American Tower Earnings Call Focuses On Global Interests

When American Tower fielded questions about its third-quarter earnings yesterday, analysts wanted info on every market but one: America. Specifically, not on North America, as Central and South were very much of interest. Mexico, Brazil, India, Nigeria, Kenya, Germany and France all were mentioned. If not for one reference to the world champion Boston Red Sox, associations with the USA were conspicuously lacking.

International interests aside, AMT reported Q3 results that were met with subdued but positive reactions from analysts.  According to Barclays’ analyst Amir Rozwadowski, American posted results above their forecasts on property revenue, EBITDA, and Consolidated AFFO.

“Property Revenue of $1,752M was 1.4% above our estimate,” Rozwadowski said. “Adjusted EBITDA of $1,095M was 0.9% above our $1,085M estimate, while Consolidated AFFO of $821M was 3.3% above our $795M estimate. AFFO attributable to AMT shareholders was 0.7% above our expectations leading to a beat on per share basis ($1.76 vs. our $1.75 estimate). Of note, during the quarter, U.S. organic tenant billings growth was consistent with last quarter’s growth rate at 7.4%.” 

The company did, however, lower the midpoint of its outlook for net income by $5 million, Rozwadowski said.

Nick Del Deo of MoffettNathanson kept it on the home turf however (USA!) saying that after a couple of relatively soft years of leasing activity, 2018 was supposed to be the year that the domestic tower industry saw a legitimate breakout in growth.

“The stars were all aligning for a meaningful improvement: AT&T with FirstNet and the spectrum it’s piggybacking on that deployment; T-Mobile starting its 600 MHz rollout; Sprint (Sprint!) finally coming back to market after abandoning its efforts to bypass traditional towers. And yet, only one operator has delivered on that promise without any asterisks. That operator is American Tower,” Del Deo said. “American Tower had already bumped up its domestic leasing outlook for 2018 twice this year, starting at >6%, then raising it to ~6.5%, and then raising it again to ~7% with last quarter’s earnings. Domestic organic tenant billings growth was 6.9% in H1 2018, implying H2 2018 would be something similar. But apparently that wasn’t enough: today, management raised its outlook to >7%.”

Spencer Kurn of New Street Research saw the results as being “solid, with organic growth beating on LatAm strength (US was in-line), and AFFO beating on the revenue beat and lower maintenance capex.”

In India, Kurn noted, AMT reached a settlement with Tata, whereby “Tata will no longer pay 80% of their required rental revenue in exchange for 50% of their stake in ATC India and $320MM in cash.”  

October 31, 2018

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