Fitch Rates American Tower Corp.'s New $1B Credit Facility 'BBB-'

CHICAGO -- (BUSINESS WIRE) -- Fitch Ratings has assigned a 'BBB-' rating to American Tower Corporation's (AMT) new $1 billion, five-year senior unsecured credit facility. The Rating Outlook is Stable.

The new facility matures on Jan. 31, 2017. At close, the company borrowed $700 million under the facility and used the proceeds, along with $625 million in borrowings on its $1 billion revolving credit facility (RCF) due 2016 along with cash, to repay outstanding amounts on the company's $1.25 billion RCF and $325 million term loan, both of which were to mature in June 2012. The June 2012 facilities were then terminated.

As a result of the termination, Fitch has withdrawn the ratings on the $1.25 billion RCF due June 2012 and the $325 million term loan due in June 2012.

Fitch expects AMT to access the long-term capital markets in the first half of 2012 to reduce outstanding amounts on its revolving facilities and in order to free up capacity to complete several pending acquisitions as well as build-to-suit towers under previously existing arrangements.

AMT's ratings are supported by the financial flexibility provided by its strong free cash flow (FCF) and its high EBITDA margin, which was 62% for the latest 12 months (LTM) ending Sept. 30, 2011. The significant operational scale provided by its large tower portfolio, combined with favorable demand characteristics for wireless services - particularly data - translates into strong, sustainable operating performance and FCF growth.

AMT's predictable and growing revenue base, which is generated primarily from long-term lease contracts with national wireless operators (of which a substantial portion are investment-grade), leads to a low business risk profile. AMT, and the tower industry as a whole, are benefiting from wireless carriers expanding their 4th generation (4G) networks to supply rapidly growing demand for mobile broadband services. The carriers' build-outs are using spectrum acquired in the Advanced Wireless Services auction (completed in 2006) and 700-MHz spectrum auctions (2008). Similar trends are occurring internationally with wireless data services at a much earlier stage of development than in the U.S. Fitch expects these dynamics to more than offset the effects of recent and potential future wireless operator consolidation on AMT's results.

The rating also reflects AMT's commitment to a net leverage target in a range of 3.0 times (x) to 5.0x. Although not expected, if AMT does operate at the high end of its target range for an extended period of time, Fitch would consider a downward revision in the company's rating. AMT's gross leverage metric was 4.0x for the LTM ending Sept. 30, 2011. AMT's leverage metric reflects EBITDA from acquisitions from the date of closing.

The rating also takes into account AMT's reorganization of its operations to allow the company to be taxed as a real estate investment trust (REIT). The reorganization was effective Jan. 1, 2012.

Fitch believes American Tower will retain significant flexibility to manage its leverage after the REIT conversion, which will require the distribution of required levels of REIT earnings to shareholders. In 2012, Fitch estimates AMT's gross leverage ratio will approximate 3.8x-3.9x, below the low-to-mid-4x level which Fitch believes may be a reasonable range for the rating category for American Tower's business and financial risk profile.

Risks reflected in the rating include the potential for acquisitions and the expansion of operations internationally. The effect of future acquisitions on AMT's credit profile will depend on the size, timing and financing of such acquisitions. Fitch believes that the company would consider the use of equity to maintain a relatively stable credit profile in the event it entered into an agreement to acquire a sizeable tower portfolio.

International revenue, about 28% of the total in the third quarter of 2011, is expected to continue to grow over the longer term.

Fitch views AMT's liquidity position as strong due to its balance sheet cash, meaningful FCF generation and favorable maturity schedule relative to available liquidity. Cash, excluding restricted cash, was $178 million as of Sept. 30, 2011.

For the LTM ending Sept. 30, 2011, FCF was approximately $581 million, compared to FCF for 2010 of approximately $674 million. The $93 million decline in FCF in the LTM period relative to 2010 was due to a $169 million increase in capital spending. Following the repayment of the June 2012 bank facilities, the next material maturity consists of the $1.75 billion commercial mortgage pass-through certificates mature in 2014.

The company has a total of $675 million of borrowing capacity on its two credit facilities, prior to the effect of letters of credit.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 12, 2011);

--'Rating Global Telecoms Companies' (Sept. 16, 2010);

--'Criteria for Rating U.S. Equity REITs and REOCs' (March 15, 2011).

Applicable Criteria and Related Research:

Criteria for Rating U.S. Equity REITs and REOCs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=610687

Rating Global Telecoms Companies - Sector Credit Factors

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=550205

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647229

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