merican Tower Corp.
) recent decision to acquire Global Tower Partners ("GTP") for
$4.8 billion has impelled Moody's rating agency to lower the
company's rating outlook to negative from stable while
maintaining Baa3 ratings on its senior unsecured debts.
AMER TOWER CORP (AMT): Free Stock Analysis
AMER MOVIL-ADR (AMX): Free Stock Analysis
NII HLDGS-CL B (NIHD): Free Stock Analysis
TELEFONICA S.A. (TEF): Free Stock Analysis
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GTP currently owns 5,400 domestic and 500 international towers
mostly in Costa Rica. Moreover, it controls over 9,000 domestic
sites, which mainly include rooftop assets. Thus, American
Tower believes that acquiring those assets through debt
financing will not only give the company access to a significant
tower base in urban locations but will also generate 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.
) 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.
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.
At present, American Tower requires nearly $6.2 billion to fund
its entire tower acquisition program. Meanwhile, the company
exited second-quarter 2013 with only $462.7 million in cash and
marketable securities and around $8.8 billion in outstanding debt
on its balance sheet.
American Tower's series of acquisitions will not only surpass its
5.0x net debt/EBITDA target (set by Moody's rating agency) but
will also exhaust its revolving credit facility. Thus, American
Tower's mounting debt accounted for the slashed outlook by
Hence, to restore to Moody's stable outlook, American Tower needs
to successfully execute and integrate both its GTP and NII tower
deals and also remain below the 5.0x net debt/EBITDA target. In
order to bring its debt/EBITDA target below Moody's benchmark
level, the company needs to repay $200 million of debt every
quarter for the next two years.
American Tower currently has a Zacks Rank #3 (Hold).