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.
Erin Kennedy and Evan Niu, CFA, both have no position in any stocks mentioned. Nor does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.