SpaceX cell-site ambitions lift tower stocks and weigh on carriers

Investing.com -- Shares of communications infrastructure firms jumped in premarket trading Friday after Bloomberg reported that SpaceX aims to secure cell sites across the U.S.

Crown Castle soared more than 7%, while American Tower jumped 6% by 05:45 ET (09:45 GMT). Conversely, U.S. telecom carriers fell on the news. Verizon, AT&T and T-Mobile each fell more than 3%.

SpaceX is in talks with at least one major cellular infrastructure company to secure a minimum of 80,000 cell sites nationwide, Bloomberg reported, citing people familiar with the matter. The agreements would potentially solidify the company’s path toward building a fourth nationwide wireless carrier.

SpaceX, which is also buying nationwide low-band spectrum, is in talks with Crown Castle specifically, according to the report.

The 80,000 sites would equal half the 158,500 purpose-built cell towers operating in the U.S. last year, according to the Wireless Infrastructure Association. Crown Castle operates about 40,000 U.S. towers, American Tower has about 42,000, and privately held Vertical Bridge owns around 18,000.

Crown Castle CEO Christian Hillabrant said Wednesday the company was talking to "all parties" when asked about potential leases with SpaceX and Amazon, though he declined to discuss specific customers.

Truist Securities analyst Matthew Niknam called the report "another positive headline/potential catalyst for a still ’less loved’ Towers group." While the talks fall "far short from actual MLA’s (master lease agreements) being signed," and some may view it as a negotiating tactic for a wholesale agreement with national carriers, Niknam said he sees the news "as another firm positive for the Towers."

Tower REITs trade at a weighted average 2027 price-to-funds-from-operations ratio of 15 times, about 5 times below data centers and lagging most peer REIT sectors, Niknam noted.

He said the headlines "pour additional cold water on the bear narrative" around satellite competition posing a terminal value risk to towers, adding that Starlink’s own earnings call this week, where it referenced ambitions to become a major U.S. mobile carrier by 2028, supports a terrestrial network strategy that leans on towers alongside satellites.

Original Article

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