In a bid to expand its presence in Brazil, leading global
wireless communications tower operator
American Tower Corporation
) has decided to purchase Brazilian mobile-phone infrastructure
firm BR Towers SA.
The transaction is valued at nearly 2.18 billion Brazilian
Reais, or approximately $978 million at present exchange rate, and
will be settled in cash along with the assumption of certain
To acquire full equity interests of BR Towers SA, American Tower
has signed a pact with private equity firms like GPCP V and FIP
Multisetorial Plus and other shareholders. The deal is expected to
be sealed in the fourth quarter of 2014, subject to customary
Post-closure of the deal, American Tower will own nearly 2,530
towers in Brazil and exclusive use rights for almost 2,110 towers
in the country. The company expects that the acquisition of BR
Towers SA's towers will generate nearly $131 million (around 292
million Brazilian Reais) revenues annually. American Tower also
estimates annual gross margin of nearly $81 million (roughly 181
million Brazilian Reais) from this operation.
We believe the acquisition of BR Towers SA will drive American
Tower's top line further. The acquisition will also support the
company's plan of owning more than 70,000 towers by the end of
2014, through organic or inorganic growth. Moreover, the company
intends to exceed 2,000 domestic leases this year in addition to
spending $110 million in land acquisitions. American Tower is
confident such strength in its tower portfolio will help it to
double its AFFO (give the full name) per share by 2017.
Notably, American Tower touched a fresh 52-week high of $90.73
on June 9, 2014 on the back of robust financial numbers for the
first quarter of 2014 and an impressive dividend increase. Higher
adoption of smartphones/tablets coupled with increased deployment
of 3G/4G networks by carriers across the world continues to drive
demand for tower space. American Tower is thus rapidly expanding
its business operations in various emerging markets.
The company also recently announced its plans to bid for Viom
Networks - an Indian tower company with nearly 42,000 towers and
more than 95,000 tenancies. This buyout will fortify American
Tower's foothold in India as it already holds 10,000 towers in this
nation. Given that India is undergoing a network upgrading phase,
this takeover should serve as an added advantage for American
American Tower currently has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked stocks in this sector are
Aviv REIT, Inc.
The GEO Group, Inc.
Chatham Lodging Trust
). All the three stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
AMER TOWER CORP (AMT): Free Stock Analysis
CHATHAM LODGING (CLDT): Free Stock Analysis
GEO GRP INC/THE (GEO): Free Stock Analysis
AVIV REIT INC (AVIV): Free Stock Analysis
To read this article on Zacks.com click here.