The gap between large and small independent tower companies became wider last week as a pair of transactions added nearly 2,500 towers to the portfolios of two of the larger players in the tower industry.
American Tower Corp. will add about 600 owned and operated towers from Unisite Inc. under an acquisition valued at about $205 million. Unisite owns about 400 collocatable towers and has an exclusive build-to-suit contract with Omnipoint Communications Corp. through 2012.
The merger is expected to close by the end of January. American Tower currently operates more than 4,000 towers.
Pinnacle Holdings Inc., which traditionally has grown its tower portfolio through the acquisition of small tower operations, agreed to buy Motorola Inc.’s North American antenna site business for $255 million in cash. The transaction will add about 1,850 wireless sites throughout the United States and Canada that are owned, managed or leased by Motorola.
Pinnacle will own or manage more than 3,000 antenna sites in North America once all pending transactions are completed. The Motorola transaction is expected to close during the third quarter.
In the wake of numerous transactions that have occurred during the last several months, a handful of companies have secured a dominant position in the tower industry. Through a series of carrier and tower company deals, American Tower, Crown Castle International Corp., SpectraSite Communications Inc. and Pinnacle have landed at the top of the tower industry. Together the four companies will own or manage about 15,000 tower sites in North America once all pending transactions are completed.
“Most of the companies are either public or they’ve been folded up into the public companies,” said Mark Ein, a principal at the Carlyle Group, a Washington D.C.-based private equity firm. “I think the market can support the companies that are out there, but I wouldn’t be surprised at some point to see some further consolidation among even the existing public companies.
“Ultimately the tower industry-especially when you look at the carrier deals-is a financing business,” said Ein. “You need access to capital, and you need scale. That’s what’s driving this.”
A few sizable independent tower companies remain. Chief among them are SBA Communications Corp., which owns about 600 towers and recently went public. LCC International Inc. also is becoming involved in the tower ownership arena. “There are still a lot of opportunities,” continued Ein. “There are still a lot of carrier tower deals out there, and there’s still international, which is a big opportunity. I think you’ll see more focus on that over time.”
In a smaller deal, Rock ‘N-D Corp. of Spicer, Minn., sold 11 towers in Minnesota, South Dakota and Wisconsin to American Tower.
