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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