Affirmation from wireless carriers and equipment vendors, as well as industry analysts and Wall Street, is driving optimism from tower companies regarding new tower builds.
Analyst firm Raymond James and Associates Inc. said its belief cell-site deployments are increasing was validated by equipment supplier Andrew Corp.’s announcement last week that its financial results for the first quarter of fiscal 2004 will exceed previous guidance.
Andrew now expects revenues between $400 million and $410 million and earnings between 6 cents and 8 cents per share. That compares with previous guidance of revenues from $320 million to $350 million and earnings from 1 cent to 4 cents per share. Shares of Andrew rose nearly 25 percent to trade at $16.99 on the news.
Raymond James also noted that Verizon Wireless’ announcement it will spend $1 billion to launch its CDMA2000 1x EV-DO high-speed data service, known as BroadbandAccess, in major cities in the United States by this summer bodes well for tower companies. “This means industry cell sites could expand even more dramatically in the future,” Raymond James’ Ric Prentiss said in a research note, adding that other operators will likely follow similar paths.
American Tower Corp. said last week during a presentation at the Smith Barney Citigroup Entertainment Media and Telecom Conference that next-generation technologies including EV-DO “would create a huge demand for cell sites, should it be commercially deployed with lots of customers using it,” further validating Prentiss’ comment.
American Tower and SpectraSite Inc. said in separate presentations at that conference that they expect 13,000 to 15,000 cell sites to be deployed industrywide in 2004. “None of the carriers are satisfied with the network they have today,” said one American Tower executive. “They have to balance that level of satisfaction with the cap ex they are willing to deploy.”
American Tower said it expects AT&T Wireless Services Inc., Cingular Wireless L.L.C., Nextel Communications Inc., Sprint PCS and Verizon Wireless to deploy around 2,000 cell sites each. American Tower expects Alltel to be consistent with its estimated 700 builds last year and said T-Mobile USA Inc.’s deployments will likely be up, although no number guidance was provided.
Meanwhile, public tower company stocks were all trading up last Thursday with American Tower above its previous 52-week high at $12.59 per share; Crown at $12.65 per share; SBA Communications Corp. also above its 52-week high at $4.92 per share; and SpectraSite at $37.25 per share.
