Blockbuster Deals Consolidate Towers

December 19, 2013

By Clayton Funk….

Two major tower deals topped the list of stories for this year.

In September, American Tower purchased Global Tower Partners for $4.8 billon. The acquisition, which increased American’s tower count by 25 percent, comprised 5,400 domestic towers, 800 property interests under third party communications sites, more than 9,000 domestic managed sites and 500 towers in Costa Rica.

The GTP/American deal was significant because of the stature of GTP as the largest privately held tower company. Marc Ganzi had assembled a team and had maintained a high profile in the industry, including a tenure as chairman of PCIA The Wireless Infrastructure Association. He has been a prolific buyer of towers domestically and internationally

Losing a major tower company will not likely affect the prices bid for towers. While it was nice having GTP bidding for towers, in the last 24 months we did north of 35 deals with eight different buyers, including Tarpon Towers, CiG Wireless, K2 Towers, Grain Communications, American Tower, Crown Castle and SBA Communications, as well as GTP. So, even without GTP, pricing will still be competitive.

In October, Crown Castle acquired the rights to 9,700 AT&T towers for $4.85 billion in cash. According to the agreement, Crown Castle will have the exclusive right to lease and operate the AT&T towers for a weighted average term of 28 years. In addition, the tower company will have the option to purchase the towers at the end of the respective lease terms for aggregate option payments of $4.2 billion.

The AT&T deal is significant because it is arguably one of the last big domestic carrier sale-leasebacks that will be done in the foreseeable future. By all accounts, Verizon is not selling its towers in the near future. The sheer size and presence of AT&T in the wireless industry also makes the deal significant. The deal had been rumored for so long out there, it was good to get it done. Why did it take so long? I would speculate that for a carrier to monetize its assets, it takes a significant commitment and, therefore, has to go through several levels of scrutiny, including the financial and engineering departments. For a company the size of AT&T to effectively turn over control over thousands of towers is not a decision that is taken lightly.

Overall, 2013 was an average year in terms of numbers of transactions. Last year was an above average year because sellers were incentivized to sell their towers before capital gains taxes went up.

Clayton Funk is managing director, Media Venture Partners, Kansas City. He joined MVP in 2004 after spending over seven years with Nations Media Partners, a Kansas City-based investment banking firm specializing in various areas of telecommunications, media, and publishing. He leads MVP’s practice in the wireless tower and other shared telecommunications infrastructure industries.