From 2012-2015, major cell tower companies like American Tower and Crown Castle acquired carrier portfolios from T-Mobile, Verizon, and AT&T. These acquisitions established Crown Castle and American Tower as industry leaders, with SBA Communications trailing in third place in terms of tower count.
The last 18 months have been uneventful for cell tower companies. As I’ve mentioned before, the market’s performance depends on carrier investments in their networks. Recently, I’ve heard that Verizon and AT&T plan to accelerate their build-outs in 2025. This raises the question: Are exciting times ahead? In my opinion, yes, and I’ll explain why.
Recently, US Cellular sold their network to T-Mobile but kept their tower portfolio. I believe they will enhance these towers with other carriers and market those that become redundant due to lease churn. A few weeks ago, Verizon announced plans to assess the value of their 5,000-6,000 towers. This comes at a time when the big three tower companies are not in a strong position to take on additional debt to fund these portfolios. Is this a sign of an impending sale? The major tower companies have likely already evaluated these portfolios and know which ones they prefer. Verizon remains a top choice for me, but what about AT&T and T-Mobile? They might also sell their remaining towers. It’s not their core business and managing these sites can be an accounting burden with added employees and expenses. Selling their towers would allow AT&T and T-Mobile to focus on their core business and use the additional revenue to build their networks.
In my opinion, any wireless carrier looking to sell their towers will want as many bidders as possible to drive up the price. Verizon’s announcement about considering a tower sale will push cell tower companies to improve their financial leverage to buy these assets. Crown Castle could gain a massive advantage if they can sell their fiber assets for $15 billion. However, American Tower, with double the market cap, is also a strong contender. While private equity might be interested, historically, portfolios of 5,000+ towers have been acquired by tower companies. If tower companies reduce their financial leverage, private equity might be less competitive. Additionally, smaller private equity tower developers might also sell. Much will depend on the portfolio multiples.
In conclusion, I believe 2025-2028 will be an exciting time for the industry, similar to 2012-2015. Carriers are likely to fully divest their towers, and cell tower companies will compete to acquire these assets. Crown Castle, with cash from its fiber business sale, will put pressure on American Tower. The race for the top spot in tower count will be intense and significant for both companies. Although the industry has faced challenges recently, the next three years could bring renewed excitement. The new CEO of Crown Castle faces crucial decisions that will impact their ability to compete with American Tower. Stay tuned for future developments.
