American Tower Corp. (AMT) has agreed to buy real-estate
investment trust MIP Tower Holdings LLC for about $3.3 billion in
cash, a deal that comes as cell carriers race to update their
networks to the latest 4G LTE technology and need more cell
sites.
MIP Tower is the parent company of Global Tower Partners, the
largest privately held operator of U.S. cell towers with about
5,400 towers, 800 property interests under third-party
communications sites, and management rights to more than 9,000
sites in the U.S. Global Tower also owns 500 communications sites
in Costa Rica.
The recent data boom has brought strong revenue to tower
companies as carriers expand coverage and need more cell sites.
Sprint Corp. (S) and T-Mobile US Inc. (TMUS), the nation's third
and fourth largest carriers, are working to upgrade their networks,
while Verizon Wireless says it has completed the bulk of its
network upgrade and AT&T Mobility is close behind.
The Wall Street Journal reported last month that Global Tower,
offering one of the bigger collections of towers to be put up for
sales in recent years, was on the block.
Though Global Tower and its three larger, publicly traded rivals
have made numerous deals in recent years to consolidate ownership
of U.S. cell towers, it remains a somewhat fragmented sector.
Ahead of the deal, the top-three companies--American Tower,
Crown Castle International Corp. (CCI) and SBA Communications Corp.
(SBAC)--owned roughly half of all U.S. wireless sites, according to
RBC Capital Markets. More than 7,000 other operators own the
rest.
American Tower expects the Global Tower portfolio to generate
about $345 million in revenue next year, and the deal is expected
to boost adjusted funds from operations immediately after it
closes. Including the assumption of debt, it is worth $4.8 billion.
The deal is expected to close in the fourth quarter.
"GTP has constructed and acquired an outstanding U.S. portfolio
of tower, rooftop and land assets, which is highly complementary to
that of American Tower," Chief Executive Jim Taiclet said.
Global Tower, based in Boca Raton, Fla., was founded in 2002 by
Chief Executive Marc Ganzi. Macquarie Infrastructure Partners LP, a
unit of the Australian investment bank Macquarie Group Ltd.,
acquired Global Tower in 2007, paying Blackstone Group LP about
$1.43 billion, including company debt. At the time, the business
included about 2,500 towers and 4,600 rooftop sites in the U.S. and
Puerto Rico.
Under Macquarie, Global Tower gobbled up smaller operations,
ranging from 235 towers it bought from AT&T Inc. (T) in 2009 to
a 2010 deal for 32 towers in west-central Alabama. In 2011 it made
a deal to expand into Costa Rica.
For its part, American Tower had been focusing on smaller deals
of late, including an agreement last month to buy $811 million
worth of towers from Latin American wireless provider NII Holdings
Inc. (NIHD), and the company isn't done looking to add to its
portfolio.
"We're going to continue to seek solid acquisition
opportunities," Mr. Taiclet said on a conference call with
analysts.
American Tower, with celltower sites in the U.S. and abroad, has
steadily posted double-digit revenue growth amid strong demand for
broadband-data services in the U.S. The company converted to a
real-estate investment trust in late 2011. Celltower companies
benefit as volume increases, prompting wireless carriers to spend
more to upgrade equipment.
In July, American Tower reported that its second-quarter
earnings more than doubled amid double-digit revenue growth and as
a key measure of performance for REITs improved sharply.
Shares were up 4.7% to $71.93 in recent trading. The stock has
dropped 6.9% so far this year.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com and
Michael Calia at michael.calia@dowjones.com
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