American Tower, SBA Communications, Crown Castle and other tower firms in the US are feeling the pinch from what appears to be a 5G network slowdown by T-Mobile. The operator has denied any deceleration of its 5G network plans, but various reports from tower companies and contractors have indicated the carrier is holding off on new cell sites as it awaits the outcome of its proposed $26 billion purchase of Sprint.
In a new report today from Wall Street research firm Wells Fargo, tower companies said T-Mobile's deployment of new cell sites has slowed down considerably recently, which is primarily impacting macro cell sites but not small cells. Tower companies said that their T-Mobile contacts are telling them that the reason for the slowdown is because T-Mobile's Sprint acquisition is still not closed -- the companies had hoped to close the transaction this summer but delayed that to the end of this year.
Wireless Estimator first reported of the slowdown in T-Mobile’s 5G network deployment last month, citing several network construction contractors that reported the operator was halting new network equipment purchase orders for the remainder of 2019.
T-Mobile's slowdown is particularly painful for tower firms and construction companies because over the past 18 months, T-Mobile has been aggressively expanding its network in 600MHz spectrum. "The build, coupled with T-Mobile's regular tower activity supporting its other spectrum bands has created a robust driver of revenue growth for the tower cos," said the Wells Fargo report.
But not only is the operator slowing its 5G buildout, but it’s also being sluggish about paying its bills. Wireless Estimator reported earlier this week that a dozen contractors claim that T-Mobile hasn’t paid their invoices. The contractors said that their invoices typically have payment terms of 60 days and are now 100 or 120 days in arrears.
Wells Fargo also heard from contractors that T-Mobile is pulling back on its payments. One vendor told Wells Fargo that this was a "systematic conservation of capital" on the part of the operator. However, the investment firm said it was unclear if the tower companies were also being impacted by T-Mobile’s longer payment cycles.
In response to the new Wells Fargo report, a T-Mobile spokesperson reiterated the operator's previous statement that it continues to expand LTE coverage and performance "while simultaneously laying the foundation for broad, nationwide 5G in 2020. That hasn’t and won’t change." The operator also reiterated that it remains on track to reach the very high end of its previously supplied guidance of $5.8 billion to $6.1 billion in capital expenditures this year.
T-Mobile’s proposed acquisition of Sprint has hit some recent hurdles. Although the company has received approvals from every major federal agency, including the Department of Justice and the FCC, it is battling a lawsuit filed by mostly Democratic state attorneys general that argue the deal is anti-competitive and will be harmful to consumers.
— Sue Marek, special to Light Reading. Follow her @suemarek.