Indian newspaper The Economic Times reported that
American Tower Corp.
) is aggressively pursuing its Indian ambitions. The company is
on the verge of acquiring 8,000 wireless towers of Tower Vision,
a privately held Indian wireless tower operator. American Tower
will pay approximately $572 million for this acquisition.
India offers some of the cheapest mobile call rates in the
world. These low level of prices have put pressure on the margins
of wireless service providers and also their capital expenditure
plans for network upgrade. As a result, mobile operators in the
country are tending toward more tower sharing and leasing to save
costs. This makes India a lucrative market for wireless tower
Furthermore, after a gap of three years due to the 2G license
scam, the Indian wireless industry is expected to grow
appreciably with the deployment of 3G and 4G LTE networks.
Wireless broadband service for high-speed Internet will be a key
growth area. American Tower is currently operating more than
10,000 operational wireless towers in India. The acquisition of
Tower Vision will further boost its foothold.
We believe that these geographic diversifications will help
American Tower to reduce its dependence on the U.S., for which
wireless market is highly saturated. The U.S. is still extremely
lucrative owing to the continuous evolution of high-speed mobile
However, we remain slightly concerned that innovation of
alternative techniques like satellite-delivered radio and video
services may reduce the need for tower-based broadcast
transmission. At present, India generates approximately 1%-2% of
American Tower's total revenue. Management has also fixed a
target to increase this level to 5%-10% within the next five
Other Stocks to Consider
American tower currently has a Zacks Rank #3 (Hold). Other
stocks in the wireless tower industry, which we can consider
Crown Castle International Corp.
SBA Communications Corp.
). All these stocks currently have a Zacks Rank #2 (Buy).
AMER TOWER CORP (AMT): Free Stock Analysis
CALIX INC (CALX): Free Stock Analysis Report
CROWN CASTLE (CCI): Free Stock Analysis
SBA COMM CORP (SBAC): Free Stock Analysis
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