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A Look into American Tower’s Major Revenue Drivers

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Rising top line

American Tower (AMT) owns and operates over 160,000 communications sites around the world. At the end of 1Q18, the company’s portfolio consisted of around 41,000 properties in the US and more than 119,000 properties in international markets. In 1Q18, the company generated about 98% of its total revenue from leasing its properties along with fiber and other urban telecommunication assets to tenants in some of its international markets.

The company’s top line has been rising over the past several years primarily on the back of solid property revenues. In 1Q18, total revenues rose nearly 8% year-over-year to $1.7 billion followed by a 15% rise in 2017 and a 21% increase in 2016.

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Property revenues

The property segment, a major contributor to the top line, accounted for nearly 98% of the company’s total revenue in 1Q18. Over the last five years, property revenues have grown at a compound annual growth rate of 18.5%. In the company’s Property segment, the US alone accounts for more than 50% of the total property revenues. In 1Q18, the US segment witnessed 4% year-over-year growth. Among the rest of the regions, Latin American and EMEA witnessed 20% and 16% revenue growth. Revenue from India fell nearly 1% due to the unfavorable impact from the churn driven by Indian carrier consolidation.

Tenant billings

Non-cancellable, long-term tenant leases contribute the major portion of the company’s revenues. American Tower has been generating consistent tenant growth in its US property segment. In 1Q18, the company’s property segment witnessed a total organic tenant billing growth of 5.8% with the US having growth of 6.3%. In other regions, Latin America saw the highest tenant billing growth of 11.7%.

Peers’ revenue growth

In 1Q18, other REITs like SBA Communications (SBAC), Crown Castle (CCI), and Simon Property (SPG) have posted 8.3%, 27.9%, and 3.7% year-over-year revenue growth, respectively. American Tower accounts for 3.3% of the Vanguard Real Estate Index Fund (VNQ).

In the next article, we’ll discuss American Tower’s robust inorganic growth strategy.

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