T-Mobile USA eyes potential tower sale

By Sinead Carew and Nadia Damouni

NEW YORK | Thu Jan 20, 2011 4:46pm EST

NEW YORK (Reuters) - T-Mobile USA aims to fetch up to $2 billion for the sale of its broadcast cellular towers around the start of the second quarter, according to a person familiar with the process.

Funds are expected to be used for investments such as buying additional wireless airwaves. The head of T-Mobile USA's parent company Deutsche Telekom AG (DTEGn.DE) said on Thursday the company may sell its 7,000 towers.

DT Chief Executive Rene Obermann told reporters on Thursday that a tower sale could generate "significant" funding to improve the financial self-sufficiency of the No. 4 U.S. mobile service, which has been a drag on DT results.

The most likely buyers are American Tower (AMT.N) or Crown Castle. (CCI.N), according to Benchmark Co analyst Clayton Moran. Representatives of those companies were not available for comment.

However, Obermann said T-Mobile USA would sell the assets only if they fetch a good price. Proceeds would be used for investment requirements beyond its typical capital needs.

"We're definitely not in a rush," he told reporters ahead of the company's financial analyst meeting in New York, adding that a sale would depend on whether "the financials work out."

The trend in recent years has been for big U.S. operators to sell their wireless towers and rent back space in them from dedicated tower operators. Sprint Nextel (S.N) sold about 3,000 towers for $670 million in 2008.

T-Mobile USA explored a tower sale in 2007 but decided against it, saying the timing and returns were wrong.

Benchmark's Moran estimated a price range of $1.5 billion to $2 billion for the towers but said valuation would depend on such factors as whether T-Mobile USA commits to renting more tower space for a future high-speed upgrade to its service.

If it instead opts to upgrade its service via a partnership with another operator that uses different towers, it would mean less growth for a prospective buyer of the T-Mobile towers.

"It's more valuable to a tower company if T-Mobile USA is going to build out its own (high-speed) network as opposed to network sharing," Moran said.

T-Mobile USA has said it is considering expanding its access to wireless airwaves through a partnership with companies such as Clearwire (CLWR.O) or Harbinger-backed start-up LightSquared.

It is also the main bidder left in a spectrum auction Clearwire is holding.


Shares of Deutsche Telekom closed up 1.22 percent at 9.72 euros on the Frankfurt Stock Exchange after the news. Deutsche Telekom investors have complained for years about weakness at the company's U.S. unit.


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