American Tower Reports Strong Q1 Performance... Diversified Global Portfolio as a Strength

[Asia Economy Reporter Eunmo Koo] American Tower, the world's largest telecommunications infrastructure REIT (Real Estate Investment Trust), posted strong first-quarter results this year that met market expectations. Analysts attribute this to its diversified global portfolio being its greatest strength.

According to Hana Financial Investment on the 3rd, American Tower recorded revenue of $1.99 billion in the first quarter of this year, up 9.9% compared to the same period last year. During the same period, adjusted EBITDA increased by 14.1% to $1.27 billion, and adjusted funds from operations per share (AFFO) rose 4.6% to $2.03. Revenue met consensus estimates, while adjusted EBITDA and AFFO per share slightly exceeded consensus, reflecting solid performance. As of the end of the first quarter, the number of towers operated in the U.S. and globally were 40,575 and 137,598 respectively, with a remaining contractual recurring revenue backlog of $28 billion.

The diversified global portfolio is seen as a key strength. Seunghyun Yoon, a researcher at Hana Financial Investment, stated in a report that "Organic revenue growth for U.S. towers, which account for 55% of total revenue, grew 5.6% year-over-year, and rental growth increased by 3.3%, marking the highest level in three years." He added, "Mid-band investments, which are key to 5G macro towers, will begin to materialize in earnest in the second half of the year alongside mid-band auctions and T-Mobile's expansion of the 2.5GHz spectrum."

Meanwhile, revenue from the Asia region, accounting for 14% of total revenue, decreased by 1%, but tenant churn for the quarter was 15.6%, showing a favorable decline compared to 23.2% in the fourth quarter of last year. Researcher Yoon explained, "Considering the annual guidance was 19%, this indicates a positive recovery." Internal revenue growth in South America, which accounts for 17% of total revenue, grew by 7.5%, but overall revenue increased by only 1.0% due to currency effects.

With sustained high top-line growth, American Tower is considered highly attractive among growth-oriented REITs. Researcher Yoon analyzed, "Despite the impact of COVID-19, the dual-track strategy of U.S. 5G and emerging market 4G infrastructure investments is expected to enable rental revenue growth in the 7% range within the year." He added, "The stability of the telecommunications infrastructure business allows for annual dividend per share (DPS) growth of 20%, unlike traditional REITs that experience dividend cuts." Given the variety of growth drivers, the investment appeal remains high at the current time.