Cowen & Company analyst Colby Synesael may have hit a nerve — or at least rung an alarm bell – during Friday morning’s Q3 results call when he asked American Tower Corp. CEO Jim Taiclet and CFO Tom Bartlett about reports the company’s Master Lease Agreement with AT&T’s is expiring in 2016.
“Let me be really clear: the Master Lease Agreement is not expiring. Okay?” Bartlett said emphatically. “There are certain elements that Jim talked about that change over that period of time but the MLA is not expiring. I know there have been some write-ups and I want to be very clear on that.”
Earlier in the lengthy conference call, Taiclet noted “Our largest new business customers over the last couple of quarters have been Verizon and T-Mobile, sort of running neck-and-neck in a way over the past six months.” He said T-Mobile has been in the field aggressively deploying its 700-megahertz, eight-watt spectrum “that’s going to give them a stronger signal in places where they don’t have it. They are also doing a roaming overbuild because of the success of their subscriber additions.” He said the carrier has made the decision to put more network equipment in place in more territories across the United States and they are doing that. “So, T-Mobile is being pretty aggressive this year.”
Taicelt also thinks, “Verizon is pretty stable and steady. Their wireless capex is up by almost 20 percent year-to-date over 2014. The guide is $8.6 billion for mobile spending for capex in 2015. They are aggressively deploying AWS spectrum across their markets to handle the data demand that they are seeing from their customer base on a pretty steady and stable spending schedule.”
AT&T continues to be grooming, I guess we’d call it. They were our biggest customer for new business from late 2013 to mid-2014 and they’ve taken the intervening year to sort of groom that to make sure it is being effectively utilized for their subscriber base. Everybody goes a little less from year-to-year. Their capex spending is at $6.6 billion. So, just as a reference, if Verizon is at $8.6 billion 2015 and AT&T is at $6.6 billion, how does that comparison or trend play out? I think everyone can draw their own conclusion on that. We do expect AT&T to continue to be competitive over next few years on the network side of the business.”
Tacilet also expects additional American Tower revenue from AT&T down the road. “They are also going to be looking at deploying, as Verizon, AWS-3 once that becomes cleared and available.” He added, “what is interesting to us about AWS-3 is especially the fact that Verizon and AT&T collective spent almost $20 billion on that spectrum.”
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