) is reportedly planning to offload its wireless towers, which
could add about $5 billion to the kitty of the leading U.S.
telecom carrier. A potential deal will put an end to months of
speculation about the sale of AT&T's towers that surfaced in
According to media reports,
American Towers Corp.
Crown Castle International Corp.
SBA Communications Corp.
) are believed to be some of the possible bidders for the assets.
AT&T is consulting TAP Advisors LLC and JPMorgan Chase for
AT&T currently owns around 10,000 towers, and has steady
revenue generating capacity, as it leases space on its towers to
other carriers. However, there is a growing tendency among
wireless operators to offload its non-core assets to concentrate
on its primary mobile service business.
The tower sale is believed to be an effort by AT&T to
strengthen its liquidity to successfully complete its planned
investment of $14 billion as the company targets to expand its
LTE network to 300 million people by the end of 2014.
Additionally, the company also plans to repurchase shares that
could reach up to $11 billion.
Tower operators generally lease the tower space to a number of
carriers thus improving the profitability on the towers. Most of
the big tower companies have taken the acquisition route to
enhance its operations. In Sep 2012, Crown Castle acquired
T-Mobile U.S.'s 7,200 wireless towers while rival American Tower
snapped up 4,500 towers from NII Holdings Brazil. Recently,
American Tower also struck a deal with MIP Tower Holdings LLC in
a deal worth $4.8 billion.
The wireless industry is currently undergoing consolidation as
big carriers are acquiring smaller counterparts to satisfy their
spectrum demand and expand inorganically. Being no exception,
AT&T recently proposed to acquire prepaid carrier Leap
Wireless International Inc. for $1.2 billion.
Among the recent few deals the most significant was Verizon
Communication Inc.'s recent agreement to buy Vodafone Group
Plc.'s 45% stake in Verizon Wireless for a staggering $130
billion. Softbank's acquisition of 78% of Sprint for $21.6
billion is also worth mentioning.
We believe that given the current consolidation scenario
within the wireless industry, a possible deal could well be on
the cards, provided AT&T gets a proper valuation for its
assets. Although the deal will strengthen AT&T's balance
sheet, it could impact its operating cost as it has to lease back
the space from the buyer.
AT&T currently carries a Zacks Rank #3 (Hold).
AMER TOWER CORP (AMT): Free Stock Analysis
CROWN CASTLE (CCI): Free Stock Analysis
SBA COMM CORP (SBAC): Free Stock Analysis
AT&T INC (T): Free Stock Analysis Report
To read this article on Zacks.com click here.