On September 20, Comcast’s Brian Roberts announced that Comcast Wireless – a second iteration wireless venture – is scheduled to roll out in mid-2017. While details have been limited so far, here is what we anticipate based upon 20+ years in the wireless industry. [Read more…] about Comcast Wireless 2.0- Maybe It Won’t Fail?
Cell Tower Companies in the News
While the call itself was pretty understated as compared to even other CCI calls, it was in the Q&A where the call got interesting. Here is what we took from the call.
TOWERS: ($115M organic revenue growth in 2nd Quarter)
New Builds: In regards to new builds, CCI is not building many new towers- only 50 of them in the last quarter. They don’t say it, but we believe that the majority of those towers are replacements of their existing towers where the underlying landowner wasn’t willing to extend the underlying tower ground lease at a fair market value rent. Crown doesn’t expect this slow pace to change, noting specifically that there are a number of new tower company entrants or established mid-tier tower companies that will do non-sensible build-to-suit deals in order to establish market share. [Read more…] about Crown Castle Small Cell and Tower Update- 2ndQ 2016
So as a clear indication that Wall Street is very focused on small cell initiatives by the public tower companies, Crown Castle
started reporting their small cell financials separately from their tower financials in the Q1 2016 quarterly earnings and call. They must have been receiving a significant number of questions from the analysts because the earnings call presentation is carefully crafted to show a rosy picture even though Crown hasn’t been completely transparent on their small cell financials.
SOME VISIBILITY- BUT QUESTIONS STILL REMAIN
In general, we are excited to see them Crown add this reporting, as we have been suggesting to the various analysts that retain us that it is difficult to measure how successful their small cell efforts are without this breakdown. Unfortunately, Crown still isn’t distinguishing between small cells and DAS in the breakdown preferring to treat all DAS nodes and small cells as if they are the same and have similar financial attributes. Interestingly, an analyst from Bank of America specifically asked this same question in the Q&A without getting a substantive answer.
What we do know from the earnings call is that Crown’s small cell business still amounts to approximately 12% of their consolidated site rental revenue similar to what it was in late 2015. Crown indicates that new small cell builds amount to 75% of their small cell systems’ incremental revenue – while 25% is additional collocation on existing fiber routes/DAS networks. They suggest that they have 16,500 miles of fiber, but don’t disclose how many miles are actually used for small cell nodes or DAS. CCI says they are focused on the top 25 markets which isn’t surprising given the location of Sunesys fiber in these same cities. This suggests a few obvious questions for CCI that were partially addressed in this call and should be expanded upon in future calls:
1. How do they expect to grow once those 25 markets are complete?
2. Now that the world is fully aware of the value of dark fiber and surplus capacity, is it reasonable to expect another fiber company acquisition?
3. How many nodes are in top 25 markets or Central Business Districts (CBD) as opposed to non urban core areas? [Read more…] about Crown Castle (CCI) Small Cell Initiatives and Reporting
The City of Orlando, Florida recently received two separate applications for two separate sets of DAS nodes and/or small cells. The applications were submitted by Crown Castle and Telemobilitie, both of whom purport to request planning approval for new poles and/or the replacement of existing poles. We believe that Telemobilitie is a “Doing Business As” name for Mobilitie – the applicant who submitted the plans to the City on behalf of Telemobilitie has a LinkedIn page indicating she works for Mobilitie, a company which is purported to be assisting Sprint with the development of 70,000 “mini-macro” small cell sites. [Read more…] about Tale of Two Small Cell Proposals – Crown Castle vs. Mobilitie
We reviewed the transcript and presentation materials for the CCI earnings call for the 4th quarter of 2015 and compared to the same call back in 2014. Here are the things we found interesting from the call. [Read more…] about Key Takeaways from Crown Castle (CCI) 2015 4th Quarter Earnings Call
In their article “Tower Rents May See Pressure from Carriers”, AGL Magazine cites three sources to justify their overreaching conclusion that cell tower collocation rents may soon see downward pressure. Incorporating statements from Ron Bizick II of Tarpon Towers, Jennifer Fritzche of Wells Fargo Securities, and Alex Gellman of Vertical Bridge, AGL surmises that the traditional tower development business model is transforming. Following is SITA’s response to that assertion. [Read more…] about Towers and Tenant Collocation Rent Trends: 2016-Beyond
1. At heart, it’s all about network anti-congestion strategies.
We’ve got to hand it to T-Mobile – they’ve been trying hard to market their shortcomings, such as network gaps and spectrum position relative to other wireless service providers, as advantages. T-Mobile was the first of the Big Four telecoms to offer WIFI calling, connecting phone calls via local WIFI networks instead of using its cellular LTE infrastructure. In mid-November T-Mobile unveiled Binge On™, a video streaming platform that would allow its customers unlimited streaming for free. In areas where T-Mobile’s LTE service is not already up and running, the innovative company has pledged to install LTE CellSpots (femtocells) into users’ homes – also for free. [Read more…] about T-Mobile’s BingeOn™ Lemonade Stand Satiates Shareholder Thirst
American Tower speaking at REIT conference suggests that their ROI on towers is 5-6% for 1 tenant, 12-13% for 2 tenants, and 18-20% for 3 tenants.” For the first time, they are no longer emphasizing their top 50 or 100 BTA number of towers- instead saying that not being in urban areas reduces their risk of disintermediation. I had to look that word up- it means “reduction in the use of intermediaries between producers and consumers, for example by investing directly in the securities market rather than through a bank.” [Read more…] about Tower Companies’ Disparate Views on Small Cells
The year of 2015 has started out flatter than most industry pundits expected. The expectation was that first half 2015 would be fairly robust, but it hasn’t been. We expected the first half to find at least two wireless carriers actively building out new cell towers, but that hasn’t been the case. We examined our leads so far this year and the bulk of them come from landowners who were approached by Verizon for cell towers on their property. We consolidated all the public tower companies (AMT, CCI, SBAC) together and also the private tower companies into individual groups. [Read more…] about Our 2015 2nd-Half: Cell Tower Lease Forecast