American Tower Raises Its Outlook on Sparkling Q2 Results

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American Tower (NYSE: AMT), in its 2Q21 earnings report, turned in double-digit growth on a year-over-year basis across the board.

Total property revenue grew 18 percent YoY to $2.2 billion as tenant billings increased by 11 percent. Net income jumped 67 percent YoY to $748 million. Adjusted EBITDA came in at nearly $1.5 billion, up 22 percent from $1.2 billion in 2Q20. Consolidated AFFO was $1.1 billion for the quarter, a 19 percent YoY increase.

The company cites rising global demand for tower space as the main driver of its growth. Mobile network operators across all of AMT’s operating regions are upgrading and expanding their networks to meet growing residential and business connectivity needs and mobile data demand.  

On the strength of its second quarter performance, the company raised its guidance for full-year 2021. It now expects total property revenues in the $9.0-9.1 billion range and net income of $2.4-2.5 billion. It guided Adjusted EBITDA to $5.0-6.0 billion and consolidated AFFO in the $4.3-4.4 billion range.

AMT also indicated it expects full-year capital expenditures of $1.5-1.6 billion. Over 85 percent of capex will go towards new tower builds, ground lease purchases, and tower modifications and upgrades while the balance is for maintenance capex. The company also raised its new tower build plan by 500 to roughly 7,000 new towers worldwide in 2021, with most of those outside of North America.

In 2Q21, AMT acquired Telxius Telecom, S.A.’s European and Latin American tower divisions in a deal valued at approximately $8.8 billion, as Inside Towers reported. As a result of that deal, AMT added in the quarter almost 27,000 communications sites, comprising nearly 20,000 communications sites in Germany and Spain and roughly 7,000 communications sites in Brazil, Peru, Chile, and Argentina. Approximately 4,000 remaining rooftop communications sites in Germany are expected to close in August 2021.

This acquisition brings AMT’s total communications sites to 212,537 in 22 countries, making it the largest independent tower company in the world. With the Telxius site addition, AMT’s global portfolio grew by 15 percent sequentially from 1Q21 and 19 percent YoY. (Note that China Tower has a much larger tower count but remains majority state-owned. See, China Tower Operates at [A Very Big] Scale.)

The U.S. and Canada account for just 20 percent of the total site count at nearly 43,000 but generated over $1.2 billion or 55 percent of the company’s total property revenues in the quarter. The big three U.S. MNOs led by T-Mobile accounted for $592 million, representing 48 percent of the total. Though AMT landed a long-term lease agreement with DISH Network in March, those revenues will not kick in until 2022 and beyond.

Even with the Telxius acquisition, Europe accounts for only 12 percent of AMT’s portfolio and less than 10 percent of international revenues. Nonetheless, the company expects that with the leading MNOs in its big markets in Germany and Spain actively expanding their 4G networks and deploying new 5G networks, property revenues will ramp steadily over the next several years.

Latin America is on a similar scale with tower counts at 48,368 and contributed $366 million in property revenues in the quarter. AMT sees Brazil as a growth market and is being opportunistic in serving mobile operators in the aftermath of the Oi SA breakup.

The market in India accounts for 35 percent of AMT’s total tower lineup with more than 75,000 sites and accounted for $298 million in property revenues. India has been hard hit by the pandemic that slowed new tower builds throughout the country where AMT is constructing the lion’s share of its new sites. The company built nearly 4,000 new towers in India in 2020 and is just under that pace through the first half of 2021.

Though its smallest regional market, AMT sees good growth prospects in Africa. It has signed a long-term agreement in Nigeria and is building about 1,500 towers a year throughout the region. In this market, AMT extends its infrastructure offerings to include power-as-a-service (PaaS) for its tenants. PaaS includes solar panels and lithium batteries to power the sites, and diesel generators as backup power where appropriate.

The company stopped short of suggesting that it might expand its leasable infrastructure to include active equipment like radios and antennas. AMT is committed to leasing passive infrastructure, even as it acknowledged that it acts as a neutral host in 1,800 distributed antenna system installations mainly in the U.S.

By John Celentano, Inside Towers Business Editor

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