Panel Expresses a Sunny “View From the Top”

Even though the wireless industry has been in a one year plus period of capex reduction by the carriers, panelists on the “View From the Top” exuded confidence yesterday at WIA’s Connectivity Expo in Atlanta. 

“You hopefully sense a degree of calm from this [panel], because our collective time in the industry has allowed us to see carrier spending ebb and flow through multiple generations,” said Brendan Cavanagh, President and CEO of SBA Communications (NASDAQ:SBAC). “The constant underlying theme is growth and bandwidth consumption, right? There’s not a single person you can find who would suggest that it’s not going to continue to grow at a rapid pace.” 

Panel Moderator Patrick Halley, President and CEO of WIA, agreed, noting that Ericsson (NASDAQ: ERIC) has projected data used to triple by 2029.

There appears to be plenty of runway when it comes to completing the 5G buildout. American Tower Corporation (NYSE: AMT) has 5G equipment deployed on only about 50 percent of its structures, and it is seeing sequential growth and improvement in application volume on its towers in 2024. 

Bud Noel, Executive Vice President at American Tower, said that the tower company is optimistic that 2024 will be better than 2023, and next year will be even better. “Most of the work we are seeing is getting the 5G technology out there, but we are also seeing elements of densification,” Noel said. “So we’re feeling pretty good that there’s a tail here. This is no different than any other deployment. It ebbs and flows.”

Half of Crown Castle’s (NYSE: CCI) towers still need to have 5G equipment deployed on them. Brendan Kavanagh, Executive Vice President and COO, said that the tower industry has just completed what he called the “first phase” of the 5G buildout and “there’s much more to come.”

One of the topics discussed at this year’s Connectivity Expo was the FCC’s lack of spectrum auction authority, which has resulted in an empty spectrum pipeline. That spectrum dearth might work in the tower industry’s favor, according to Ron Bizick, President  and CEO of Vertical Bridge. “Absent new spectrum, infrastructure becomes even more valuable, right?” he said. “Densification becomes much more important to the network.”

Even with the high cost of capital, Kavanagh said he believes the current environment is also positive for tower builds, especially in rural areas.  “I think there has to be some rationalization between private and public valuations before you start seeing improvement in the M&A market,” he said.

The reduced propagation of radio waves in mid-band 5G spectrum also encourages new builds, because it results in the need for more density. “Therefore, not only are we seeing more new builds, but also collocations,” Kavanagh said. “I think collocations are starting to pick up in terms of absolute new leases.”

Ed Farscht, CEO of Diamond Communications, summed up the reason for the panel’s optimism, saying the constant growth of data going over the networks demands more tower sites. “If you believe, like I have for close to 40 years now, that everything is going to go through your phone, it’s all going to get to your phone through a tower.”

By J. Sharpe Smith, Inside Towers Technology Editor

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