American Tower today announced an agreement to acquire 100% of InSite Wireless Group (InSite) for an enterprise value of $3.5bn equating to a multiple of 30.4x tower cash flow. The transaction is scheduled to close by the end of 2020. InSite, the target company, owns and operates 3.0k communications sites, across the United States and Canada.
InSite’s portfolio includes more than 1.4k owned towers in the United States, 200+ owned towers in Canada and 70 distributed antenna system (DAS) networks in the United States. In addition, InSite controls more than 600 land parcels under communications sites, as well as 400 rooftop sites.
InSite was formed in 2000, by David Weisman, and is the seventh largest tower company in the United States. InSite’s investors include Cox Enterprises, private equity firm Macquarie Infrastructure Partners, and Catalyst Investors.
American Tower expects InSite to generate $150m in property revenue and $115m in gross margin during 2021. From a margin perspective, InSite will generate a 77% tower cash flow (TCF) margin. The transaction will be immediately accretive to American Tower’s Consolidated Adjusted Funds From Operations (AFFO) per Share.
American Tower’s legal advisor was Cleary Gottlieb Steen & Hamilton. InSite’s financial advisor was Evercore, and legal advisor was Lowenstein Sandler LLP.
United States Tower M&A
American Tower’s deal for InSite Wireless comes shortly after Apollo Global Management, acquired a portfolio of 500 operating cell towers. Apollo’s deal also included a pipeline of contracted towers under development from Lendlease – meaning a build-to-suit backlog. The acquired company re-branded itself as Parallel Infrastructure, which is the name it held prior to Lendlease’s acquisition in 2017. Parallel Infrastructure will be led by CEO Yannis Macheras and its management team from its headquarters in Charlotte, North Carolina.
Parallel Infrastructure is a build-to-suit tower operator with 500 cell towers across the U.S. and several hundred more under development. The company has all major United States wireless carriers as customers, including AT&T, Verizon and T-Mobile, which lease space on its towers under long-term contracts.
Apollo and American Tower have demonstrated, through these deals, the importance of digital infrastructure and its significant future growth. Specifically, the growth drivers of towers include increased data consumption and the shift to 5G networks across the United States.
American Tower operates 178.8k towers in five distinct geographical regions, including the United States (40.6k), India (73.6k), Latin America (40.9k), Africa (18.8k) Europe (4.8k).