Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong demand for American Tower Corp (AMT, Financial)'s global portfolio, particularly in the U.S. and Europe, driven by 5G deployment and data center growth.
- Successful sale of ATC India, which enhances portfolio quality and reduces volatility.
- CoreSite data center business is experiencing record leasing and is expected to continue double-digit growth.
- Cost management initiatives have led to a reduction in SG&A expenses, supporting margin expansion.
- Strategic focus on developed markets and divestiture of non-core assets like India and Mexico Fiber to enhance earnings quality.
Negative Points
- FX headwinds negatively impacted revenue growth, particularly in Latin America.
- Final tranche of Sprint churn expected to weigh on U.S. growth in the near term.
- Challenges in emerging markets leading to reduced capital expenditure and potential growth limitations.
- Concerns over potential customer bankruptcies, such as in Colombia, affecting revenue recognition.
- Interest rate uncertainties and exposure to emerging market currencies pose risks to future growth.
Q & A Highlights
Q: How should we think about 2025 new lease activity versus 2024 in North America?
A: Steven Vondran, President and CEO, mentioned that while it's too early to give specific guidance for next year, there are positive conversations with customers about the densification phase. The final tranche of Sprint churn will weigh on the U.S. growth, but they expect mid-4% growth in the U.S. for next year, consistent with their long-term guide of at least 5% from 2023 to 2026.
Q: Can you explain the transition from the 2024 AFFO per share outlook of $10.60 to $9.95?
A: Rod Smith, CFO, explained that the $10.60 per share was the original outlook. The sale of the India business resulted in a reduction to $10.48 per share. The $9.95 figure represents the AFFO per share from continuing operations, excluding India, and is a good starting point for assessing growth in 2025.
Q: What are the growth prospects for CoreSite, and how does it contribute to American Tower's overall strategy?
A: Steven Vondran highlighted that CoreSite is experiencing record leasing and is well-positioned for double-digit revenue growth over the next several years. The focus is on expanding existing campuses and potentially entering new markets, with a strong emphasis on hybrid cloud infrastructure and AI-driven workloads.
Q: How does American Tower view potential acquisitions in the European tower market?
A: Steven Vondran stated that while they are interested in expanding their European presence, any acquisition would need to meet their investment criteria, including favorable terms and conditions, and align with their long-term value creation strategy.
Q: What is the outlook for dividend growth, and how does it relate to AFFO per share growth?
A: Rod Smith indicated that dividend growth is expected to resume in 2025 and will likely mirror the average AFFO per share growth rate over time. The dividend payout ratio is expected to remain in the 60-65% range, allowing for continued investment in growth opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.