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Sprint Sells Towers To Pay Down Debt
Will then lease access to their own towers...
by Karl Bode 09:04AM Thursday Jul 24 2008
According to a post in this morning's Wall Street Journal, Sprint is planning to sell nearly all of their cell towers to a private-equity-backed firm called TowerCo. The deal will bring a $670 million cash infusion to the struggling company, which they'll be using to pay down some of the company's $24 billion debt load. Sprint will then lease back its own towers, expected to be around 3,300 total, from Towerco.

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grydlok

join:2004-01-06
Richmond, VA

?

Well at least they won't have to pay for upkeep.

BK

join:2001-09-10
Chicago, IL

Re: ?

now who pays for the upgrading up the towers to WiMAX ?
cghh

join:2001-01-15
Milpitas, CA

1 edit

Re: ?

said by BK:

now who pays for the upgrading up the towers to WiMAX ?
I think that this agreement is about the tower structures, not the antennas hanging on the towers and the base station equipment. It's this stuff that would have to upgraded to WiMax, not the tower structures. It seems that in these discussion, the distinction between "tower" and "cell site" often gets lost. Sometimes a cell site doesn't even have a tower, such as when the antennas are mounted on top of a building.

Zen6

@rr.com

service

If they had better service/coverage they would not have lost so many subs.
jc100

join:2002-04-10

Re: service

Hey,

For all the BAD things about sprint.. Customer Service... Capping their EVDO..... Poor Billing..... Their Service was the high note. I've rarely if ever had trouble with their network. The fact that I get free roaming also is a plus. It's just their customer support side needs a revamp. Maybe they wouldn't have such a debt if they would get their ducks in a row. This coming from a 10 year sprint customer.
hottboiinnc
ME

join:2003-10-15
Cleveland, OH

Re: service

all providers give you free roaming anymore. So free roaming does not apply anymore.
jc100

join:2002-04-10

Re: service

Well even off roaming, I have few problems. The only time I can't make a call is when indoors at some buildings. That happens to a lot of providers. Short of that, I rarely if ever get drop calls. I'm happy with their network, just not their customer service.
dustman81

join:2002-05-28
Tallmadge, OH
I have Sprint as well. But unlike VZW or Alltel, I don't have to look at my roaming indicator. As long as I have a signal, I can place a call with no roaming charges.

I also have free data roaming, even on VZW's or Alltel's EVDO networks. I can also send or receive SMSs on VZW or Alltel's networks for free.

Basically, as long as I have a signal, I can call, use data or SMSs.
hottboiinnc
ME

join:2003-10-15
Cleveland, OH

Re: service

With alltel you don't need to look at the indicator. Their network is free except some parts of Texas. Other wise they roam freely on VZW and Sprint.

They can send and recieve SMS from Sprint and VZWs networks as well. I used to have both Sprint and Alltel. Alltel by far is better than Sprint.
in terms of coverage, customer service and pricing.
BPLSUCKS9

join:2006-04-26
Grand Ledge, MI

Good going

Exec 1:"Hey guys! I got a great idea! Let's sell our cell towers for 670million!"
Exec 2:"But what will we do about cell service to the few one customer we have left?"
Exec 1:"Don't worry we will lease them back and end up paying more in the long run than if we kept them ourselves!"

trparky
Apple... YUM
Premium,MVM
join:2000-05-24
Cleveland, OH
kudos:2

Re: Good going

It's the beginning of the end for Sprint.
--
Tom

FicmanS
Premium
join:2005-01-11
Brownsburg, IN

Re: Good going

Yes this does not sound good at all...

jpl931

join:2001-02-22
Herculaneum, MO
It is called CTD (circling the drain)

FLengineer
CCNA, CEH, MCSA
Premium
join:2007-06-26
Leesburg, FL
Exec 2: "Cool, now leave me alone I just installed UT4, wait I meant I have a conference call coming in."

FFH5
Premium
join:2002-03-03
Tavistock NJ
kudos:5
said by BPLSUCKS9:

Exec 1:"Don't worry we will lease them back and end up paying more in the long run than if we kept them ourselves!"
There are tax advantages leasing versus owning. State & local taxes can be eliminated and federal taxes can be reduced as leases are operational expenses that reduce taxable income.
--
My BLOG .. .. Internet News .. .. My Web Page
Ask yourself one question: 'Do I feel lucky?' Well, do ya punk?

Re: Good going

said by FFH5:

said by BPLSUCKS9:

Exec 1:"Don't worry we will lease them back and end up paying more in the long run than if we kept them ourselves!"
There are tax advantages leasing versus owning. State & local taxes can be eliminated and federal taxes can be reduced as leases are operational expenses that reduce taxable income.
Exactly! One thing we both agree upon.
amigo_boy

join:2005-07-22
said by FFH5:

State & local taxes can be eliminated and federal taxes can be reduced as leases are operational expenses that reduce taxable income.
Doesn't the new owner of the towers have the same tax consequences that the towers previously caused for Sprint? Won't they just pass that along to Sprint?

Mark

FFH5
Premium
join:2002-03-03
Tavistock NJ
kudos:5

Re: Good going

said by amigo_boy:

said by FFH5:

State & local taxes can be eliminated and federal taxes can be reduced as leases are operational expenses that reduce taxable income.
Doesn't the new owner of the towers have the same tax consequences that the towers previously caused for Sprint? Won't they just pass that along to Sprint?

Mark
That would all be taken in to account with the terms of the lease. Obviously the tower company would want all their costs( + a profit) covered in the lease. So the localities aren't losing anything, but Sprint gets advantages by having the costs covered "above the line" in the lease.
--
My BLOG .. .. Internet News .. .. My Web Page
Ask yourself one question: 'Do I feel lucky?' Well, do ya punk?

insomniac84

join:2002-01-03
Schererville, IN
But all the original tax is still being charged to the new owner and sprint will have to pay some tax. This equals more taxes overall. And the new company is going to have to collect this money, plus an additional 50% for profit. Sprint has to be going under.
fiberguy
My views are my own.
Premium
join:2005-05-20
kudos:3
Without knowing the terms of the lease, what empowers you to make a comment like that? Its' quite possible that as part of the lease, and is common, the owners maintain the towers, permit them, etc. It reduces labor costs, ownership costs, etc.

I think you don't know what you're talking about. But, in the spirit of, well, many others, your cute remark fits in here.
NewMariner

join:2005-06-24

Whats the point?

When one owes 24 BILLION dollars, whats the point of selling towers for 670 MILLION dollars? It wont pay off the debt, it wont even cut it in half. Then they have to turn around and spend money on monthly leasing fees, although this may be cheaper then upkeep.

Whos driving this boat?

insomniac84

join:2002-01-03
Schererville, IN

Re: Whats the point?

That only holds true if this company has success leasing extra tower space to competitors If they do not, the costs are going to be higher. And what happens if this company goes under and a bank decides to liquidate the towers? Sprint could lose their entire tower network.
tmc8080

join:2004-04-24
Brooklyn, NY
Reviews:
·ooma
·Optimum Online
·Verizon FiOS

prelude...

12-18 months later; sprint exits the cellular business.. notice I said cellular.. not wireless, because they've already bet the company on wireless however they've failed in cellular. Selling towers only goes to further prove the point.

One can only imagine that the remaining customers will go to At&t, Verizon and T-Mobile or smaller regional carriers.

Cheese
Premium
join:2003-10-26
Naples, FL
kudos:1

Great....

I think it will be time to jump ship soon!
xenophon

join:2007-09-17

Sprint has the most towers

Sprint has 65K towers compared to about 50-55K for ATT and 30K or so for Verizon.

Smith6612
Premium,MVM
join:2008-02-01
North Tonawanda, NY
kudos:24

Re: Sprint has the most towers

But yet Sprint has the most roaming areas and the most spotty service if you look at each provider's coverage maps.
EPS4

join:2008-02-13
Hingham, MA

Re: Sprint has the most towers

It's about spectrum- Sprint has nearly all of their CDMA on the PCS spectrum band, which requires more towers than the cellular bands favored by Verizon Wireless and at&t. (Nextel uses bands nearby the cellular bands)

Agent_haito

join:2002-09-20
Winston Salem, NC

24 Bill?

Wow all this debt from Nextel?

They will need to sale $670million of assets at least 35 times over to offset the debt

Mr Fingers

@dslextreme.com

2 recommendations

Towers

Sprint was the only cell co. that owns most of their tower sites. All the telcos either own or lease their tower sites from Tower Co. or American Tower Corp. who buy, erect and maintain most of the communications towers in the USA.

Sprint isin't going anywhere, it may merge with SK Telecom in the future but it still generates huge amounts of income and has 50 million customers.

As for Wimax, one single tower and antenna can cover hundreds of square miles so a lot of towers isin't necessary for coverage.

Don't diss these guys, a new CEO and management and the customer service is getting better, they never had a problem with coverage. Now ATT on the other hand.....
xenophon

join:2007-09-17

Re: Towers

Yeah, Sprint will pull through eventually. They may be merged with someone else but even if they go it alone, they'll pull through. They may become a slightly smaller company (45m customers?) but they seem to be on a path of finally moving slowly forward instead of backward. I'd think the defections will end by end of the year to early next and then maybe some growth will return.

When they fix customer support, they need to cause a price war and offer unlimited everything for $80/month.

Jim_in_VA

join:2004-07-11
Cobbs Creek, VA
kudos:4
Reviews:
·Metrocast Commun..

Sprint towers

keep in mind what they OWN vs. what they are co-located on are two different things. Example: Sprint is on 5 towers in my little county... but SBA owns them all. I have great coverage.
--
»evdo-tips.com/

Jack_in_VA
Premium
join:2007-11-26
North, VA
kudos:1
Reviews:
·Millenicom

Re: Sprint towers

said by Jim_in_VA:

keep in mind what they OWN vs. what they are co-located on are two different things. Example: Sprint is on 5 towers in my little county... but SBA owns them all. I have great coverage.
I agree Jim. We have great coverage with our Non-Sprint owned towers.

This is just another attempt to trash Sprint and start some unfounded hysteria. It doesn't matter who owns the tower.

kapil
The Kapil

join:2000-04-26
Chicago, IL

1 edit

3 recommendations

The Truth

Most wireless carriers already lease, not own, the towers the hang their equipment on.

The difference is that Sprint was the first company to build out a nationwide PCS network and back then it decided to build its own tower network because leasing wasn't always an option where it needed towers.

There is actually a Sprint subsidiary that leases out space on Sprint towers to other interested parties.

So, this is more about shedding a business that is not a core competency so that it can better focus on its core business than it is about getting rid of assets to raise cash...although cash from the sale is a welcome benefit.

Sprint has always been very good as an engineering company...always first to market with new technology and always very good at making that new technology work. PCS, 1x, EVDO, REV A, ION, Sprint Wireless Broadband, and now WiMax...Sprint is on the cutting edge and should really get a lot more credit for getting things right than it does.

Sprint's downfall has been poor management on the business end. A management team that ran the company by looking at spreadsheets, putting customer service last, a poorly executed merger with Nextel, allowing credit challenged customers to become a sizable chunk of its customer base...the list goes on.

But that doesn't change the fact that Sprint's core network is one of the best, if not the best.

The new CEO and management are making a lot of right moves. Simplifying rate plans so they generate fewer calls to customer service, placing emphasis on customer service, expanding service options and handsets that customers actually want.

negative customer perception is a tough boat to turn around...any fool could tell you that.

I sincerely hope that Dan Hesse and company can do it for Sprint before it's too late. A marketplace without Sprint is certainly going to be bad for consumers...with only ATT, VZ and TMO left as major nationwide carriers.
--
»www.DumbLogic.com

•••
qworster

join:2001-11-25
Bryn Mawr, PA

Once companies get to this point...

Once companies get to this point, it's almost over for them. I have seen a number of department and grocery stores do the same thing (sell their store real estate and then lease it back)-and within a year or two they were gone!

•••

reikon

@comcast.net

sero

I think some people may just be jealous of the $30 SERO plan. They want Sprint to die so we have to pay the same high costs as them.

chrisf8657

join:2002-01-27
Glendale, AZ

Time to jump!

I honestly think I'm going to jump ship from them. I have one of their data plans, I'm in Hawaii right now, and it's Roaming on 1x RTT...yet AT&T has 3G right here, plus the fact they are selling towers & 24 billion in debt = no or little upgrades and nothing but problems.

Sorry