01—Abstract
Summary
Summary of the 10-K filed February 28, 2018. Cited figures are marked; the original filing is the authoritative source.
American Tower (AMT) closed 2017 as one of the largest global REITs, with 99%a of revenue from property operations (site leasing) and a portfolio of 150,181 communications sites across the U.S., Asia (India), EMEA and Latin America.
Total operating revenues grew 15% to $6.66 billionb, operating income rose 8% to $1.998 billion, and net income attributable to common stockholders reached $1.15 billion ($2.67 diluted EPS). Adjusted EBITDA grew 15% to $4.09 billion, and AFFO attributable to common stockholders rose 15% to $2.75 billion. Non-cancellable tenant lease revenue backlog exceeds $32 billion, and tenant churn was roughly 2% of tenant billings, with management flagging elevated India churn from carrier consolidation.
Growth was driven heavily by acquisitions: the Viom acquisition in India (2016), the FPS Towers acquisition in France, and Mexico urban assets. The company agreed in November 2017 to acquire roughly 20,000 additional Indian sites from Idea Cellular and Vodafone India, expected to close in the first half of 2018. Those transactions would materially expand the Asia footprint.
Balance-sheet risk is meaningful, with total debt of about $20.3 billionc and total liquidity of $2.97 billion. The company recorded $244 million of impairment and disposal charges in 2017, mostly in Asia, and India goodwill headroom is thin at about 3%. Capital returns increased, with $766 million of buybacks under the 2011 program and $2.62 per share in common distributions declared.
The company remains a REIT, with the TRS and foreign-earnings structure shaping its tax profile, and it reported a 2.4%d effective tax rate. Investors should weigh the strong recurring revenue base and dividend coverage against leverage, concentration in a few large tenants (AT&T 19%, Verizon 16%), and carrier consolidation risk in India.
02—Key points
Key Highlights
- Revenue up 15% to $6.66B and Adjusted EBITDA up 15% to $4.09B, driven by acquisitions and organic colocation growth
- Over $32B of non-cancellable tenant lease revenue backlog, with typical churn of about 1-2% of property revenue
- Pending ~$1.2B-equivalent India transactions (Idea and Vodafone, ~20,000 sites) expected to close in 1H 2018, a major Asia expansion
- Total debt of $20.3B and liquidity of $2.97B; investment-grade ratings maintained
- Common dividends declared of $2.62 per share (up from $2.17) and $766M of share repurchases in 2017
- Asia impairments of $182.9M (carrier consolidation in India) and India goodwill headroom of only ~3%
- Customer concentration: AT&T (19%), Verizon Wireless (16%), Sprint (9%) and T-Mobile (9%) account for about half of revenue
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, American Tower Corp kept $0.19.
- Revenue$6.66B100.0%
- Cost of revenue−$34.6M0.5%
- Gross profit$6.63B99.5%
- Operating costs−$4.63B69.5%
- Operating income$2.00B30.0%
- Interest, other & tax−$759.5M11.4%
- Net income$1.24B18.6%
Where FY2017 revenue went
$6.66B- Other operating costs: $3.99B, 60% of revenue
- Net income: $1.24B, 19% of revenue
- Cost of revenue: $34.6M, 0.5% of revenue
- SG&A: $637.0M, 9.6% of revenue
- Interest, other & tax: $759.5M, 11% of revenue
Kept 19% as net incomeCost of revenue $34.6M · 0.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 28, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $6.66B$5.79B | +15.2% |
| Cost of Revenue | $34.60M— | — |
| Gross Profit | $6.63B— | — |
| SG&A Expenses | $637.00M$543.40M | +17.2% |
| Operating Expenses | $4.67B$3.93B | +18.6% |
| Operating Income | $2.00B$1.85B | +7.8% |
| Interest Expense | $749.60M— | — |
| Net Income | $1.24B$956.40M | +29.5% |
| EPS (Basic) | $2.69$2.00 | +34.5% |
| EPS (Diluted) | $2.67$1.98 | +34.8% |
| Shares Outstanding (Basic) | 428.18M425.14M | +0.7% |
| Shares Outstanding (Diluted) | 431.69M429.28M | +0.6% |
05—Questions
Frequently Asked Questions
What drove American Tower's revenue growth in 2017?
Total revenue rose 15% to $6.66B. Asia grew 41% largely from the Viom acquisition, EMEA grew 18% with the FPS Towers acquisition in France, and U.S. property grew 7%, helped by colocations and contractual escalators.
How much contracted revenue does the company have?
Based on tenant leases in place at year-end 2017, the company expects over $32 billion of non-cancellable tenant lease revenue, before straight-line accounting. Most leases have initial 10-year terms with about 3% average U.S. escalators.
What are the main risks to the India business?
Carrier consolidation in India (including Tata Teleservices exiting wireless) is expected to raise churn. The company recorded $100.1M of Asia tenant relationship impairments, and the India reporting unit's fair value exceeded carrying value by only about 3%, leaving sensitivity to revenue, margin and discount-rate assumptions.
How is the company's leverage and liquidity position?
Total debt was $20.3B at year-end 2017, with $775M current. Liquidity was $2.97B, including $2.17B of available credit facility capacity and $802M of cash. The company was in compliance with its leverage covenants (total leverage limit 6.0x), with roughly $5.0B of additional debt capacity under the total leverage test.
Is the dividend covered and what are capital allocation priorities?
Management prioritizes REIT distributions (at least 90% of REIT taxable income), then capital expenditures of $850-950M planned for 2018, then acquisitions. Excess capital is returned via buybacks, with $344.8M remaining under the 2011 program and a new $2.0B program authorized in December 2017. AFFO attributable to common stockholders of $2.75B comfortably exceeded common distributions of about $1.1B paid in 2017.
06—Continue