CEO Jaimes Taiclet says previous carrier mergers in the U.S. had a net positive business impact for American Tower
American Tower Corporation expects the proposed merger between T-Mobile US and Sprint to have a neutral to positive impact in the company’s business, American Tower’s Chairman and CEO James Taiclet said during a conference call with investors.
“We remain highly confident that this transaction, as proposed, will be neutral to positive for American Tower’s U.S. business. First, the disclosed plans for the combined entity to spend $40 billion in network and other capital investments over the next three years would represent a substantial increase in spending relative to the recent average annual combined spending of the two companies,” the executive said. “And the other carriers, per their recent public statements, are already increasing their capital spend to meet the growing demand for data on their networks, while positioning themselves to take advantage of enhanced opportunities that may be offered by 5G.”
Taiclet said that previous carrier mergers in the U.S have led to a net positive impact to tower revenue growth for the company. “In this particular case, it’s important to note that the merging companies have announced that their planned 5G network would be based on low-band spectrum in rural and suburban areas, mid-band spectrum in metro and millimeter wave spectrum in dense urban. This is in line with ATC’s prior expectations for actual operational 5G rollouts utilizing sub-6 GHz bands in the vast majority of U.S. geographies, fully preserving in those geographies the primacy of macro tower sites in the coming 5G technology upgrade cycle,” Taiclet said.
American Tower’s CEO also highlighted that although T-Mobile US and Sprint have announced their intention to enhance the efficiency of their combined network by reducing total cell site count over time, American Tower foresees a significant opportunity as the merging companies have described plans to largely deploy all of their respective spectrum bands on all remaining sites. “So while there may ultimately be less total transmission sites in the merged network, each site is likely to have more spectrum bands, more data traffic and more equipment installed, which would result in offsetting amendment benefits from American Tower,” Taiclet said.
He also said that the merging companies’ expectation of deploying 2.5 GHz on the bulk of T-Mobile US’ towers is of particular relevance for American Tower.
“To summarize, an enhanced amendment opportunity and densification need for 2.5G in a future merged T-Mobile network, combined with the potential for an accelerated 5G deployment by the wider U.S. mobile industry, in our view, preserves the long arc of cash flow growth that we expect to generate over the current planning period for our U.S. business,” he said.
In the near- to medium-term, American Tower expects its growth to be mainly driven by the strengthening and improvement of the domestic 4G network, augmented by early phases of 5G deployments, Taiclet added.
He went on to say that additional areas which can become growth drivers for the firm’s business in the U.S over the longer term include smart city technology, augmented/virtual reality, edge computing solutions, drone control networks, autonomous cars and other internet of things applications.
