By the middle of next year most Tier 1 carriers' macro LTE buildouts are expected to be largely completed. Some carriers, such as AT&T Mobility (NYSE:T), have indicated that the next phase of network evolution, to LTE Advanced, will be largely the result of software upgrades to existing network equipment. However, in an interview with FierceWireless, Crown Castle CEO Ben Moreland contended that despite that trend, there will still be a lot of cell site activity and amendments in the next few years.
He pointed to Sprint (NYSE:S), which has indicated it plans to build out TD-LTE service using its 2.5 GHz spectrum to 100 million POPs by the end of 2014 on top of its existing 1.9 GHz LTE network and planned 800 MHz LTE service.
Sprint announced it will brand its forthcoming tri-mode LTE service as "Sprint Spark," and said it will bring the service to the top 100 U.S. markets during the next three years with speeds capable of reaching 50-60 Mbps and perhaps faster. The first markets with limited availability of Sprint Spark will be Chicago, Los Angeles, New York, Miami and Tampa.
Sprint plans to have 5,000 2.5 GHz TD-LTE sites on air by the end of 2013, a goal in line with Clearwire's previous buildout plans. Today Sprint counts a total of 55,000 macro cell sites, a level Sprint expects staying at for the next few years. Sprint's current plan for Network Vision is to modernize 38,000 cell sites with multi-mode base stations.
"Sprint hasn't done a lot of sites in the last six years," Moreland said. "As they build a very robust product with Network Vision and add capacity with the 2.5 GHz spectrum, I would expect that they're going to need to come back and add sites."
That contention fits with both comments from analysts and Crown Castle's competitors. SBA Communications CEO Jeffrey Stoops told FierceWireless in October that SBA will look to get a piece of Sprint's planned nationwide deployment of 2.5 GHz spectrum for TD-LTE services. "We're clearly interested," he said. "That's our business and we expect to get at least our fair share."
"We expect that Sprint will repurpose the Clearwire tower sites and add an estimated 15,000 to 18,000 cell tower sites, which will generate increased leasing revenue that the carrier pays to the tower companies," Gregory Fraser, a Moody's Investors Service analyst, wrote in August. "These new tower sites will replace the 16,500 Clearwire sites scheduled to be decommissioned and will therefore eliminate the risk that lost rent from those towers would not be replaced with new rental revenue."
New Street Research analyst Jonathan Chaplin predicted over the summer that Sprint's total cell site count would increase to somewhere between 50,000 and 60,000 sites, more than offsetting disconnects of old Clearwire sites. Sprint's confirmation of maintaining a cell site count of 55,000 in the years ahead seems to confirm that.
It's not just Sprint that will have new cell site activity, according to Moreland. Verizon Wireless (NYSE:VZ), for instance, has said it will not commercially deploy Voice over LTE until its LTE network can produce the same voice quality as its 3G CDMA network. Verizon plans to launch VoLTE in the first half of 2014. Moreland said getting to that level of quality will require additional LTE cell sites. Further, Verizon is expanding its LTE network from its 700 MHz spectrum to its AWS spectrum, with 5,000 sites planned for the end of this year, which could generate additional tower activity.
Moody's also said that once AT&T acquires Leap Wireless (NASDAQ:LEAP), it "may take similar steps to those of Sprint," which will likewise benefit independent tower firms. AT&T is expected to further its LTE deployment by taking advantage of Leap's underutilized spectrum on roughly 15,000 to 20,000 sites, including the 9,700 leased sites AT&T will gain through buying the regional carrier.
Moreland said all of this activity will vindicate the company's strategy over the last two years of aggressively acquiring U.S. assets. In September 2012, T-Mobile US (NYSE:TMUS) agreed to sell the rights to 7,200 of its towers to Crown Castle for $2.4 billion. In the T-Mobile deal, Crown noted that 83 percent of the towers were located in the top 100 U.S. markets and 72 percent were located in the top 50 markets.
In October, AT&T agreed to sell and lease 9,700 of its cell towers to Crown Castle in a $4.85 billion deal. Crown said that the towers are mostly in urban areas, with nearly 50 percent of sites in the top 50 U.S. markets.
Also, in December 2011, Crown agreed to pay $1 billion to acquire distributed antennas systems (DAS) provider NextG Networks, which has given the tower company a leg up in small cells.
Moreland acknowledged that the T-Mobile portfolio has more towers in the top urban markets than the AT&T portfolio, but he said that, ultimately, as carriers continue to densify their networks that distinction would not be material. Taken together, he said, the nearly 17,000 towers are younger than Crown's legacy towers and have, on average 1.5 to 1.75 tenants per site, leaving a lot of room for growth.
"All of it basically goes to our original strategic moves we've made over the last 18 months, which is to spend $9 billion on U.S. assets which we think are extremely well positioned to handle this path of growth from LTE," Moreland said.
Sprint Spark to combine LTE in 800 MHz, 1.9 GHz and 2.5 GHz, will offer 50-60 Mbps peak speeds
Sprint to cover 100M POPs with 2.5 GHz LTE by end of 2014
AT&T sells and leases towers to Crown Castle in $4.85B deal
SBA: Tower consolidation will come via sales from carriers
Moody's: Sprint, AT&T LTE rollouts will boost tower companies
Analyst: Sprint's nationwide 2.5 GHz LTE network could be boon for tower companies