SBA Communications has announced the acquisition of 7,000 telecom towers from Millicom for a reported US$975mn, in a major move that strengthens its presence in Central America. This deal solidifies SBA’s strategy of expanding its global footprint and diversifying its portfolio, with a particular focus on high-growth international markets. The transaction is set to have a significant impact on the region, with long-term implications for the telecommunications infrastructure in countries such as Guatemala, Honduras, Panama, El Salvador, and Nicaragua. TowerXchange takes a look at the deal.
SBA on the strategic acquisition
In a recent statement, Brendan Cavanagh, CEO of SBA Communications, emphasised the importance of this acquisition: “This transaction aligns perfectly with our long-term growth strategy and allows us to enhance our tower portfolio in one of the most promising regions. We see strong potential in the Central American market, and this deal not only expands our asset base but also establishes a solid platform for future growth.”
The acquisition includes 7,000 existing sites and a further agreement with Millicom to build up to 2,500 additional towers through a build-to-suit partnership. Millicom, under the Tigo brand, will lease back space on these towers for 15 years, ensuring steady cash flow for SBA. As part of the deal, SBA also secured a seven-year exclusivity agreement to provide additional infrastructure services to Millicom.
Financial overview of the deal
The US$975mn transaction is expected to generate substantial financial returns for SBA Communications. According to the company, the newly acquired sites will generate an estimated US$129mn in revenue and US$89mn in tower cash flow during the first full year of operation. This cash flow is particularly noteworthy, as it will be denominated in US dollars, providing SBA with greater financial stability and predictability.
Millicom will lease the towers back from SBA for an initial 15-year period, contributing to long-term revenue generation. The deal also extends the leasing terms of SBA’s existing 1,500 towers with Millicom, ensuring continuity of service and financial performance.
Impact on Central America
This acquisition is expected to play a transformative role in the telecommunications landscape of Central America. SBA's presence in Guatemala, Honduras, Panama, El Salvador, and Nicaragua will significantly increase, providing enhanced connectivity and infrastructure development. The region’s reliance on modern telecommunications infrastructure has been growing, and SBA’s increased involvement will likely spur further advancements in mobile and broadband services.
According to TowerXchange’s regional reports, Central America has seen a rapid increase in mobile penetration and data consumption, driving demand for robust and scalable network infrastructure. SBA's acquisition of Millicom's towers is poised to meet this demand, enabling better service coverage and capacity.
Beyond expanding its infrastructure footprint, SBA’s acquisition aligns with broader industry trends in the region, such as improved market standards and increased fairness in operations. In El Salvador, the government has been actively encouraging investment, creating a favourable environment for telecommunications growth. In Nicaragua, Costa Rica, and Panama, SBA is closely assessing regulations for 5G deployment and the integration of renewable energy into its operations, reflecting its commitment to sustainability. However, in Panama, the market is currently facing consolidation pressures due to the recent merger of Cable & Wireless and Claro, as well as Digicel's exit, which has disrupted network stability and altered market dynamics.
In many central American Markets SBA Communications is now a leading towerco,and is the number one across the region. Particularly in Guatemala, Tigo’s most profitable market, SBA Communications has a lead against its competitors’ market share. The new deal, once closed, will change the dynamics in these markets substantially, as illustrated by the below graphic from MoffetNathanson.
Millicom's shift from towerco ambitions
Millicom's decision to sell its tower assets follows a broader trend in the telecommunications sector, where operators are moving away from owning infrastructure in favour of asset-light models. Initially, Millicom had intended to develop its own tower company, but instead opted to capitalise on favourable market conditions, securing a better valuation for its assets.
In Latin America, this is not the first time Millicom has sold off tower assets. In Colombia, the company sold its towers to KKR in a similarly structured deal. The sale of these assets’ underscores Millicom's focus on generating value from its infrastructure and reinvesting capital into its core business operations.
What’s next for Millicom’s remaining towers?
With this sale, Millicom's tower portfolio has significantly reduced, but it still retains assets in Bolivia and Paraguay. While no specific announcements have been made regarding the future of these towers, the current trend suggests that Millicom may continue to divest its infrastructure to focus on service provision and digital transformation. The outcome of this potential divestment could further shape the balance of tower ownership in South America.
Shifting ownership dynamics in South America’s tower market
This acquisition further tilts the balance of tower ownership in South America towards independent tower companies like SBA. As operators like Millicom offload their infrastructure assets, tower companies gain increasing control over the region's telecommunications infrastructure. This shift is likely to create more opportunities for tower companies to expand and invest in building new infrastructure, as the demand for data and mobile services continues to grow across Latin America.
In many markets in Central America site growth had been delivered by specialised built-to-suit towercos, rather than the major internationals that acquired their portfolios through sale and leasebacks. In Central America that may change, Claro’s owner America Movil created Sites, an operator-backed towerco which has been competing for Claro’s built-to-suit. Now Millicom has signed a build-to-suit agreement with SBA Communications the scope for new build coming to market is further diminished.
Conclusion
SBA Communications’ acquisition of 7,000 towers from Millicom marks a pivotal moment in the telecommunications landscape of Central America. The deal not only strengthens SBA’s market position but also provides Millicom with a significant capital boost to invest in its core operations. As the telecommunications sector continues to evolve, the sale underscores a broader trend towards asset-light strategies among operators, with independent tower companies playing an increasingly dominant role in providing the infrastructure that supports modern mobile and data networks.
