Tower company contracts show that additional loading from the existing tenants leads to only a limited increase in rent, and this does not count as additional tenancy. However, a comparison of 2G and 3G spectrum holdings indicates that in most circles where operators have acquired 3G spectrum (2.1GHz), their existing 2G networks are on 900MHz, while 2.1GHz requires 1.9x sites to cover the same footprint.
Operators will focus only on loading their existing 2G sites with 3G over the next two-to-three years and will let subscribers move to an EDGE network in 3Gdark areas. However, operators will have to consider rolling out additional sites as data volumes increase. 3G loading is also a profitable proposition for tower companies as loading provides incremental 10-15% rental without any significant increase in cost.
What about 700Mhz Spectrum ?
Allocation of spectrum in lower frequency bands, especially in the 700MHz band, could be a risk for the telecom tower industry, as it would enable operators to deploy LTE without a meaningful increase in the number of sites. However, there is low visibility on the 700MHz auction, and we believe the current price suggested by the regulator (4x the price of the 1,800MHz band) would make it difficult for any operator to acquire the spectrum