The National Association of REITS, an international representative voice for real estate investment trusts, met in Los Angeles this week. Since all three of the major towercos now answer to that name, industry analysts were in attendance as panelists and information gatherers for their clients. Jennifer M. Fritzsche, Senior Analyst, Wells Fargo Securities met with AMT’s management at NAREIT to discuss recent earnings calls and global conditions.
Fritzsche said the company was being cautious in the wake of a recent ruling by the Supreme Court in India to uphold a decision that would require wireless carriers to pay certain spectrum license and other fees retroactively to the Department of Telecom which created a ripple of uncertainty through AMT’s India segment.
Under the terms of the ruling, carriers have 90 days from the date of the ruling to pay these fees (this ruling came in late October).
“Thus, by the time AMT reports Q4 earnings, expected in early February,” Fritzsche said, “we expect it will know more in regard to the status of Indian growth. While we recognize this is an optically difficult headline, we still remain bullish as to the longer term growth outlook for India. Driving this conviction is the lack of wired broadband deployment in the continent,” she said.
One of the most interesting things Fritzsche said she learned during their meeting was that AMT estimates the active (non-passive) dedicated REIT holders only account for ~ 10 percent of AMT’s current shareholder base. The passive management percent of REIT shareholders has significantly increased in the past few years given changes to the Vanguard Index’s buying parameters (which was favorable to towers) and the move to create a dedicated REIT GIC index (August, 2016).
“This is worth noting given that, based on our recent conversations with dedicated REIT investors, our sense is towers remain a strong area of focus,” she said. “With higher AFFO and dividend growth rates than the ‘typical’ REIT, we expect this sector screens quite well for this investor group. This could gain more attention from this sector next year as many of the overhangs on the sector will be removed in 2020.”
November 15, 2019