The tower industry was busy last week with Sprint Nextel Corp. announcing the sale of 3,300 towers to TowerCo L.L.C. for $670 million and tower giant SBA acquiring a pair of smaller players.
Sprint Nextel said the sale of its towers to TowerCo provides the carrier with some cash and relieves it of the business of owning and managing the towers. The deal includes both CDMA and iDEN towers as well as towers for its WiMAX network being deployed by Clearwire Corp.
“By leasing rather than owning these network facilities, we can better focus on our core business of providing communications services to consumers, businesses and government customers,” said Bob Azzi, senior VP of field engineering and operations at Sprint Nextel. “Significantly, this transaction provides Sprint Nextel with additional liquidity, which gives us greater flexibility in managing our company.”
The agreement could represent an effort by Sprint Nextel to pad its finances ahead of its second- quarter earnings release. The carrier has been rumored to be suffering from customer churn and a slight let down in sales of its Samsung Electronics Co. Ltd. Instinct vs. rival AT&T Mobility Inc. and its exclusive Apple Inc. iPhone.
SBA spending spree
The Sprint Nextel-TowerCo announcement followed news from SBA that it will acquire Light Tower Wireless L.L.C., the wireless infrastructure branch of Light Tower L.L.C. and Optasite. SBA currently owns and operates towers for AT&T Mobility and Verizon Wireless.
The Light Tower deal includes 340 tower sites in 23 states, five managed sites and five distributed antenna system networks. SBA said it expects to purchase Light Tower Wireless for roughly $200 million in cash, plus 1.15 million shares of SBA Class A common stock. However, if Light Tower forgoes the stock option, SBA will pay $240 million in total cash value. SBA said the funds will come from existing cash resources and a draw into its $335 million senior credit facility. SBA expects this deal to close at the end of October.
Light Tower Wireless is expected to be generating up to $19 million of annualized site leasing revenue and up to $14 million of annualized tower cash flow by the time the deal is expected to close.
The Optasite deal calls for SBA to issue Optasite sellers 7.25 million shares of SBA common stock and SBA will assume Optasite’s fully drawn $150 million credit facility. SBA also plans to absorb $25 million in additional liabilities from Optasite and will pay the cash portion of the deal with existing funds. The deal is valued at around $430 million.
Optasite is expected to have 548 towers sites in 38 states on the close of SBA’s purchase of the company, which means SBA could gain 888 new towers by the end of the year through its two acquisitions.
