The U.S. tower industry is seeing a lot of activity as all three carriers continue to build out 5G networks and deploy new spectrum, plus Dish Network is embarking on a brand new network build.
Carriers have unused spectrum along with desire and capital to roll it out, Crown Castle CEO Jay Brown said this week during a Goldman Sachs virtual investor conference.
“Not only are we at a stage where we've got fallow spectrum in the hands of the carriers, and a capital and ability to deploy it, but you've also got four very willing and hungry carriers that are pushing to get network deployed,” Brown said Wednesday. “So that's a landscape that we feel great about, for frankly for a long period of time.”
But high carrier activity across the board adds to what has been a tight labor market.
“I think some of the labor shortage in telecom is a direct result of the amount of investment and activity that's going on,” Brown said.
In the first half of 2021, Crown Castle had more applications for leases on its tower sites than they'd seen in any other year in its history.
“So activity is up significantly, and that has certainly put a strain on the labor market,” he acknowledged.
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But Brown doesn’t see supply chain and worker shortages impacting the tower company’s ability to reach its targets, saying he feels good about guidance the company has given for 2021 and about going into 2022. Brown didn’t comment on specifics for equipment shortages and deferred to carrier customers.
“But we haven't seen it disrupt our own outlook or expectation for the year,” Brown added.
And 2022 is expected to continue to be a boon for towers and Crown Castle, as 5G deployments continue and revenue from signups starts to show up in financials.
“I don't see any reason why we don't go into '22, with tower growth that looks like what we saw in 2021,” Brown said.
The company continues to believe it’s positioned to get an outsized portion of Dish’s 5G build, and benefit from early C-band deployments.
Around 71% of Crown Castle macro tower sites are in the top 100 markets. Verizon has plans to start deploying in the top 46 markets with C-band once that first batch becomes available in early December. Of the first 100-megahertz cleared by satellite operators, AT&T has 40-megahertz on hand in major markets.
When carriers deploy new technologies and densify, the top 30 urban markets are where they typically aim and those areas usually get a larger slice of the capital spending, Brown said.
At Verizon’s appearance at Goldman Sachs this week, CEO Hans Vestberg acknowledged supply chain constraints but indicated they weren’t hampering deployment timelines for C-band.
“We have secured all our sort of radio equipment. So we have no shortage of that,” Vestberg said in terms of C-band gear like antennas and basebands, and is on track with earlier committed timelines.
“Then there are some challenges in the supply chain, especially on mid material,” he noted. “But I have to say my team is doing a fantastic job to work around, work with suppliers and our field force to see that we keep the pace up to deliver to our commitments.”
American Tower, meanwhile, which has outlined plans to build 7,000 new towers globally, echoed a similar sentiment as Crown Castle – very high activity levels but work is getting done.
Asked by Goldman Sachs about challenges in getting materials or labor to meet construction goals, and supply chain impacts on customer deployment plans, American Tower CEO Tom Bartlett said in general the company isn’t experiencing issues.
In the U.S. most of the tower activity also is happening on large existing macro sites rather than new build construction, Bartlett noted.
“And so, our guys are busy. Don't get me wrong. They are really, really busy, working with different construction groups and firms across the country to be able to meet the demand and they've been able to do it,” he said.
One area where he’s seen a hiccup is generators, although Bartlett suggested it was not a major issue.
“I haven't been able to secure as many generators, but it was more of a, 'oh, by the way' kind of a thing. It wasn't ‘this is going to get in our way of getting access to generators’,” Bartlett said. “So, that was really the only issue that we're seeing here in the United States.”
And in terms of infrastructure, “we're not seeing that our customers are struggling at all in terms of securing what they need to, to be able to meet their ongoing demand."