A follow up story by the Wall Street Journal mentioned reports from American Tower and SBA who confirmed the number of leases impacted:

• American Tower has 3,100 towers where AT&T and T-Mobile are both on the tower out of 36,000 sites or 8.6% overlap.   American Tower’s lease agreements with T-Mobile have between 5 and 6 years remaining on them. 
• SBA has 1,533 of the company’s 9,260 towers with duplication between T-Mobile and AT&T or 16.5% overlap.   The average lease has 3 years remaining on it.  
• Crown has 4,000 of the company’s  22,000 towers with duplication.   The average AT&T lease has 12 years remaining while T-Mobile has 7 years remaining. 

Due to the remaining time left on these tenant leases, the tower companies don’t expect immedate losses.  The market analysts who cover the tower sector have been pretty ambivalent about the risk of long term termination losses to the Big 3 tower companies.   This despite AT&T’s claim on their initial conference call that they will reap over $10 billion in synergies by cutting out redundant cell towers and network equipment.  The analysts seem to be ignoring the fact that the Big 3 tower companies receive 25-33% of their incremental revenue year over year from lease modifications such as 4G antenna upgrades.   The concern would be that given the duplication that the combined AT&T/T-Mobile will not need to do these upgrades on at least 5,000 of the towers (1/2 of the duplicated towers for AMT, CCI, and SBAC).   These numbers also don’t consider the number of towers where AT&T or T-Mobile has a cell site on another company tower or their own tower that is adjacent to a AMT, CCI, or SBAC tower where they are collocated as well. 

They seem more concerned (and rightly so in our humble opinion) about the downturn in new site deployment by AT&T now that it owns T-Mobile sites which will help it avoid deploying new capacity sites.  We haven’t seen any projections for how many new sites AT&T and T-Mobile plan on deploying going forward.  Over the last few years, AT&T and T-Mobile have collectively deployed 5,000 or so new macrocells a year.   Based upon anecdotal information we have collected over the last few years from landowners who were approached by AT&T or T-Mobile, 80% of these sites are “infill” cell sites.  Infill sites are intended to shore up capacity issues and are placed between existing cell sites in urban/suburban areas.   It is our assumption that many of these new infill sites will no longer be necessary especially in markets where AT&T and T-Mobile had a strong presence previously.   To us this means that AT&T and T-Mobile will deploy 1,000 to 2,000 new macrocells per year instead of 5,000 and that when the lease terminations start to come (and they will come) that AT&T may actually have a negative number of macrocells deployed per year.

 What does this mean?  That if you are structure owner (tower company or rooftop owner or otherwise) with structures in urban and suburban areas, that you should expect lower macrocell lease-up over time and slightly lower incremental year over year revenue as site modifications are reduced.