(Updates share price in fifth paragraph.)
March 15 (Bloomberg) -- AT&T Inc., the largest U.S. phone company, is open to the sale of some of its peripheral assets, which include wireless towers, a move that analysts say would give the carrier more of a financial cushion.
“We’ve seen others in the industry sell noncore assets, and if we wanted additional flexibility, that could be an option for us too,” Brad Burns, a spokesman for Dallas-based AT&T, said in an interview. “In all cases, our decisions are driven by what’s right for the company and for our shareowners. So in that sense, nothing’s off the table.”
AT&T’s remarks follow speculation by analysts that the company is working on unloading some of its assets, especially its wireless towers. Finding a buyer for the towers could raise about $5 billion in cash, based on the value of similar transactions by T-Mobile USA and other companies, estimates Jonathan Atkin, an analyst at RBC Capital Markets LLC. In these transactions, the carrier typically leases back antenna space from the buyer so that its network isn’t affected.
“AT&T is actively considering the monetization of its tower assets in a similar fashion to several of its peers in the wireless industry,” Atkin said in a note yesterday.
AT&T shares fell 1.2 percent to $36.43 today in New York. The stock has climbed 8.1 percent this year.
Last year, in an effort to shed slower-growing businesses, AT&T sold a majority stake in its Yellow Pages division to Cerberus Capital Management LP for $950 million.
Raising additional funds would bolster AT&T’s balance sheet as it faces a $14 billion network upgrade, a stock buyback plan of more than $11 billion and its 4.9 percent annual dividend. Still, the carrier says it’s under no pressure to raise money. Analysts estimate that AT&T will generate $14.8 billion in free cash flow this year, according to data compiled by Bloomberg.
“Any comments by analysts about potential sales are simply speculation,” Burns said. “The bottom line is we have attractive assets that could be a potential source of cash.”
Even so, the discussion itself could raise concern that money is tight at AT&T, said Jennifer Fritzsche, an analyst with Wells Fargo & Co. in Chicago.
“I certainly don’t think their back is against the wall, but I worry that talk of divestitures could make it seem like it is,” she said.
CenturyLink Inc., a carrier based in Louisiana, shocked investors last month by cutting its dividend by 26 percent in a capital-reallocation move. The stock suffered its biggest one- day drop in more than three decades, wiping out about $6 billion in market value.
AT&T’s Burns said the company has no plans to cut its dividend and is proud of its unbroken streak of 29 years of increasing the amount it pays out.
“CenturyLink created concern about dividends, but I don’t think AT&T’s dividend is in danger,” Fritzsche said.
--Editors: Nick Turner, John Lear