Vertical Bridge Purchases Highlight Tower M&A for 2014

December 17, 2014

By J. Sharpe Smith —

December 18, 2014 — No sooner had Vertical Bridge announced raising copious amounts of capital than it put those funds to work last week with two major tower purchases. It paid $400 million for a portfolio of tower assets owned by iHeartMedia, a radio broadcasting giant, and it bought 595 towers from U.S. Cellular for $159 million.

Unless a deal is struck by the end of the year (for Verizon Wireless’ 12,000 towers?), the iHeartMedia tower sale will stand out as the largest deal in 2014.

iHeartRadio will enter into a lease arrangement with Vertical Bridge with respect to the sold tower assets and continue its broadcast operations.

“In addition to being a premier broadcast portfolio, these sites already have many broadband telephony and data tenants and the capacity and potential to add many more,” said Alexander Gellman, CEO of Vertical Bridge Holdings. “With this latest transaction, Vertical Bridge now has 2,000 revenue-producing sites that are owned or under definitive agreement.”

The sale of U.S. Cellular’s towers has been expected for some time. The carrier placed its towers in Chicago and St. Louis and four Midwest markets on the block in October, after it sold the spectrum, network and subscribers that used those towers to Sprint in November 2012.

This November, we reported that Vertical Bridge had raised more than $1 billion in private equity. At that time, company CEO Marc Ganzi said the company had plans to close 22 acquisitions by the end of the year. Two down.

The tower aggregator is approaching a milestone of 2,500 towers, which according to Ganzi, may allow it to get debt pricing similar to a public company.

American Towers Purchases Tall Towers

Another significant domestic deal occurred in April when American Towers purchased 60 tall towers, primarily used for radio and TV, from Richland Towers for $450 million in total consideration plus the assumption of $197 million in secured debt.

International M&A Proves to Be Hot Market

While AGL Link almost exclusively covers the domestic tower market, it is hard not to notice the number of international mergers and acquisitions. Global tower buys dwarfed the domestic M&A activity.

The number of international deals announced in 2014 and the number of U.S. companies looking to purchase towers in other countries was one of the big stories of 2014, according to Clayton Funk, managing director, Media Venture Partners.

“There weren’t that many [domestic] deals announced in 2014. There was a lack of inventory and a lot of competition. It was a slow deal year for everybody. I think small deals are getting done, but there were not the big headline deals,” Funk said. “These tower companies want to deploy capital into accretive assets. The international markets, they will tell you, are 10 years by the United States in the development of wireless infrastructure, so they will have higher growth in their networks.”

Late in November, American Tower purchased 4,800 communications towers in Nigeria from Bharti Airtel International (Netherlands), which will be the anchor tenant. American Tower also purchased two portfolios from TIM Celular in Brazil, totaling 6,480 towers for $1.2 billion. In June, a Brazilian company with 4,640 towers was purchased by American Tower for $978 million.

In September, Phoenix Tower International acquired American Tower’s Panamanian business, which consists of 60 telecommunications sites. The sites represent a mix of towers in urban and suburban locations across the country occupied by all of the major Panamanian wireless carriers.

Digital Bridge has made two international investments so far, forming a joint venture with Macquarie Mexico to develop towers under the name Mexico Tower Partners and making a small investment in a Chinese tower company.