The two major independent cell tower owners in the US, Crown Castle and American Tower, are both strengthening their grip on mobile networks with major acquisitions. The former is reported to be close to buying AT&T’s tower portfolio in a deal potentially worth $5bn, while the latter last month announced it would pay $4.8bn for Global Tower Partners (GTP).
This is part of a scramble for assets by these two giants and their other major US competitor, SBA. As well as consolidating their US holdings, all three are hunting for international infrastructure too, as the tower business becomes one of scale ‘ margins have been falling amid the squeeze on operators’ budgets and trends such as network sharing.
However, this has been offset for the independent tower owners by a trend for cellcos to give up on owning towers themselves and selling them off, often as a relatively simple way to raise cash. And they are hopeful that there will be a new rush for tower space among carriers as they deploy LTE. Although the adoption of small cell architectures, with base stations sited close to the ground on roofs or lamp-posts, could hit the tower business, most operators are deploying those assets in addition to enhancing their macro networks, not as a replacement.
The latest deals, then, are part of a wider ongoing process. A year ago, T-Mobile USA sold its 7,200 towers to Crown Castle for $2.4bn while in August, American Tower announced it would pay $811m for 4,500 towers in Brazil and Mexico, owned by NII Holdings.
AT&T has about 10,000 towers, and has been shopping the portfolio to several buyers through the summer, according to Bloomberg sources. The collection generates $326m a year in revenue for the carrier through leasing agreements, estimates JPMorgan, and reduces AT&T’s own operating costs, but the business is increasingly considered non-core to AT&T.
Jeffrey Stoops, CEO of the third player, SBA, told FierceWireless that other cellcos were considering offloading some or all of their towers, citing US Cellular. He commented: “I think to the extent those carrier-driven portfolios do come to market, I think that is part of a carrier’s grand plan to specifically go out and sell those assets and use the money for other things.’
Meanwhile, Marc Ganzi, CEO of Global Tower Partners, highlighted the consolidation in the sector, saying that Macquarie Infrastructure Partners, which owned GTP, decided to sell the unit, because it could no longer compete with its larger rivals in acquiring new tower assets. GTP owned and operated 5,400 domestic towers, 800 domestic property interests under third party sites, and had management rights to over 9,000 domestic sites, mainly rooftop assets. American Tower also gained its 500 locations in Costa Rica, but not its assets in Mexico. Ganzi may continue to run the latter as a standalone business and is also a co-founder of spectrum and wireless network investor, Digital Bridge.