Deals could pocket Verizon $15B per reports
Verizon Communications is reportedly moving closer to an asset sale that could include both tower and wireline properties, netting the telecom giant close to $15 billion.
According to The Wall Street Journal, the proposed deals would include several partners and be announced as early as this week. Those funds could then be used to help the company pay down recent debt increases tied to its wireless operations.
Verizon has reportedly been looking at a potential tower sale for months, with the company stating that it would only proceed with such a transaction if it could garner sufficient financial interest for the approximately 12,000 towers it owns. Analysts had predicted the company could get up to $500,000 per tower in a deal, pushing its total value to around $6 billion.
Verizon CEO Lowell McAdam noted at an investor conference late last year that it was looking for a specific price in terms of its tower assets, but that interest in those sites has been increasing.
“Two years ago, the deals that were offered, it was very easy to say no way, not interested,” McAdam said at the Goldman Sachs Communacopia Conference last September. “I think those deals are coming to us a little bit more now. Still not where we would want them. There are some very key terms that we won’t compromise on, but if an opportunity presented itself to generate shareholder value around towers, I would do that.”
Rival AT&T in late 2013 sold off approximately 9,700 towers for $4.85 billion.
Wells Fargo Securities senior analyst Jennifer Fritzsche, said the buyer for the tower assets would likely come down to either Crown Castle, which picked up the AT&T towers, or American Tower, which recently expressed interest in the assets.
Verizon has a history of selling off certain wireline assets tied to local telephone services, which have become a smaller part of its overall business. The company in 2009 sold off wireline assets across 14 states to Frontier Communications for $8.6 billion.
Fritzsche noted that Frontier or CenturyLink could be the most likely acquirer of wireline assets.
If completed, Verizon could use proceeds to help pay down recently incurred debt tied to the $10.4 billion in new licenses it acquired in the Federal Communications Commission’s Auction 97, as well as the $130 billion it paid to Vodafone to gain full control of Verizon Wireless.
“While we recognize the sale of some of these legacy wireline assets may have higher margin, we continue to believe [Verizon] continues to focus on shifting its wireline business more toward a fiber-centric/managed service-focused entity,” Fritzsche wrote. “We would view any move to speed up this transition as a positive – especially for the long-term revenue drivers of the model.”
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