DT’s U.S. CAPEX Investment in 2013 Good for Towers

December 10, 2012

Deutsche Telecom is putting its money where its mouth is in the coming year, funding T-Mobile’s LTE and HSPA + rollouts, according to Rene Obermann, CEO, Deutsche Telecom, at the carrier’s Capital Markets Day, Dec. 6, in Bonn, Germany.

The biggest chunk of Deutsche Telecom’s total CAPEX next year will be spent in the United States to the tune of $4.7B to $4.8B, compared with the last three years, which averaged $2.7B. Then it will drop to $3B in 2014 and 2015.

“While the company had already announced plans to spend $4B on its U.S. network modernization plan, we view this longer-term spend as especially positive in terms of further visibility for the tower sector’s pipeline,” wrote Jennifer Fritzsche, Wells Fargo senior analyst, a research note. “Recall, all three major tower players (AMT, CCI and SBAC) have secured master lease agreements.”

Flush with cash and additional spectrum from the failed AT&T/T-Mobile merger, Deutsche Telecom is spending CAPEX on refarming the spectrum in the PCS band, as well as network modernization. More than 37,000 sites are being modernized in 2012 and 2013.

“T-Mobile gained more spectrum in a deal with Verizon, which enabled us to build a more efficient network and to have better LTE coverage, and we announced a tower transaction worth $2.5 billion gives a chance to maintain our operational flexibility,” Obermann said.