DAS boosts the bottom line

Distributed antenna systems provide connectivity behind the scenes, out of sight, even underground in some cases, and at times they have been as hard to find in corporate financial results as they are in some of the venues where they’re deployed. But that’s starting to change. Wireless infrastructure providers are highlighting DAS as it makes a bigger contribution to the bottom line.
“Site rental revenue from our small cell network is up approximately 26% year over year, and small cells generated 6% of consolidated site rental revenue,” said Crown Castle (CCI) CFO Jay Brown within the first five minutes of the company’s earnings call. Crown Castle uses the term “small cells” to refer to DAS nodes, and it says it has 13,000 of these nodes currently deployed, with another 3,500 under contract.
Analyst Simon Leopold of Raymond James singled out DAS in a note on Commscope’s (COMM) second quarter results. “Distributed antenna systems (DAS) were notably strong, approaching 15% of sales vs. about 10% last year by our estimate,” he wrote. “We think this business is favorable to margins, contributing to a wireless segment operating margin of 29% vs. 21% in 2013. DAS, along with the rest of wireless, plays into the densification trend and could hold up better than overall carrier wireless [capital expenditure] trends.”
Boingo Wireless (WIFI) is another company likely to see DAS as a major contributor to second quarter results, on the heels of a record first quarter. Boingo says its first quarter venue agreement signings were worth more than all the agreements signed in 2013. The company recently won a contract to install a neutral host DAS at John Wayne International Airport in Southern California.
American Tower is one major DAS provider that did not highlight distributed antenna systems in its second quarter earnings call, although CEO Jim Taiclet did field an analyst question on DAS, noting that the company is now taking its DAS expertise overseas.
“I think we’re up to 250 [indoor] locations now in United States,” Taiclet said. “We’ve got half a dozen or so up and running in Latin America, and we’re starting to implement a few in both India and Africa. So that’s maintaining our industry leadership. And then on the outdoor side, we’ve got about 400 nodes in the U.S., and we’ve added about 20% of the portfolio this year.”
American Tower has said recently that going forward it will be more focused on indoor DAS than on outdoor systems.