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AT&T Looking to Sell Its Cell Towers for $5 Billion to Free Up Some Cash

September 17, 2013 - Written By Jeremiah Nelson

AT&T is making moves to free up some cash by selling off its cell phone towers. The company is actively seeking buyers for its towers and is working with TAP Advisors LLC and JPMorgan Chase & Co. to make the sale happen. The usual, anonymous “people familiar with the matter” are reporting this information, which was first covered by Bloomberg.

AT&T’s cell tower assets could sell for about $5 billion. There are several possible buyers, including Crown Castle International Corp, SBA Communications Corp, and American Tower Corp. AT&T said back in March that it is open to selling its wireless towers, as well as it’s other peripheral assets.

The company is considering selling its towers in order to offset some pretty major undertakings that are happening in the near future. AT&T is working on $14 billion in network upgrades to increase its national coverage and continue with its LTE rollout. There is also an $11 billion stock buyback that the company is planning, and they are looking at expanding in to Europe as well. By selling its towers, AT&T is trying to increase cash flow and offload the maintenance and upkeep of those towers.

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We’ve already seen Sprint and T-Mobile do this with their cell towers. There are several reasons why a company would want to give up control of their cell towers. First is the profit from the sale of the towers and any accompanying assets. The second is simply decreased overhead; the time, effort, and people that are involved in tower build-out and maintenance. The third benefit, and this might be the biggest, are the tax advantages that come with leasing tower space. When a company owns their own towers, they can only write off the expense of building the towers one time. After that, the cost of maintenance can be written off but that’s about it. When leasing tower space from a third-party company almost the entire cost of that lease is a tax write off, giving the wireless company huge yearly incentives. So while AT&T, like Sprint and T-Mobile, won’t directly own its towers, they have a financial incentive to sell. The purchasing companies like American Tower Corp make money by collecting lease payments from wireless companies who lease space on their cell towers.

AT&T looks to be moving quickly to sell their towers and tower assets. The impact to customers will be negligible and the financial gain for the company is huge.