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AT&T Looks to Sell Off 10,000 Cell Towers, Valued Around $5 Billion

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Bloomberg reports that AT&T is currently in discussions with a few of America’s largest cell tower operators, apparently looking to sell off up to $5 billion worth of towers. Once purchased by the various parties, AT&T will then look to lease the towers, which currently bring in $326 million of annual revenue. According to sources close to the matter, AT&T is looking to bulk up its cash pile as the carrier is planning a massive network upgrade, estimated around $14 billion. 

Now, since AT&T will lease the towers back, customers of the network won’t need to worry about losing coverage area or anything of that nature. This type of thing has been seen before, as T-Mobile made the same type of move last year in September. T-Mobile sold the rights to operate 7,200 cell towers, and pocketed $2.4 billion off of the deal.

Do work, AT&T.

Via: Bloomberg

  • http://www.twitter.com/dback02 dback02

    Sprint did a similar situation with Ericcison. It could slow the network upgrade process, cause there are more steps involved with accessing the towers.

  • http://www.hammertechnologies.net/ Chase Johnson

    This seems like a very stupid idea. So sell something you own to someone, then pay to lease them. Nothing stopping the new owner to kill AT&T once the first contract folds to the highest bidder.

    • Tojen1981

      Doesn’t state it in this article, but I seen in another that the lease was good for 10 years.

  • Buck

    $326M in revenue does not equal an asset worth $5B. If you triple that by adding in the money from lease fees from ATT, it still probably doesn’t equal an asset worth $5B once you consider costs.
    ATT might have PAID $5B to build the towers, but that doesn’t mean they are WORTH $5B.

  • Trevor

    Didn’t ATT literally just acquire a bunch of towers from Verizon? Now they’re selling them off? Silly large businesses and their endless supplies of money.

    • Tojen1981

      Maybe you’re thinking of of spectrum? They swapped some 1.7/2.1 ghz spectrum for some b-block 700mhz spectrum.

      • Trevor

        Aaaah, I think you may be right. Too lazy to search for the article at the moment. Good call.

  • http://twitter.com/geoff5093 Geoff Johnson

    Maybe this is good news, AT&T was probably a lot less willing to share tower space with Verizon, T-Mobile, Sprint, etc. when they owned the towers, but now that a 3rd party will own them they will want as many providers as possible to get the most ROI.

    • Adrynalyne

      Companies share towers all the time. One close to my house is used by Verizon and ATT.

      • http://twitter.com/geoff5093 Geoff Johnson

        Do you know who owns that tower? This is my point, if a 3rd party owns cell towers they are much more willing to share tower space with other providers. If AT&T or Verizon own the tower, there’s a good chance they will be the only provider as they want to be the only carrier providing coverage in that area.

        • Adrynalyne

          Verizon owns it.

    • michael arazan

      Can just see Dish set up a new company to just come in and buy it out from ATT without them knowing it is Dish

  • BigMixxx

    american tower is gonna pick up more business.

    The question is why are they trying to raise capital? It was their CEO who said that they had a couple billion in the bank when they were attempting the t mobile aquisition.

    AND just 5 billion for ATT’s towers? Seems kinda cheap to me.

    • Pedro

      That’s half a million each.

      $100K of steel.
      $100K of assembly
      $100K of support building
      $100K of actual electronics to run a tower
      $100K of ‘cover all the stupid ass assumptions’ made

      Suddenly not so cheap?

      And, by the way, they had to give T-Mobile $5B in cash when the deal fell through. And spectrum.

  • Pedro

    And if there is a problem with a tower they lease, they have to call customer service.

    Press 2 for slow speeds
    Press 3 for tower unavailable
    Press 0 to talk to an Operator

    • https://www.facebook.com/aaron.williams.125 Champion1229

      Hopefully they get to deal with the stupid voice activated ones, you know the ones that are like, “Say yes, to connect to an operator” then you say yes but somehow the system thinks you said no and disconnects you.

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  • Captain_Doug

    C’mon T-mobile, you know you want them…

    • Pedro

      Awesome.

      Hey! We have $5B we got in the failed merger. Let’s buy some towers!!

      I know, T-Mobile probably doesn’t have half of it anymore, but still. The irony.

    • BulletTooth_Tony

      I don’t think you understand what’s going on here…

    • yesterdays

      They arent selling to other carriers. They are selling them to companies that lease/maintain them to carriers.

      • http://www.getintonursing.com/ Jon

        Yep and then they are planning on leasing the towers from the very people they just sold the towers to. It’s a way for AT&T to make a quick $5 Billion that they want to spend expanding their network, while in exchange having to make small (relatively) lease payments to continue using the towers.

  • Diablo81588

    Leasing must be fairly cheap in comparison for this to make sense.

    • Cowboydroid

      It can’t be cheaper, otherwise the purchasing party would be losing money. ATT is simply going to eat the higher long term costs in order to fund this short term capital investment. Which likely means higher bills for those on contract with ATT.

      • Pedro

        Uhm, higher bills for those SIGNING a contract with AT&T.
        Those on contract have, well, a contract.

        • Cowboydroid

          Right…until they sign a new one.

      • BigMixxx

        It’s cheaper. Prime real estate opportunities. Not to mention you don’t have to house resources their to maintain them. you can shift that work to the company that’s buying them.

        • Cowboydroid

          The only way ATT would save money is by cutting administrative costs associated with owning the towers themselves. Because the operating cost doesn’t change a whole lot, independent of who actually operates the towers. But now they have to subsidize the profits of a separate company in leasing the towers. Will they come out ahead in the end? Who knows? The market is not that predictable.

    • kashtrey

      It kind of depends but to ATT it’s cheaper than other forms of capital funding i.e. loan, stock sale, etc. This is a really common practice to get cash relatively quickly when borrowing isn’t as easy http://en.wikipedia.org/wiki/Leaseback

  • Butters619

    Hopefully part of that network upgrade is building more towers lol, because they still haven’t caught up with their network load yet.

  • https://www.facebook.com/aaron.williams.125 Champion1229

    I get what they’re doing but from a business standpoint the whole thing is lost on me. Why would you sell one of your most valuable assets to a third party just to turn around and lease them back (having to pay monthly, quarterly or annual lease fees, taxes, etc).

    • Butters619

      It’s like refinancing your house or car when you need some cash. They could have also done some number crunching and showed the towers are more valuable when they are owned by a third party because other carriers may be more willing to utilize them, so selling for a higher price and leasing back for less may make sense financially.

      • https://www.facebook.com/aaron.williams.125 Champion1229

        Thanks, that makes more sense! But I still don’t see the longterm benefits because in the long run wouldn’t the costs of having to constantly pay for the lease eventually eclipse the price of what it would of cost to pay for the maintenance and upkeep on the towers from the get go (kinda like when you lease a car, you pay all that money every month and at the end have nothing to show for it whereas with buying the car once you pay for the car thats it besides repairs).

        • DoctorJB

          The price on the lease only exceeds the cost if AT&T isn’t doing anything with the money in the mean time. If they use that money to expand their LTE network they can effectively upgrade their systems with little to no cost (just the price of the lease) and discard the obsolete towers with the buyers for MVNOs). It’s a win-win.

    • Tyler Rynberg

      By doing this, they shift maintenance and liability to a 3rd party. In addition, they can write off the leasing fees as operating expense and reduce their taxes.

      • Tojen1981

        Exactly

      • sk3litor

        Will you do my taxes for me? ;)

      • BigMixxx

        on the money…

      • kashtrey

        Yup, that and it’s a relatively easy way to create cash without resorting to debt (getting a loan) or equity (selling more stocks) financing.

      • KleenDroid

        But they will pay taxes on the profit from the sale. Even if you own the towers they still right off operating expenses. I guess they calculated that the upside was greater than the downside.

    • KleenDroid

      This is nothing.

      Many of our states are “or trying” to sell our toll roads to China and leasing them from them.

      Towers are one thing but actually selling our roads to foreign countries is beyond my understanding. They try to say they will save lots of money on repairs.

      Someday we will be leasing the United States and everything in it from China.

  • htowngtr

    So basically share the towers with pre-paid or smaller services?

    • Tojen1981

      Depends. Sometimes the tower owner can/will have two different carriers on the same tower.

      • BigMixxx

        real estate….

    • kashtrey

      Not necessarily, they could lease exclusively if they wanted to. It all kind of depends on what the contract terms are for the sale and lease. The move here isn’t so much about the towers as it is about getting cash quickly and relatively inexpensively.