American Tower Dials in Another Quarter of Double-Digit Growth

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American Tower's (AMT -0.11%) global focus continues to pay big dividends, with its international tower segments delivering robust year over year growth. That fueled the company's ability to achieve double-digit revenue and earnings growth once again. American Tower's international expansion efforts are showing no signs of slowing down. Not only did it invest $93.4 million in acquiring 351 tower sites in various international markets during the quarter, but after the quarter's end, it announced the formation of a joint venture with Dutch pension fund manager PGGM to drive expansion in Europe.

American Tower results: The raw numbers

Data source: American Tower. YOY = year over year.

What happened with American Tower this quarter? 

American Tower's international operations continue to drive results.

• American Tower's Asia segment fueled growth again in the third quarter, with its revenue up 338.4% from the year-ago quarter to $270 million. As was the case in the second quarter, driving the year-over-year improvement was the acquisition of a 51% stake in India's Viom Networks.
• Growth in the Latin America segment was also strong, up 63% to $260 million, driven mostly by the company's recent acquisition of TIM Cellular in Brazil.
• Europe, the Middle East, and Africa (EMEA) moderated a bit, with revenue increasing just 4.9% to $131 million. That said, the company took steps to reaccelerate growth by forming a joint venture in Europe to establish a platform to invest in future opportunities. Under the terms of the deal, American Tower will contribute its German assets in exchange for a 51% interest in the venture.
• Finally, revenue in the U.S. was also moderate, up 3.6% to $837 million, propelled primarily by organic tenant billings growth, which was up 5.8%. However, that is less than half the 13% organic tenant billings growth rate of its international segment.

What management had to say

In commenting on the quarter, CEO Jim Taiclet said:

In response to rapid growth in mobile data usage, our tenants continue to utilize a combination of incremental spectrum assets, advancing technology and our diverse portfolio of real estate to expand their mobile networks and deliver top-quality service to their subscribers. Our global asset base of nearly 144,000 towers and over 700 small cell systems is uniquely positioned to benefit from these continuing investments, and as a result, we were able to extend our long track record of generating double-digit growth in property revenue, adjusted EBITDA, and consolidated AFFO per share in the third quarter.

American Tower's focus on the global tower market continues to drive its ability to grow revenue and earnings by double digits, which is faster growth than its U.S.-focused rivals. For example, Crown Castle (CCI -0.97%), which is America's largest tower company, only grew third-quarter site revenue by 6% year over year, while adjusted EBITDA rose 7% and AFFO jumped 17%. Meanwhile, Crown Castle sees 2017 revenue and AFFO only rising 3% and 9%, respectively. Even the Americas-focused SBA Communications (SBAC 0.59%) is trailing American Tower's growth. During the second quarter, SBA Communications' revenue slumped 1.3%, while its total cash flow was up just 4.3%, due in part to meager domestic growth when compared to its international operations.

Looking forward 

Thanks to its solid third quarter, American Tower is once again raising the midpoint of its full-year outlook. The company boosted its guidance for total property revenue by $50 million, adjusted EBITDA by $25 million, and consolidated AFFO by $30 million. As a result, the company's year-over-year growth guidance for revenue, adjusted EBITDA, and consolidated AFFO is 22%, 15.6%, and 14.9%, respectively, at the midpoint.