Verizon unloads more than 11,000 towers to American Tower for $5 billion cash

Big Red is cleaning up its balance sheet, an inescapable reality after it shelled out $130 billion to fully acquire the part of Verizon Wireless it did not own from Vodafone in a deal that closed a year ago this month.

While it gives Verizon all of the revenue from the wireless unit, the assets came at a cost, most of which presented itself as a significant amount of new debt.

Verizon has been dutifully paying that debt down as the carrier has remained healthily profitable, but is eager to take a few big bites out of it before the 600MHz spectrum auction next year. To that end, Verizon agreed to sell off a significant portion of its wireline operations to Frontier Communications for $10 billion.  That deal was announced last week.

Now, Verizon has reached an agreement with American Tower, who owns and maintains over 30,000 cell towers in the United States. Verizon will be on the receiving end of $5 billion in cash from American Tower who will get leasing rights to over 11,000 towers in all 50 states, and acquire outright 165 additional sites. Once this deal closes, American Tower will have over 40,000 towers in its stable.

While American Tower is paying Verizon for the leasing rights, Verizon will be paying American Tower for long-term leases, about $1,900 per-month, per-site. American Tower will be able to further increase its revenue by leasing space to other tenants, space permitting. That could allow other carriers to expand coverage in many areas.

As for the towers themselves, American Tower gets a big feather in its cap, with executives noting that over half the sites have no competitive towers within a mile. The company expects it will be able to gain a bit more than $400 million in rental revenue annually from the sites.  The leasing rights agreement is good for 28 years, after which, American Tower will get first right of refusal to buy the towers.

source: FierceWireless