Sprint sells most of its cell towers to TowerCo

Source:
http://newsreleases.sprint.com/phoenix.zhtml?c=127149&p=irol-newsArticle_newsroom&ID=1178501
http://news.cnet.com/8301-1035_3-9998824-94.html

"Sprint Nextel today announced an agreement to sell approximately 3,300 towers to TowerCo for approximately $670 million in cash. Additionally, the two companies have entered into a long term leasing agreement where TowerCo will provide Sprint Nextel with wireless communications towers to support the company's CDMA, iDEN and WiMAX networks.

"By leasing rather than owning these network facilities, we can better focus on our core business of providing communications services to consumers, businesses and government customers," said Bob Azzi, senior vice president, Field Engineering and Operations, Sprint Nextel.

"Significantly, this transaction provides Sprint Nextel with additional liquidity which gives us greater flexibility in managing our company."
...
"The cash Sprint gets from the sale of these towers will likely go toward paying down the company's $24 billion debt. But even at a price tag of $670 million, this is still a drop in the bucket. The sale does signify, however, Sprint's willingness to shed nonstrategic assets in an effort to get back on its feet, said Chris King, a principal analyst with Stifel Nicolaus."

"King said the sale of the cell phone towers is not unusual. Over the past five years, most of the big wireless operators, including AT&T and Verizon Wireless, have sold their cell phone towers to companies, such as American Tower, Crown Castle International, and TowerCo., which specialize in cell phone tower management. These companies typically allow different carriers to lease access to the same tower, especially in densely populated areas where it's difficult to build new towers."

"This is a pretty standard industry-wide practice," he said. "From a service provider standpoint, it doesn't make sense for wireless operators to own these assets. It's really more of a real estate holding."

"Some experts have speculated that the company is looking to sell its Nextel business unit, which was acquired in 2005."

Looks like Sprint is trying to get its finances in order after the expensive acquisition of Nextel that put it under massive debt (something like $24 billion of debt still outstanding!). With a tight US credit market, they might need cash infusion from overseas (such as from companies like SK Telecom or Deutsche Telekom) or from private equity firms.