NII Holdings announced a deal to sell approximately 2,790 towers in Brazil and 1,666 towers in Mexico to American Tower for approximately $811 million. The deal calls for NII, which operates under the Nextel brand across it Latin American properties, to lease back the towers for a minimum of 12 years and have the option to extend that lease.
NII noted that it expects the deal to close later this year, with the initial closing set to include around 4,000 towers, with subsequent closings enveloping the remaining assets.
The move is expected to help NII fund its current 3G technology rollouts across Mexico and Brazil that will see the carrier supplant its legacy iDEN operations with W-CDMA-based services.
“We are excited to reach agreement with American Tower and achieve our goal of unlocking the value of a significant portion of our tower assets while raising additional liquidity,” said NII CEO Steve Shindler in a statement. “We will use the proceeds from the transactions to support the continuing investments in our next generation network deployments in our largest markets, Brazil and Mexico, which we believe offer the best opportunity for value creation and long-term growth and profitability.”
NII recently sold off its operations in Peru to Empresa Nacional de Telecomunicaciones (ENTel) for $400 million. The carrier is also looking at options for its operations in Chile and Argentina.
Analysts have been expecting NII to sell off its tower assets as the carrier looked to bolster its bottom line to fund its 3G rollout and tighten its operational focus.
“This is a big day and a big event for [NII],” noted Wells Fargo Securities senior analyst Jennifer Fritzsche in a research note. “Not only does this represent an important mark in establishing credibility for the company and this management team (even though the announcement was 10 days later than hoped), but it offers [NII] additional flexibility in terms of its liquidity position (we believe it is this concern that is one of the main bear theses on this stock).”
NII posted mixed second quarter financial results, impacted by its move out of Peru. The company’s consolidated operating revenues were $1.26 billion, down 11% from the second quarter of 2012. The consolidated adjusted operating income before depreciation and amortization dropped 55% to $101 million.
NII’s stock (NIHD) was trading up slightly Friday morning on the news.
The move also continues American Tower’s aggressive tower acquisition model across Latin America. The company in late 2011 purchased 2,500 towers from Telefónica’s Mexican subsidiary for about $500 million, which followed the acquisition of 2,126 towers from Millicom International Cellular S.A. subsidiary Colombia Móvil for $182 million in cash. In 2012, American Tower purchased 558 towers from Telefónica’s Movistar Chile for $96 million.
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