Market Overview

Will Google's Entry Into Mobile Impact Tower Companies?


Recently at the Mobile World Congress at Barcelona, Google Inc (NASDAQ: GOOGL)(NASDAQ: GOOG) confirmed the rumors that it's planning to launch its own wireless service. However, the company plans to operate it on a much smaller scale as compared to other cellular carriers.

Jennifer Fritzsche, senior 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 (NYSE: AMT), Crown Castle International Corp (NYSE: CCI) and SBA Communications Corporation (NASDAQ: 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 the 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 Leads To Question

When asked if her model is based on Google's entry into the wireless market or if she is just forecasting a larger market overall, Fritzsche replied, “There is really no incremental association with [it]; 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 out. So, there's nothing in their guidance, in our model, that would just be upside.”

Related Link: 8 Reasons Bank Of America Is Upgrading Google

Google Wants More Clicks

When asked if this would cause an influx of towers to be built, Fritzsche replied "no."

“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.

Posted-In: CNBC Jennifer Fritzsche Mobile World CongressTech Media


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