10-KPeriod: FY2018

AMERICAN TOWER CORP /MA/ Annual Report, Year Ended Dec 31, 2018

Filed February 27, 2019For Securities:AMT

Summary

American Tower Corporation (AMT) is a leading global independent owner, operator, and developer of multitenant communications real estate. For the fiscal year ended December 31, 2018, the company reported strong revenue growth, driven primarily by its property operations segment which leases space on its extensive portfolio of communications sites to wireless service providers and other industries. AMT's business model benefits from long-term, non-cancellable tenant leases with built-in contractual rent escalations, high lease renewal rates, and significant operating margins due to minimal incremental costs for adding new tenants. The company continued its global expansion strategy in 2018, adding approximately 20,000 communications sites through acquisitions in India, as well as expanding its presence in Kenya and Brazil. While the company demonstrated robust top-line growth, it also faced challenges, notably increased churn in its Asia segment due to carrier consolidation, which negatively impacted revenue and profit. AMT also incurred significant impairment charges in India related to tenant bankruptcies and the aforementioned consolidation. The company maintained a strong balance sheet with significant liquidity and continued to manage its capital effectively through a combination of capital expenditures for portfolio growth and a stock repurchase program. As a REIT, AMT is focused on distributing a substantial portion of its taxable income to shareholders.

Financial Statements
Beta
Revenue$7.44B
Cost of Revenue$49.10M
Gross Profit$7.39B
SG&A Expenses$733.20M
Operating Expenses$5.54B
Operating Income$1.91B
Interest Expense$825.50M
Net Income$1.24B
EPS (Basic)$2.79
EPS (Diluted)$2.77
Shares Outstanding (Basic)439.61M
Shares Outstanding (Diluted)442.96M

Key Highlights

  • 1Reported total revenues of $7.44 billion, an increase of 12% year-over-year, primarily driven by the property operations segment.
  • 2Expanded its global portfolio to 170,686 communications sites, with significant acquisitions in India, Kenya, and Brazil during 2018.
  • 3The Asia property segment saw revenue growth of 32%, but experienced elevated churn due to carrier consolidation in India, impacting profitability.
  • 4The company incurred impairment charges of $164.2 million related to a settlement with Tata Teleservices in India and $147.4 million due to Aircel's bankruptcy.
  • 5Maintained a strong liquidity position with $4.27 billion in total liquidity as of December 31, 2018.
  • 6Repurchased $232.8 million of its common stock under its share repurchase programs during 2018.
  • 7Continued to operate as a REIT, distributing a significant portion of its taxable income to shareholders.

Frequently Asked Questions

American Tower Corporation's primary business is the leasing of space on its communications sites to wireless service providers and other industries. This property operations segment accounted for 98% of its total revenues in 2018. The business is characterized by long-term leases with contractual rent escalations, high renewal rates, and significant operating margins.

Revenue growth was driven by several factors, including new revenue from acquired and constructed sites, an increase in colocations and lease amendments on existing sites, and contractual rent escalations. Acquisitions in India, Kenya, and Brazil contributed significantly to the expanded site portfolio and revenue.

The company faced challenges including increased churn in its Asia segment due to carrier consolidation in India, which negatively impacted revenue and profitability. It also incurred substantial impairment charges in India related to tenant bankruptcies and consolidation activities. Foreign currency fluctuations also had a negative impact on revenue in some regions, notably Latin America.

American Tower maintained a strong liquidity position with over $4.27 billion available as of December 31, 2018, supported by its credit facilities and cash on hand. The company continued to invest in its portfolio through capital expenditures and acquisitions, while also repurchasing shares under its stock repurchase programs. As a REIT, it also focused on distributing taxable income to shareholders.