Dish, T-Mobile 5G, C-Band Build Spark Tower Optimism
The U.S. will get another wireless network as Dish Network launches 5G, said Bob Paige, Vertical Bridge senior vice president-mergers and acquisitions. “There seems to be a need for a fourth network.” Dish will deploy next-generation 5G using a “green-field” open radio access network, he said. Others told Wednesday's Wireless Infrastructure Association event that, with this and C-band deployments, the outlook for the tower sector is bright, but questions remain.
Investors are pursuing tower investments “because of the long-term, stable cash flow streams … and the quality tenants,” said investment banker Jesse Nichols, Alpina Capital managing director. There’s excitement over 5G, the C-band auction and investments by Dish and T-Mobile, he said. The problem for smaller players is big tower companies are hard to compete with, he said.
“It definitely is a seller’s market,” said Strategic Wireless CEO Jerry Sullivan: “Telecom is a very, very fast-paced business. It’s not for the faint hearted. A lot of things change very rapidly. It’s very hard to estimate what the market will do.”
“I’m always averse to betting against this industry,” said Wells Fargo’s Eric Luebchow. With spending on C-band deployments, “it seems like enthusiasm is near all-time highs,” he said. There are “roadblocks ahead,” including decommissioning Sprint towers, he said. “It impacts each operator a little bit differently, but that certainly will have an impact on net organic growth rates.”
Paige said some underestimate the effects of closing Sprint facilities after its buy by T-Mobile, which could take 10 years. The cost of capital is likely to increase, he said. The tower sector is “very competitive,” he said. “We continue to see new players enter the market.”
“Our industry has some pretty strong tailwinds, with data use increasing year over year at 50%,” said Michael Brescio, chief financial officer at ZenFi Networks, which builds fiber and other infrastructure. “Our contracts are strong, and they’re long.” In the New York market, “it’s pretty tough for new players to jump in,” he said: “It takes a significant amount of local knowledge and experience.”
Dish just added Amazon Web Services as the “preferred cloud provider” for its ORAN-based 5G build. Deployment starts later this year, with Las Vegas the first market, Dish said.
“A cloud infrastructure provider was the last big piece of Dish’s network plan that we have been waiting on; we aren’t surprised that they are partnering with AWS, though we are pleased,” New Street’s Jonathan Chaplin wrote investors. “Some assumed they would partner with a smaller, less well-known provider, as they have on other parts of the network.”
Citi is waiting for “broader disclosures by DISH on its future customer revenue opportunities, anticipated cost structure, [and] multiyear investment requirements to establish a national 5G network,” said Michael Rollins. He noted the consumer market is about $200 billion in annual service revenue, while “the future size of business wireless communication revenues remains somewhat uncertain given its relatively nascent stage.”