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American Tower (AMT) Strengthens Foothold with $100M Deal
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Leading wireless tower operator American Tower Corp. (AMT - Free Report) recently inked a new tower lease agreement worth $100 million with one of its major clients, which might be considered a shot in the arm for the company. Although it did not revealed the name of the client, as per FierceWireless report, the tenant is the U.S. telecom behemoth AT&T Inc. (T - Free Report) . The wireless carrier is set to deploy 40 MHz of AWS-3 and WCS spectrum of its portfolio.
As a result of this renewed deal, American Tower has raised its 2017 revenue guidance to a range of $6.31 to $6.49 billion from the previous estimate of $6.21 to $6.39 billion. Adjusted EBITDA is projected in the range of $3,810–$3,910 million. Consolidated AFFO will likely be $2,700–$2,800 million.
American Tower generates most of its revenues from long-term (typically 5-10 year) tower leases with major wireless carriers. In addition, the company provides on-site maintenance and servicing of antennas, amplifiers and base station equipment. Since moving equipment from one tower to another is cumbersome, carriers normally renew these contracts upon expiration. This generates a strong long-term lease up-cycle.
The revenues generated from leasing and management of such networks is remarkable and over 95% is recurring in nature. Moreover, most of its towers are over 210 feet tall, thus allowing sufficient space for its customers to install transmission equipment. The company also holds 29% of the land under its towers in the U.S.
Nevertheless, customer concentration is very high for American Tower and the top four customers account for nearly 65% of its quarterly revenues. The loss of any of these customers or consolidation among them will have a significant material impact on the company’s top line. Moreover, the ongoing consolidation trend among telecom and cable TV operators may generate significant financial fluctuations for the company.
American Tower is rapidly expanding internationally, especially in the emerging Asian and Latin American markets. However, tower operations in these markets are not as profitable as that in the mature U.S. market. Therefore, a renewed lease agreement with AT&T will bode well for the company.
In the last six months, the stock price of American Tower has gained 3.95% outperforming the Zacks categorized REIT-Equity Trust industry’s negative growth of 5.11%. Nevertheless, high customer concentration, foreign currency exchange rate risks, stiff competition, integration risks, rising operating expenses and a highly leveraged balance sheet are near-term concerns for the company.
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American Tower (AMT) Strengthens Foothold with $100M Deal
Leading wireless tower operator American Tower Corp. (AMT - Free Report) recently inked a new tower lease agreement worth $100 million with one of its major clients, which might be considered a shot in the arm for the company. Although it did not revealed the name of the client, as per FierceWireless report, the tenant is the U.S. telecom behemoth AT&T Inc. (T - Free Report) . The wireless carrier is set to deploy 40 MHz of AWS-3 and WCS spectrum of its portfolio.
As a result of this renewed deal, American Tower has raised its 2017 revenue guidance to a range of $6.31 to $6.49 billion from the previous estimate of $6.21 to $6.39 billion. Adjusted EBITDA is projected in the range of $3,810–$3,910 million. Consolidated AFFO will likely be $2,700–$2,800 million.
American Tower generates most of its revenues from long-term (typically 5-10 year) tower leases with major wireless carriers. In addition, the company provides on-site maintenance and servicing of antennas, amplifiers and base station equipment. Since moving equipment from one tower to another is cumbersome, carriers normally renew these contracts upon expiration. This generates a strong long-term lease up-cycle.
The revenues generated from leasing and management of such networks is remarkable and over 95% is recurring in nature. Moreover, most of its towers are over 210 feet tall, thus allowing sufficient space for its customers to install transmission equipment. The company also holds 29% of the land under its towers in the U.S.
Nevertheless, customer concentration is very high for American Tower and the top four customers account for nearly 65% of its quarterly revenues. The loss of any of these customers or consolidation among them will have a significant material impact on the company’s top line. Moreover, the ongoing consolidation trend among telecom and cable TV operators may generate significant financial fluctuations for the company.
American Tower is rapidly expanding internationally, especially in the emerging Asian and Latin American markets. However, tower operations in these markets are not as profitable as that in the mature U.S. market. Therefore, a renewed lease agreement with AT&T will bode well for the company.
American Tower competes fiercely with Crown Castle International Corp. (CCI - Free Report) and SBA Communications Corp. (SBAC - Free Report) . All three tower operators currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price performance of American Tower
In the last six months, the stock price of American Tower has gained 3.95% outperforming the Zacks categorized REIT-Equity Trust industry’s negative growth of 5.11%. Nevertheless, high customer concentration, foreign currency exchange rate risks, stiff competition, integration risks, rising operating expenses and a highly leveraged balance sheet are near-term concerns for the company.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>