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American Tower (AMT) Grows Assets With InSite Wireless Buyout

American Tower Corporation AMT announced the closure of its InSite Wireless Group, LLC. acquisition for a total consideration of $3.5 billion including debt. The deal was publicized last month and the buyout is projected to be immediately accretive.

Precisely, the acquired entity that owned, operated and managed around 3,000 communications sites, mainly in the United States and Canada, is likely to generate roughly $150 million in property revenues and around $115 million in gross margin in 2021, per management.

The transaction, which was funded by a combination of cash on hand and revolver borrowings, not only marked American Tower’s entry in Canada but also fortified its U.S. business by adding a high-quality, complementary, macro-tower focused portfolio.

Particularly, according to the company’s earlier press release, InSite’s portfolio included more than 1,400 owned towers in the United States and more than 200 owned towers in Canada. Also, the portfolio comprised roughly 70 distributed antenna system (DAS) networks in the United States. This apart, InSite controlled more than 600 land parcels under communications sites and around 400 rooftop sites.

“As 5G densification initiatives in the U.S. accelerate and network deployments in international markets continue, we believe we are well positioned to generate attractive, sustainable long-term growth, including on these new sites, while playing a key role in enhancing mobile broadband connectivity,” stated CEO Tom Bartlett.

With remarkable growth in mobile-data usage, wireless carriers are increasingly investing in 5G upgrades and 4G network densification. This is propelling demand for tower space, supporting American Tower’s leasing activity. The company has a resilient business model, providing a safer harbor amid the current global uncertainty. Also, decent liquidity and prudent capital-allocation strategy bode well.

In fact, the company is ramping up its investments in international business and strengthening the global footprint through acquisitions. During the third quarter of 2020, American Tower spent around $101 million to acquire 305 communication sites, primarily in international markets. Such a diversified asset base positions American Tower to leverage secular trends in mobile data usage across the globe.

Shares of this currently Zacks Rank #3 (Hold) company have depreciated 5.4% so far in the year, narrower than its industry’s decline of 6.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Stocks to Consider

The Zacks Consensus Estimate for CubeSmart’s CUBE 2020 FFO per share has moved up marginally to $1.66 over the past week. The company currently carries a Zacks Rank of 2 (Buy).

Extra Space Storage Inc.’s EXR FFO per share estimates for the current year have been revised 2% upward to $5.10 in the past month. The company carries a Zacks Rank of 2, currently.

The Zacks Consensus Estimate for City Office REIT, Inc.’s CIO ongoing-year FFO per share has moved 5.3% north to $1.20 in two months’ time. The company is Zacks #2 Ranked at present.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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American Tower Corporation (AMT): Free Stock Analysis Report
 
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City Office REIT, Inc. (CIO): Free Stock Analysis Report
 
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