American Tower Corporation AMT has entered a master lease agreement with DISH Network Corporation DISH through which the latter may lease space on up to 20,000 American Tower communications sites.
With this, the carrier has secured access to American Tower’s extensive portfolio of communications sites in the United States to deploy its new nationwide 5G network. As for American Tower, the lease agreement will enhance its long-term U.S. organic growth trajectory.
Specifically, the company will receive cash lease payments from DISH, starting in 2022, and this will increase over time as the tenant’s network deployment progresses. This will likely drive its rental revenues in the upcoming period. In addition, DISH might lease shared generators from American Tower at select sites and utilize zoning, permitting and other pre-construction services offered by the tower real estate investment trust (REIT).
Per American Tower management, “We believe that our nationwide portfolio of communications sites is optimally positioned to continue to serve as the backbone of today’s critical mobile broadband networks while assuring a meaningful share of new leasing activity in the marketplace.”
Notably, DISH has been entering several tower agreements to expand its 5G wireless infrastructure.
In fact, in November 2020, Crown Castle International Corp. CCI announced a long-term lease agreement with DISHto rent out space to the latter on up to 20,000 of its communication towers. Additionally, as part of the multi-year anchor tenant tower agreement, Dish had the option to access specific fiber transport services and the option to use Crown Castle for pre-construction.
Also, in February 2021, SBA Communications SBAC announced a new long-term master lease agreement with DISH, per which the latter will lease SBA Communications’ towers to achieve its greenfield nationwide 5G network build-out.
Hence, with the above-mentioned agreement with American Tower, DISH has now entered leasing deals with all three major tower REITs in the United States.
Admittedly, accelerations in 5G deployments by carriers to address the growing levels of mobile data traffic and future deployment of the mid-band spectrum will result in meaningful incremental densification and amendment activity for American Tower over the long term. Also, wireless service providers and carriers have been deploying additional equipment on existing networks to enhance network coverage and capacity. American Tower is well-poised to benefit from these secular global growth trends in the wireless industry, given the unmatched geographic diversification of its distributed sites.
Shares of this Zacks Rank #3 (Hold) company have lost 12.9% over the past six months against the industry’s rally of 7.1%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Given the solid growth potential in the tower business, competition is expected to intensify in the upcoming period from existing players as well as the entry of new players. This competitive landscape is likely to increase pricing pressure for American Tower. Moreover, stiff competition for assets may hinder the company’s ability to achieve an attractive return on investment.
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