Accounting firm Ernst and Young (EY), which represents American Tower, is in negotiations with Israeli mobile telephony operators on sale and lease-back deals for their cellular sites.
American Tower attempted to enter the Israeli market in the past, but the Israeli carriers were apparently not convinced that the company's model was worthwhile for them. Despite this, talks carried on at various levels of intensity, mainly involving Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), and HOT Telecommunication Systems Ltd. (TASE: HOT) , whose Hot Mobile service shares the PHI network with Partner.
American Tower enables mobile carriers that are in need of cash to sell the rental agreements with the owners of their sites, in return for a commitment to lease the sites for a specified period. These are finance agreements in every respect. They allow the mobile carriers to cut expenditure on renting sites - one of their heaviest expenses - and to receive large amounts of cash which they can use for investment or to repay debt.
The background to the talks that have been taking place over the past year is the perception that because of the situation of some of the carriers and the continuing price erosion in the industry, some of the companies will at some stage have difficulty in recycling debt and will seek alternative sources of finance.
To make such a project financially worthwhile, at least two companies need to participate, in order to bring down the leasing costs. The tower companies put both companies on one site, and reopen agreements with the site owners with the aim of reaching new agreements that are good for all sides.
Published by Globes, Israel business news - en.globes.co.il - on August 3, 2020
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