In This Article:
Given a portfolio of more than 148,000 communication sites worldwide and the unmatched geographic diversification of its sites, American Tower Corporation AMT is strategically positioned to capture incremental demand from global 5G deployment efforts, growing wireless penetration and spectrum auctions.
Its Data center business is also performing well. These opportunities are likely to support renewed growth momentum and pave the way for the resumption of dividend increases in the coming year.
Customer concentration and consolidation are a concern in the wireless industry and are likely to weigh on top-line growth.
What’s Aiding AMT?
American Tower's third-quarter results highlighted the sustained demand for its extensive global communications infrastructure portfolio. The ongoing deployment of 5G networks has driven strong activity in the United States and Europe, reflecting robust growth in these mature markets.
Meanwhile, emerging markets, particularly in Africa, are witnessing a surge in network upgrades and coverage expansion, which has bolstered the pipeline for new business. These developments underscore American Tower's pivotal role in supporting the evolving needs of the telecommunications industry across diverse geographies. In the third quarter, American Tower’s organic tenant billings growth was a healthy 5% across the United States and Canada and 6.3% in Europe. In Africa, organic tenant billings growth was 11.5% for the period.
American Tower’s data center business is doing well. During the third-quarter earnings release, management noted that “CoreSite delivered another fantastic quarter of new leasing, and is on pace for its third consecutive year of record sales.” This comes amid the growing adoption of hybrid IT solutions and the emergence of AI-driven workloads, which are driving increased demand for data centers.
Apart from having a robust operating platform, American Tower has ample liquidity to support its debt servicing. Its consistent adjusted EBITDA margins, revenue growth and favorable return on invested capital indicate strength in its underlying core business and support its ability to manage its near-term obligations. As of Sept. 30, 2024, AMT had $10.9 billion in total liquidity. The company's net leverage ratio as of Sept. 30, 2024 was 5.2. With a weighted average remaining term of debt of 5.8 years, it has decent financial flexibility.
American Tower has a disciplined capital distribution strategy and remains committed to increasing shareholder value through regular dividend hikes. In the last five years, American Tower has increased its dividend 15 times, and the annualized dividend growth rate for this period is 11.56%. Moreover, it has a lower dividend payout compared with its industry. Such disbursements highlight its operational strength and commitment to rewarding shareholders handsomely. Check American Tower’s dividend history here.
