Crown Castle International has announced a deal to buy the rights to 9700 wireless services towers owned by AT&T in a deal worth $4.85B – that works out to $500,000 per tower. Crown Castle claims to be the largest wireless infrastructure player in the US, with 40,000 towers, representing nearly half the towers in the top 50 urban markets.
Under the arrangement, AT&T will lease back space on the towers for $1900 per month for 10 years, covering about half of the original price. Under the agreement, Crown Castle will have the exclusive right to lease and operate the AT&T towers for a weighted average term of about 28 years. At the end of the leases, there is an option for Crown Castle to purchase the towers for a further $4.2 billion. Those purchases, if exercised, would be primarily between 2032 and 2048.
In Canada, the construction of a tower costs about $250K, but this does not include the land or the costs associated with permits. There are continuing costs for rent and maintenance of each site. The valuation of the AT&T deal appears to provide a break even point if Crown Castle can increase the current average occupancy of each tower by 20%, rising from 1.7 to 2 tenants per tower.
The carrier gets to unlock value in its infrastructure, allowing Crown Castle to aggressively market the real estate.