WSJ article about Nextel getting out of cell tower ownership business.
(Sorry if already posted).
February 11, 1999
Nextel to Sell Its Wireless Towers
To SpectraSite for $560 Million
By STEPHANIE N. MEHTA
Staff Reporter of THE WALL STREET JOURNAL
Nextel Communications Inc., a national wireless-telephone carrier, has agreed
to sell its 2,000 communications towers to closely held SpectraSite
Communications Inc. for $560 million.
The sale, which the companies
announced Thursday, reflects wireless
carriers' desire to shift away from
building and managing their own
towers. Community groups view the
towers as eyesores and have fought
vigorously to keep them out of their
towns.
Under the agreement, SpectraSite,
Cary, N.C., will scout for future sites
and build an additional 1,700 towers
for Nextel over the next five years.
Nextel will pay SpectraSite a monthly
fee for renting space on the towers.
"This is a prudent financial move," said Steve Schindler, Nextel's chief financial
officer. "It provides us with more than half a billion dollars in new capital
without having to take on new debt or issue additional shares." As part of the
agreement, Nextel, McLean, Va., will take a 17% stake in SprectraSite.
Analysts say carriers' moves away from direct tower ownership make sense.
Carriers, especially newer ones, can instead devote their time to building their
networks and marketing to customers. "It's a source of financing, and carriers
eliminate a management drain on a noncore business," said Steven Yanis, a
wireless analyst with NationsBanc Montgomery Securities.
The deal allows SpectraSite "to aggressively market the [acquired] towers for
co-location," said Stephen H. Clark, SpectraSite's chairman. With the
introduction of new wireless carriers, third-party tower companies such as
SpectraSite can house more than one carriers' antennae on a single tower. That
helps smooth relations with community groups worried about tower
proliferation, Mr. Clark said.
SpectraSite, founded in 1997, aims to "roll up" the burgeoning
tower-management business. Of the more than 200,000 towers in the U.S.,
some 50,000 are owned by smaller, mom-and-pop type operators.
As part of its Nextel agreement, the company said it has raised some $400
million in private equity and about $550 billion in bank financing.
Other wireless carriers have begun to outsource tower-management functions.
Late last year, for example, Bell Atlantic Corp.'s wireless unit formed a joint
venture with Crown Castle International Corp. to manage the Bell's 1,400
wireless towers.
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