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American tower to buy SpectraSite

American Tower agreed last week to pay $3.1 billion to acquire rival SpectraSite in a deal to create a network of 22,600 wireless and broadcast towers and accelerate consolidation in the tower industry.

The stock transaction follows a string of mergers among wireless carriers who rent or lease tower space and are seeking additional signal capacity to move beyond voice services as more consumers use cell phones to download video content and play games.

Boston-based American Tower expects to issue 181 million shares to acquire Cary, N.C.-based SpecraSite in a transaction the firms expect to close in the second half of 2005, subject to shareholder and regulatory approvals.

The deal to create the nation’s largest tower company with more than $1 billion in annual revenue will combine American Tower’s 14,800 towers — 12,400 in the United States, with the rest in Brazil and Mexico — with SpectraSite’s 7800 U.S. communications sites. Since 1995, American Tower has built and are currently developing more than 175 broadcast sites in the United States and 200 television broadcast towers in Mexico.

The combined numbers will give the companies more than one-quarter of all U.S. communications towers.

The American Tower-SpectraSite deal could slow the pace of tower construction as the combined company expands by filling capacity on existing or new towers, rather than having to build separate towers operating below capacity had the companies continued as rivals, said Jeff Kagan, an Atlanta-based independent telecommunications analyst.

The boards of both companies have unanimously approved the agreement. The combined company will carry the American Tower name, bringing together American Tower’s 726 employees with SpectraSite’s 455 workers. Corporate headquarters will be in Boston.

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