Feature Article

September 26, 2014

Verizon Communications Tower Sale Not Unique

For fixed network service providers, the network of access cables stretching from points of presence (central offices, headends or data centers) to actual end user locations always has been viewed as a source of unique business value, because such networks are hugely expensive and therefore rare.

In recent years, though, many mobile service providers paradoxically have been selling off their tower networks. Verizon Wireless is the latest tier-one service provider said to be considering a move.

Verizon Communications apparently is looking very seriously at a sale of its tower network by the end of 2014, a deal that may raise about $6 billion. The thinking is that Verizon then would use the proceeds to purchase more spectrum in upcoming auctions.

The sale would involve about 12,000 towers. Mobile service providers have conducted tower sales as a way to raise cash and redeploy the assets. The move would not be unusual.

AT&T sold 600 towers and the exclusive rights to lease 9,100 more towers for an average of 28 years for $4.83 billion. T-Mobile US generated $2.4 billion in 2012 for the rights to operate 7,200 towers. And Sprint also sold off its tower network in 2008.

Half of Africa’s mobile communications towers will have been sold by mobile service providers to independent tower companies by the end of 2015, according to research organization TowerXchange.

Since 2010, 18 percent  of Africa’s 160,000 telecom towers have been transferred from mobile service providers to independent tower companies.

TowerXchange forecasts that tower companies will own or operate about 39 percent of Africa’s towers by year end 2014, and more than 50 percent by the end of 2015,” said Kieron Osmotherly, CEO TowerXchange.

Among 35,000 towers for sale are the remainder of Airtel’s 15,000 to 20,000 African towers in 17 countries. TowerXchange forecasts that 84 percent of Nigeria’s mobile towers will be owned or operated by independent tower companies, not the mobile service providers.

Tactical concerns drive the trend. As service providers grapple with falling average revenue per user, rising energy costs and the need to investment more in broadband networks, service providers are concluding that capital is better used elsewhere.

Does that mean access networks no longer confer business advantage? By no means. Scarcity remains, but the scarce resource is licensed spectrum. The towers are a means to monetize spectrum, but it is spectrum rights that now are the scarce asset for mobile access.

 


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