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?quote: AT&T in turn will AT&T will sublease capacity on the towers
Need some editing. As far as the deal, if this is a money loser, how then is Crown Castle expected to make money? I simply dont understand it. I would never lease a car, because I always keep my cars a minimum of 10 years. Regardless as to how much up-front money they get, if AT&T is in business the next 100 years, its a bad move. Maybe their long term plan is wireline afterall. Wireless has a limited future | |
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| openbox9 Premium Member join:2004-01-26 71144 |
openbox9
Premium Member
2013-Oct-21 9:10 am
Re: ?said by ITALIAN926:Regardless as to how much up-front money they get, if AT&T is in business the next 100 years, its a bad move. Why not let the experts do what they do best? Telcos provide wireless services and tower companies manage and maintain towers. Sounds efficient to me. | |
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Re: ?quote: Sounds efficient to me.
Making decisions that saves a dollar today, but costs you $10 tomorrow is not efficient at all. This is the typical, irresponsible way of doing business today, infatuation with short-term profits, without a care in the world of the negative impacts of tomorrow. | |
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en103
Member
2013-Oct-21 1:36 pm
Re: ?Companies like AT&T will buy and sell as needed.
They'll sell the towers to a tower management company today, then lease the towers (giving them some cash that they need 'today'), then eventually, AT&T will purchase the tower management company itself or become a major shareholder when it suits them (i.e.costs more to lease than its worth). I suspect that AT&T probably has some stock invested in these tower companies anyways. | |
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| | | skeechanAi Otsukaholic Premium Member join:2012-01-26 AA169|170 |
to ITALIAN926
With that logic, why not MAKE the handsets too? Why? Because others are better at it.
And it depends on what they do with the cash. If they pay down debt, they save of debt service costs. If they make other investments, those have a return too.
AT&T can simply get a better return on capital somewhere else than in tower ownership. | |
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| | | BiggA Premium Member join:2005-11-23 Central CT |
to ITALIAN926
If you can save $10 now, invest it, put the returns towards the extra cents of cost tomorrow, and then dodge $2 in taxes, then it makes sense. It's really all about the taxes when it comes down to it. Either that, or they buy a stake in CC. lol. | |
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| | | openbox9 Premium Member join:2004-01-26 71144 |
to ITALIAN926
What if you can invest that dollar today to make $11 tomorrow? | |
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JasonOD to openbox9
Anon
2013-Oct-21 10:06 am
to openbox9
I own shares of T and I disagree here. The wind is at their back (financially speaking), and in doing this they are pissing away tower access rights, which is akin to printing money. | |
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| | | openbox9 Premium Member join:2004-01-26 71144 |
openbox9
Premium Member
2013-Oct-21 7:54 pm
Re: ?I'm a T shareholder also and I don't necessarily have a problem unloading unnecessary O&M requirements. I haven't dug into the numbers yet, but my guess is that this is a good decision. | |
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| | axus join:2001-06-18 Washington, DC |
to openbox9
Tower leasing company will lease to ALL providers, which is good and more efficient, right? What happened in the past, would each wireless company build their own towers? The only problem might be if a "tower company monopoly" replaces 4 different wireless companies there, and jacks up the price. | |
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| | | openbox9 Premium Member join:2004-01-26 71144 |
openbox9
Premium Member
2013-Oct-21 7:55 pm
Re: ?said by axus:Tower leasing company will lease to ALL providers, which is good and more efficient, right? Yes. You think that T's radios are the only ones on these towers now? | |
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| n2jtx join:2001-01-13 Glen Head, NY 1 edit
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to ITALIAN926
said by ITALIAN926:quote: AT&T in turn will AT&T will sublease capacity on the towers
As far as the deal, if this is a money loser, how then is Crown Castle expected to make money? I simply dont understand it. I would never lease a car, because I always keep my cars a minimum of 10 years. Regardless as to how much up-front money they get, if AT&T is in business the next 100 years, its a bad move. Maybe their long term plan is wireline afterall. Wireless has a limited future This is all the latest trend in short term thinking. A lot of businesses and the government too are selling their buildings for a quick infusion of cash and then leasing them back. Also, for tax paying entities (ie. NOT the government), there are tax advantages to leasing back a building instead of owning it. As for Crown Castle, they would be free to sell space to any and all comers to make additional revenue. Of course, some day the piper will have to be paid and once the AT&T leases are up, I am sure Crown Castle will be free to charge whatever they want in rent and AT&T will have to cough it up. I suspect the same thing will apply to all these entities selling their buildings. Eventually they will start having to pay whatever the market rate is for rent and they will come to regret their decision. Of course, that is a fourth quarter problem so no need to worry about it now... | |
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to ITALIAN926
It is called opportunity cost.
While selling infrastructure and buildings might not seem to make sense when considered on its own, doing so frees up millions or even billions to invest elsewhere where the capital may generate more revenues than what the leases cost.
In the process, they also shed property tax obligations and can write off the lease as a tax-deductible expense so the net cost of the lease is much lower than its nominal cost.
It may seem counter-intuitive but if they are doing it, you can bet your shorts it is because it ultimately improves their bottom-line. | |
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| | n2jtx join:2001-01-13 Glen Head, NY |
n2jtx
Member
2013-Oct-21 9:37 am
Re: ?My church had a similar issue about a dozen years ago. We own two parsonages. Here on Long Island, rents are high to begin with and where we are located, well above average for the rest of the island. Some of our trustees were pushing the idea that we should not be in the real estate business but instead sell the houses and provide a rental stipend to our ministers. We did not sell the houses as we discovered we would be paying tens of thousands of dollars a year in rental stipends in order to attract talented personnel. Money that would be gone. We might spend the same money now on our parsonages but those are capital assets and the money we plow into them improves that asset.
The long term problem I see with many of these leases will be sticker shock. When you own a property outright, your costs are maintenance and taxes. Once you sell, you are beholden to whatever price the landlord wants to charge. What will AT&T do if after the lease term ends Crown Castle demands triple the rent? They either pay it or go out and start over building new towers. Yes leasing makes their bottom line look great today and for the short term but they wind up losing monetary control of a major part of their infrastructure. Plus, what if Crown Castle eventually gets a far better offer for their space from some new startup and refuses to renew AT&T's lease? I can see them leasing their vehicles and other assets not critical to their business but the towers are a necessary component of their survival. | |
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Re: ?What T will pay in rent would be much less than an actual tower customer such as the local WISP. They'll be lucky if they pay a couple thousand per tower at that rate with how man they are leasing.
VZW is the same way- Crown Castle manages several of their sites in Ohio but VZW's agreement is that they're the only one on the tower. | |
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to InvalidError
Not to mention also freeing up the ongoing cost of owning these properties from upkeep and maintenance of the tower and non-carrier specific entities on site. This is actually a fairly common process for wireless carriers. They want a tower here, but don't want to maintain it. They build one where they need it, and sell that asset to a tower management company. This lets them lease only the space they need, and invest only the engineering needed to make additions to that space and the cost to maintain current assets on site.
The tower company gains a property, that they will maintain, that they can then lease out to others as well. | |
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to ITALIAN926
Simple - it's a tax write-off as assets incur taxes and depreciation. Expenses do not and go against your profits for tax purposes.
Say I own my building - I pay taxes on that and it's an asset and the few expenses I have for that building go to reduce my liabilities. As well as it gets depreciated down to 0 at some point.
If I lease my building, all those expenses get to become a cost of business and eat into profits I am taxed on. It reduces my tax liability.
It makes little sense in the very long run but in the short term, it can be a huge tax advantage. As well as you can better take advantage of markets in the future. Today the real estate market is doing OK. I can sell my building for $1 million and lease for $250k a year. In year 4 the RE market tanks. I could either make an offer for the building or negotiate my rent downward to, say $175k a year. Win for me. However the reverse is also true, in year 4 I could be paying $300k/year for rent. | |
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to ITALIAN926
Or if they are in business for 8 to 9 years. | |
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Zenit_IIfxThe system is the solution Premium Member join:2012-05-07 Purcellville, VA ·Comcast XFINITY
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Nah, its not that they think Wireline is the futureThey did this to reduce taxes and not be as responsible for infrastructure. Towers/Land costs money. Let someone else deal with it.
I am sure they still own the GSM/LTE equipment up on those towers though, its just space to place their equipment. | |
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Re: Nah, its not that they think Wireline is the futureSort of a sarcastic comment, I will change my smiley to a wink. | |
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to Zenit_IIfx
That's the way it works. its a co-location deal. | |
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Until Crown Castle is bought out...by a Chinese-owned telecom... | |
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| Cci @comcast.net |
Cci
Anon
2013-Oct-21 10:45 am
Re: Until Crown Castle is bought out...said by cableties:by a Chinese-owned telecom... Crown Castle doing an IPO of 36 million shares at $76/share on Oct 22 to come up with the funds for this deal. » www.streetinsider.com/Co ··· 028.htmlNo Chinese buyout. | |
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Re: Until Crown Castle is bought out...but nothing is stopping their US companies from buying shares into that IPO. | |
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en103
Member
2013-Oct-21 1:38 pm
Re: Until Crown Castle is bought out...I agree - and I suspect that companies like AT&T will purchase a handful of shares - or become a major shareholder, as this ties directly into their line of business. | |
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to Cci
If AT&T were smart they would buy 18.5 million of those shares.... | |
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| | | BiggA Premium Member join:2005-11-23 Central CT |
BiggA
Premium Member
2013-Oct-21 7:06 pm
Re: Until Crown Castle is bought out...That's probably what they are going to do. Then they can have their cake, eat lots of it, and not pay any taxes on it. | |
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| | | | KrKHeavy Artillery For The Little Guy Premium Member join:2000-01-17 Tulsa, OK |
KrK
Premium Member
2013-Oct-22 12:59 am
Re: Until Crown Castle is bought out...Exactly what they will do. Own and control but pay no taxes | |
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onceDidn't sprint sell their towers and lease back from this same company? This some how just seems like a future setup for some serious issues somehow.. Multiple providers on the same towers.. I hope they keep the frequencies managed properly... Otherwise holy crap heh | |
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| nonymous (banned) join:2003-09-08 Glendale, AZ |
nonymous (banned)
Member
2013-Oct-21 12:21 pm
Re: oncesaid by decifal7:Didn't sprint sell their towers and lease back from this same company? This some how just seems like a future setup for some serious issues somehow.. Multiple providers on the same towers.. I hope they keep the frequencies managed properly... Otherwise holy crap heh That is the way it is done. Plus anyone else say even wisps may also use the same towers. Or business and government may be on some towers also. Heck also water towers, church steeples and tall buildings downtown are used for multiple antennas no problems. | |
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| | trparky Premium Member join:2000-05-24 Cleveland, OH |
trparky
Premium Member
2013-Oct-21 1:55 pm
Re: onceI've seen some towers in my area that have four or five different antenna arrays on them all at different heights on the tower. I'm going to assume here that that tower probably has four carriers on it. | |
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to decifal7
Sprint sold it to TowerCO, though I think Nokia is the one doing the maintenance in some parts of the U.S., and Alcatel in others. | |
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GorbGuy join:2003-09-23 Middleville, MI
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GorbGuy
Member
2013-Oct-21 11:48 am
Just some simple math...9,600 tower space leases at $1,900/month/site... - $18,240,000 per month in tower leasing - $218,880,000 per year - $2,188,800,000 over the 10 yr. life
I'm in the wrong business. | |
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rody_44 Premium Member join:2004-02-20 Quakertown, PA 2 edits |
rody_44
Premium Member
2013-Oct-21 4:18 pm
Look at it this wayYou have a at@t tower and its costing you lets say 5000.00 a month. You sell it and now it has verizon and t mobile on the same tower. Now instead of costing you 5000.00 it is generating 10,000 a month in income. Its a win win for everyone involved. They could be giving the cell tower away and it make financial sense. They are getting 4.85 billion dollars. Interest alone more than pays what the lease will cost. Instead of costing them money the towers now become income earners. | |
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Don't think AT&T is as short sighted as the headlines may suggest...I'm not an expert, but i did dig deeper into the actual deal. "Crown Castle (CCI -0.9%) is trading lower following its $4.85B deal to buy and acquire leasing rights to 9.7K AT&T towers" "Crown Castle will have the rights to lease about 9.1K AT&T towers and purchase roughly 600 others. The average term of the lease rights is about 28 years, after which Crown Castle has an option to purchase the towers for approximately $4.2B. AT&T will sublease space on the towers for at least 10 years with an option to renew up to a total of 50 years." » seekingalpha.com/news-ar ··· nsaction | |
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