Recent news reports have confirmed that Verizon has engaged a third-party advisor to evaluate the sale of its remaining cell towers. Verizon is rumored to be considering the sale of somewhere between 5,000 to 6,000 towers. (Our estimate is 5,500 to 5,600.).
Hasn’t Verizon Sold Towers Before?
Yes, Verizon or related entities previously sold portfolios of towers to public tower companies. These include:
YEAR | ENTITY | BUYER | PURCHASE PRICE | # OF TOWERS | $ PER TOWER |
2015 | Verizon | American Tower | $15,000,000,000 | 11,500 | $1,304,347 |
2000 | Alltel | American Tower | $660,000,000 | 2,200 | $300,000 |
1999 | Airtouch | American Tower | $800,000,000 | 2,100 | $380,952 |
1999 | Bell Atlantic | Crown Castle | $660,000,000 | 1,460 | $452,054 |
Why is Verizon Considering Selling Its Cell Towers Now?
Wireless carriers sell portfolios of towers for a few reasons. First, a wireless carrier may sell their towers to fund future development. Towers are considered non-core assets for wireless carriers. Second, in this case, Verizon is aware of the high valuations on cell tower assets and has decided that this is a good time to sell these non-core assets. Interestingly, 2023 would have been a better year, as towers valuations peaked in the middle of the year.
How Much Are Verizon’s Towers Worth?
Various analysts have offered estimates of the value of Verizon’s tower assets, ranging from $500,000 per tower to $1,400,000 per tower. The truth is that only Verizon and the advisor really know. When a large portfolio of carrier-owned towers like this is sold, the advisor puts together a confidential information memorandum (CIM) that includes the specific details of the towers. Of these, some details are more critical than others. For a extensive view of how towers are valued, please see our page on Cell Tower Valuation.
Long story short, there are a few key factors that will influence the value of Verizon’s remaining tower assets. These include:
- Number of tenants. The more subtenants there are on a tower, the higher the revenue and tower cash flow. The higher the tower’s cash flow, the higher the tower’s valuation.
- Location of Competing Towers. Are these towers built to accommodate multiple wireless providers, and are they in locations where other wireless carriers are likely to sublease?
- The Sale/Leaseback Terms. Most carrier tower portfolio sales include a sale and leaseback agreement. The sale/leaseback defines how much Verizon will pay to remain as a tenant on the towers in the future and under what terms. The sale/leaseback lease rate and terms have a significant impact on tower valuation, especially in a carrier sale transaction like this. Will Verizon pay a higher lease rate, which would also generate a higher per tower price? Will Verizon expect to pay for future equipment modifications, or will they look to never have to sign another amendment?
How Much Do You Think the Towers Are Worth?
Without the specific confidential information above, it is hard to reliably place a value on the Verizon tower portfolio. But offhand, we would anticipate that the towers are worth somewhere between $1,000,000 and $1,200,000 per tower. At our estimate of 5,600 towers, that would equate to a market value of $5.6 Billion to $6.7 Billion.
Who is the Likely Buyer?
The Big 3 tower companies have historically almost always purchased these portfolios. (American Tower, Crown Castle, and SBA Communications.) Right now, though, it may be hard for those companies to be competitive on offers for this specific portfolio. The public tower companies may be limited in how much they can offer as their stocks are trading at or near their 5-year lows. In contrast, infrastructure funds and private tower companies have completed more tower portfolio acquisitions over the past year. These buyers have consistently bid higher amounts in our competitive bidding offerings. The issue for these sets of buyers is that few of the private buyers have the team and infrastructure in place to acquire and manage a portfolio this large. Vertical Bridge may be a potential buyer and several infrastructure funds have looked to make larger investments in the sector, although they may need a management team to acquire a portfolio this large.
I Have a Ground Lease Under a Verizon Tower. How Will the Sale Impact Me?
As this is a sale of towers from a wireless carrier to a tower company, it is unlikely that there will be much impact on landowners who have Verizon tower ground leases. The checks may continue to come from Verizon, or the tower company may take over the payments. Your existing lease will remain in place, and the terms and conditions will be the same. Verizon will continue to use these towers and may even commit to remaining on the towers for a long time under the sale/leaseback. A tower company may do a slightly better job of marketing the towers for use by other wireless providers, which may increase your rent if you have a revenue share.
The only negative side of a potential sale is that you may have to deal with a tower company in the future regarding lease issues instead of Verizon. Tower companies tend to be more aggressive when dealing with landowners than carriers and can be harder to contact and resolve issues with. Additionally, tower companies tend to be more assertive when trying to renegotiate cell tower leases or extend cell tower leases with landowners. Ultimately, though, Verizon selling its cell towers is generally advantageous to landowners.
What Should I Do Next?
Our guidance is to wait until a sale is announced and consummated. At that time, the buyer may send out estoppels or other requests. We would recommend not signing anything until you have had your attorney review the request. In the past, some tower companies have tried to send out estoppels that amend the terms of the lease or change its interpretation after buying a carrier portfolio. (An estoppel is intended to confirm existing lease terms, not add new ones.) If you have questions regarding your situation or lease, please contact us.
Questions About Verizon’s Potential Sale of Its Towers – CONTACT US.
8 thoughts on “Is Verizon Selling Towers?”
I have a 110′ tower owned by American Tower with 2 carriers on the tower. It’s located along I-64 and 2 state route roads, What should the monthly rent be for the land owner?
Thank you
Hi- there are many factors that go into American Tower lease valuation beyond just the location and the number of carriers. Please see our page on American Tower lease extensions. Then if you want to discuss, please contact us and mention that you submitted a comment on our website and I responded. Ken
I have a land lease with Verizon equipment located on a PGE tower. About 6 months ago Verizon offered to buy out the lease. What is the outlook for me in this situation?
Nathan- It’s extremely unlikely that Verizon’s sale of their towers will have an impact on your lease. They aren’t selling their sites that are located on someone else’s structure, like PGE in this case. Thus, the outlook on your lease shouldn’t change.
Hi. We have had an agreement with Verizon for the last nine years when they installed their tower. They never found anyone else to sub-lease a space on this. We have been contacted on multiple occasions by lease accquisition companys over the years. This week, for the first time, American Tower has contacted us about selling them our lease. Might this be a sign that they are looking to purchase our site from Verizon and are looking to make things more profitible by taking us out of the picture?
Thanks,
Ron and Lynn Graham
Hi, American Tower likely already owns the tower, having acquired it from Verizon in a previous transaction. The towers that are the subject of this article are ones that weren’t sold previously. The buyout offer from American Tower is unrelated to the Verizon sale of their currently owned towers—just a normal cell tower lease buyout offer. Also, if it helps, the average tower adds one tenant every 10 years. ATC has been marketing the tower, and if they haven’t found a tenant yet, it is not due to a lack of trying. I hope this helps. Ken
Thanks, Ken. I remember about a year and a half ago that I came home to find that the survey markers had been uncovered having to do with the cell tower location. I contacted the Verizon site manager to see if he knew what was up. He did not, and the only explaination he could give was that perhaps more fiber cable was going to be installed. That did not happen. Could this have been done for the sale of this tower to American or someone else? I have never seen any signage changes or been notified in anyway of an ownership change. Thoughts?
Ron and Lynn Graham
Ron/Lynn,
It is typical for carriers on towers to change their fiber provider. Verizon likes to use its own fiber. If for fiber, they will mark where existing fiber is located so they don’t dig it up. It wouldn’t have anything to do either way with the sale of the tower. If you haven’t received a notification about American Tower and there isn’t a sign for it on the fence, Verizon probably still owns it and it might be up for sale. It would be odd though that American Tower contacted you independently about purchasing the lease- they normally don’t do that. Ken