SBA: Tower consolidation will come via sales from carriers

HOLLYWOOD BEACH, Fla.--Further consolidation in the U.S. cell tower market will come from carriers choosing to sell non-core wireless tower assets and not from tie-ups between publicly traded tower companies, according to SBA Communications CEO Jeffrey Stoops.

In an interview with FierceWireless here at the PCIA wireless infrastructure conference, Stoops noted that AT&T (NYSE:T) has indicated it would be willing to sell some towers. U.S. Cellular (NYSE:USM) has said it is considering selling its towers in markets it has divested, but not in its core markets. T-Mobile US (NYSE:TMUS) last fall sold the rights to 7,200 of its towers to Crown Castle for $2.4 billion.

"I think to the extent those carrier-driven portfolios do come to market, I think that is part of a carrier's grand plan to specifically go out and sell those assets and use the money for other things," Stoops said. "I don't think that same logic will apply to the public tower companies."

Global Tower Partners CEO Marc Ganzi agreed. "Those are the two major transaction that are logically left in the marketplace," he said in a separate interview with FierceWireless, referring to potential AT&T and U.S. Cellular tower sales. GTP just agreed to sell its U.S. tower assets to American Tower in a deal valued at $4.8 billion.

Stoops said SBA's business is healthy. SBA closed its own $1.45 billion deal to acquire TowerCo's assets, including around 3,250 U.S. towers, about a year ago, and that deal came shortly after SBA bought Mobilite's assets for $1.09 billion. Stoops seemed to be stating the obvious when he noted "portfolios of size that remain continue to shrink in number."

Yet even if tower M&A activity may be on the wane, Stoops pointed to several market developments that he said could augur continued optimism in the tower business. He said further demand for mobile data will force carriers to deploy additional infrastructure, even if that's just software upgrades to support LTE Advanced. For example, he said that's how Verizon Wireless (NYSE:VZ) upgraded to EV-DO Rev. A.

"We always look at history as being a fairly good predictor of the future," Ganzi added. "And in every innovation of technological advancements of wireless, one truism has held up throughout time, and that is as networks evolve and expand the carriers continue to add more equipment."

Stoops also said that SBA will look to get a piece of Sprint's (NYSE: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." He said that Sprint's agreements with tower companies may force the carrier to renegotiate new terms depending on how much equipment it needs to add at existing sites or deploy on new sites. 

"It's possible they [will] need a lot more towers," he said. "It really depends on how far they want to take this thing." Sprint expects to launch TD-LTE on 5,000 Clearwire sites by the end of this year, and expand that to all of its 38,000 Network Vision cell sites starting next year. Sprint has said its TD-LTE network will eventually require more sites beyond that 38,000 figure since 2.5 GHz signals don't travel as far as lower-band signals.

New Street Research analyst Jonathan Chaplin wrote in a research note last month that, following meetings with Sprint's management, "we estimate Sprint will increase CDMA / LTE cell sites by at least 5-10k over the next two years.  In addition, they will deploy LTE on 800 MHz across all sites and 2.5 GHz across at least two-thirds of sites. Finally, we expect Sprint to deploy about 10k standalone 2.5GHz sites. When complete, Sprint will have a compelling speed and capacity advantage over other carriers; however, the deployment will take longer than we expected and comes with significant additional opex."

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