AT&T Rumored to Sell Assets to Raise Cash

If AT&T (NYSE: T  ) wants to upgrade its network at a cost of $14 billion, and raise its share price with up to $11 billion in stock buybacks, and buy second-tier wireless operator Leap Wireless, and go on a shopping spree in Europe in order to keep up with rival Verizon's (NYSE: VZ  ) latest monster deal, then it's got to start raising some cash -- pronto.

Source: Justin Smith/Wikimedia Commons, CC-By-SA-3.0.

According to Bloomberg's unnamed sources, AT&T is hoping to rake in up to $5 billion by selling off its cell towers to possible buyers such as American Tower (NYSE: AMT  ) , Crown Castle International (NYSE: CCI  ) , and SBA Communications.

If AT&T does sell off its towers, it wouldn't be the first mobile operator to do so lately, as tower operators continue buying up available wireless infrastructure. Earlier this month, American Tower announced its agreement to acquire 100% of Global Tower Partners from parent company MIP Tower Holdings for $4.8 billion.

American Tower said it would purchase Global Towers' 5,400 towers with $3.3 billion in cash and borrow the rest. That acquisition would increase American Tower's infrastructure holdings by around 25%.

And In September of last year, Crown Castle agreed to buy the rights to 7,200 T-Mobile towers for $2.4 billion in cash. That deal gave Crown Castle approximately 30,000 domestic towers, making it the largest wireless infrastructure operator.

By selling its towers, AT&T would be losing about $326 million annually from renting out space on its approximately 10,000 towers to other wireless companies, according to Bloomberg. However, the company would likely work out a leaseback arrangement with whichever company or companies end up with the towers.

Verizon has had to do some cash-raising itself in order to complete its proposed buyout of Verizon Wireless partner Vodafone (NASDAQ: VOD  ) . Verizon recently made a public offering of $49 billion worth of notes to help it pay the $58.9 billion in cash it needs to give Vodafone as part of the $130 billion price tag for sole ownership of Verizon Wireless.

That's quite a gulp, but it will almost double Verizon's domestic mobile revenue, and, as AT&T found out with its failed acquisition proposal of two years ago, the regulatory agencies don't want to see a consolidation of the major wireless operators in the U.S.

The FCC and the DOJ shot down AT&T's $39 billion attempt to acquire T-Mobile because of strong antitrust fears. That means significant acquisitions for AT&T would have to happen overseas, most likely in Europe.

So Vodafone, the largest European mobile operator, may also play a part in any AT&T expansion. By selling off its Verizon Wireless stake, it makes itself more affordable as a buyout target. The cost for Vodafone has been estimated at around $124 billion according to one analyst who talked to Businessweek. Certainly not cheap, but doable -- maybe.

Other potential European buys could include EE, the U.K. mobile carrier that's a partnership of Deutsche Telekom and Orange, and some assets of Spanish company Telefonica (NYSE: TEF  ) .

Meanwhile, back home, Leap stockholders will get a chance to vote at a special meeting Oct. 24 on whether or not to accept AT&T's buyout offer. If they vote "Y, then that's another $1.19 billion AT&T will have to come up with.

The real winner of the mobile revolution
Want to get in on the smartphone phenomenon? Truth be told, one company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it! But it stands to reap massive profits NO MATTER WHO ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further..."


Read/Post Comments (0) | Recommend This Article (15)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2643754, ~/Articles/ArticleHandler.aspx, 9/22/2014 10:19:10 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement