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Global Expansion Strategy Brings Incremental Revenue for AMT

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Increasing international revenue

American Tower (AMT) generates ~45% of its revenue from the international market. The company’s revenue from the international market reached $792 million in the second quarter, reflecting a YoY (year-over-year) rise of 7%.

The rise was mainly driven by the company’s robust performance in Latin America, where it registered a YoY revenue rise and total tenant billings growth of 10.8% and 16%, respectively. Mexico and Brazil continued to witness strong growth trends, with ~18% and ~10% YoY rises in their organic tenant billings, respectively. Massive mobile data consumption in both countries has compelled cellular operators to accelerate the deployment of 4G (fourth-generation) networks, driving demand for American Tower’s communication sites.

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In Asia, American Tower has continued to register growth in revenue and organic tenant billings despite the churn in the Indian market due to carrier consolidation. Second-quarter revenue and organic tenant billings in the region rose 4.5% and 6.6%, respectively, YoY. Revenue and organic tenant billings rose 4.4% and 8%, respectively, in the EMEA (Europe, the Middle East, and Africa) region.

Acquisitions remain the key driver

Acquisitions have remained a key growth driver for American Tower. The strategy has helped the company increase its international tower assets from a mere ~60,000 at the end of 2015 to ~128,000 at the end of the second quarter of 2018.

The strategy has helped it to expand its global footprint across several fast-growing markets, such as India, Mexico, Brazil, South Africa, and Nigeria. Apart from this, the approach has helped it to lower its dependence on the US market. American Tower’s revenue contribution from its international operations increased to 45% in 2017 from 36% in 2014.

Recent major acquisitions

In May, American Tower agreed to acquire Telkom Kenya, marking its entry into the fifth African market and the 17th market on a global basis. Furthermore, early this year, it completed the buyout of 10,000 tower assets from Vodafone India. Apart from this, in June, it closed a deal to acquire 9,900 towers from Idea Cellular, bringing its total number of tower sites to over 78,000 in the Indian market.

The Real Estate Select Sector SPDR ETF (XLRE) has parked 9.51% of its total holdings in American Tower stock. The company’s main competitors Crown Castle International (CCI), SBA Communications (SBAC), and Simon Property (SPG) have weights of 6.88%, 2.86%, and 8.03%, respectively, in the ETF.

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