T-Mobile Could Net Close To $3 Billion Through Tower Sale

T-Mobile’s exploration of a sale of its tower system could net the company as much as $3 billion for parent Deutsche Telekom, according to Macquarie Capital USA Inc. Macquarie analyst Kevin Smithen wrote in a note that American Tower Corp., Crown Castle International Corp. and SBA Communications Corp are all in “a hotly contested auction” of T-Mobile towers. The expected price is at least $2.25 billion but could go as high as $3 billion.

“All three tower companies have expressed strong interest” in T-Mobile towers, Smithen wrote.

T-Mobile is considering the tower sale as a way to fund future spectrum purchases and a LTE network, Deutsche Telekom’s Chief Financial Officer Timotheus Hoettges said last month.

Smithen estimated that T-Mobile currently has 7,500, making up the largest network that would go up for sale barring any future offer from AT&T or Verizon Wireless.

Deutsche Telekom declined to comment as did representatives for American Tower, Crown Castle and SBA communications.

This move isn’t unheard of as Sprint undertook a similar offer three years ago agreeing to sell their cellular towers to TowerCo and then signing a lease for the same towers. Sprint sold approximately 3,080 towers raising $670 million dollars which went to pay down Sprint’s debt. This move wouldn’t see T-Mobile giving up any tower space nor would coverage be affected in anyway. T-Mobile would simply turn from buyer to leaser and pocketing the cash. I’d much rather see T-Mobile build an LTE network on their own through the money generated via a tower sale than having to seek an outside partner.

Businessweek

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  • Chris

    Cool story, bro!

  • http://www.joshrobertnay.com Respawn

    Is it just me or is there NO article?

    $3 billion is good. That would definitely help T-Mobile!

  • Robert

    So they are cannibalizing their network now?

  • XookieMonsterX

    riveting tale chap!

  • http://profiles.google.com/breeah0305 Michael Nelson

    I hope that is towers not in use. It would be a shame if T-Mobile were to turn into Sprint or ATT.(No signal or lack thereof)  :P

    • Wow

      Att and Sprint um are no comparrison to tmobiles coverage theyte Waugh better

  • Anonymous

    I cant see the article!!!!!!

  • http://twitter.com/Vosko33 Jonathan Voskinarian

    Yeah they forgot something

  • Jeepnfun

    Where is the story? Why would they sell their only source of income? Please finish the article.

    • http://www.joshrobertnay.com Respawn

       Actually, the towers themselves are an expense, not a source of income.

      By selling to someone else and leasing the space, T-Mobile would not only gain $3 billion, but would also lower its own maintenance costs.

      This could be a very good thing for T-Mobile.

      • J-Hop2o6

        So will Tmo have ANY kind of control of the towers? As in upgrades and if the tower goes down (eg. not working). Or will that be handled by the new owners? Or both?

        • Anonymous

          everything is spelled out in a lease contract. They’ll be leasing space up on the tower and retain their equipment down below it. Tmobile owns more towers than the other guys and they too lease tower everywhere.

          Someone like TowerCo does nothing but tower management and they even manage TV station towers all over the US I believe, so it’s not some run of the mill operation.

          I also suspect leases are probably long-term

        • J-Hop2o6

          Oh ok. And do they have the power to have other companies uses Tmo’s spectrum? Or does that have to be approved by Tmo first?

  • Anonymous

    Even though the story isn’t up, I think what they’re trying to explain here is that TMobile could sell towers and still use them. All of the other carriers have done it. Here’s how it works:

    TMobile sells a few towers to SonyEricsson, making some money in the process. Then it turns around and leases those same towers from SonyEricsson and continues to use them, but TMobile is still saving itself money because now the maintenance of those towers is up to the owner, SonyEricsson, not TMobile.

    See? Simple. It’s been done before by all the other major carriers.

    PS. The above was just an example. I do not claim to know that TMo will sell towers to Sony or anyone else for that matter. Just an example.

    • jrr

      If the buyer is going to make any money off the deal at all (and, indeed, they won’t buy if they can’t!), then this would be effectively borrowing against future lease payments.  They could get some cash now, but they’d better have a real good investment plan or they’ll lose out paying the lease over time.

      • Anonymous

        Always a possibility but it would take a long time before TMobile gets to $3billion spent in tower leasing so I’m sure that they’re looking at it like, “We can get the cash now, use it to upgrade capacity, network, etc, and deal with the lease later.” They might even ultimately decide that leasing permanently is the best way to go. Who knows? It’s a good solution in the short term and in the mid-term as well… and depending on what they use those $3billion for, it could be a good solution in the long term as well.

      • BigMixxx

        The buy would benefit from the ownership of the land for the tower.  Multiple companies can then benefit from the placement of those towers, plus more jobs would be created.   (and some lost due to the tower’s moving in ownership).  It’s really win-win…let those that know how to build multicarrier towers build them. (not just outside, but in buildings, etc, etc, etc — American tower’s forte’)…

    • Rudy Belova

      Your right about that. Verizon, At&t and i think maybe even sprint don’t own most of their tower. This isn’t much of an issue as people are making it out to be. T-Mobile owning their own towers nationwide is actually a fairly rare thing in this country. Most of them are leased back to the carrier.

      • Anonymous

        Exactly. It’s nothing new and it might just be the cash infusion TMo needs to compete.

  • http://twitter.com/squiggleslash s slash

    Worst. Recommendation. To. T-Mobile. Ever.

    David, next time you come up with any bright ideas like this one, keep them to yourself!

    • Mike Panagiotou

      We’ve actually sold off a lot of our towers already…..and it does save us money. TMobile Tech

    • BigMixxx

      awe dude…3 billion+ in cash is a lot of money……especially if t mobile can convince the government to open up additional spectrum in the AWS space.

      It’s a good move.  American tower will more than likely be all over this one.  Remember, American tower does provide service for ALL of the carriers.  This is very good move and makes the company nimble, especially when it comes to tower upgrades and sharing technology with other companies with similar installations….

      • Mirad77

        British telecom owns all towers in England the fact for which all 3G GSM phones will work with all carriers in England.

        • http://www.joshrobertnay.com Respawn

           England has amazing 3G coverage from what I’ve seen. But then they’re a lot smaller landmass wise than we are, so naturally it would take them far less time and resources to build a nationwide network.

  • Thomas Maibauer

    A picture worth 1000 words?

  • Lani

    Less 4G in more places.

    • Rudy Belova

      Wrong, other way around. No coverage loss at all. In fact, they will pocket between 2 to 3 billion dollars. In other words. Hella LOT more 4g coverage!!!

  • Cwxcf00

    yeah they will sell U.S towers and invest all that money on their home network in Europe!! lets all Americans stick to carriers that are from America ONLY!! so the money stays in America!!

    • Anonymous

      That’s right! Make sure you only buy cell’s phones that made in the USA!  Wait sec.none are!
      Iphones are made in China!  Oh well!

    • http://www.joshrobertnay.com Respawn

      Yeah, good luck with that, while you’re enjoying your “awesome” Fords and Chevys too. The rest of us will be buying things made better and costing less.

      • Carlos Fontes Jr

        Oh what!?!? Wanna throw down against my Ford Mustang GT!?!?… while I stream my Google Music collection over HSPA+ 4G through the Shaker 1000 system!?!?

  • Jaygqitalia

    Its ok I’ll act like I am him today..

    So heres some good news ..

    Jan. 19 (Bloomberg) — T-Mobile USA’s exploration of a sale of its tower system may help the company raise as much as $3 billion for parent Deutsche Telekom AG, according to Macquarie Capital USA Inc.Citing discussions with tower companies American Tower Corp., Crown Castle International Corp. and SBA Communications Corp., Macquarie analyst Kevin Smithen wrote in a note today that there was potentially “a hotly contested auction” of T- Mobile towers. The price may be at least $2.25 billion and could go higher, the New York-based analyst wrote.“All three tower companies have expressed strong interest” in T-Mobile towers, Smithen wrote.T-Mobile is considering the tower sale as a way to fund possible spectrum purchases and an long-term-evolution network expansion, Deutsche Telekom’s Chief Financial Officer Timotheus Hoettges said last month, after the failure of a $39 billion AT&T Inc. takeover bid.T-Mobile is the fourth-largest U.S. wireless operator. Deutsche Telekom explored a possible T-Mobile tower sale a year ago, and shelved that strategy in March when AT&T made its offer.Smithen estimated that T-Mobile has 7,500 towers, making up the largest network that might go up for sale unless there is an offering by AT&T or by Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group Plc.Philipp Kornstaedt, a Deutsche Telekom spokesman, declined to comment. Representatives for American Tower, Crown Castle and SBA Communications weren’t immediately available for comment.

    • http://profile.yahoo.com/O6OE2JIZWWDDHGZ7FEMP5LJ3ZI Matt S

      I hope the good news part was sarcastic.  I can hardly see how T-Mobile divesting its network will be any good.

      • Anonymous

        Do you have no sense of reading comprehension?  This does NOT impact customer coverage.  All the other carriers own a less % of their towers than T-Mobile.  T-Mobile is just going to lease those towers INSTEAD of owning them.

    • J-Hop2o6

      What kind of sale is this?

  • Rudy Belova

    Where do i get my tmonews decoder glasses?

    • http://pulse.yahoo.com/_VGQMRQOQYPZHFOGRIZ53F646KU Not ice_fusion.

      Seriously?!?! I got mine in the mail last week… where were you? ;)

  • Guest

    I can’t wait until the article is posted so that the ridiculous comments below will stop. What is being suggested is that the ownership of the towers would transfer to a property management group, and would be leased from these companies. The vast majority of towers on the other networks are leased in this fashion, and it would create a great increase of investment capital. 

  • Anonymous

    Regardless of what they do, I’m happy to own the penta-band Galaxy Nexus. It can go anywhere…except the third and first largest carriers.

    • Anonymous

      What kind of data speeds do you currently get with the Galaxy Nexus on T-Mobile?

      • Anonymous

        I’ve seen up to 12mbps download but that was only once. Lol. On average I see about 8-10mbps download. I’ve seen some people getting faster on XDA though.

        • Anonymous

          Much better than the 3mbs I get on my G2. :-)

        • Anonymous

          Aww, crap! I tried to post a link which might be beneficial to you but it is awaiting approval. It helped me with my phone, lol. Are you a member on XDA? If so, search my username jonathan3579 and check the last thread I created. It boosted my speeds when I am at my apartment and…ahem, doesn’t get throttled.

  • Swimfan9100

    fail

  • Anonymous

    Here’s your article:

    T-Mobile USA’s exploration of a sale
    of its tower system may help the company raise as much as $3
    billion for parent Deutsche Telekom AG (DTE), according to Macquarie
    Capital USA Inc.

    Citing discussions with tower companies American Tower
    Corp. (AMT), Crown Castle International Corp. (CCI) and SBA Communications
    Corp. (SBAC), Macquarie analyst Kevin Smithen wrote in a note today
    that there was potentially “a hotly contested auction” of T-
    Mobile towers. The price may be at least $2.25 billion and could
    go higher, the New York-based analyst wrote.

    “All three tower companies have expressed strong
    interest” in T-Mobile towers, Smithen wrote.

    T-Mobile is considering the tower sale as a way to fund
    possible spectrum purchases and an long-term-evolution network
    expansion, Deutsche Telekom’s Chief Financial Officer Timotheus Hoettges said last month, after the failure of a $39 billion
    AT&T Inc. (T) takeover bid.

    T-Mobile is the fourth-largest U.S. wireless operator.
    Deutsche Telekom explored a possible T-Mobile tower sale a year
    ago, and shelved that strategy in March when AT&T made its
    offer.

    Smithen estimated that T-Mobile has 7,500 towers, making up
    the largest network that might go up for sale unless there is an
    offering by AT&T or by Verizon Wireless, a joint venture of
    Verizon Communications Inc. (VZ) and Vodafone Group Plc. (VOD)

    Philipp Kornstaedt, a Deutsche Telekom spokesman, declined
    to comment. Representatives for American Tower, Crown Castle and
    SBA Communications weren’t immediately available for comment.

    • Jeffreygreen1315

      What was the reason for rewriting the exact same article? It’s not like it was broken down to make it easier to be understood…wtf?

  • Anonymous

    These types of stories always result in massive misunderstanding — often causing many to think that a carrier is selling its network and becoming an MVNO — because people incessantly refer to cell sites or base stations as “towers.”  Cell sites or base stations can be located on towers, buildings, mountains, etc., but they are not towers themselves.  Towers are merely elevated structures that may or may not host cellular base stations.

    So, when a story comes out that a carrier is selling or considering a sale of its corporate owned towers, that story is referring to the elevated structures and any associated real estate.  If a carrier sells its towers, it retains ownership of all of its network infrastructure and leases tower space from the new owner(s).  It is one way that a carrier can achieve a big short term financial gain.

    AJ

    • Steve

      Is there a long term effect?

      • Anonymous

        i too am curious about the long term effect. There are cities who sell then lease back infrastructure to raise money

        • Alvin B.

          Not really too many negatives. Even Verizon leases many of its towers. 

        • Rudy Belova

          Yup, they lease the vast majority of their towers, along with at&t, sprint, and others.

        • JBLmobileG1

          Yes there is a long term effect and Straight Talk is proof of it. They use to solely run on the Verizon network. However when the contract was up they decided to go with using At&t because they offered to lease them spectrum for less. And now for their current smart phones they use Sprint because they were offered a better deal on data. Who’s to say the future own of the towers won’t try raising the price of leasing the towers in the future. As greedy as At&t and even Verizon are… those prices to lease the towers could cost Tmobile more in the long run IMO.

        • Rudy Belova

          That is not at all what this is about. Straight talk never owned any tower, and never sold any towers to anybody. They are an MVNO. Whole different ballgame.

          T-mobile is just selling its towers (NOT NETWORK) to a company. That way this other company builds out, maintains, and fixes these towers for t-mobile. NOT OWNERSHIP OF THE NETWORK. The network is still t-mobile, your phone will say t-mobile, the actual network is the same. In fact, much of the existing t-mobile network has been built this way NOW.
          Outsourcing the towers to someone else. (and site agreements are not short term, they are Long term.)
          There is nothing to worry about, at all.

  • Anonymous

    i’ve searched around for towers and who owns them, ended up being surprised just how many towers around us in South Florida are not owned by the mobile operators

    • Anonymous

      Yes, the carriers these days own very few of their own towers and instead, lease them. It makes more financial sense for them that way. (I live in South FL too)

  • Alvin B.

    My mother lives right in the middle of a t-mobile coverage hole on the map… wonder if they’re looking for property to put up NEW towers anytime soon? 

  • JBLmobileG1

    I don’t understand why they would want to sell the towers then lease them back. Sure it could save money because like renting the landlord is responsible for the upkeep. But let’s say At&t were to buy the towers. Who’s to say they will even agree to lease it back to Tmobile. Or if it’s part of the deal who’s to say how long the contract for the lease would last. What if the leasing contract is up and the owner of the tower decides not to let Tmobile renew the contract. That would be a way to hurt Tmobile because they just lost more coverage that they might have needed. Why sell your towers when you should be building more of them? And if they are not needed why did you waste the time and money to build them in the first place?

    • Rudy Belova

      Why would these companies do that to t-mobile? That issue hasn’t come up before, considering at&t, verizon, sprint, and other have been doing this for years. It’s not in the interest of these companies to do that.
      The upside is the company who gets these towers has more buying power, bigger network, and it helps other carriers as well. (These companies put numerous providers on one site a lot of times). If t-mobile requests a site at a location where the company already owns a few, just put the baby on an existing site and be done, vs. t-mobile having to negotiate with this same company or built it from scratch.

      This could help us a lot.
      Plus the liability goes to the company that owns the tower, or thats what i understand.

    • Mmmaxheadroom

      Leasing towers = tax break pure and simple.

  • Rudy Belova

    I think this could be a very good thing. Last i checked, american tower corporation had around 30,000 towers. (NOT including any of tmo owned towers.) Crown Castle builds for At&t, Sprint, Verizon, and more. Same with SBA,

    Not all of t-mobile’s towers are t-mobile owned. Many are leased through various companies already. They already have a working relationship with these companies and have for a long time. It all depends on many factors, what’s in the best interest for coverage, for the company.
    The plus side is if one of these companies (like american tower) gets these towers, in theory t-mobile could have easy access to the 30,000 towers that company already manages now. Easy access to new coverage.

    So, this could be very good news..

    • rene ledesma

      good point, in the end, that is probably the play. access.

  • Anonymous

    most people don’t realize what it takes to get a tower up. Getting one of those things up costs $150,000 or more!

    You have to go to local governments, deal with the board, easments, permits, rights of way. Angry residents that don’t want a tower nearby. Land owners who want nice payments for the right to put the thing up. All the gov’t bureaucracy forces you to deal with. Then you might end up having to scrap everything because somebody doesn’t want a tower nearby.

    This and all the compliance has costs which are probably more than what T-mobile can lease the towers for

    • Frigadroid

      Don’t forget the local tax too, like the carriers often do and wind up paying more with penalties another reason they don’t want to deal with it.
      I know a guy who lucked out when he signed a thirty year contract to lease land for one tower. Way more than $150k paid out over time like a GE or Ford retirement.

  • Frigadroid

    If they lease the same towers obviously nothing will change in coverage, but I don’t trust DT and tmobile so I wouldn’t be surprised if they pocket the money and try to cut cost by eliminating some of the towers that are in close proximity leaving us with less coverage and slower data.

  • TMoFan

    Is this a common thing in the industry? Does at&t/Verizon lease back their towers too?

    I agree with David. If this helps T-Mobile get on the LTE path, and remain independent, then I’m all for it.

    • Anonymous

      very common

  • Tuliom Mesa

    Theres a Tmobile Satellite next door to me xD not a tower, the roof from my neoighbors building has a bunch of them up there :o

    • JustSaying

      what do you mean?? where do you live?

  • Anonymous

    I for one LOATHE American Tower, they are the worst “landlords” to deal with, contract driven and not customer service driven.  I’m hoping Crown wins out on this sale because they have a top notch group of people that are very customer service oriented.

    I hope that whoever buys these assets will give TMO favorable terms in for future expansion (read: modernization programs/LTE/upgrades) without having to jump through a lot of hoops and/or pay additional monthly fees.

    Spectrasite now ATC purchased some sites from CIngular back in the day and some were turned back because they couldnt use some of them.  TMO ended up owning them.

    I hope this generates the anticipated money they are looking for

    • FtKnox TM User

       Powertel sold all their GSM tower to Crown Tower back before they were merged with Voice Stream/T-Mobile and the network expanded 10 fold in less than 16 months.  This would be a great deal for T-Mobile since they don’t have the capital to expand the network on their own.  With someone else owning the towers, you can bet that there will be more than one carrier using this tower, meaning they could share back haul costs, upgrade costs, especially with a comparable carrier like AT&T using the same GSM technology.

  • Anonymous

     I hope that DT doesnt steal the money after they sell the towers. DT wants to build out Germany with LTE.

    • Guesty

      with the current state of affairs in Europe it will be crazy to invest there atleast for now. the american market is more stable and profitable for DT.

    • Anonymous

       The whole point of T-Mobile USA selling their tower portfolio is to bolster the US network, and probably rebuild their T-Mobile-owned tower portfolio again.

      • Mattcat03

        Not good for the customer=Not good for the Company.  Yes if they sell Cash Flow goes up, but to continue to service the exisiting coverage, expenses of leasing goes up. Connect the dot and you will see voice and data plans go up. This not good. DT needs to bring money in from different source.

      • Nearmsp

        I would think buying new towers or signing new leases for new towers would “bolster” their network. How does SELLING towers and leasing back these towers “bolster” their network? It is speculation to imagine that the money they recover from their sale will go to “rebuild” their network. I have not seen any T-mobile statement to that effect. Do you have any additional information than what is published?

        • Anonymous

          Very shortly before the att merger was announced in the beginning of 2011 the sell lease back was listed as one of the ways T-Mobile was going to gain the capital to expand coverage to rural areas.

  • wsj

    This is just stupid, stupid & stupid.  Yes it raise cash in the short term, but the long run the company’s cost are greatly increased. Of course Mgt will be long gone by then and new Mgt will have to deal with the increased overhead.  Sale lease back is a favoriate move of McKinnsey & Co, Mgt Consultants to raise cash. I have been through this before, its not very pretty a few years out.

    • Mattcat03

      I agree with you.  Tmo’s competitive pricing will be affected by leasing these towers and will we see an increase in the voice and data plans closely resembling that of Sprint.  This is not a good thing for the customers specially the only glue holding Tmo is their competive pricing.  Owning those towers has kept Tmo to be the less expensive alternative in comparison to the other carriers.  If they go this route, they would be shooting themselves on their foot.  Looks like there is no love from DT because at first they want to sell Tmo and now they want to dismantle it altogether. Simply put, DT does not want to invest in Tmo. With all the other things Tmo lacks against the other carriers, by doing this, Tmo will not survive which I’m starting to believe thats the intention of DT.

      • Anonymous

        Well the gamble is that if they use the $3 billion to effectively improve their network with data speeds and coverage then the added subscribers will give them added revenue covering any additional expenses which wouldn’t hurt the company for a very long time.   I would imagine we’re talking many years before lease fees would exceed $3 billion.  That’s a reasonable amount of time to hope that T-Mobile would grow as a business.  Personally, I hope T-Mobile would use the cash to buy a regional provider like Leap or Metro and effectively enhance their rural coverage instantaneously (if it was that simple)

        • wsj

          3 billion is not a lot of money.  And you assume that they wil use it to build out LTE, its gone and what have to got to show for it. Nothing as soon as G5 comes out.  Of couse if DT take it to buy down their overall debt, TMUSA is cooked.  Those tower are valuable property, & DT knows it and so do the tower companies, after they are willing to pay 3B for them.  I doubt they are expecting for payback to be in 20 years.

        • Anonymous

          This tower sale to improve coverage plan was in the works before the at&t deal announcement.  Around this time last year Philip Humm and Rene Obermann made a presentation in New York.  Even though the deal with at&t was practically in place during this time there was never 100% certainty att would offer such a high pay out for t-mobile usa and agree to a historically high break up fee but that’s neither here or there.  DT did take the $3 billion from the att break up to pay down their debts because that was most critical at that time, remember they were expecting the $39 billion for t-mobile usa to cover their WHOLE debt.

          A lot of people who comment here seem to lack the ability to think as a business.  The tower sale actually REDUCES the worth of T-Mobile USA.  This is why it was held off from happening pre and during merger.  If DT was still trying to actively sell T-Mobile USA off, this is NOT a step they would take.  T-Mobile USA is their asset, so in short they are going to do things that will help make their assets more valuable.  The endgame is to get T-Mobile to finally GAIN some marketshare.  So unless otherwise proved, the tower sale idea is strictly a T-Mobile USA move.  They understand they HAVE to make a capital investment in the US and this is the perfect way to do that.  The LEAST likely thing that could happen with the $3 billion is it being used to pay down DT’s debt.  Even if DT’s long term goal is to pull out of the US, they are going to keep their US asset as competitive as possible so they can get the most amount of money for it.  T-Mobile US still brings in the cash for them, just not an extraordinary amount and I’m pretty sure if DT did not have a massive debt to pay off they would never had agreed to sell them to at&t.

  • Sidekicker89

    Has anyone else noticed on Tmo.com’s prepaid and monthly 4G map that roaming coverage in Iowa is gone now?!

    • http://pharaohtechblog.blogspot.com/ Conan Kudo (???????)

      Considering T-Mobile USA owns 54% of Iowa Wireless Services (d.b.a. i-wireless), I don’t think Iowa’s coverage will be an issue for too much longer.

      • Sidekicker89

        Does this mean Tmobile will acquire I wireless? Or?

      • Anonymous

        Hey Kudo, from what I’ve read a key advantage over performance of Verizon LTE over HSPA+ 42 is the MIMO implementation of LTE Verizon has.  Does T-Mobile have the ability to go MIMO nationwide?  Also, does MIMO have a backwards compatibility effect?  Meaning, if T-Mobile went MIMO for HSPA+ 84 would people with HSPA+ 14 devices see a difference or would the advantages be strictly for HSPA+ 84 devices and onwards?

        • Anonymous

          I don’t think it would necessarily make things faster for others just due to the MIMO. But when we do implement MIMO we will simultaneously increase the back haul to the sites to accommodate the +84. so that would help increase the speed for others.

  • Lawrence of Arabia

    Is this a good or a bad thing for Tmo customers?

  • http://cosmicbreeze.tumblr.com/ DtheArtist

    Whatever gets the job done