American Tower has entered the out of home business with the purchase of RSA in Boston and some Total Outdoor assets in Boston. Kalil and Company handled the RSA transaction. PJ Solomon handled the Total transaction. The company has been low profile about its investments. No mention of out of home in any of American Tower’s financials or public utterances. Insider thinks this may change.
Insider is skeptical about business synergies between out of home and other businesses. iHeart ownership of Clear Channel Outdoor was a mess. Towers may be different.
To succeed at out of home you need the following skills:
- Leasing – The ability to find good locations and to secure and administer a reasonable lease.
- Regulatory – The ability to get sites permitted.
- Sales – The ability to get customers on signs.
- Creative – The ability to design effective ads.
When you put the tower business side by side with the out of business you can see that three of the four skills overlap which means that a tower company has lots of the skills necessary to succeed in out of home and vice-versa.
Lease origination and administration is critical to the success of a tower company because leases account for a significant portion of tower expenses. Towers are difficult to site just like billboards which means that a tower company knows how to negotiate the local regulatory environment.
Two other considerations. (1) Out of home companies are trying to figure out how to turn their billboards into small cell sites. Who better to figure this out than a tower company. (2) Out of home assets are REIT qualified which means they’ll fit nicely into American Tower which is also a REIT.
Insider’s take: American Towers has a market capitalization of $101 billion, cash of $1.2 billion and debt/cashflow is a moderate 4.5. Insider predicts more out of home acquisitions by American Towers and the entry of other tower companies into out of home due to synergies between the tower business and the out of home business.
[wpforms id=”9787″]
Paid Advertisement
