US-based telco NII Holdings has agreed to sell 4,456 telecoms towers in Brazil and Mexico to American Tower as it continues to execute its new strategy announced at the start of February.
Nextel Brazil will sell 2,790 towers for US$413m and Nextel…
US-based telco NII Holdings has agreed to sell 4,456 telecoms towers in Brazil and Mexico to American Tower as it continues to execute its new strategy announced at the start of February.
Nextel Brazil will sell 2,790 towers for US$413m and Nextel Mexico 1,666 towers for US$398m. NII said both subsidiaries have agreed to leaseback the towers from American Tower for at least 12 years, and will have the option to extend the contracts.
The purchase prices will be made in reais and pesos respectively, and so the dollar amounts are subject to change before the closing date, expected in Q4 for the majority of the towers.
In a separate statement American Tower said it expects the towers to generate US$149m in annual run rate revenues and US$55m in annual gross margin. It added that once the acquisition closes, it should be immediately accretive to adjusted funds from operations.
The US tower giant’s newly acquired portfolio consists of sites located in and around well populated areas and along important highways. It said that the majority of the towers were underutilised with Nextel as the sole user, meaning there is potential to lease out space to other tenants.
In a statement Steve Shindler, CEO of NII Holdings, commented: “We are excited to reach agreement with American Tower and achieve our goal of unlocking the value of a significant portion of our tower assets while raising additional liquidity.
“We will use the proceeds from the transactions to support the continuing investments in our next generation network deployments in our largest markets, Brazil and Mexico, which we believe offer the best opportunity for value creation and long-term growth and profitability.”
As part of its new strategy announced earlier this year, NII plans to exit three of the five markets it operates in. It has already agreed to sell Nextel Peru to Entel Chile while Nextel Argentina and Nextel Chile are also on the block.
The company’s CFO Juan Figuereo said that he was happy with the valuations NII received for the tower assets and added that the Brazilian and Mexican units now have significant liquidity to support their investments.
In a note Wells Fargo analyst Jennifer Fritzsche said the disposal was a milestone for NII.
“This is a big day and a big event for NII,” she said. “Not only does this represent an important mark in establishing credibility for the company and this management team (even though the announcement was 10 days later than hoped), but it offers NII additional flexibility in terms of is liquidity position (we believe it is this concern that is one of the main bear theses on this stock).”
In the statement the CEO of American Tower Jim Taiclet said: “Through this acquisition, American Tower will gain significant incremental scale in our Mexican and Brazilian operations, and we anticipate leveraging the strong demand backdrop in both markets to drive meaningful revenue and cash flow growth for many years to come.”
Evercore was American Tower’s financial adviser and Kilpatrick Townsend & Stockton was its legal adviser. Deutsche Bank acted as financial adviser to NII and Jones Day and Lape Mansfield Nakasian & Gibson were its legal advisers.
