Cellphone Tower Companies Race Higher
July 15 2019 - 8:29AM
Dow Jones News
By Corrie Driebusch
In the race toward 5G, tower companies are asking investors, "Do
you hear us now?"
As the biggest wireless companies in the U.S. prepare to bring
5G to more customers, cellphone-tower operators are shaping up to
be big winners in the stock market. They could be ready to get
another boost if or when the deal between T-Mobile US Inc. and
Sprint Corp. closes, some analysts say.
Shares of Crown Castle International Corp., American Tower Corp.
and SBA Communications Corp. all hit records in 2019, and are
currently up at least 20% from where they traded six months ago.
Cellphone companies like Verizon, AT&T and T-Mobile pay these
tower companies fees to use their high-up real estate.
A concern among some investors is that these companies soared
too high too fast. Of the trio, only shares of SBA Communications
have risen in the past month. Part of the reason for that is a
slowdown in talks between T-Mobile and Sprint.
While final conditions for the merger deal remain to be seen, a
key component of the Federal Communications Commission's conditions
is an accelerated 5G rollout in rural areas, UBS notes. That stands
to benefit American Tower most, as about 65% of its macro portfolio
covers the most rural part of the U.S., according to a research
report by UBS last month that looked at the FCC's antenna
registration database of tower locations throughout the U.S.
Another potential overhang has been worries that private
operators could be competition for these three big public tower
owners as wireless carriers seek out lower rents. However, UBS's
report also found that the big three public tower companies remain
the dominant players in a hot business, with the largest private
owner of tower sites accounting for just about 2% of all towers.
That bodes well for SBA Communications, American Tower and Crown
Castle.
"While the private operators have increased their tower
counts...this competitive threat is far more limited in practice at
this time," UBS said in its note.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
July 15, 2019 08:14 ET (12:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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