After the announcement that Sprint was considering making a bid for T-Mobile, Crown Castle International and American Tower Corporation released statements regarding this potential merger and many people are wondering how this change with affect them. The Wall Street Journal reported that Sprint may place a bid within the next six months to acquire T-Mobile for more than $20 billion. With Sprint and T-Mobile sharing spots on many of the same towers, the tower companies are worried about what this will do to business. American Tower released on Monday that after the quarter ended September 30, 2013 Sprint and T-Mobile accounted for 16% and 10% of the company’s operating revenue. American Tower currently has separate leases for antenna space with Sprint and T-Mobile on the same site at approximately 5,500 communications sites. Crown Castle announced that Sprint and T-Mobile represented approximately 23% and 22%, respectively, of CCI’s consolidated site rental revenues. Crown Castle also owns about 8,000 towers on which both carriers reside, with approximately six years of current term remaining on all lease agreements with Sprint and eight years left on all lease agreements with T-Mobile.
The news of this potential merger didn’t help the three publicly traded companies on Monday with everyone in the red: AMT (-0.87%), CCI (-2.35%), SBAC (-2.39%). Because Sprint and T-Mobile are the smaller of the major carriers, it’s likely that the FCC and Justice Department will be more open to this merger than that of two years ago when AT&T wanted to acquire T-Mobile.
However, tower owners are worried more about what this merger will do to their revenue sources. “It removes another revenue stream,” 1 Source Wireless Vice President, Justin Dehnert, explains, “It first started with 9 players, now there are 4 or 5.” If Sprint were to acquire T-Mobile, there may be a holding period where the companies determine how to move forward. “There are growing pains to mergers with internal problems, trying to figure out what they are going to do, and how to make it happen as smoothly as possible,” Dehnert says. They might get further behind AT&T and Verizon. The scary thing is they [Sprint and T-Mobile] have been dormant up until recently with making updates to equipment but no new builds.”
The two companies operating as one may not get up and running as quickly as they would like, making them even less of a competitor in the market than before. With consolidating the two companies into one, jobs will be lost but work for tower technicians may increase if the equipment on towers needs to be replaced and updated. The merger would have a huge ripple effect across every aspect of the tower industry if it were to happen but we’ll just have to wait and see what happens.
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