American Tower Corporation (AMT) – a leading independent operator of wireless communications towers in the world plans to acquire nearly 883 towers from Mexican telecom operator Axtel for $250 million.
Axel mainly offers telecom and Internet services to Mexican customers. However, the Mexican market is hugely dominated by America Movil (AMX). So Axel in recent times is going through a tough phase, hence the amount to be received from American Tower will help the former to pay back certain portion of its debt to its long list of creditors.
As of Sept 30, 2012, American Tower managed to acquire 50,699 communications towers, of this, 50,226 are for Wireless network and 473 for Broadcasting. Geographically, the company operates 21,668 wireless towers and 274 broadcast towers in the U.S. along with 29,031 wireless towers and 199 broadcast towers outside the U.S. So, the acquisition of these towers from Axtel will further expand its tower portfolio.
American Tower continues its strong performance driven by substantial demand for tower space to facilitate high-speed wireless data and on demand video services, along with super-fast 3G/4G technologies. Massive demand for wireless data and video throughout the world will boost American Tower’s long-term growth.
However, American Tower has a highly leveraged balance sheet. So, any further acquisition of towers may exert huge pressure on company’s balance sheet going forward.
Few days back, Crown Castle International Inc. (CCI) – the leading tower company in the U.S. reported strong fourth-quarter 2012 financial results with the bottom line beating the Zacks Consensus Estimate by a significant margin.
Another tower company, SBA Communications Corp. (SBAC) is expected to release its fourth quarter results on Feb 18 while American Tower is yet to release its results in the upcoming days.
Currently, American Tower has a Zacks Rank #3 (Hold).
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