T-Mobile USA announces 2.4 Billion USD Tower Transaction

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  • Agreement with Crown Castle on the lease-leaseback of 6,400 wireless communication towers and the sale of a further 800
  • Proceeds strengthen funds for network modernization and LTE roll-out in the United States
  • The group's net debt reduced by around 1.9 billion Euro

Today, T-Mobile USA announced the conclusion of a framework agreement with Crown Castle regarding the lease-leaseback of 6,400 wireless communication towers and the sale of a further 800 owned by Deutsche Telekom's U.S. subsidiary. Subject to a one-off payment of USD 2.4 billion, Crown Castle will receive the sole right to use and lease out the wireless communication towers for approx. 28 years. Payment will be made at the closing of the deal which is expected in the fourth quarter of 2012. T-Mobile USA will continue to house its network equipment on these towers and thus lease back the required capacity from Crown Castle. T-Mobile USA will pay an annual lease rate for the duration of the agreement. Previously unused facilities will thus be available for lease by third parties. "We have found an intelligent way to strengthen T-Mobile USA among competitors and reduce the group’s net debt at the same time," said Deutsche Telekom CFO Timotheus Höttges. "This is part of our financial strategy that clearly follows the principle of making forward-looking investments while ensuring sound and stable balance sheet ratios." The structure of ownership and rights to use the wireless communication towers will thus in future comply with the standards practiced in the USA where radio towers are mainly operated by specialized companies. The network operators use this infrastructure for the payment of lease rates. The transaction is advantageous to both parties because U.S. tower operators mostly install a larger number of antennae of different mobile communications operators on the masts per site than is the case at the own sites of telecommunications companies. The transaction will reduce the group's net debt by around USD 2.4 billion. Based on the current exchange rate, this corresponds to around EUR 1.9 billion. This improves one of the most important key figures, the ratio between net debt and adjusted EBITDA, and thus continues to be well within the communicated range. The transaction also supports Deutsche Telekom's rating. T-Mobile USA's nationwide network is currently present at around 51,000 sites of which the vast majority are leased from third parties. As part of its strategy, T-Mobile USA can now realize the planned initiatives. The key part of these initiatives is the 4G network roll-out with investments worth around USD 4 billion. It includes the modernization of 37,000 cell sites, the introduction of 4G/HSPA+ services in the 1900 MHz spectrum and the market launch of LTE 2013. The assets and liabilities directly connected with the transaction are reported in the group balance sheet for the third quarter of 2012  as "held for sale." The net effect of the transaction will not impact adjusted EBITDA of 2012.

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