American Tower Corporation — 2024 Q1

Sure. Thanks for the question. In the U.S., again, we're seeing an acceleration in Q1 relative to Q4. And our application pipeline coming in, in Q1 was about 70% higher than Q4. And our services gross margin came in at about $16 million in the quarter, which was higher than we had expected. So what we're seeing is an acceleration in activity that really underpins the guidance that we gave last quarter. And just to kind of reiterate what that is, on our services, we're expecting our services about $195 million in revenue, about $100 million in gross margin.

Matt, this is Rod. If I could just add briefly here 1 or 2 comments. So of course, as Steve said, we've had record levels of new business in the past. And what that is leading to is higher revenue growth now as we're delivering that new business that we signed up over the last couple of years. So you saw in the quarter, we had a north of 10% revenue growth rate. As I said in my prepared remarks, that is the result of delivering on that new business, those record levels of new business we signed up over the last couple of years.

Sure. Thanks for the question. So what we're seeing in the U.S., it's clearly -- it's 1 quarter results. And again, the conversations that we're having give us the optimism that our guide for the year is kind of spot on in terms of the customer is starting to ramp up. I don't have a lot of visibility into what my competitors are seeing. So I don't think I can give an opinion on whether what we're seeing is materially different than what they're seeing.

A little bit. Again, I think when you think about these cycles that the carriers build in, the first push that you see is always a coverage network and that implies overlays on existing sites. And then, when they slow down and start optimizing, part of that optimization is infill to get better quality of service where they might have some coverage gaps or might not be getting the optimal service. And that always implies more co-locations. So we are seeing some demand for that as well.

Yes. Sure. I'll start with India. No updates at this point. It's very hard to predict when that approval will come through. So we're still expecting second half of the year. But we'll let you know as soon as we know what's happening on that.

Simon, this is Rod. Simon, I'm going to add a couple of comments on India just to give everyone listening a couple of the numbers and a reminder. So as Steve said, the timing is still second half of this year. Everything is going well, certainly within our expectation. I just want to remind everyone that we announced when we signed a deal with Brookfield to sell 100% of India that it would have total proceeds that could be up to $2.5 billion. That comes in a couple of different forms. It will be $2 billion in terms of the -- let's call it, the purchase price, which includes the intercompany debt that we have in there as well as the term loan that we have in India.

Yes, what we've said is we plan to resume growth in 2025, subject to Board approval, and we'll give specifics on our Q4 call in February '25, as we always do, in terms of what that's going to look like. Over the long term, what you can think about is that our dividend per share and AFFO per share growth to be similar over the longer term. And so there may be some short-term changes in that.

Well, if we continue to grow it kind of in line with our AFFO per share growth, you can think of that payout ratio staying kind of in that 60% to 65% range.

I would just add to that quickly, Rick, to that 65% range. It does leave us between $1.5 billion and $2 billion of additional, let's say, AFFO to put towards other uses, either CapEx or anything else we want to do. So that ratio of that 60% to 65% kind of fits in well with giving us a lot of financial flexibility to invest capital.

Sure. I'm happy to. Thanks for the question, Rick. So when you look at carrier CapEx, first, I would point out that we're seeing -- the estimates for carrier CapEx and 5G are around that $35 billion, $36 billion per year mark on average. And that's up about $5 billion or $6 billion from what we saw in 4G, and that was up $5 billion or $6 billion from 3G. So we do see overall CapEx increasing.

Yes, that's a possibility, Rick. A new lease rate is typically higher than an amendment rate, but you get more amendments than you do new leases, so there's a little bit of a trade-off there. But look, it's all positive, and it's all the things that underpin our long-term guidance, and that's what our expectation for growth is. It's a combination of new leases and amendments as we go through a 5G cycle. It's a long cycle, and it's going to replicate very closely what we saw in 4G and 3G, and that's what we're seeing playing out today.

Yes. It's a great question, Rick. And as we've -- as Steve and I have been saying really for the last couple of quarters, we are very focused on driving organic growth, very focused on driving operational efficiency, reducing our overall direct and SG&A cost to drive AFFO and AFFO per share growth where when it comes to capital allocation, we're very focused on delevering and strengthening our balance sheet and continuing momentum of adding CapEx and with the best projects that we see driving quality of earnings, the right risk profile, the right growth profile over the long term. So all that is clear and remains our focus.

David, thanks for the question. I'll hit the FX one, and then, I think Steve will take the one on fixed wireless. So when it comes to FX, you're absolutely right to point out, we do have some FX headwinds in the business. That's clear. This year, the FX headwinds that we're really seeing are coming through Africa, and primarily in Nigeria, which I think you're aware of. So when you look at outlook to outlook, we're down about $15 million in this guide on property revenue, just about $5 million on EBITDA and AFFO, which is about $0.01 dilution or headwind when it comes to the outlook adjustment there.

Yes. I would just add that we also use contractual mechanisms to also control it to some extent. It's very important for us to have CPI-linked escalators in all those international markets to make sure that you do recover some of the differential that you have from inflation from the U.S. in those markets. And in some markets, we also will have some of the revenues pegged to U.S. dollar. For example, in Nigeria, the -- about 40% of the revenue in Nigeria is passed through power.

Sure. Let me attack the first part of that. So when you look at pricing across our markets, what's really driving it is supply-demand dynamics. And so we're seeing similar increases and retail scale, hyperscale pricing in those markets. There's probably a little bit more increase in hyperscale at this point because contiguous capacity is becoming more rare and because they have the lowest pricing to begin with kind of in the markets. And so what we've seen across all of our markets is the supply is less than the demand.

I mean, certainly, look, we price the higher density cabinets more because they're taking up more power. So that does influence it. We did have a press release a couple of weeks ago about being NVIDIA certified in some of our facilities. And so certainly, when you're putting GPUs in versus CPUs, there's a pricing differential on that cabinet. But really what's driving the pricing increases across the board or the supply-demand dynamics?

Sure. Let me give you kind of the backdrop to it, then I can give you a few examples. So over the last decade, we've been in a rapid growth mode in a lot of our markets. And when you're growing very quickly and you're buying and integrating assets, you're really focused on that piece of it and making sure that no balls drop and you're providing new customer service, et cetera. Now that we're not buying a lot of assets and integrating them, it's a good time for us to really focus on operational excellence.

Batya, this is Rod. I'll start with LatAm and give you a little insight on the trends there. So we're seeing for the outlook for 2024, LatAm is going to be coming in around 2% organic tenant billings growth. That's coming with about 3% being contributed via the co-location and amendment revenue. And if you put that up against prior year, it's pretty flat. So we're seeing a steady level of demand and activity across Latin America in that 3-ish percent for new business. The escalators are also in that 4%, so a touch above that. That's actually down kind of moderating because inflation across the region has come down.

Yes. In terms of the build-to-suits, I mean, we're keeping that consistent up in the range of 2,000 to 2,500 to 3,500. Q1, the volumes were a little bit lower, but we do expect that to increase. We continue to see strong demand for us building towers for our customers across Africa and also in Europe. So we certainly have been happy with that.

Sure. So when it comes to our international markets, we have a variety of contract structures, and sometimes, they depend on whether it's with an acquisition that we did or build-to-suits or a bigger part of the business there. So I would say there's a lot more variation in terms of how we construct our contracts internationally. We do have a couple of holistic type deals internationally. Again, a little bit different flavor than we would have in the U.S., but we do try to utilize those contract structures.

Well, look, it's a little early for us to be giving any type of guidance for 2025. But look, we think that our fundamental growth algorithm kind of holds true. And so when we look at 2025, we continue to see strong fundamentals in our business. That includes a continuation of solid U.S. and Canada organic tenant billings growth, even while we're still absorbing some headwinds associated with that final tranche of spread churn that happens in Q4 of this year.

Thanks, everyone, for joining the call today. Please feel free to reach out to myself or the IR team with any questions. And operator, we can close the call.