Rapidly rising mobile data usage in the range of 30% to 40% per year remains the underlying driver of demand for American Tower Corp’s U.S. assets. So says Jim Taiclet, president and CEO of the REIT. “The sheer growth in the volume of mobile data traffic, plus consumers expectations of ubiquitous, higher quality coverage, motivate the national wireless carriers to continually invest in their networks to remain competitive.”
Consequently, he said on the firm’s Q1 call, that the company again expects U.S. aggregate mobile CapEx in 2019 to be on the order of $30 billion, as carriers preserve network quality and enhanced capacity. “For ATC, we expect that to translate into significant lease amendment revenue growth on our towers, including for equipment to support the deployment of new and repurposed spectrum bands.
Independent industry research estimates suggest that elevated usage trends will persist, as more advanced devices, applications and network technologies are introduced in the United States. One key projection is that by 2023, the average U.S. consumer mobile device is expected to consume nearly 50 gigabytes of data per month, which is nearly four times current levels.”
Meanwhile, industry analysts, Taiclet continued, are also forecasting the deployment of more than 0.5 billion active IoT devices in the U.S. within the next five years. “Taken together, in aggregate. Monthly U.S. mobile data usage is therefore predicted to exceed 20 exabytes by 2023, again, about four times today’s levels.”
As our tenants seek to optimize their networks in the context of this tremendous usage growth, he said, “initial deployments and mobile operator planning for wider implementation of 5G have intensified. As described in their respective public statements, each U.S. wireless carrier is crafting its own individual approach to the rollout of this new technology.”
Importantly, he adds, “we view our approximately 40,000-site macro tower portfolio as extremely well positioned to capture a significant portion of this activity during the evolution from 4G to 5G, similar to past network technology cycles.”
Franchise real estate assets typically have significant incremental capacity, he added, and are located in high value areas, such as highway corridors and major suburbs. “We contract for space on these assets under lease structures that have enabled us to maximize the revenue and cash flows throughout the mobile technology deployment cycle, while at the same time providing significant value to our tenants.”