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Dividends Don't Power This Tower REIT

Mar. 06, 2018 7:00 AM ETAmerican Tower Corporation (AMT)7 Comments
Arturo Neto, CFA profile picture
Arturo Neto, CFA


  • American Tower has sold off along with the broader market and is now trading at 14% below its all-time high.
  • With the recent earnings beat, we reiterate our positive view on the stock.
  • At a P/AFFO multiple of 21, we think price appreciation will come from AFFO growth not multiple expansion.
  • If the government privatizes the telecom industry, AMT could benefit from accelerated investments in 5G.

Headquartered in Boston, American Tower Corp. (NYSE:AMT) is a major independent tower player that owns, operates, and develops real estate for wireless and broadcast communications. Formed in 1995 as a unit of American Radio Systems, the company came into existence after it was spun off after the merger of its parent company with CBS Corporation (CBS). The company is structured as a Real Estate Investment Trust (REIT) that has rapidly expanded in developed as well as emerging markets. The company's growth strategy has been mainly implemented through mergers and acquisitions, and its global presence is one of the key attributes that has made it one of our largest holdings, even as we have pared back exposure over time.

Source: Wireless Tower Communication Operator, Cell Site Lease Solutions | americantower.com

AMT's global portfolio comprises of 149,000 cell sites, and it is experiencing robust growth. Unlike some of its competitors, AMT has deep and broad global presence, and it has established itself as a leading tower company within the United States, France, Germany, Mexico, Argentina, Brazil, Chile, Colombia, Paraguay, Peru, Costa Rica, India, Ghana, Nigeria, South Africa, and Uganda. The table below highlights the number of sites within each country and the amount of revenue and margins produced by each.

In the latter half of the table, international tenants are listed for each country, which we highlight that many of the tenants are customers in multiple countries, including the US.

In India, specifically, India is experiencing rapid consolidation among carriers, which the company has been expecting. At first glance, consolidation may seem to be a negative for the company as redundant exposures per tower are reduced, but the company thinks that consolidation is leading to more rational markets on the demand side among carriers and the supply side among tower companies. Eventually, the company expects there to be 4-6 mobile

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This article was written by

Arturo Neto, CFA profile picture
I have been involved in financial services for almost 30 years. When I first started focusing on financial planning and money management it was out of a first-hand experience watching friends and family having to work well past retirement age because they hadn't saved or invested enough. Eventually I landed in a family office worth hundreds of millions of dollars where I was able to see 'how the other half lived' so to speak. I now operate a wealth advisory firm and publish articles on Seeking Alpha for DIY investors that prefer to manage their own money. As publisher of The Income Strategist, a premium subscription service on SA, my goal is to guide investors on how best to generate income from their investments. The service includes several income portfolios with different strategies that members can use independently or in combination. As part of the service, I also collaborate with other SA authors to provide broader and deeper coverage of investing. In addition to being a Chartered Financial Analyst, I am also a Certified Private Wealth Advisor and have an MBA from the Darden Graduate School of Business at the University of Virginia. I also hold a Master of Science in Finance and Bachelors in Finance from Florida International University. Having lived in Miami almost my entire life, my family and I relocated to Nashville, Tennessee in May 2018 in the pursuit of a better lifestyle and southern hospitality. If you're ever in the area, please do reach out. I'm happy to be teaming up with the following expert analyst contributors:1. Dilantha De Silva2. The Belgian Dentist

Analyst’s Disclosure: I am/we are long AMT, CCI, UNIT, QTS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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