US wireless infrastructure giant Crown Castle is set to acquire rights to around 9,700 towers from local telco AT&T for US$4.85bn.
The group is buying roughly 600 towers while leasing the remainder for an average of 28 years each, increasing the number…
US wireless infrastructure giant Crown Castle is set to acquire rights to around 9,700 towers from local telco AT&T for US$4.85bn.
The group is buying roughly 600 towers while leasing the remainder for an average of 28 years each, increasing the number of masts it has rights to in the US by a third to approximately 40,000.
The deal also gives Crown Castle fixed price options to buy the towers as their leases expire, primarily between 2032 and 2048, costing around US$4.2bn in total.
Ben Moreland, Crown Castle’s CEO, said: “Consistent with our focus on the top 100 US markets, nearly half of the AT&T towers are located in the top 50 markets, where we expect the majority of network densification and upgrade activity to occur.
“With an average of only 1.7 existing tenants per site, we expect the AT&T tower assets to provide significant growth opportunities driven by the continued consumer demand for wireless data services.”
Crown Castle plans to fund the initial transaction with cash on hand, equity and debt financing, including borrowings under its revolving credit facility.
Reporting Q3 results today, it said it had around US$219m in cash and cash equivalents as of 30 September 2013, and roughly US$$1.3bn of availability under its revolver.
The towerco has also announced plans to sell 36 million common shares and 7.5 million shares of its mandatory convertible preferred stock, Series A, in a registered public offering. It also intends to grant underwriters the option to purchase up to an additional 5.4 million common shares and an extra 1.125 million shares of the preferred stock.
AT&T, which could use the proceeds for M&A as it explores the possibility of entering Europe – where it has been linked to a possible acquisition of British mobile operator Vodafone – has also agreed to sublease capacity on the towers.
The telco will pay US$1,900 per month per site for a minimum of ten years, with annual rent increases of 2%. Crown Castle believes the towers have enough capacity to accommodate at least one additional tenant each, although AT&T has rights to some additional space on them for future use.
Bill Hogg, senior vice president of network planning and engineering at AT&T’s services unit, said: “This deal will let us monetise our towers while giving us the ability to add capacity as we need it.
“And we’ll get additional financial flexibility to continue to invest in our business, maintain a strong balance sheet and return value to our shareholders.”
AT&T is being financially advised by TAP Advisors and JP Morgan Securities. Crown Castle, which reported Q3 revenue up 21% on the year to US$749m, hired Cravath, Swaine & Moore for legal advice.
Both companies expect to close the deal before the end of this year.
