), one of the largest independent tower companies, is set to place
yet another bid for T-Mobile U.S.'s tower arm. The firm has placed
its bid for the second time after the German company named Crown
Castle as a potential bidder for its tower arm in March 2012. We
believe that a successful acquisition will strengthen Crown
Castle's leading position in the tower industry.
Based in Bellevue, Washington, the U.S. subsidiary of Deutsche
Telecom AG owns nearly 7,300 towers and has also received bids from
Crown Castle's biggest rival
American Tower Corp.
) and other private equity companies. T-Mobile has put its tower
assets for sale after the $39 billion bid by telecom giant
) failed last year due to regulatory issues.
T-Mobile is the only large telecom carrier in the U.S. which
does not offer
) iPhone, and lost 1.65 million contract customers last year. It is
expected that if successful, the deal could fetch about $2 billion
for T-Mobile. We believe that it is selling its tower arm to
generate cash, which is likely to be used to bid for the wireless
spectrum and for its planned $4 billion investment in 2013 to
strengthen its 4G network.
Crown Castle manages around 24,700 towers worldwide and earns a
major part of its revenue through leasing antenna spaces on self
controlled towers to other wireless carriers. If the company
manages to acquire T-mobile's tower arm, it will get 7,300
additional towers to provide services to carriers which will help
it achieve better operational efficiency.
In recent times, mobile subscribers' growth has significantly
boosted the wireless tower industry. Moreover, future financials
are likely to be propelled by strong demand for wireless voice,
broadband wireless data and video networks, which require more
Furthermore, consolidation in the traditional wireless space
will help the company concentrate on complementary wireless tower
solutions like Distributed Antenna System (DAS). Recently, Crown
Castle acquired privately held NextG Networks Inc. for $1 billion
which has enhanced its DAS network by 10,000 nodes in 26 U.S.
However, we believe that the 21.74% increase in its debt in the
last quarter act as a hindrance to the acquisition, making it
difficult for the company to acquire T-Mobile's tower arm
We are maintaining our long-term Neutral recommendation on Crown
Castle International Inc. Currently, Crown Castle International has
a Zacks #3 Rank, implying a short-term Hold rating on the
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