Crown Castle has upped its full-year guidance for the second time this after posting a strong set of quarterlies on the back of 5G growth in the US.

But while business in the telecoms towers space is buoyant, Crown Castle’s figures raise some serious questions over the small cells market.

The towers specialist cited the “robust 5G leasing environment” in the US as the catalyst behind its second-quarter performance, the highlights of which included an 8% increase in site rental revenues to US$1.43 billion, 15% EBITDA growth to $958 million, and 22% growth in AFFO, that’s adjusted funds from operations, a key metric in the real estate investment trust (REIT) sector.

“We are seeing the highest level of tower activity in our history as our customers are focusing on utilizing towers in the first phase of deploying their 5G networks nationwide,” said Crown Castle chief executive Jay Brown.

That increased level of activity in the towers space has led the company to predict 12% growth in AFFO per share for the full year, having guided for an 11% hike at the midpoint back in April at its Q1 numbers, which was itself an increased forecast. It has also increased its forecasts across all metrics since Q1, including revenues and earnings. The numbers themselves are not hugely important, but the message is: Crown Castle, and the towers sector in general, are on a roll.

But the picture in the small cells market, long predicted to come into its own in the 5G era, is less rosy. While increased towers activity is a big driver of Crown Castle’s improved revenue forecast, this is tempered somewhat by an expected reduction in the contribution from small cells.

“This initial focus on towers has led to delays in some of our small cell deployments that impact the timing of when we expect to complete the nearly 30,000 small cells currently in our backlog,” Brown noted.

Crown Castle said it expects to deploy around 5,000 small cells this year, which is around half its original forecast. It attributes the decline to customers prioritising towers over small cells at this stage of 5G deployment; zoning and permit challenges; and the cancellation by T-Mobile US of around 1,000 small cells earmarked for Sprint that should have been rolled out this year.

The scenario remains the same in 2022, when the firm expects to deploy a similar number of small cell nodes as it will this year. But it insists this is a temporary blip and that it will roll out those 30,000 small cells eventually.

“We continue to believe the deployment of 5G in the US will extend our opportunity to create value for our shareholders as our ability to offer towers, small cells and fibre solutions, which are all integral components of communications networks, will be critical as our customers densify their networks to deliver 5G,” Brown said.

The small cells may be – still – all promise and no delivery, but the opposite is true of the towers space, which is exceeding expectations. And for the moment, that’s more than good enough for Crown Castle and its peers.