Oct 21, 2013 2 min read

HOUSTON – Crown Castle International Corp. said Sunday that it entered into a definitive agreement in which the Houston-based operator of cellular telephone towers will acquire rights to approximately 9,700 AT&T towers for $4.85 billion in cash.

Under the agreement, Crown Castle Crown Castle will buy 600 AT&T towers and get the exclusive right to lease and operate about 9,100 others for an average of 28 years, the companies said. Crown Castle said it will have the option to buy the leased towers for $4.2 billion beginning in 2032.

“We are very pleased with our agreement with AT&T, which strengthens our position as the largest provider of shared wireless infrastructure in the U.S., which we believe is the largest, fastest growing and most profitable wireless market in the world,” said Crown Castle Chief Executive Ben Moreland in a statement. “With an average of only 1.7 existing tenants per site, we expect the AT&T tower assets to provide significant growth opportunities driven by the continued consumer demand for wireless data services.”

AT&T, the largest U.S. phone company, contracted to maintain its communications facilities on the towers for a minimum of 10 years with monthly rent of $1,900 per site and fixed annual rent escalators of 2 percent. AT&T will also have access to additional space on the towers for its future use, subject to certain restrictions.

Crown Castle will have the right to sublease other available capacity on the towers to additional tenants and believes the AT&T towers have sufficient capacity to accommodate at least one additional tenant per tower.

Crown Castle, which also has an operations center in Southpointe, Cecil Township, said in a press release that it estimates the AT&T towers will contribute approximately $245 million to $255 million to its adjusted funds from operations before financing costs in 2014. It expects to fund the transaction with cash on hand and equity and debt financing, including borrowings under its revolving credit facility.

Following the transaction, Crown Castle will continue to be the largest wireless infrastructure operator in the United States with approximately 40,000 towers throughout the United States and extensive small cell operations in more than 50 markets. The transaction is expected to close in the fourth quarter.