Standard& Poor’s, a credit rating company, announced today that they completed their CreditWatch review or three U.S. wireless tower operators: American Tower Corporation, Crown Castle International Inc., and SBA Communications Inc. A credit rating is Standard & Poor's opinion on the general creditworthiness of an obligor, or the creditworthiness of an obligor with respect to a particular debt security or other financial obligation.
Here is the overview of the review from S&P:
- We have raised the corporate credit rating and senior unsecured debt rating on American Tower Corp. to 'BBB-' from 'BB+' and removed the ratings from CreditWatch positive.
- We have raised the corporate credit rating on Crown Castle International Corp. to 'BB-' from 'B+' and raised all other ratings by one notch. We removed the ratings from CreditWatch positive.
- We have raised the corporate credit rating on SBA Communications Corp. to 'BB-' from B+' and raised all other ratings by one notch. We removed the ratings from CreditWatch positive.
- The stable outlook on all three entities reflects the predictability and stability of their tower leasing businesses, which should continue to support current ratings over the next few years.
S&P believes that the outlooks are stable. "As part of our sector review of wireless tower operators, we have revised our assessment of the business risk profiles on each of these companies to 'excellent' from 'strong' based on key fundamentals that have prevailed over the past several years," said Standard & Poor's credit analyst Catherine
Cosentino. They include:
- Very healthy leasing gross profit and overall reported EBITDA margins of at least 70% and 60%, respectively;
- Low volatility and cyclicality of the business, leading to high predictability of cash flows;
- Long-term contracts and high renewal rates with large telecom carrier customers; and
- Very high barriers to entry, especially in the U.S. market but also in most of the company's growing non-U.S. markets.