American Tower Corp. (AMT) has decided to acquire over 4,800 mobile phone towers from India’s biggest telecommunications company – Bharti Airtel Ltd. The latter’s Netherlands-based unit has agreed to sell its telecommunications towers in Nigeria to American Tower for approximately $1.05 billion.
The sell-off will allow Bharti Airtel to focus on its core business and customers, and also enable it to reduce debt and cut capital expenditure in Nigeria. Notably, Nigeria is Bharti Airtel's biggest market in Africa. The company had entered the African market in 2010 but is yet to see profits owing to the high charges associated with operations that have eaten into its margins.
Interestingly, Bharti Airtel will be the anchor tenant on the portfolio under lease with an initial term of 10 years. Moreover, both the companies expect the deal to be sealed in the first half of 2015, subject to customary closing conditions and regulatory approval.
Apparently, for mobile operators in Africa, selling towers to specialist tower firms and leasing them back is becoming the most favored path to cut maintenance costs. Bharti Airtel’s latest deal comes after an agreement in September, to sell more than 3,500 towers in six African nations to Eaton Towers Ltd. Furthermore, in July, the company agreed to sell about 3,100 telecom towers in four African countries to Helios Towers Africa.
On the other hand, American Tower has been aggressively building its portfolio through acquisitions, including 4,600 towers acquired through the takeover of BR Towers, and 2,790 purchased from Latin American telecom service provider NII Holdings.
Moreover, only last week, the company announced that it has decided to acquire 6,480 telecom towers from TIM Celular S.A., a subsidiary of Telecom Italia S.p.A. (TI), for about $1.2 billion, in a bid to further expand its tower portfolio in Brazil. Altogether, at the end of third-quarter 2014, American Tower managed 69,519 communications towers.
Currently, American Tower has a Zacks Rank #3 (Hold).
Stocks that Warrant a Look
Corrections Corporation of America (CXW) and Ashford Hospitality Trust, Inc. (AHT) are some of the better-ranked stocks worth considering in the wireless tower industry over the near term. While Corrections Corporation of America carries a Zacks Rank #1 (Strong Buy), Ashford Hospitality Trust holds a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment