UScellular doesn’t get a lot credit score for its tower portfolio, based on Wells Fargo analysts, however the agency continues to be impressed with efficiency and thinks a sale could possibly be a boon for traders.
That stated, on Friday’s fourth quarter earnings name executives repeated their stance that promoting towers just isn’t within the playbook for now because the regional provider sees worth in proudly owning, each operationally for community modifications and renting area to others.
“As we proceed our multi-year community modernization and 5G roll out management of our towers stays essential,” UScellular CFO Douglas Chambers stated.
UScellular owns 4,271 towers, representing 63% of cell websites. With 1,894 colocated, Wells Fargo famous the portfolio has only one.4 tenants per tower, inclusive of UScellular.
“Whereas USM will get basically zero credit score for its owned tower portfolio, the underlying efficiency continues to be spectacular, with whole revenues up almost 9% yr/yr within the quarter,” wrote the Wells Fargo crew led by Eric Leubchow, in a Friday notice to traders.
The regional provider’s finance chief cited help from a third-party advertising settlement that’s helped regular development in UScellular’s tower rental revenues during the last 12 months. Tower income rose to $19.7 million in This fall 2020 in comparison with $18.1 million in the identical quarter of 2019.
UScelllular CEO LT Therivel has emphasised earlier than that by proudly owning towers, it removes extra prices when new gear must be added or modifications made to the community. And that’s notably essential within the midst of a serious community improve and transition to 5G.
The provider can also be aiming to enhance returns on capital in 2021, and prompt optimizing its tower portfolio is one avenue to do this. When requested by funding analysts on Friday’s earnings name, Therivel stated that there are alternatives by managing the towers extra like an impartial enterprise, per say, however careworn that doesn’t contain separating the property out.
Particularly, he stated UScellular is in talks with “a wide range of potential colocators” (or extra tenants that will pay to be used of the towers).
“And since we’re each house owners of the towers and tenants of these towers, now we have alternatives to share some property that different pure play tower operators don’t,” Therivel stated. Sharing shelter area, and probably generator area, are two examples he cited.
“By having these property in our portfolio, they provide us a chance to supply a differentiated service” to a tower buyer, he stated.
Wells Fargo analysts famous that UScellular isn’t planning to promote, “even when – in our view – it may yield a considerable windfall for USM shareholders,” the agency wrote.