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.
