American Tower’s $9.4bn Acquisition of Telefonica’s Telxius tower division

By James Muse, Omar Santos and Sean Salamante (Columbia University), Alexander Bergmüller, Haozhe Huang and Friedrich von Storch (IE Business School)


Overview of the deal

Acquirer: American Tower (NYSE: AMT)

Target: Telefonica (NYSE: TEF)

Total Transaction Size: $9.4 billion

Announce Date: Jan 13th, 2021

Expected Close date: April 30th, 2021

Acquirer Advisor: Bank of America, EA Markets, CDX Advisors

Telefonica subsidiary Telxius Telecom has reached an agreement to sell 30,722 telecommunication towers based primarily in Germany, Spain, Brazil, Chile, Argentina, and Peru to American Towers for 7.7 billion euros ($9.41 billion) in cash. Telxius Telecom is partly owned by Zara fashion brand owner Amancio Ortego and private equity firm KKR. American Tower plans on leasing the existing phone towers back to Telefonica, allowing current operators to continue providing their services. Financed by Bank of America, American Tower representatives said they intend to purchase the towers in a manner that preserves the current investment-grade credit rating. The telecommunication towers are in-line with American Tower’s strategy to expand into the 5G internet space and secure long-term revenue streams tied to increasing inflation expectations. American Tower CEO Tom Bartlett says the assets in Germany and Spain mix well with existing assets the company has in France. Telefonica reports capital gains of about 3.5 billion euros from American Tower. The transaction marks a key threat to competing telecommunications infrastructure company Cellnex Telecom SA and poises American Tower to continue increasing international market share.

"This is a deal that makes strategic sense within our roadmap. American Towers was our second supplier after Telxius...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" -- Telefonica Chief Executive Officer Jose Maria Alvarez-Pallete

Source: Telefonica

Company Details: (Acquirer - American Tower)

American Tower is a global real estate investment trust that was founded by Steven Dodge in 1995 and began as a subsidiary to American Radio before growing through acquisitions. The company owns, operates, and develops wireless and broadcast communications real estate and provides solutions through different systems and services that assist in speeding network deployment. (Source: American Tower Website)

Founded in 1995, headquartered in Boston, MA, USA

CEO: Tom Bartlett

Number of employees: 5,454

Market Cap: $98.7B (as of 21/01/2021)

EV: $98.6B

LTM Revenue: $7.8B


LTM EV/Revenue: 17.6x