AT&T to Sell, Lease Cell Towers for $4.85B

Crown Castle will lease 9,100 and buy 600 cell towers to give AT&T the cash to fund its network upgrades and Leap acquisition.

Sarah Thomas, Director, Women in Comms

October 21, 2013

2 Min Read
AT&T to Sell, Lease Cell Towers for $4.85B

AT&T has agreed to sell 600 of its cell towers and lease another 9,100 to Crown Castle for $4.85 billion, the companies announced Sunday evening.

Under the terms of the deal AT&T Inc. (NYSE: T) will get $4.5 billion up front and rights to sublease capacity on the towers from Crown Castle International Corp. (NYSE: CCI) for a minimum of 10 years for $1,900 per month per site, with annual rent increases of 2 percent. The carrier gets the option to renew up to a total of 50 years and will also have access to additional capacity on the towers for future use.

Crown Castle gets exclusive rights to lease and operate 9,100 of its wireless towers, which are located in AT&T's top markets, for the duration of a 28-year lease. When the lease expires, the tower company will have the option to purchase the towers for near what it paid, around $4.2 billion, based on the fair market value at the end of the lease.

In discussing the deal on the company's third-quarter earnings call Monday morning, Ben Moreland, Crown Castle president and CEO, noted that there was a significant increase in new leasing activity in the third quarter as the carriers focused on improving network quality.

Indeed, the need for network upgrades is one reason AT&T has entered into the agreement as it has promised to spend around $12 billion upgrading its network this year. Some extra cash to buy back stock and fund its Leap Wireless International Inc. (Nasdaq: LEAP) acquisition are two other reasons. It's a win-win for the carrier as it gets more money and the ability to add capacity as it needs it.

Crown Castle is the largest independent provider of wireless tower infrastructure in the US. Its deal with AT&T won't hold it back from maintaining similar deals with other operators either. Last year it took over 7,200 of T-Mobile US Inc. 's cell towers for $2.4 billion. Sprint Corp. (NYSE: S) and Clearwire also make up a significant chunk of its tower revenue. (See Sprint & Clearwire Make Up 26 Percent of its Tower Revenue and T-Mobile USA in $2.4B Towers Deal.)

AT&T isn't expecting this deal to have a significant impact on its financial results, which it reports on Wednesday for the third quarter, and anticipates the transaction closing by the end of the year.

— Sarah Reedy, Senior Editor, Light Reading

About the Author(s)

Sarah Thomas

Director, Women in Comms

Sarah Thomas's love affair with communications began in 2003 when she bought her first cellphone, a pink RAZR, which she duly "bedazzled" with the help of superglue and her dad.

She joined the editorial staff at Light Reading in 2010 and has been covering mobile technologies ever since. Sarah got her start covering telecom in 2007 at Telephony, later Connected Planet, may it rest in peace. Her non-telecom work experience includes a brief foray into public relations at Fleishman-Hillard (her cussin' upset the clients) and a hodge-podge of internships, including spells at Ingram's (Kansas City's business magazine), American Spa magazine (where she was Chief Hot-Tub Correspondent), and the tweens' quiz bible, QuizFest, in NYC.

As Editorial Operations Director, a role she took on in January 2015, Sarah is responsible for the day-to-day management of the non-news content elements on Light Reading.

Sarah received her Bachelor's in Journalism from the University of Missouri-Columbia. She lives in Chicago with her 3DTV, her iPad and a drawer full of smartphone cords.

Away from the world of telecom journalism, Sarah likes to dabble in monster truck racing, becoming part of Team Bigfoot in 2009.

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