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What to Expect from American Tower in 2018 amid 5G Rollout

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Strategies to back growth momentum

American Tower (AMT) is likely to continue its momentum on the growth trajectory on the back of strategic investments along with rapid expansion in emerging markets. The company’s revenue base is likely to gain from its innovative approach towards improving the existing 4G network. In addition, adopting the early phases of 5G deployment also remains a major positive for players (IYZ) like American Tower, SBA Communications (SBAC), Crown Castle (CCI), and Verizon Communications (VZ).

American Tower has been able to clock solid top-line growth in the recent past, which has boosted shareholder confidence. Its revenue is also expected to be further aided by accretive tower buyouts in emerging markets along with long-term tower leases with major wireless carriers. The recent acquisition of the Vodafone tower portfolio in India at the end of 1Q18 is worth a mention here.

For 2018, the company expects 6.5% growth in US organic tenant billings from the beginning of new businesses along with the robust pipeline of applications for both amendments and new colocations.

A strong start to 2018

During 1Q18, American Tower reported adjusted funds from operation (or AFFO) of $759 million, up 11.6% from 1Q17. Its AFFO per share came in at $1.84, which is 9.5% higher year-over-year. Adjusted earnings before interest, tax, depreciation, and amortization (or EBITDA) in the reported quarter were $1,062 million, up 6.5% from the prior-year quarter. Operating income was $402.9 million compared with $531.4 million in the year-ago quarter. The company reported total revenues of $1.7 billion, which rose 7.8% year-over-year on the back of a solid performance from the property segment.

In this series, we are going to discuss the impact of the Trump administration on American Tower along with American Tower’s financial strength and capital allocation strategy. We’ll also look into the major revenue drivers for the company. We’ll also discuss the company’s valuation from a shareholder’s perspective and analysts’ view on American Tower.

In the next article, we’ll discuss the company’s 2018 outlook.

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