The Olympics are not the only thing going to Brazil. SBA Communications has purchased more than 2,000 wireless sites from Oi, one of Brazil’s largest telecom carriers, for $645 million. Previously, SBA acquired use rights to 2,113 sites from Oi, a deal that closed in November.
SBA President and CEO Jeffrey Stoops said he was impressed with the quality of the sites, which are concentrated in the most populous areas of Brazil and have demonstrated attractiveness to additional tenants.
“With this acquisition, we will have established SBA as one of the largest and most capable independent tower operators in Brazil, a market which we believe is very attractive and will produce strong growth in the future,” he said.
Under the long-term agreement, Oi will make monthly lease payments for antenna space on each of the sites, which average 1.6 tenants. SBA expects to fund the purchase price from cash on hand, existing revolver capacity and future debt issuances.
During the “View From the Top” session at PCIA’s Wireless Infrastructure Show in October, Stoops said SBA gauges international investments by risk adjusting them against the North American market and analyzing the company’s capital allocations.
“Shareholders like to see top line and EBITDA growth,” he said. “To make sure we always had the largest or the right size of playing field to deploy capital, we moved international investment first in Canada, then in Central America and, most recently, in Brazil.”
Whether a capital allocation is made in the U.S. versus international is based on which has the appropriate return on investment, according to Stoops.
“The return on international investment always is higher than what we would seek in the United States,” he said.
The end game for SBA, according to Stoops, is to always stay fully invested, so if investments in foreign or domestic towers aren’t attractive, it will purchase its own stock or pay down debt.
“It’s all about managing the equation to produce the greatest value for shareholders,” he said.
American Tower Also Bets on Brazil
SBA is not the only U.S. tower company heavily invested in Brazil. American Tower entered the market in 2000 and now has 7,500 towers covering 80 percent of the country’s GDP.
American’s portfolio is mostly urban and suburban in the large metros, such as Sao Paulo, Rio de Janeiro. Towers are also strategically located along major transportation corridors, and 70 percent of them are self-supporting structures, 20 percent are rooftops and 10 percent are monopoles/guyed structures.
The reason tower companies are interested in Brazil is simple. With an IT/telecom market size of $180 billion, Brazil stand as the fourth largest market in the world and it represents more than 50 percent of Latin America.