Crown Castle Buys the Rights to 7,200 T-Mobile Cell Towers for $2.4B

On Friday, Crown Castle and T-Mobile announced in a joint press release, that Crown Castle will acquire the rights to lease and operate approximately 7,200 T-Mobile cellular towers for $2.4 billion.  Crown Castle will have these rights for about the next 28 years, with the option to acquire them at the end of the term.  This transaction has allegedly been in the works ever since AT&T ended its $39 billion bid to takeover T-Mobile, back in the end of 2011.  The deal is expected to close by the end of the 4th quarter of 2012.

T-Mobile believes this transaction will help solidify their position in the fiercely competitive mobile market.  As new T-Mobile CEO John Legere stated in the joint press release, “We are pleased to reach this mutually beneficial agreement with Crown Castle and take another step closer to realizing the bold vision outlined in our Challenger strategy… by investing in areas where we anticipate the strongest return for our customers.”

Crown Castle expects to fund this transaction with cash on hand and debt financings, including borrowings under Crown’s existing revolving credit facility.  The money generated from this deal will allow T-Mobile to revamp their 4G network as well as rent back antenna space.  Further, Crown Castle can then use the towers to provide services to other carriers and increase their dominance as the largest wireless infrastructure operator in the US.

Although T-Mobile’s transaction presentation begins with a hefty disclaimer, this tower transaction has the potential for growth opportunities for both companies:

Currently, T-Mobile is the 4th largest mobile carrier in the US, ranking behind Verizon, AT&T and Sprint.  Do you think this tower transaction will help T-Mobile seize the number three spot, or do you think T-Mobile is too optimistic in their endeavors?


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