American and T-Mo Sign 15-Year Master Lease Agreement

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T-Mobile and American Tower Corp. announced yesterday they have entered into a new 15-year master lease agreement (MLA). American Tower now expects to recognize approximately $95 million in additional straight-line revenue for the full year and has revised its outlook for the full year 2020. The company predicts total property revenue of $7,750 to $7,880 million, net income of $1,845 to $1,925 million and Adjusted EBITDA of $4,985 to $5,065 million. 

Full year expectations for other measures, including Organic Tenant Billings Growth and Consolidated AFFO, remain unchanged from the full year 2020 outlook issued on July 30, 2020. The MLA provides for an average non-cancellable term of nearly 15 years on leases included in the MLA, thereby securing approximately $17 billion in expected incremental contractually committed revenue over the contract term. 

We believe the agreement paves the way for T-Mobile to integrate Sprint’s spectrum into their network, sets parameters for them to decommission Sprint’s legacy sites, and significantly increases visibility on revenue growth for AMT,” said Spencer Kurn of New Street Research. “Now that the agreement with AMT has been signed, we expect agreements with CCI and SBAC to follow.”

Kurn said he views the agreement as positive for T-Mobile, AMT, and “the Towers” more broadly, as agreements with T-Mobile are key catalysts for the acceleration in organic growth that he expects over the next several years.

“All of Sprint’s leases with AMT were set to expire in late 2021,” Kurn said, “which could have driven a large churn event in 2021 and 2022.”

Although details of the MLA are sparse, Kurn believes the MLA has spread this churn over a multi-year period, which should soften the impact of the churn from Sprint and ensure positive organic growth for AMT over the next several years.

As to the impact on Crown and SBA, Kurn said it’s a positive for both, expecting similar MLAs to come in short order. “Both acknowledged that spending from T-Mobile has been slower than they initially expected after the Sprint merger was completed,” he said. “We always viewed MLAs as the big hurdle to spur T-Mobile’s spend with the Towers; if they sign them with T-Mobile in the next couple of months, as we expect, it should bode well for accelerating growth in 2021.”

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