November 17, 2016
CS&L has agreed to acquire privately-held Network Management Holdings, which owns and operates 359 wireless communications towers in Latin America with an additional 114 build to suit tower sites under development, for $65 million. CS&L’s tower business will now operate under the name Uniti Towers (see story below).
“This portfolio is a very attractive investment for our tower business with nearly 90 percent of the revenues from three investment grade major wireless carriers, and 60 percent from existing CS&L customers,” said Kenny Gunderman, president and CEO of CS&L. “All three of these customers have committed to growth and investment in substantial additional mission critical infrastructure. So we believe the opportunity to scale these relationships is material, not only in towers, but also fiber.”
Gunderman said he sees opportunity in these markets because the penetration of 4G wireless technology at 6 percent for Mexico, 8 percent for Colombia and 0 percent in Nicaragua, while the average global 4G penetration is 29 percent.
“We believe investment is required in towers, fiber and other mission critical infrastructure to enhance 4G penetration,” Gunderman said. “For example, the average towers per subscriber in these markets collectively is 50 percent to 80 percent below the world average.”
The move continues the diversification of CS&L, which purchased regional fiber providers Tower Cloud and PEG Bandwidth and formed Uniti Fiber in September. Before that, in March, Windstream Holdings spun off its assets, including fiber and copper networks and other real estate, to CS&L, which Windstream leases back for $650 million a year. At the same time, CS&L purchased 81 towers and the rights to 1,000 properties from Windstream.
“We have a significant depth in our M&A pipeline, Uniti Towers is expanding its scope of operations and Uniti Fiber is positioned to capitalize on an increasing number of organic opportunities as well as synergies provided by the combined operations,” said Mark Wallace, CS&L EVP, CFO and treasurer.
The NMS portfolio spans three Latin America countries with 313 towers in Mexico, 55 in Nicaragua, and 105 in Colombia. The entire portfolio, when completed, is expected to generate approximately $7.9 million of annual revenue.
“We continue to expect Uniti Towers to invest about $1.5 million related to our tower builds in Mexico under our current awards, excluding NMS. Ten sites have been completed to date and we expect a total of 22 towers to be completed by the end of this year. The balance should be completed by mid-2017,” Wallace said.