Report: Verizon hires financial advisers to explore tower sale, could raise $6B

Verizon Communications (NYSE: VZ) has hired TAP Advisors LLC to look into a sale of network assets including its cell towers, according to a Reuters report.

The report, citing an unnamed source familiar with the matter, comes after senior Verizon executives indicated they might be open to selling Verizon Wireless' cell towers. A Verizon spokeswoman declined to comment.

Macquarie Securities analyst Kevin Smithen has estimated that Verizon is looking to sell about 12,500 sites.

Verizon Communications CFO Fran Shammo said at an investor conference earlier this month that Verizon has previously attempted to sell its towers but never inked a deal, and that a transaction for Verizon's towers always came down to price, and terms and conditions. "And some of the recent deals that have been done, the terms and conditions seem to be much more favorable," he said, according to a transcript of his remarks provided by Verizon. Shammo said Verizon opened up to the idea of selling its towers because of AT&T's (NYSE:T) agreement last year to sell and lease 9,700 of its cell towers to Crown Castle in a $4.85 billion deal.

"The AT&T deal was a good deal for them," Shammo added. "And it kind of opened our eyes and said, OK, well, maybe there is a way to get through this and protect all of our interests and get a deal that is palatable to us. So again, and that is why we said we are open to the idea and we will see what happens." Verizon Communications CEO Lowell McAdam also said earlier this month he'd be open to a tower deal "if an opportunity presented itself to generate shareholder value."

According to Reuters, Smithen wrote in a research note that a sale or leaseback of the towers similar to AT&T's deal at $500,000 per site could raise $6 billion in liquidity for Verizon. Crown Castle is seen as a potential bidder for Verizon's towers, along with private equity firms, according to the analyst.

"We believe there could be multiple bidders for this asset but believe the potential sale of the last sizeable U.S. tower asset could explain why [Crown Castle] has not announced a capital return strategy to date," Smithen wrote.

Under the terms of AT&T's October 2013 agreement with Crown Castle, Crown got the exclusive right to lease about 9,100 AT&T towers for an average of about 28 years and it bought 600 other towers. Crown can buy the leased towers for $4.2 billion beginning in 2032. AT&T subleased capacity on the towers from Crown Castle for a minimum of 10 years for $1,900 per month per site, with annual rent increases of 2 percent. AT&T said it can add "additional reserve capacity," most likely new antennas, on the towers for future use.

For more:
- see this Reuters article

Related Articles:
Analyst: Verizon could sell as many as 12,500 cell towers
Verizon Wireless plans to launch Wi-Fi calling in mid-2015
Verizon CEO hints at Q3 wireless subscriber growth, possible sale of towers
AT&T sells and leases towers to Crown Castle in $4.85B deal

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