Crown Castle offered a positive outlook on the U.S. tower industry, with CEO Ben Moreland predicting that "over the next several years, we believe that the current level of investment by U.S. wireless carriers will be sustained." He added that Verizon Wireless (NYSE: VZ) and T-Mobile US (NYSE:TMUS) have been the most active carriers in 2015 in spending on their networks, but he said AT&T (NYSE: T) and Sprint (NYSE: S) are expected to increase their own spending this year as well.
"The U.S. wireless market has one of the most compelling wireless investment stories in the world. With strong unit economics and relatively high ARPU reflecting U.S. consumers' demand for mobile data and their willingness to pay for mobile services, U.S. carriers were able to generate positive incremental returns on their capital investments," Moreland said during Crown Castle's quarterly conference call with investors, according to a Seeking Alpha transcript of the event.
"After three quarters of declining capex at carriers, it appears that we have finally reached the inflection point where capex (and tower revenue) is starting to rise," wrote the investment analysts at New Street Research in a note following the release of Crown Castle's earnings. "After Verizon reported a sharp increase in capex, we suspected that the towers would benefit and raise guidance. CCI's results reflect rising carrier activity and, importantly, this is the first quarter where macro cell site activity has played a meaningful role in CCI's guidance raise. This should have a positive read through for the all of the tower companies. Further, there is likely more upside to guidance if carrier capex continues to ramp throughout the year (as we expect)."
Crown Castle has also made a significant bet on the small cell market. "We believe that as mobile demand continues to grow, carriers will need to deploy small cells in conjunction with macro towers to address network congestion. And while it's still early days, we are seeing evidence that support our investment pieces," CFO Jay Brown said during Crown Castle's conference call.
The company said that its revenues from small cells grew in excess of 30 percent during the quarter, and that they currently represent about 8 percent of Crown Castle's overall site rental revenue. "Our small cells consists of approximately 7,000 miles of fiber supporting approximately 15,000 nodes on-air or under construction with another approximately 2,300-node opportunities awarded but not yet under construction," Brown said.
Overall, Crown Castle reported that total revenues for the second quarter increased 2 percent to $899 million, from $878 million for the same period last year. The company said its site rental revenues for the second quarter of 2015 increased $26 million, or 4 percent, to $737 million. The results generally impressed financial analysts.
- see this release
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