Grupo TorreSur, Brazil’s third largest independent tower company, has been put up for sale by its financial sponsors Providence Equity Partners and Cartesian Capital. Overall, Grupo TorreSur has 6.0k tower sites in Brazil giving the company a market share of ~9% of the total 64.8k towers across the country.

Potential Buyers for Grupo TorreSur

The three most likely buyers for Grupo TorreSur are all of the other largest independent tower companies in Brazil. Specifically, these independent tower companies are American Tower (19.1k towers in Brazil), SBA Communications (9.9k towers in Brazil), and Highline do Brasil (3.3k towers in Brazil), which is backed by Digital Colony.

However, Dgtl Infra understands that Digital Colony, through Highline do Brasil, is the frontrunner to acquire Grupo TorreSur. Indeed, this is in-part because American Tower and SBA are in the process of completing and integrating two recent acquisitions.

Firstly, American Tower will close its $9.4bn Telxius Towers deal in stages between Q2 and Q3 2021. Secondly, while the majority of SBA Communications’ utility tower deal with PG&E has closed, the transaction brings the company above its targeted leverage range. Specifically, the company anticipates its net debt-to-adjusted EBITDA leverage ratio will be above its target range of 7.0x to 7.5x at the end of Q1 2021.

Highline do Brasil – Digital Colony

Highline do Brasil is a portfolio company of Digital Colony Partners I, the first private equity fund of Colony Capital. Indeed, after acquiring Highline do Brasil from Pátria Investments in December 2019, Digital Colony has quickly scaled the platform. Specifically, in November 2020, Digital Colony acquired both Phoenix Tower do Brasil and Oi’s UPI Torres unit in separate transactions.

Furthermore, Colony Capital Chief Executive Officer, Marc Ganzi has recently discussed his firm’s admiration for Brazil’s towers market. Below we highlight two relevant quotes from Marc Ganzi in January 2021:

  • “The tower business was good in Latin America this year. We saw a real acceleration in Brazil in the second half.”
  • “We’ve been very active in towers, as you know, extremely active in Brazil… Both Southeast Asia and Brazil are two real hot markets for us.”

Grupo TorreSur Chief Executive Officer Engagements

Another fact pattern to highlight related to Grupo TorreSur being for sale is the company’s Chairman, Chief Executive Officer and Co-Founder, Jim Eisenstein, increasingly taking on engagements elsewhere.

Firstly, in October 2019, Jim Eisenstein was elected as a director of ATN International. Notably, ATN International was the ultimate winner in the take-private of Alaska Communications Systems for $332m, usurping Macquarie Capital.

Secondly, in mid-February 2021, Jim Eisenstein agreed to serve on the board of directors of InterPrivate IV InfraTech Partners. Specifically, InterPrivate IV is a special purpose acquisition company (SPAC) that invests in the TMT infrastructure sector.

Precedent Towers M&A Transactions

The closest comparable transaction to Grupo TorreSur being for sale, is a sale of a portfolio of its own towers, in Brazil, less than 18 months prior. In December 2019, Grupo TorreSur (owned by Providence Equity), sold a portfolio of 1,313 towers in Brazil to SBA Communications. Specifically, the transaction value was $460m, equating to 14.8x tower cash flow, and an enterprise value per tower of $350k.

Additionally, in November 2020, Highline do Brasil (backed by Digital Colony), acquired 637 towers from Oi, a Brazilian wireless carrier. Specifically, the deal’s transaction value was $200m, equating to an enterprise value per tower of $314k.

Based on these recent tower company M&A transactions in Brazil, it is conservative to assume a $350k per tower valuation for Grupo TorreSur’s tower assets. Therefore, a sale of 6.0k towers by Grupo TorreSur, results in an enterprise value of $2.1bn for the tower company.

For further comparable transactions, check out our comprehensive list of towers precedent M&A transactions here.

Adam Simmons covers Towers for Dgtl Infra, including American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), SBA Communications (NASDAQ: SBAC), Cellnex Telecom (BME: CLNX), Vantage Towers (ETR: VTWR), IHS Holding (NYSE: IHS), and many more. Within Towers, Adam focuses on the sub-sectors of ground-based cell towers, rooftop sites, broadcast / radio towers, and 5G. Adam has over 7 years of experience in research and writing for Towers.


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