Speaking during Metro Connect 2025’s annual State of the Market session, Gregory Williams, director for technology, media, and telecoms at TD Cowen, said we’re witnessing a “peak year” for fibre deployment, driven by AI and ever-increased connectivity demands.
Meanwhile, the outlook for towers was far less optimistic, with related stocks continuing their downward trajectory, reflecting broader concerns about elevated borrowing costs and sluggish network expansion.
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Fibre boom gains momentum
The fibre sector remains in high-growth mode, with operators aggressively expanding their networks. Williams highlighted that major fibre players are adding new routes at an unprecedented rate, with some estimates projecting up to 10 million additional homes connected annually.
AI and data centre connectivity are key drivers of this expansion, pushing fibre deeper into remote locations and underpinning the industry's long-term investment appeal.
Wireless carriers are also increasingly reliant on fibre, integrating it into their broader network strategies.
This convergence is accelerating buildouts, making fibre a strategic imperative rather than just an optional infrastructure play.
“Wireless carriers need fibre-to-the-home as part of their future roadmap, and this has significantly ramped up investment activity,” Williams said.
Fibre mergers and acquisitions have also picked up pace, with industry players consolidating assets to strengthen market positions.
Williams said that notable transactions such as T-Mobile's acquisition of MetroNet, underscored the increasing value of fibre-based networks in the telecom ecosystem.
Towers under pressure
While fibre is thriving, the tower sector tells a different story. Tower stocks have seen significant declines, with Williams pointing out that they were down 20% in 2023 and have dropped another 21% so far in 2024.
The key culprit? According to Willian’s talk, higher-for-longer interest rates have dampened capital-intensive infrastructure investment and made deal-making more difficult.
Crown Castle's ongoing small-cell divestitures and concerns over potential dividend cuts have added further strain, dragging down the broader tower market.
In addition, the anticipated 5G investment boom has not materialised at the expected scale, leaving tower operators in a prolonged “spending lull”.
“Unfortunately, we’re not seeing a meaningful pickup in activity,” Williams said. “There’s typically a six-to-nine-month lead time for tower deals to translate into bookings, but right now, the pipeline remains weak.”
Adding to the pressure, international tower deals continue to trade at lower multiples due to market uncertainty and foreign exchange risks. This divergence makes it harder for US-based tower firms to justify aggressive expansion abroad, further limiting growth opportunities.
The market’s new reality
As AI reshapes digital infrastructure demands, Williams’s market report showed fibre remains the standout winner, while towers continue to struggle.
Alongside fibre, the data centre sector has seen intense demand, which has translated into strong stock performance.
Williams pointed out that the lack of investment alternatives in the public market has created a ‘TINA’ (There Is No Alternative) effect, where investors have little choice beyond Digital Realty and Equinix, driving valuations upward.
Williams said that the TINA effect combined with hyperscale demand has resulted in unprecedented valuation premiums, effectively driving consolidation and capital inflows.
Williams emphasised that despite the shifting investment landscape, long-term fundamentals for digital infrastructure remain solid.
However, the sector is increasingly divided: fibre and data centres are attracting fresh capital, while towers must navigate an uncertain future until interest rates stabilise and network buildouts regain momentum.
With fibre rollouts accelerating and telecom firms vying for strategic assets, the sector is primed for further consolidation.
“We’re in a fibre frenzy — regional roll-ups will continue, and eventually, the big players will step in to consolidate the consolidators,” Williams said. “The game is far from over.”
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