American Tower has purchased 31,000 cell towers agreements in Germany, Spain, Brazil, Chile, Peru and Argentina as part of the acquisition of Telxius Towers from Telefónica for $9.4 billion. In addition, American Tower expects to spend $500 million to construct a committed pipeline of approximately 3,300 new sites in Germany and Brazil through 2025.
“This transaction is transformational for our European business and will establish American Tower as one of the largest independent communications infrastructure providers in Europe,” Tom Bartlett, American Tower CEO, said in a prepared release. “ It is also complementary for our Latin American portfolio and positions us to drive strong long-term organic growth across both regions while augmenting our new build programs and enhancing our relationships with key tenants.”
American Tower expects the assets to generate approximately $775 million in property revenue, $410 million in gross margin and $390 million in adjusted EBITDA. This implies an enterprise value/adjusted EBITDA multiple of less than 26x.
American Tower intends to finance the transaction through committed financing from Bank of America. B of A Securities is serving as lead financial advisor to American Tower, who is also being advised by CDX Advisors and EA Markets.
New Street Research calculated the purchase multiple to be 25x EBITDA, which it said is high relative to historic European tower deals.
“The growth on the portfolio is also much higher, stemming from an expected new entrant in Germany (Drillisch), low churn from a seven-year agreement with Telefonica, and a build-to-suit contract for 3.3 thousand sites,” Spencer Kurn, New Street Research analyst, wrote. “American Tower now has a much larger presence in Europe, which should provide the scale they need to strike more attractive leasing agreements with tenants, similar to the way they have managed the US which has led to outperformance.”