Crown Castle is accelerating efforts to deploy small cells in 2019. The company says it will now build up to 15,000 small cell nodes in the coming year, marking a 50% jump from its previous projections.
While small cell deployments among the big four carriers in the United States were originally focused in the top 10 markets, Crown Castle says the reach and interest of small cell nodes has broadened to many additional markets. The tower company is now projecting leasing revenue from small cells to increase 35% year over year to about $75 million.
“In addition to the expected acceleration and new leasing activity, our pipeline of contracted small cell nodes to be constructed over the next 18 to 24 months continues to grow, and currently stands at an all-time high of approximately 35,000, which is up 40% from this time last year,” CEO Jay Brown said during an earnings call with analysts, according to a Seeking Alpha transcript of the event.
“We are seeing activity from all four of the operators on small cells,” Brown said. The company is experiencing a sustained year-over-year increase in the number of nodes it activates and the amount of new nodes it’s contracted to build. Some of that increase can be attributed to greater investment among more carriers, but activity is also growing in the number of markets where small cells are being deployed, according to Brown. “The vast majority of the activity will be concentrated in the top 30 markets in the United States,” he said during the earnings call.
Crown Castle’s investment in small cells has positioned the company for greater leasing revenue in 2019, but the company believes ongoing network advancements will lead to further acceleration of small cell deployments throughout the country in the years ahead.
“If I think more broadly about the opportunity around small cells, I don't think 10,000 to 15,000 nodes a year is going to get anywhere close to accomplishing what the carriers have publicly talked about their needs for small cells and the densification that's going to be required for the 5G,” Brown said.
Crown Castle banked a 43% year-over-increase in net profit of $164 million during the third quarter. Total leasing revenue from towers, small cells and fiber jumped 33% during the same period to $1.18 billion.
Wall Street reacted positively to the company’s earnings and outlook. Oppenheimer said the company appears to be well positioned for 5G and will likely play an important role in the deployment of 5G networks, and Deutsche Bank said Crown Castle is poised to benefit from a pickup in FirstNet deployments at AT&T, network upgrades at Sprint and steady growth at Verizon and T-Mobile.