Crown Castle (CCI) to Acquire 7,200 T-Mobile Towers in $2.4B Deal
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Crown Castle International Corp. (NYSE: CCI) and T-Mobile USA, Inc. (“T-Mobile”), a subsidiary of Deutsche Telekom, AG (“DT”), announced today that they have entered into definitive agreements pursuant to which Crown Castle will acquire rights to approximately 7,200 T-Mobile towers for $2.4 billion in cash at closing (subject to certain adjustments). Under the definitive agreements, Crown Castle will have the exclusive right to lease and operate the T-Mobile towers for a weighted average term of approximately 28 years. In addition, Crown Castle will have the option to purchase such towers at the end of the respective lease terms for aggregate option payments of approximately $2.4 billion, which payments, if exercised would be primarily between 2025 and 2048. The transaction is expected to close in fourth quarter 2012.
Crown Castle expects to fund the transaction with cash on hand and debt financing. DT will use the proceeds from the transaction to retire corporate debt and strengthen its financial position to provide for funding of growth investments, including T-Mobile’s Challenger strategy.
Following the contemplated transaction, Crown Castle will continue to be the largest wireless infrastructure operator in the US with approximately 30,000 towers and extensive small cell operations in over 50 markets. T-Mobile’s nationwide network remains unchanged today, consisting of approximately 51,000 cell sites, the vast majority of which are leased from third parties, as is common in the industry across the US.
Crown Castle estimates the T-Mobile towers will produce approximately $125 million to $130 million in adjusted funds from operations (“AFFO”) before financing costs in 2013, and have sufficient capacity to accommodate at least one additional tenant per tower without significant incremental capital. T-Mobile has committed to maintain its communications facilities on the towers from Crown Castle for a minimum of 10 years with annual rent escalation provisions tied to the consumer price index. Further, T-Mobile’s rent includes the rights, subject to certain limitations, to complete its current network modernization on these sites.
It is expected that the net effect of this transaction, as reported under US GAAP, will not have a material impact to adjusted OIBDA or annual operating income in 2012 for T-Mobile USA. DT reports results under IFRS. The transaction is expected to result in a material gain impacting Net Income and EBITDA under IFRS for 2012.
Crown Castle expects to fund the transaction with cash on hand and debt financing. DT will use the proceeds from the transaction to retire corporate debt and strengthen its financial position to provide for funding of growth investments, including T-Mobile’s Challenger strategy.
Following the contemplated transaction, Crown Castle will continue to be the largest wireless infrastructure operator in the US with approximately 30,000 towers and extensive small cell operations in over 50 markets. T-Mobile’s nationwide network remains unchanged today, consisting of approximately 51,000 cell sites, the vast majority of which are leased from third parties, as is common in the industry across the US.
Crown Castle estimates the T-Mobile towers will produce approximately $125 million to $130 million in adjusted funds from operations (“AFFO”) before financing costs in 2013, and have sufficient capacity to accommodate at least one additional tenant per tower without significant incremental capital. T-Mobile has committed to maintain its communications facilities on the towers from Crown Castle for a minimum of 10 years with annual rent escalation provisions tied to the consumer price index. Further, T-Mobile’s rent includes the rights, subject to certain limitations, to complete its current network modernization on these sites.
It is expected that the net effect of this transaction, as reported under US GAAP, will not have a material impact to adjusted OIBDA or annual operating income in 2012 for T-Mobile USA. DT reports results under IFRS. The transaction is expected to result in a material gain impacting Net Income and EBITDA under IFRS for 2012.
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