American Tower has entered into an agreement to acquire rights to approximately 11,324 wireless communications towers and purchase approximately 165 additional towers from Verizon Communications for $5.056 billion in cash. Under the terms of agreement, American Tower will have the exclusive right to lease and operate the Verizon towers for approximately 28 years with an option to acquire them at the end of the lease terms. Verizon has contracted to sublease space on the towers for a minimum of 10 years with monthly rent of $1,900 per site and fixed annual rent escalators of 2%.
Verizon will also have access to certain additional space on the towers for its future use, subject to certain restrictions. American Tower will have the right to sublease other available capacity on the towers to additional tenants.
With the new addition, American Towers said that it will establish the largest wireless communications real estate portfolio in the United States with over 40,000 tower sites. This transaction expands and strengthens American Tower’s relationships with major U.S. wireless operators, and 85% of domestic rental and management revenue will be generated by the Big Four U.S. carriers. American Tower’s global portfolio, which is expected to be nearly 100,000 towers, will be uniquely positioned to capitalize on the worldwide proliferation of advanced mobile communication and broadband services.
American Tower estimates that the Verizon tower portfolio will generate approximately $410 million in domestic rental and management revenue, approximately $235 million in gross margin and will be break-even to Adjusted Funds From Operations (AFFO) per share in its full first year of operation.
Jim Taiclet, American Tower’s Chief Executive Officer
The Verizon tower portfolio is a unique asset. Due to outstanding design and management by the Verizon Wireless network operations team, the portfolio boasts a number of key attributes that we believe will facilitate robust leasing opportunities under our focused management. Demand for mobile bandwidth by U.S. consumers is expanding dramatically as the proliferation of advanced devices and applications continues. As evidenced by the just-concluded AWS spectrum auction, the Big Four domestic carriers plan to address this growth with significant ongoing investment in both spectrum and their physical networks. We believe that by aggressively marketing these relatively under-utilized towers to additional tenants, we will enable faster deployment of this spectrum, accelerating the expansion of broadband coverage throughout the U.S.
