US towerco Crown Castle has completed the acquisition of the long-term rights to more than 9,000 of incumbent AT&T’s towers, and bought a further 600 sites outright.
The US$4.83bn deal was announced in October and increases the number of masts Crown…
US towerco Crown Castle has completed the acquisition of the long-term rights to more than 9,000 of incumbent AT&T’s towers, and bought a further 600 sites outright.
The US$4.83bn deal was announced in October and increases the number of masts Crown Castle has rights to in the US by a third to 40,000.
As part of the agreement, Crown Castle has fixed-price options to buy the towers as their leases expire, primarily between 2032 and 2048. The portfolio would cost around US$4.2bn in total.
When announcing the deal, Crown Castle said this tranche of towers averaged 1.7 tenants per site, therefore representing a significant growth opportunity.
Crown Castle funded the deal through a US$3.42bn equity offering, cash on hand and debt financing. In its Q3 results it said it had around US$219m in cash and cash equivalents as of 30 September 2013, and US$1.25bn of availability under its US$1.5bn revolver.
In a ratings report Moody’s said it expected the towerco to draw US$875m from the revolver for the AT&T deal, which would leave US$370m available. The ratings agency also said that Crown Castle was securing a new US$500m incremental term loan due 2021 to repay part of the amount drawn under the revolver, leaving US$630m outstanding. Moody’s rated the new loan Ba2.
AT&T, which is leasing the towers back, said it would use some of the transaction proceeds for opportunistic share repurchases and repayment of commercial paper.
In October, AT&T’s senior vice president of network planning and engineering Bill Hogg 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 could add some of the proceeds to its war chest for acquisitions. The Dallas-based telco is widely reported to be looking at opportunities in Europe and has consistently been linked with a takeover offer for Vodafone Group.
AT&T was advised by TAP Advisors and JP Morgan.
Crown Castle, which reported Q3 revenue up 21% on the year to US$749m, hired Cravath, Swaine & Moore for legal advice.
