How Google's Entry In Wireless Will Impact The Tower Companies?

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Recently at the Mobile World Congress at Barcelona, Google Inc GOOGL confirmed the rumors that it's planning to launch its own wireless service. However, the company plans to operate it in a much smaller scale than other cellular carriers.

 

Jennifer Fritzsche, Sr. Analyst at Wells Fargo, was on CNBC recently to discuss how Google's entry into the wireless space will impact tower companies like American Tower Corp AMT, Crown Castle International Corp CCI and SBA Communications Corporation SBAC.


"In the most simplistic sense, if a new competitor comes in, even through what's called a MVNO or a virtual operator status, that means there's more antennas on tower to support more usage," Fritzsche said. "And the tower companies like an American Tower, Crown, SBA are paid on [more] kind of junk being on the towers themselves."


Google's Entry A Question

When asked if her model is based on Google's entry into the wireless market or she is just forecasting a larger market overall, Fritzsche replied, "There is just no incremental association with Google hasn't even confirmed that. They said today at Barcelona that they are certainly having talks, but no official press release has been put in out. So, there's nothing in their guidance in our model that would just be upside."


More Clicks Is What Google Wants

"There wouldn't be probably new subscribers because if you think in your own life, who doesn't have a wireless phone? But I think if Google got a lot more serious in the wireless arena, with advertising behind it, remember that they have $58 billion in cash, then that would drive more usage and for Google's model more clicks, which is what they want at the heart of it," Fritzsche concluded.

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Posted In: CNBCMedia
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