Welcome!

News Feed Item

Fitch: American Tower's Brazil Acquisition Has No Effect on Rating

Fitch Ratings believes American Tower Corporation's (AMT) plans to acquire the entire equity interests of BR Towers S.A. (BR Towers), an independent tower operator in Brazil, will not affect its 'BBB' Issuer Default Rating (IDR) and Stable Rating Outlook.

The total value of the transaction is approximately $978 million, including assumed debt and preferred stock. The acquisition of BR Towers will add, at closing, approximately 4,640 owned or exclusive rights to towers to AMT's Brazilian tower portfolio. As of March 31, 2014, AMT owned or operated 6,771 sites in Brazil. AMT anticipates upon closing that BR Towers will generate approximately $131 million in annual run rate revenues and $81 million in gross margin. The transaction is expected to close in the fourth quarter of 2014.

Although the company has not disclosed financing plans regarding the cash portion of the transaction, Fitch's assumptions incorporate that this portion of the transaction may be funded by debt. Since the end of the first quarter of 2014, AMT has paid down a substantial portion of its revolver borrowings through the issuance of mandatory convertible preferred stock, which raised approximately $583 million. Under Fitch's criteria, the mandatory convertible preferred stock is accorded full equity credit.

The ratings and Outlook reflect Fitch's expectations that AMT remains on the path to delever to levels established upon its October 2013 acquisition of MIP Tower Holdings LLC, the parent of Global Tower Partners (GTP), for $4.8 billion (including assumed debt). Owing to expectations for debt levels at the end of 2014, combined with recently increased expectations for EBITDA due to acquisitions in 2013 and 2014 and the continued strong performance of its legacy tower business, Fitch expects the company to remain on a path to reduce quarterly run rate net leverage to approximately 5.0x by the end of 2014 or early 2015.

Fitch believes the issuance of the mandatory convertible preferred stock signals the company's intent to get back into the high end of its 3x to 5x net leverage target by the end of 2014 or early 2015.

Tower revenues are predictable and contractual escalators combined with strong prospects for additional business provide for growth. Revenues are generated primarily from non-cancellable long-term lease contracts with national wireless operators, of which several are investment-grade. AMT, and the tower industry as a whole, are benefiting from wireless carriers expanding their fourth generation (4G) networks to supply rapidly growing demand for mobile broadband services. Similar trends are occurring internationally with wireless data services at an earlier stage of development than in the U.S.

U.S. wireless consolidation is not expected to have a material effect on AMT's operations. Revenue growth from continued lease activity (supported by wireless data growth) and contractual escalators in the U.S. market will more than offset the relatively modest losses that may occur over time due to consolidation.

In Fitch's opinion, AMT has strong liquidity position supported by its free cash flow (FCF), cash on hand and availability on its revolving credit facilities. Operationally, cash flow generation should remain strong. For the LTM ending March 31, 2014, FCF (cash provided by operating activities less capital spending and dividends) was approximately $432 million. As of March 31, 2014, cash on hand approximated $333 million and unused revolver capacity was approximated $2.8 billion. Pro forma for the April 2014 Richland Properties LLC and related acquisitions and the May 2014 mandatory convertible preferred offering, but not the current transaction, cash amounted to $318 million and there was more than $3.2 billion available on its revolving credit facilities.

AMT has three revolving credit facilities: a $1 billion, 364-day revolving credit facility due in September 2014, a $1 billion facility due in January 2017, and a $2 billion facility due in June 2018. The principal financial covenants limit total debt to adjusted EBITDA (as defined in the agreements) to no more than 6.5x until Sept. 30, 2014 and 6.0x thereafter and senior secured debt to adjusted EBITDA to 3.0x for the company and its subsidiaries. If debt ratings are below a specified level at the end of any fiscal quarter, the ratio of adjusted EBITDA expense must be no less than 2.5x for as long as the ratings are below the specified level. The next material maturities are in 2015 and total approximately $1.18 billion.

RATING SENSITIVITIES

At the current 'BBB' level, Fitch's sensitivities do not currently anticipate developments with a material likelihood of leading to a rating upgrade.

A negative rating action could occur if:

--Operating performance falls short of expectations of at least mid-single digit organic growth combined with margin pressure;

--The current transaction does not extend the time to reach the target leverage range from our initial expectations, as a result, subsequent, significant leveraging transaction that delays anticipating delevering could lead to a downgrade.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (May 28, 2014);

--'Rating Telecom Companies - Sector Credit Factors' (Aug. 9, 2012).

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
A critical component of any IoT project is what to do with all the data being generated. This data needs to be captured, processed, structured, and stored in a way to facilitate different kinds of queries. Traditional data warehouse and analytical systems are mature technologies that can be used to handle certain kinds of queries, but they are not always well suited to many problems, particularly when there is a need for real-time insights.
UpGuard has become a member of the Center for Internet Security (CIS), and will continue to help businesses expand visibility into their cyber risk by providing hardening benchmarks to all customers. By incorporating these benchmarks, UpGuard's CSTAR solution builds on its lead in providing the most complete assessment of both internal and external cyber risk. CIS benchmarks are a widely accepted set of hardening guidelines that have been publicly available for years. Numerous solutions exist t...
We're entering the post-smartphone era, where wearable gadgets from watches and fitness bands to glasses and health aids will power the next technological revolution. With mass adoption of wearable devices comes a new data ecosystem that must be protected. Wearables open new pathways that facilitate the tracking, sharing and storing of consumers’ personal health, location and daily activity data. Consumers have some idea of the data these devices capture, but most don’t realize how revealing and...
"Software-defined storage is a big problem in this industry because so many people have different definitions as they see fit to use it," stated Peter McCallum, VP of Datacenter Solutions at FalconStor Software, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Unless your company can spend a lot of money on new technology, re-engineering your environment and hiring a comprehensive cybersecurity team, you will most likely move to the cloud or seek external service partnerships. In his session at 18th Cloud Expo, Darren Guccione, CEO of Keeper Security, revealed what you need to know when it comes to encryption in the cloud.
Actian Corporation has announced the latest version of the Actian Vector in Hadoop (VectorH) database, generally available at the end of July. VectorH is based on the same query engine that powers Actian Vector, which recently doubled the TPC-H benchmark record for non-clustered systems at the 3000GB scale factor (see tpc.org/3323). The ability to easily ingest information from different data sources and rapidly develop queries to make better business decisions is becoming increasingly importan...
StackIQ has announced the release of Stacki 3.2. Stacki is an easy-to-use Linux server provisioning tool. Stacki 3.2 delivers new capabilities that simplify the automation and integration of site-specific requirements. StackIQ is the commercial entity behind this open source bare metal provisioning tool. Since the release of Stacki in June of 2015, the Stacki core team has been focused on making the Community Edition meet the needs of members of the community, adding features and value, while ...
Using new techniques of information modeling, indexing, and processing, new cloud-based systems can support cloud-based workloads previously not possible for high-throughput insurance, banking, and case-based applications. In his session at 18th Cloud Expo, John Newton, CTO, Founder and Chairman of Alfresco, described how to scale cloud-based content management repositories to store, manage, and retrieve billions of documents and related information with fast and linear scalability. He addres...
You think you know what’s in your data. But do you? Most organizations are now aware of the business intelligence represented by their data. Data science stands to take this to a level you never thought of – literally. The techniques of data science, when used with the capabilities of Big Data technologies, can make connections you had not yet imagined, helping you discover new insights and ask new questions of your data. In his session at @ThingsExpo, Sarbjit Sarkaria, data science team lead ...
Extracting business value from Internet of Things (IoT) data doesn’t happen overnight. There are several requirements that must be satisfied, including IoT device enablement, data analysis, real-time detection of complex events and automated orchestration of actions. Unfortunately, too many companies fall short in achieving their business goals by implementing incomplete solutions or not focusing on tangible use cases. In his general session at @ThingsExpo, Dave McCarthy, Director of Products...
Ixia (Nasdaq: XXIA) has announced that NoviFlow Inc.has deployed IxNetwork® to validate the company’s designs and accelerate the delivery of its proven, reliable products. Based in Montréal, NoviFlow Inc. supports network carriers, hyperscale data center operators, and enterprises seeking greater network control and flexibility, network scalability, and the capacity to handle extremely large numbers of flows, while maintaining maximum network performance. To meet these requirements, NoviFlow in...
"delaPlex is a software development company. We do team-based outsourcing development," explained Mark Rivers, COO and Co-founder of delaPlex Software, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
WebRTC is bringing significant change to the communications landscape that will bridge the worlds of web and telephony, making the Internet the new standard for communications. Cloud9 took the road less traveled and used WebRTC to create a downloadable enterprise-grade communications platform that is changing the communication dynamic in the financial sector. In his session at @ThingsExpo, Leo Papadopoulos, CTO of Cloud9, discussed the importance of WebRTC and how it enables companies to focus...
The competitive landscape of the global cloud computing market in the healthcare industry is crowded due to the presence of a large number of players. The large number of participants has led to the fragmented nature of the market. Some of the major players operating in the global cloud computing market in the healthcare industry are Cisco Systems Inc., Carestream Health Inc., Carecloud Corp., AGFA Healthcare, IBM Corp., Cleardata Networks, Merge Healthcare Inc., Microsoft Corp., Intel Corp., an...
Is your aging software platform suffering from technical debt while the market changes and demands new solutions at a faster clip? It’s a bold move, but you might consider walking away from your core platform and starting fresh. ReadyTalk did exactly that. In his General Session at 19th Cloud Expo, Michael Chambliss, Head of Engineering at ReadyTalk, will discuss why and how ReadyTalk diverted from healthy revenue and over a decade of audio conferencing product development to start an innovati...