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BMO Capital: EchoStar Spectrum Sale Poses Challenges for Tower Industry

After EchoStar (SATS), formerly known as DISH, announced it is selling 3.45 GHz and 600 MHz spectrum licenses to AT&T (T) for $23B and decommissioning "elements" of its network, BMO Capital analyst Ari Klein called the news a negative for the tower sector, which now will need to contend with "yet another churn headwind," though acknowledges this "could take considerable time to play out." At a high level, Crown Castle (CCI) has the most exposure to EchoStar at about 5% of revenues, versus about 2% of total global revenues for American Tower (AMT) and SBA Communications (SBAC), estimates the analyst, who says churn is "likely inevitable," but timelines will differ as contract structure and exposure varies. With all of that said, BMO adds that EchoStar has been "a long-time Tower overhang" and argues that the sale helps illustrate the value of spectrum and carriers' need to keep investing in their networks.