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SBA jumps into Brazilian tower market

SBA Communications jumped into the Brazilian tower market, announcing today the acquisition of 800 “freestanding” towers from an undisclosed mobile broadband provider for approximately $174 million. The company said the transaction will be paid for with cash on hand and borrowing under its revolving credit facility.

SBA management said it expects the towers to generate approximately $9 million to $11 million in cash flow through 2013.

“This acquisition provides us with a national footprint of high quality towers, including leasing arrangements with all of the major broadband wireless providers, and establishes us as a substantial independent tower owner in an attractive and high growth market,” explained Jeffrey Stoops, SBA’s president and CEO, in a statement.

SBA currently owns and operates approximately 16,500 tower sites across North and Central America, and manages approximately 5,000 sites on behalf of third-party landlords.

The deal also puts the tower company into more direct competition with rival American Tower, which has substantial operations in Brazil and a significant portion of Latin America. American Tower claims to own or manage approximately 50,000 sites around the world, having recently acquired thousands of towers in Latin American from a handful of operators.

Analysts noted that the deal prices the towers at $217,500 per site, and in line with current valuations.

“We view this price as fair and, more importantly, view the formal entry into Brazil as a very positive for the [SBA] story,” noted Wells Fargo Securities senior analyst Jennifer Fritzsche. “Recall, [SBA] now receives less than 4% of its revenue from outside the [United States] and has publically stated its desire to increase this percentage with greater focus on Latin America. Prior to this announcement, the only non-U.S. countries in which [SBA] operated were Canada, Costa Rica, El Salvador, Guatemala, Nicaragua and Panama.

Investors were a bit more cautious on the deal, with SBC’s stock (SBAC) trading down slightly early Wednesday morning at $70.47 per share. That is just off the 52-week high of $70.98 per share the company’s stock hit on Monday, with SBA’s stock up 65% for the year.

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