Verizon Partners with Vertical Bridge in Tower Sale Deal
Verizon's Strategic Divestment of Mobile Towers
Verizon Communications has made a significant move in the digital infrastructure landscape by announcing the sale of thousands of mobile phone towers to Vertical Bridge for a total of $3.3 billion. This transaction is designed to generate additional capital for Verizon, enabling the company to further enhance its extensive wireless network.
The Details of the Tower Deal
This comprehensive agreement encompasses 6,339 towers spread across all 50 states, plus Washington D.C. The initial cash proceeds amount to $2.8 billion, indicating a robust value for these assets. Notably, Verizon will continue to leverage these towers by leasing them back for a duration of 10 years, with the possibility to extend this lease time to up to 50 years. This strategic leaseback arrangement allows Verizon to free up essential resources while still utilizing the towers for service provision.
Benefits of the Transaction
The anticipated closure of this deal by the end of the year 2024 aligns with Verizon's broader agenda to optimize its operational costs associated with tower management. MoffettNathanson analyst Craig Moffett highlighted that this move reflects a global shift among wireless operators toward divesting their owned and operated towers. The recognition that such infrastructure is typically more valuable in the hands of independent operators, who can efficiently lease out space to several tenants, further underlines the strategic reasoning behind this sale.
Vertical Bridge's Growing Presence
Vertical Bridge, known for its expansive footprint in the U.S. telecom sector, possesses over 500,000 sites, which encompass both wireless and broadcast towers. This expansion contributes to their robust partnerships with major telecommunications companies like AT&T and T-Mobile US. Vertical Bridge Vice Chairman Marc Ganzi commented on how this deal would enable them to meet the rising demand for wireless infrastructure sparked by the advent of AI technologies and the rollout of 5G networks, which are transforming connectivity requirements across various sectors.
Support from Strategic Partners
The financing of this deal is largely backed by DigitalBridge, a leading asset manager and the majority stakeholder in Vertical Bridge, in collaboration with Canada’s second-largest pension fund, CDPQ. Their involvement distinctly highlights the confidence in the ongoing growth of telecommunications infrastructure and the associated returns expected from such investments.
Verizon's Additional Investments
In a show of commitment to enhancing its service efficiency, Verizon has additionally announced plans to acquire Frontier Communications, a fiber-optic internet provider, for an all-cash deal valued at $20 billion. This move underscores Verizon's ongoing strategy to leverage its resources and expand its service offerings in a rapidly evolving tech landscape.
Advisory Teams Behind the Transaction
J.P. Morgan and Centerview Partners LLC are serving as the financial advisers for both Verizon and Vertical Bridge, while Jones Day and Greenberg Traurig are providing legal counsel for the respective companies. Their expertise is crucial in navigating the complexities of such a substantial transaction.
Frequently Asked Questions
What is the value of the deal between Verizon and Vertical Bridge?
The deal is valued at approximately $3.3 billion, including upfront cash proceeds of $2.8 billion.
How many towers are involved in the Verizon-Vertical Bridge deal?
The deal encompasses a total of 6,339 mobile phone towers located across all 50 states and Washington D.C.
What is the significance of leasing back the towers?
By leasing back the towers for 10 years with the option to extend to 50 years, Verizon can maintain its operational capacity while freeing up capital for further investments.
Who are the partners involved in financing this acquisition?
The deal is supported by DigitalBridge, which is the majority owner of Vertical Bridge, and CDPQ, Canada’s second-largest pension fund.
What other major investment has Verizon announced recently?
Verizon plans to acquire Frontier Communications, a fiber-optic internet provider, for $20 billion, emphasizing its commitment to enhancing its service capabilities.
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