American Tower Corp.
) continues to expand its wireless tower portfolio by striking a
deal with the Latin American wireless operator,
NII Holdings Inc.
). NII Holdings will sell 2,790 Brazilian towers and 1,666
Mexican towers for $413 million and $398 million, respectively.
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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American Tower will finance the whole transaction through cash on
hand and funds accessible from revolving credit facility. The
deal is expected to close by the end of 2013.
However, the towers will be leased back to NII Holdings for 12
years. The lease agreement is expected to produce an annual
turnover of nearly $149 million with a gross margin of 37%.
NII Holdings is targeting the highly lucrative Brazilian and
Mexican markets, which are dominated by
America Movil S.A.B. de C.V.
). Thus, to consolidate its position in these markets, NIHD plans
to aggressively rollout its 3G service integrated with the Push
to Talk (PTT) technology by the end of 2013. However, lack of
funds has been a bottleneck for the company.
In order to finance its 3G deployment, NIHD plans to raise nearly
$1 billion in fiscal 2013 either through tower sale or by issuing
At the end of the second quarter of 2013, American Tower managed
56,193 communications towers, comprising 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.
At the end of 2012, American Tower bought 2,000 wireless towers
from KPN's German subsidiary, E-Plus, for 393 million. Moreover,
the company is about to acquire 8,000 wireless towers of Tower
Vision, a privately held Indian wireless tower operator, for
nearly $572 million.
Hence, we believe that a further acquisition of nearly 4,500
towers will not only expand American Tower's international
presence but will also boost its top line as these emerging
markets are gradually adopting 4GLTE technology.
On the flipside, it may also exceed American Tower's annual
capital expenditure target of $625 million, thereby pressurizing
its cash position. Moreover, such buyout proposals may further
expand the company's present debt-to-capitalization ratio of
American Tower currently has a Zacks Rank #3 (Hold).