American Tower, SpectraSite to merge

Cellular tower companies American Tower and SpectraSite have agreed to merge in an $11.3 billion deal that will give the combined entity more than 20,000 towers in the U.S. market.

During a conference call announcing the deal, Jim Taiclet, chairman and CEO of American Tower, called the deal a “landmark event” for the still heavily fragmented tower industry. Though the consolidation of large wireless carriers and their networks has led some observers to question the future potential of the market for new towers, Taiclet said that carriers’ 3G buildouts and the ensuing broadband traffic will continue to create “sustained demand for new tower sites.”

The merger will result in SpectraSite becoming a subsidiary of American Tower, with American Tower shareholders owning 59% of the combined company, and SpectraSite shareholders getting the remaining 41%. The deals will add SpectraSite’s 7800 towers, mostly located in large metropolitan markets, to American Tower’s roster of more than 12,000 towers across the U.S. It also will give the combined entity 20% penetration in the U.S. market. Including assets outside the U.S. market, the company will have about 22,600 cellular towers and about 400 broadcast towers.

“We will have much more to offer carriers in terms of scope and scale,” Taiclet said.

Steve Clark, president and CEO of SpectraSite, said that his company began last year to look at ideas for maximizing shareholder return, and hired an outside strategic consultant last December.

“We made the decision then that we would work actively on industry consolidation,” Clark said.

Aside from added scale and the related efficiencies, Taiclet said American Tower also was interested in further exploiting in-building antenna technology developed by SpectraSite.