AT&T Deal Positive for American Tower

After AT&T’s announcement that they would buy the assets of Nextel Mexico, analysts began discussing how this would impact American Tower, as AT&T is one of their major customers. Will Clayton and Kevin Smithen of Macquarie noted that AT&T is likely to spend heavily on the LTE rollout over the next three years, and they will need help in building out the LTE in Mexico so AMT should benefit. Jonathan Schildkraut and Justin Ages, analysts at Evercore, wrote, “This is a positive for AMT on three levels: (1) overall, we expect to see accelerated investment in Mexico – where AMT has meaningful exposure (roughly 9% of revs, before accounting for tower acquisitions in Nigeria and Brazil (BR Towers and TIM)), (2) AMT bought towers from NIHD in Mexico and with T acquiring that business, the credit quality of AMT’s customer base just improved (not to mention less exposure to a company in bankruptcy), and (3) the cash infusion should make NIHD (roughly 6% of revs as of 3Q) better positioned in the bankruptcy process – which could lead to a good outcome for the remainder of its properties. Recall that in 2013, AMT purchased 1,666 towers in Mexico for approximately $398MM.”