American Tower (NYSE: AMT) continues to bolster its position as the world’s largest independent tower company. With significant new tower builds during the quarter, along with some small acquisitions and site sales, the company ended 1Q22 with a total of 219,266 towers worldwide. During its quarterly earnings call, AMT reported that total property revenues, including contributions from both towers and data centers, increased 22 percent on a year-over-year basis to $2.6 billion. Adjusted EBITDA grew 13 percent to $1.6 billion while AFFO came in at $1.2 billion, up 7 percent YoY.
The company attributes the strong growth to global secular trends for mobile data consumption and continued heavy capital expenditures by its mobile network operator tenants around the world as they install equipment to activate new spectrum. MNOs in the U.S. and Europe are focused on new 5G networks while 4G coverage and densification continues apace among MNOs in developing markets. Internally, AMT is on track with its construction program to build 6,000-7,000 new towers in 2022. The company completed 1,437 new builds in 1Q22 across its global footprint with the majority split between India and Africa.
The U.S. & Canada segment accounts for nearly 43,000 or just 20 percent of the global towers but was $1.2 billion or 47 percent of 1Q22 total property revenues. International segments together account for another 46 percent of total property revenues.
Of note, 1Q22 was the first full quarter of contributions from the company’s Core Site data center acquisition at the end of 2021. AMT now reports data centers in a separate segment that includes Core Site, earlier Data Site acquisitions along with mobile edge computing in six U.S. markets. The Data Center segment accounted for $184 million or 7 percent balance of total 1Q22 property revenues.
AMT points out that macro towers continue to be critical infrastructure for long-term MNO network investments, particularly in North America. The company says its backlog of contractually guaranteed revenues in the U.S. has more than doubled on a per site basis over the past five years, indicating the long-term value its MNO tenants attribute to macro towers as a key component of their 5G network deployment strategy.
In 2022, AMT expects another year of accelerating gross new business growth in the U.S. and Canada. It expects growth from colocations and amendments to ramp in the back half of the year, reaching a high point by the end of 2022. With colocation and amendment contributions accelerating and the impacts of the Sprint churn gradually declining through 2022, AMT expects strong mid-single digit organic tenant billings growth in 2023 and beyond.
At the same time, the data center business has growing long-term prospects. AMT sees accelerating hybrid IT and multi-cloud deployments driving demand for highly interconnected data center facilities that the company now operates. AMT will selectively deploy capital toward high-yield development projects as that demand grows.
In Europe, AMT’s acquisition of Telxius from Telefonica in 2021 is paying off with a recently signed long-term deal with 1&1 for a greenfield 5G network across Germany. Furthermore, AMT is assessing the potential for more tower acquisitions in Europe as MNOs divest their passive infrastructure assets.
“We’re off to a strong start in 2022 with organic tenant billings growth accelerating sequentially in each of our reported segments,” states Tom Bartlett, American Tower’s President and CEO. “It is clear to us that macro towers will continue to be critical infrastructure for carrier network investments over the next decade and beyond. We believe our global footprint of distributed communications real estate is well-positioned to capture the benefits of the emerging technological trends, ultimately driving what we hope to be a prolonged period of solid global growth and attractive returns for our shareholders.”
Accordingly, the company is upping full-year 2022 midpoint guidance on all key metrics. It now expects 2022 total property revenue of $10.4 billion, a 14 percent increase over FY2021, Adjusted EBITDA of $6.6 billion, up 11 percent and AFFO of $4.8 billion, an 8 percent increase. The company plans to invest over $2 billion in capital expenditures of which roughly $835 million is in discretionary capex that includes the 6,000-7,000 tower construction and about $300 million towards data centers, $270 million of which is for development projects.
By John Celentano, Inside Towers Business Editor
