SA News • Yesterday, 7:05 PM
American Tower Corporation: Understanding The Leverage That Drives Returns
- The REIT is capable of providing enormous leverage on their operations as the volume of customers increase.
- Gross margins on marginal revenues can be as high as 95%.
- The business case for leasing towers is dramatically superior to building towers from the perspective of the carriers due to the need for leverage to make costs efficient.
- AMT is able to access lower cost financing than many of their customers which reinforces the appeal of leasing the assets AMT acquires.
- AMT’s accelerated acquisitions remain an important growth driver.
- AMT’s cash flow productivity will improve to support shareholder-friendly capital allocation strategy.
- Stock offers potential price appreciation of 17%.
In A Santa Claus Market Look For American Tower Under The Tree
- American Tower is a cash flow machine.
- The company is expanding rapidly in the developing world with deals in Nigeria and Brazil.
- This is the easiest way to profit from mobile phone expansion.
- It's pricey now, so look for weakness.
Update: American Tower Corporation Acquires 5240 To 6480 Towers From Tim Cellular S.A.ColoradoWealthManagementFund • Nov. 24, 2014
- AMT has reached an agreement to purchase a total of 6,480 towers.
- 1,240 of the towers are still subject to preemptive rights.
- The deal increases the total asset base for AMT by about 5% and total revenues by 4.1%.
- Based on projected numbers, gross margin percentage will be down.
- This supports my thesis of management pursuing growth at all costs.
Earnings Beat Analysis - American Tower Corporation
Long-Term Growth Looks Secured As American Tower Earns Bullish Thesis
- Expanding tower network will support top-line growth amid rapidly growing network investments by carriers.
- Acquisition of BR towers has potential to boost AMT's revenues in emerging markets.
- Company consistently repaying debt, which will strengthen the balance sheet.
- Quarter 3 EPS misses projections, but revenues beat and were up year over year.
- The impact of adjustments to EBITDA was anticipated, full year guidance increases not predicted.
- The results confirmed my slightly bullish stance on operations and my concerns about adjusted values.
American Tower Isn't As Safe As It Seems, But It Has Some Great Qualities
- AMT is focused on growth at all costs.
- Significant first mover advantages encourage risky expansions.
- There are some challenges with guaranteed revenue from the contracts.
- Reliance Jio's plan to roll out 4G network across India may intensify competition and force other carriers to accelerate their roll out plans.
- The race to acquire an Indian tower company may add 41,000 towers to its network and could be the next trigger for the stock.
- American Tower Corporation is ideally positioned to take advantage of demand both in America and emerging markets. It already has a portfolio of more than 12,000 towers in India.
American Tower: Expansion Plans And Efforts At Improving Risk Profile Earn Bullish Thesis
- Wireless carriers in U.S. investing in network quality improvements and expansion will portend well for company’s top and bottom-line growth.
- AMT is well positioned to cater to growth potential of rapidly growing demand in international markets.
- Has been making strategic acquisitions to expand operations.
American Tower Maintains Growth Potential By Making The Right Moves In The Market
- Company is on track to growing revenues due to aggressive investments by carriers in network enhancements and expansions.
- Non-cancellable lease contracts with healthy renewal rates strengthen AMT’s future revenue base.
- Acquisitions in emerging international markets will portend well towards growing company’s operations and revenues.
American Tower: Another Acquisition, Yet I Continue To Have Valuation And Leverage Concerns
- American Tower expands operations in Brazil by yet an other acquisition.
- The company has seen solid growth in recent years, driven by organic and external growth.
- High valuation, high leverage and very low interest rates makes it easy for me to avoid this tower empire.
American Tower: Planning Ahead And Expanding Internationally Make It An Ideal Buy
- Company set to benefit from infrastructure improvement spending in U.S. and international markets.
- Strategic investment and acquisitions to expand international operations offer company robust future growth potential.
- Analysts project growth rate of 22% for next five years.
- Global demand for personal mobile devices will continue to grow significantly.
- No new technology in sight to replace towers as means of relaying cell phone and other personal device signals.
- Virtual local monopoly status once a tower is owned. Only a few major global players in this market. High barriers to entry, excellent cash flow.
American Tower Is Set To Prosper In The Future By Availing Itself Of Growth Opportunities
- Recent upgrades in U.S. telecom infrastructure and expansion in international markers are set to provide growth opportunities.
- The company remains committed to de-levering its balance sheet to counter investor fears.
- Cash flow base remains strong.
Qualcomm, Apple, And NXP Semiconductors Work Together To Enhance The 2014 Ballpark Experience
- Wireless users are increasing rapidly.
- AMT keeps benefiting from providing wireless infrastructure.
- NXPI, MA, and INTC opened the door to secure wireless electronic payments.
- Qualcomm, like AMT, will keep benefiting from providing beacon infrastructure.
Yesterday, 7:05 PM| Comment!
Thu, Jan. 22, 2:24 PM
- American Tower (AMT +1.8%) and (especially) SBA (SBAC +4.2%) are rallying after fellow tower owner Crown Castle beat Q4 revenue estimates (while slightly missing AFFO forecasts) and hiked its 2015 guidance. The S&P is up 0.9%.
- AMT (1.6% dividend yield) is $8 away from a high of $106.31. SBA is $6 away from a high of $122.79.
Dec. 2, 2014, 6:24 PM
- American Tower's (NYSE:AMT) new quarterly distribution is $0.02 above a prior $0.36/share, and good for a 1.5% yield. The distribution is payable on Jan. 13 to shareholders on record as of Dec. 16.
- The tower owner has also declared a $1.3125/share distribution for its 5.25% convertible preferred stock. It's payable on Feb. 16 to shareholders on record as of Feb. 1.
- Earlier: AMT, CCI hit by Raymond James downgrades
Dec. 2, 2014, 10:53 AM
- Raymond James has downgraded American Tower (AMT -2.5%) to Outperform from Strong Buy, and Crown Castle (CCI -2.3%) to Market Perform from Outperform. Peer SBA (SBAC -2.2%) is off in sympathy.
- AMT and SBAC have rallied strongly this year; CCI has seen more moderate gains.
- A month ago: Goldman, Macquarie downgrade AMT; CCI receives upgrade and downgrades
Nov. 24, 2014, 11:27 AM
- American Tower (AMT +0.2%) hasn't disclosed how much it's paying to buy Airtel's Nigerian tower portfolio. Airtel's Nigerian unit will act as the portfolio's anchor tenant, courtesy of a 10-year lease. (PR)
- AMT CEO Jim Taiclet: "With the largest population and economy in Africa and relatively underdeveloped wireless infrastructure, we view Nigeria as a tremendous growth opportunity. Further, we expect this investment to support our long-term objective of generating double-digit AFFO per share growth for our stockholders."
- The agreement comes on the heels of a $1.2B deal to buy 6,480 Brazilian towers from TIM Participacoes.
- Update: AMT discloses in an 8-K it's paying $1.05B for the Nigerian towers.
Nov. 21, 2014, 6:36 PM
- American Tower (NYSE:AMT) is buying 6,480 towers from TIM Participacoes (NYSE:TSU) for R$3B ($1.2B), slightly more than the ~$1.1B previously reported by Reuters. AMT "intends to finance the acquisition in a manner consistent with its previously announced leverage targets."
- The towers are expected to produce R$435M/year ($171M/year) in revenue, and R$191M/year ($75M/year) in gross margin. TIM has agreed to 20-year leases for the towers, and will act as their anchor tenant.
- AMT has already bought Brazilian towers from NII Holdings, and acquired local tower owner BR Towers. The company also bought 666 Brazilian towers in 2011, a transaction Muddy Waters took aim at.
- Altogether, AMT owned/operated 69.5K towers at the end of Q3.
Nov. 21, 2014, 3:48 AM
- Telecom Italia (NYSE:TI) will likely sell the mobile phone towers of its Brazilian unit TIM Participacoes (NYSE:TSU) to American Tower (NYSE:AMT) for almost €900M ($1.1B), says Reuters quoting two sources.
- Yesterday, Telecom Italia was reported to be weighing a deal between TIM and Brazil's Oi (NYSE:OIBR), saying it would ask its board for support today to "explore a potential transaction".
- Previously: Oi, PT rally; Telecom Italia reportedly weighing deal
Nov. 3, 2014, 8:48 AM
- Goldman and Macquarie have both downgraded American Tower (NYSE:AMT) to Neutral, and Nomura has issued a similar downgrade for Crown Castle (NYSE:CCI). Meanwhile, Goldman has upgraded CCI to Buy, and Raymond James has downgraded the company to Outperform from Strong Buy.
- AMT rallied on Thursday thanks to a strong Q3 AFFO figure and a full-year guidance hike. CCI sold off on Friday due to the company's soft 2015 outlook.
- Macquarie's Kevin Smithen says his firm has spent the last few days conducting checks to "try and reconcile" AMT's bullish commentary with CCI's cautious outlook. The checks "suggest a 100-150bps slowdown in industry US site leasing revenue growth in ‘16 as AT&T, Sprint and T-Mo reduce aggregate wireless capex and decommission Leap, Clearwire and Metro sites."
- He sees AMT's U.S. organic growth falling to 7.5% in 2015 and 6.4% in 2016 from 9.5% in 2014, and predicts the slowdown will yield multiple compression. "While we regard AMT’s mgmt. team and business model very highly, we are moving to the sideline on the shares until we feel ... expectations reflect slowing growth in ’16."
- Goldman's Brett Feldman says his "fundamental outlook for AMT" hasn't changed. However, he thinks "investors looking for exposure to the tower sector can generate a more attractive total return in CCI," following the company's huge dividend hike.
- If they pan out, Macquarie's checks also have implications for SBA (NASDAQ:SBAC). SBA's shares fell 1.8% on Friday thanks to Crown Castle.
Oct. 30, 2014, 1:39 PM
- Though it missed Q3 EPS estimates (while beating on revenue), American Tower (NYSE:AMT) is hiking its full-year AFFO guidance to $1.8B-$1.82B from $1.755B-$1.795B.
- Also, AMT now respectively forecasts U.S. and international organic core revenue growth of 9.5% and 16%; prior guidance was for 9%+ and "nearly 15%" growth.
- Rental/management revenue guidance has been narrowed to $3.975B-$4.005B from $3.945B-$4.015B, and net income guidance lowered to $805M-$825M from $830M-$850M.
- Q3 AFFO rose 25.2% Y/Y to $460M ($1.15/share, well above EPS of $0.50).
- U.S. rental/management revenue +25.2% to $664M (+9.1% organic); international revenue +30.3% to $348M (+17.7% organic). Network development services revenue more than doubled to $27.1M.
- Rental/management op. margin slipped to 67% from 69% a year ago. AMT ended Q3 with $13.6B in net debt, and a 5.1x net leverage ratio.
- SBA (SBAC +1.4%) and Crown Castle (CCI +0.8%) are up moderately.
- Q3 results, PR
Oct. 30, 2014, 7:04 AM
Oct. 29, 2014, 5:30 PM
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Oct. 10, 2014, 8:23 AM
- Scooping up Verizon's (NYSE:VZ) tower portfolio could position American Tower as (NYSE:AMT) the new leader in the U.S. tower market, Citigroup says in a note.
- A purchase would help AMT's scale and increase its exposure to VZ as an anchor tenant.
- Related: Bloomberg: Verizon looking to sell towers, could net $6B
Sep. 23, 2014, 6:13 PM
- Verizon (NYSE:VZ) has hired boutique i-bank TAP Advisors to find a buyer and work out a lease-back agreement for its 12K wireless towers by year's end, Bloomberg reports. It adds a deal could yield $6B, given how much AT&T received per tower in last year's $4.83B sale/leasing deal with Crown Castle (NYSE:CCI).
- Crown Castle, American Tower (NYSE:AMT), and SBA (NASDAQ:SBAC) have all been buying towers at a heady pace. However, the rising debt loads produced by the purchases could make one or more of the companies respond cautiously to Verizon's move.
- Verizon, for its part, is looking to de-leverage some after raising over $60B in debt to help pay for the Vodafone deal. The carrier had $104.2B in net debt at the end of Q2.
Sep. 3, 2014, 12:59 PM
- With American Tower (AMT -0.7%) up 24% YTD going into day, Morgan Stanley's Simon Flannery now considers shares fairly valued, and is downgrading them to Equal-Weight. His target is at $98.
- AMT is 5 weeks removed from posting a Q2 beat and guidance hike. Flannery still thinks emerging markets (previous) could act as a growth driver for the cell tower owner.
Aug. 15, 2014, 5:35 PM
Jul. 30, 2014, 12:51 PM
- In addition to beating Q2 estimates, American Tower (AMT +3.9%) is hiking its full-year AFFO guidance to $1.755B-$1.795B from $1.725B-$1.765B, and its full-year rental/management revenue guidance to $3.945B-$4.015B from $3.895B-$3.975B.
- At the midpoint, the revenue forecast assumes domestic revenue of $2.625B, and international revenue of $1.355B. Full-year core domestic revenue is expected to grow over 9% on an organic basis (accounts for acquisitions), and international organic core growth is expected to be near 15%.
- Full-year capex guidance has been hiked by $75M to $925M-$1.025B. Discretionary capex is expected to total $480M-$540M, and cover the buildout of 2,250-2,750 new sites.
- Organic core revenue grew 11.4% Y/Y in Q2 in the U.S., and 17.9% internationally. Gross margin fell 120 bps Y/Y to 74.1%; segment op. margin was steady at 68%.
- AMT's site portfolio grew by 1,112 Q/Q to 68,822. 642 were constructed, 508 acquired, and 38 lost due to adjustments. Strong 4G buildout activity is providing a boost to site demand.
- Q2 results, PR
AMT vs. ETF Alternatives
American Tower Corp is an owner, operator and developer of wireless and broadcast communications real estate. The Company's main business is leasing antenna space on multi-tenant communications sites to different providers.
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