The conversation at the Wireless Infrastructure Show gave a positive outlook for the tower industry in 2017, despite huge industry emphasis on small cells
A well-attended panel discussion involving tower company executives highlighted the Wireless Infrastructure Association’s annual trade show and gave a glimmer of hope for the macro business despite the growing emphasis on small cells.
Read more about that panel, which gave us the wonderful term “smacro,” here.
The takeaway from CEOs of American Tower, Crown Castle, InSite and more is that the macro segment is in a lull, but there will be renewed interested as FirstNet deployments and repacking 600 megahertz spectrum takes shape.
According to Wells Fargo Senior Analyst Jennifer Fritzsche, who attended the show: “We do not get the sense the overall domestic environment (which was more the focus of our meetings vs. international) has materially changed since our March downgrade of the sector, but we saw some glimmers of hope that could make the set-up for 2017 a positive one.”
On to the game of chicken, Fritzsche wrote carriers are putting pressure on tower companies to lower prices without much success.
“The tension between the carriers and the tower [companies] remains at an all-time high,” Fritzsche noted. “There was talk that the ask from the carriers was for a fixed price on a rad center. The game of chicken that was going on earlier this year seems alive and well. All tower cos acknowledged that yes the carriers want to pay less for their service and are trying to ‘commoditize the infrastructure chain’ in such a way to lower prices. We believe the smaller tower operators are being somewhat used in this game of leverage. We heard chatter of an AT&T RFP … that is being floated to smaller tower operators not only for new sites but also to move some high-rent sites off their existing towers. We believe this is a clear move to try to force the hand of the public tower cos to blink on price. We do not sense there is any bending by the public tower cos here.”
Fritzsche also wrote that small cells “should not be considered a threat to the tower model. We still heard a lot of questions about the returns on small cells. That said, it is clear that the near-term focus for carrier’s [capital expense] will likely be directed toward small cells … point is there is a need for small cells and macro to work together – especially in a 5G world.”
