Last week, AT&T and Crown Castle International Corp. announced a deal whereby Crown Castle will purchase or lease 9,700 of AT&T’s towers in exchange for $4.85 billion in cash.
Crown Castle plans to finance the deal through the sale of common stock. AT&T intends to use the cash for network upgrades and new spectrum.
Under the terms of the deal, Crown Castle—one of the world’s largest tower operators– will lease 9,100 towers from AT&T and will purchase an additional 600 outright. AT&T will lease a fixed amount of capacity from the towers and has an option to lease additional capacity, if needed.
“This deal is good for AT&T and our shareholders,” said AT&T senior vice president for network planning and engineering Bill Hogg. “This deal will let us monetize our towers while giving us the ability to add capacity as we need it.”
The deal will, in one fell swoop, double AT&T’s cash holdings. The company had previously announced plans to invest $14 billion over three years to improve its network.
Houston-based Crown Castle also will have an option to purchase the leased towers for $4.2 billion beginning in 2032. “We are very pleased with our agreement with AT&T, which strengthens our position as the largest provider of shared wireless infrastructure in the U.S.,” said Ben Moreland, Crown Castle president and CEO.
After paying off $402 million in debt that matures through 2015, Frontier Communications Corp. announced that it will use additional cash to improve its fiber-to-the-home network and pay its annual 40 cent dividend rather than paying down longer term debt.
Frontier will put cash on hand to use repaying $200 million in 8.25% bonds which come due in May 2014, $105.1 million of 6.625% notes maturing March 2015, and $96.9 million of 7.875% bonds due April 2015.
The company’s free cash flow of $760.6 million will be used to pay its $400 million cash dividend. That will leave more than $360 million for Frontier to use for network reinvestment.
Frontier’s ratio of debt to earnings before interest, taxes, depreciation and amortization, also known as leverage, currently stands at 3.65 times. The company’s long-term goal is to reduce its leverage to 2.5 times. That would position Frontier with the lowest leverage ratio among peers with revenues between $2 billion and $10 billion.
AT&T announced recently that it has agreed to buy Leap Wireless. Leap is best known for its Cricket brand, a low-priced, prepaid mobile wireless service that has approximately 5 million customers. AT&T has said that it will keep the Cricket name and service and expand it in certain markets.
The deal requires approval by the FCC and the Department of Justice. AT&T said that it expects the deal to close in six to nine months.
If approved, the AT&T purchase of Leap would continue the consolidation in the mobile wireless industry in the United States. T-Mobile recently acquired MetroPCS, and that newly combined company has about 43 million customers nationwide. Read more
The joint owners of Internet TV service Hulu—21st Century Fox, NBCUniversal and The Walt Disney Co.—announced that they would retain their ownership positions in the company and invest an additional $750 million to grow the business.
However, shortly after the release of that announcement, a Bloomberg report indicates that the owners are “continuing talks to sell a stake in the video-streaming service to Time Warner Cable Inc. (TWC).”
Hulu had been on the market for approximately six months. DirecTV, AT&T and Chernin Group (jointly), and TWC have been the past three suitors for Hulu. But while Hulu’s owners had hoped to receive $2 billion for the company, no bids above $1 billion have been extended.
The Walt Disney Co., 21st Century Fox and NBCUniversal indicated that they intend to move Hulu more toward a subscription video-on-demand service, in order to better compete with Netflix.
According to the source for the Bloomburg article, there is no definite time horizon on when a deal might be reached.
The National Rural Telecommunications Cooperative (NRTC) has announced plans to acquire 100% ownership of Raleigh-based cloud services provider NeoNova Holdings. Terms of the transaction were not announced.
NeoNova provides a wide array of subscriber, network management and professional services leveraged by a powerful service delivery platform. The company empowers rural and regional broadband providers, technology partners and small businesses with 21st century cloud-based technologies. Read more
Joining at least seven other companies in the bidding, Silicon Valley giant Yahoo has reportedly submitted a bid for video site Hulu. Other bidders include DirecTV and Time Warner Cable. Hulu, which is currently jointly owned by News Corp., Disney and Comcast, has both a subscription and an advertising business.
While the deal is an effort to boost Yahoo’s video offerings, the company already has a respectable amount of exclusive video content. For example, comedian Jack Black is producing a Web series that debuted on Yahoo Screen in March. So, while Google has YouTube and Amazon has Amazon Instant Video, Yahoo is not far behind.
Yahoo has reportedly offered multiple amounts for Hulu, from $600 to $800 million. That price range is tied to the length of the licensing rights for content available on Hulu. Assuming that the licensing issue can be resolved, the big question for Yahoo is Hulu’s place in the market, where consumers already have access to TV Everywhere and Netflix. Read more
Less than two years after a failed deal to sell T-Mobile USA to AT&T, parent company Deutsche Telekom AG has finalized a deal to merge T-Mobile USA with MetroPCS Communications Inc. The deal, approved by MetroPCS shareholders last week, is set to close on May 1, and it has already been granted approval by both the Justice Department and the Federal Communications Commission.
The T-Mobile/MetroPCS deal combines the fourth and fifth largest wireless carriers in the United States. The combined entity will have approximately 40 million U.S. subscribers.
The deal comes after what has been a tough period for Deutsche Telekom. The proposed merger with rival AT&T fell apart after expressions of concern from regulators that the combined entity would decrease competition in the U.S. mobile wireless market and ultimately harm consumers. In addition, from 2009 to 2012, T-Mobile lost about 13% of its contract subscriber base.
With the MetroPCS deal finally closed, T-Mobile can move forward and push to become a true rival to the largest nationwide wireless carriers. Helping this along is the spectrum holdings that T-Mobile will acquire as part of the deal. With a finite amount of spectrum available to deliver wireless services to consumers, carriers like T-Mobile need all they can get to compete with the likes of AT&T and Verizon Wireless.
Added to that, T-Mobile has recently added the iPhone. This, and its adoption of wireless plans that do not require long-term contracts (they eliminate subsidies for the phones, however), are things that the carrier hopes will set it apart from its rivals.