DALLAS – The current waves impacting the financial markets have not gone unnoticed by the tower industry, though many in the space seem to think their ship is water tight enough to handle whatever investors can throw at it.
Speaking during a session at this week’s 2011 Wireless Infrastructure Show, executives from the domestic market’s tower companies expressed confidence that despite certain similarities to the economic downturn that hit hard in 2008 and 2009, they are in a much better position to ride out the current swells.
Jay Brown, SVP and CFO at Crown Castle International Corp., noted that unlike the situation two years ago, tower companies are now in possession of “cleaner” balance sheets, less debt and there are still opportunities to raise capital.
Echoing that sentiment, Global Tower Partners’ CEO Marc Ganzi noted his company had raised more than $1.2 billion in debt this year and that the credit markets were “very open” to the segment.
“I continue to believe in the fundamentals of wireless,” Ganzi added.
“The market is not good, but our sector in particular provides a stable cash flow and operational results which makes it easier to finance,” explained Brendan Cavanagh, SVP and CFO of SBA Communications Corp. “We have learned from what happened in the past.”
Ric Prentiss, who covers the telecom segment for Raymond James & Associates Inc., added that the continued strong demand for smartphones across the domestic market is a buffer from past issues in the financial markets.
“There is still strong demand for smartphones and to attaching a higher rate plan,” Prentiss said. “This gets carriers more committed to build networks now as they will get their return on investment. … We are in a great industry with good demand.”
Looking beyond the current economic climate, the execs also provided their insight into the current drama surrounding AT&T Inc.’s proposed acquisition of T-Mobile USA Inc. and how they see the deal impacting their operations.
Prentiss noted that if the deal does come apart it will be a big positive for tower owners as AT&T Mobility will need to increase the density of its network to handle increasing consumer demand and T-Mobile USA will need to make a move on a true 4G play.
TowerCo CFO Daniel Hunt noted that if the deal is approved he did not thing it would be in AT&T Mobility’s interest to shut down sites, and instead thinks they would need to bolster capacity. Hunt did note that the worst possible result from the deal would be for continued uncertainty.
“The worst thing is for this to drag on, with T-Mobile not doing anything in the meantime,” Hunt explained.
Brown added: “The best is to have carriers with spectrum and capital. T-Mobile has had neither for the last couple of years.”
