Wireless tower operators unlikely to see improvement, S&P says

New York, Jan. 3 - U.S. wireless tower operators are unlikely to see improvement in their weak business profile over the next 18 to 24 months, according to Standard & Poor's.

"Without a significant improvement in tower-related spending by wireless carriers or strong prospect of financial deleveraging by operators, the wireless tower industry is unlikely pull out of its current slump for some time," said Standard & Poor's credit analyst Michael Tsao, in a news release.

S&P noted that two companies - Pinnacle Holdings Inc. and SpectraSite Holdings Inc. - have already filed for bankruptcy while American Tower Corp. and SBA Communications Corp. have had to obtain amendments to their credit facility covenants and Crown Castle International Corp. has taken a series of measures to cut overheads.

The industry experienced a difficult 2002 as a slowdown in demand for leasing and network services by wireless carriers caused tower operators to experience slower EBITDA growth, S&P said.

As a result the prospects weakened for significant debt reduction in the near term.

Describing American Tower, Crown Castle, and SBA Communications as highly leveraged with limited financial flexibility, S&P said the likely lower industry growth ahead due to slowing tower demand by wireless carriers means these companies are unlikely to be able to materially reduce their debt level and improve the amount of safety margin they have against execution risks.

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