In a classic sale-and-leaseback arrangement, NII Holdings has agreed the $811 million sale of nearly 4,500 towers in Latin America to infrastructure company American Tower.
The company, which operates mobile businesses under the Nextel brand in Latin America, is to sell 2,790 towers in Brazil, for the sum of $413 million, and another 1,666 in Mexico, for $398 million.
NII Holdings (Reston, VA, USA) will then lease the towers from their new owner for a period of at least 12 years.
Such deals are becoming more common in the telecoms market as cash-strapped operators look to relieve balance-sheet pressure and raise funding for next-generation network deployments, and NII Holdings appears motivated by similar concerns.
“We are excited to reach agreement with American Tower [Boston, MA, USA] and achieve our goal of unlocking the value of a significant portion of our tower assets while raising additional liquidity,” said Steve Shindler, the chief executive of NII Holdings.
“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.”
Juan Figuereo, NII Holdings’ chief financial officer, says proceeds from the sale will be added to the $1.8 billion the company already holds in cash, cash equivalents and short-term investments to support its spending program.
New owner American Tower expects the assets to generate $149 million in annual run-rate revenues and $55 million in annual gross margin, noting there are substantial opportunities for growth because Nextel is currently the sole user of most of the towers.
It also plans to invest $50 million in start-up capital expenditure in the assets.
“Through this acquisition, American Tower will gain significant incremental scale in our Mexican and Brazilian operations, and we anticipate leveraging the strong demand backdrop in both markets to drive meaningful revenue and cash flow growth for many years to come,” said Jim Taiclet, chief executive of American Tower.
The companies expect to close the deal – which remains subject to regulatory approvals – in the fourth quarter of the year.