Which Telecom Providers Could Spin Off Assets as Real Estate Investment Trusts (REITs)?

Though I don’t have a lot to say about this article about telecom service providers spinning off REITs, by Reinhardt Krause of Investor’s Business Daily, a couple of things struck me about it.  It may be of more interest to me than to many of you, but it’s my blog, so I’m going to write about it.  It’s a topic I may return to as I run across articles with additional thoughts on the financial structuring of assets in the telecom industry or chat with industry contacts about their thoughts.

First, at the end of the article, I learned that the big tower operators American Tower and Crown Castle were structured as REITs (real estate investment trusts).  I didn’t know that before, but I wouldn’t have been surprised if I had thought about it; it makes perfect sense.

Of course, the key point of the article is the prediction that Frontier may follow Windstream down the path of telcos restructuring their network assets as REITs.  And the article points out that, even if an REIT trend ensues, large carriers like Verizon and AT&T are unlikely to restructure using REITs, if only due to the regulatory difficulties they would encounter trying to get approval.  The article lists CenturyLink, Cincinnati Bell, and TDS as other carriers who might follow Windstream into the REIT pool

In any case, it’s a concept worth keeping an eye on, particularly to those of us with interest in telcos, real estate financial structures, and the combination of the two.

And for those who’d like to read about the Windstream REIT spinoff that started all of this, I dug up this July 29 Windstream press release on Telecom Ramblings about it.

Carrier Consolidation Update: June 2014

I haven’t had time to formulate thoughtful analyses of any news items recently, but I have been noticing a lot of news about telecom carrier mergers lately, so I thought I’d summarize some of what I’ve seen… with links, of course, if you want to delve further into any of them.

TeleGeography reports that it sees cellular consolidation on the horizon in India, as the country’s top three cellular carriers dominate the market.  If that happens, India’s wireless industry would simply be joining the ongoing consolidation trend in telecom.

Here in the U.S., we’re following the merger chatter surrounding T-Mobile and Sprint.  BGR’s Zach Epstein provides the details in his overview, referencing CNBC’s video discussing the $2 billion break-up fee and the plans to go with the T-Mobile name and management team post-merger.  Meanwhile, AT&T CEO Randall Stephenson has been widely quoted as noting that a Sprint-T-Mobile merger would reduce the “big four” to a “big three,” the same reasoning cited for disallowing an AT&T-T-Mobile merger three years ago.  Obviously, T-Mobile and Sprint are hoping a merger of the 3rd and 4th largest carriers is more palatable to the FCC and DoJ.

In Europe, the talk is about Telefonica’s proposed acquisition of German wireless carrier E-Plus from KPN.

In the Italian wireless space, Reuters has reported a restart of negotiations between Hutchison Whampoa and Vimpelcom to merge their Italian wireless subsidiaries.  This report came just a week after Hutchison gained final EU approval of its Irish subsidiary’s acquisition of Telefonica’s wireless business in Ireland.

Back in the U.S., on the video side, AT&T continues to push ahead with its proposed acquisition of DirecTV, while Comcast and Time Warner Cable pursue a mega-merger.  In fact, this article suggests the AT&T-DirecTV deal may help boost the likelihood of regulatory approval for Comcast-Time Warner.

One of the interesting aspects of the AT&T-DirecTV acquisition is the role NFL Sunday Ticket plays in the deal.  As this Digital Trends article points out, there is reportedly an opt-out clause for AT&T if DirecTV fails to renew its deal with the NFL.

Meanwhile, Fierce Telecom’s Sean Buckley notes that Level 3 is looking to vastly expand its access on on-net buildings with its proposed acquisition of tw telecom.

I’m sure I may have missed a few, but those are the deals I’ve noticed in the news lately.

Quick Hits (Fiber Edition): Metro Fiber Deployment, Fiber Leasing, FTTH Speeds, FTTH Penetration

Because of my years as an analyst with fiberoptics research firm KMI, I’ve always noticed fiber deployment articles and press releases.  Here are a few recent fiber network articles:

From a CLEC perspective, tw telecom is expanding its metro network in Nashville from  the city center out to the west side of the city.  This is in line with tw telecom’s November 2013 announcement that it had planned to expand its metro networks to 5 new markets and within at least 27 existing markets within a year.

Elsewhere, Shentel (Shenandoah Telecom) is seeing growth in its fiber leasing revenue.

Another carrier announced its intention to provide 1 Gpbs FTTH service, with Cox joining AT&T and Google Fiber in the FTTH speed arms race.

Turning to Europe, telecompaper reports on the growth of FTTH connection in Spain – 85% year-over-year in January to 650,000.  An interesting point in the article is a statistic about total fixed broadband connections (not just FTTH): A vast majority of new broadband connections were added by alternative network operators, with Telefonica and cable operators adding a much smaller number.

And while we’re on the topic of FTTH, though I don’t really have much to say, this is an interesting read I ran across recently that’s probably worth sharing.  It’s a bit of a chat about FTTH in Africa with some of the writer’s personal experience with an eye to history.  At one point, to put FTTH in Africa in context, it references a Google Africa Blog article that notes “only 16% of Africa’s 1 billion people are online.”  Again, this is a rather disconnected paragraph, but it’s interesting, nonetheless, and worth sharing.

That’s what’s drawn my attention the last few days, at least from a fiber perspective.  As always, the purpose of this blog is to share what I read and some thoughts about it with old friends and contacts in the telecom industry, as well as anyone I haven’t met who will find this interesting.  Obviously, today’s post was more news and less opinion.  Hope you’ve found it helpful.