Sprint Corp.’s often-rumored plans to sell its significant tower holdings could be getting closer to a reality as the company reported during its second-quarter conference call that it was exploring strategic initiatives for its approximately 6,300 cellular towers. Analysts estimate the towers could be worth around $1 billion on the open market.
A number of industry analysts noted last week that Sprint has recently begun offering its tower “book” to potential suitors, possibly including AAT Communications Corp., Global Signal Inc., American Tower Corp. and Crown Castle International Corp., though the potential $1 billion price tag could be tough for most to swallow.
AAT told RCR Wireless News last week that it was looking at using proceeds from its recently closed $325 million senior credit facility for acquisitions. The facility includes a $200 million Term Loan B, a $75 million delayed-draw Term Loan A and a $50 million revolver, which the company originally said it would use to repay debt, increase its cash balance and to fund new acquisitions and tower development.
“This facility will leave us with a cost-efficient capital structure and flexibility for growth,” said Jerry Kent, AAT’s chief executive officer.
Crown Castle recently announced it was selling off its U.K. business that included 3,600 tower sites for more than $2 billion and that it could use some of those proceeds on possible investing in new U.S. business opportunities.
Raymond James analyst Ric Prentiss wrote in a research note that American Tower and Crown Castle’s stock were trading down last week due to their potential interest in Sprint’s towers, though he thought a more likely bidder would be one of the other companies.
“While we expect all tower companies to at least get the book and take a look we think the more likely buyer of Sprint Towers will be Global Signal or a private tower company like [American Tower],” Prentiss noted.
If Sprint decides to unload its tower assets, it will be following a trend of other nationwide carriers that have sold tower assets and leased them back from tower companies, enabling carriers, including Alltel Corp., Cingular Wireless L.L.C. and Verizon Wireless, to focus more on marketing and customer service. However, some of those deals have been re-negotiated as the tower sector struggled in recent years. For example, Verizon Communications Inc. extended its joint venture with Crown Castle International Inc. until 2007. Nextel Communications Inc. and AT&T Wireless Services Inc. each still have substantial tower portfolios.
