Cell Tower Owners Dodge Bullet With Dish’s Decision to Go Mobile

(Bloomberg) -- Wireless tower operators, which were expected to lose big from the merger of T-Mobile US Inc. and Sprint Corp., are looking at a brighter future thanks to Dish Network Corp.’s entry into the wireless industry.

Dish Chairman Charlie Ergen announced on Friday that he plans to buy $5 billion worth of assets from the merged company. As part of the deal, Dish will get to use their network for several years while it builds its own 5G wireless platform. Dish promises to have at least 15,000 5G sites deployed by mid-2023.

That means the outlook for wireless tower companies isn’t as bleak as the $26.5 billion deal suggested. While T-Mobile and Sprint will merge and build just one 5G network instead of two, Dish will probably need about 35,000 cell sites. Ergen should pick up some T-Mobile and Sprint leases that the merged company is expected to drop and also need an additional 15,000 cell towers, said Roger Entner, founder of Recon Analytics.

“Dish will need additional sites and will build out spending more than what Sprint has traditionally spent on network,” Entner said.

Tower stocks didn’t react much to the news, likely because the Dish deal has already been priced into the shares, according to Craig Moffett, founding partner at MoffettNathanson LLC. Shares of SBA Communications Corp. hit an all-time Monday and are up 46% this year.

Looming Deadlines

“We believe the contemplated final terms of this merger are positive as they ensure four facilities-based nationwide carriers, two of which will have significant nationwide deployment deadlines to meet,” SBA Chief Executive Officer Jeff Stoops said on a call with investors Monday.

American Tower Corp. declined to comment. Crown Castle International Corp. didn’t have an immediate response.

Dish stepped into the fray as a part of a deal the T-Mobile and Sprint negotiated to gain Justice Department approval for their union. The merger is still facing a legal challenge from a number of state attorneys general who have expressed concern about wireless industry’s consolidation and the impact on consumers.

Dish is also now halting its plan to build a network supporting web-connected devices, and that’s also going to take away some business from tower operators.

Analysts at Cowen & Co. believe the deal is “most positive for SBA followed by Crown Castle and then American Tower based on their exposure to T-Mobile Sprint,” according to a July 26 note.

“The accelerated investment by New T-Mobile and Dish beginning in calendar 2020 should drive modest acceleration in U.S. tower growth,” they said.

To contact the reporters on this story: Olga Kharif in Portland at okharif@bloomberg.net;Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Rob Golum, Andrew Pollack

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