SBA pays $973M to lease PG&E electric towers for wireless gear

Tower company SBA Communications has struck a $973 million deal to buy license agreements from Pacific Gas and Electric Company (PG&E). The license agreements apply to over 700 towers, which PG&E currently leases to wireless providers under 100-year leases.

In addition, SBA will be allowed to sub-license space on up to 28,000 transmission towers across PG&E’s network for 15 years. These 28,000 towers currently receive no subleasing revenue. SBA and PG&E will share revenues from any new sublease agreements with wireless carriers.

SBA Communications CEO Jeff Stoops said in a statement that he’s “pleased about the opportunity to work closely with PG&E over the coming years to maximize wireless deployments across their extensive network of transmission towers.”

New Street Research analyst Spencer Kurn told Fierce, “Carriers leasing space on utility transmission towers is less common than a typical macro site. This is clearly evidenced by the fact that only 700 of PG&E’s sites had leasing revenue associated with them, while 28,000 sites had no leasing revenue at all.” 
One of the reasons that carriers haven’t tapped utility infrastructure to deploy wireless gear is that it can be difficult and dangerous to work on transmission poles, given the high levels of electricity. It requires a specialized skill set.

PG&E said in a statement that licenses for wireless antennas are one of the secondary uses of transmission towers approved by the Federal Energy Regulatory Commission (FERC) and the California Public Utilities Commission (CPUC). “PG&E retains control over its safety protocols,” said the company. “PG&E will continue to regularly inspect and maintain the towers and audit the attachments. Any work on PG&E’s electric transmission infrastructure will continue to be performed by trained, qualified electrical workers.”

Wireless gear on electric infrastructure

Kurn said that utility companies haven’t put a lot of effort into marketing their transmission towers to wireless carriers. The utilities have a different set of priorities. But he said SBA “should be able to create even more value by properly marketing these sites to the national carriers and generating above industry lease-up rates."

“On top of this, the backdrop for leasing activity in the U.S. is extremely robust, with T-Mobile upgrading their network following the Sprint merger, carriers acquiring and deploying C-band spectrum, and Dish entering as a fourth national player,” said Kurn. “I don’t think the PG&E sites are exposed to any one of these trends in particular, but all three should further enhance an already-solid deal.”

For its part, PG&E’s Interim Chief Financial Officer Chris Foster said in a statement, “When we emerged from Chapter 11, we made a commitment to achieve financial stability and bolster our overall financial health, and we’re delivering on that objective. Strategically selling non-core assets like these is one way we’re continuing to follow through on that commitment.”

The deal between PG&E and SBA raises the possibility that electric companies could become bigger players in the U.S. wireless landscape.

Utility companies own vertical infrastructure everywhere there’s electricity in the United States, which is pretty much everywhere there are people. And they could help provide a solution for closing the digital divide.

The FCC recently concluded the first phase of its Rural Digital Opportunity Fund (RDOF) auction. The reverse auction garnered pledges from bidders to spend $9.2 billion of Universal Service Funds to close the digital divide.

RELATED: Congressmen worry RDOF funds will be squandered

The Rural Electric Cooperative Consortium was the third highest bidder in the RDOF auction, pledging to spend $1.1 billion.