Infrastructure Stocks at the Half

The following is an excerpt from an article featured in Inside Towers Intelligence.

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Disclaimer: This analysis is for our readers’ and subscribers’ information only. It does not constitute a recommendation to either buy or sell securities held in any of the infrastructure companies mentioned.

Telecom infrastructure company stocks have been buffeted for over a year by both prevailing macroeconomic conditions and the wireless industry’s own buildout slowdown. Equipment vendor and contractor concerns continue due to the MNO capex “pause” in 2023, which Inside Towers Intelligence forecasted, persistent inflation that has raised the cost of materials, and the high cost of capital precipitated by elevated interest rates. 

Note that infrastructure stocks are down nearly 25 percent from year-ago levels. That said, infrastructure companies have performed better than their stock prices indicate. Escalating demand for fixed and mobile data consumption continues to drive the need for telecom infrastructure with spectrum build outs for 5G coverage and capacity, fiber construction for backhaul and broadband connectivity, and data center expansion for storage and cloud computing. 

Our proprietary Wireless Infrastructure Value Index is an indication of the relative value of a select group of 14 infrastructure companies’ stock prices over a 52-week interval. The Index comprises a balanced mix of infrastructure owners and operators: 

  • tower companies – American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), SBA Communications (NASDAQ: SBAC); 
  • fiber companies – Frontier Communications (NASDAQ: FYBR), Lumen Technologies (NYSE: LUMN), Uniti Group (NASDAQ: UNIT); 
  • data center companies – Equinix (NASDAQ: EQIX), Digital Realty (NYSE: DLR), Iron Mountain (NYSE: IRM);
  • cable companies – Altice USA (NYSE: ATUS), Charter Communications (NASDAQ: CHTR), Comcast (NASDAQ: CMCSA);
  • diversified infrastructure companies – Brookfield Infrastructure Partners (NYSE: BIP) and DigitalBridge Group (NYSE: DBRG).

For the week, and the quarter, ending June 30, the 14 companies in our Index had an aggregate market capitalization of $546 billion, up five percent from the prior week’s level of $518 billion.

Each group of companies ended the week, and the second quarter, on an upbeat tone. Towerco stocks were up four percent, Data Centers grew six percent, Fibercos jumped by 16 percent, Cablecos increased six percent and Infracos were up by five percent.

The top seven companies including the Big 3 tower companies (AMT, CCI, SBAC), the leading data center companies (EQIX, DLR), and the top two cable companies (CMCSA, CHTR), accounted for $501 billion or 92 percent of the total. That figure was up five percent from the $476 billion in the prior week.

The Index oscillated throughout 2022. From a peak of 104.1 on August 12, 2022, the Index dropped to a low of 72.6 on October 14 then recovered somewhat reaching 84.0 on December 30, 2022.

Though showing gains in the first month of 2023, climbing back up to 93.9 by February 3, the Index slid down through the end of 1Q23, ending the quarter at 86.4, slightly ahead of 84.0 at the end of 2022. Through 2Q23, the Index has bounced around but upticked to 88.1 at the market close on June 30.

Expect the Index to trend upward through the balance of the year and into 2024 as macroeconomic conditions stabilize and MNOs pick up the pace of their 5G network expansion activities.

For more details and related analyses and insights, subscribe to Intelligence by Inside Towers.

By John Celentano, Inside Towers Business Editor

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