By now, most have heard about Sprint and T-mobile’s announcement to merge as one company. While some are still doubtful, there is a fair chance that it will go through, so cell tower site lease holders should prepare for the impact the merger will have on the industry.
When the two companies first announce their plans to merge in early 2018, many industry experts doubted that the FCC would approve the deal. But more and more are starting to join the opposite camp, voicing valid arguments for why it will be approved.
Some of the reasons many believed the FCC would deny the merger was to prevent an oligopoly from forming. But as a critic from Inside Towers Magazine denoted, T-mobile and Sprint are relatively smaller companies, and the merger would level them with major providers like AT&T and Verizon.
With 45.039 million subscribers, T-mobile has less than half of AT&T’s 107.884 million. But with Sprint’s 54.977 subscribers, the newly formed company will rival even the largest carrier — Verizon, which which currently has 117.194 million subscribers.
An expert from Steel in the Air Inc. states the merger is about 50% likely to go through. Although the FCC’s decision could go either way, leasers should be prepared for either outcome. With increased competition, the industry will become more difficult for leasers, as many wireless cell sites will become redundant. The Steel in the Air expert claims the merger will result in the termination of 35,000 cell sites, and most of these will be Sprint sites.
The claim is supported by previous examples when carriers merged. Back in 2013 when Metro PCS merged with T-mobile for instance,10,000 of Metro PCS’s 12,500 sites were terminated to save on operating costs. With so many of T-mobile and Sprint sites housed in nearby locations, many sites will be redundant, and others will be closed for compatibility reasons as the company creates a standard for the kind of networks it will use.
Under these conditions, many leasers will have to renegotiate their leases. With only four or five major carriers, many lesers will find long-held contracts dropped or that the terms will change significantly. Some tower owners may even find lease-buyouts are their best option.
However, there is no need to give in to pressure. The deal is still not approved, and even if does go through, changes will not take place overnight. The industry probably has several more years before the competition drives change in tower infrastructure. In the meantime, every company should devise a strategy to either endure or make a profitable exit from the industry. In many cases, it will require only slight changes to survive.
If you’d like to know where you stand in the changing industry, reach out to TowerPoint. We’ll provide insights and helpful advice so you can make the best decisions for your company.
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