The growth rate of small cells and distributed antenna systems (DAS) is down in 2015 compared to 2014, according to Wells Fargo analysts Jennifer Fritzsche, Caleb Stein and Eric Luebchow. But that will likely change in 2016.
In a research note, the Wells Fargo analysts said that AT&T and Sprint are likely responsible for the slower growth. AT&T appears to have reduced its spending on small cells while Sprint has had little, if any, small cell activity so far this year.
The Wells Fargo analysts said that at a recent conference a speaker said carriers "are broke," as payments from Verizon (NYSE: VZ), AT&T (NYSE: T) and T-Mobile US (NYSE:TMUS) for their AWS-3 spectrum were due on March 2 and this pressured cash situation has led to reduced spending. "We walked away from the conference somewhat muted on the small cell space," the analysts wrote.
Installers could see an uptick in business starting in mid-2016, as carriers will be swapping out AWS-1 equipment to launch service in AWS-3 spectrum. The analysts also said that 3.5 GHz spectrum will be important to watch and that AT&T's deployment in 2.3 GHz WCS spectrum may also foster growth.
The analysts indicated that "Verizon has been very busy in the small cell/DAS space," as executives from Verizon have indicated that small cell capex is less expensive than purchasing spectrum at very high prices.
A number of equipment makers recently visited Sprint headquarters, the analysts wrote. However, those companies came away pessimistic that much activity would be occurring soon.
Another conclusion is that much of the "low-hanging fruit" for small cells--venues such as casinos, stadiums and arenas-- have already been connected. Most venues to be connected in the future will be a fraction of the size of many venues already connected.
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