US Cellular touts 5G millimeter wave and cell tower agreement with Dish Network

US Cellular is investing in network modernization, 5G, and spectrum assets.  Laurent Therivel (LT), the company’s President & Chief Executive Officer said during their 1st Quarter 2021 earnings call that US Cellular is focusing on low band and millimeter wave spectrum for 5G. Their initial deployment is in clean, low band spectrum. “US Cellular 5G is available to some degree in 18 states today,” LT said.

The company is satisfied with their C band spectrum purchases, especially when combined with their CBRS holdings. Mid-band spectrum is available in nearly all of US Cellular’s “operating footprint.”

Millimeter wave spectrum has been deployed to offer fixed wireless access in three test markets pilot launch in those markets is expected to occur in the third quarter of this year.   LT expanded on millimeter wave:

“We need to be optimistic on the performance capabilities of millimeter wave spectrum. We recently performed additional millimeter wave spectrum testing the base station and radio enhancement we achieved a line of sight propagation distance of the 7 kilometers with average speeds, approaching 1 gigabit per second this exceeds our results from last year where we achieved this the 5 kilometers of average speed with 100 megabits per second.”

Strategic partnerships were said to be an area of opportunity to better leverage the value of US Cellular assets. In April, US Cellular signed a Tower MLA (master lease agreement) with Dish Network. The company expects “this agreement to contribute to our tower revenue growth beginning in 2022.”  However, any details on the deal have to remain confidential, LT said.  US Cellular recently hired Austin Summerford to oversee its cell towers strategy.

US Cellular CFO Douglas Chambers highlighted the importance of the Towers MLA with Dish Network:

“The control of our towers remains very important.  By owning our towers we ensure we maintain the operational flexibility to add new equipment to make other changes to our cell sites without incurring additional costs which is very important, particularly given our current technology evolution. As you can see on the slide with the assistance of our third -party marketing agreement, we have seen steady growth in tower rental revenues. As I mentioned first quarter tower rental revenues increased by 9% year-over-year. As LT noted earlier, new master lease agreement we signed with DISH Wireless and we will continue to focus on growing revenues from these strategic assets.”

In answer to a Morgan Stanley analyst question about growth drivers, LT again alluded to the towers deal with Dish (grammar corrections):

‘The best thing we did is, we said look, we’ve got assets in those towers in the form of generators, shelters and backhaul and we’re willing to share that with our partners if the economics makes sense.  We’ve taken those actions. I think the DISH deal is the first example of those actions bearing fruit, and I expect to see more. So, I hope that gives you some flavor about how we’re doing from a growth perspective. I’m encouraged — I expect to see those efforts continue to bear fruit; certainly throughout the rest of this year and particularly going into next.”

“We still see significant unrecognized market value in the [US Cellular] towers,” stated financial analysts at Raymond James in a May 10th note to clients. US Cellular owned 4,270 towers at the end of the 1st quarter of 2021.  Analyst Ric Prentiss wrote that Raymond James does not expect an outright sale of US Cellular towers, which is a question that has come up repeatedly in the past. Operationally, the company’s 4,300 tower portfolio produced $20.3 million in third-party revenue in the 1st quarter of 2021.

“Importantly, USM announced it has had signed a Master Lease Agreement (MLA) with Dish in April, and as Dish ramps the deployment of its greenfield nationwide 5G network in 2H21/2022, USM should see some upside. Moreover, USM under new (as of July 2020) CEO Laurent Therivel (LT) has focused on ‘sweating’ the tower assets, including more aggressive marketing, faster application cycle times, and sharing backhaul/generators/shelters at tower sites with tenants,” Prentiss stated.

US Cellular is somewhat unique in the U.S. wireless industry because it owns thousands of cell towers. Most wireless network operators like Verizon and AT&T have sold off most of their towers and now primarily rent space on towers owned by other companies like Crown Castle.

Image credit: Pixabay

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US Cellular reported total operating revenues of around $1 billion, up from the $963 million it reported in the same quarter a year ago. US Cellular ended the period with roughly 5 million total wireless subscribers, which was  a subscriber net loss of 6,000. Smartphone connections increased by 15,000 during the quarter and by 56,000 over the course of the past 12 months.  There were lower additions of Internet products such as hotspots and routers compared to the prior year when there was an increase in demand due to COVID 19.

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Dish Network and Cell Towers:

To comply with Dish Network’s 2019 agreement with the U.S. Department of Justice, Dish is to cover 20% of the U.S. population by June 2022 with 5G, and 70% by June 2023. It will need to do so via thousands of cell towers across the country.  Dish has already signed agreements with a wide variety of cell tower companies, including Crown Castle, American Tower, Vertical Bridge among others.

New Street Research analysts wrote in a note to clients this week:

“Between cash on hand and ongoing cash generation, the company has all the resources it needs to fund the early stages of the network buildout.  The company will need to raise more capital to fully fund the build, but they will likely do that after proving out their technology platform and its commercialization, starting with its [5G] deployment in Las Vegas later this year.”

The majority of cell towers in the U.S. are owned by three cell tower companies:

  1. American Tower             40,586
  2. Crown Castle                   40,567
  3. SBA Communications    16,401

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References:

https://www.fool.com/earnings/call-transcripts/2021/05/08/united-states-cellular-corporation-usm-q1-2021-ear/

https://investors.uscellular.com/news/news-details/2021/UScellular-reports-first-quarter-2021-results/default.aspx

https://www.lightreading.com/5g/dish-teams-with-uscellular-for-5g-towers/d/d-id/769381?

https://www.fiercewireless.com/operators/uscellular-touts-tower-deal-dish

3 thoughts on “US Cellular touts 5G millimeter wave and cell tower agreement with Dish Network

  1. Thanks, Alan. This article provides good insight on U.S. Cellular, as well as Dish’s multiple partnerships with infrastructure providers to build out their network.

    Qualcomm’s press release provides additional insight into the testing of millimeter wave equipment. The testing was in Janesville, Wisconsin. The ~1 gbs/7km link is impressive. As impressive is the 1.75 km non-line of sight distances they were able to achieve, albeit at lower “sustained average downlink speeds of ~730 Mbps and sustained average uplink speeds of ~38 Mbps.”

    One has to wonder if U.S. Cellular is going to use mm-wave to offer a fixed wireless broadband offering to the home and businesses in the rural towns they serve?

    https://www.qualcomm.com/news/releases/2021/05/06/uscellular-qualcomm-ericsson-and-inseego-address-digital-divide-multi

  2. Thanks, Alan. It will be interesting to see whether they move beyond trials with fixed wireless. Given the Qualcomm testing and their C-Band/CBRS spectrum holdings, perhaps they will be able to edge out beyond the towns with fixed wireless.

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