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  "documentTitle": "American Tower (AMT)",
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  "authorName": "Carson C. Block",
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  "presentationDate": "2013-07-17 00:00:00",
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  "notes": "The slide presents a forensic financial argument questioning the due diligence and valuation of an acquisition.",
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      "text": "This anomaly raises a number of questions, not least as to what is the true value of the assets? Why would MTN sell AMT 51% of the assets for just 42% of the value, it does not appear that they were desperate to do so as there would have been other bidders? Could this mean that the assets are overstated?",
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      "text": "impairment: $272 million",
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      "text": "In MTN’s 2011 accounts, it seems that ATL’s share of the cost remained at US$219 million but this only 42% of the final purchase price, it should be noted that the amount AMT paid does not appear in MTN’s 2012 accounts.",
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      "text": "As a result of the above, we performed a calculation to assess ATL’s investments in the country. We estimate that AMT has made acquisitions totaling US$518 million and those investments are now worth US$246 million. We believe the market conditions and the outlook for ATL’s business prospects in Ghana are uncertain given the extremely high inflation in the country, high government bond yields, high business risk and questionable joint venture structure. Given the decline in value relative to the amount paid for acquisitions, we believe that AMT should be forced to impair its intangible assets and/or goodwill by US$272 million, or by 53% of the original acquisition price.",
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      "text": "On December 6, 2010 AMT had entered into a definitive agreement with MTN in Ghana to form a joint venture to buy 1,876 towers for approximately $430m. Once the final tranche of towers were transferred on December 23, 2011, the joint venture paid $518m for 1,856 towers. No reason has been provided for the increase in purchase price.",
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      "text": "We project that ATL’s existing Ghanaian investment will only generate an IRR of 11%. Ghanaian government bonds yield 17 %, and are rated B. We use a WACC of 25% in Ghana, and an exit multiple of 6.0x EBITDA. Such discount rates might sound high to",
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      "text": "We understand from industry experts in Ghana that a significant amount of capital expenditure is required in Ghana. Whilst, they did not have direct information regarding ATL/MTN joint venture in Ghana, they have looked at newer tower portfolios and have found that at least 25% of towers built by local carriers were only strong enough for one carrier, another 15% needed refurbishment and a further 10% needed to be fully replaced. We believe that as the MTN’s tower portfolio is older, it is likely to minimally require this amount of capital expenditure.",
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      "text": "This raises questions over the level of due diligence that AMT have put into assessing their acquisitions, at a significant cost to shareholders. This cash drain also raises questions over the value of the transaction itself.",
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      "text": "investing in a US$517.7 million joint venture it is surprising that it is loss making.",
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      "text": "This anomaly raises a number of questions, not least as to what is the true value of the assets? Why would MTN sell AMT 51% of the assets for just 42% of the value, it does not appear that they were desperate to do so as there would have been other bidders? Could this mean that the assets are overstated?",
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