American Tower Corp said it would buy the parent of telecom tower operator Global Tower Partners for $3.3 billion as it seeks a bigger share of the billions of dollars that U.S. telecom carriers are spending to upgrade their networks.
American Tower shares rose about 4.5 percent in late morning trade on the New York Stock Exchange as investors cheered the acquisition, the latest in a string of deals in the sector.
The company will also assume $1.5 billion in debt as part of the deal, which will increase its tower count by a quarter and cement its position as the largest U.S. operator.
The company is scouting for more deals, Chief Executive Jim Taiclet said on a conference call, adding that the Global Tower purchase was not the "end of the road."
American Tower and its U.S. peers Crown Castle International Corp and SBA Corp are in a scramble to beef up assets across the world as explosive growth in data traffic pushes carriers to spend heavily on upgrading their networks.
Major U.S. telecom companies such as AT&T Inc and Verizon Communications Inc have increased their spending budgets for the current year as they roll out 4G LTE, a high-speed wireless technology.
"With 4G handset penetration still under 10 percent, we continue to believe that we are in the early stages of the 4G deployment cycle," Taiclet said.
The deal comes a month after American Tower said it would acquire about 4,500 telecom towers in Brazil and Mexico from Latin American telecom service provider NII Holdings Inc for $811 million.
JP Morgan analyst Philip Cusick said American Tower might still be interested in buying AT&T Inc towers, which are up for sale. The analyst, however, expects smaller rival Crown Castle to clinch that deal.
MACQUARIE SELLS OUT
Global Tower, formed by its CEO Marc Ganzi in 2003 by acquiring 187 towers from American Tower, is controlled by a consortium of funds managed by the Macquarie Group.
It was acquired by the group for $1.42 billion and structured as a REIT in 2007. Its parent company is MIP Tower Holdings LLC, a privately held real estate investment trust.
The deal will add about 15,700 towers in the United States and Costa Rica to American Tower's existing portfolio of 56,000 towers.
The deal is expected to immediately add to the company's adjusted funds from operations and is expected to close in the fourth quarter of 2013.
The portfolio is expected to generate about $345 million in revenue in 2014. American Tower had revenue of $2.88 billion in 2012.
American Tower was advised by Goldman, Sachs & Co and EA Markets Securities LLC, while Global Tower's adviser was Deutsche Bank Securities Inc.
American Tower shares were up at $71.84 on Friday on the New York Stock Exchange.
(Reporting by Chandni Doulatramani in Bangalore; Editing by Saumyadeb Chakrabarty)