Cell Tower Shrinkage Will Give Way to Long-term Growth: SNL Kagan

July 16, 2015

By J. Sharpe Smith —

July 17, 2015 — The number of active cell sites decreased for the first time in 2014. And that may be the last decrease for a long time, according to SNL Kagan estimates.

“Driving the contraction was the decommissioning of Nextel locations and the shuttering of redundant sites following the acquisitions of Leap Wireless and MetroPCS by AT&T and T-Mobile US, respectively,” John Fletcher, SNL Kagan senior research analyst, wrote in the firm’s online publication Wireless Investor. “We think the shrinkage will pass. A number of positive events and trends outweigh the temporary lull of carrier consolidation.”

Cell tower growth will be boosted by mobile data growth, spectrum auctions in the AWS-3 and 600-MHz bands, the rollout of FirstNet, and the involvement of Google and DISH Network in the wireless market, according to Fletcher.

“Through 2025, we project towers will grow at a CAGR of 3 percent with sites growing at 3.9 percent,” Fletcher wrote. “Driven by the spike in mobile data use and the other variables, 10 years out the U.S. could have 200,000+ towers and 400,000+ sites in use.”

At the end of 2014, there were 154,941 towers and nearly 300,000 sites active in the United States, compared with 96,852 towers and 242,130 sites in 2008 at the beginning of the 4G build out, according to SNL Kagan estimates. Towers are defined as physical structures, and sites are the carriers’ equipment on those towers. Fletcher believes these growth trends will continue with future generations of wireless.

“Looking back, the United States has experienced a wireless technology upgrade roughly every 10 years since analog 1G premiered in 1984,” Fletcher wrote. “Prior to and following both 3G and 4G commercial launches, tower and site growth spiked, then plateaued. Our forecast for 5G (we think 5G could emerge in the early 2020s) mirrors this pattern.”