Telecom Lead America: American Tower Corporation (AMT) has signed an agreement with NII Holdings, (NIHD) to acquire up to 2,790 towers in Brazil and 1,666 towers in Mexico.
The two transactions are worth approximately $413 million and $398 million, respectively, the company said.
The towers will collectively generate approximately $149 million in annual run rate revenues and approximately $55 million in annual Gross Margin for American Tower. Both Nextel Brazil and Nextel Mexico have agreed to leaseback the towers from American Tower for a minimum 12-year initial lease term with additional renewal options thereafter.
This acquisition will help American Tower gain significant incremental scale to their Mexican and Brazilian operations, Jim Taiclet, CEO of American Tower, said. The company is anticipating strong demand backdrop in both markets to drive meaningful revenue and cash flow growth for many years to come.
NII International Telecom S.C.A, a subsidiary of NII based in Luxembourg, has agreed to provide certain credit support with respect to the obligations of Nextel Brazil.
American Tower expects to use cash on hand and borrowings under its existing revolving credit facilities to fund the acquisition.
The majority of the portfolio consists of towers located in and around major population areas and along major highways. On average, the towers have a tenancy ratio of just over one tenant per tower, with Nextel Brazil or Nextel Mexico as the primary tenant, providing significant opportunities for future site leasing growth.
American Tower expects to invest approximately $50 million in start-up capital expenditures associated with the two portfolios.
Recently American Tower said it is buying Tower Vision, a telecom tower company, for Rs 3,200 crore.
Tower Vision’s investors include Fort Group and Mivatch Shamir from Israel, UK’s RP Capital, and Quadrangle Partners, a private equity fund.
This will be the first M&A transaction in nearly three years in the telecom towers business.
