The third largest wireless opeator in the US, Sprint Nextel plans to sell approximately 3,300 towers to cell phone tower operator TowerCo for an estimated $670 million in cash, and then lease them back to operate its cellular phone network as well as build the new 4G WiMax network that is a part of its joint venture with Clearwire to provide mobile users with wired broadband speeds late this year.
Other big wireless operators, including AT&T and Verizon Wireless, have sold their cell phone towers to companies, such as American Tower, Crown Castle International, and TowerCo., which specialise in cell phone tower management
Sprint said the specific number of towers and the final purchase price would be determined after the deal closes in about 90 days.
Sprint has been suffering from severe customer attrition and has been focussing on improving its core cellular business and has around $24 billion in debt.
Earlier this year Sprint sold its WiMax business to Clearwire as part of their 4G venture, valued at an estimated $14.5 billion, which would combine all the spectrum licenses owned by the two companies into a new firm, Clearwire, allowing Sprint to retain its cellular business and third-generation (3G) data network. The new venture includes an infusion of over $3 billion in cash from Google, Intel, and several cable operators.
Earlier this year it sold off its WiMax business unit to Clearwire, and launched an aggressive marketing campaign to help reshape its public image. The company has also introduced new devices, such as the Samsung Instinct, in an effort to win new subscribers.
"By leasing rather than owning these network facilities, we can better focus on our core business of providing communications services to consumers, businesses and government customers," said Bob Azzi, senior vice president, field engineering and operations, Sprint Nextel. "Significantly, this transaction provides Sprint Nextel with additional liquidity which gives us greater flexibility in managing our company."
"These are great towers concentrated in large metropolitan markets throughout the US. and will benefit as wireless communications continue to grow," said Richard Byrne, TowerCo's CEO.
Equity financing for this transaction will be provided by Tailwind Capital, Soros Strategic Partners II LP, Stone Tower Equity Partners and Vulcan Capital.
In this transaction, Sprint Nextel was advised by Wachovia Capital Markets, LLC, Citi and the law firm of Jones Day. TowerCo was advised by UBS Investment Bank and the law firm of Paul, Weiss, Rifkind, Wharton and Garrison LLP.