AT&T has decided to lease and sell some of its telecom towers to Crown Castle International for $4.85 billion.
On Sunday, October 20, the network carrier agreed on leasing around 9,100 and selling around 600 of its towers to the broadcasting and mobile telephony company Crown Castle International. The carrier confirmed that the average term of the lease rights is around 28 years. Crown Castle International will have a fixed price purchase option, which totals approximately $4.2 billion, after the lease expires. AT&T suggests that the purchase option of the towers is based on the estimated fair market value of the towers at the end of the lease agreement.
"This deal is good for AT&T and our shareholders," said Bill Hogg, Senior Vice President, Network Planning and Engineering, AT&T Services Inc. "This deal will let us monetize our towers while giving us the ability to add capacity as we need it. And we'll get additional financial flexibility to continue to invest in our business, maintain a strong balance sheet and return value to our shareholders."
AT&T also announced that it will sublease the towers from Crown Castle International for a minimum of 10 years and the carrier will pay $1,900 per month per site along with an annual rent increase of 2 percent. The company has an option to renew the sublease to up to a maximum of 50 years. AT&T will be able to access additional reserve capacity on the towers for future use. The carrier hopes that the additional capacity will enable the company to continuously meet growing demand for mobile Internet services.
The carrier said the lease agreement with Crown Castle International will have no impact on the customer experience.
Crown Castle will have the responsibility and full operating rights for the towers during the tenure of the lease. Per the lease agreement, Crown Castle International will also be able to sublease any available space to other companies as well.
AT&T anticipates that the tower deal with Crown Castle will to close by 2013-end, and believes that the transaction will not have any major effect on its financial results.
