,” he wrote.
Sprint’s network improvement plans are taking shape, with a 70K macro-mini cell-site addition project set to launch in July, according to RBC’s research.
“We believe the project is about to enter the site acquisition, engineering and permitting phase, once vendors are finalized in the first half of July,” Atkin wrote.
T-Mobile appears focused on LTE and coverage expansion at 700 MHz and seems to be nearing completion of its LTE overlays in the PCS and AWS bands while ramping up network-hardening efforts on the East Coast.
“We believe T-Mobile will shut down all remaining MetroPCS CDMA equipment at mid-year (June 30th) with full decommissioning targeted by late 3Q or early 4Q,” Atkin wrote.
Verizon remains the most active carrier in deploying new macro sites, according RBC, and its small-cell deployments are also more advanced than the other carriers. Its small cells use a cloud RAN design, which inhabits street furniture connected by fiber to centralized hardware locations.
Wireless Infrastructure Impact
Tower beneficiaries from increased activity at Sprint are CCI, because of its outdoor small cell focus, and SBA Communications with its U.S. exposure, according to RBC. AT&T’s increased Mexico spend should benefit AMT, which derives roughly 6 percent of total revenues from its 8,700 Mexico sites. AMT should also benefit from 4G upgrades on legacy Iusacell and Nextel leases, which comprise more than 70 percent of its Mexico revenues.
“We maintain our favorable views on American Tower (AMT) because of improving U.S., Mexico and India trends, and SBAC, because it has the strongest core U.S. growth rate and prospects for Brazil leasing,” Atkin wrote.