SBA to acquire 2,300 towers, select DAS assets from Mobilitie for $1.1B

small cell outdoor

SBA Communications (SBAC) said it plans to pay nearly $1.1 billion to acquire certain affiliates of Mobilitie, including more than 2,300 tower sites in the United States and Central America and certain indoor and outdoor distributed antenna systems in Chicago, Las Vegas, New York City and Auburn, Ala.

SBA said the payment would include $850 million in cash and 5.25 million class A shares, which will be subject to certain restrictions. The cash payment is to be made from cash on hand, existing credit facilities and $500 million in financing commitments from Barclays Back and J.P. Morgan. SBA said it expects the deal to close during the second quarter.

“We believe these assets are high quality, relatively new, well located and have ample capacity for additional tenants,” said Jeffrey Stoops, SBA’s president and CEO, in a statement. “The towers will be very complementary to and readily integrated into our existing portfolio, as they are all located in areas where we are currently conducting business. We are particularly excited about the prospects for these towers to serve the future cell-splitting needs of US wireless carriers, which needs we anticipate will flow from the continued growth in consumer demand for wireless data services. We expect this transaction will be immediately accretive to equity free cash flow per share.”

Wells Fargo Securities noted that the deal values each tower at approximately $475,000, and that tower companies have become increasingly interested in DAS assets.

“We note there has been a strong rise in importance to DAS sites of late with the tower sector,” Wells Fargo Securities Senior Analyst Jennifer Fritzsche noted in a research report. “We continue to believe these assets will be the focus of acquisitions for tower companies.”

In return, SBA said the assets will product approximately $75 million in tower cash flow in 2012, including $16 million from the DAS assets. SBA said it in turn is planning to sell off the DAS assets to ExteNet Systems, though that deal will not have any impact on the original transaction. SBA and ExteNet have a history of working together on DAS projects as well as a financial connection.

Mobilitie last year signed a deal with Sprint Nextel to convert cell sites as part of the carrier’s Network Vision initiative. SBA rival Crown Castle is a big player in Sprint Nextel’s network upgrade plan.

Mobilitie has also recently increased its focus in Latin America, with plans to build up to 400 towers in Guatemala and Nicaragua.

Macquarie Equities Research said the deal could put pressure on SBA’s stock price citing what it called “a steep multiple at 14.5x forward tower cash flow for the Mobilitie assets,” though in early Tuesday trading SBA’s stock was up nearly 2%.

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