Crown Castle International Corp. announced it plans to acquire 467 towers from TrinTel Communications Inc., based in Irving, Texas, for about $145 million in cash. The acquisition of the towers is expected to close on or about Aug. 1.
TrinTel’s portfolio produces about $14.4 million in annual site rental revenue, more than 99 percent of which is derived from wireless telephony tenants, and about $9 million in annual site rental gross margin. Further, the portfolio was built between 1998 and 2001 and is generally concentrated in key U.S. markets such as Dallas-Fort Worth, Detroit and New Orleans.
The company also invested an additional $55 million in FiberTower Corp., a privately held provider of backhaul services that designs, deploys and operates radio-based backhaul networks for major wireless carriers. With this investment, Crown Castle now owns about 32 percent of FiberTower and remains FiberTower’s largest shareholder. Commensurate with Crown Castle’s investment, FiberTower raised $150 million through an equity offering, with investments from Oak Investment Partners and Affiliates, Tudor Investment Corp. and Affiliates, Goldman, Sachs & Co. and Meritech Capital Partners and Affiliates. In addition, Crown Castle signed an agreement with FiberTower to lease space on at least 400 Crown Castle towers within two years.
Crown Castle used cash balances to purchase its common shares and make its investment in FiberTower. The company said it expects to use its cash and borrowings under a contemplated new revolving credit facility to acquire the TrinTel towers. Crown Castle expects the impact to its 2005 recurring cash flow, defined as adjusted earnings before interest, taxes, depreciation and amortization less interest expense less sustaining capital expenditures), from the acquisition of the TrinTel towers to be minimal given the timing of the transaction and the expected increase in interest expense from additional borrowings.
Crown Castle also bought 10.4 million shares of its common stock for $175.8 million during the second quarter, which includes previously announced purchases of 8 million shares for $131.5 million. The average price of the stock purchased was $16.94 per share. The company’s outstanding share count is 213.6 million.
“We continue to invest in opportunities we believe will drive long-term shareholder value,” said John P. Kelly, president and chief executive of Crown Castle. “As we’ve stated previously, we analyze investments in our common shares similarly to the acquisition of other towers. I am excited that we’ve been able to commit $320 million to investments in our core tower business through the purchase of nearly 5 percent of our common shares outstanding as of March 31, 2005, and the acquisition of the TrinTel towers. Further, our additional investment in FiberTower, as part of a successful $150 million equity offering by FiberTower reflects our belief that there will be a significant demand for the backhaul solutions FiberTower provides to wireless carriers as the demand for additional wireless minutes of use increases.”
