American Tower announced strong organic core growth across its global wireless infrastructure assets during its first quarter 2016 earnings call.
The towerco raised its full year guidance for property revenue and Adjusted EBITDA by one percent, according to Thomas Bartlett, executive vice president and CFO, based on the first quarter performance and the foreign currency exchange rate forecast.
American’s global strategy fared well during the quarter, with an average of 13 percent organic growth, including Latin America, Asia and EMEA (Europe, Middle East, Africa) compared with U.S. organic revenue growth at 7 percent.
Bartlett said the wireless markets are vibrant in places like Mexico, where they are is aggressively rolling out 4G, and Brazil, where the 3G network is being augmented.
“These strong growth rates continue to highlight the benefits of our diversification across countries, customers and technologies,” Bartlett said. “On a global basis there are nearly 2.5 billion people in the markets that we serve and our largest customers will be investing tens of billions of dollars in those markets just this year to meet their customers rapidly growing wireless needs.”
During the quarter, American closed on its purchase of Viom’s 42,000 towers and began integrating them into its portfolio in India, a market that is already showing double digit growth, according to Bartlett.
“In India, we generated organic core growth of more than 12 percent [in Q1] as large incumbent Indian wireless operators continue to spend aggressively to support the deployment of new technologies and spectrum,” he said.
Collocation, Densification Drive Domestic Growth
Domestically, collocation and densification activity have been driven by deployment of 4G technology at higher spectrum bands, according to American CEO James Taiclet.
“In addition, each new spectrum band acquired and deployed into the network has driven additional amendment activity in the form of more antennas and remote radio heads on our towers,” he said.
Even though the initial 4G coverage deployment is mostly completed, Taiclet expects demand for macro tower space to continue through subsequent 4G deployment phases and then onto 5G.
“We are now at the stage where most U.S. wireless carriers have deployed the majority of their 4G coverage sites so in practice the vast majority of U.S. mobile subscribers have access to 4G bars when they look at our phone,” he said. “The anticipated six times increase in mobile traffic from 2015 to 2020, however, can’t just be solved through these phase one coverage sites.” More than 97 percent of American’s towers are in rural and suburban environments, where 80 percent of the U.S. population resides.
As a matter of course, expect continued investment in networks to increase capacity at suburban and rural sites along with transportation corridors, he added.
In the near term, Bartlett noted a couple of factors that have changed compared with last year. New business will be evenly distributed throughout the year versus of being front-loaded. Additionally, decommissioning revenue will be flat, partially offset by lower churn.