American Tower Is Said to Near $500 Million Mexico Fiber Deal

(Bloomberg) -- American Tower Corp. is close to an agreement to acquire communications infrastructure from Mexican company KIO Networks in a deal valued at about $500 million, according to people with knowledge of the matter.

American Tower outbid more than a dozen potential buyers, said one of the people, who asked not to be identified because the information is private. While talks are advanced and a deal could be reached as soon as this week, the discussions are ongoing and talks could still fall apart, one of the people said.

KIO, the data-storage provider backed by billionaire Maria Asuncion Aramburuzabala, is selling some of the assets acquired in the leveraged buyout of RedIT for $400 million in 2014, the person said.

Matt Peterson, a spokesman for Boston-based American Tower, the largest U.S. operator of towers for wireless networks, declined to comment. KIO didn’t immediately respond to an email to its investor relations department outside of regular business hours.

The deal would give American Tower more than 4,200 kilometers (2,600 miles) of fiber-optic lines, adding to its capacity to handle growing demand for data as mobile-phone users watch more video.

Closely held KIO may use proceeds from the sale to pay off debt it took on when it acquired RedIT in 2014 in the leveraged buyout, a transaction that’s rare in the Mexican market because companies are more conservative in their use of debt. The company issued $500 million of dollar-denominated junk bonds to fund that purchase but the peso has depreciated 28 percent since then, which has caused leverage at KIO to balloon.

American Tower reached an agreement in July to buy 142 telecom towers from Mexican telecommunications firm Axtel SAB for $56 million. The tower company has been expanding overseas to markets where the need to upgrade and install equipment has prompted carriers to lease more tower space. In Latin America, data traffic could increase by 42 percent a year through 2022, according to a June 2017 report from Ericsson, a network equipment and software company.

American Tower’s international segment accounted for 90 percent of its growth in the 12 months that ended in June, according to Bloomberg Intelligence.

--With assistance from Scott Moritz

To contact the reporters on this story: Michelle F. Davis in Mexico City at mdavis194@bloomberg.net, Alex Sherman in New York at asherman6@bloomberg.net.

To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, Crayton Harrison