By John Kell and Thomas Gryta
AT&T Inc. (T) on Friday confirmed it is exploring a sale of
some or all of the telecommunication giant's wireless tower assets,
a portfolio sale analysts say can exceed $4 billion.
The company has said it is open to selling non-core assets and
has sold real estate and cell towers in the past. Last year, it
sold a majority stake in its Yellow Pages business to
private-equity firm Cerberus Capital Management LP for $950
million.
The time may also be right for selling tower assets, as the
industry consolidates to the major operators that focus solely on
the business.
American Tower Corp. (AMT) agreed to buy MIP Tower Holdings LLC
for about $3.3 billion in cash last week. Late last year, T-Mobile
USA Inc.--which at the time was a unit of Deutsche Telekom
AG--agreed to sell rights to 7,180 towers to Crown Castle
International Corp. (CCI) for $2.4 billion.
In a research note published this week, Wells Fargo analyst
Jennifer Fritzsche said she believed the most logical buyer of
AT&T's towers portfolio is Crown Castle, citing recent
acquisitions that will keep other potential buyers distracted.
"If [AT&T] sells these assets, it's likely just taking
advantage of the continued high multiple environment paid for these
portfolios," Ms. Fritzsche wrote.
On Friday, AT&T also said it expects to report record
third-quarter smartphone sales next month, as well as stronger
upgrades from year-ago levels, but sees a slowdown in upgrades in
the final quarter of the year.
AT&T said while it sees higher smartphone upgrades in the
current quarter from year-ago levels, that metric will be lower in
the fourth quarter, due to AT&T's new 24-month upgrade policy
and given higher upgrade expectations for the third quarter. The
telecommunication giant also expects to grow its smartphone base by
more than one million in the third quarter.
AT&T, which left its full-year guidance unchanged, is
expected to report third-quarter results on Oct. 23. Analysts
surveyed by Thomson Reuters most recently expected AT&T to
report a 7% jump in profit on a 2% increase in revenue for the
third quarter.
The rosy commentary comes as AT&T and Verizon Wireless--a
joint venture of Verizon Communications Inc. (VZ) and Vodafone
Group PLC (VOD, VOD.LN)--have recently unveiled plans that bill
subscribers for the full price of their phones, which are broken
into monthly payments.
The change allows consumers to upgrade to new devices at a
faster pace, and shifts from the hefty subsidies AT&T and
Verizon offer for smartphones purchased with traditional
contracts.
On Friday, AT&T also disclosed that it closed on its roughly
$780 million acquisition of Atlantic Tele-Network Inc.'s (ATNI)
retail wireless operations.
AT&T shares rose 0.2% to $34.39 in after-hours trading.
Write to John Kell at john.kell@wsj.com
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