01—Abstract
Summary
Summary of the 10-K filed February 27, 2017. Cited figures are marked; the original filing is the authoritative source.
American Tower (AMT) closed 2016 with total operating revenues of $5.79 billiona, up 21% from $4.77 billion in 2015, driven mainly by the Viom Acquisition in India and the full-year contribution of the Verizon Transaction.
Property operations generated 99% of revenue, and net income attributable to common stockholders rose to $849.3 millionb, or $1.98 per diluted share, from $594.9 million, or $1.41. Adjusted EBITDA grew 16% to $3.55 billion, and AFFO attributable to common stockholders rose 13% to $2.40 billion, which supports the dividend growth in the filing. Management highlighted a contracted base of more than $31 billion in non-cancellable tenant lease revenue and churn of roughly 1-2% of property revenue per year.
The balance sheet expanded substantially, with total assets of $30.9 billionc and total debt of $18.7 billion. Leverage remained within covenant limits, with total liquidity of $3.6 billion at year-end. Investors should note the growing international mix, with Asia rising to 14% of property revenue and the U.S. falling to 59%.
That shift brings more foreign currency exposure, with 40% of revenue denominated in non-U.S. dollar currencies, and the Viom redeemable noncontrolling interest puts starting in 2018. Subsequent events included the February 2017 closing of the FPS Towers acquisition in France for about $757 milliond and the repayment of several secured notes, funded largely through the 2013 Credit Facility.
02—Key points
Key Highlights
- Total operating revenues rose 21% to $5.79 billion in 2016, with property revenue reaching $5.71 billion, or 99% of the total.
- Adjusted EBITDA increased 16% to $3.55 billion, and AFFO attributable to common stockholders increased 13% to $2.40 billion.
- Diluted EPS rose to $1.98 from $1.41, helped by higher operating profit and lower foreign currency losses in other expense.
- The Viom Acquisition added roughly 42,000 towers in India, and the Asia segment's revenue increased 242% to $828 million.
- Total portfolio reached 144,884 sites, and the company reported over $31 billion of non-cancellable tenant lease revenue.
- Total liquidity of $3.6 billion and investment-grade credit ratings support financial flexibility, with $3.25 billion of senior notes issued in 2016.
- A 2017 capital expenditure guide of $800-900 million and a common dividend of $0.58 per quarter declared for January 2017 payment reflect continued capital deployment and distributions.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 27, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $5.79B$4.77B | +21.3% |
| SG&A Expenses | $543.40M$497.80M | +9.2% |
| Operating Expenses | $3.93B$3.16B | +24.5% |
| Operating Income | $1.85B$1.61B | +14.9% |
| Net Income | $956.40M$685.10M | +39.6% |
| EPS (Basic) | $2.00$1.42 | +40.8% |
| EPS (Diluted) | $1.98$1.41 | +40.4% |
| Shares Outstanding (Basic) | 425.14M418.91M | +1.5% |
| Shares Outstanding (Diluted) | 429.28M423.01M | +1.5% |
05—Questions
Frequently Asked Questions
How much of American Tower's revenue is recurring and how durable is it?
Most tenant leases are non-cancellable with an initial term of about ten years and contractual escalators, averaging roughly 3% in the U.S. and inflation-linked internationally. The company expects more than $31 billion of non-cancellable tenant lease revenue over future periods. Historical churn has been about 1% to 2% of property revenue per year.
How concentrated is the tenant base?
Concentration is significant. In 2016, AT&T accounted for 21% of total revenue, Verizon Wireless for 15%, Sprint for 11% and T-Mobile for 9%. Four tenants represented 56% of revenue. Risk factors highlight that tenant consolidation, network sharing or financial distress could materially affect revenue.
What drove the 2016 growth, and how sustainable is it?
Growth came mainly from acquisitions. The Viom Acquisition in India contributed $341 million in new-site tenant billings and $244 million in pass-through revenue. The U.S. grew 7%, driven by colocations and escalators. Acquisition-driven growth depends on continued deal flow and integration success, while organic growth depends on carriers' capital spending.
How is the company managing its debt and currency exposure?
Total debt was $18.7 billion at year-end. The company stated it was in compliance with its covenants and had a Total Debt to Adjusted EBITDA leverage ratio well inside its 6.00x limit. It has historically not hedged most non-dollar exposure, with 40% of revenue in foreign currencies, so a 10% adverse move in intercompany balances would create about $38 million of unrealized losses.
Does the REIT structure constrain the company?
As a REIT, American Tower must distribute at least 90% of REIT taxable income, which limits retained capital for growth. Foreign earnings are subject to local withholding taxes and currency controls, and the company has said it generally does not repatriate foreign subsidiary earnings, which affects how it funds international expansion.
06—Continue