Insight on Telesites  

New Street Research’s LatAm analyst, Soomit Datta, shared some initial thoughts on Telesites’ tower portfolio. Telesites will be the spin-off company of Mexico telecom, América Móvil. “Telesites may be one of the fastest growing public tower companies. In addition, Mexico should be a great tower market with a more stable currency than other emerging market opportunities. Finally, Telesites should be an attractive target for US tower companies (depending on where it trades),” the analyst wrote. New Street Research’s analysis values the equity at $1.1 billion. “Telesites is an underutilized asset in an attractive market in which infrastructure deployment will likely accelerate as AT&T enters. We estimate that these factors could drive revenue growth of 14% and AFFO per share growth of 38% over the next five years. Telesites has no third party tenants at present. The market needs more cell sites; cell site density in Mexico is 1/4 that of the U.S.,” Datta explained. AT&T is entering the Mexico market through its acquisition of Iusacell and Nextel Mexico. It’s likely the carrier will invest heavily to upgrade the network to the newest LTE technology, expand the coverage, and increase site density. “Moreover, Telesites could be an attractive acquisition opportunity for US tower companies. We know little of management’s intentions for portfolio growth, capital allocation, and target leverage at this point. As such, we haven’t set a formal target and recommendation yet; however, our preliminary analysis suggests that this could be an exciting opportunity, at the right price,” Datta said.

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