American Tower Corporation posted a solid quarter, beating estimates and providing more evidence that the cell tower industry is alive and well.
Crown Castle's first-quarter earnings drew relatively positive responses from analysts as the company reported mixed financial results but increased its guidance for the year.
U.S. tower companies could be in for a slow summer if carriers cut back their spending during the upcoming incentive auction, according to analysts at Evercore ISI.
Crown Castle announced late last week that it has bought Tower Development Corporation (TDC), a portfolio company owned by investment firm Berkshire Partners, for approximately $461 million in cash. The deal for TDC give Crown Castle control of 336 towers in the U.S. and Puerto Rico with an average tenancy of approximately two tenants per tower.
Wells Fargo Securities analysts downgraded the entire tower sector, saying that carriers are beginning to balk at traditional network contracts in advance of the FCC's incentive auction and the development of 5G standards.
Shares of wireless tower companies waivered last month following a report that Sprint planned to dramatically overhaul its network and move away from traditional macrocells in favor of smaller cells. But tower companies say they aren't seeing decreased demand for their services.
As wireless operators move forward with their C-RAN deployments, it could spell new opportunities for a host of competitive fiber providers and tower providers like Zayo Group and Crown Castle that offer dark and lit fiber services.
Crown Castle posted relatively solid quarterly earnings and bumped its guidance for 2016, capping what had been a nervous couple of weeks for investors in light of reports of a major network transition by Sprint.
Sprint is reportedly about to embark on a radical overhaul of its cellular network that will include moving its antennas off of towers owned by companies like Crown Castle and American Tower and instead using government-owned land and towers with cheaper rent. In addition, the carrier is rumored to also be ending its reliance on fiber for backhaul and instead use microwave, which will mean it won't have to lease fiber from players like AT&T and Verizon. According to Re/code, which first reported Sprint's network plans, the revamp of its network towers and backhaul could save the company $1 billion and begin as soon as June.
Tower operator Crown Castle said that the demand for small cells is behind most of the company's construction costs. In the third quarter, the company reported that it had spent approximately $98 million building new sites, most of which were small cell sites.