CCI traded down today as talks of a possible S/TMUS merger continued, with indications that a deal could be reached as early as this weekend. This is still speculation and could be held up by disputes over control of the combined company and/or push back by regulators.
I will follow up on Monday when there is more definitive information available, but below is the note that Sarah sent on April 10th after the merger talks first resurfaced (this merger has been discussed and plans collapsed on two different occasions). The worry from analysts is that, currently shared sites may be decommissioned, reducing a revenue source for CCI. There are a number of assumptions and unknowns at this point.
S/TMUS represent approximately 16% and 22% of site rental revenue respectively and have about 6% of overlapping cell sites. Based on a Goldman analysis, if they decommissioned all the overlapping sites as their contracts expired (average of 5-7 years) it looks like the net impact would be ~$8/share. This assumes an NPV on the remaining contract life and that they account for around $0.60 of AFFO. There are a lot off assumptions in that including that if a merger were even approved that they would decommission all their overlapping sites.
$CCI.US
Peter Malone, CFA
Research Analyst
Direct: 617.226.0030
Fax: 617.523.8118
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