Sprint (NYSE: S) will need to roll out an additional 30,000-40,000 transmission sites if the carrier wants its 2.5 GHz TD-LTE network to reach coverage parity with its 1.9 GHz networks, according to the head of American Tower.
On a conference call with investment analysts to discuss American Tower's first-quarter 2014 results, Jim Taiclet, company chairman, president and CEO, touched on the tower footprint of Sprint, one of American Tower's tenants, and offered a "theoretical construct" regarding what it will take for Sprint to match its 1.9 GHz coverage with its 2.5 GHz spectrum, which has much weaker propagation characteristics.
Sprint is rolling out TD-LTE on the 2.5 GHz spectrum it acquired last year from Clearwire simultaneously with deployment of its original Network Vision multi-mode base station network project, which upgrades its CDMA service at 1.9 GHz and adds LTE at 800 MHz and 1.9 GHz. Last summer, Sprint said it would also deploy Clearwire's 2.5 GHz spectrum on all 38,000 of its planned Network Vision cell sites in a nationwide rollout. By mid-2014, Sprint expects to begin overlaying 2.5 GHz access on its existing network as new 8T8R radios become available. The overlay will be key to Sprint Spark, the carrier's tri-band 800 MHz/1900 MHz/2.5 GHz LTE service.
During Sprint's second-quarter 2013 earnings call, Steve Elfman, who was then the carrier's president of network operations but has since announced plans to leave the company, acknowledged that due to the weaker propagation characteristics of the 2.5 GHz spectrum, Sprint will likely have to deploy small cells and other sites beyond the 38,000 Network Vision sites the company has mapped out. But he did not say how many more sites would be needed.
According to a Seeking Alpha transcript of American Tower's most recent earnings call, Taiclet said American Tower is "estimating that in addition to 38,000 Network Vision sites that are kind of on the docket with Sprint, they probably need another 30,000 or 40,000 transmission locations ultimately to have 2.5 coverage match the 1.9 network at the end of the day," he said. "So, it should be a long-term, as I said, multiyear project to get that signal out there," Taiclet added.
In response to a question from an analyst, Taiclet said his numbers are theoretical and do not necessarily represent Sprint's specific plans. "Not sure Sprint is ever going to go that far, but if they wanted to, that's the order of magnitude that might take," he added.
"The 2.5 GHz deployment will last for a number of years and really ramp up probably more next year," Taiclet noted.
Taiclet's envisioned site numbers for Sprint are higher than estimates made in August 2013 by New Street Research analyst Jonathan Chaplin, who wrote in a research note that he expects Sprint's total cell site count to increase to somewhere between 50,000 and 60,000 sites, more than offsetting disconnects of old Clearwire sites. That increase could lead to incremental revenue growth for American Tower, Crown Castle and SBA Communications, the three major U.S. tower companies, he wrote.
Taiclet also said American Tower expects to see more growth opportunities from voice over LTE (VoLTE), the rollout of FirstNet's nationwide public-safety broadband network (NPSBN), multicasting and machine-to-machine services.
He said VoLTE, which both AT&T Mobility (NYSE: T) and Verizon Wireless (NYSE: VZ intend to launch this year, will require greater cell site density than that required to support classic circuit switch voice calls. "It's our belief that in order to roll out VoLTE effectively carriers will both eventually need to increase the density of their networks by up to 20 percent to 30 percent over time," Taiclet said.
He noted the NPSBN being planned by the First Responders Network Authority (FirstNet) should provide American Tower with incremental revenue opportunities in the latter half of the decade, regardless of whether a dedicated network is deployed or existing carriers deploy additional spectrum for FirstNet's use.
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