American Tower not Internally Planning for FirstNet Revenue Growth

Noting FirstNet is funded and will be coming, Taiclet said American Tower hasn't planned for any related growth in 2016, and, citing uncertainty surrounding the public safety wireless broadband network, won't incorporate it into any projected growth until more information about it is known. Taiclet placed FirstNet third in the order of things the company sees as potentially having an influence on domestic demand, behind a combination of spectrum and Voice over LTE (VoLTE) deployment, plus the addition of small cells -- a market in which American Tower is "selectively" playing a role. But the macro tower is "still what the customer wants first," Taiclet said. "We are very much a tower company going forward. You are going to see us across the board exploring, but the main thrust of the growth is going to be towers."

American Tower has been undertaking a "fairly aggressive effort" to extend land leases and now owns 25 percent of the land its towers sit on, Taiclet said. He said 90 percent of its land leases span 10 years or more, and 60 percent are protected for 20 years or more. When asked if connected cars are a revenue opportunity for American Tower, Taiclet said long term "there absolutely is" opportunity in the sector, due in part to a need for more significant wireless coverage build out, which will take place through the next few years, for connected cars to operate on the roads.

Taiclet also said the FCC TV incentive auction is a potential driver of revenue, saying when spectrum becomes available, it drives up competition for data speeds and there's a need for more carriers to have more sites. The broadcast side of the incentive auction is a "neutral to a positive" for American Tower, Taiclet said, and the company will "have to see how that auction plays out." American Tower "war-games" potential scenarios that might not be positive for the tower space, Taiclet said, but "can't find anything that is going to bend" its current financial trajectory. "We haven't been able to find one [scenario] yet that is going to have a material adverse effect" on the company.

Crown Castle and SBA Communications also presented at the conference, and also forecast growth for the tower industry. Chief Financial Officer Brendan Cavanagh said Wednesday that SBA is focused this year on maximizing its organic leasing growth portfolio and looking for quality investment opportunities. SBA is expecting "slightly higher" activity levels from AT&T in 2016 over its activity last year, Cavanagh said, which could positively affect the company's growth. Cavanagh said predicted deployment of new spectrum is a reason to anticipate growth and gives SBA an "optimistic" growth outlook. SBA hasn't seen "really much [of] a change from Sprint" in tower activity, Cavanagh said, and the company's guidance doesn't show any activity from Sprint tower spending in 2016. The company could see some positive growth if Sprint has more activity in the coming year, Cavanagh said, but "as of today, not a lot of activity with us."

CFO Jay Brown said that small cells represent about one-third of Crown Castle revenue growth -- two-thirds of which is from macro towers. Brown said Crown Castle's 2016 guidance is "pretty much the same" as 2015, but small-cell growth could raise revenue over time if more carriers were to get involved in that space, and "we think they will." Looking at 2016, "our best estimate is that it looks a lot like 2015," Brown said. Crown Castle didn't speak about carriers' tower acquisition plans, but Brown said "it's coincidental" when all four major carriers get extremely active in the tower space in any given year. On FirstNet, Brown said it has been "sort of a figment of our imagination in the tower business for some time," but that he's optimistic it will begin deployment in 2017.