Skip to content
    AMT
    Earnings call· Dec 2024(Q4 FY24)

    AMERICAN TOWER CORP /MA/ AMT

    Feb 25, 2025 Source

    Executive summary

    American Tower Q4 FY24 — Strong Developed Market Performance and Strategic Portfolio Optimization

    American Tower delivered a strong Q4 FY24, driven by robust performance in developed markets and strategic portfolio optimization, including divestitures in India and South Africa. The company is focused on enhancing earnings quality and balance sheet strength, with a significant portion of capital directed towards developed markets and data center expansion. While macroeconomic uncertainties and carrier consolidation persist, management is confident in sustained long-term growth from increasing mobile data demand and AI-driven network needs.

    Highlights

    5

    • Organic tenant billings growth of over 5% for FY24, and approximately 5% for FY25.

    • U.S. data center business revenue growth of nearly 10% in Q4 FY24 and nearly 12% in FY25.

    • Cash adjusted EBITDA margin expansion of over 200 basis points in Q4 FY24, with cash SG&A reduced by approximately $35 million in 2024 vs 2023.

    • Attributable AFFO per share growth of nearly 7% YoY (over 9% FX-neutral) to $10.54 in FY24.

    • Net leverage target of 5x expected to be maintained on a recurring basis in 2025, accelerating deleveraging plan.

    Concerns

    4

    • Negative headwind of 2% to property revenue growth in FY24 due to reduction in noncash straight-line revenue.

    • Organic tenant billings growth in U.S. and Canada expected to step down modestly in 2025 compared to 2024, impacted by ~140 basis points of Sprint churn in Q1-Q3.

    • Carrier consolidation-driven churn in Latin America expected to persist through 2027, resulting in elevated churn of approximately 5% in 2025.

    • Net interest headwinds of $80 million, representing a roughly 1.7% negative impact to AFFO per share growth in 2025.

    Guidance & targets

    26
    CategoryTargetConfidence
    Net leverage target
    5x
    high materiality
    High
    Developed markets contribution to unlevered AFFO
    ~75%
    medium materiality
    High
    Wireless CapEx spend (industry)
    ~$35 billion
    low materiality
    High
    Required network capacity growth
    More than double
    high materiality
    High
    Data center development capital deployment
    >$600 million
    high materiality
    High
    Europe new tower construction
    600 sites
    medium materiality
    High
    Emerging market discretionary CapEx
    >$300 million
    medium materiality
    High
    LatAm/Africa/APAC new tower construction
    ~1,650 sites
    medium materiality
    High
    Total company organic tenant billings growth
    ~5% (or ~5.5% absent the impacts of the final tranche of Sprint churn)
    high materiality
    High
    U.S. & Canada organic tenant billings growth
    >=4.3% (or >=5.3%, excluding the impacts of Sprint churn)
    high materiality
    High
    Africa & APAC organic tenant billings growth
    ~12% (includes ~7% escalators, ~6% organic new business)
    medium materiality
    High
    Europe organic tenant billings growth
    ~5% (includes 2% escalators, ~4% organic new business)
    medium materiality
    High
    Latin America organic tenant billings growth
    ~2% (includes ~5% escalators, >2% organic new business)
    medium materiality
    High
    Property revenue growth
    >0.5% (or ~3% on an FX-neutral basis)
    high materiality
    High
    U.S. data center business growth
    nearly 12%
    high materiality
    High
    Adjusted EBITDA growth
    ~1% (or >3% on an FX-neutral basis)
    high materiality
    High
    Services gross margin increase
    ~$30 million
    medium materiality
    High
    Cash SG&A decline
    ~-$20 million
    medium materiality
    High
    Attributable AFFO per share
    $10.40 (growth >4% YoY, ~7% FX-neutral)
    high materiality
    High
    Dividend growth
    Mid-single-digit range (~$3.2 billion distribution)
    high materiality
    High
    Total capital deployments
    $1.7 billion (total), $1.5 billion (discretionary)
    high materiality
    High
    Discretionary spend allocation to developed markets
    ~80%
    high materiality
    High
    Floating rate debt exposure target
    <10%
    high materiality
    High
    Net leverage target
    <=5x
    high materiality
    High
    U.S. organic tenant billings growth (long-term average)
    Mid-single-digit range (implied from prior guidance)
    high materiality
    High
    Europe organic tenant billings growth (long-term)
    Mid-single digits
    medium materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    U.S. & Canada
    U.S. & Canada organic tenant billings growth is expected to step down modestly in 2025 due to cadence of contracted use fees and commencement timing of non-contracted new business, but underlying demand remains strong.
    Organic tenant billings growth: >=4.3% (FY25)Organic tenant billings growth ex-Sprint churn: >=5.3% (FY25)Organic new business contribution: mid-3% range (FY25)Escalator contribution: 3% (FY25)Non-Sprint churn & other adjustments: ~1% (FY25)Sprint churn impact: ~140 bps (Q1-Q3 FY25)Mid-band spectrum upgrades (big 3 customers): average 65% (end of FY24, up from 50% a year ago)Application activity: 4 quarters of sequential acceleration (FY24)Q4 application volumes: more than doubled YoY
    		————
    CoreSite (U.S. Data Center)
    CoreSite delivered strong results, reinforcing demand and pricing durability for interconnection-centric colocation, with significant development capital planned for existing campuses.
    Revenue growth: nearly 12% (midpoint FY25)New leasing: elevated (Q4 FY24)Stabilized yields on development: mid-teens or higher (long-term expectation)Average monthly recurring rent per cabinet: up a couple of hundred dollars (last couple of years)
    		—nearly 10% (Q4 FY24)——
    Africa & APAC
    Strong organic tenant billings growth driven by 4G densification and initial 5G upgrades, with reduced discretionary CapEx.
    Organic tenant billings growth: ~12% (FY25)Escalator contribution: ~7% (FY25)Organic new business contribution: ~6% (FY25)Churn: ~2% (FY25, notable improvement from prior years)5G mid-band coverage: ~10%
    		————
    Europe
    Steady organic new business contributions and escalators drive growth, with significant new tower construction planned.
    Organic tenant billings growth: ~5% (FY25)Escalator contribution: 2% (FY25)Organic new business contribution: ~4% (FY25)Churn: ~1% (FY25)5G mid-band coverage: ~45%
    		————
    Latin America
    Growth is partially offset by elevated churn due to carrier consolidation, which is expected to persist through 2027. Discretionary CapEx is being reduced.
    Organic tenant billings growth: ~2% (FY25)Escalator contribution: ~5% (FY25)Organic new business contribution: >2% (FY25)Churn: ~5% (FY25, due to carrier consolidation)5G mid-band coverage: ~15%
    		————

    Operational metrics

    16
    Cash SG&A excluding bad debt
    -$35 millionvs 2023
    FY24

    Supported by various efficiency initiatives, including the thoughtful globalization of company-wide functions like finance, IT and HR.

    Cash SG&A decline
    -$20 millionYoY
    FY25

    Another year of cash SG&A declines.

    Cash margin expansion
    140 bpsYoY
    FY24

    Demonstrating our commitment to driving efficiency throughout our global organization.

    Floating rate debt exposure
    3%
    Q4 FY24

    Insulates us somewhat from the volatility and the uncertainty around rates.

    Liquidity position
    $12 billion
    Q4 FY24

    Provides optionality to manage the $3.7 billion of fixed note maturities in 2025.

    Net interest headwinds
    $80 millionYoY
    FY25

    A roughly 1.7% negative impact to growth.

    U.S. land purchases
    $200 millionvs $144 million in FY24
    FY25

    Very selective in terms of which parcels of land we purchase, and we look to purchase land under our very best towers to secure the revenue over the long term.

    Percentage of towers with long-term land security
    north of high 70s
    Q4 FY24

    Partly through the execution of extending leases, but also purchasing these leases.

    Mobile data traffic growth
    >15%
    Annually

    Underwritten by projected total mobile network traffic growth.

    Incremental capacity need solved by current spectrum/efficiency
    ~half
    Long-term

    That leaves a sizable capacity gap that can only be resolved through densification, additional spectrum coming to market or a combination of both.

    5G network traffic share
    35%
    Current

    Prompting carriers to enhance and expand their increasingly stressed networks.

    New business (U.S.)
    $165 million-$170 millionvs $180 million in FY24
    FY25

    Although we do see a dip, as Steve talks about from the end of last year going into Q1 and 2, we do think there's an acceleration -- modest acceleration that could be seen at the end of the year.

    Attributable AFFO per share (adjusted)
    $9.96
    FY24

    Used as baseline for 2025 guidance.

    Net leverage
    5.1x
    End of FY24

    Our view is that we will be at or below 5x early in 2025.

    Sprint churn revenue
    $98 million-$100 million
    FY25

    Will impact the organic tenant billings numbers over the first 3 quarters, and then it will be absent in Q4.

    Churn run rate
    ~$30 million
    Q1 FY25

    That churn number in Q1 will reduce down to about $10 million or so.

    Industry KPIs

    2
    MetricValueDetails
    Carrier churn impact~140 bpsbps
    Organic tenant billings growth~5%%

    Orderbook & backlog

    1
    CoreSite backlog>$80 millionQ4 FY24

    all-time high

    Expected to sustain solid revenue growth over the next couple of years.

    Deals & partnerships

    3
    South Africa fiber businessSale of fiber assets

    Highlights another step towards enhancing portfolio quality and focus.

    India businessExit from India business

    As discussed on Q3 call, exited India business.

    Australia and New Zealand land interestSale of modest land interest

    Sold modest land interest in Australia and New Zealand.

    Capital programs

    3
    Data center development on existing campusesunderway
    Period spend: >$600 million

    Underwritten at mid-teens stabilized yields, to replenish record level of capacity sold.

    Europe new tower constructionunderway

    Benefit: 600 sites

    Anticipate low double-digit day 1 yields.

    Latin America, Africa and APAC new tower constructionunderway

    Benefit: ~1,650 sites

    Primarily focused on previously committed tower sites for strategic customers underwritten at mid-teens day 1 NOI yields.

    Risks & headwinds

    6
    Macroeconomic uncertaintyOngoing

    Persists across the global landscape

    Mitigation: Focus on operating and actively managing the highest quality global portfolio of assets, offering best-in-class customer service and delivery through our experienced global teams and leveraging our investment-grade balance sheet.

    FX and interest rate volatilityOngoing

    Global risks persist

    Mitigation: Entering 2025 in a stronger position thanks to significant efforts undertaken by the talented members of our global team.

    Carrier consolidationOngoing

    Headwinds in 2024 underscore the importance of these initiatives

    Mitigation: Better prepare us to weather challenges like carrier consolidation.

    Latin America carrier consolidation-driven churnThrough 2027

    ~5% churn in 2025

    Mitigation: Focus on augmenting sites to accommodate incremental tenants and meeting multiyear agreement obligations with leading carriers.

    Sprint churn impact on U.S. organic tenant billings growthFirst 3 quarters of 2025

    ~140 basis points

    Mitigation: Expected to recover to over 5.5% in Q4 2025 as Sprint churn impacts cease.

    Net interest headwindsFY25

    $80 million

    Mitigation: Tightly managed cash taxes and maintenance CapEx.

    What to watch in Q1 FY25

    5

    U.S. organic tenant billings growth

    Q4 FY25
    Current>=4.3% (FY25 guidance)
    TargetRecovery to >5.5%

    Why it matters

    To confirm the expected recovery after Sprint churn impacts cease and validate underlying demand strength.

    our guide assumes the first 3 quarters of 2025 will be impacted by approximately 140 basis points of Sprint churn, likely keeping growth below 4% during that time period before recovering to over 5.5% in Q4, which will not have any negative growth impacts from Sprint churn.

    Q&A highlights

    6

    Details on colo vs. amendment mix, impact on OTBG, and confirmation of mid-single-digit growth through 2027.

    Management confirmed the long-term guidance of mid-single-digit growth through 2027. Explained that 2025's modest step-down in OTBG is due to the cadence of contracted use fees and commencement timing of non-contracted new business (colos, non-MLA amendments), not softening demand. Noted a rise in new colocations for network extension and early densification.

    “our outlook for organic tenant billings growth in the U.S. and Canada steps down modestly compared to 2024. This is a function of the cadence of our contracted use fees and also the commencement timing associated with noncontracted new business... not a softening in demand.”

    asked by Michael Rollins · answered by Steven Vondran

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Priorities and Portfolio Optimization

    American Tower has focused on balance sheet strength, efficiency, portfolio quality, and capital allocation discipline. This includes exiting the India business, selling land interests in Australia/New Zealand, and divesting the South Africa fiber business to enhance earnings quality and focus on developed markets. The company expects developed markets to contribute about 75% to unlevered AFFO in 2025, reflecting a shift in portfolio emphasis.

    02

    Operational Efficiency and Leadership Changes

    The company achieved approximately $35 million in cash SG&A reduction in 2024 and targets another $20 million in 2025 through globalization of functions. New appointments, including a Chief Operating Officer, aim to further leverage global operating expertise and drive margin expansion across direct costs, operations, maintenance, utilities, and supply chain. Long-term efficiency targets are expected to be communicated in the future.

    03

    5G Investment Cycle and AI Demand

    The 5G investment cycle is progressing as expected, with carriers deploying mid-band spectrum and densifying networks. The company anticipates sustained higher CapEx needs, with wireless CapEx projected to reach $35 billion in 2025, $5 billion above the 4G average. Emerging AI-driven demand, particularly from bandwidth-intensive video AI applications, is expected to further exacerbate capacity shortages, benefiting both towers and data centers.

    04

    CoreSite Performance and Edge Strategy

    CoreSite delivered record new leasing and strong revenue growth, reinforcing demand and pricing durability for interconnection-centric colocation. The business is underwritten at mid-teens stabilized yields for development. Management remains convinced of its core business model and the long-term potential for convergence of wireless and wireline edge compute, with CoreSite's highly interconnected ecosystem well-positioned for AI inferencing.

    05

    Capital Allocation and Developed Market Focus

    Discretionary capital is primarily directed towards developed markets, with approximately 80% of the $1.5 billion discretionary spend in 2025. This includes over $600 million for data center development and construction of 600 new tower sites in Europe. Emerging market discretionary CapEx is significantly reduced to just over $300 million, focusing on committed sites for strategic customers in Latin America, Africa, and APAC.

    06

    U.S. Leasing Environment and Cadence

    U.S. application activity showed sequential acceleration through Q4 2024, with Q4 volumes more than doubling YoY. While 2025 U.S. organic tenant billings growth is modestly lower due to the cadence of contracted use fees and commencement timing of📎 non-contracted new business, the underlying demand and pipeline remain solid, with an expected recovery in Q4 2025 after Sprint churn impacts.

    AI-generated summary of the company’s earnings call. Not investment advice.