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Summary

Communications service providers (CSPs) were involved in 26 network and/or tower sharing deals in 1Q15, compared with 33 in 1Q14. Momentum is still strong: the annualized deal total (107) is near an all-time high, and many large CSPs are pursuing tower spin-offs. American Tower’s 1Q15 announcements with Verizon, MTN and Telecom Italia Mobile (TIM) illustrate this trend.

Busy time for sharing and spin-offs as CSPs evolve business model

In Ovum’s latest quarterly network and tower sharing tracker, we added 26 deals in 1Q15. The annualized deal total of 107 exceeds the 99 recorded in the 2Q13–1Q14 period. Passive sharing of cell sites was the most common type of contract announced; MVNO-based sharing was also common, this time spurred by Google’s big announcement with Sprint and T-Mobile. Regionally, 1Q15 deals were evenly spread across the globe’s four regions (Americas, Asia & Oceania, Europe, and Middle East & Africa), in contrast to 2014 when Europe led.

Among the carrier-neutral providers (CNPs) in the tower segment, American Tower was especially active in 1Q15, announcing or closing several large deals involving tower divestments and lease backs: 5,240 towers with TIM, 9,000 with MTN, and 11,448 with Verizon Wireless. Opportunities remain strong for American Tower, Crown Castle, SBA, and others (e.g. privately held Helios) to buy existing tower assets. Mobile CSPs continue to see tower sales as a safe source of fundraising, a convenient way to establish shared infrastructure agreements, and a chance to move to a potentially lower overall network opex base.

There are also opportunities for CNPs to expand their scope, not just scale. Tower CNPs are shifting focus from primarily addressing the needs of macro cells to including small cell solutions as well. Relatedly, tower CNPs are stretching their wings into the two other legs of the CNP segment: fiber and data centers. Crown Castle recently announced it would buy Sunesys, which owns fiber networks in several large US cities. Crown’s CEO says this purchase will facilitate the company's rollout of small cells, presumably using the newly purchased Sunesys fiber for backhaul.

New fiber CNPs are being created, as well, from CSP spin-offs; US CSP Windstream recently completed a spin-out of its fiber and copper network into an independent, publicly traded real estate investment trust (REIT). The REIT structure is already popular with CNPs in both the tower sector (e.g. American Tower) and data centers (e.g. Digital Realty Trust).

While capex within the CNP group of network operators isn’t huge (~$8bn in 2014), they play an increasingly important role in the delivery of telecom services.

Appendix

Further reading

Network & Tower Sharing Analyzer: 1Q15, TE0006-001063 (May 2015)

Communications Provider Revenues & Capex, 2014: CSPs, ICPs, and CNPs, TE0006-001046 (April 2015)

4Q14 Capex Spreadsheet: Global, TE0006-001043 (April 2015)

“Telecoms provider M&A jumps in 2014, but activity may slow in 2015,” TE0006-001012 (February 2015)

Internet Content Providers & Carrier-Neutral Providers: Revenue & Capex Forecast, 2014‒19, TE0006-000987 (January 2015)

Radio Access Network Forecast: 2014–19, TE0006-001009 (January 2015)

Author

Matt Walker, Principal Analyst, Intelligent Networks

matt.walker@ovum.com

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