Goldman initiates U.S. tower coverage: Buy AMT, Neutral on CCI and SBAC

Overview

Goldman initiates coverage of the U.S. tower sector, covering American Tower, Crown Castle, SBA Communications, and IHS Holdings. The report argues that tower assets feature long-term leases, annual rent escalators, high incremental margins, and high barriers to entry, and that the industry is likely to resume growth after experiencing abnormally high churn in 2026. At the stock level, Goldman prefers AMT, believing it offers the best balance among organic growth, valuation, and capital allocation optionality; CCI and SBAC are rated Neutral due to recent churn, growth elasticity, and valuation factors.

Core views

Core views include: first, domestic organic growth in the U.S. will rebound after bottoming in 2026, with AMT expected to remain the leader, followed by SBAC, while CCI is relatively more moderate; second, annual rent escalators of about 3% remain a stable foundation, with amendment/co-location additions and contract modifications supported by FWA, spectrum deployment, and carrier network competition; third, EchoStar, Sprint, and US Cellular-related churn makes 2026 particularly pressured, but investors already appear to understand its one-off nature fairly well; fourth, international towers have higher growth potential, but also higher risks from carrier consolidation, macro factors, and FX, making asset quality and portfolio optimization critical; fifth, direct-to-cell satellite poses limited threat to core urban tower operations, but may weigh on demand for new rural and some international towers.

Analysis framework

The report uses the tower industry revenue formula as its main framework, decomposing organic growth into annual escalators, amendment/co-location and contract modifications, new leasing, and churn, while incorporating the capex of carriers such as AT&T, T-Mobile, and Verizon, FWA subscriber growth, spectrum events, international tower density, and portfolio adjustments. On valuation, the report mainly compares AFFO growth, P/AFFO multiples, capital intensity, leverage, and target prices.

Methodology notes

• Industry growth decompositionTower organic growth framework

  Annual escalators, co-location/amendments, new leasing, and churn jointly determine domestic organic growth.

  The report argues that contractual escalators of about 3% provide a stable base, co-location and amendment activity contributes about 1.5%-3%, while carrier M&A, defaults, or network consolidation can create periodic churn.

• Valuation methodsP/AFFO and AFFO growth comparison

  Relative attractiveness is evaluated using 2027E P/AFFO, 2026-2029E AFFO per share growth, and target prices.

  At about 15x 2027E P/AFFO and roughly 8% AFFO per share CAGR, AMT is viewed as being overly penalized in relative valuation for its international exposure and capital intensity.

• Asset qualityPortfolio quality and risk discounting

  International exposure, capital intensity, FX, carrier consolidation, and leverage jointly affect the discount rate for tower assets.

  The report acknowledges that international operations deserve a higher risk discount, but also emphasizes that AMT's data center business and edge computing optionality may create value.

• Demand driversCarrier network investment cycle

  FWA, spectrum deployment, network quality competition, 6G, and mobile data growth form the medium- to long-term demand base for towers.

  FWA expansion by AT&T, T-Mobile, and Verizon and future spectrum deployment may increase demand for network densification, but the main 5G and C-band build cycle is nearing completion, making the base case more moderate.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• American Tower Corp. (AMT)

  Top pick, rated Buy

  Strengths

  Leads in domestic organic growth, with 2026-2029E AFFO per share CAGR of about 8%; valuation of roughly 15x 2027E P/AFFO is reasonable; has optionality in data centers and edge AI inference; net leverage of about 4.9x is below peers' target ranges.

  Weaknesses

  Higher share of international revenue, higher capital intensity than peers, and exposure to country, FX, carrier consolidation, and international churn risks.

  Comparison

  Versus CCI and SBAC, AMT stands out more on growth and capital allocation flexibility, but its international and data center exposure also implies a higher discount rate.

  Risks

  International carrier consolidation, FX volatility, capex intensity, satellite pressure on some new tower demand, and uncertainty around EchoStar-related legal recoveries.

• Crown Castle Inc. (CCI)

  Covered name, rated Neutral

  Strengths

  Cleaner pure-play exposure to U.S. towers, potential upside from cost reductions and valuation rerating, and long-term benefits from stable escalators and carrier network investment.

  Weaknesses

  Domestic organic growth is expected at about 3%, below AMT and SBAC; 2026 churn is expected at about 7%, creating more near-term growth pressure.

  Comparison

  CCI's risks are more tied to the U.S. market and cost execution; compared with AMT it lacks international high growth and data center optionality, and compared with SBAC it has slightly lower churn but also more moderate growth.

  Risks

  Sprint, US Cellular, and EchoStar-related churn, insufficient realization of cost reductions, and slower carrier wireless capex.

• SBA Communications Corp. (SBAC)

  Covered name, rated Neutral

  Strengths

  Domestic organic growth is expected at about 3%-4%, with co-location growth above CCI; it also has opportunities for scale and portfolio optimization in some international markets.

  Weaknesses

  2026 domestic churn is expected at about 8%, the highest among the three major tower companies; average international churn is also higher than AMT's.

  Comparison

  SBAC has higher growth elasticity than CCI but greater churn pressure, and lacks the same data center and edge computing optionality as AMT.

  Risks

  EchoStar- and M&A-related churn, international carrier consolidation, macro and FX risks, and execution risk in asset sales or acquisitions.

• IHS Holdings (IHS)

  Mentioned in coverage but not rated

  Strengths

  Provides exposure to international and emerging-market towers.

  Weaknesses

  The report does not provide a rating or target price, leaving limited evidence behind the investment conclusion.

  Comparison

  Compared with AMT, CCI, and SBAC, IHS is not a core recommended name in this report.

  Risks

  Emerging-market macro, FX, regulatory, and carrier consolidation risks.

• AT&T, T-Mobile, Verizon

  Drivers of tower demand

  Strengths

  FWA growth, spectrum deployment, network quality competition, and mobile data growth support long-term tower investment.

  Weaknesses

  Major build cycles such as 5G and C-band are nearing completion, and near-term wireless capex may stabilize or slow.

  Comparison

  T-Mobile leads on network quality but still needs to maintain its advantage; Verizon may increase investment to improve customer experience; AT&T may bring incremental demand again after EchoStar spectrum deployment.

  Risks

  If carriers shift toward lower-cost network solutions, reduce high-rent sites, or delay spectrum deployment, incremental tower leasing could come in below expectations.

Key data

• Coverage and ratingsAMT Buy; CCI Neutral; SBAC Neutral; IHS Not RatedThe report initiates coverage of the U.S. tower sector.
• Target pricesAMT $215; CCI $95; SBAC $205Disclosed in the table of contents and investment view sections.
• AMT growth2026-2029E AFFO per share CAGR of about 8%Above the roughly 5%-6% range for CCI and SBAC.
• AMT valuationAbout 15x 2027E P/AFFOThe report views the relative valuation as reasonable and discounted for international exposure and capital intensity.
• Industry revenue trendNearly 2% CAGR decline in 2023-2026E; expected to grow above 3% thereafterThe decline is mainly due to Sprint, EchoStar, and US Cellular-related churn, with support later from escalators, spectrum, and network investment.
• Domestic organic growth rankingAMT about 4%-5%; SBAC about 3%-4%; CCI about 3% (2027-2029E)AMT is expected to remain the leader.
• 2026 domestic churnAMT about 5%; CCI about 7%; SBAC about 8%Expected to gradually normalize to about 1%-2% after 2027.
• Contractual escalatorsAbout 3%Annual rent escalators are typically around 3% of prior-year run-rate revenue.
• Co-location/amendment growthAMT about 2.4%-2.7%; SBAC about 2.1%-2.3%; CCI about 1.6%-1.7% (through 2029E)Driven by network densification, FWA, spectrum deployment, and carrier competition.
• International tower growthAMT and SBAC international organic growth expected at about 4%-6% after 2026Build-to-suit towers drive growth, but carrier consolidation and macro uncertainty bring higher churn.
• Global traditional tower count5.55 million in 2025 rising to 6.53 million in 2035, with 2025-2035 CAGR of about 1.6%Increment of about 975,000 towers, the vast majority from markets outside the U.S.
• FWA subscriber outlookT-Mobile about 14 million; AT&T and Verizon about 6 million each (2029E)FWA users consume more data, potentially driving network densification and tower investment.
• AMT asset structureInternational operations account for about 43% of 2025 tower revenue; capital intensity about 17% of 2025 revenue; net leverage about 4.9xInternational exposure and capital intensity create a discount, but data centers and edge computing provide optionality.

Impact & implications

For investors, the report emphasizes that the tower sector is not a high-growth theme, but rather a combination of stable cash flow, predictable contractual escalators, and optionality tied to network investment. The 2026 churn shock could mark a growth trough, after which industry revenue and valuations may have room to reaccelerate if FWA, spectrum, and carrier competition on network quality play out. In stock allocation, the report favors AMT because it leads on growth and its valuation does not fully reflect the potential of data centers and edge computing; CCI and SBAC need further confirmation that churn pressure is fading, cost cuts are being realized, or international portfolio optimization is progressing.

Risks

• 2026 churn related to EchoStar, Sprint, and US Cellular could be higher than expected, or normalization could occur later than 2027.
• If wireless capex from AT&T, T-Mobile, and Verizon continues to slow after 5G and C-band buildouts, it would weigh on co-location and contract amendment growth.
• Carrier consolidation, macro volatility, and FX risk in international markets could lead to higher churn and valuation discounts for AMT and SBAC.
• While direct-to-cell satellite is unlikely to replace core terrestrial networks, it could reduce demand for new towers in rural and some international regions.
• There is uncertainty around the outcome and amount of the DISH/EchoStar lease recovery litigation.
• If AMT's higher capital intensity and data center investment do not translate into returns, the valuation rerating thesis could weaken.
• If carriers seek cheaper alternatives in high-rent areas, this could create future structural churn.

What to watch

• The actual 2026 churn rates of the three major tower companies, and whether they return to the normal 1%-2% range in 2027 as expected.
• Progress on EchoStar spectrum sales, DISH lease litigation, and related damages recovery.
• The pull from Auction 113, the upper C-band auction, and subsequent spectrum deployment on co-location and amendment activity.
• FWA subscriber growth, network congestion indicators, and wireless capex guidance from AT&T, T-Mobile, and Verizon.
• Whether Verizon increases tower investment to reverse net subscriber losses and improve network experience.
• Delivery of AMT's data center business, CoreSite growth, and demand for edge AI inference.
• International asset transactions, portfolio optimization, FX risk, and carrier consolidation events for AMT and SBAC.
• The actual impact of direct-to-cell satellite and joint ventures to eliminate coverage gaps on rural tower construction.
• The pace of 6G deployment and its potential catalytic effect on new tower leasing cycles.