American Tower Corp. (AMT: 46.345 -0.535 -1.14%) is quickly expanding its business operations in various emerging markets. Yesterday the company announced that it has operations in Chile. After Mexico, Brazil and India, Chile becomes the fourth operational market for American Tower outside the U.S.Recently, American Tower has entered into an agreement with Telefonica Chile S.A. to acquire up to 287 wireless tower sites from the latter. Telefonica Chile S.A. is a subsidiary of Telefonica S.A. (TEF: 61.293 -0.217 -0.35%). American Tower has already purchased 113 towers from Telefonica Chile and is expected to buy the remaining tower sites by end 2010 subject to the regulatory approval.
Expansion outside the U.S. will generate long-run sustainable business for the company. American Tower accounts for most of its revenue from long-term (typically 5–10 year) tower leases with major wireless carriers. In addition the company provides on-site maintenance and servicing of antennas, amplifiers, and base station equipment as it relates to leasing. Since moving equipment from one tower to another is cumbersome, carriers normally renew these contracts upon expiration. This generates a strong long-term lease up-cycle.
The revenue generated from leasing and management of such networks is impressive and over 95% is recurring in nature. American Tower maintains one of the strongest EBITDA margins in the industry. EBITDA margin for the most recent quarter was 69%, well above its peers.
As of March 31, 2010, the company had total 27,661 communications towers of which 27,037 for Wireless network, 431 for Broadcasting and the rest 193 for DAS (Distributed Antenna System). The company controls more than 2,700 wireless towers in Mexico and 1,600 wireless towers in Brazil. American Tower’s wireless communications site portfolio in India increases to more than 7,000 sites.
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