HOLLYWOOD, Fla. – For the second year in a row, Crown Castle looks set to pull off a big deal with a wireless carrier as published reports indicate the tower giant was close to picking up tower assets from AT&T. According to a Bloomberg report, terms of the potential deal were still being worked out.
Last year Crown Castle agreed to lease 7,200 towers from T-Mobile USA that provided the company with exclusive rights to lease and operate the towers for approximately 28 years, and have the option to purchase those towers at the end of that lease for an aggregate option payment of $2.4 billion.
Following months of speculation, AT&T admitted last month that it was looking to offload its tower assets, with reports noting the nearly 11,000 sites could garner up to $5 billion for the company. The most recent round of rumors were followed by predictions that Crown Castle was the most likely acquirer.
The potential deal to acquire what was the market’s No. 4 tower holder would again extend Crown Castle’s domestic lead in the tower space, which got a bit closer last month when American Tower announced plans to acquire smaller rival Global Tower for $4.8 billion. That deal, if approved by regulators, would add around 5,400 domestic towers; 800 domestic property interests under third-party communications sites; management rights to over 9,000 domestic sites, which are primarily rooftop assets; and 500 communications sites in Costa Rica to American Tower’s portfolio of more than 56,000 owned and managed sites.
Crown Castle recently announced it would qualify for Real Estate Investment Trust status beginning Jan. 1, 2014, well ahead of expectations. The move to REIT status will allow Crown Castle to lower its tax burden and increased dividend payments, though it did note that it does not plan to make any dividend payments prior to the REIT move. U.S. tax law stipulates that in order to avoid federal income taxes, a REIT must show that 75% of its assets qualify for tax exemption.
American Tower converted to REIT status at the end of 2011, which allowed the company to avoid paying federal income tax as long as it distributed 90% of its REIT income to shareholders.
This week at PCIA 2013, RCR’s Jeff Mucci spoke with Crown Castle CEO Ben Moreland about the purchase of the T-Mobile towers and other capital expenditures.
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