Millicom flogs 7,000 towers to SBA for $975 million

It has struck a deal with towerco SBA Communications, which has agreed to fork over $975 million for 7,000 sites spread between Guatemala, Honduras, Panama, El Salvador and Nicaragua – five out of the nine markets in which Millicom operates.

The agreement comes with an unspecified earn-out clause contingent on meeting certain financial performance metrics.

As is common practice with these deals, Millicom and SBA have agreed a 15-year leaseback deal for these towers, plus a build-to-suit agreement that covers up to an additional 2,500 new sites.

For SBA, the agreement will bolster its position in Guatemala, Panama, El Salvador and Nicaragua, and adds a new market to its footprint in Honduras.

"We are happy to join Millicom in announcing this transaction, which significantly enhances the longstanding relationship enjoyed between our companies," said SBA chief executive Brendan Cavanagh. "As a result of this transaction and the strength of our existing portfolio, SBA Communications will be the leading tower company across all of Central America and we are excited to support Millicom as a leading mobile network operator in advancing their network goals and enhancing connectivity throughout the region."

In a separate announcement, SBA said it expects the acquired sites to generate $129 million of revenue and $89 million of cash flow during the first full year after the deal completes, which is expected to happen – subject to customary closing conditions – in mid-2025.

For Millicom meanwhile, the sale frees up funds that can be reinvested in its operations and potentially returned to investors.

"We are pleased to partner with SBA Communications in this landmark tower transaction, a key element of Millicom's strategy to unlock shareholder value. By monetising non-core assets, we are optimising our operational and capital efficiency, positioning the company for sustainable growth and long-term value creation," said Millicom CEO Marcelo Benitez.

"This agreement with SBA Communications strengthens our position as the leading mobile network operator in the region. We are committed to continue building and expanding our mobile coverage to empower communities, foster innovation and create new opportunities for economic development," he said.

Shoring up its financials could also help Millicom defend itself from Xavier Niel.

The French billionaire's investment vehicle Atlas Luxco made a takeover bid for Millicom worth around $4 billion this summer, a bid that was swiftly rejected by Millicom's board for being too low.

Niel upped his offer to $4.4 billion in August, but Millicom's board remained unmoved, insisting it was still too low, and that it could have downsides for employees.

It's all gone a bit quiet since then, which either means Atlas has walked away or is having a rethink over its offer price. Either way, Millicom lowering its costs and generating capital from a towers deal is only going to make it a harder target to acquire.