Purchase of AAT expands SBA's tower count by
55 percent, shrinking the big five to four
March 17, 2006 - SBA Communications of Boca Raton, FL, is boosting its tower portfolio with the purchase of AAT Communications Corp., the fifth largest tower owner in the US and the only remaining privately held company with a large national footprint. The $1 billion deal involves $634 million in cash and 17 million shares of stock.
According to company news releases, the AAT asset agreement will increase SBA's tower portfolio by 55 percent. AAT's portfolio consists of 1,855 owned tower sites and 250 managed sites in 44 states. SBA owns and operates 5,500 towers in 47 states, Puerto Rico and the U.S. Virgin Islands. The combined company expects to report annual savings of between $8.5 million and $10.5 million, according to SBA.
St. Louis-based AAT is the nation's largest privately held owner of wireless tower sites and one of the largest privately held companies in St. Louis, generating about $83 million in 2005 revenue.
AAT CEO Jerry Kent said in a statement that SBA's "financial standing and exceptionally talented management team give us great confidence that SBA will continue to enhance value for our shareholders."
"We love the tower business, but we also know that the operating scale SBA brings to the table is critically important to the future of AAT. It was increasingly difficult for us to achieve that scale through additional acquisitions," he said.
Kent, who also owns and manages Cebridge Connections, a cable TV company, has been seen as a leading voice in identifying some of the conflicts that were prevalent in oftentimes tenuous landlord/tenant relationships as carriers pressured tower owners to reduce and renegotiate their agreements. He also stressed the need for better communications between both groups.
"We know the AAT tower portfolio very well, and believe it to have generally the same favorable characteristics as our portfolio, particularly in the areas of quality, capacity, growth and low cost of operation," stated Jeffrey Stoops, president and chief executive officer of SBA.
What comes around goes around, but at a steep price
AAT primarily built its tower holdings by acquiring the majority of its structures. In 2003, AAT bought 784 towers from SBA in the Western United States. That same year, the company also bought 78 towers in Alabama, Arkansas, Florida, Louisiana, Mississippi and Texas from U.S. Unwired Inc., and in 2004, the company bought all of Signal One L.L.C.'s 226 towers located in Alabama, Georgia, Mississippi and Tennessee.
In 2003 SBA received from AAT for their Western portfolio approximately $253,000 per tower. At that time Stoops said that they sold the structures to improve SBA's balance sheet and stabilize their liquidity position.
They are buying back those same towers at a hefty premium. Based upon the addition of AAT's 250 managed sites and their complement of 1,855 owned towers, the 2,105 structures averaged $475,000 each in the $1 billion cash and stock deal announced today.
The AAT acquisition still places SBA Communications as the country's fourth largest tower owner behind American Tower Corporation, Crown Castle International and Global Signal.
The acquisition was viewed as good news on Wall Street for SBA, boosting the company's stock over 12% in late afternoon trading. It wouldn't appear to be welcomed news for PCIA - The Wireless Infrastructure Association. The industry advocacy group received considerable support from AAT. During 2005 the association lost another key member, SpectraSite Communications, when the country's fourth largest tower owner was acquired by American Tower Corporation. AAT was also a driving force in starting and supporting the State Wireless Association Program throughout the country.
The possible sale of AAT has been the subject of trade reports for a couple of months. The St. Louis Business Journal reported last month that according to analysts and people familiar with the bids, AAT received at least three offers. RCR Wireless News was on target with its report earlier this month that Raymond James analysts Ric Prentiss and Mark DeRussy estimated AAT's asking price at around $1 billion.
The transaction is expected to close in the second quarter.