AT&T Logo

AT&T Strikes $4.85 Billion Tower Deal With Crown Castle

AT&T Inc. (NYSE:T) agreed to lease or sell 9,700 of its wireless towers to Crown Castle International Corp. (NYSE:CCI) for $4.85 billion.

AT&T Strikes $4.85 Billion Tower Deal With Crown Castle

The deal is expected to bolster the largest U.S. phone company’s balance sheet.

AT&T Terms Of The Deal

Under the terms, AT&T Inc. (NYSE:T) would lease the rights to roughly 9,100 of its company-owned wireless towers to Crown Castle International Corp. (NYSE:CCI), with the latter purchasing about 600 AT&T towers.

The terms of the lease would facilitate Crown Castle to have exclusive rights to lease and operate approximately 9,100 AT&T Inc. (NYSE:T) towers, with the average terms of the lease rights spanning approximately 28 years. As the lease expires, Crown Castle will have fixed price purchase options, totaling about $4.2 billion, for these towers based on their estimated fair market values at the end of the lease terms.

In return, AT&T Inc. (NYSE:T) will sublease capacity on the towers from Crown Castle International Corp. (NYSE:CCI) for a minimum of 10 years for $1,900 per month per site, with a provision to increase rent by 2 percent per annum.

The largest U.S. phone company will also have access to additional reserve capacity on the towers for future use. The company anticipates the additional capacity will help it continue to meet growing demand for mobile Internet services.

Deal Size Closer To Earlier Figure

As reported earlier, AT&T Inc. (NYSE:T) was considering selling its data-carrying towers, as it seeks to rid itself of some under-performing assets in order to boost profitability. People familiar with the matter earlier anticipated the sale would fetch as much as $5 billion.

The sale marks the latest move in a series of mergers, acquisitions and divestments in the wireless data industry in the last year or two. The industry has changed completely with the rise of mobile devices and that has necessitated a change in the structure of their business.

Industry Witnesses Consolidation

Last month, American Tower was in a $4.8 billion acquisition deal with Global Tower Partners.

Similarly, Verizon Communications Inc. (NYSE:VZ) also announced its intention to buy the remaining half of U.S. carrier Verizon Wireless from Vodafone Group Plc (NASDAQ:VOD) (LON:VOD). Earlier this year, most of Sprint Corporation (NYSE:S) was sold to Softbank, a Japanese firm, and smaller U.S. carrier T-Mobile merged with PetroPCS Communications.

Scott Moritz & Serena Saitto of Bloomberg believe that by selling towers, carriers can focus on more profitable parts of their businesses. By leasing the space on their sites to multiple carriers, the tower operators can squeeze more profit out of their assets.

Michael J. De La Merced of Dealbook speculates that AT&T Inc. (NYSE:T) may consider striking more deals in the near future.

LEAVE A COMMENT


Saved Articles
X
TextTExtLInkTextTExtLInk

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted for being a sophisticated and loyal reader.

Welcome in the new year by signing up up for ValueWalkPremium today and get our exclusive content for 40% off. This is our second biggest discount ever!!

Use coupon code VIP20 or click on the button below

Limited time offer only ENDS 1/31/2019 or after next 30 23 subscribers take advantage whichever comes first – please do not share this discount with others

 

0