Cell phone tower operator
SBA Communication Corp.
) plans to buy 3252 tower sites from TowerCo in the U.S. and Puetro
Rico for about $1.45 billion. We believe that the growing demand of
data services from smartphone users is the primary reason for the
SBA Communication, the third largest tower operator in the U.S.,
will pay $1.2 billion in cash and 4.6 million SBA class A shares to
TowerCo and will use a combination of its existing cash balance,
credit facility and $900 million in debt from
JPMorgan Chase & Co.
) to close the deal. The company expects to close by the fourth
quarter of this year and will boost its tower count to more than
A telecom tower can accommodate antennas for multiple carriers
which reduce the network cost of operators and at the same time
produce more profit for tower companies. Once completed, the deal
is expected to generate $155 to $160 million in leasing revenue and
$93 to $95 million in tower cash flow for SBAC. Furthermore,
TowerCo possess high quality assets which have ample scope for
tenant addition and are well placed to help SBA Communication
integrate its assets more quickly.
Increased adaptation of smartphones and tablets has led to
unprecedented growth in mobile data traffic. All major tower
operators are going through acquisition sprees to ramp up their
The largest independent tower operator,
American Tower Corporation
), has spent $500 million to buy 2500 towers from
) Mexican arm, whereas
Crown Castle International
) has snapped up NextG Networks Inc. for $1 billion.
This is the second acquisition for SBA Communication in the last
four months, after it bought 2300 antenna towers from Mobilitie LLC
in February for $1.1 billion.
A large portion of TowerCo's revenue comes from
), which has recently announced it is dumping its Integrated
Digital Enhance Network (iDEN) technology, as part of a network
upgrade policy to offer next-generation LTE services.
It is believed that SBA Communication is acquiring TowerCo to
bring the third largest U.S. carrier under its belt. However,
following the acquisition, Moody's credit rating has changed SBA
Communication's debt rating to negative from stable as they believe
that the company's liquidity position could be stressed.
AMER TOWER CORP (AMT): Free Stock Analysis
CROWN CASTLE (CCI): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis
SPRINT NEXTEL (S): Free Stock Analysis Report
SBA COMM CORP (SBAC): Free Stock Analysis
TELEFONICA S.A. (TEF): Free Stock Analysis
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