As smartphone usage surges, cell tower behemoth American Tower Corp. struck a nearly $5 billion deal Friday to gain a much bigger stake of the lucrative business of delivering high-speed, wireless data.
The Boston-based company has agreed to buy privately held Global Tower Partners of Boca Raton, Fla., for $3.3 billion in cash, and assume $1.5 billion of debt, which owns some 5,400 towers in the United States and more in Central America, banking that wireless carriers will continue expanding their infrastructure to provide mobile devices with speedy access to the Web.
The deal increases American Tower’s wireless tower count by 25 percent in the United States, adding to the more than 54,000 towers it now owns.
Since American Tower spun out of American Radio Systems and became an independent company in 1998, it has bought numerous other tower operations, and focused much of its expansion in emerging markets such as South America, Africa, and India. In 2005, it paid $3.1 billion to buy competitor SpectraSite Inc., creating one of the biggest tower companies in the world.
Last month, it also agreed to buy more than 4,000 towers in Mexico and Brazil from NII Holdings Inc. of Reston, Va., for $811 million in cash.
American Tower chief executive officer Jim Taiclet said the Global Towers deal represents the next phase of acquisitions for the company as it seeks to accommodate wireless carriers already spending billions of dollars to expand high-speed 4G LTE networks.
“You’ve got to have the network hardware literally up in the air to catch all those signals,” he said. “If this was a plumbing system, you better build a lot of plumbing.”
Indeed, the amount of mobile data traffic is expected to grow ninefold by 2017, with connectivity speeds becoming 3.4 times faster than they are today, and the vast majority of Americans buying mobile devices over the next four years, according to a recent industry report from Cisco Systems Inc.
That growth in the number and sophistication of smartphones and tablets means that wireless networks will continue to be stretched, and carriers will be looking for more tower real estate on rooftops, especially in urban areas, to keep up with demand, said Ken Rehbehn, a wireless industry analyst with the Yankee Group in Boston.
And as many people use their gadgets to access high bandwidth content such as videos, he said, it will put even more pressure on carriers to expand, and add more infrastructure and towers that are closer to large groups of customers.
“The quantity of bits that have to be transmitted over the air to deliver video is absolutely amazing,” said Rehbehn.
The demand for more wireless infrastructure has fueled much of the recent consolidation in the cell tower business. Only a few large public tower companies, including Crown Castle International Corp. of Houston, control much of the cell tower market and make most of their money from leasing space on towers to wireless carriers.
“As the carriers have been consolidating, so are we,” said Taiclet of American Tower. “If you are going to have big customers with national presences, it makes incredible sense to also have a very sizable real estate portfolio with a national scope.”
News of the deal was greeted enthusiastically by Wall Street investors. American Tower’s share price rose 4.6 percent to close at $71.91 on Friday. The acquisition is expected to close later this year.Michael B. Farrell can be reached at firstname.lastname@example.org.