NEW YORK (Reuters) - T-Mobile USA, the No. 4 U.S. mobile provider, has agreed to sell the rights to operate 7,200 of its wireless broadcast towers for $2.4 billion to Crown Castle International Corp to help its parent Deutsche Telekom pay back debt.
Crown Castle has the option to pay another $2.4 billion to buy the towers outright from T-Mobile USA at the end of the lease term for each tower - between 2025 and 2048 - under the deal announced Friday.
T-Mobile USA, which is spending $4 billion on a network upgrade, has also been looking for ways to become more financially independent from its parent, which had tried to exit the U.S. market the year before.
The customer-losing U.S. operator has been struggling to stem customer losses as it has a tough time competing with bigger and smaller rivals.
It had been trying to sell its wireless towers since its proposed purchase by AT&T Inc failed last year due to regulatory opposition. It had looked into selling the towers in early 2011 before it started the AT&T process.
Deutsche Telekom declined to give specifics on the impact on its financials, except to say it would use the cash to pay back some debt.
Crown Castle said it expects the towers to generate about $125 million to $130 million in adjusted funds from operations before financing costs in 2013.
JPMorgan analyst Phil Cusick said while the price tag was at the high end of his expectations it was mitigated by Crown Castle's strong growth outlook for the assets.
Crown Castle also said that the towers will have enough space to accommodate at least one additional wireless service provider customer on each tower without significant incremental capital.
As part of the deal, T-Mobile USA committed to maintaining its communications facilities on the towers for at least 10 years with annual rent increase provisions tied to the consumer price index. T-Mobile's rent includes the rights to complete its current network upgrade on these sites.
"The deal is well structured to account for the inherent risks of purchasing a tower portfolio highly weighted to one carrier," Piper Jaffray analyst Christopher Larsen said.
Deutsche Telekom said the company had multiple bidders for the assets but declined to name them.
Analysts have said other companies that considered the towers included American Tower Corp and SBA Communications Corp.
Crown Castle shares fell 18 cents to $64.73 in morning trade on the New York Stock Exchange. Deutsche Telekom shares were down 1.1 percent in afternoon trading in Frankfurt.
(Reporting By Sinead Carew; Editing by Jeffrey Benkoe)
Source: http://news.yahoo.com/t-mobile-usa-inks-2-4-billion-tower-121836677--sector.html
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