To maintain its wireless tower portfolio expansion, American Tower Corp. (AMT - Analyst Report) has struck a deal with MIP Tower Holdings LLC, a private real estate investment trust and owner of Global Tower Partners (“GTP”). The deal is worth nearly $4.8 billion, subject to regulatory approvals.
American Tower will finance the whole transaction partly through $3.3 billion in cash and the rest is expected to be met through funds accessible from revolving credit facility. The deal is most likely to close by the end of 2013.
GTP currently has 5,400 domestic and 500 international towers mostly located in Costa Rica. Moreover, it also controls over 9,000 domestic sites, which mainly include rooftop assets.
Thus, acquiring MIP Tower Holdings LLC will not only give American Tower access to a significant tower base but will also boost the company’s Adjusted Funds From Operations (AFFO) going forward. Moreover, the tower giant also expects the newly-acquired towers to contribute around $345 million and $270 million in revenues and gross margin, respectively by 2014.
Last month, American Tower entered into an agreement with NII Holdings Inc. (NIHD - Snapshot Report) to purchase 2,790 Brazilian and 1,666 Mexican towers for $413 million and $398 million, respectively. These acquisitions will help the company to consolidate its position in the highly lucrative Latin American markets, which is mainly dominated by America Movil S.A.B. de C.V. (AMX - Analyst Report) and Telefornica SA (TEF - Analyst Report) .
American Tower is also on the verge of acquiring 8,000 wireless towers of Tower Vision, a privately held Indian wireless tower operator, for nearly $572 million.
The company exited the second quarter of 2013 with 55,720 Wireless network towers and 473 Broadcasting towers. Geographically, the company operates 22,720 wireless towers and 274 broadcast towers in the U.S. along with 33,473 wireless towers and 199 broadcast towers outside the U.S.
Hence, we believe that a further acquisition of nearly 13,000 international towers and 5,400 domestic towers in fiscal 2013 will not only pressurize its cash position but will also expand the company’s present debt-to-capitalization ratio of 0.71.
American Tower currently has a Zacks Rank #3 (Hold).