AT&T strikes $4.85-bn tower deal with Crown Castle

AT&T Inc, the largest carrier in the US, yesterday struck a $4.85 billion cash deal to lease some of its cell towers, and sell a few others, to Crown Castle International Corp.

Under the deal, AT&T will sell about 600 towers and lease the rights to about 9,100 for a weighted average term of approximately 28 years. Crown Castle will have the option to purchase the towers at the end of the lease terms for around $4.2 billion.

AT&T has contracted to maintain its communications facilities on the towers for a minimum of 10 years, with an option for 50 more, for a monthly rent of $1,900 per site with annual rent increase of 2 per cent.

AT&T will also have access to additional space on the towers for its future use, subject to certain restrictions. Crown Castle will have the right to sub-lease other available capacity on the towers to additional tenants and believes the AT&T towers have sufficient capacity to accommodate at least one additional tenant per tower.

Houston-based Crown Castle, which operates wireless communications towers across the US and in Australia, expects to fund the transaction with cash on hand and equity and debt financing, including borrowings under its revolving credit facility.

After the closure of the deal, Crown Castle will continue to be the largest wireless infrastructure operator in the US with approximately 40,000 towers throughout the US and extensive small cell operations in over 50 markets.

"We are very pleased with our agreement with AT&T, which strengthens our position as the largest provider of shared wireless infrastructure in the US, which we believe is the largest, fastest growing and most profitable wireless market in the world," said, Ben Moreland, Crown Castle's president and CEO.

"Consistent with our focus on the top 100 US markets, nearly half of the AT&T towers are located in the top 50 markets, where we expect the majority of network densification and upgrade activity to occur. With an average of only 1.7 existing tenants per site, we expect the AT&T tower assets to provide significant growth opportunities driven by the continued consumer demand for wireless data services,'' he added.

''This deal will let us monetise our towers while giving us the ability to add capacity as we need it. And we'll get additional financial flexibility to continue to invest in our business, maintain a strong balance sheet and return value to our shareholders,'' said, Bill Hogg, senior vice president, Network Planning and Engineering at AT&T.