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September 09, 2013

American Towers Increases Its Holdings with Another Purchase

According to The Wireless Association (CTIA), there were 324.6 million wireless subscriber connections in the United States in 2012 generating $185 billion in revenue. The annual incremental capital investment in the industry was $30.1 billion for improving network capacity and introducing new technologies. One of the sectors the telecoms are investing in is purchasing or leasing cell towers. With more than 300,000 cell sites around the country, tower operators are consolidating and increasing their stake to grab a share of the $30 billion plus annual investment by telecoms.

The latest acquisition was made by American Tower Corp, owner of more than 56,000 communication sites around the world, of Global Tower Partners (GTP) for $4.8 billion. The purchase will make American Tower the largest operator in the U.S. by adding 15,700 towers to its current portfolio, and the company is still looking to make additional purchases. This purchase follows a deal the company made to acquire 4500 telecom towers in Brazil and Mexico from Latin America telecom service provider NII Holdings Inc.

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The deal is expected to close in the fourth quarter of 2013 and the GTP portfolio is expected to generate around $345 million in revenue in 2014, giving American Towers a substantial increase from its 2012 total of $2.88 billion.

The towers purchased from GTP are located in the top 100 markets and will increase American Tower's presence in the top 10 markets, including New York City, San Francisco, and Washington, D.C. According to the figures released by American Tower, 25 percent of GTP's towers are used by AT&T Mobility, followed by 17 percent from Sprint, 17 percent from T-Mobile US, and 12 percent by Verizon wireless.

The scramble for assets is an industry phenomenon at the moment because of the upgrades telecoms have to make in order to keep pace with the increased demand on their networks from consumers with data traffic. The penetration rate for 4G handset is estimated at only 10 percent at the moment, and experts believe the deployment cycle is in its early stages.

GTP has 5,400 domestic Towers, 800 domestic property interest that are under third-party communication sites, and 9,000 domestic sites with management rights primarily on rooftop assets. An additional 500 communication sites in Costa Rica are also part of the acquisition, but the assets in Mexico were not included as part of the deal.

"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,” said American Tower CEO Jim Taiclet. “With all four major domestic wireless carriers engaged in aggressive multi-year 4G LTE deployments, we believe our acquisition of GTP solidifies our path to achieving our strategic goals related to growing our AFFO (Adjusted Funds From Operations) over the next five years."

Edited by Alisen Downey

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