SBA Agrees to Buy Smaller Rival TowerCo
Tower company SBA announced its second big buy of the year Tuesday, unveiling an agreement to buy 3,252 towers, many in urban markets, from TowerCo for $1.45 billion in cash and stock. SBA will have a portfolio of 16,213 towers, the third largest among U.S. tower companies behind Crown Castle International (CCI) and American Tower (AMT). In February, SBA picked up another 2,300 towers in the U.S. and Central America when it bought Mobilitie LLC for $1.1 billion (CD Feb 22 p10).
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"We believe the U.S. market is the best market in the world operationally for our business,” said SBA CEO Jeffrey Stoops during a call with analysts. “This transaction fits squarely within that perspective.” The towers “are located in great locations,” with 67.3 percent located in the top 50 U.S. markets, he said. With U.S. carriers looking to build out their wireless broadband networks, Stoops said the towers have on average 1.8 tenants, with two more carriers possible. “This is definitely the deal we wanted to do at the price we wanted to pay,” Stoops said.
Most of the towers SBA is buying were built by Sprint Nextel, in many cases for iDEN, SBA said. With the acquisition, 27 percent of SBA’s business is with Sprint, up from 22 percent, compared to AT&T (20 percent), T-Mobile (15 percent) and Verizon Wireless (12 percent).
T-Mobile is seeking a buyer for its 7,000 domestic towers, and the latest deal likely means SBA won’t immediately be back in the market, said Benchmark analyst Clayton Moran. Stoops said he doesn’t expect his company to make another major U.S. acquisition in 2012. “SBA has grown from a distant third player in the tower industry to a major player,” Moran said. “SBA is here to stay. We no longer view a sale of SBA to AMT or CCI as inevitable. It appears SBA will remain independent.”
AT&T and Verizon “are underrepresented in these towers and given an expected second wave of 4G spending (initial wave is coverage -- driven by amendments, second wave is capacity -- which is new cell sites), this could be a great lease-up opportunity,” said Evercore Partners in a research report.