SBA, Crown Castle report carriers' continued demand for macrocells

Shares of wireless tower companies waivered last month following a report that Sprint planned to dramatically overhaul its network and move away from traditional macrocells in favor of smaller cells. But tower companies say they aren't seeing decreased demand for their services.

Re/code reported last month that Sprint had finalized plans to cut $1 billion by moving its towers from space leased by American Tower and Crown Castle to government land where rent is cheaper. Shares of the two companies slid on the news, although Sprint later said the report was inaccurate.

Regardless, the story led some to question whether U.S. carriers in general are rethinking their network strategies and focusing less on traditional towers and more on small cells as they work to densify their networks. 

But based on commentary from tower companies reporting their fourth-quarter results, operators continue to hammer out leasing deals with tower companies for macrocells.

"We've been at this a long time," said Jeffrey Stoops, CEO of SBA Communications, during a fourth-quarter earnings call last week, transcribed by Seeking Alpha. "And I think people would be mistaken if they think that carriers didn't negotiate hard throughout history on all this. And that hasn't really changed. Their needs are changing a little bit, so we're talking about different things. But in terms of any new way of dealing with each other, it's always a spirited negotiation and we both end up somewhere in the middle."

And while small cells have clearly become a priority for U.S. operators, they are generally used to complement macrocells rather than replacing them, said Ben Moreland, CEO of Crown Castle International.

"First of all, without addressing Sprint specifically, what I'd like to talk about is the fact that three of the four carriers have reported thus far and I think all of them in various ways have confirmed the need for macro sites being an integral part of their network now and in the future, and that shouldn't be surprising any of us that are close to the business," Moreland said recently during Crown Castle's earnings call, according to another Seeking Alpha transcript.

"Macro sites i.e. towers remain the most attractive and cost effective way to cover a given geography with the spectrum that they [carriers] own," Moreland added. "That said, there are certainly hybrid sites and hetnet architectures that we participate in…. And I can tell you that we're working with all four carriers in that regard to utilize our cost of capital and the sharing model to be an integral part of their solution going forward. And so I think it's been helpful for the last couple of weeks that three out of four carriers have confirmed that macro tower sites are an integral part of their model going forward. That's not surprising to us."

For more:
- see this Seeking Alpha transcript

Related articles:
Analysts: Sprint's reported network overhaul is high-risk, high-reward
Report: Sprint to cut $1B by moving towers to government-owned land, backhaul to microwave
Sprint 'undeniably improving' with half a million new customers and improved financial guidance

Sponsored by ADI

What if we were always connected? With the help of our advanced wireless technology, even people in the most remote places could always be in touch.

What if there were no ocean, desert, mountain or event that could ever keep us from telling our stories, sharing discoveries or asking for help? ADI’s next-gen communications technology could keep all of us connected.

Suggested Articles

Is there a better mousetrap in terms of macrocell deployment? Facebook Connectivity thinks so.

Nokia said joint research with Telefónica confirms that 5G networks are up to 90% more energy efficient than 4G.

The Senate Commerce Committee voted 14-12 along party lines to move forward on President Trump’s nomination of Nathan Simington to the FCC.