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With chatter about a potential T-Mobile and Sprint merger ramping up, questions about what it might mean for the tower sector have popped up.

Wells Fargo Senior Analyst Jennifer M. Fritzsche thinks it may not be all bad for companies like American Tower and Crown Castle International, as the overall macro environment, such as spectrum crunch and LTE deployment, bodes well for towers. She acknowledged that while T-Mobile will likely call out tower and backhaul for network savings if a merger is announced, that historically tower companies have done well in M&A transactions.

“In almost every M&A transaction the wireless sector has seen (exception being MetroPCS/T-Mobile) – the number of cell site additions have outnumbered the number of site decommissioned post close,” Fritzsche wrote. She noted the new company post-merger would need to support the same number of customers as they did separately.

Fritzsche also pointed to T-Mobile’s large swath of 600 MHz spectrum, a low band that Sprint does not have.

“This low band spectrum requires larger macro sites vs. small cells for coverage,” Fritzsche said. So this could make for a “meaningful opportunity for towers,” even if there is a T-Mobile-Sprint merger, according to Fritzsche.

Wells Fargo analysts also see other opportunities for tower companies that will not be impacted by a potential merger of the two carriers, including AT&T’s FirstNet build, which so far has had 23 states and territories opt-in. The analysts also see continued deployment of AWS-3 spectrum, and “the ‘here and now’ catalyst as to the continued impact of Unlimited plans on the big four carriers’ current network demand.”

With more than 140,000 towers in the United States and internationally, American Towers should be able to take a large share of spending on capacity and coverage improvements from the wireless carriers, according to Fritzsche.

Crown Castle, meanwhile, has more than 74 percent of its towers in the top 100 markets, and according to the analysts has a portfolio well positioned to reap the benefits of current 3G and 4G spending in many major cities.

“We also believe CCI’s small cell/fiber strategy offers it a unique role in the 5G conversation with the largest U.S. carriers,” Fritzsche said.

Still, a Sprint-T-Mobile deal would have to clear many hurdles before it could go through, including approval from the Department of Justice. MoffettNathanson analysts have estimated just a 50/50 odds of approval for the merger.

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