American Tower Upbeat on Full-Year Outlook

American Tower (NYSE: AMT) is still the largest independent tower company in the world, according to Inside Towers Intelligence. The company’s 1Q24 results reflected that position. For the quarter, the company reported a total of 222,643 towers across its global portfolio. That figure is down by 187 sites from 4Q23, the net result of site sales and decommissioning, and new builds and acquisitions in the quarter. Most of the decline is in India where the company is in the process of selling its largest holdings, over 76,000 towers, to Brookfield Infrastructure Partners (NYSE: BIP), Inside Towers reported. That deal is scheduled to close in the second half of 2024.

For the quarter, total property leasing revenue was $2.8 billion, up over three percent year-over-year. Of the total revenues, the U.S.& Canada segment accounted for 47 percent, international markets 45 percent and data centers the eight percent balance. Adjusted EBITDA came in at nearly $1.9 billion, up more than five percent YoY and AFFO was $1.3 billion, up 10 percent from 1Q23. 

In his remarks during the company’s 1Q24 earnings call, Steve Vondran, American Tower President and CEO said that strong global demand for mobile network upgrades and digital transformation trends drove 5.4 percent consolidated organic tenant billings growth across the company’s tower and data center platforms.

The demand drivers are a combination of 5G rollouts that are contributing to an acceleration of site amendment applications in the U.S., which he attributed to the comprehensive master lease agreement that the company has with the Big 3 U.S. MNOs. 

Vondran also highlighted another sequential step up in colocation and amendment growth in Europe. He added that solid demand in Africa continued to drive elevated new business growth, and that retail demand resulted in nearly 11 percent growth in its CoreSite data centers segment, the highest quarter of signed retail leasing since 4Q20. 

On the strength of first quarter performance, American Tower raised its full-year 2024 midpoint guidance for property revenues, Adjusted EBITDA and AFFO.

The company plans to spend $1.4 billion in discretionary capex in 2024 for new tower builds, site development and acquisitions. Though new tower builds of 356 in 1Q24 were “low,” Rod Smith, CFO, said he expects that level of new build activity to increase throughout the year to reach 2,500 to 3,500 by the end of 2024.

“We continue to see strong demand for building towers for our customers across Africa and also in Europe,” he pointed out. “We are being fairly disciplined with the higher cost of capital, looking to make sure that pricing around build-to-suits reflects the new reality. But we still see several thousand sites that we can build every year.”

He acknowledged the volumes likely would decline over time but one of the results of that is the quality has increased. Smith said, “We’re really being very selective about where we build, who we build for, and what assets we build. As we look at the macro environment with the uncertainty around rates and cost of capital, we’re being extremely disciplined.”

By John Celentano, Inside Towers Business Editor

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