How The Sprint T-Mobile Merger Will Affect Your Cell Tower

By Nick G. Foster

July 30, 2014

Sprint and T-Mobile Merger Affects On Your Cell Tower

They say a picture is worth a thousands words and the above network overlap image from Mosaik reads like a book. However before we narrow our focus on individual cell towers we would like to provide you some background information on the proposed merger between Sprint and T-Mobile.

Softbank, Sprint’s majority owner, has reportedly reached an agreement to buy T-Mobile. Any merger would require the review and approval of the Department of Justice (DOJ) and the Federal Communications Commission (FCC). The DOJ would look at antitrust concerns while the FCC would be concerned with whats best for the consumer. It is speculated that the Sprint brand will disappear and T-Mobile’s brand and flamboyant CEO  John Legere will be in charge post merger.

For the purpose of this article we are not going to focus on if the merger is good or bad for the consumer. Instead our focus is on how the merger will affect your cell tower.

If You Have A Cell Tower With Sprint As a Tenant

As of the writing of this article, July 29, 2014, Sprint is valued by investors as a moderate risk tenant. If you look at the above map you will see the Sprint and T-Mobile networks have huge overlap. So much so their networks almost look like duplicates. There is discussion that Sprint’s CDMA network would be decommissioned if the merger is approved. If your Sprint cell tower has not been upgraded from CDMA to Network Vision that could be your cell tower. If you have considered selling your Sprint cell tower lease, now is a good time. If the merger is approved by the DOJ and FCC cell tower lease values and thereby purchase prices for Sprint and T-Mobile cell tower leases will plummet.We went through this exercise years ago when Nextel and Sprint merged. Nextel later announced to decommission 6,000 cell towers and investors stopped buying Nextel leases.

If You Have T-Mobile As a Tenant

While the proposed merger means retaining the T-Mobile brand it is uncertain if the merger would mean retaining all T-Mobile cell sites. T-Mobile’s parent company, Duetsche Telekom, sold the rights to operate 7,200 T-Mobile cell towers back in 2012.  Your tenant may currently be T-Mobile or Crown Castle, depending on the history of the site. Regardless of who is operating the tower, T-Mobile’s valuation reflects that of Sprint and  is viewed as a moderate risk. If the Sprint T-mobile merger is approved the value of both carrier’s leases will decrease dramatically due to a potential decommission risk. If you have considered selling your T-Mobile lease, now is the time to sell.

If You Own A Cell Tower With Both T-Mobile And Sprint

If the merger is approved one of these tenants will most certainly disappear. We don’t know for sure which one it will be but one thing you can count on is if you have both tenants and the merger is approved – one of the tenants will go away. This of course leads to a reduction in your net operating income with the property.

Conclusion

If you have considered cashing out on your T-Mobile and/or Sprint cell tower lease – now is the time. If you need more convincing look again at the above network overlap map. These identical networks once combined will require substantial decommissioning as the carriers merge. If you would like to receive top of the market purchase prices with you cell tower leases give us a call today.

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Nick Foster Airwave Advisors

About Nick G. Foster

Since founding Airwave Advisors® in 2014, Mr. Foster has added value to over 400 clients ranging from the State of Nevada, City of Beverly Hills, to Habitat For Humanity. Mr. Foster focuses on cell tower lease renewals, buyouts, new lease negotiation, and cell site lease management. Prior to starting Airwave Advisors® Mr. Foster founded and led the Cell Site Services Group within nationwide commercial real estate services leader Cassidy Turley (now known as Cushman & Wakefield).