AT&T Inc. (NYSE:T) Nets $4.8 Billion On Hiving Off Its Tower Business


Dallas, Texas 10/22/2013 (Financialstrend) – The second largest telecom carrier in U.S. in terms of number of subscribers AT&T Inc. (NYSE:T) has agreed to shed its cell towers assets to Crown Castle. The entire deal is valued at $4.8 billion. This decision by the carrier with close to 112 million active subscriber base is being viewed by analysts as a smart move to monetize it non-core assets by selling the tower assets at a premium. The heighten valuation for the tower business is due to the wave of consolidation in the telecom industry. Carriers are concentrating on adding new users and keeping them tied up to their service by offering better voice, data connectivity by shedding their non-core business. AT&T will be hoping to use the proceeds to further enhance its prepaid connection offerings and augment its bandwidth/frequency capacity in order to support more users.

As part of the deal, Crown Castle will by close to 600 towers and lease roughly 9100 towers which are the back bone of wireless mobility. The deal allows Crown exclusive option to lease the reminder of the 9100 towers in the future and make the first offer if the towers come up for purchase on expiry of the lease terms.  In the event of the sale option being exercised, the value of the remaining towers is pegged at close to $4.2 billion. The average term of the current lease agreement is expected to run through the next 28 years.

With the operation of these towers off its purview, AT&T Inc. (NYSE:T) will concentrate on adding more number of users to its subscriber base. It will sublet the towers from Crown for the next 10 years at a minimum by paying $1900 per month per tower. On expiry of the term the telecom operator has a option to extend the lease period to 50 years.

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