Verizon (NYSE:VZ) has hired boutique i-bank TAP Advisors to find a buyer and work out a lease-back agreement for its 12K wireless towers by year's end, Bloomberg reports. It adds a deal could yield $6B, given how much AT&T received per tower in last year's $4.83B sale/leasing deal with Crown Castle (NYSE:CCI).
Crown Castle, American Tower (NYSE:AMT), and SBA (NASDAQ:SBAC) have all been buying towers at a heady pace. However, the rising debt loads produced by the purchases could make one or more of the companies respond cautiously to Verizon's move.
Verizon, for its part, is looking to de-leverage some after raising over $60B in debt to help pay for the Vodafone deal. The carrier had $104.2B in net debt at the end of Q2.
Crown Castle (CCI -0.9%) is trading lower following its $4.85B deal to buy and acquire leasing rights to 9.7K AT&T towers, which includes the right to eventually purchase the leased towers for $4.2B. The decline comes even though Crown Castle posted solid Q3 results and issued decent Q4/2014 guidance.
Nomura sees the deal being modestly accretive, and doesn't like the equity dilution and higher operating leverage that comes with it. Crown Castle is issuing 36M shares of common stock, and 7.5M shares of convertible preferred stock.
Though Q3 EPS missed by a penny, Crown Castle's AFFO came in at $1.09/share, above a guidance range of $1.02-$1.04/share and up from $0.79/share a year ago. Q4 AFFO is expected to total $1.09-$1.11/share. Crown Castle expects Q4 site rental revenue of $625M-$630M, up from Q3's $621M (+15% Y/Y).
The company expects 2014 AFFO of $1.546B-$1.561B, up from an expected $1.23B-$1.235B in 2013. The AT&T deal, which increases Crown Castle's tower count by 33% to 40K+, is expected to provide a $245M-$255M boost to 2014 AFFO, exc. financing costs.
Cashing in on the consolidation action among cell phone tower operators, AT&T (T) agrees to lease/sell its tower portfolio to Crown Castle International (CCI) for $4.85B in upfront proceeds.
Crown Castle will have the rights to lease about 9.1K AT&T towers and purchase roughly 600 others. The average term of the lease rights is about 28 years, after which Crown Castle has an option to purchase the towers for approximately $4.2B. AT&T will sublease space on the towers for at least 10 years with an option to renew up to a total of 50 years.
Bloomberg reports AT&T (T +0.6%) is looking for a buyer for its massive cell tower portfolio in a deal that could be worth $5B.
American Tower (AMT -0.3%), Crown Castle (CCI +0.1%), and SBA (SBAC) are natural potential suitors for part or all of the portfolio. AMT is fresh off announcing a $4.8B deal to acquire private tower owner Global Tower, whose assets are mostly U.S.-based.
AT&T has spiked slightly higher on the report. A tower sale would help Ma Bell pay down some of the $75.2B in debt it held at the end of Q2, and thus strengthen its balance sheet as it turns its eyes toward Europe.
Back in March, RBC speculated AT&T could sell its tower assets for a "mid-$5 billion" or higher price tag.
SBA (SBAC +2.1%) and Crown Castle (CCI +3.2%) have joined American Tower (AMT +4.4%) in rallying following news AMT is acquiring giant private cell tower owner Global Tower Partners for $4.8B ($3.3B in cash + the assumption of $1.5B in debt).
The WSJ reported a month ago Global Tower, controlled by a REIT managed by Macquarie, was being shopped. The company owns 5.4K U.S. towers and 500 Costa Rican sites, and also has management rights to 9K+ U.S. sites (mostly rooftop assets) and property interests in another 800.
The deal is expected to close in Q4, and will increase the size of AMT's debt load to $10.3B (offset by just $1B in cash/investments). The announcement comes a month after AMT announced an $811M Mexican/Brazilian tower purchase/lease-back deal with NII Holdings (NIHD +1.4%), and 10 months after it reached a deal to buy 2K German cell sites from KPN for $502M. NII has additional tower assets that could be on the block.
In July, Muddy Waters criticized the accounting behind an earlier Brazilian tower purchase by AMT. The company strongly refuted Muddy Waters' claims.
The WSJ reports private cell tower owner Global Tower Partners "is being shopped to larger rivals." Analysts think the company could fetch $4B.
Global Tower, owned by funds managed by Australian i-bank Macquarie, owns/operates/leases 16K cell sites, 6.4K of which are in the U.S., Mexico, and Costa Rica.
Publicly-traded tower owners American Tower (AMT - $27.8B market cap), Crown Castle (CCI - $20.5B), and SBA (SBAC - $9.5B) have all shown a willingness to grow their footprints via M&A (I, II, III).
The recent performance of their shares could make a deal easier to come by. Likewise, the higher valuations being assigned to tower owners (fueled by expectations 4G investments/mobile traffic growth will keep demand strong) could be motivating Macquarie to put Global Tower on sale.
American Tower (AMT), Crown Castle (CCI) and P-E firms have made second-round bids for T-Mobile USA's (DTEGF.PK) cellular towers, Bloomberg reports. "I expect they will announce a winner in July and probably close the deal by September," says Macquarie analyst Kevin Smithen, who estimates that the assets could fetch $2B.
Crown Castle International (CCI) buys privately-owned NextG Networks for $1B to help boost its portfolio of distributed antenna systems. The deal is expected to close in Q2 and be funded with debt financing.