SBC to sell towers


Monday, August 28th 2000, 12:00 am
By: News On 6


NEW YORK – San Antonio-based SBC Communications Inc. plans to sell 3,900 wireless towers to SpectraSite Communications Inc. in a $1.3 billion cash-and-stock transaction that could shift the balance of power in the fast-growing tower-management business.


The deal, which is expected to be announced as early as Monday, would mark the largest transaction of its type. Terms call for SpectraSite, a unit of SpectraSite Holdings Inc., based in Cary, N.C., to manage SBC's wireless-communications towers and build about 800 more towers across the country.


With SBC's towers, SpectraSite would wind up with one of the largest collections of wireless towers in eight of the top 10 U.S. markets. That would make it a top competitor to companies such as American Tower Corp., an industry leader based in Boston, and Crown Castle International Corp. of Houston, another big player in the tower-management business.


Towers transmit cell-phone calls to their final destination. Though not a glitzy part of the business, towers are crucial to cell-phone operators. Without them, their networks couldn't exist.


Under terms of the deal, SpectraSite would pay SBC $983 million in cash and $325 million in SpectraSite stock. The deal is structured as a lease agreement in which SpectraSite will have exclusive rights to the towers for 26 years. The transaction is expected to close in the fourth quarter.


The deal is the latest in a string of high-profile transactions involving wireless-communications towers. SpectraSite last year signed a similar deal with Nextel Communications Inc.


Big wireless carriers such as SBC have been looking to exit the tower-management business, an enterprise that is capital-intensive and timeconsuming. Carriers have grown frustrated at dealing with homeowners and others who favor cell-phone service but don't want towers, which are considered eyesores, in their communities.


By passing along those troubles to SpectraSite, SBC will be able to focus on signing up wireless customers and running its successful cell-phone business.


SBC said it chose SpectraSite because it offered the best terms. What's more, "this is their core business," said Stephen McGaw, SBC's managing director of corporate development.


Shares of SpectraSite closed unchanged at $21 Friday on the Nasdaq Stock Market, well off their 52-week high of $30.38.


SBC closed at $41.19, up 69 cents, in New York Stock Exchange trading on Friday.