American Tower Firing on All Cylinders

We’re in the era of electric cars but if you have ever driven an American muscle car with a V8 and a 5-speed stick, you can appreciate this analogy. American Tower (NYSE: AMT) presented its 4Q21 and full-year 2021 results yesterday and clearly, the company is firing on all cylinders.

The company reported double-digit increases across all its key financial metrics. Property revenues or site leasing revenues, came in at $9.1 billion, up 15 percent from $8.0 billion in 2020. The company realized solid organic tenant billings growth particularly in its Africa and Latin America markets. Service revenues garnered from customer site support activities nearly tripled to $247 million. Net income jumped 52 percent to $2.6 billion and Adjusted EBITDA grew to $6.0 billion, a 16 percent YoY increase. AFFO was up 14 percent to $4.3 billion from $3.8 billion in 2020.

AMT invested $1.2 billion in discretionary capital expenditures to construct 6,319 new towers in 2021. Nearly 60 percent were built in India, another 28 percent in Africa and the balance among AMT’s Latin America, Europe and U.S. & Canada markets. It points out these new builds are profitable as soon as they are built, yielding an average of 12 percent Day-1 net operating income.

AMT’s global tower count grew by almost 35,000 to 218,353 at year-end 2021. These towers span 24 countries in five geographic regions making the company the largest independent tower company in the world. The portfolio expanded in 2021 on the strength of the new tower construction and its acquisition of Telxius Towers from Telefónica that added around 31,000 towers, mainly in Germany and Spain and parts of Latin America. 

AMT is raising its 2022 discretionary capex guidance by 58 percent to $1.9 billion mostly for the construction of another 6,000-7,000 towers globally and several hundred million of discretionary capex in data centers. The company indicated its 2022 tower build plan calls for about 4,000 new towers in India, roughly 1,900 in Africa and about 500 each in Europe and Latin America. Included in the 2022 construction program is the annual allotment of a 10-year build-to-suit program for 3,300 towers in Germany and Brazil that AMT inherited with the Telxius acquisition. 

The company is projecting property revenue for 2022 to grow 13 percent to $10.3 billion as its mobile network operator tenants accelerate their 5G network ramp-ups and densify 4G networks in global markets. At the same time, the $1.2 billion incremental property revenue growth includes contributions of $420 million from international towers and $705 million from data centers reflecting the accretive nature of the its two big acquisitions in 2021 – Telxius Towers in Europe and Core Site’s U.S. data centers, respectively, as Inside Towers reported.

AMT acknowledged that organic tenant billing will slow in the U.S. in 2022, to around one percent due to churn associated with redundant Sprint site decommissioning as T-Mobile, AMT’s largest customer, rationalizes its merged network. On balance, the company pointed out that it has renewed, long term master lease agreements with all its MNO tenants and fully expects domestic organic tenant billing to revert to around 5 percent a year once the Sprint churn subsides.

By John Celentano, Inside Towers Business Editor

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