Tower Companies Report Uptick in Colocation Activity

Tower companies are seeing increased interest in colocation, marking a positive trend from recent lows. Both American Tower and SBA Communications highlighted stronger colocation activity and application volumes on their earnings calls.

Meanwhile, Crown Castle announced the cancellation of 7,000 planned small cell nodes in their backlog but emphasized optimism for future demand as carriers continue network densification. American Tower also shared insights on the role of mobile edge computing, noting that emerging AI workloads will drive demand for latency-sensitive edge infrastructure.

Carriers Post Growth, AT&T Plans CapEx Acceleration

The top carriers added nearly 1.5 million postpaid net subscribersthis quarter. T-Mobileled the way with 850,000 new customers, solidifying its position in the market.

AT&Tannounced plans to increase capital expenditure in Q4, focusing on modernizing its 5G network to close the gap with T-Mobileand Verizon.

Verizon has finalized an agreement to sell 6,000 towersto Vertical Bridge, signaling a strategic pivot to focus on core network operations while likely capitalizing on favorable market conditions to monetize these assets.

US Cellular and T-Mobile Deal Progresses

The acquisition of US Cellular’s wireless operationsby T-Mobilecontinues to move through regulatory approvals, with an anticipated closing by mid-2025.

On their earnings call, US Cellularoutlined their repositioning strategy as a pure-play tower company. This includes increasing tower tenancy and acquiring ground rights for leased sites, signaling a long-term focus on optimizing their portfolio.

Market Watch

Key Takeaway for Cell Tower Owners

The demand for mobile infrastructure remains strong as consumers drive year-over-year increases in mobile data usage. Carriers are transitioning into the next phase of 5G deployment, focusing on colocation and selective new site builds. While growth may be slower than the initial 5G rollout, the need for reliable wireless infrastructure remains critical to supporting next-generation networks.

At the same time, industry consolidation and shifting dynamics are creating challenges for individual property owners. Uncertainties surrounding Dish’s viability as a fourth carrier, regulatory hurdles in the T-Mobile and US Cellular deal, and the rapid rise of cable companies like Comcast and Charter in the wireless space are reshaping the competitive landscape. In this environment, scale and diversification have become increasingly important. Tower portfolios with geographic breadth and diverse tenant bases are far better positioned to weather these changes and seize new opportunities.

For individual landlords, these trends underscore the need to carefully evaluate exposure—particularly to carriers and market participants facing disruption. Diversified portfolio companies, with their scale and expertise, are best equipped to thrive in this evolving market.

EARNINGS CALL SUMMARIES

Crown Castle reported annual tower organic growth of 4.3% for the quarter, in line with the anticipated 4.5% organic growth forecast for 2024 but a slowdown from the 5% organic growth in 2023. The company announced the cancellation of 7,000 planned small cell nodes; however, their backlog of future nodes still remains at 40,000. While the company did not provide any substantive updates on their strategic review of their fiber and small cell business units, they noted the review is still ongoing and they hope to have updates as soon as possible. Finally, the company referenced a recent CTIA study noting that wireless data usage increased 36% in 2023, which provides support for the long-term demand trends bolstering the tower industry.

SBA reported a 5.3% gross, 2% net domestic organic growth rate year-over-year due to 3.3% churn, of which 2% was related to Sprint consolidation. The company stated that new business executions, applications, and inquiries were up, and the activity has shifted more to colocations from amendments, on a dollar basis, as carriers begin their network densification. The fourth quarter is expected to be a low water mark for organic growth due to the delay between activity being signed and rent commencing, but management offered optimism for growth in 2025. Additionally, the company noted that relocation builds have waned in prevalence from a few years prior as the industry realized this was mutually assured self-destruction. Finally, broadly speaking, the company stated they remained confident in the industry due to growing network consumption, limited new spectrum, fixed wireless, generative AI in handsets, 5G coverage, and regulatory build-out commitments all contributing to healthy network investment in coming years.

American Tower reported 5% domestic organic tenant billing growth year-over-year and 6% when removing the impact of Sprint churn, although this is expected to step down to 4% in the fourth quarter due to the final tranche of Sprint churn being worked through which will also weigh on 2025 net growth. The company noted an acceleration of application volumes in the US and an increase in colocation activity due to densification. Finally, the company noted increasing optimism that the mobile edge will present a meaningful addressable market due to AI deployments and the latency-sensitive workloads of inferencing.

Verizon Wireless reported total postpaid phone subscriber net gain of 239,000 for the quarter, driven by a net gain of 81,000 in the consumer segment and 158,000 in their business segment, and their total fixed wireless subscriber base grew to over 4.2 million, with a target of 8-9 million subscribers by 2028. The capex year to date has been $12 billion, which is $2.1 billion less than this time last year, and full-year capex is still expected to be between $17 and $17.5 billion. This capex is expected to step up slightly in 2025, with the company referencing a target of $17.5-18.5 billion. Within the quarter, the company announced the sale of over 6,000 towers to Vertical Bridge as well as the acquisition of approximately $1 billion worth of spectrum from U.S. Cellular. Finally, the company announced they expect to have 70% of their planned C-Band footprint covered by the end of the year and expect 80-90% of this footprint to be covered by the end of 2025.

AT&T reported postpaid wireless subscriber net adds of 403,000 for the quarter, which is modestly below last year’s pace, as well as 135,000 subscriber additions for AT&T Internet Air, their fixed wireless service. Capital investment in the quarter was $5.3 billion, which is slightly below the same period last year, but this investment is expected to step up in the fourth quarter as their wireless network modernization ramps and their full year investment is expected to be on the high end of their $21-22 billion estimate.

T-Mobile reported postpaid wireless subscriber net adds of 865,000 for the quarter, their highest number of third quarter net adds in a decade. They tightened their guidance for their 2024 full-year capex to come in at $8.8-9.0 billion, while longer-term expectations remain at $9-10 billion in annual capex. In response to a question about their deployment plans for their C-Band spectrum, the company noted that their mid-band holdings are still only 60% deployed. Finally, the company stated that their previously announced US Cellular transaction is progressing through regulatory approvals, and they expect the deal to close in the middle part of 2025.

Dish reported that, excluding the impacts of the ACP, they added 62,000 wireless subscribers in the quarter and the company noted that their Boost Mobile network now covers 250 million people with 5G broadband. Their third quarter wireless capex was just $235 million, well below their third quarter spend, however this is expected to increase in the coming quarters. Most importantly, the company announced several transactions to allow the company to meet existing debt obligations and provide go-forward capital including raising $2.5 billion in standalone financing and $5.1 in spectrum backed financing. Additionally, the company agreed to sell their Dish DBS unit to DirecTV to reduce the broader company’s debt load, however this transaction is contingent on existing creditors accepting an exchange offer, the outcome of which is uncertain. Finally, the FCC agreed to push Dish’s next network build deadline from mid-2025 into late-2026.

US Cellular reported that their deal with T-Mobile, to sell their wireless operations and a portion of their spectrum, continues to progress and is anticipated to close in mid-2025. Additionally, the company announced that they had sold a portion of their remaining spectrum to Verizon and two other smaller operators, generating over $1 billion in proceeds. In addition to updates on these deals, the company spent time discussing how their go-forward focus is on operating their remaining tower portfolio, with priorities of driving colocation and other organic growth, as well as acquiring the ground rights underneath some of their towers.

Comcast and Charter reported that they added 319,000 and 545,000 wireless subscribers, respectively, in the quarter, bringing their total combined mobile subscribers to almost 17 million. Both companies still see a long runway of subscriber additions as their mobile penetration among their existing broadband customers remains low.