Yesterday, American Tower (NYSE: AMT) Executive Vice President & Chief Financial Officer Rodney Smith took a look at what the coming year has in store for the towerco giant at the Deutsche Bank 30th Annual Media, Internet and Telecom Conference. Smith led off by saying the year has been productive already with the big acquisition they did in Europe, buying the Telxius assets, and then following that up with another $10 billion acquisition of a data center business in the U.S. But, according to Smith, that doesn’t change the priorities of the company which he said are putting together a collection of assets around the globe that are well positioned to drive organic growth through the increased consumption of mobile data around the world.
“We see that continuing to happen in the U.S. as the U.S. market transitions to 5G. We see Europe at the early stages of transitioning to 5G deployments as well,” Smith said. “In many of the emerging markets that we’re in, in India, in Latin America, throughout Africa, they’re all continuing to build out 4G networks and densifying those networks. So we see mobile data consumption really around the world continuing to rise.”
Smith said, at its core, American is a tower company and feels they are well positioned to benefit from growth in mobile data around the globe while expanding that portfolio.
However, their increased visibility in the data center business with buying CoreSites presents what he called “a very unique, high-quality set of assets.” Each one of the facilities has cloud on-ramps within them. “So this set of assets is not your old-fashioned data center,” Smith said, “where people are watching over, babysitting servers and air-conditioned space. These are full interconnection facilities, network-dense facilities with cloud on-ramps.”
American projects that these networks will evolve over time, particularly with 5G in the wireless side but also on the landline side, where network users and network companies will require lower latency in the networks. In order to get that, according to Smith, you’ve got to push out the compute power of the on-ramps and the network connections closer to the edge.
“So, we see that evolution coming. We firmly believe that more and more connections through the networks will be cloud centric,” he said, “and we expect to see many more cloud on-ramps around the country. Those cloud on-ramps could certainly be at tower sites. We have the wireless carriers at the tower sites today. We have base radios at the sites today. We have easements for power and telco. So, there are perfect locations to site these new cloud on-ramps and have network compute power there as well.”
“We also put out longer-term organic tenant billings growth targets for the U.S. And in that — on that topic, we sit today with a clear path to seeing, on average, four percent reported organic tenant billings growth between now and out through 2027 in the U.S. If you normalize that for the Sprint churn, it will be up more like five percent,” he said.
Smith said over the next couple of years, with 5G applications and DISH as a customer, he expects that number to continue to accelerate, where American would have reported growth from 2023 out to 2027 on a reported basis, inclusive of the Sprint churn at five percent.
Smith said American already has over two thirds of the revenue growth that its projecting from now out to 2027 is already contracted, fully contracted and non-cancelable.
By Jim Fryer, Inside Towers Managing Editor
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