American Tower sees some U.S. carrier activity trending towards 'record levels’

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The one snag for growth is upcoming churn as T-Mobile shuts down Sprint sites starting later this year. (Getty Images)

American Tower is excited about the U.S. market as carrier activity continues to pick up pace and looks set to accelerate through 2022, according to CFO Rod Smith.

Specifically, he pointed to the gross number of new applications from carriers for both colocations and amendments saying levels are “the highest we’ve seen in quite some time,” as well as an acceleration in related services work.

In some cases, as applications come in the tower company performs services for carriers like structural capacity testing or analysis, providing zoning and regulatory support, and some project management – all well before equipment goes up on towers. It is paid non-recurring fees for these.

American Tower increased guidance for services work by $55 million to about $175 million, which Smith said would also be a record.

“So those kind of data points certainly do point to the fact that the level of activity is accelerating and in some cases trending towards record levels we’ve seen in the U.S.,” Smith said Monday, speaking at JP Morgan’s Technology, Media and Communications conference.

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Still, he emphasized 5G is in the early days and it’s likely too early to make those comparisons of the 5G era to 4G over an extended period. Activity is, however, in line with what American Tower saw in 2018 when AT&T, Sprint, T-Mobile and Verizon were all active, according to Smith, especially as AT&T built out the dedicated public safety FirstNet.

While sustainability remains to be seen, “we're really excited about what we see in the market now and kind of where the market in the U.S. is headed for sure,” Smith said, according to a transcript

Major carriers are working on 5G deployments, including AT&T – which just upped plans for capital spending next year (including for 5G) after deciding to spin-out WarnerMedia. The carrier increased C-band deployment targets to reach 200 million people by the end of 2023. Verizon, meanwhile, is moving quickly to cover 100 million people with mid-band during 2022 and T-Mobile expects 200 million PoPs with 2.5 GHz this year – up from 140 million currently.

RELATED: C-band focus turns to densification

American Tower has seen some activity from Dish Network, which already signed a master lease agreement (MLA) for up to 20,000 sites. While revenue from Dish won’t start showing up until 2022, its forthcoming standalone 5G build is part of the accelerated growth American Tower anticipates over the next year and a half, Smith said.

It’s worth noting that in terms of the number of applications, which “certainly could be paced towards having a record year” can, but don’t always mean revenue for American Tower, according to Smith. Applications come in whenever a carrier wants to touch a tower and can span a wide range of activities, he explained.

That can mean colocations to small changes on a tower, such as adding radio heads or fine-tuning equipment, or large amendments “like adding new antenna arrays to deploy new spectrum.” Since many of American Tower’s MLAs are comprehensive or “holistic in nature” revenue is not necessarily tied to site-by-site applications, he added, but rather an overall level of activity it expects to see from carriers over a certain number of years.

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“So you won’t necessarily see a spike because of the build-up in activity that we’re seeing here, our revenue will be much smoother over a longer period of time,” Smith noted.

The one snag for growth is upcoming churn as T-Mobile shuts down Sprint sites starting later this year, which will have its biggest impact on American Tower in 2022.