- American Tower confirmed guidance for 2020. While many industries and companies are withholding guidance for 2020 due to the lack of clarity due to COVID-19, American Tower committed to their pre-COVID-19 guidance. Crown Castle did as well, showing the resilience of the tower industry.
- Average smartphone data use in 2019: 9GB: Estimated 2025: 45GB. Also- 70% of cellular traffic in 2025/2026 will be #5G.
- American Tower broke down the return on investment for its tower assets in the US.
- Prior to 2005: 24%,
- 2005-2010: 17%,
- After 2010: 6%.
- Not coincidentally- the earlier years were when ATC was doing build-to-suit
- AMT only built 4 (yes four) sites in the US in Q1. They also acquired 19 towers in the US while decommissioning or selling 15. The total increase in the US: 8 towers. In other words, American Tower isn’t buying or building much in the US at all. We believe that this is due to the aggressive Build-To-Suit terms offered by private tower companies and a reluctance by carriers to enter into build-to-suit agreements with the public tower companies.
- AMT has 3,000 total tenants besides the big 3 cellular providers in the US. Collectively they generate more than 15% of overall US cashflow. I suspect though that most of this comes from broadcasters as ATC has acquired and built a decent number of broadcast towers in the US.
- AMT experienced churn of 2% in Q1 2020. Churn is the loss of revenue as tenants terminate their leases. Surprisingly, no analysts asked a questions about why.
- American Tower purchased $33M of its ground leases from landowners. This was down from the two previous quarters.
- There have been no revisions to the T-Mobile/American Tower master lease agreement yet regarding the T-Mobile/Sprint merger and what equipment will be allowed on the towers. American Tower is likely to use the merger to press for terms that limit the overall loss from future Sprint lease terminations. T-Mobile wants to drive costs down while they install additional equipment on those Sprint and T-Mobile sites they are keeping.
- As they do in many of their earnings calls, American Tower continues to provide lip service to data centers, fiber, CBRS, edge computing. However, as with previous calls, there is little revenue from these endeavors, and AMT is still unwilling to commit to any real guidance for revenue in the future.
- American Tower is experiencing some slowdowns due to #COVID19 primarily on new tower builds which we assume are outside the US (see point 4 above). However, for the most part, carriers are still active and proceeding with their modification and development activity.
Overall, AMT’s earnings call was positive and reflective of how the tower industry really isn’t suffering like other industries.
If you have an American Tower lease and are curious about how these earnings impact you or need help with other American Tower lease issues, please contact us.