American Tower has agreed to acquire InSite Wireless Group, which owns, operates and manages approximately 3,000 communications sites, primarily in the U.S. and Canada.
The portfolio includes more than 1,400 owned towers in the U.S., over 200 in Canada and approximately 70 distributed antenna system (DAS) networks in the U.S.
InSite Wireless Group controls more than 600 land parcels under communications sites as well as approximately 400 rooftop sites. American Tower said that the total value of the transaction is approximately $3.5 billion, subject to customary closing adjustments.
Tom Bartlett, American Tower’s CEO, said: “This transaction augments our foundational U.S. business through the addition of a well-run, high-quality, complementary, macro-tower focused portfolio, while also marking our entry into Canada. We believe that these assets are positioned to enhance our organic growth and cash flow trajectory in the future as 5G deployments accelerate and densification initiatives progress.”
“Nearly two decades ago, we set a goal to build a leader in wireless communications by providing critical infrastructure to wireless carriers and other customers,” said David Weisman, co-founder and CEO of InSite. “We believe the acquisition of InSite by American Tower will result in even greater benefits for our customers in the future.”
American Tower expects the assets to generate approximately $150 million in property revenue and approximately $115 million in gross margin in their first full year in its portfolio.
The transaction is expected to close by the end of 2020, subject to customary closing conditions.
American Tower recently reported revenues of $2.01 billion in the third quarter of the year, up 3% compared to the same period last year. The company also recorded a net profit of $464 million in the period, an increase of 6.9% in Q3 2019.
During the third quarter of 2020, American Tower spent approximately $101 million to acquire 305 communications sites, primarily in international markets, including 195 communications sites in France as part of its previously announced agreement with Orange.
In a recent conference call with investors, Bartlett highlighted the business opportunities the firm sees in the 5G space. “Our core global macro tower business has been and will continue to be the foundation of our success, and the primary driver of future cash flows. In fact, our conviction around macro towers being the primary infrastructure for 5G deployments has only increased. As more and more mid-band spectrum is deployed to support 5G, and this network usage continues to grow at upwards of 30% per year and even faster internationally, we believe that significant additional macro tower oriented network densification is inevitable.”
“We believe our consolidated customer base is spending upwards of $60 billion per year on building out their network. Going forward, there will be the need for even more equipment on more of our sites as carriers deploy massive MIMO and utilize DSS O-RAN, and then any other tools they have at their disposal to optimize their network performance and efficiency. In addition, as 5G and the surrounding ecosystem develops in the U.S. and this network technology continues to advance throughout our international footprint, we expect to have compelling opportunities to extend our core value proposition into new, related, accretive product and service offerings to expand our total addressable market,” the executive added.