T-Mobile USA has agreed to sell approximately 7,200 towers to US towerco Crown Castle for US$2.4bn, with T-Mobile to leaseback the towers for at least 10 years. Crown Castle will have the exclusive right to lease and operate the T-Mobile towers for…
T-Mobile USA has agreed to sell approximately 7,200 towers to US towerco Crown Castle for US$2.4bn, with T-Mobile to leaseback the towers for at least 10 years.
Crown Castle will have the exclusive right to lease and operate the T-Mobile towers for approximately 28 years, and has the option to purchase the towers at the end of the respective lease terms for a further payment of approximately US$2.4bn, according to a joint statement from the companies.
Crown Castle expects the deal to close in Q4, and said it will fund the deal with cash on hand and debt financing.
The Deutsche Telekom subsidiary hired TAP Advisors in March to sell the towers, with Deutsche Bank also retained.
DT will use the proceeds from the transaction to retire corporate debt and strengthen its financial position to help fund investments for growth.
“We are pleased to reach this mutually beneficial agreement with Crown Castle and take another step closer to realizing the bold vision outlined in our challenger strategy to solidify our competitiveness in the industry by investing in areas where we anticipate the strongest return for our customers,” said John Legere, newly appointed CEO of T-Mobile USA.
T-Mobile has committed to maintain its communications facilities on the towers from Crown Castle for a minimum of 10 years, with annual rent escalation provisions tied to the consumer price index.
T-Mobile’s rent includes the rights to complete its current network modernisation on these sites.
“We are very pleased with our agreement with T-Mobile, which strengthens our position as the largest provider of shared wireless infrastructure in the US, which we believe is the largest, fastest growing and most profitable wireless market in the world,” stated Ben Moreland, Crown Castle’s CEO.
Crown Castle estimated that the T-Mobile towers will generate approximately US$125m to US$130m in adjusted funds from operations before financing costs in 2013, and will have sufficient capacity to accommodate at least one additional tenant per tower without significant incremental capital.
T-Mobile was advised by Jones Day while Crown Castle was represented by Cravath Swaine & Moore.
