Sprint Nextel To Decommission Cell Towers
In Sprint’s recent SEC filing they announced that they will be decommissioning 6,000 redundant sites. Here is an excerpt from page 29 of Sprint’s 10-K filing.
As of the date of the Clearwire Acquisition, Clearwire had deployed WiMAX technology on approximately 17,000 cell towers and was in the process of deploying 4G LTE technology using the 2.5GHz spectrum on approximately 5,000 of these sites, which has now been completed. We plan to expand the 2.5 GHz 4G LTE deployment to approximately 5,000 more legacy Clearwire sites. In addition, we plan to cease using WiMAX technology by the end of 2015. We have also evaluated our consolidated cell tower portfolio, including the 17,000 cell towers obtained in the Clearwire Acquisition, and identified approximately 6,000 redundant sites that we expect to decommission and terminate the underlying leases. We expect lease exit costs recorded in future periods associated with these sites to range between approximately $50 million to $100 million on a net present value basis. The timing of lease exit charges will be dependent upon the date we cease utilizing these sites without future economic benefit.
What Does That Mean To Sprint Landlords?
First, it’s important to note that the decommission will not affect all Sprint Landlords. Sprint has many more cell towers nationwide than the 6,000 that will be decommissioned. Some landlords will be affected while others will never notice the decommission. To those landlords that are affected, we anticipate the process to go much like the current Nextel decommission. With that process Nextel has hired MD7 to act as an agent in an effort to decrease lease exit costs. As mentioned in the above quote, Sprint anticipates lease exit costs ranging from $50 to $100 million. With the Nextel process MD7 contacts Nextel’s landlords in an attempt to have the landlord agree to leave some of Nextel’s equipment behind. This of course decreases Nextel’s lease exit costs it does however leave a liability on the landlord and is not in the landlord’s best interest.
Should I Sell My Sprint Cell Tower Lease?
If you are interested in reducing your risk and cashing in on your cell tower lease now is good time. Cell tower purchase prices are at an all-time high however interest rates are rising. With rising interest rates the cost of cash becomes more expensive. As a result we anticipate cell tower purchase prices to decrease in the near future. Are we at the peak of the market? Quite possibly. If you are interested in selling your cell tower lease contact Airwave Advisors today for an evaluation of your lease.
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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).