Alex Pettee, CFA
Cell Tower REITs: 5G's True Killer App
With 5G on the horizon, Cell Tower REITs have outperformed the broader real estate sector in each of the past four years. 5G technology will fundamentally disrupt the communications sector.
The true “killer app” for 5G will be fixed wireless broadband internet. Dense small cell networks will allow carriers to deliver fiber-like speeds without the last-mile wires into each home.
The technological limitations of 5G – notably the very small coverage area per antenna – mean that 5G small cell networks will complement, not replace, macro cell tower networks.
The Sprint/T-Mobile merger saga continues. Just when a deal appeared imminent, a new curveball emerges. We think that Sprint’s troubles are overstated and that no-deal outcome would benefit tower REITs.
Cell tower REITs continue to benefit from a favorable competitive positioning within the telecommunication sector. Concentrated ownership and strong demand have translated into substantial pricing power for cell tower operators.