American Tower Looks Ahead


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At the recent Goldman Sachs Communicopia conference, Tom Bartlett, CEO, American Tower (NYSE: AMT) shared his outlook for the company.

Key strategic and operational priorities for 2022

AMT’s objective for strong, sustainable, profitable growth is driven by:

  • Organic growth. 5G will develop with new spectrum in each of AMT’s existing customers’ networks, in the U.S. and around the globe.
  • Build-to-suits. AMT will build 6,000-7,000 towers in 2021, and 40,000-50,000 new sites over the next several years. Higher band spectrum, advanced technology, coverage, and densification are driving demand for new site builds around the world.
  • Inorganic growth. AMT has expanded its portfolio, most recently in Europe. AMT’s total portfolio in the 23 countries where it operates is about a third of the inventory in those combined markets, creating acquisition opportunities.
  • Extending the platform. Edge applications in power and multi-access edge computing are unfolding.

“We can always do a better job at servicing our customers,” says Bartlett. “We’re working on that to make sure that we are absolutely the preferred vendor that they look to. I’d argue that we’ve got the best … global management team in the industry. There are going to be ways that we’re going to be able to improve the operationalizing of our business on a global basis.”

U.S. organic tenants’ billings growth acceleration

Escalating mobile data demand, nationwide 5G buildouts, DISH, and C-band deployments are driving record levels of applications on towers. AMT’s MLAs incorporate fixed rate, holistic pricing schemes over many years. AMT expects 2021 and 2022 to be outsized years for new business.

U.S. growth upside

Holistic pricing structures expire with Verizon in 2021 and AT&T in several years, with prospects of increasing prices on renewals. Higher levels of site services provide incremental upside. AMT is projecting $200-250 million in services in 2021 in the U.S. alone, more than double the company’s service revenue average of the past three years. As well, DISH could step up its deployments, adding to AMT’s organic growth.

Edge opportunities

A few small, mid-size accounts are looking for additional computing capability that AMT can provide at towers.

Developed versus developing markets

Developed markets like Europe lagged the U.S. from a technology perspective but carriers now are deploying 5G with new spectrum and active build plans. From a small European presence, AMT expects to scale with organic growth from 5G.

Developing markets have a mix of technology and spectrum but offer growth opportunities as carriers modernize and expand.

Sharing investment risk

AMT values the diversity of its customers and its capital. The company seeks pools of capital with good rates of return and looks for strategic partners, like a CDPQ or Allianz, to help with its global growth.

Acquiring towers from carriers or tower operators

Independent towercos already have customer relationships and have invested in their sites to support multiple tenants, enhance ground space, and provide long-term security. The question is: What are future growth opportunities?

Acquiring towers from a wireless carrier often requires a capital investment to strengthen the portfolio, update permitting and zoning, and shore up the land. The carrier becomes the anchor tenant under a long-term MLA with escalators, expansion opportunities and amendment activity. Growth potential comes from marketing the sites to other wireless service providers.

Both approaches are attractive, depending on the math: number of sites and locations, upgrade capital needed, lease up potential, tower cash flow?

India as a strategic market

India is AMT’s largest market with over 76,000 towers. The recent Indian government actions give AMT’s largest customer, Vodafone Idea, relief on spectrum and tax payments to increase its overall network investment, increasing AMT’s potential for gross new business. Churn is declining and all customers, including Airtel, Reliance Jio and BSNL, the government-backed carrier, have new spectrum and spectrum license extensions, and will “turn the spigots on.”

Supply chain

AMT has no supply chain issues. U.S. work is focused on servicing customer applications, largely on existing sites, with different contractors across the country. Access to standby generators is limited but AMT’s customers have secured the infrastructure elements they need to meet demand. Outside the U.S., COVID-related issues slowed carrier activity in India for a month or two, but carriers are back on track.

AFFO growth

AMT is targeting double-digit annual AFFO per share growth through 2027. Underlying organic demand around the globe supports AFFO growth. AMT also sees several infrastructure asset portfolios “up for grabs.” Incremental AFFO will also come from platform extensions at the edge, and “operationalizing” service opportunities globally.

By John Celentano, Inside Towers Business Editor

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