American Tower (NYSE: AMT) has become, through strategic acquisitions and a record number of new builds, the largest publicly held tower company in the world. On a pro forma basis, including towers from its pending acquisition of Telefonica’s Telxius Towers, announced in January, AMT’s global portfolio is nearly 215,000 towers in 20 countries.
That tally puts the company only second to China Tower’s two million towers, though China Tower is predominantly state-owned.
AMT reported total 2020 property leasing revenues of almost $8.0 billion, up about 7 percent over $7.5 billion in 2019. Adjusted EBITDA grew nearly 9 percent year-over-year to $5.2 billion and consolidated AFFO came in at $3.8 billion, up 8 percent YoY.
Capital expenditures in 2020 were $1.1 billion, up 4 percent from $1.0 billion in 2019. Discretionary capex for new tower builds, tower upgrades and ground lease purchases totaled just over $900 million. The balance went towards tower maintenance and corporate facility investments.
The company reported 5,852 new tower builds worldwide during 2020, the highest in its history. That compared to the 4,414 towers AMT built in 2019. AMT’s construction activity in 2H20 was very pronounced with nearly 2,900 towers built in 4Q20 alone, again the most in its history.
Roughly 4,000 new towers were built in Asia-Pacific, specifically in India, which is AMT’s biggest market with close to 75,000 towers. India is a highly competitive wireless services market with the four major mobile network operators moving rapidly to expand and upgrade their 4G coverage across the Indian subcontinent.
Africa is a major growing market for the company, as well. AMT built almost 1,500 new towers bringing its portfolio in Africa to 20,000 at year-end 2020. The company offers power as a service (PaaS) at many sites like those in Africa, especially in countries where the electrical power grid is unreliable. PaaS includes back up diesel generators and renewable energy sources such as solar power.
AMT expects another wave of new builds in 2021, even surpassing the 2020 level. The company is planning for another record of around 6,500 new builds in 2021, and is guiding full-year capex to $1.4 billion.
The Telxius deal makes AMT a player in the European tower market, growing its base to over 33,000 towers where it previously had a nominal market share. The company will compete with larger Vantage Towers and Cellnex.
Germany becomes AMT’s biggest and most attractive European market where AMT expects to offer mobile edge computing as a value-added service for its carrier tenants’ business and Enterprise customers. The Telxius deal is expected to close in 2021 in several tranches beginning in 2Q.
Despite having only 20 percent of AMT’s towers, the U.S. and Canada markets account for 57 percent of total property revenues. AMT revenues are highly concentrated among the three U.S. Tier 1 MNOs. The company has master lease agreements with AT&T, T-Mobile and Verizon that together account for 51 percent of its total global property revenues.
Certainly, 5G is driving infrastructure demand in the U.S. In September, AMT signed a new 15-year MLA with T-Mobile to support the MNO’s aggressive 5G deployment and network growth plans.
While assuring a long-term revenue stream, the T-Mobile MLA actually is a two-edged sword for AMT. As T-Mobile rationalizes the integration of its network with the acquired Sprint network, it will be successively decommissioning, that is, turning off and removing radios and antennas that were used for Sprint’s CDMA 4G network and the Sprint Clearwire/Nextel 3G networks.
This means tower leases for that equipment will be wound down and terminated, creating revenue “churn” for AMT. The decommissioning is expected to commence in earnest by 4Q21 and continue into the end of 2022.
As such, AMT is projecting U.S. organic revenue growth of just 3 percent for 2021, while acknowledging the T-Mobile decommissioning activity is reducing that annual growth by about 1 percent.
The good news is that once T-Mobile completes that phase of its network construction, AMT expects its U.S. annual growth rate to rebound to the 4-5 percent it expects from MLAs already in place.
AMT does not have a MLA with DISH although it is counting on site-specific leasing deals as DISH moves forward with its 5G plans.
By John Celentano, Inside Towers Business Editor