News that the Sprint/T-Mobile merger talks are back on again was met with skepticism and wariness from speakers on the first day of the Wireless West Conference, yesterday, in Los Angeles. The story, originally reported by the Wall Street Journal, caused Sprint’s stocks to go up 20 percent and T-Mobile’s to rise 7 percent, while CCI fell $5.22, AMT fell $5.04 and SBAC fell $8.51. On a percentage basis, all three fell about 5 percent.
The latest talks between the two carriers fell through last November but attempts for a merger span back to 2014. Bob Paige, senior VP, mergers and acquisitions, Vertical Bridge, didn’t think anything would come from the renewed talks after previous failures.
“Different day, same stuff,” Paige said. “The last time it broke down because of control issues for Sprint. I’m not sure what has changed this time. Maybe Sprint has realized how difficult and costly it is to deploy a network, and it has brought them back to the table.”
Clayton Funk, managing director, MVP Capital, was also skeptical. “What has changed from five months ago?” he said.
Panelists agreed that even if Sprint and T-Mobile can strike a deal, it is far from a foregone conclusion that the Department of Justice would sign off on the deal.
When the merger was called off and Sprint pledged to renew building out its system, tower owners were excited at the prospects of having four carriers concurrently building out.
Whether the Sprint/T-Mobile merger is successful or not, the fact that the merger talks have begun again may throw a wrench into one of the key catalysts for growth in the tower industry, the panel agreed.
“We had believed that all four carriers were going to become active, now, my fear is that two of them will shut down,” said Tony Peduto, CEO, CTI Towers. Paige agreed, saying that the carriers would probably slow down with their leasing plans and tower builds as they go through this process.
The vast majority of the inquiries for leasing that Tarpon Towers received in the first quarter were from Sprint.
“Yesterday’s announcement muddies the waters. The next month will be very interesting,” said Ron Bizick, CEO, Tarpon Towers. “We will see if we don’t have Sprint shoving the pig through the python and they put a hold on it. They could keep going, slow roll it or it could come to a screeching halt.”
Analysts Not Shocked by Talks but also Not Overly Optimistic
Craig Moffett, MoffettNathanson, was not surprised by the merger announcement. In a report on T-Mobile, which dropped on April 10, the same day as the WSJ article, he said any deal that returns $40 billion shouldn’t be counted out. But he also didn’t think it was highly probable.
In an email, he gave four reasons that could be affecting the timing of the renewed talks for a union. The election cycle was one, with the 2020 presidential primaries a year and a half away and a merger taking roughly one year to get approved. The second was the FCC’s spectrum auction for 24 GHz and 28 GHz spectrum scheduled for November and the accompanying “quiet period” that might preclude merger negotiations. Third, Sprint’s renewed buildout only wastes money if the two eventually get together. Lastly, Moffett doesn’t be Sprint can make it on its own.
“There is the simple reality that Sprint doesn’t appear to have a path to sustainability on its own,” he wrote. “With a significant step-up in their network capex (of an incremental $1.5B to $2.5B YoY) beginning in F2018, it is hard to see Sprint coming close to free cash flow breakeven – much less cash flow positive – in the foreseeable future.”
Matthew Niknam, Deutsch Bank Research noted that if control and price were hurdles in 2017, the firm could not see how those factors had changed five months later.
“While scenarios discussed in late 2017 indicated DT/TMUS would be the controlling parties in the merged entity, recent stock performance would dictate that dynamic has diverged even further,” Niknam wrote. “For context, the relative ratio between TMUS/S shares had recently widened to 12:1 (prior to recent reports), versus an 8:1 ratio widely discussed in press reports this past summer. As such, the better operating performance and a brighter market outlook for standalone TMUS (relative to standalone Sprint) would now dictate (in theory) that the former (and DT) may warrant an even bigger controlling stake in a merger entity.”
And there were those reports that Masa Son did not want to lose control of Sprint…
May 2, 2017 —
The nonprofit that recruits, trains and places veterans into the wireless industry, Warriors4Wireless (W4W), is set to dramatically increase the amount of seasoned talent that it infuses into the development of broadband networks, Major General Kevin J. Kennedy, president of the nonprofit, told an audience at the Wireless West Conference in April.
“In the past three years, W4W has placed 1,000 veterans in the wireless industry. Based on the needs in the wireless industry we could triple that,” Kennedy said. “We are trying to take what Kelley Dunne (Executive Chairman and Co-founder) did with W4W and scale it up. It not only does great things for veterans but it does great things for the wireless industry.”
Kennedy joined W4W in February as Senior Advisor to the CEO and just recently became president of the organization. His 32 years of wartime service included tours of duty in Iraq and Afghanistan and more than 3,600 hours of operational flying, including 145 hours flown in combat. In addition, he served as Director of Joint Strategic Planning at U.S. Strategic Command, Senior In-country Air Force Strategist and Advisor to the Commander of U.S. Forces in Afghanistan, and Commander of the U.S. Air Force Global Cyberspace Integration Center.
Kennedy noted that veterans receive $100,000 to $200,000 worth of training during their tours in the military, making them potentially highly skilled assets. He told a story about meeting a man who was working for a moving company, but during his active duty he served the Air Force climbing towers and as a certified electrician maintaining systems at a base overseas.
“When I told him what he could do in the wireless industry as opposed to the moving industry, he jumped at the chance,” Kennedy said.
Kennedy wants to begin a dialogue with the wireless industry concerning its personnel needs. For W4W to be a successful conduit to funnel veterans into the wireless industry, he said, it must have up-to-date knowledge of the positions that need to be filled. He called out to the industry to inform him of their labor needs.
“It all starts with our industry partners telling us what types of jobs that you would like to hire a veteran into,” he said. “We then go back to the military and line up people, put them through the right training so we can place them with you. I need you to help me if I am going to help you.”
Verticom Helping with W4W Training
Verticom, which designs, develops and maintains broadband networks, has been selected as the southern regional training facility by W4W. Jeff Lewis, president and founder, noted that the wireless industry is going run into a labor shortage as next generation networks are built out and filling the openings will go beyond tower climbers to include a spectrum of communications technicians and professionals.
“We are taking the tower climbers that they want to be trained, but we are expanding the program to include the whole ecosystem, including fiber splicers, fiber testers, project managers and coordinators, civil, electrical and installation technicians, and more,” Lewis said.
Beyond tower climbers, the industry needs to focus on adding engineers and real estate professionals, he added.
“For 5G and IoT, we need real estate professionals with pole attachment and rights of way experience,” Lewis said. “With the training we are doing at Verticom, we are trying to look 12 to 36 months out when the big demand for labor in wireless is going to hit.”
As a volunteer for W4W, Lewis is putting together the business model that will allow the organization to grow through the addition of regional training centers located across the nation.
“I think it is something great for the wireless industry,” he said. “Returning vets are sometimes forgotten. We are trying to give them purpose and meaning again for their lives, placing them in the industry so they can provide for their families.”
April 28, 2016 — As General Packet Radio Services (GPRS) packet-based data services fade along with 2G and 3G cellular networks, the competition for a new network to carry Internet of Things traffic is heating up. This will be a break out year for narrowband wide area network IoT providers as they shift into high gear building out in the United States and around the world, panelists said during the Wireless West Conference, last week, in Anaheim.
SIGFOX USA built out coverage in the top ten cities in the United States in the first quarter of this year. The company built out San Francisco, its first market, with only two dozen sites because of the propagation characteristics of its ultra-narrowband technology. The city gave it access to as many roof tops on as many libraries and city facilities as it wanted, according to Allen Proithis, president, SIGFOX USA. New York City, which is almost built out, will take many more sites, but it is still a fraction of what is needed for cellular, he added.
“I need you help to spend my money faster to build out faster, because the demand is that strong. This is the year that IoT goes from hype to deployment around the world,” Proithis, told the audience at the opening plenary session, entitled “Internet of Things / M2M: The New Frontier.”
SIGFOX’s ultra-narrow band modulation provides a long-range, high-capacity network with a 162dB link budget, which operates at 868 MHz in Europe and 902 MHz (Industrial Scientific and Medical band) in the United States.
The buildout is being prioritized by customer demand, but it is not a static process, according to Proithis. “As well as the top markets, we have built out in third-tier cities simultaneously, because someone wanted a tracking network,” he said.
While SIGFOX USA will own and operate its network in the United States, its France-based parent will partner with other companies internationally. Earlier this month, SIGFOX vendor Thinxtra began deployment in Sydney and Melbourne, Australia. SIGFOX’s partner Omantel, a major telecom operator in Oman, plans to provide IoT coverage to 85 percent of the population within 18 months. The largest tower company in Italy announced last Fall it will roll out the SIGFOX IoT network across Italy.
“On the international side, we have been busy putting agreements into place. By the end of this year, we will be in 30 countries, through partners in each country,” Proithis said. “I have agreements in place for 200,000 sites so far. A lot of those sites will fall out in the scrubbing process, as we look for a particular set of technical characteristics.”
The Key to IoT Communications is Network Cost
When a cellular carrier puts up a base station, it’s expensive, but when a narrowband IoT provider adds a base station to a cellular tower, it is the size of a brief case with a 30-inch omnidirectional antenna. It uses either satellite or DSL for backhaul to the network. No fiber. Proithis said hosting IoT base stations can be a fairly lucrative play for tower companies.
“This is found money for you. It really doesn’t take up space on your tower sites or add stress. But it is stacking nickels. You need a lot of them; however, it can be a big revenue opportunity,” he said. “I have to be very aware of the costs or it blows up my business model. For partners that are willing to be flexible, it is a great opportunity for the long term.”
Low-power WAN is a complementary technology to cellular, according to Proithis, whose company has three of the biggest telcos in the world, Telefonica, SK Telecom, NTT DoCoMo, as investors.
“IoT is a different technology and it’s a different business case that drives deployment,” Proithis said. “At volume, we are providing connectivity at one dollar a year,” Proithis said. “We are giving a voice to all the things that want to participate in the IoT revolution. Existing technologies, which are made for people and not things, are too expensive or the battery life is too low.”
Ingenu Nationwide Build Out Begins in Dallas
Ingenu plans to have 30 top markets built out in the United States this year, beginning with Dallas, Phoenix, Austin, San Antonio and Houston. On April 13, Ingenu began delivering connectivity to machines in the Dallas/Fort Worth area with the deployment of its Machine Network, covering 2,116 square miles and a population of more than 4.4 million people with only 17 base stations. Application development for the Machine Network is currently underway with Dallas-based Plasma, which will create smart cities initiatives using Plasma’s C2M enterprise-grade IoT platform.
Like SIGFOX USA, Ingenu Networks enjoys the flexibility of deploying a low-cost, low-power network that operates in the unlicensed 2.4 GHz Industrial, Scientific and Medical (ISM) band, according to Derrick Calderon, VP Business Development, Ingenu Networks.
“In regard to which markets we go to first and how are we going to deploy there, if a customer wants us in a certain market we will take it under advisement depending on the volume of the business,” Calderon said. “Given that it is unlicensed spectrum, it is easy for us to pivot from the plan that we have in place. We don’t need to have a customer lined up in a city before we deploy there, because of the minimal capital expenditure needed to build out a market.”
Ingenu’s low-power WAN is enjoying popularity in both rural and urban buildouts. On April 27, the City of Riverside, California, selected Ingenu’s Machine Network to provide network connectivity for the city’s electricity distribution infrastructure, which serves 108,000 customers. The network will enable comprehensive monitoring of the electrical grid, reducing the time it takes to isolate and repair outages.
Late in March, Ingenu teamed with KONČAR INEM, a Croatia-based industrial electronics and power electronics OEM, to provide IoT connectivity to the oilfields operated by Shell Nigeria. The solution provides pipeline surveillance and wellhead monitoring capabilities to remote infrastructure in the Niger Delta.