Over the weekend, AT&T (T 1.88%) announced a nearly $5 billion transaction with Crown Castle International (CCI -0.03%), 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.
