June 24, 2020 — Amid general economic downturn, shares in publicly held tower companies are holding steady with 2019 levels, a trend that is expected to continue, said analysts and investors speaking at the virtual ConnectX conference of the Wireless Infrastructure Association.
While short term supply chain issues have caused problems for both carriers and infrastructure providers, disrupting rollouts and build cycles, M/C Partners Vice President Abhishek Rampuria was optimistic about long term trends.
“In general, we’ve definitely slowed down on our new investment front and are waiting to see how things shake out over the next six months,” he said. “We think there’s going to be unique opportunities of new deals that come up into the market coming out of this.”
Rampuria and other analysts were speaking during pre-recordings of the ConnectX show that originally launched in May, although new content has continued to go live on the site during the month of June.
Other panelists in the program pointed out less encouraging data, however.
“If I was to play devil’s advocate and be a bit more negative on what we’re seeing as relates to COVID-19, I’d actually made the argument that from a wireless mobile network usage perspective, usage is actually down,” said Colby Synesael, senior research analyst at Cowen.
The coronavirus pandemic has highlighted the importance of carriers teaming up with the right infrastructure providers, said Bo White, vice president of global business development for the Macquarie Group.
“We’re seeing the carriers asking the infrastructure providers to really evolve beyond just steel in the air — they’re asking them to do more and more services,” White added. “That trend was developing before COVID, and we believe that that that trend is going to accelerate post COVID.”
For example, AT&T is actively looking for an increasingly holistic relationship with tower operators, Synesael said.
White predicted that most future industry changes would be an expansion of current agreements, such as altering agreements to allow infrastructure providers to provide additional services.
“The most boring but exciting thing at the same time about the tower industry is that the delta between a good year and a bad year is maybe two or three hundred basis points,” Synesael said. “It’s that limited level of volatility, that defensiveness, that obviously makes the space so attractive.”
Jennifer Fritzsche, managing director of the Equity Research department at Wells Fargo Securities, predicted that small cell deployment would continue to see growth.
“Verizon really has put the majority of their eggs in the millimeter wave spectrum basket — that is best supported with small cells,” Fritzsche said. “I think you’re going to see a lot of money flowing towards small cells.”
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