AT&T/EchoStar Bad for Tower Companies Long Term: MoffettNathanson
AT&T’s agreement to buy EchoStar spectrum for $23 billion (see 2508260005) will likely have a short-term positive effect and a long-term negative effect for tower companies, MoffettNathanson’s Nick Del Deo told investors Thursday. MoffettNathanson cut its target prices for American Tower by 3%, Crown Castle by 7% and SBA by 5%. “We continue to view the group as attractive, but not pound-the-table attractive,” the analyst said.
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Deploying the 600 MHz spectrum that’s part of the deal “should yield a decent amount of amendment revenue, while AT&T is too early in its deployment of 3.45 GHz spectrum for any deployment plans to be curtailed,” Del Deo wrote. Over the medium to long term, “the likely sale of the remainder of EchoStar’s spectrum to other players and the company’s exit from the wireless market will all but certainly prove to be bad for the Towers,” he said. The spectrum “can be deployed using existing equipment and without generating material amendment revenue, and it can substitute for other deployments that would otherwise stimulate tower revenue growth.”