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Reports Verizon (Baa1/BBB+/A-) To Sell Towers Ahead Of AMT (Baa3/BBB-/BBB+) Lease Lapse

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  • BBG reported overnight that Verizon is considering selling 5,000-6,000 mobile-phone towers, potentially raising over USD 3bn. Discussions preliminary with no sale guaranteed.
  • In March 2015, Verizon sold exclusive 28yr lease and operation rights for 11,000 towers to American Tower Corp. for USD 5bn to fund airwave purchases and reduce debt while signing a 10yr agreement to lease back capacity on the towers from AMT (with an option to renew) so it seems a move to sell towers could correspond with the end of their sublease.
  • Announcements from the time noted that AMT will have fixed price purchase options to acquire towers based on their anticipated fair market values at the end of the 28yr lease terms. The BBG report last night does not mention AMT and notes that expected sources of interest include both infrastructure firms and strategic investors.
  • Telecom companies like AT&T have similarly sold towers to raise cash e.g. AT&T's USD 4.8bn sale of 9,700 towers to Crown Castle in 2013 to fund network upgrades.
  • USD 3bn represents <0.1x turns of Verizon’s FY23 leverage (2.6x). Were AMT to buy the towers it would represent ~0.4x turns of American Towers leverage (5.2x).
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  • BBG reported overnight that Verizon is considering selling 5,000-6,000 mobile-phone towers, potentially raising over USD 3bn. Discussions preliminary with no sale guaranteed.
  • In March 2015, Verizon sold exclusive 28yr lease and operation rights for 11,000 towers to American Tower Corp. for USD 5bn to fund airwave purchases and reduce debt while signing a 10yr agreement to lease back capacity on the towers from AMT (with an option to renew) so it seems a move to sell towers could correspond with the end of their sublease.
  • Announcements from the time noted that AMT will have fixed price purchase options to acquire towers based on their anticipated fair market values at the end of the 28yr lease terms. The BBG report last night does not mention AMT and notes that expected sources of interest include both infrastructure firms and strategic investors.
  • Telecom companies like AT&T have similarly sold towers to raise cash e.g. AT&T's USD 4.8bn sale of 9,700 towers to Crown Castle in 2013 to fund network upgrades.
  • USD 3bn represents <0.1x turns of Verizon’s FY23 leverage (2.6x). Were AMT to buy the towers it would represent ~0.4x turns of American Towers leverage (5.2x).