Cell phone tower operator
SBA Communication Corp.
) has launched its operations in Brazil by acquiring 800 wireless
towers of Vivo S.A., a subsidiary of
Telefonica Brazil S.A.
). With this acquisition, SBA Communications became the second
U.S. independent tower operator after
American Tower Corp
) to enter the Brazilian market.
Per the deal, the Florida-based tower company will pay $178
million to Vivo S.A. to acquire the latter's 800 tower sites. SBA
Communication will use its existing cash in hand and revolving
credit facility to finance the transaction.
According to the company, the acquisition will be beneficial
as it will provide them with a tower footprint spread across
Brazil along with tower leasing agreement with the major
Brazilian wireless carrier. SBA Communication expects to generate
$9.3-11.3 million in cash flow in 2013 from the acquisition.
On the other hand, Madrid-based Telefonica has been struggling
with rising debt amid Spain's macroeconomic concern. As a result,
it has been disposing off its non-core assets and getting rid of
the tower portfolio.
SBA Communication has been playing the catch up game behind
rival American Tower and
Crown Castle International
) for quite some time as both have expanded their tower portfolio
through various acquisitions. Crown Castle has opted for the
inorganic growth route by acquiring T-Mobile USA's 7100 broadcast
towers while American Corp picked the inorganic route by
purchasing towers in India, Ghana and Brazil.
The acquisition has come at a very good time for SBA
Communications as tower companies are benefiting from the low
interest rate scenario in the U.S. which in turn is aiding them
to ramp up acquisitions in the country and abroad.
With a Brazilian population base of 190 million and growing
independent tower industry, the acquisition will provide a great
opportunity for the company to expand in an international market.
Additionally, the need to improve the network infrastructure
before the 2014 World Cup and 2016 Summer Olympics offers SBA
Communication the capital spending opportunity in a high growth
market like Brazil.
SBA Communication retains a Zacks #3 Rank, implying a
short-term Hold rating.
AMER TOWER CORP (AMT): Free Stock Analysis
CROWN CASTLE (CCI): Free Stock Analysis
SBA COMM CORP (SBAC): Free Stock Analysis
TELEF BRASIL SA (VIV): Free Stock Analysis
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