Installers expecting more work deploying network gear at AT&T Mobility (NYSE: T) and Sprint (NYSE: S) cell sites during the rest of 2015 will likely need to keep waiting, according to a new report from financial analysts. While AT&T and Sprint are expected to ramp up network investment, it likely won't be until 2016 that the two carriers will significantly boost their activity.
Verizon Wireless (NYSE: VZ) has been generating a lot of network deployment activity through small cell deployments, and T-Mobile US (NYSE:TMUS) has been driving similarly steady installations with macro cell rollouts and the additions of 700 MHz A Block gear.
In a research note, Evercore ISI analysts Jonathan Schildkraut and Justin Ages said that at last week's CTIA Super Mobility conference their meetings "failed to deliver clear evidence of the expected 2H acceleration of spending from T and S (though spending from VZ and TMUS appears to be steady)."
More spending could be on the horizon from AT&T, according to the analysts, but it's not clear when that will come. AT&T has indicated it has started using 2.3 GHz spectrum for LTE in some markets, and that deployment could lead to an increase in cell site amendments. "We believe amendment activity from T has ticked up slightly -- though new macro site demand remains muted," they said. AT&T has historically been a more important carrier for tower companies and driving more new cell site amendment activity and installations than Sprint, the analysts note. Therefore, "an inflection in T's investment (amendments and new sites) will be a harbinger for an expected re-acceleration of U.S.-based sector growth."
"Given the ramp necessary once plans are released (search rings, applications, permitting, etc.), tower companies may take a conservative approach to T spending expectations when providing initial guidance" when they report their third-quarter results, the analyst said.
Meanwhile, Sprint is planning to roll out thousands of new macro sites and tens of thousands of small cells as part of its Next Generation Network plan, as well as make sure that nearly all of its cell sites have equipment to support LTE in the 800 MHz, 1900 MHz and 2.5 GHz bands. Yet the analysts said Sprint has not shown "a meaningful acceleration of spending" since it announced its plans in conjunction with its quarterly results in early August.
The analysts said at Super Mobility they "received a number of reference points on more 2.5 GHz investment from S -- but we continue to believe the ultimate balance of small cells and macro sites in the NGN plan has not been finalized." While it is clear that Sprint plans to deploy more network gear, many vendors are in competition for the contracts and a "fair portion" might not go to publicly traded companies.
"We continue to believe Mobilitie has won some of the initial build out requirements -- using aggressive leasing structures while providing much of the capital necessary for small cell construction," they added.
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