U.S. markets closed
  • S&P 500

    -15.88 (-0.39%)
  • Dow 30

    +26.76 (+0.08%)
  • Nasdaq

    -142.21 (-1.20%)
  • Russell 2000

    -9.24 (-0.52%)
  • Crude Oil

    +3.44 (+3.11%)
  • Gold

    +15.20 (+0.84%)
  • Silver

    +0.64 (+3.07%)

    +0.0021 (+0.20%)
  • 10-Yr Bond

    -0.0580 (-1.98%)

    +0.0060 (+0.49%)

    -0.0740 (-0.06%)

    -1,138.50 (-3.68%)
  • CMC Crypto 200

    +424.36 (+174.87%)
  • FTSE 100

    +46.65 (+0.63%)
  • Nikkei 225

    +119.40 (+0.45%)

American Tower Expands in Africa, Closes Eaton Towers Buyout

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

American Tower Corporation AMT is making efforts to expand its footprint in Africa. The company recently closed the previously-announced buyout of Eaton Towers Holdings Limited. This has enabled the company to add around 5,700 communications sites in its African portfolio.

Total purchase consideration, subject to post-closing adjustments, approximated $1.85 billion. This included the assumption of Eaton Towers’ existing debt.

The transaction will enhance American Tower’s scale in five African markets, including Ghana, Kenya and Uganda. When the transaction was announced in May 2019, the company had anticipated the assets to generate nearly $260 million in property revenues and another $165 million in gross margin, in the first full year of addition in American Tower’s portfolio.

American Tower has also announced an agreement with its joint venture (JV) partner MTN Group Limited to acquire the latter’s minority stakes in each of their JVs in Ghana and Uganda, for an aggregate consideration of $523 million. Subject to regulatory approvals, the deal is anticipated to close in first-quarter 2020. The transaction will also result in a one-time impact of roughly $65 million in 2020 from the payment of the previously-deferred cash interest associated to JV debt.

Notably, most of the company’s African markets are in relatively earlier stages of technology evolution, network capacity and mobile-data usage. In fact, declining smartphone prices and higher 4G penetration are fueling mobile-data usage. This, is turn, is spurring demand for towers in the region, both for the existing sites as well as for new builds.

Further, given the limited fixed-line infrastructure in Africa, and wireless broadband been recognized by African governments as key aspects of economic modernization plan, there is significant opportunity for the communications real estate over an extended time horizon.

Amid these underlying opportunities, the transactions to expand in the African markets will enable the company to take advantage of growth opportunities in the region.

Moreover, rapid growth in mobile data usage is not just a U.S. phenomenon, but a global one. Hence, American Tower is ramping-up its investments in international business. This has supported the company’s bottom-line growth. In fact, total international property revenues for third-quarter 2019 amounted to $826 million, up 4% year over year.

However, the company has a substantially leveraged balance sheet. Such high-debt levels might impede cash-flow growth, which is needed to meet future debt obligations. In fact, the payment of previously-deferred cash interest related to the JV transaction will further hinder its cash flow.

In the past six months, shares of this Zacks Rank #3 (Hold) company have gained 8.7%, outperforming the industry’s rally of 2.4%.

Stocks to Consider

EastGroup Properties, Inc. EGP currently carries a Zacks Rank of 2 (Buy). The company’s funds from operations (FFO) per share estimates for 2019 have been revised marginally upward to $4.96 in two months’ time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Duke Realty's DRE Zacks Consensus Estimate for 2019 FFO per share has moved marginally north to $1.44 in the past two months. It carries a Zacks Rank of 2, at present.

PS Business Parks, Inc. PSB Zacks Consensus Estimate for 2019 FFO per share has remained unchanged at $6.74 over the past month. Currently, it carries a Zacks Rank of 2.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>

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
American Tower Corporation (REIT) (AMT) : Free Stock Analysis Report
PS Business Parks, Inc. (PSB) : Free Stock Analysis Report
Duke Realty Corporation (DRE) : Free Stock Analysis Report
EastGroup Properties, Inc. (EGP) : Free Stock Analysis Report
To read this article on Zacks.com click here.