Consolidation is set to strike the tower space as American Tower announced this morning plans to acquire smaller rival Global Tower Partners’ parent company Macquarie Infrastructure Partners Tower Holdings for approximately $4.8 billion. The deal, if approved by regulators, would add around 5,400 domestic towers; 800 domestic property interests under third-party communications sites; management rights to over 9,000 domestic sites, which are primarily rooftop assets; and 500 communications sites in Costa Rica to American Tower’s portfolio of more than 56,000 owned and managed sites.
American Tower’s management cited the wireless industry’s current push to deploy next-generation services as a key to initiating the deal.
“With all four major domestic wireless carriers engaged in aggressive multi-year 4G LTE deployments, we believe our acquisition of GTP solidifies our path to achieving our strategic goals related to growing our [adjusted funds from operations] over the next five years,” explained American Tower President and CEO Jim Taiclet in a statement.
American Tower noted that in combination with the GTP assets it expects to generate $345 million in revenues and $270 million in gross margins next year. Terms of the deal call for American Tower to provide $3.3 billion in cash and assume $1.5 billion in debt from GTP, with financing coming from cash on hand and borrowing under its existing revolving credit facilities. American Tower expects the deal to close by the end of the year.
“American Tower intends to maintain its financial and capital structure policies, consistent with investment grade credit metrics, and expects to use the quality cash flow and margin characteristics of the GTP portfolio to de-lever over time back to its stated target leverage range,” the company added.
American Tower’s stock (AMT) surged more than 4% in early Friday trading at around $72 per share, pushing it off a recently reached 52-week low of $67.89. American Tower posted robust second quarter results, but was dinged by investors over concerns regarding potential foreign currency from its international operations.
The deal should push American Tower closer to larger rival Crown Castle in domestic scale. Crown Castle bolstered its portfolio last year when it agreed to lease 7,200 towers from T-Mobile USA for $2.4 billion. American Tower was seen as the leading bidder for those assets before Crown Castle swept in and sealed the deal.
American Tower last month announced plans to acquire more than 4,000 towers from Latin American telecom operator NII Holdings for $811 million. That deal included 2,790 towers in Brazil and 1,666 towers in Mexico, with NII, which operates under the Nextel brand across it Latin American properties, to lease back the towers for a minimum of 12 years.
Analysts have in general remained bullish on the tower space, citing the continued push by wireless carriers to expand LTE deployments and coverage as well as by the beginning phases of carrier’s adding new spectrum bands to their current LTE deployments.
Global Towers currently houses antennas from all four nationwide operators, with AT&T Mobility making up 25% of its revenues, Sprint at 17%, T-Mobile US at 16% and Verizon Wireless at 12%. American Tower did note that Sprint’s recently de-commissioned iDEN network was housed on approximately 500 of Global Tower sites, but that it had modeled that impact into its forecasts.
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