KeyBanc: Tower Operators Are Key Beneficiaries Of 5G Networks

Tower operators could benefit from increased leasing driven by accelerated 5G activity and new entrants into the wireless arena, according to KeyBanc Capital Markets.

The Analyst

Brandon Nispel maintained Overweight ratings on American Tower Corp (NYSE: AMT) and SBA Communications Corporation (NASDAQ: SBAC), while raising their price targets to $253 and $292, respectively.

The Thesis

Tower operators are poised to benefit from 5G network deployments by U.S. carriers, but this potential is not reflected in current leasing estimates, Nispel said in the Sunday note. (See his track record here.) 

The merger of T-Mobile Us Inc (NASDAQ: TMUS) and Sprint Corp (NYSE: S) is likely to be approved, and this will accelerate leasing activity in 2020, the analyst said. 

“We estimate that new leasing activity will be front-half-weighted over a five-year integration period between 2020-2025,” he said, estimating new leasing of over $31 million for 2020.

Approval of the T-Mobile-Sprint merger would mean DISH Network Corp (NASDAQ: DISH) acquiring Sprint's prepaid subscribers to enter the wireless space, Nispel said.

The Federal Communications Commission will require DISH Network to build out 70% of its key 5G spectrum bands by June 14, 2023, and the company has indicated it would need around 15,000 tower sites for this build, the analyst said. 

KeyBanc believes Dish Network will need more tower sites in the long run to be able to compete nationwide, he said. 

Nispel said he expects AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) to significantly accelerate their 5G activity with an increase in network competition.

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