Speaking at an investor conference Tuesday, Crown Castle CFO Dan Schlanger cited the tower company’s fiber business as a differentiating factor in signing the first major long-term tower deal that was announced by Dish yesterday.
“It is a big deal that we signed with Dish and we’re really excited about it,” Schlanger said during the New Street 2020 Conference on 5G and Infrastructure.
Schlanger declined to get into too many details about the agreement, which is for up to 20,000 tower sites and marks Dish’s first major infrastructure deal for its 5G network build. But when asked by New Street Research analyst Spencer Kurn about whether Crown is poised to capture an outsized market share of Dish’s site build, Schlanger said the company thinks it set itself up “really well to get a significant portion” for how Dish will deploy its network.
Dish is planning a standalone (SA) 5G network with open radio access network (Open RAN) architecture.
“We put ourselves in a position of being a partner that extends beyond” not just towers, he said, as the deal also includes fiber transport services. “We think that was a big deal for them [Dish] in trying to choose a partner.”
Dish has some choice when it comes to picking an infrastructure partner that has towers in the right place, he noted, but said it’s also about having the overall solutions to accomplish the network build.
“We believe having a large-scale tower operation focused in the top 100 markets in the U.S., with fiber, was a differentiating factor for us and something that really skewed to our direction,” Schlanger said.
In addition to 40,000 U.S. towers, Crown Castle has 80,000 route miles of fiber, as well as a small cell business with 70,000 sites either on air or under development. A Dish spokesperson previously confirmed the deal with Crown Castle yesterday doesn’t involve small cells.
That said, as networks continue to densify to handle increased capacity needs and new use cases, small cells are a part of the picture overall. Schlanger reiterated that the tower company firmly believes small cells will be an integral component of 5G networks, especially with the need for increasinly dense networks as next-gen technology shifts from just connecting people to people, instead to billions and billions of things.
The Dish agreement provides a first proof point, he said, “that having that combination of solutions that we can provide helps us in winning business in the market.”
Edward Knapp, technology chief at peer American Tower, also participated in the New Street event and indicated the agreement with Crown Castle was a positive step for all of the tower companies.
“It’s good to see that Dish is out building and deploying, that’s an important piece,” Knapp said. American Tower expects to be participating, he said, citing Dish’s plan to build at least 15,000 sites in the initial network phase to meet early coverage targets and adding that those will be distributed across any number of partners.
“Ultimately it’s great to see a fourth operator come in and will drive growth for the business,” Knapp added, saying that the announcement was an important first step. “I think all of the participants will benefit from having another spectrum provider and operator in the marketplace.”
While specific financial and deal terms were not disclosed, analysts at Cowen had indicated Monday the agreement could be slightly negative for American Tower and SBA, given Dish’s limited need over the next few years and the up to 20,000 sites for Crown Castle. Wall Street analysts New Street Research and Wells Fargo initially viewed it as positive for tower companies broadly, suggesting it could mean Dish plans to build more towers than the firms initially estimated.
“This agreement suggests that the addressable market for DISH tower sites is larger than we previously estimated, likely +50K over time to reach nationwide coverage,” wrote the Wells Fargo team in a Tuesday note to investors. “We estimate that by FY2027E, DISH could contribute $1-1.2B in annual tower revenues.”