The tower sector has faced unexpected headwinds in recent months. Since EchoStar’s $23B spectrum sale to AT&T was announced on August 26, the sector has declined  ~11% – even amid an interest rate cut that historically benefit tower companies.

Investor concerns are straightforward: as EchoStar’s prospects of becoming America’s fourth facilities-based wireless operator fade, the industry effectively contracts from four potential customers to three. Greater customer concentration appears negative on the surface.

However, history suggests that spectrum in the hands of motivated, financially stable operators often translates to accelerated deployment. 

Let’s not forget….as EchoStar’s financial position deteriorated – including missed interest payments – the likelihood of this valuable spectrum being deployed became increasingly uncertain. Idle spectrum generates zero revenue for tower companies.

AT&T’s acquisition changes this dynamic entirely. The company already has a lease agreement with EchoStar to use the 3.45GHz spectrum before the transaction closes, and they are not sitting still. AT&T expects to deploy the majority of this incremental 3.45GHz spectrum in Q4 2025, with full completion in 2026. While AT&T pays nothing to lease the spectrum pre-close, it bears all buildout costs – including antennas on towers.

The 3.45GHz part of this transaction, while interesting, is not unsurprising. AT&T was the largest bidder in FCC Auction 110 and recently completed several 3.45GHz deals, including US Cellular. The more significant development for tower companies is AT&T “thickening” the bottom layer of its spectrum “wedding cake” with 600MHz spectrum. And here is where investors should focus. 

Recall, AT&T’s existing low-band spectrum centers on 700MHz, which is complicated by FirstNet sharing requirements. Through the EchoStar deal, AT&T acquires approximately 20MHz of unencumbered, nationwide plug and play 600MHz spectrum. Ironically, AT&T spent over $900MM on 600MHz licenses in FCC Auction 1002 (2017), only to quickly sell them to a private capital player. T-Mobile dominated that auction and remains the largest 600MHz holder. Verizon chose not to participate in that auction, and instead has been making a big big bet ($53B+ bet) on midband spectrum.  

Why is AT&T’s bet on  600MHz  significant for towers? Three reasons.

First, deploying a new band requires new equipment. While AT&T can execute “one touch” installations, the carrier’s existing  tower antennas don’t support 600MHz – necessitating equipment additions.

Second, physics dictates that 600MHz performs optimally on macro cell sites rather than small cells. These antennas are large, consuming more tower real estate. More space utilized equals higher revenues for tower companies.

Third, this creates potential pressure on Verizon. Without robust low-band spectrum (the “wedding cake” bottom layer), Verizon may need increased tower infilling to maximize its midband assets and reclaim its “Can you Hear Me Now?” crown. 

Of course, the caveat to all this is what is captured under each individual tower companies’ MLA (Master Lease Agreement) with AT&T and others. While not publicly disclosed, AT&T likely considered this spectrum acquisition when structuring recent MLAs. However, most MLAs limit included tower space. Once carriers exceed these limits, incremental revenue for the tower companies is triggered beyond the holistic agreement.

The sky isn’t falling for tower companies.  As history has shown us time and time again, the tower industry has historically benefited most when spectrum moves from uncertain hands to operators ready to get going. 

Listening to Mr. Stankey on AT&T’s Q3 2025 earnings call last week, he seems to be ready to do just that!