By J. Sharpe Smith, Contributing Editor
The major carriers appear to be healthy, generating strong cash flows, paying down debt and buying back stock. But will tower construction and maintenance companies be healthier in the coming year? That might depend on which services each company provides. Opportunities for growth in fiber, fixed wireless access, C-Band (and other spectrum), and private networks were discussed by C Level execs during the recent third-quarter earnings calls.
The big three carriers are projecting growth in their capex budgets for 2025 and beyond. But how much money will go to towers is hard to answer.
First, the numbers
T-Mobile expects its capex to be between $8.8 billion and $9 billion for 2024, and its long-term expectations are to be in the $9 billion to $10 billion range annually.
Verizon’s year-to-date capital spending equals $12 billion, which is down approximately $2.1 billion compared to last year, according to Tony Skiadas, Verizon’s chief financial officer. The carrier’s full-year guidance for capex remains unchanged at a range of $17 billion to 17.5 billion dollars, and “back to business” as usual levels of capital intensity. Guidance for 2025 capex was set between $17.5 billion to $18.5 billion by the carrier.
“The cash generation of the business continues to be very strong, and we have ample flexibility and funding to execute on our capital allocation priorities … with good momentum as we close 2024 and head into 2025,” Skiadas said.
AT&T reported a third-quarter capex of $5.3 billion, which is up from $4.6 billion year over year, and CAPEX for the year stands at $13.4 billion. The carrier has not offered 2025 guidance.
T-Mobile uses algorithms to guide growth
According to Michael Sievert, company president and CEO, the expansion of T-Mobile’s wireless coverage is guided by a fine-tuned analytical approach based on specific geographic customer communications needs.
The carrier ranks tens of thousands of pending projects based on the output from its AI-driven algorithmic model called “Customer Driven Coverage.” This is to “improve network performance, deliver higher customer satisfaction, and prioritize network investments where they matter most to customers,” the carrier said.
“We’re not using blunt tools, like going across the countryside and building towers. It’s much more algorithmic, Sievert said. “The result [of Customer Driven Coverage] is we will stay ahead of the demand curve and continue to extend our overall performance and 5G experience leadership in the country within the capex envelope.”
Sievert did say that T-Mobile will not only “defend” its leadership position but plans to expand it “over time.”
According to the company, the T-Mobile for Business division had its best quarter on record in terms of activations for private and government networks, working with customers such as the Federal Reserve, American Airlines, and New York Life Insurance Company.
In fixed wireless access, T-Mobile said it had its highest net adds ever, with a number of wins in the third quarter with multi-site retail networks. New customers included Spirit Halloween and PetSmart.
Verizon sees activity in C-Band, FWA, and private networks
Verizon brought more C-Band online in the third quarter, expanding network capacity on towers across the country, according to Hans Vestberg, Verizon Communications Inc. Chairman and CEO. The carrier’s infrastructure initiatives include rolling out C-Band to 80 to 90 percent of its sites on C-Band by the end of 2025.
Verizon ended the third quarter with nearly 4.2 million fixed wireless access subscribers, which was 15 months ahead of schedule. “The continued success of our fixed wireless access … confirms the strong demand for our offering and its high level of customer satisfaction,” Vestberg said.
In private networks, Vestberg said the carrier is seeing “strong momentum and exciting opportunities.” Verizon is expanding its sports partnerships with an agreement to provide FIFA with network services for the 2026 Men’s World Cup. Verizon’s partnership with the Madison Square Garden Family of Companies was expanded to include all of its venues, including Madison Square Garden and the Sphere.
For AT&T, fiber and 5G are the perfect marriage
AT&T signaled its intent to continue plowing capex into expanding its fiber network, calling it the perfect complement to 5G. As far as towers are concerned, the carrier will begin planning a nationwide rollout of 50 megahertz of 5G spectrum for Firstnet.
“While our 5G and fiber businesses are performing well on their own, it’s increasingly clear that customers prefer to purchase mobility and broadband together as a converged service,” AT&T CEO John Stankey said. “Our strategy remains the same — to lead the industry with converged connectivity through 5G and fiber and mobility.”
The carrier currently passes over 28 million consumer business locations with fiber and is on track to pass 30 million plus fiber locations by the end of 2025. In the third quarter, broadband revenues grew 6.4 percent powered by strong fiber revenue growth of nearly 17 percent for the full year.
“The better than expected returns we’re seeing on our fiber investment potentially expand our opportunity to go beyond our initial build target by roughly 10 to 15 million additional locations,” said Pascal Desroches, chief financial officer. The carrier is also looking to expand its fiber infrastructure outside of its wireless footprint through its joint venture with BlackRock, as well as through recent agreements with commercial open-access fiber providers.
Desroches reported sustained growth at FirstNet, which has approximately 6.4 million total connections and serves more than 29,000 public safety agencies and organizations. AT&T plans to build out the 50 megahertz of spectrum recently made available by the FCC at 4.9 GHz for the FirstNet authority to facilitate nationwide deployment of 5G services for first responders. However, that deployment will take time to materialize, according to Stankey.
“If the FirstNet authority decides they want to deploy that in a way that is similar to how they’ve deployed spectrum previously, it will certainly take time to have the infrastructure put in place and to figure out where they wish to do that and how they want to deploy it,” Stankey said.
Spectrum moves that could lead to tower work
The big three carriers continue to add spectrum, which should lead to additional tower work.
On October 18, United States Cellular Corporation (NYSE: USM) agreed with Verizon Communications Inc. (NYSE, Nasdaq: VZ) to sell a portion of its spectrum licenses for $1 billion. The agreement includes 663 million MHz POPs of cellular (850 MHz) spectrum, 11 million MHz POPs of AWS, and 19 million MHz POPs of PCS spectrum.
T-Mobile announced during the third quarter earnings call that it will probably get to keep the 800 MHz spectrum that it was supposed to sell as a result of its deal to merge with Sprint. When the spectrum was put up for auction, no buyer met the minimum price of $3.6 billion. Late in September, T-Mobile traded 20 megahertz of 3.45 GHz spectrum to SoniqWave for 2.5 GHz spectrum.
More recently, UScellular announced that it is selling a portion of its spectrum licenses to AT&T for $1.018 billion. The agreement with AT&T includes the sale of 1,250 million MHz-Pops of 3.45 GHz and 331 million MHz-Pops of 700 MHz B/C block licenses.
