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American Tower Expands in Africa, Closes Eaton Towers Buyout

Zacks Equity Research

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%.


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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.

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