Verizon said to hire TAP Advisors for tower sale by year end

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Verizon Communications Inc. is pushing for a sale of its wireless network towers by year-end, according to people familiar with the situation, in a deal that may raise about $6 billion for spectrum purchases.

Verizon, the biggest U.S. mobile-phone company, has hired TAP Advisors LLC, a New York boutique investment bank, to work on a tower sale and leasing agreement, two of the people said. The package would involve about 12,000 towers and could be announced within 30 to 60 days, according to one of the people, who asked not to be identified because the discussions were private.

A sale could bring in about $6 billion, based on the price per tower that AT&T Inc. got in a tower deal last year. Wireless carriers have turned to tower sales as a way to raise cash at a time when tower operators like Crown Castle International Corp., American Tower Corp. and SBA Communications Corp. have been eager buyers.

TAP has been an adviser to the sellers in the last two major U.S. tower deals, with Houston-based Crown Castle as the buyer in each. AT&T sold 600 towers and the exclusive rights to lease 9,100 more towers for an average of 28 years for $4.83 billion. T-Mobile US Inc. got $2.4 billion in 2012 for the rights to operate 7,200 towers.

Bob Varettoni, a spokesman for New York-based Verizon, declined to comment. A company representative at TAP Advisors wasn’t immediately available for comment.

Eyes opened

An infusion of cash would give Verizon more flexibility after its debt ballooned to finance the $130 billion deal to buy full control of its wireless unit earlier this year. Verizon’s had net debt of $104.2 billion at the end of June, or about 2.4 times its annual earnings before interest, tax, depreciation and amortization. That compared with a ratio of 1 times earnings a year earlier.

AT&T’s deal “opened our eyes” to the appeal of a tower sale, Verizon Chief Financial Officer Fran Shammo said last week at an investor conference. While the company had previously resisted the idea of divesting its network real estate, executives saw how AT&T got immediate cash by selling its towers to Crown Castle.

Verizon is expected to participate in the Federal Communications Commission’s airwave sale in November, an auction that may raise at least $11 billion, according to Barclays Plc. That makes it the most significant airwave auction since 2008, Barclays said in a note this week.

Tower operators have sought acquisitions because they can reap bigger profits by using the assets to serve multiple wireless carriers.

Crown Castle has told Verizon it would be interested in a deal, and that the towers would “provide great attractive growth opportunities in our business,” Jay Brown, the tower company’s CFO, said last week at the investor conference.

Asked if a $6 billion tower deal is beyond Crown’s financial reach, Brown said, “No, not at all.”