Network Builder News 4/11/18 ( previous newsletters )
Sprint fined $10M, Mobilitie $1.6M
The Federal Communications Commission has fined Sprint and Mobilitie $11.6 million, with Sprint paying the lion's share of the penalty. Sprint hired Mobilitie to build towers and small cells, and the FCC says some of these were built without the required registrations. The agency says the companies also failed to complete environmental and historic preservation reviews for some sites. Last month, the FCC voted to exempt most small cells from these reviews.

At the local level, many jurisdictions have also accused Mobilitie of ignoring or violating permitting procedures. Mobilitie has been an active advocate for federal preemption of some local authority over small cells in order to streamline permitting and cap pricing.

AT&T expands relationship with Crown
AT&T has signed a new tower leasing deal with Crown Castle, saying the contract will simplify leasing and expand the relationship between the two companies. In recent years, AT&T and other carriers have been pressuring tower owners to reduce their rents. AT&T said the agreement " establishes a market-based framework and simplifies the lease management and administration process." The carrier added that the streamlined process will make it easier to add new network technologies and execute the FirstNet build.

Analyst Jennifer Fritzsche of Wells Fargo notes that last year AT&T delivered roughly $900 M of site rental revenue to Crown, or 22% of the company's total site rental revenue.
Tower stocks climb back
Shares of Crown Castle, SBA Communications and American Tower were hit hard on Tuesday by the resurgence of reports that T-Mobile and Sprint will try to merge. If the two carriers eventually become one, they will only need one set of radio equipment at each tower, which would reduce rents for the tower companies. The big three tower stocks all tumbled 4% or more yesterday, but today they are all slightly higher.

Could it happen this time?
Could T-Mobile and Sprint finally pull the trigger? Wall Street analysts started crunching some familiar numbers this week, but some of the analysis now is a guessing game, because it isn't clear how much of the cost savings the deal could create have been eliminated by Sprint's current network investment.

"It is clear that there are still huge synergies in a merger between these two companies. However, Sprint’s recent tower and fiber contracts might have reduced those synergies," wrote analyst Walt Piecyk of BTIG. "We believe Sprint has signed an MLA with SBA and a new fiber to tower contract with Zayo in order to finally invest in its deep spectrum asset. We estimate that Sprint will burn $3.5 billion of cash over the next two years, further eroding equity value in order to deliver a competitive network."

After Sprint's deal with T-Mobile fell apart last fall, executives from both companies told investors they regretted the fact that their parent companies (SoftBank and Deutsche Telekom) could not come to terms. T-Mobile CFO Braxton Carter said the deal would have created at least $37 billion in synergies. Analyst Craig Moffett of MoffettNathanson wrote yesterday that the merger could have created up to $40 billion in synergies.

"Transactions that offer as much as $40 billion in synergies aren't easily abandoned," wrote Moffett. "Sure, all the regulatory challenges are still there, but the exchange ratio has gotten better between the two, making a deal more feasible now."

New research: Global Macrocell Remote Radio Unit (RRU) Market Analysis & Forecast
Just released this week. Email [email protected] for more information.
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