American Tower (NYSE: AMT) expanded its presence in Africa signing a deal to form a joint venture with MTN Group to acquire nearly 1,000 tower sites from MTN Group’s subsidiary in Uganda for $175 million. The towers will be controlled and managed by the newly formed ATC Uganda, in which American Tower will have a 51% controlling interest, which cost the company $89 million.
American Tower, which also works with MTN in Ghana, controls about 40,000 cell sites in the United States, Mexico, Latin America, Africa and India.
MTN Uganda will be the anchor tenants on the sites, with American Tower expecting the joint venture to build out roughly 280 new sites for the carrier over the next three years. The venture will also pursue the build-out of tower sites for other wireless operators in Uganda.
“Our strategy is to invest in select African markets with strong wireless growth potential and a positive investment climate,” said Jim Taiclet, American Tower’s chairman, president and CEO. “Our investment in Uganda is further evidence of our execution of this strategy.”
The transaction is expected to close in the first half of next year.
Macquarie Securities, which trades in American Tower, expressed some concern over the political risks of operating in Africa, but said it expects the deal to add to the tower company’s top-line revenues and improve earnings before interest, taxes, depreciation and amortization. The research firm said it forecasts the towers will bring in an average of $39,000 per year per tower.
“We continue to be wary of expensive deals but view the JV as a positive,” Macquarie Securities wrote in a research note on the deal. “This transaction is in line with our global perspective of increased tower-sharing and enhanced network efficiency facilitated by tower companies.”
American Tower posted robust third-quarter results, including $1.59 billion in EBITDA and a 22.8% year-over-year increase in revenues.
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