SoftBank to Launch Cellular Sites in U.S. -- WSJ
October 18 2017 - 3:02AM
Dow Jones News
By Drew FitzGerald
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 18, 2017).
Japanese telecom giant SoftBank Group Corp. plans to form a
joint venture with Australia's Lendlease Group to build or manage
about 8,000 cellular sites across the U.S., challenging tower
operators that dominate the industry.
Most of the infrastructure will initially come from Sprint
Corp., which plans to shift its leases for rooftop transmitters and
other sites to the joint venture, according to the companies.
SoftBank, which owns about 80% of Sprint's outstanding shares, has
struggled to turn the carrier into a profitable business since it
took a controlling stake in the company in 2013.
SoftBank and Lendlease will each initially contribute $200
million toward the new infrastructure company, called Lendlease
Towers, with plans to snap up $5 billion of telecom assets "over
the medium term" as the venture grows, a Lendlease spokesman said.
The new company also plans to strike agreements with more wireless
carriers.
"Our intention is to become sizable in this arena," said Denis
Hickey, chief of Lendlease's business in the Americas.
The venture's backers didn't say how much of that future
commitment they plan to fund themselves but said they are seeking
more capital partners. A Sprint spokesman said the arrangement
could help the company cut its expenses in the long run.
SoftBank Chairman Masayoshi Son has placed big bets on a variety
of companies big and small over the past year. Many of the
investments have come from his $100 billion Vision Fund, a massive
private-equity arm backed by partners that include Apple Inc. and
Saudi Arabia's sovereign-wealth fund. The latest U.S. tower
investment will come directly from SoftBank Group.
The investment could put pressure on the few companies that own
most U.S. cell towers and the land beneath them. American Tower
Corp., Crown Castle International Corp. and SBA Communications
Corp. have enjoyed strong returns over the past decade by renting
their structures to wireless companies, serving as suppliers to a
sector that spends billions of dollars a year on capital
improvements.
The market already has the makings of a free-for-all as new
entrants lay the groundwork for miniaturized cell radios that can
be installed on streetlamps, traffic signals and the like. These
small cells allow some carriers and fiber-optic cable owners to
compete with tower operators, though many, including Sprint, are
struggling with local resistance.
Shares of Sprint, now the No. 4 carrier by subscribers, have
barely appreciated over the past five years. Mr. Son, who is also
Sprint's chairman, has privately complained that limits on where
carriers can install their gear has made it harder for the company
to invest in the infrastructure it needs, according to people
familiar with his thinking.
--Ryan Knutson contributed to this article.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
(END) Dow Jones Newswires
October 18, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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