Subject: [NEXTEL-1] NEXTEL READY TO TAKE TOWERS FROM SPECTRASITE'S CONTROL

From: Marcel <[email-masked]>
Date: Sat, 02 Nov 2002 19:05:00 -0500

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NEXTEL READY TO TAKE TOWERS FROM SPECTRASITE'S CONTROL

November 2, 2002 9:31am

Nextel Communications has formed a new tower division and
appears poised to buy back its towers from beleaguered SpectraSite,
which will likely file for Chapter 11 bankruptcy as it sinks under
massive debt.

While SpectraSite has indicated that day-to-day operations will
remain intact should it file for bankruptcy, people close to Nextel
said the carrier is preparing itself for a worst-case scenario.
Nextel declined to comment on plans for the newly created Tower
Assets Group.

In 1999, Nextel and other major operators began selling off
their tower portfolios and leasing them back from major public
tower companies in order to monetize tower assets and compete in an
increasingly crowded market. Tower companies were willing to pay
handsomely, and Wall Street fed their appetites. Today, falling
capex budgets and customer growth expectations are translating into
fewer towers and tenants to share them.

“The least leveraged tower company has a 10 times
debt-to-EBITDA,” said Sean Butson, wireless analyst with Legg
Mason.

Wireless operators are faced with tower partners that may have
to sell back some of their portfolios to reduce debt. In addition,
carriers are becoming increasingly uncomfortable about partnering
with companies that have shaky balance sheets.

As a result, industry insiders said operators are reluctantly
reassessing their relationships with tower companies and struggling
to value tower assets in a shifting pricing environment.

In the heat of competition, managing towers and brokering
relationships with competitors that want to share tower space is
not the best allocation of carrier resources, analysts said. And
most operators don't want to own their towers again.

Meanwhile, because capital markets are essentially closed,
public tower companies have stopped purchasing new tower portfolios
from carriers that haven't sold assets yet. Now private tower
companies are stepping into the breach.

AAT Communications, backed by investments from Charterhouse
Group International and Cequel III, has quickly become one of the
largest privately held tower companies in the U.S., announcing an
agreement to purchase U.S. towers from New Jersey-based Centennial
Communications.

“Even though the market is difficult, we're still actively
looking to deploy capital for acquisitions,” said Ed Farscht,
senior vice president of corporate development for AAT.

Likewise, Marc Ganzi formed Global Tower Partners in June and
has $200 million in financing from undisclosed backers. “We
think we can buy towers at about 75% cheaper than what the public
guys paid for them,” he said.

GridCom International, led by CEO Doug Wiest, entered the U.S.
market about two months ago as an unregulated affiliate of U.K.
power company National Grid Transco. Its purpose is to provide
turnkey services that locate wireless operators' network equipment
on National Grid USA structures. However, cheap tower valuations
give the company an opportunity to buy and build towers, Wiest
said.

Public tower companies appear happy to oblige by shedding
non-core assets. American Tower is divesting some microwave towers
and other non-strategic towers. Meanwhile, SpectraSite is looking
for a buyer for its network services division.

Private companies believe it's only a matter of time before some
significant tower portfolios come up for sale at attractive
prices.“We think we can be opportunistic,” Ganzi
said.

PUBLIC TOWER FIRMS ON SHAKY GROUND

American Tower: Reaffirmed strong guidance to Wall
Street, but Standard & Poor's Rating Services put the company
on CreditWatch with negative implications.

Crown Castle International: S&P placed the company on
CreditWatch with negative implications. Appears to be in the most
favorable financial position of all the public tower companies.

Pinnacle Holdings: Filed for bankruptcy reorganization in
May. Is emerging as a privately held tower company.

SBA Communications: Lowered third quarter guidance.
S&P placed the company on CreditWatch with negative
implications.

SpectraSite Holdings: Defaulted on $200 million of bonds
following its failure to pay $10.8 million in interest on notes due
Sept. 15. Analysts say bankruptcy is imminent.

Source: Company research

Copyright 2002 by Primedia Incorporated. All rights reserved.
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