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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.

This media information contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These forward-looking statements include statements with regard to the expected development of revenue, earnings, profits from operations, depreciation and amortization, cash flows and personnel-related measures. They should therefore be considered with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom's control. Among the factors that might influence our ability to achieve our objectives are the progress of our workforce reduction initiative and other cost-saving measures, and the impact of other significant strategic, labor or business initiatives, including acquisitions, dispositions, business combinations, and our network upgrade and expansion initiatives. In addition, stronger than expected competition, technological change, legal proceedings and regulatory developments, among other factors, may have a material adverse effect on our costs and revenue development. Further, the economic downturn in our markets, and changes in interest and currency exchange rates, may also have an impact on our business development and the availability of financing on favorable conditions. Changes to our expectations concerning future cash flows may lead to impairment write downs of assets carried at historical cost, which may materially affect our results at the group and operating segment levels. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, our actual performance may materially differ from the performance expressed or implied by forward-looking statements. We can offer no assurance that our estimates or expectations will be achieved. Without prejudice to existing obligations under capital market law, we do not assume any obligation to update forward-looking statements to take new information or future events into account or otherwise.   In addition to figures prepared in accordance with IFRS, Deutsche Telekom also presents non-GAAP financial performance measures, including, among others, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted EBIT, adjusted net income, free cash flow, gross debt and net debt. These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways.     About Deutsche Telekom Deutsche Telekom is one of the world’s leading integrated telecommunications companies with almost 130 million mobile customers, 33 million fixed-network lines and more than 17 million broadband lines (as of June 30, 2012). The Group provides fixed-network, mobile communications, Internet and IPTV products and services for consumers, and ICT solutions for business and corporate customers. Deutsche Telekom is present in around 50 countries and has over 233,000 employees worldwide. The Group generated revenue of EUR 58.7 billion in the 2011 financial year - over half of it outside Germany (as of December 31, 2011). 

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