AT&T Inc., the multinational telecommunication giant, is reportedly selling and leasing 9700 wireless towers located in the top 50 markets of the United States to Crown Castle International for an all-cash deal worth $4.85 billion, according to several news reports.
In a statement released Sunday, AT&T said that while Crown will be purchasing 600 towers, it will also be leasing and operating other 9100 towers. The latter will have the option to buy the leased space once the agreement expires. The lease is valid for about 28 years approximately, reports Bloomberg.
The transaction is slated to be completed by the end of 2013 and once the deal is sealed, AT&T will continue renting space in the towers for a monthly rent of $1900 with a 2 percent annual rent increase. It will operate from the towers for a minimum of 10 years. It will have an option to extend the lease to 50 years, reports Reuters.
According to USA Today, AT&T is selling to gather cash to buy back 300 million of its shares, which could cost more than $10 billion. Also, the company had announced recently that it would be investing about $11 billion to $12 billion on speeding up its networks. Further, it had also expressed its interest in expanding business, specifically in the European region. The deal could help the company gather capital for its future endeavours.
"This deal will let us monetize our towers while giving us the ability to add capacity as we need it. We'll get additional financial flexibility to continue to invest in our business and maintain a strong balance sheet and return value to our shareholders," Bill Hogg, Senior Vice President at AT&T said in a statement.
Meanwhile, Crown Castle is quite happy with the acquisition. Ben Moreland, Crown Castle's President and CEO said that the deal would make the company "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," reports International Business Times.
This is not the first tower acquisition deal for Crown. In October 2012, the company sold $1.65 billion in debt to purchase 7200 towers from T-Mobile USA, reports USA Today. The company was advised by law firm Cravath, Swaine & Moore in the AT&T deal.
Crown Castle will hold a conference call on October 21 to discuss the deal and its third quarter 2013 results.
