Sell-Off of Tower Business Logical for AT&T: Kaplan

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Sept. 18 (Bloomberg) -- Robert Kaplan, professor at Harvard Business School and Bloomberg View columnist Bill Cohan examine AT&T moving to sell-off its tower business and what it may say about the future of the wireless industry. They speak on Bloomberg Television's "Bloomberg Surveillance."

You will see companies do this.

The tower business is a very high pe business.

What do you mean by that?

That was a massive jargon alert.

The comparables like crown castle international traded at 60, 70 times earnings.

One of the other things they look at is, can you sell an asset that trades a much higher price to earnings multiple than your stock, and if they are interested in dividends and improving the balance sheet, this is logical.

What fascinates me is top of the market.

We saw the giant enormous -- dj -- maybe the u.s. markets mature, and maybe there glidepath are changing and ebbing.

Maybe it is a strategic concern over where revenue stream is going.

I think this is different than that in that they were two similar businesses, geographically different.

This is about getting rid of the business that has a dramatically different valuation parameter, and that is why they are doing it.

It raises the question of who could be a buyer.

Robert kaplan mentioned crown capital, one potential buyer.

The reason i bring this up is because there has been consolidation in the industry lately.

American tower and crown capital increasing their role.

They buy the tower and lease the space back to the carrier.

Air is a member on at&t, it has 10,000 towers at jpmorgan generates 326 million dollars in annual revenue.

The idea of the company leasing it back to free up some cash -- maybe they will sell it -- not in my back yard.

Bill cohan is with us.

First of all, lots of telecom companies have sold their tower businesses.

At&t may be one of the last, people have been pushing them to sell these towers when it was sbc.

What i think you are seeing is these prices are high.

Why did verizon ultimately do this deal?

Verizon was willing to pay $130 billion to vodafone to get it done, and vodafone could figure out a way to pay -- to avoid $500 billion in taxes.

Prices are high, so why not redeployed that cash into other purposes?

Like your network upgrade, for instance.

Coming up, we are going to

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