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September 28, 2012

T-Mobile, Crown Castle Ink $2.4 Billion Tower Deal

By Ashok Bindra, TMCnet Contributor

The number four U.S. mobile operator T-Mobile USA Inc. has agreed to sell the rights to about 7,200 of its broadcast towers to Crown Castle International Corp. (News - Alert) for $2.4 billion in cash. The No.4 wireless carrier plans to use the funds to upgrade its network to the next generation LTE technology. Other reports indicate that part of the cash will also be used to help parent Deutsche Telekom pay back debt.

As per the WSJ report, the deal gives Crown Castle, a cell-tower company, exclusive rights to lease and operate the T-Mobile (News - Alert) USA towers for about 28 years. “After that, Crown Castle will have the option to buy the towers for an additional $2.4 billion,” the report states. The deal is expected to close in the fourth quarter. 

Image via Shutterstock

In late July, Crown Castle had emerged as the lead bidder for the towers.  These efforts began after AT&T (News - Alert) Inc., the country's No. 2 wireless carrier, dropped the $39 billion bid to buy T-Mobile USA last year due to regulatory opposition.

JPMorgan analyst Phil Cusick, said, “While the price tag was at the high end of his expectations it was mitigated by Crown Castle's strong growth outlook for the assets.” Crown Castle believes that the towers will have enough space to accommodate at least one additional wireless service provider customer on each tower without significant incremental capital.

As part of the deal, T-Mobile USA is committed to maintaining its communications facilities on the towers for at least 10 years with annual rent increase provisions tied to the consumer price index. The report says that T-Mobile's rent includes the rights to complete its current network upgrade on these sites.

Other bidders for the T-Mobile towers include American Tower Corp and SBA Communications (News - Alert) Corp.

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Edited by Brooke Neuman
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