Leading wireless tower operator,
Crown Castle International Corp.
) has entered into a definitive agreement with telecom giant
) to acquire exclusive rights of 9,700 wireless towers of the
later for a total consideration of $4.85 billion in cash. Per the
deal, Crown Castle will buy 600 wireless towers of AT&T and
get the exclusive right to lease and operate about 9,100 others
for an average of 28 years.
Additionally, Crown Castle will have the option to purchase
the remaining 9,100 towers for approximately $4.2 billion between
2032 and 2048. AT&T will lease network capacity from those
towers for at least 10 years for $1,900 per month per site with
2% annual rent increase. AT&T has the option to extend this
lease period for another 50 years. The deal is expected to close
by the end of this year. Crown Castle currently has a Zacks Rank
We believe that this deal is a major positive for Crown
Castle. Firstly, after completion of this deal, the company will
become the largest wireless operator in the U.S. outpacing its
American Tower Corp.
). Secondly, half of the 9,700 towers of AT&T are located in
the top 50 U.S. markets where wireless carriers are actively
involved in network upgrades and densification. Thirdly, Crown
Castle expects to add at least one additional tenet per tower,
thereby increasing profitability.
Crown Castle has decided to finance this deal through cash on
hand and equity and debt financing, which will include borrowing
from its existing revolving credit facility. Management stated
that the deal would be slightly accretive to its adjusted
operating income in 2014. In Oct 2012, the company acquired 7,200
wireless towers from
T-Mobile USA Inc.
) for approximately $2.4 billion.
This deal will also help AT&T to divest its non-core
wireless tower operations and will provide significant cash to
pursue its core activities. The company has decided to invest
$11-$12 billion this year to upgrade its wireless and high-speed
broadband (Internet) networks. AT&T is expected to acquire
Leap Wireless International for around $1.2 billion.
Additionally, in Jul 2013, AT&T declared its plan to
repurchase 300 million of its common outstanding shares.
AMER TOWER CORP (AMT): Free Stock Analysis
CROWN CASTLE (CCI): Free Stock Analysis
AT&T INC (T): Free Stock Analysis Report
T-MOBILE US INC (TMUS): Free Stock Analysis
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