American Tower Acquires BR Towers in Brazil

There’s been a lot of talk about which of the three major tower companies, if any, would purchase BR Towers in Brazil. American Tower announced on June 15^ththat they have reached an agreement with GPCP V, a private equity fund managed by GP Investments, Ltd., FIP Multisetorial Plus, a private equity fund managed by Bradesco BBI, and other shareholders, to acquire 100% of the equity interests of BR Towers S.A., a Brazilian telecommunications real estate company that is expected to own approximately 2,530 towers and the exclusive use rights for approximately 2,110 additional towers in Brazil at closing. The purchase price of approximately 2.18 billion Brazilian Reais, (approximately $978 million at current exchange rates) subject to customary adjustments, will be satisfied with a combination of cash and the assumption of certain existing indebtedness. According to the company, “American Tower anticipates that the towers will generate approximately 292 million Brazilian Reais (approximately $131 million at current exchange rates) in annual run rate revenues and approximately 181 million Brazilian Reais (approximately $81 million at current exchange rates) in annual Gross Margin and anticipates that the acquisition will be immediately accretive to Adjusted Funds From Operations upon closing. The transaction is subject to regulatory approvals and other customary closing conditions, and is expected to close in the fourth quarter of 2014.”

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Wireless Towers Rise Above the Carrier Wars

The analysts at Pacific Crest Securities prefer the wireless tower companies to the mobile carrier any day of the week. According to Michael Bowen and Trevor Upton, “While the carriers, Verizon Communications, AT&T, Sprint and T-Mobile US, have stabilized a bit, we remain cautious on the group and prefer the wireless towers, SBA Communications, Crown Castle International and American Tower.T-Mobile’s promotion of 4G tablets for the price of Wi-Fi tablets ended in May, but its discounted data plans for tablets remain. In all cases, two-year data plans were required to take advantage of the free or discounted tablets. We expect these free or heavily discounted tablets to boost tablet net additions, which should bolster overall net additions. We believe this will make it difficult to see the underlying net addition trends.” While the mobile carriers are seeing muted-revenue and average-revenue-per-user impact, the wireless tower companies seem much more reliable to researchers.

American Tower Enters into Exclusive Agreement with Plum Creek Timber

American Tower has recently entered into an agreement with Plum Creek Timber Company giving the company exclusive development rights to construct new towers on their property. This agreement provides the company with 6.4 million acres of land located in 19 states and access to that land with negotiated terms enabling expedited construction of new towers and reduced project cycle time.American Tower also has an agreement with Railroad Rights-of-Way, which provides 52,000+ miles of rights-of-way located in 40 states. Much of this property is located in urban or densely populated areas.

Carriers Have a Different Set of Priorities than Tower Climbers

Recently, on our LinkedIn Blog an industry professional posed the question: why are crews still required to do work at night? Crew leader at PDQ’s point was that it would be much safer for work to be done during the day. With the increase in tower accidents over the past few years, it’s a valid question to ask. Shouldn’t we eliminate unsafe work practices? This week in Clinton, Oklahoma KCCU posted a notice on their website explaining to listeners that an antenna needs to be removed from the tower, repaired, and then replaced. This would cause outages from the 9th-11th. While this may not be ideal for mobile carriers, it’s an option. It won’t be the end of the world if cell service is a little slow that day if the alternative is to put workers at risk. Working at night is a common practice though, according to David Trout, owner at TroutINV. As professionals in this industry it is up to us to ensure we use crews that are qualified to work at night under head lamps,” Trout explains. He suggests that working at night isn’t for a newcomer. Michelle Resch, owner at Infinite Wireless Solutions, said, “I think it continues to speak to the carriers priorities. They are so far and safely removed from what happens in the field. We should have skilled workers doing the appropriate jobs. But when schedules are aggressively driven by the carriers, job prices continue to decline, it only seems to make logical sense that the injury counts are going to continue to climb.” Let us know what you think by logging onto our LinkedIn Group and sharing your opinion. Should tower climbers work at night or is it an unsafe practice?

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U.S. Carriers Spent $109 Per Citizen in CapEx in 2013

U.S. carriers shell out about $109 in capital expenditures per citizen annually, according to a new report from Recon Analytics. In 2013, US wireless capital expenditure spending hit an all-time high. AT&T and Verizon Wireless were going head-to-head to see who could finish their 4G LTE deployment first. According to Roger Entner of Recon Analytics, “AT&T’s attempt to overtake Verizon in network quality had the company spending roughly $11.5 billion on network improvements, while Verizon Wireless spent another $9.75 billion improving its network. Let me put this into context: AT&T and Verizon together spent more money improving their networks in 2013 than all 20 operators serving the five largest EU countries (EU5) combined.” That’s not counting Sprint and T-Mobile, who took the “slow and steady wins the race” approach during their 4G LTE build out.  Once we add the capital expenditure of Sprint and T-Mobile, which both spent more on network improvements last year than they had in previous years, US operators spent more than twice as much as the EU5 operators did to improve their infrastructure covering roughly the same number of subscribers, Entner explained. “So, with US wireless carriers at the upper bounds of investing in infrastructure, is it reasonable to assume that they will spend even more money to deploy small channel networks that are slower and less efficient? Most investors will tell you that that is not a tenable outcome,” according to Entner. “So what does this mean? In the US, the carriers that have the largest swaths of contiguous spectrum will be able to provide fast download speeds. Only Sprint is continuously in this fortuitous situation and in some markets T-Mobile, due to pure happenstances, also has 20×20 MHz contiguous spectrum. The other carriers will have to rely on costly and still unproven “carrier aggregation technology” to achieve results similar to what is possible with wider, contiguous spectrum blocks,” he explains.

T-Mobile Is at a Crossroads, So Is the U.S. Wireless Industry

The future of the U.S. wireless industry may soon be in the hands of the Obama administration, CNN Money reported. Sprint and T-Mobile have been negotiating terms of a merger and with a price tag of $32 billion agreed upon, now all that’s left is for regulators to approve the deal. Despite SoftBank Chief, Masayoshi Son, shouting from the rooftops that this is a deal that must be made it’s tough to see how regulators will respond. When the FCC and the Department of Justice blocked a deal between AT&T and T-Mobile in 2011, they believed a combination of the two companies “would eliminate the important price, quality, product variety, and innovation competition that an independent T Mobile brings to the marketplace.” While T-Mobile has done a great job by increasing subscribers, cutting prices, and shaking up the industry, some believe that their success will be short lived. “They can’t continue this forever because it will cost them too much money, so the question is what’s next,” said industry analyst Jeff Kagan. According to CNN Money, some analysts see the carrier’s recent moves as an effort to boost its asking price in a potential acquisition. T-Mobile CEO John Legere said last month that consolidation in the industry was “a matter of when and not if,” and that his company could benefit from the additional scale and assets a merger would offer.

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SoftBank’s Chief Expects Merger Approval

SoftBank’s leader, Masayoshi Son, is the Japanese billionaire who controls Sprint. You have probably heard a lot about him these past few months while a merger between Sprint and T-Mobile has been discussed. If there’s one thing Son has made clear, it’s that he expects this merger to go through and will be extremely unhappy if regulators hinder the acquisition. Last week, Sprint agreed to pay about $40 per share to buy T-Mobile US Inc, a person familiar with the matter said, marking further progress in the attempt to merge the third and fourth-biggest U.S. mobile network operators. The New York Times reported, “Mr. Son has been happy to wield his bully pulpit, calling repeatedly for consolidation within the wireless industry ever since his company, SoftBank, first moved to buy a majority stake in Sprint nearly two years ago. The American-educated Japanese mogul has always dreamed big. His company moved into the wireless telecommunications industry only eight years ago by buying Vodafone’s Japan assets, and quickly sought to become that country’s biggest cell phone service provider. ” The FCC and U.S. Department of Justice will need to sign off on the agreement, but executives at both companies are moving forward as if they don’t require that approval. It’s uncertain how the regulators will rule, and how this merger will affect the industry. One aspect that’s been speculated upon is: who will run the combined company? Some suggest that industry maverick and CEO of T-Mobile, John Legere, would take on the job. Sprint CEO Dan Hesse has said in response that he wouldn't mind not taking the post, citing his age of 60 and his plans to do other things. Although Legere has taken the industry by storm, we’ll have to see if he works well with Son.