Wells Fargo Downgrades Wireless Tower Sector
The U.S. wireless tower industry is "facing some growing pains right now" and was downgraded from "outperform" to "market weight" by Wells Fargo analyst Jennifer Fritzsche Friday. Her investor note cited carrier resistance to current tower pricing, as well as…
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a difficulty achieving "new incremental growth" due to the lead up to the FCC broadcast incentive auction, the creation of the FirstNet system and the development of 5G standards. "Additionally, our sense is AT&T... has still not yet turned on the wireless spending faucet" and instead is focusing capital on fiber deployment, said Fritzsche. "Carriers are indeed saying 'enough,'" Fritzsche said, saying carriers are "definitely pushing back on the structure of amendments and pricing for the tower companies." The current lull in spending is consistent with historical spending plateaus before FCC spectrum auctions and the transition to a new wireless technology, such as 5G, she said. Fritzsche said "little or any of current tower business is at risk." Fritzsche also said the increase in size of cell sites and tower equipment "helps [the] longer term amendment revenue outlook."