US telco giant Verizon Communications is reportedly close to disposing of more than US$10bn worth of assets, including its mobile towers and parts of its fixed-line business, to reduce debt and fund spectrum acquisitions.
A deal could be announced later…
US telco giant Verizon Communications is reportedly close to disposing of more than US$10bn worth of assets, including its mobile towers and parts of its fixed-line business, to reduce debt and fund spectrum acquisitions.
A deal could be announced later this week, according to a Wall Street Journal report citing people familiar with the matter.
The sale would involve a number of suitors, although the report did not name any companies.
Verizon declined to comment.
Last week, the company won 181 licences in the country’s latest AWS-3 spectrum auction, covering 61% of the territory, for a total value of US$10.4bn.
The airwave tender kicked off last November and closed on 29 January, raising a record US$44.9bn in provisional bids.
Payments for the acquired spectrum are due in the coming weeks, prompting bidders to boost their war chests before settling the bill.
The New York-based operator has also been striving to reduce its debt levels, which stood at US$113.3bn as of 31 December 2014, as a result of its US$130bn acquisition of Vodafone’s 45% stake in Verizon Wireless last February.
In November, it issued a €2.4bn (US$2.9bn) bond for general corporate purposes, including spectrum acquisitions and debt repayment.
Fitch, which rated the offering A-, said that Verizon’s ratings and stable outlook were not affected by its spectrum acquisitions.
“Going forward, Fitch expects Verizon to materially reduce debt over the next few years. Debt reduction, combined with EBITDA growth, is expected to reduce leverage to a level appropriate for the rating in the 2016/2017 timeframe as a result of Verizon’s strong position in the wireless industry and the significant cash flows generated by the wireless business,” the agency said in a statement.
In early January, Verizon CEO Lowell McAdam said during a conference that the carrier was interested in offloading its tower portfolio and certain wireline assets so that it could focus its efforts on a “more narrow geography”.
McAdam also stressed that the company will continue to invest in the network by acquiring spectrum, deploying AWS and expanding fibre optic services across urban areas.
In September last year, Verizon’s CFO, Fran Shammo, said the idea of selling and leasing back towers was inspired by AT&T’s US$4.85bn sale of some of its towers to Crown Castle in 2013.
The company was rumoured to have mandated TAP Advisors, which had previously advised AT&T, to assist in the sale.
