The Wireless Pulse 12th Edition
October’s attendees are comprised of various telecom executives working across the national wireless real estate spectrum.
1. There is little to no cell tower inventory for sale. It’s as slow as it’s ever been.
2. The worst part about no inventory is investors are willing to pay up to 30 to 40 times the annual rent to buy any tower assets.
3. Cell tower buyers are all over the board about types of tower assets wanted, yield and debt coverage.
4. The drivers for the crazy multiples are not really cost of funds, but equity and yield. Interest rates haven’t affected the multiples unlike brick-and-mortar real estate. But we know it soon will.
5. The Fed stimulus money is driving fiber (broadband) to home in rural areas. Problem is, it takes a lot of time to lay fiber and many years to recoup the cap ex spending.
6. Expect the rural broadband build to really ramp up in 2023. The Fed is releasing funds to shovel ready projects.
7. Still no push by carriers to build in-building systems (DAS). They’re too focused on 5G upgrades and greenfield builds.
8. Once macro networks become mature and stable, carriers will look at large class “A” office properties for DAS installations where costs can be recouped and tenant experience will benefit.
9. We forecast carriers have made the bulk of their cap ex spending this year. While upgrades and new builds will remain robust, look for a reduction of carrier cap ex spending in 2023.
10. The 5G upgrade frenzy came at a high economic cost to the carriers. The equipment was snarled in supply chain problems causing delays and material increases. COVID lockdowns further exacerbated the issue by reducing the number of crews to complete installations.
11. The increased costs of the 5G upgrades during the pandemic were unbudgeted. Everyone involved in the upgrade process had to absorb increased costs.
12. Moreover, carriers keep giving away 5G enabled phones for free. This is unsustainable and at some point, the costs will be passed along to the consumer.
13. Speaking of supply chain, we’re still not normal. Many equipment buyers have hedged supply chain issues by buying generic equipment ahead without carrier purchase orders. They’re banking on having minimal delays by pre-ordering the available supply using multiple suppliers. This reduces the wait time, and it makes sense because they will inevitably use the equipment for future installations.
14. In most macro builds and upgrades, the equipment is provided by both the installers as well as the carriers. The carriers are behind the 8-ball getting their equipment so the installations are delayed. This is causing delays in deployment and what’s worse, multiple trips to any site with labor costs being passed along to the carriers.
15. Even with continued supply chain and lack of available labor, new builds and upgrades will remain steady through the end of 2023. Anyone looking for a real employment opportunity should consider entering the cell lease labor trades.
16. Time to use the “S” word, Satellite. Carriers are looking to use satellite technology in very rural areas that aren’t really accessible and have no infrastructure to support macro-sites.
Fun Fact: 80% of cellular traffic occurs in 20% of the country!