It's a new era in the US cell tower industry

All of the big US cell tower companies are kicking off 2024 with new leadership. And it's possible that, with new leaders, new business strategies might emerge as well.

"Every management change tends to allow a company to have a 'control / alt / delete' moment," Jennifer Fritzsche, managing director at investment bank Greenhill & Company, wrote recently.

Already Crown Castle is pursuing new opportunities. Longtime Crown Castle CEO Jay Brown retired late last year amid a campaign against him by Elliott Investment Management, an activist investor firm. Now the company is in the midst of a "strategic review" of its fiber business, which houses Crown Castle's small cell operation.

Crown Castle hasn't yet named Brown's successor. Anthony Melone, a member of the company's board and Verizon's former CTO, will be the company's interim CEO while the board starts a search for a permanent CEO.

American Tower and SBA Communications – the other two big cell tower operators in the US – are also under new leadership. Brendan Cavanagh replaced Jeff Stoops as SBA's CEO on December 31, while American Tower's Steve Vondran is set to take over from Tom Bartlett on February 1.

"How American Tower's and SBA's new captains steer their respective ships will be perhaps the more interesting paths to watch," Fritzsche wrote. "Key questions include American Tower's data center strategy expansion and if SBA will stay with a pure tower asset mix."

Already Vondran has been busy at American Tower. Late last year he signaled a delay in his company's edge computing aspirations, which stem from American Tower's blockbuster purchase of data center operator CoreSite Realty in 2021. Then, earlier this year, he finalized the sale of American Tower's operations in India.

The bigger story

As the new CEOs at Crown Castle, American Tower and SBA take up the reins, they'll probably be pretty busy. The cell tower and broader digital infrastructure industry has been awash in M&A recently.

For example, in recent weeks Charter Communications said it will sell 546 cell towers to Everest Infrastructure Partners and TowerCo. Meanwhile, both UScellular and Shentel have indicated plans to sell thousands of cell towers across the country.

Indeed, just this week BlackRock said it would purchase Global Infrastructure Partners (GIP) in a deal worth $12.5 billion. As noted by Inside Towers, GIP manages over $100 billion in assets, including stakes in data center operator CyrusOne and European tower company Vantage Towers.

BlackRock, for its part, has investments all over the digital infrastructure space, including with AT&T for a fiber buildout in the US.

Regardless, most financial analysts agree that the US tower industry will remain a bright spot, despite signs of slowing spending among wireless network operators.

"Broadly, we remain positive on the tower sector as a whole," wrote the financial analysts at Raymond James in a note to investors last week. They argued that a variety of factors are helping to firm up the market including improved interest rates and continued confidence in the overall value of cell tower assets.

However, in a note to investors this week, the financial analysts at BofA Global Research argued that "tower stocks will experience slower domestic growth in 2024." That's because AT&T, Verizon and T-Mobile – the primary customers of cell tower operators – have all indicated they will slow their network spending this year.