T-Mobile USA Inks $2.4 Billion Tower Deal With Crown Castle
By VALLI MEENAKSHI RAMANATHAN | September 30, 2012 9:42 PM EST
T-Mobile USA has entered into an agreement with Crown Castle International Corp to sell the operation rights for 7,200 of its wireless broadcast towers for $2.4 billion.
The deal is aimed to facilitate network upgrade and reduce debt at T-Mobile parent company Deutsche Telekom.
Apparently, Crown Castle holds the exclusive rights to lease and operate the antenna towers for about 28 years, with the option to fully acquire them at the end of the lease, the companies said in a statement issued Sept.29. Crown Castle is expected to make the payment by the fourth quarter, at the close of transaction, Bloomberg reported.
Ben Moreland, CEO, Crown Castle, stated that 83 percent of towers were located in top 100 U.S. markets with nearly three-quarters in the top 50.
Analysts stated that it was a good deal for T-Mobile USA, which spends $4 billion on a network upgrade, Reuters reported adding, T-Mobile has been looking to become more financially independent from its parent, which tried to exit the U.S. market in 2011.
Deutsche Telekom stated that the deal is likely to reduce its debt by about $2.4 billion.
T-Mobile USA, the No. 4 U.S. mobile carrier, has been trying to raise funds from tower sale ever since its purchase by AT&T Inc. failed in 2011, owing to regulatory opposition. Besides, competition from rivals has resulted has eroded its customer base, Reuters has pointed out.
Selling towers is a common practice with wireless carriers when they need to raise funds, James Ratcliffe, an analyst with Barclays Capital Inc, told Bloomberg.
“T-Mobile got a good amount of cash and good lease terms. This frees up financial capacity for upgrades in the U.S., and they don’t need to be as dependent on financing from Germany,” Ratcliffe added.
T-Mobile USA has been an acquisition target for quite some time as it is the only carrier that does not provide Apple Inc's iPhone. This puts it at a disadvantage against three larger rivals, Verizon Wireless, AT&T and Sprint.
Previously, Sprint sold about 3,300 towers to TowerCo LLC, in 2008 raising $670 million in cash.
To contact the editor, e-mail:
Most Popular Slideshows
- Manny Pacquiao Vs. Chris Algieri World Tour Kick Off Press Conference In Macau [PHOTOS]
- 2014 US Open Update (Day 4 - Men's Singles): Murray, Djokovic, Raonic and Isner Advance to 3rd Round [PHOTOS]
- Prince Harry & Camilla Thurlow Getting Serious, St. Tropez Holiday Before The Prince’s 30th Birthday [PHOTOS]
- Kate Middleton’s Mom Accused Of Being A Social Climber, Prince George Not Seen By Relatives
Join the Conversation
- Sept 19 iPhone 6 Release Date Confirmed as Apple Sets Sept 9 iWatch, 2 iPhones Intro - Report
- Hundreds of Men Rape Teen for Three Years
- iPhone 6 Release Date Update: 4.7-Inch Model Scores 65.8% In Screen-To-Size Ratio; A Surprise Entry Scales Top Spot [List Attached]
- Product Recall Alert: Hewlett-Packard Pulls Out 6M Power Cords from US, Canada Over Fire Hazard Concerns, Australia Also Affected
- ISIS Wants $6.6M and Release of Aafia Siddiqui in Exchange of Head of Female US Humanitarian Aid Worker, 1st American Fighting for Jihadis Dead
- Ukraine Ceasefire Looks Remote As Putin Talks Tough At Meeting With Poroshenko
- Google Nexus 6 Release May Be the New Google Nexus X Smartphone as New Details Emerge