Infrastructure Stocks Hold Up Well Despite Banking Sector Jitters

Telecom infrastructure stocks stood up well against the shock wave that hit the economy on Monday in the aftermath of the Silicon Valley Bank collapse. We track the stocks of 14 infrastructure companies in our proprietary Wireless Infrastructure Value Index, part of our Inside Towers Intelligence™ quarterly publication. The Index comprises a balanced mix of leading companies in four key infrastructure asset classes – towers, data centers, fiber, cable, and diversified infrastructure companies. This group of 14 companies that make up the Index gained a composite average stock price increase of nearly 1 percent by the time the stock market closed on Monday.

Telecom stock analysts contacted by Inside Towers were not expecting companies in the sector to be affected, at least not directly. None of the companies in our Index have financial exposure to SVB. Still, the analysts suggested that these companies may feel reverberations if a broader economic impact were to occur. What happened on Monday with these infrastructure company stocks has less to do with bank failures and more with how these companies are actually performing. 

SBA Communications (NASDAQ: SBAC) led all companies in our Index with a 3.72 percent gain. Along with American Tower (NYSE: AMT) and Crown Castle (NYSE: CCI), the tower sector led all infrastructure categories with an average 3.10 percent increase. The tower business model of steady recurring lease revenue is holding up. These three towercos reported steady revenue and profit gains in 2022, and are expecting growth in 2023.

Similarly, data center stocks are doing well even with signs of space and power constraints in several key markets such as Ashburn, VA, Inside Towers reported. Digital Realty (NYSE: DLR) was the big gainer among data center operators with its stock price up 3.32 percent. With Equinix (NASDAQ: EQIX) and Iron Mountain (NYSE: IRM) each increasing over 2.5 percent, the segment collectively enjoyed a 2.83 percent average stock price increase. 

Cableco stocks moved the needle slightly with a 0.49 percent average price increase. Comcast (NASDAQ: CMCSA) and Charter Communications (NASDAQ: CHTR) were up 1.75 and 0.57 percent, respectively, but Altice USA (NYSE: ATUS) was down by 0.84 percent. Cable companies are under competitive pressure from telco fiber overbuilds and MNO fixed wireless access service. In 2022, both Comcast and Charter experienced significantly slower net broadband subscribers adds than in recent years.

Fiber companies have fallen out of favor with investors after providing guidance for 2023 that their pace of fiber passings is slowing. Stock prices were already declining. On Monday, the average stock price of the three fiber companies in our Index dropped 1.37 percent. Uniti Group (NASDAQ: UNIT) was up 1.4 percent but stock prices for both Frontier Communications (NASDAQ: FYBR) and Lumen Technologies (NYSE: LUMN) dropped by 2.5-3.0 percent.

Investor perceptions of diversified infrastructure companies appear mixed, and perhaps, lack confidence in those business models. Brookfield Infrastructure Partners (NYSE:BIP) declined less than 1 percent but DigitalBridge Group (NYSE: DBRG) stock dropped by nearly 2 percent by the end of the day.

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By John Celentano, Inside Towers Business Editor

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