Our 2015 2nd-Half: Cell Tower Lease Forecast

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.

In our review we noted three interesting observations:  Firstly, Verizon simply outpaces all other wireless carriers and tower companies combined.  They are the only wireless service provider who appears to be actively contacting landowners and building owners regarding small cells. No other wireless service provider or tower company has approached any of our landowners/ clients about proposed small cell deployment.  Secondly, while reviewing our data, we noticed that while both SBA and CCI are active in terms of new cell tower lease proposals, not a single landowner has approached us to help them with a new American Tower (AMT) lease.  This suggests that American Tower is not very active this year in terms of new site development – at least not in the United States, which is fairly surprising.   Third, we noticed is that small to mid-size private tower companies are making up a larger percentage of our leads for proposed leases.   We anticipate this is because of expectations of pending search rings from AT&T, T-Mobile, and possibly from Sprint.

Going forward, we along with a number of industry pundits and analysts expect a more robust 2^nd half of the year for all wireless carriers.   For Verizon, it will be more of the same- they tend to be the steadiest of all the wireless service providers year after year in terms of new sites.  For AT&T, we anticipate a slow ramp up of additional cell towers through the end of 2015, increasing in early 2016.   Primarily, we anticipate that the stoppage of work from AT&T that occurred in May of 2014 and continued through now is building a pending number of new sites that are sorely needed to help AT&T keep pace with Verizon’s ongoing and aggressive deployment of new cell towers and cell sites.  For Sprint, rumor has it that they have a pending build plan of up to 20,000 new towers depending upon the source that you read.  At Steel in the Air, we anticipate a slightly less robust build plan consisting of around 4,500-5,000 new cell sites and 4,000 small cells being deployed over the next year and a half.   Whether this starts in 2H 2015 or 1H 2016 is anybody’s guess.   Lastly, for T-Mobile, the forecast for 2015 and 2016 is pretty hazy.   We anticipate slightly more robust new cell site deployment throughout the second half of 2015, but anything would be considered robust for T-Mobile who has done little new site deployment for a few years while they absorbed MetroPCS and focused on site modifications.   We have heard that T-Mobile may be inclined to invest more money in new sites than planned after they observed the expensive pricing for the last AWS-3 spectrum auction.  (You can expand the capacity of your network by buying spectrum or building more sites- or both: we think T-Mobile thinks that it is now cheaper to build than to buy).

As you can see, we at SITA anticipate additional capex spending for the US Wireless Carriers through the end of 2015.   By the end of the first half 2016, we would be surprised if all four wireless service providers were actively building new cell sites for the first time in over 5 years.

If you are a market analyst and want to talk to us further about our insight about wireless capex spending in the US based upon our unique vantage point of having direct visibility to actual build plans when they start across the US, contact us.