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Tag Archives: American Tower Corporation

Towers Enjoying Multi-year Growth Trend: American Tower

By J. Sharpe Smith, Senior Editor

American Tower has seen organic growth of more than 7 percent this year and the good times will keep on coming in 2019 and beyond, Igor Khislavsky, senior director, investor relations, said in an interview with Batya Levi, analyst with UBS Securities, at the UBS 46th Annual Global Media and Communications Conference 2018, Tuesday in New York City.

“The trends that are supporting our growth levels this year are inherently multi-year in nature. For example, AT&T is doing one-touch with FirstNet, and they are one-third of the way through,” Khislavsky said according to Seeking Alpha transcript. “From that respect, our expectation is there will be continued strong growth in the United States.”

American Tower has been growing at industry leading rates all year, because the tower company has been able to effectively monetize the growth of all four carriers.

“We spend considerable effort internally to model out the builds carrier by carrier. We expend quite a bit of manpower to be in position to capture the activity in the marketplace,” Khislavsky said. “If you look at, not really, this year, but the last couple, we have consistently had the lowest churn rates in the industry. We have consistently had solid growth rates that lead the pack. That is a reflection of our positioning.”

While the tower company has had much higher volume in 2018, the activity isn’t fundamentally different from previous years. Amendments still account for 70-75 percent. Carriers are putting more equipment, because of the number bands that are being deployed simultaneously, increasing the loading, the weight and the size of the footprint, as well as the amount paid to American Tower.

“We have been on the historically high end of the cost for an amendment,” Khislavsky said. “In the past, amendments have ranged from $200 up to $1,500. We have been in the $1,000 ballpark.”

Sprint/T-Mobile Merger

Khislavsky was upbeat about the pending Sprint/T-Mobile deal. American Tower is “net neutral to net positive,” because the carriers have promised a lot of capex spend building out 5G if the deal goes through.

“The question is whether the competitive dynamics of having three carriers rather than four encourages incremental spending across the board,” Khislavsky said.

The overlap between the two carriers in American Tower’s tower portfolio is 4 percent of total revenue today and by the time the leases expire in three years, it will be lower as the business continues to grow. Khislavsky promised a “constructive” approach to potential churn.

“Concerning the 25,000 [net] sites that will be decommissioned, we are making sure we are offering them as much flexibility as possible from a contractual perspective,” he said. “We want to achieve a happy medium in terms reducing some of the churn risk, capturing some of the upside of some of the deployments they are planning.”

CBRS Offers Opportunities

On a lighter note, Khislavsky discuss American Tower’s involvement in the Citizens Broadband Radio Service, CBRS Alliance and its investment in Federated Wireless which is developing the technology for spectrum sharing. CBRS could potentially allow the addressable indoor wireless market to move beyond the major venues and increase American Tower’s market share.

“So we’re exploring that. It’s early stage at this point, but we’re excited about the opportunity,” Khislavsky said. “It could be a way for us to grow our indoor business from the 2 percent to 3 percent that it represents today and maybe to a slightly higher level.”

Another spectrum opportunity for wireless is in C-Band, which the FCC is currently investigating. Khislavsky said the mid-spectrum is interesting because it combines propagation characteristics of the millimeter wave spectrum with characteristics of lower band spectrum.

“I think our view is that a significant portion of that spectrum ultimately gets deployed on macro sites, which should benefit us, but that’s probably a couple years out,” he said.

American Tower Eschews Fiber-backed Small Cells

Small cells are the hot topic right now. However, the long-term return on investment involved in fiber-backed outdoor small cell business still doesn’t make sense for American Tower, because of the upfront cost to acquire the fiber, the opex costs and high levels of churn that enterprise fiber businesses. The towerco prefers the returns that it is getting in macro towers internationally.

“There are pretty decent returns in that type of business, but the numbers don’t justify us deploying that incremental dollar or capital versus the other options that we have,” Khislavsky said. “We can deploy capital not only in the U.S. but also throughout the 17 markets in which we operate.”

American Tower Reports Best Quarter Since Q2 2015; Raises Outlook

April 27, 2017 — 

American Tower reported strong growth in the U.S. market in the first quarter with an increase of 6.5 percent in organic tenant billings.

“We saw particularly strong results in our largest core market, the U.S., where our 6.5 percent Organic Tenant Billings Growth was the highest we’ve seen since the second quarter of 2015, supported by a recently amended master lease agreement with one of our tenants,” Jim Taiclet, American CEO said.

Capital Expenditures during the first quarter of 2017 stood at $177 million, of which approximately $24 million was for non-discretionary capital improvements and corporate capital expenditures. During the first quarter, the company spent $512 million to acquire nearly 2,500 sites in France. Additionally, it acquired 1,400 sites in Paraguay from Millicom International Cellular’s subsidiary.

Wireless infrastructure catalysts, such as unlimited plans at Verizon and AT&T, the FirstNet award, visibility into AWS-3, WCS, and 600 MHz deployments, have investors on the U.S. bandwagon, according to Nick Del Deo, MoffettNathanson.

“Just a few months back, few people would have guessed that the U.S. would be the star of the show in 2017. But here we are,”  Del Deo wrote in a research note. “Truth be told, the U.S. has always been the star of the show.  Aside from its sheer size, that’s because the U.S. tower market rates much higher than just about every other tower market on one absolutely critical dimension: pricing power. In real terms (i.e., inflation-adjusted), the domestic segment has grown at essentially the same pace as American Tower’s international portfolio over the last several years, despite U.S. growth being pressured by AT&T’s pullback in leasing activity and the leasing environment overseas generally perceived as being far more robust.”

Expectations for Full Year 2017 Increased

American Tower is raising the midpoint of its full year 2017 outlook for property revenue, net income, Adjusted EBITDA and Consolidated AFFO by $105 million, $30 million, $70 million and $55 million, respectively, as compared to the company’s 2017 outlook, as updated on March 21, 2017.

“Further, given the recent conclusion of the 600 MHz auction, the numerous other spectrum assets yet to be deployed and several other potential catalysts, we believe that our portfolio of over 40,000 U.S. sites remains optimally positioned to drive strong organic growth over the long term,” Taiclet said.

American Tower Ups Revenue Outlook by $100M

March 21, 2017 — 

American Tower updated its outlook today, filing a Form 8-K with the Securities and Exchange Commission.

After giving its full year 2017 outlook on February 27, 2017, the tower company amended a master lease agreement with one of its tenants and now expects at least $100 million in additional straight-line revenue for the year. It now expects total property revenue, net income and Adjusted EBITDA in the range of $6,310 million to $6,490 million, $1,275 million to $1,345 million and $3,910 million to $4,010 million, respectively. The tower company also plans to purchase an additional $1.1 billion of its common stock.

Jennifer Fritzsche, senior analyst, Wells Fargo, saw the increased outlook as a sign that wireless infrastructure deployment is increasing and is consistent with her firm’s recent upgrade for towers.

“We suspect this is U.S.-based activity and our guess is it likely involves one of the largest two carriers (AT&T or Verizon). If we were to speculate, our belief is this could be more related to Verizon activity given it had a holistic MLA with AMT in the past,” she wrote. AT&T is expected to increase spending on the towers once it receives confirmation on FirstNet contract.

American Tower Reports Double Digit Growth

February 27, 2017– In the fourth quarter 2016, American Tower saw total revenue increase 20.3 percent to $1,540 million and property revenue increase 21.6 percent to $1,521 million. Those results were in line with the full year 2016 numbers, which included a 21.3 percent increase in total revenue to $5,786 million and property revenue increase of 22.1 percent to $5,713 million

“In 2016, we once again generated double digit growth in our property revenue, Adjusted EBITDA and Consolidated AFFO per share,” Jim Taiclet, American Tower’s CEO, said. “At the same time, we continued to expand our asset base through our active tower construction program and accretive acquisitions like the Viom transaction in India and ended the year with nearly 145,000 towers and small cell systems.”

Tower growth is being driven by increases in smartphone penetration and monthly data consumption, including in the U.S., where the average smartphone user now consumes over 4.4 gigabytes of data per month, according to Taiclet.

“We expect that these trends will in turn result in continued network investment and underpin our expectations for 2017, which include organic tenant billings growth of over 7 percent and consolidated AFFO growth of over 10 percent,” he said. “Further, we continue to target annual dividend per share growth of at least 20 percent, remain committed to our target net leverage range and expect to evaluate both accretive acquisition opportunities and a reinstatement of our share repurchase program during the course of the year.”

Small Cells? Maybe Later


September 20, 2016 —

The balance that American Tower strikes between macrosites and small cells has much to do with the better return on investment it can obtain with foreign investing.

By Don Bishop

Executive Editor
AGL Magazine

rp_don-85x135-189x300-189x300.jpgEDITORS’ NOTE — This is the second of three articles revealing the different approaches to small cells of the major tower companies.  American Tower owns 40,000 towers in the United States. It owns 300 in-building distributed antenna system (DAS) networks in places such as Las Vegas casinos and Class A shopping malls, among other inside venues. It owns another 30 outdoor DAS networks that cover areas where zoning for towers is difficult to obtain.

The company’s senior vice president and CFO, Rodney Smith, said wireless carriers need towers, DAS and small cells to solve their mobile network problems. He said American Tower believes the carriers spend about 5 percent of their capital on small cell and DAS deployments, generally in urban centers where permits for macrosites are difficult to obtain. “But we do see the carriers choose macrosites whenever they have the chance,” Smith said. “If you can get a macrosite zoned and built, they will go on that before they’ll build an outdoor DAS network.” American Tower has been constructing new in-building networks and leasing to additional tenants on its older networks.

Smith said he believes wireless carriers will grow their investments in small cells by at least 5 percent and maybe by as much as 10 percent during the next four or five years. “That would mean if they’re spending about $30 billion dollars altogether, they will be spending about $3 billion of that on small cells,” he said. “That’s not a huge drag away from macrosites, which the carriers will continue to need to use in the long term and outside of urban centers. But they will also need the DAS networks in other places.”

Smith compared in-building DAS with outdoor DAS, saying that in-building systems are where American Tower has chosen to spend most of its capital allocated to DAS. “When we invest capital, we look at the returns that we can get, and we’ve done really well with our in-building deployment,” he said. “We generally see those networks lease to an average of two carriers, or a little more, similar to the way we see towers lease. On outdoor DAS networks that we’ve had for as long as five or six years, the average is 1.2 or 1.3 carriers per system. They don’t lease up quite the same way.”

American Tower also obtains lower margins on its outdoor DAS networks compared with its in-building systems. Smith said the margin for indoor networks is about 70 percent, compared with 50 percent for outdoor DAS. The outdoor networks are more complex and they have a heavy operating expense (opex). Smith said they are capital-intensive, too, resulting in a mid-single-digit return on invested capital. “That’s primarily because we don’t see the clear path to lease to second tenants because every time you put a new node in, you’re running new laterals, you’re running fiber, you’re splicing your investing and you’re increasing your investment,” he said. “In the indoor space, we see returns that are similar to the tower space when they get in the double digits.” As a result, American Tower invests more in in-building systems, although Smith said outdoor DAS definitely is needed.

“We also have the whole globe available to us to invest in macro towers,” Smith said. “One of the reasons we are somewhat choosy about what we invest in in the United States is because we can invest in India, Mexico, Brazil, Germany, South Africa, Nigeria and other countries in Africa. We see better risk-adjusted returns from macro towers in those markets. For us, the ability to invest internationally is key. When you ask, ‘Why isn’t American Tower investing in outdoor DAS,’ it’s because we believe we can achieve better returns in different spaces in the United States and outside of the United States.”


Rodney Smith spoke at the Wireless Investors Conference, part of the Wireless Infrastructure Show, in May. The next Wireless Infrastructure Show is scheduled for May 22–25, 2017, in Orlando, Florida.