Colby Synesael, Jonathan Charbonneau, and Gregory Williams, CFA, at Cowen and Company attended NAREIT’s REITWorld Investor Forum last week in Atlanta, Georgia. The team had the chance to sit down with American Tower CFO, Tom Bartlett, and President and CEO of Crown Castle, Ben Moreland. “Mr. Bartlett made it clear that the issues that Crown recently spoke about regarding the outsized impact of churn from ‘acquired networks’ was not happening at American and that to the degree it did he believed it would be absorbed within the company’s typical 1-1.5% annual churn rate. As such he still feels comfortable messaging the company’s expectation of long-term organic core growth of 6-8% in the U.S. and 200-300bp higher in International,” the research team wrote. “When asked about American’s interest in the Verizon portfolio he said they would seriously look at it but reiterated that they would not have done the same deal Crown did with AT&T for its portfolio and they still would not do that same deal with Verizon for its portfolio.” The team’s take away from their conversation with Moreland left them with some insight on the potential purchase of Verizon’s towers. “While Mr. Moreland made it clear the company would seriously look at the Verizon portfolio if it was to come to market (which we got the sense has yet to occur), he seemed to suggest a deal at present was unlikely considering that part of the problem in paying a multiple similar to what it paid for the AT&T portfolio is Verizon is already on the sites. More specifically, Verizon has ‘by far’ been its most active customer since the AT&T deal and thus if by definition Verizon is already on its own towers, growth will have to come from the remaining three carriers which would limit initial upside,” according to Cowen and Company.
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