Bernstein US Communications Infrastructure: FCC Spectrum Initiatives Are a Net Positive for Tower Companies
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Bernstein asserts that the Federal Communications Commission's (FCC) recent spectrum policy adjustments are a net positive for American cell tower companies. The planned reallocation of C-Band and AWS-3 spectrum will expand wireless carriers' spectrum holdings, driving network upgrades and increased tower leasing demand.
As carriers deploy new equipment to utilize these frequencies, they must increase base station density. Historically, the C-Band auction is expected to generate incremental rental income of roughly $0.50 to $1.00 per megahertz for tower operators. Furthermore, AWS-3 spectrum expansion could boost annual rent per tower by 2% to 3%. With spectrum policy uncertainty now resolved, tower valuations are positioned for a recovery. Bernstein highlights that American Tower (AMT) and Crown Castle (CCI) are the primary beneficiaries of these dynamics. Capital expenditure increases from major carriers like T-Mobile and Verizon will directly translate into higher tower leasing revenues.
Bernstein maintains an "Outperform" rating on American Tower with a target price of $280, noting the stock trades at 22 times forward EBITDA, below its historical average. Similarly, Crown Castle carries an "Outperform" rating with a $180 target. The firm projects a 4% to 6% compound annual growth rate for the tower industry from 2026 through 2028. Operators are expected to commence network deployments progressively between 2027 and 2028.
Key exhibits
Exhibit 1
