American Tower Pays 25x Multiplier for Telxius Inventory


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American Tower Corporation (NYSE: AMT) yesterday announced that it has entered agreements to acquire Telxius Towers from Telefónica, S.A. The portfolio comprises approximately 31,000 sites in Germany, Spain, Brazil, Chile, Peru and Argentina. AMT said they will pay $9.4 billion at an EBITDA multiple of less than 26x which analysts see as below market rates for U.S. sites, although it sets a high bar for European towers. Telefonica, in a statement, said the proforma would be 30.5 times if the number is adjusted to consider the full impact of the German portfolio acquired by Telxius in June 2020.

“The purchase multiple of 25x EBITDA is high relative to historic European tower deals,” said Spencer Kurn of New Street Research, “but growth on the portfolio is also much higher, stemming from an expected new entrant in Germany (Drillisch), low churn from a 7-year agreement with Telefonica, and a build-to-suit contract for 3.3K sites. AMT now has a much larger presence in Europe, which should provide the scale they need to strike more attractive leasing agreements with tenants, similar to the way they have managed the U.S. which has led to outperformance.”

American Tower expects the assets to generate approximately $775 million in property revenue, approximately $410 million in gross margin, and approximately $390 million in adjusted EBITDA. 

The President of Telefónica, José María Álvarez-Pallete, said that, “this is a deal that makes strategic sense within our roadmap. American Tower was our second supplier after Telxius.” He added that “after this great operation we will continue to focus on our most ambitious objectives: the integration of O2 with Virgin in the United Kingdom, the purchase of Oi mobile in Brazil and the reduction of debt.” With this purchase, American Tower becomes Telefónica’s leading supplier in both Europe and Latin America and maintains its status as a partner in strategic projects in Brazil, Argentina and Colombia.

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