AT&T Raises Some Much-Needed Cash

Over the weekend, AT&T  (NYSE: T  ) announced a nearly $5 billion transaction with Crown Castle International  (NYSE: CCI  ) , whereby Crown Castle would purchase approximately 600 cell towers and lease another 9,100 from Ma Bell. AT&T would still have the right to reserve future capacity, as mobile data use shows no signs of slowing down.

AT&T can certainly use the cash right now, as the company has been interested in expanding internationally through acquisitions. AT&T is also in the process of acquiring Leap Wireless, which it will need to pay for.

To help finance the deal, Crown Castle is proposing a secondary offering. That news is weighing on shares today, as it would be dilutive to existing shareholders while raising Crown Castle's weighted average cost of capital -- offsetting some of the benefits from becoming a REIT next year. In addition, Crown Castle reported earnings this morning that left a little to be desired.

In this segment of Tech Teardown, Erin Kennedy discusses AT&T's deal with Evan Niu, CFA.

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9/23/2016 4:00 PM
T $41.28 Up +0.17 +0.41%
AT and T CAPS Rating: ****
CCI $95.18 Up +0.35 +0.37%
Crown Castle Inter… CAPS Rating: ***