Fitch Rates American Tower's Debt Offering 'BBB'; Outlook Stable

Fitch Ratings has assigned the following ratings to American Tower Corporation's (AMT) reopening of notes originally issued in August 2013:

--Senior unsecured notes due Feb. 15, 2019 'BBB';

--Senior unsecured notes due Feb. 15, 2024 'BBB'.

The Rating Outlook remains Stable.

Proceeds from the offering will be used to partially repay outstanding revolver borrowings, which on a Sept. 30, 2013 pro forma basis total approximately $1.9 billion.

KEY RATING DRIVERS

The ratings and Outlook reflect Fitch's expectations that AMT will delever over the next two years following the $4.8 billion acquisition (including assumed debt) on Oct. 1, 2013 of MIP Tower Holdings LLC, which is the parent of Global Tower Partners (GTP). AMT, following the acquisition, is expected to continue to post strong free cash flows (FCF), generate mid- to high- single digit organic growth and maintain stable margins. Pro forma leverage at the close of the transaction was 5.8x. Fitch believes organic EBITDA growth combined with debt repayment will enable the company to reduce leverage on a quarterly annualized basis to below 5x around the end of 2014. Fitch estimates AMT's gross leverage ratio on a last 12 months (LTM) basis will decline to approximately 5.3x to 5.4x by the end of 2014 and to 4.7x by 2015.

Tower revenues are predictable and contractual escalators combined with strong prospects for additional business provide for growth. Revenues are generated primarily from non-cancellable long-term lease contracts with national wireless operators, of which several are investment-grade. AMT, and the tower industry as a whole, are benefiting from wireless carriers expanding their fourth generation (4G) networks to supply rapidly growing demand for mobile broadband services. Similar trends are occurring internationally with wireless data services at an earlier stage of development than in the U.S.

The ratings also take into account AMT's real estate investment trust (REIT) status. Fitch believes AMT will retain significant flexibility to manage its leverage as a REIT even though it will be required to distribute required levels of REIT earnings to shareholders.

U.S. wireless consolidation is not expected to have a material effect on AMT's operations. Revenue growth from continued lease activity and contractual escalators in the U.S. market will more than offset the relatively modest losses that may occur over time due to consolidation.

AMT has maintained a strong liquidity profile upon the close of the GTP transaction. Following the repayment of $875 million in revolver borrowings, cash on hand and unused revolver capacity approximate $2.3 billion, with liquidity improving as acquisition-related borrowings are reduced. In addition to entering into the 364-day revolving credit facility due in September 2014, the company exercised the accordion feature of its revolving credit facility due 2018, expanding its capacity by $500 million to $2 billion.

Operationally, cash flow generation should remain strong. For the LTM ending Sept. 30, 2013, FCF (cash provided by operating activities less capital spending and dividends) was approximately $408 million. For 2014, Fitch estimates AMT's FCF could exceed $700 million.

The principal financial covenants limit total debt to adjusted EBITDA (as defined in the agreements) to no more than 6.5x until Sept. 30, 2014 and 6.0x thereafter and senior secured debt to adjusted EBITDA to 3.0x for the company and its subsidiaries. An amendment arising from the GTP acquisition temporarily increased the maximum leverage ratio to 6.5x from 6.0x. If debt ratings are below a specified level at the end of any fiscal quarter, the ratio of adjusted EBITDA expense must be no less than 2.5x for as long as the ratings are below the specified level. The next material maturity consists of $600 million of senior unsecured notes due in 2015.

RATING SENSITIVITIES

At the current 'BBB' level, Fitch's sensitivities do not currently anticipate developments with a material likelihood leading to a rating upgrade.

A negative rating action could occur if:

--operating performance falls short of expectations of mid-single digit organic growth combined with margin pressure;

--a significant leveraging transaction that delays anticipating delevering could lead to a downgrade.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 5, 2013);

--'Rating Telecom Companies - Sector Credit Factors' (Aug. 9, 2012);

--'Criteria for Rating U.S. Equity REITs and REOCs' (Feb. 26, 2013).

Applicable Criteria and Related Research:

Corporate Rating Methodology - Effective from 8 August 2012 - 5 August 2013

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

Rating Telecom Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682323

Criteria for Rating U.S. Equity REITs and REOCs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=700091

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