Leading international wireless tower operator American Tower Corporation AMT recently announced the acquisition of nearly 4,700 mobile phone towers from India’s largest telecommunications company – Bharti Airtel Ltd. In Nov 2014, Bharti Airtel’s Netherlands-based unit had signed a deal to sell its telecommunications towers in Nigeria to American Tower for about $1.05 billion.
American Tower has been aggressively expanding its portfolio through acquisitions and intends to buy over 100,000 towers by the end of 2015, through organic or inorganic means. Moreover, the company plans to exceed 2,500 domestic leases in 2015 in addition to spending $180 million on land acquisitions. Meanwhile, American Tower is confident that such strength in its tower portfolio will help it double its AFFO per share by 2017.
On Mar 30, 2015, American Tower had announced the closing of the deal pertaining to leasing rights of approximately 11,324 wireless towers and acquisition of 165 additional towers from Verizon Communications Inc. VZ. This deal provides American Tower with the exclusive right to operate the leased towers for an average term of around 28 years, with an option to buy them as well. The deal, valued at $5.06 billion, was announced in Feb 2015.
Also, reportedly, American Tower is mulling the acquisition of nearly 9,000 towers of Africa’s largest wireless carrier, MTN Group Ltd. The value of the deal may be anything between $1.5 billion and $2 billion. However, the proposed deal is not expected to close before the end of 2015.
Also, as per the latest market buzz, American Tower is considering the purchase of Saudi Arabian telecommunications company – Mobily's – cell tower assets. According to a report by The Wall Street Journal, Mobily possesses 10,000 towers in Saudi Arabia.
American Tower is rapidly expanding in the international markets, especially in the emerging Asian and Latin American markets. Although this geographic diversification will boost revenues, it may jeopardize the bottom line. Tower operations in the emerging markets are not as profitable as that in the mature U.S. market.
American Tower currently holds a Zacks Rank #2 (Buy).
Stocks that Warrant a Look
Other favorably-ranked stocks in the same space include MFA Financial, Inc. MFA and Walter Investment Management Corp. WAC. Both these stocks sport a Zacks Rank #1 (Strong Buy).
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