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4G/3G/WiFi

Uniti sells 486 cell towers to mystery buyer for $190M

Regional fiber company Uniti said it will sell 486 of its 672 cell towers – spread across 33 eastern and central US states – to an unnamed buyer for $190 million.

"Concurrent with the sale of the US towers, we entered into a strategic 'off-take' tower arrangement with a wireless infrastructure partner," the company wrote in a filing with the SEC. "Pursuant to the 'off-take' arrangement, we will continue to build towers in the US and sell those towers to our partner at an agreed upon price during 2020. We also have the option to extend the 'off-take' arrangement to 2021."

When questioned about the transaction this week during the company's quarterly conference call with analysts, Uniti officials declined to provide details, including the identity of the buyer.

"I don't want to comment too much, other than to say that our current buyer is a party that we know well, have worked with in the past and it's one of the non-traditional capital sources that we've talked about many times as being a good source of not only capital but potential partnership for us. And so we're excited about that," CEO Kenny Gunderman said, according to a Seeking Alpha transcript of his comments.

Gunderman added that Uniti isn't exiting the cell tower business but is instead using the sale as an "opportunity to inject liquidity in a volatile capital market period and this is a good way to add liquidity versus issuing expensive securities."

Indeed, the company said it currently counts 270 additional towers in various stages of development.

US wireless industry executives count roughly 200,000 macro cell towers across the US, a figure that does not include the hundreds of thousands of small cells that operators and vendors hope to switch on in the coming months and years. Giant cell tower companies like Crown Castle, SBA Communications and American Tower own the bulk of those macro cell towers, though there's been plenty of recent transactions in the space among some of the market's smaller providers.

For example, Phoenix Tower International recently purchased around 200 towers from Tower Ventures Holdings for an undisclosed amount, while AT&T sold 1,000 towers to Peppertree Capital Management for $680 million last year.

Importantly, the Wall Street analysts at New Street Research recently raised their expectations for the tower industry in general on expectations that companies like T-Mobile and Dish Network will raise spending in the sector. The analysts also noted that the auction of C-Band spectrum ought to generate more spending on towers as operators look to put that specrum to use. "High multiples are now warranted," the analysts noted of tower-related stocks.

In its overall quarterly results, Uniti reported revenues of $268.5 million and a net loss of $11.4 million, and executives boasted of "robust momentum in all of our businesses."

Company officials also cheered Uniti's recent settlement with Windstream.

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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