Cell Tower REITs: 5G Is Coming, Just Not That Fast
Cell Tower REITs - a perennial performance leader in the real estate sector - have uncharacteristically lagged this year, dipping into "bear market" territory for just the second time in history.
Several factors are behind the recent cell tower slump including potential competition from Low-Earth-Orbit satellite networks, delays in 5G deployment related to airline interference, rising rates, and broader tech-related weakness.
U.S. cell carriers are "all-in" on 5G, driving record levels of activity at cell tower sites and powering another year of double-digit earnings and dividend growth for Cell Tower REITs.
Capacity first, density later: 5G build-outs have so far focused on equipment upgrades at macro towers for broad mobile coverage, but small-cell deployment - necessary for "true" 5G speeds" has lagged amid local regulatory challenges and challenging unit economics.
Revolutionized by SpaceX's Starlink, the economics and performance of satellite-based networking are long-term wildcards, perhaps for the better but potentially for the worse. For the foreseeable future, however, macro towers will remain the "hub" of communications networks.