Tower giant Crown Castle announced that KMM will handle the “full scope” of its materials and warehouse management activities for both its fiber and small cell business. The agreement expands and extends a trial partnership between the two companies that started last year.
"We were very impressed with KMM's responsiveness and flexibility throughout the trial. Their willingness to tailor their solution and systems to fit our exacting needs, along with their national warehousing capabilities, were the primary reasons we elected to entrust our materials management to them," said William Barnett, VP of asset management for Crown Castle, in a release. “This helps us more effectively manage and expand our growing Small Cell and Fiber Solutions business."
However, it’s exactly that small cell business that has financial analysts divided. Crown Castle has been arguably the most vocal player in the small cell business among the nation’s major tower companies, but Wall Street researchers are torn over Crown Castle’s strategy.
“We remain buyers of AMT [American Tower], but are cautious on CCI [Crown Castle] given small cell deployment challenges and on SBAC given growth challenges,” wrote the analysts at Pacific Crest Securities in a recent research note to investors.
Specifically, the analysts pointed to the fact that small cells likely will only be deployed in dense, urban markets. “Good luck deploying small cells in rural markets. In rural markets, where the majority of towers are located, there is no replacement for macro towers. Theoretically, macro towers could be replaced with a couple dozen small cells, but the cost would be prohibitive and would still not provide the coverage needed,” the analysts wrote.
However, other Wall Street firms offered a much more positive outlook on Crown Castle’s activities. “From a stock perspective, we view Crown Castle (Buy, CCI) as the biggest near-term beneficiary of the 5G theme (among our coverage), given the need for small cell deployments to overlay current macro sites,” the analysts with Deutsche Bank wrote in a recent report.
The Deutsche Bank analysts were not alone: “A disproportionate amount of incremental growth will go to small cells,” noted the analysts with Cowen and Company in a recent report. “As part of this argument, tower operators like Crown Castle and the collective Digital Bridge that are able to provide a ‘solution’ to its carrier partners/customers seem best positioned to experience the strongest U.S. oriented aggregate growth over the coming years. As a result, we increasingly believe American Tower and SBA are going to want to participate in the outdoor small cell opportunity despite what has appeared limited interest. As such we would be surprised if within two years neither company has found a way into the outdoor small cell business.”
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