American Tower to buy smaller rival GTP for $4.8B

American Tower will acquire privately held rival Global Tower Partners in a deal valued at $4.8 billion, capping a month of speculation about whether GTP, the largest privately held operator of U.S. cell towers, would be sold.

GTP owns and operates approximately 5,400 domestic towers, 800 domestic property interests under third-party communications sites, and has management rights to over 9,000 domestic sites, which are primarily rooftop assets. GTP also owns 500 communications sites in Costa Rica. American Tower did not acquire GTP's assets in Mexico as part of the deal.

On a conference call with investors, American Tower executives said the GTP portfolio is highly complementary to the company's existing tower portfolio. The deal will increase the size of American Tower's U.S. portfolio 25 percent, the company said, which the company said will be especially advantageous as U.S. carriers continue their LTE deployments. American Tower currently owns and operates over 56,000 communications sites in the United States, Brazil, Chile, Colombia, Germany, Ghana, India, Mexico, Peru, South Africa and Uganda.

American Tower said around 65 percent of GTP's sites are in the top 100 markets, and that the deal "materially strengthens" the company's presence in the top 10 markets, including New York City, San Francisco and Washington, D.C. The deal will generate about $345 million in revenue and $270 million in gross profit next year, American Tower said.

According to American Tower, AT&T Mobility (NYSE:T) accounts for 25 percent of GTP's tower portfolio, while 17 percent is from Sprint (NYSE:S), 17 percent is from T-Mobile US (NYSE:TMUS) and 12 percent is from Verizon Wireless (NYSE:VZ). Those figures roughly align with American Tower's existing leases. American Tower said it expects to add more LTE sites and more antennas on existing sites as carriers' LTE data traffic grows.

The purchase will be made up of $3.3 billion in cash and the assumption of $1.5 billion GTP debt. American Tower said the deal is expected to close in the fourth quarter of 2013.

"GTP has constructed and acquired an outstanding U.S. portfolio of tower, rooftop and land assets, which is highly complementary to that of American Tower," American Tower CEO Jim Taiclet said in a statement, adding, "With all four major domestic wireless carriers engaged in aggressive multi-year 4G LTE deployments, we believe our acquisition of GTP solidifies our path to achieving our strategic goals related to growing our AFFO (Adjusted Funds From Operations) over the next five years."

Reports last month from Reuters and the Wall Street Journal indicated that Macquarie Infrastructure Partners, a unit of the Australian investment bank Macquarie Group, was shopping GTP. 

American Tower CFO Tom Bartlett hinted that the company was interested in M&A in the tower market at an investor conference last month after the reports came out. Bartlett noted that Verizon and AT&T each own more than 10,000 towers and that smaller carriers could look to monetize their towers as well (U.S. Cellular (NYSE:USM) has said it is considering selling its towers in markets it has divested, but not in its core markets).

American Tower also recently agreed to buy around 2,790 towers in Brazil and 1,666 towers in Mexico from NII Holdings for a total of $811 million.

For more:
- see this release
- see this presentation (PDF)
- see this WSJ article (sub. req.)
- see this Bloomberg article

Related Articles:
American Tower CFO sees potential for U.S. tower M&A
Report: Global Tower Partners could be sold for $4B
Analyst: Sprint's nationwide 2.5 GHz LTE network could be boon for tower companies
AT&T leaves door open to selling non-core assets amid tower sale speculation
Crown Castle sees $2.4B T-Mobile tower purchase as long-term capacity play
T-Mobile sells towers to Crown Castle for $2.4B
SBA Communications buys TowerCo assets for $1.45B

Article updated with additional information from American Tower.