AT&T Confirms Exploration of Wireless Tower Asset Sale - Update

   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 [e-mail]

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