AT&T, Verizon strike tower agreement in effort to diversify vendors

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NEW YORK (Reuters) - AT&T Inc and Verizon Communications Inc said on Monday they have agreed to lease hundreds of new cell towers from owner and operator Tillman Infrastructure, a move they hope will give them more leverage in negotiations with major U.S. tower vendors.

The U.S. cell tower market is currently dominated by three companies: American Tower Corp, SBA Communications Corp, and Crown Castle International Corp.

The agreement announced on Monday shows that Verizon and AT&T, the No. 1 and No. 2 biggest U.S. wireless carriers, are willing to strike deals with other vendors to secure better prices for the towers they use to transmit wireless signals, analysts and company officials said.

Both carriers are seeking to add to their network capacity at a time when consumers are using increasing amounts of cellular data.

Carriers are “always looking for alternative partners to lessen their dependence on the big three guys,” said Jonathan Chaplin, analyst at New Street Research.

As part of the agreement, Tillman will construct the towers and AT&T and Verizon will serve as anchor tenants. Construction will begin in the first quarter of 2018.

“This is Verizon and AT&T working together with a new provider to put some competition into the mix,” said Susan Johnson, AT&T’s senior vice president of supply chain, in an interview, adding, “we do really hope this will be a future model.”

Shares of American Tower were flat in afternoon trading, while shares of SBA Communications were down 1.9 percent and Crown Castle was down 0.3 percent.

Reporting by Anjali Athavaley; Editing by Frances Kerry