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SBA Fills Plate at the Build-to-Suite Tower Buffet

SBA Communications Corp. is on a mission to set a new standard for the wireless communications industry.

The 11-year-old firm added tower ownership to its core business line-up in 1997 and its quickly become a leader in the industry. Through strategic acquisitions and build-to-suit contracts with leading wireless carriers, SBA has accumulated an inventory of more than 1,600 tower sites that are ready and able to deploy broadband wireless services.

TeleCorp PCS, Inc. is AT&T Wireless Group's largest affiliate with licenses covering approximately 16.7 million people in the U.S. Although it's been rumored that TeleCorp PCS has caught the eye of AT&T Corp. as a potentially juicy acquisition for the telecom giant, both firms said no serious discussions have taken place.

With possible takeover bids quelled, SBA sealed a deal on Monday to acquire up to 275 existing TeleCorp PCS towers and to become the exclusive build-to-suit provider for wireless firm. The deal is earmarked as SBA's largest acquisition to date.

Steven Bernstein, SBA chairman and chief executive officer, said TeleCorp is one of its primary partners in developing wireless network services.

"We were attracted to the portfolio because TeleCorp's towers are very similar to the towers we have been building for SBA -- newly constructed, well-located, multi-tenant capable and engineered for today's PCS, digital and data users," Bernstein said.

Gerald T. Vento, TeleCorp chairman and chief executive officer said today's deal was a natural extension of the two's existing business relationships.

"The sale of these tower assets provides us with additional capital as we continue to focus on our core business," Vento said. "We also have the security and confidence that our future sites will be ready on time and on budget."

TeleCorp currently has more than 142,000 subscribers in selected markets in the south-central and northeast U.S. and in Puerto Rico. The existing towers that SBA purchased are predominantly located in Louisiana, Tennessee, Mississippi, Missouri, Arkansas and Puerto Rico.

To seal the deal, SBA will pay TeleCorp $327,500 per tower, or more than $90.1 million total. TeleCorp PCS will be the first anchor tenant on the towers for a monthly rental fee of $1,200 per site under a long term lease agreement.

The towers currently produce approximately $1.5 million in annualized rental revenues from other tenants providing wireless communication services. The towers have the capacity to hold up to 4.5 broadband wireless tenants per tower.

The build-to-suit portion of the agreement requires that TeleCorp PCS construct a minimum of 200 new towers for SBA over the next three years. The wireless infrastructure buildout allows SBA to extend leasing opportunities in Louisiana, Mississippi, Arkansas, Texas, Tennessee, Kentucky, Missouri, Indiana, Illinois, Iowa, Michigan, Wisconsin and enter the wireless communications market in Puerto Rico.

TeleCorp will execute long term leases to place its wireless network equipment at each site and pay SBA an initial monthly rental fee of $1,300 per site. The first 200 towers will be built under the new agreement, and up to 200 additional towers may be constructed under an agreement between the two firms formed in April.

The tower acquisition is subject to due diligence and other contingencies, and is scheduled for completion early in the first quarter of 2001. The new build-to-suit agreement is contingent on the closing of the tower acquisition.