Verizon Communications Inc. (NYSE, NASDAQ: VZ) and Vertical Bridge have recently announced a definitive agreement for Vertical Bridge to secure the exclusive rights to lease, operate, and manage 6,339 wireless communications towers across all 50 states and Washington, D.C. from Verizon subsidiaries for approximately $3.3 billion, including certain commercial benefits. The transaction structure comprises a prepaid lease with upfront proceeds of approximately $2.8 billion in cash.
Under the terms of the agreement, Verizon will enter into a 10-year leaseback agreement to lease capacity on the towers from Vertical Bridge, with options that could extend the lease term up to 50 years. Additionally, Verizon will have access to certain additional space on the towers for its future use, subject to certain restrictions. This move is anticipated to support Verizon's efforts to reduce tower-related costs and provide greater vendor diversity in a concentrated industry.
Verizon Chairman and CEO Hans Vestberg stated that, "as the nation’s largest mobility provider, we are well positioned with greater financial flexibility to invest in our business, return value to our shareholders and make the nation’s best network even better for customers." He also mentioned that the transaction builds on their existing relationship with Vertical Bridge and realizes substantial value for a unique set of assets, enabling Verizon to optimize the network with one of the best operating partners.
Ron Bizick, President and CEO of Vertical Bridge, expressed his pleasure at being selected by Verizon as the counterparty in the largest US tower transaction in almost a decade and described the transaction as a significant step for Vertical Bridge. The transaction represents a significant milestone in the company's vision to create a permanent, private, and at-scale US tower company.
The transaction is expected to close by the end of 2024, subject to customary closing conditions. J.P. Morgan acted as the financial advisor to Verizon, while Jones Day acted as legal counsel. Centerview Partners LLC served as the financial advisor to Vertical Bridge, and Greenberg Traurig acted as legal counsel. Simpson Thacher & Bartlett acted as legal counsel to DigitalBridge, and Mayer Brown LLP acted as legal counsel to CDPQ.
Verizon generated revenues of $134.0 billion in 2023, and Vertical Bridge, headquartered in Boca Raton, Florida, is the largest private owner and operator of communications infrastructure and locations in the United States, with a portfolio of more than 500,000 sites, including over 11,000 owned and master-leased towers pre-transaction.
This landmark transaction not only solidifies Vertical Bridge's leadership in the tower space but also strategically positions them to capitalize on the growing demand for wireless infrastructure, especially as AI-driven technologies and 5G continue to reshape connectivity needs across industries.
DigitalBridge, a leading global alternative asset manager dedicated to investing in digital infrastructure and majority owner of Vertical Bridge, has committed capital to support the transaction. CDPQ, a global investment group and an important shareholder of Vertical Bridge since 2019, also committed capital to finance the transaction. Following these announcements, the company's shares moved 0.1%, and are now trading at a price of $44.92. For the full picture, make sure to review Verizon Communications's 8-K report.
