While International is Hot, U.S. Growth to Continue — Taiclet

November 4, 2012

While international markets are growing fast, American Tower Executive Chairman, President and CEO James Taiclet told the third quarter earnings call that the United States remains the company’s foundation and it expects many years of increasing demand domestically for its tower space.

Internationally, core organic revenue up 8.4 percent in the third quarter, compared with 6.2 percent domestically. Additionally, the company built or acquired more than 1,400 sites internationally, while it added 70 sites in the United States.

“All of our original hypotheses about the United States market are playing out. First, the American consumers will drive smartphone and advanced device penetration toward 100 percent,” Taiclet said. “Second, that leading U.S. wireless carriers can profitably progress toward this penetration rate. And third, these carriers will continue to invest in network quality and capacity to sustain their competitiveness.”

Taiclet noted several carrier announcements that will have positive effects on tower companies, such as AT&T’s has 18-percent increase in data revenues in the last quarter; Sprint’s cash infusion from Softbank that will accelerate its Network Vision program; cost, scale and capital markets benefits fromT-Mobile’s planned merger with MetroPCS, and Verizon Wireless’ continued LTE deployment.

Additionally, American Tower signed a new master lease agreement with T-Mobile, which extended its average remaining lease term to nine years and locked in consolidated revenue of nearly $19 billion. The tower company now has three of its four major U.S. customers, or 60 percent of its U.S. revenue under non-cancelable comprehensive leases.

“These contracts have enabled us to lock in medium-term committed cash revenue growth from amendments related to our customers’ network upgrades while also mitigating any potential churn risk from these customers,” Taiclet said. “In addition, the contract structure leaves open the opportunity for us to achieve revenue growth in excess of the original commitment levels, in cases where our customers exceed established tower sites loading limits or entitlements.

As a result, American Tower is confident it will continue to garner 6 percent to 8 percent core organic growth domestically into the future, according to Taiclet.