American Tower buys InSite Wireless for $3.5B

American Tower plans to acquire InSite Wireless Group for about $3.5 billion, including cash acquired and assumption of InSite debt.

InSite owns about 3,000 communications sites, which include towers, distributed antenna system (DAS) networks and real estate, primarily in the United States and Canada. Its portfolio includes ownership of more than 1,400 towers in the U.S., more than 200 towers in Canada and about 70 DAS networks in the U.S. 

InSite, which was established about 20 years ago, also controls more than 600 land parcels under communications sites as well as approximately 400 rooftop sites. 

Tom Bartlett, American Tower’s CEO stated, “This transaction augments our foundational U.S. business through the addition of a well-run, high-quality, complementary, macro-tower focused portfolio, while also marking our entry into Canada.”

American Tower expects the assets to generate about $150 million in property revenue and approximately $115 million in gross margin in their first full year in its portfolio. The transaction is expected to close by the end of 2020.

“This acquisition expands the growing international portfolio as AMT enters Canada, but more importantly, adds to the core U.S. tower business, that we believe is the BBE (Best Business Ever),” writes Raymond James analyst Ric Prentiss. “As T-Mobile US rationalizes and upgrades its combined networks, Dish deploys a greenfield 5G network to meet buildout deadlines, and carriers rapidly deploy mid-band spectrum (CBRS/C-Band) to deliver 5G services, we see significant upside in this space over the next several years.”

When founded in 2000, InSite Wireless focused on the in-building/DAS segment of wireless infrastructure. But in 2006, co-founders CEO David E Weisman and CFO Lance Cawley established InSite’s Towers.

American Towers currently owns 181,000 communications sites worldwide, comprised mostly of towers. With this acquisition that number will rise to 184,000.

RELATED: American Tower revenue increases 3% in Q3, CEO talks about edge compute

American Tower reported revenue for the third quarter 2020 of $2.01 billion, a 3% increase year-over-year. During the quarter, the company signed a new 15-year master lease agreement with T-Mobile US. 

Related to American Towers’ earnings, analysts at New Street Research said they recommend owning tower company stocks because the market is entering a multi-year period of accelerating growth.

American Tower is also making a push into the edge data center business, leveraging the real estate next to its towers. The company officially launched its American Tower Edge Data Center initiative this year, and it already has deployed six edge data centers in Denver and Boulder, Colorado; Pittsburgh; Atlanta; Jacksonville, Florida; and Austin, Texas.

RELATED: American Tower has deployed 6 edge data centers at tower sites

On its recent earnings call, Bartlett said that at the highest level, the company is trying to create new tower-like infrastructure business models and expand its revenue base beyond the traditional tower tenants.