LAS VEGAS-The once-sleepy tower industry revealed its flashier side last week at the third annual 2000 Tower Summit and Trade Show here, as industry executives touted the growing demand for towers and tower sites courtesy of fixed-wireless and third-generation services, and financial analysts promoted the increasing bankability of tower companies and suppliers as sound financial investments.
American Tower Corp.’s Chairman and Chief Executive Officer Steven Dodge kicked off the two-day conference sponsored by Shorecliff Communications Inc. and RCR Wireless News with his perspective on the tower industry. Speaking to an audience of about 1,500, Dodge issued an industry report card. In the areas of tower collecting, raising money and performing to Wall Street expectations, Dodge gave the industry a “B+,” but in developing people and performing to customer expectations, he said current industry performance is average at best.
Looking ahead, Dodge said he expects there to be at least three broadband tenants on each of his company’s towers by 2005.
“A lot of new towers will be built in core markets,” Dodge said.
SpectraSite Communications Corp. then treated show-goers to a laser and pyrotechnics display. As green lasers darted around the room and smoke billowed from the stage, SpectraSite Chairman and CEO Stephen Clark emerged from the haze and took his place at the podium. Clark addressed how the changing wireless industry will affect tower companies, as well as the kind of growth that lies ahead.
“More bandwidth always results in more cell sites,” Clark said.
Clark said 3G technologies will demand that tower companies support up to three times the amount of cell sites as is required today for second-generation services. As such, cell splitting will be an inevitable requirement. He predicted 600,000 new cell sites will be needed by 2008.
“Existing towers might even become bottom heavy,” Clark added.
But the tower industry is not dependent on 3G to grow and prosper, he added. More sites are going to be needed all around and in the end, tower industry players should “expect the unexpected.”
“This may just be the best business model in wireless,” said Clark.
Wall Street seems to still be trying to figure out if that is the case. Analysts from various firms converged on the show, hoping to catch a glimpse of what towers hold in store for their investors.
The consensus that demand for towers and tower sites is on a steady upswing should give tower companies an abundance of business and capital in the years to come, but to make the most money, tower companies will need to keep adding new tenants, according to Ian Zaffino, analyst with Credit Suisse First Boston. Zaffino said mature, collocated tower sites often are able to generate 75 percent to 80 percent cash-flow margins, and companies that design their network around already-owned sites will reap the most benefits.
Michael Schueppert, senior vice president of marketing for Crown Castle International Corp., said tower companies could cut costs up to $170,000 per site by sharing infrastructure.
Timely deployments also will contribute to a company’s success, said Jeffrey Jon Berney, securities analyst with Goldman Sachs & Co.
“Speed to market is going to be one of the most critical things here,” said Berney.
Both analysts and executives seemed to agree that wireless carriers inevitably will be forced out of the tower siting and maintenance business. More and more of carriers’ resources will need to go toward spectrum acquisition, marketing and other costs, and tower companies will be able to build, site and maintain towers much more effectively and efficiently.
“Assets are worth much more in our hands than in the carriers’ hands,” said Adam Stulberger, chief development officer of SpectraSite.
