Wireless Towers: Propelling the Data Boom

With all of the media focusing on the flash crash, financial turmoil in Europe, and the oil spill in the Gulf, it is understandable that you may have forgotten that earnings reports are also a critical catalyst of future stock prices. Lucky for you, we have the inside scoop on the latest earnings of wireless-tower operators.

In recent weeks, wireless infrastructure companies American Tower (NYSE: AMT  ) , Crown Castle International (NYSE: CCI  ) , and SBA Communications (Nasdaq: SBAC  ) reported earnings with mixed results. While American Tower exceeded expectations, both Crown Castle and SBA are in the doghouse. The table below displays estimated vs. actual earnings per share (EPS) for the three competitors for the latest quarter.

Company

Latest Quarter's Estimated EPS

Latest Quarter's Actual EPS

American Tower

$0.18

$0.24

Crown Castle International

($0.15)

($0.43)

SBA Communications

($0.24)

($0.32)

While Crown Castle and SBA were unable to turn a profit last quarter, their respective earnings reports were not all doom and gloom. 

The entire industry is experiencing a winning streak that would make the Yankees jealous. Wireless providers, led by Verizon (NYSE: VZ  ) and AT&T (NYSE: T  ) , are in the midst of upgrading their networks to provide more efficient data services, which leads to leasing more tower space from the industry. This has led to substantial revenue growth for all of the tower operators. 

Crown's revenue grew 10% compared to a year ago, and it raised its full-year revenue guidance, a positive sign for the future. Similarly, SBA also reported a 10% increase in revenue and raised its full-year revenue outlook. This growth is expected to continue, as mobile phone technology is transitioning in order to full implement the advances of improved networks.

However, the rest of the tower operators continue to bow down to American Tower. Not only is American the only operator to turn a profit last quarter, trouncing estimates, but its revenue increased 11% compared to the first quarter of 2009. It refuses to rest on its laurels and recently announced its acquisition of Essar Telecom, which more than doubles the number of towers it manages in India. The company's strategic positioning in India and Brazil is likely to allow it to grow faster than its counterparts.

The continued transition of wireless telecommunications providers from 3G to 4G networks will ensure revenue growth for all three of the wireless tower operators for the foreseeable future. Therefore, all three companies in the industry are intriguing investments. However, American Tower continues to beat its competition because of its profitability and potential for growth.

More on the telecommunications industry:

Gerard Torres does not own shares in any of the companies mentioned in this article. American Tower is a Motley Fool Rule Breakers pick. The Fool's disclosure policy is best served chilled with a late-night snack.


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