AT&T Announces $4.85 Billion Deal to Sell Towers and Leases
Published on: 21st Oct 2013
Note -- this news article is more than a year old.
AT&T has announced a USD4.85 billion deal to sell some of its towers and the lease rights to most of the remainder to Crown Castle.
Crown Castle will pay the USD4.85 billion in cash upfront, and will be buying 600 towers from AT&T, and will have exclusive rights to lease and operate approximately 9,100 AT&T towers.
The average term of the lease rights is about 28 years. As the leases expire, Crown Castle will have the option to purchase the towers at the end of the respective lease terms for aggregate option payments of approximately $4.2 billion , which payments, if exercised, would be primarily between 2032 and 2048.
In total the deal could therefore be worth just over USD9 billion.
AT&T will sublease capacity on the towers from Crown Castle for a minimum of 10 years for $1,900 per month per site, with annual rent increases of 2 percent. AT&T has the option to renew up to a total of 50 years. AT&T will also have access to additional reserve capacity on the towers for future use. AT&T expects the additional capacity will help it continue to meet growing demand for mobile Internet services.
During the terms of the leases, Crown Castle will have full operating rights to and responsibilities for the towers. Crown Castle's rights will include the ability to sublease other available space to other companies.
Crown Castle noted that the towers have just an average of 1.7 existing tenants per site, and believes the AT&T towers have sufficient capacity to accommodate at least one additional tenant per tower. Crown Castle also noted that while the transaction increases its tower count by a third, the transaction consideration represents only approximately 15% of its enterprise value.
Following the contemplated transaction, Crown Castle will continue to be the largest wireless infrastructure operator in the US with approximately 40,000 towers throughout the US and extensive small cell operations in over 50 markets.