Nearly 10,000 cell towers could be up for sale; AT&T planning to lease back what it sells

Reports today indicate that AT&T is considering a sale of its cell towers to other companies for upwards of $5 billion in order to fund other initiatives in the company. According to sources of Bloomberg, AT&T is partnering up with financial firms TAP Advisors LLC and JPMorgan Chase to explore the merits of selling off the 10,000 cell towers the carrier owns in the US.

These towers currently generate about $326 million in annual revenue from roaming and leasing agreements for AT&T, but reports indicate that an all-out sale of the towers could net it up to $5 billion. The expected buyers of so many towers are expected to be some of the largest tower operators in the country such as American Tower and Crown Castle.

Now a sale of the towers by AT&T doesn't mean that customers will lose coverage area, however. The structure of such agreements usually involves a sale of the physical tower sites as well as an agreement to lease back the use of the towers for its network. Similar deals from T-Mobile in the past netted the company $2.4 billion in 2012, and a similar move by AT&T could give it extra cash it needs to further its other initiatives.

Source: Bloomberg


Reader comments

AT&T investigating possible $5 billion sale of cell towers


There is one thing we know for sure. This will be a GREAT DEAL

for TAP Advisors LLC and JPMorgan Chase !

Not a good deal for the users.

Now tower upgrades have to go through TWO companies before they get approved, and a tower company has different priorities than AT&T itself.

(Knowing AT&T, one can't discount the possibility that a tower company might actually be more responsive. But they have many customers, not just one.).

Plus when companies start dumping physical plant, its always a worrying sign. 10K towers aren't something you can rebuild when your tower company decides not to renew the contract, or wants to quadruple the price, or doesn't want to lay more fiber to the tower, or something.

AT&T isn't the only one selling off and leasing back towers, though. These few major tower companies own and lease out a vast number of towers to all of the major carriers, not just AT&T. And in many ways this is a more efficient use of the limited number of towers we have out there (its hard to build more), because one company can effectively and efficiently lease out the rights to one tower to multiple carriers at once. It means in the end thers a possibility to not have unused tower space in places where its needed.

Sure it may end up not being all good, but just because AT&T is selling of its towers doesn't mean you need to think the sky is falling.

Ya but do we even know if there is something in the contract requiring them to do upgrades by a certain point? Or even thw option of buying back the towers after a set period?

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By other initiatives they mean trying to catch up to Verizon!

AT&T trying to scrounge up $5 bill when Verizon just bought themselves for $50 bills!

Yeah, yeah, yeah Verizon's phone selection suckage mucha, for those who buy a new phone every 3 months!

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So AT&T dumps their physical towers and opts to lease them back figuring its more economical. And what happens in 3 years when the deal doesn't go as planned, can they just ink a deal with some other company that has 10k towers laying around?

Seems risky considering its the basic infrastructure of your business but I'm just thinking aloud.

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They cannot afford them all, but it would be nice to see Sprint and tmo team up and buy them.

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Sprint and T-Mo together still can't come near affording these towers. And as I note in the article, T-Mobile already went through the process of selling its own towers (about 7,000) back in 2012, they don't want to own them outright either.

I dont get what is in it for the buyer. The towers generate 326 mil in revenue and ATT wants upwards of 5 bil for them? That is over 15 years of payback assuming they continue to operate for 15 years which is doubtful seeing as though they are probably 2G tech towers. Is the idea that the buyer would retrofit them with new technology? If so wouldnt they be of more value to ATT for expanding coverage anyway?

When a company buys the towers, they don't lose all value. They spend $5 billion (or whatever) on them, making ~$325 million per year off of them AND still have the asset value of the towers at $5 billion (or more in the future).

Also remember that these companies can lease out to any number of carriers, and may have a better strategy to make more money annually off leasing them.

Restrictions from local and federal governments make it hard to just build new towers. There is a lot of inherent value in having the rights to a cell tower and cell site in the US.

They would probably be making more than the $325m for them since they would sign new leases with AT&T as well.

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Great info, thanks! As I said in another comment: seems like a win-win situation to me. AT&T gets an infusion of cash, while decreasing their costs buy selling off towers(no more maintenance, taxes, etc). The buyer not only gets the tower, but more than likely a nice deal from AT&T for a lease, plus the ability to lease to other carriers.

I wonder if these are completely built out sites? If so maybe their strategy is to sell of things that are in "maintenance mode" and start the venture of building out newer sites where they have no coverage.

Well if they are smart they could sell the naming rights to them, like football stadiums. Coverage is brought to you today by Android Central Tower in Wheeling, WV!

That's all I got.

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Somewhere along the line:

All US carriers will switch to LTE. Will this make it easier for all carriers to "share" cell sites?

Will they want to share sites?

As quiet as it is kept ATT and TMobile and the regional GSM carriers share site/roam.

Same thing applies to CDMA Carriers (Verizon and Sprint)

Didn't Sprint sell and leaseback its towers a1-2 years ago?

True but all they would have to do is add the correct radio. ..instead of building and maintaining the entire towet

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T-Mo and AT&T don't share ALL their towers in areas where T-Mo doesn't have network coverage... One of my only "regrets" about my jump to T-mobile from Sprint. There are "gaps" in coverage (any coverage) where AT&T has great signal. Granted, I'm OK with paying a LOT less than I would for AT&T service!

"its other initiatives". Exactly what does that mean I wonder? I would think job 1 for A (add more bloatware) T&T is selling more phones and tablets to run on their network of towers which they want to sell. Hmm..... confused!

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AT&T's other initiatives include continuing to build out its network, make deals to get new handsets and continue to market its network, among countless other things.

These big carriers are no different than any other extremely large corporations — they have a lot going on behind the scenes that demands attention just as much (or more) than their consumer-facing business at times.

As I reiterate in the post, selling off their towers doesn't mean they're going to decrease coverage and just move the money elsewhere in the business, it means that right now it makes sense to have $5 billion in cash to use more than it does to have the asset of the towers.

I think any towers on public property should be required to lease space to any carrier.

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Would the lease deal be exclusive for those towers? If not couldn't T-Mobile talk with the new owners and be able to use them? Seems like it would be a no brainer if it increases coverage without having to build out more towers.

It looks like most of the towers already have other carrier antennas on them as well as AT&T.

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Ahh, if that's the case then I can see why they would want to sell. Less cost for them because now they won't have to maintain the towers or the teams dedicated to maintaining them, not to mention land taxes and everything else that goes along with owning towers. AT&T will receive a large cash influx for whatever they want to do and get to lease back the use of the towers from whoever buys them. Then the buyer can not only lease to AT&T but maybe even other carriers, thereby increasing their revenue.

Seems like it would be a win-win for both parties. AT&T not only gets money, but saves money in the long run. The buyer will get a deal to lease the tower to AT&T and probably be able to lease it to whoever else they want.