In the second major development to impact the U.S. wireless tower market in a month, AT&T and Verizon Wireless announced the signing of a joint agreement with wireless tower and small cell provider Tillman Infrastructure through which Tillman would construct cell phone towers to be leased, co-anchored and co-located by both carriers. The agreement follows the recent formation of a joint venture between Australian infrastructure firm Lendlease Group and SoftBank of Japan that aims to acquire or manage at least $5 billion in U.S. wireless tower and related infrastructure assets over the medium term. U.S. national wireless carrier Sprint, which is owned 80% by SoftBank, has agreed to shift leases for its network of wireless rooftop transmitters and other transmission facilities to the Lendlease-SoftBank venture as part of Sprint’s ongoing effort to cut long-term costs.
As AT&T, Verizon, Sprint and other carriers develop the small cell infrastructure needed for the fifth-generation networks of the future, analysts say that increasing demand for tower space combined with high rental prices is driving many carriers to seek alternative and less costly arrangements. Asserting that traditional models of tower leasing are “not costeffective or sustainable,” AT&T Senior Vice President Susan Johnson observed in a press statement that her company’s agreement with Tillman and Verizon corresponds with her company’s effort to create “a diverse community of supplier and tower companies who will help increase market competition while reducing our overhead.” Similarly, Verizon Wireless Chief Network Officer Nicola Palmer told reporters that “we are excited to develop new vendor partners to diversity our infrastructure providers,” as she emphasized: “it is imperative to reduce operating costs.”
Rather than focusing on acquisitions of existing tower sites, Tillman has committed to build hundreds of new towers which, in the words of a joint AT&T/Verizon/Tillman press release, “will add to the overall communications infrastructure in the U.S. and will fulfill the need for new locations where towers do not exist today.” As stated in the press release, these new towers are expected to provide opportunities for AT&T and Verizon “to relocate equipment from current towers.” While the project has been described as a national build-out, construction is expected to begin early next year on the first phase which will cover “fewer than 30 states.” Details on pricing were not disclosed although a spokesman for the companies maintained that Tillman’s rates would be “competitive.” Citing Tillman’s goal of “rapidly building a leader in wireless infrastructure in the U.S.,” Tillman CFO Suruchi Ahuja proclaimed that his company “is excited about the opportunity to work with AT&T and Verizon in order to further develop the cell tower model of the future.”