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International Organic Growth Powered American Tower Corp in the Second Quarter

By Matthew DiLallo – Jul 27, 2017 at 12:16PM

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The telecom tower REIT boosts guidance again.

American Tower (AMT -0.50%) notched its 17th consecutive quarter of double-digit revenue and earnings growth thanks to continued robust demand for tower space. While recent acquisitions continue to play a significant role in driving that growth, the company also continues to sign up more tenants per tower, which drove solid organic growth during the quarter. American Tower doesn't anticipate that either trend will slow given that the world's seemingly insatiable demand for mobile data isn't expected to abate anytime soon.

American Tower results: The raw numbers


Q2 2017

Q2 2016

Year-Over-Year Change


$1.66 billion

$1.43 billion


Adjusted funds from operations (AFFO)

$681 million

$570.5 million






Data source: American Tower.

Cell tower at sunset.

Image source: Getty Images.

What happened with American Tower this quarter? 

The dual fuels of acquisitions and organic growth drove American Tower's results.

  • American Tower's Asia segment grew at a brisk pace during the quarter after revenue spiked 31.1% versus the year-ago quarter to $295 million thanks to recent acquisitions and a 10.1% increase in organic tenant billings.
  • The Latin America segment also continues to expand at a rapid rate, delivering $287 million in revenue during the quarter, which is up 20.9% versus the year-ago quarter. Again, a combination of recent acquisitions, including adding another 54 towers in Brazil, and an 11.2% increase in organic tenant billings drove revenue higher. The company has more tower deals lined up to drive revenue growth in Latin America over the coming year, including agreements to acquire up to 1,200 sites in Colombia, 1,400 in Paraguay, and 100 in Mexico.
  • Revenue in Europe, the Middle East, and Africa (EMEA) rose 18.5% to $160 million thanks to an 8.9% increase in organic tenant billings and the acquisition of FPS Tower in France.
  • Finally, revenue in the U.S. jumped 8.1% to $897 million due primarily to a 6.2% increase in organic tenant billings.

What management had to say

CEO Jim Taiclet commented on what drove results in the second quarter:

The second quarter of 2017 represented our 17th consecutive quarter of double-digit growth in property revenue, Adjusted EBITDA and Consolidated AFFO per Share, driven by strong demand for our tower real estate from Los Angeles to São Paolo to Paris. Organic Tenant Billings Growth in the U.S. of over 6% was complemented by Organic Tenant Billings Growth of more than 10% in our international markets, where the pace of advanced handset adoption and mobile data usage growth continues to require the addition of substantial network equipment on our sites.

American Tower's ability to deliver steady double-digit growth lies in its strategic decision to expand internationally. As Taiclet notes, organic growth alone on its international towers last quarter was in the double digits due to the rapid adoption of mobile data usage overseas. It's a trend he expects will continue for the foreseeable future as those markets catch up to the more developed U.S. market.

The international expansion strategy continues to pay big dividends for American Tower investors because the company is growing much faster than its U.S-focused rival Crown Castle International (CCI -0.47%). During the second quarter, for example, Crown Castle's revenue rose 8% while AFFO was up 12% year over year, whereas American Tower's revenue jumped 15.3% while AFFO surged 19%. Because of that faster growth rate, American Tower expects to continue increasing its dividend at a more rapid pace than Crown Castle. It's targeting annual growth of 20%, while Crown Castle sees its payout increasing by 7% to 8% annually, which is a slight improvement from its previous pace thanks to a major acquisition.

Looking forward 

Thanks to the continued improvement in the foreign exchange market, American Tower sees currency fluctuations having an even more favorable impact on its results this year. Overall, it sees total property revenue rising 14.3% at the midpoint, which is up from its prior guidance of 13.9% growth. Furthermore, it sees AFFO rising 14.8% at the midpoint, up from its previous view that AFFO would increase 12.6% at the midpoint this year. Also, this forecast doesn't include the Latin American tower deals the company has in the pipeline, so it's possible that guidance could get another boost if those deals close as expected.

Looking further ahead, Taiclet stated: "As a result of the ever-increasing consumer appetite for mobile broadband and our strategic positioning in key markets spanning five continents, we believe that we are on track to sustain strong growth in Consolidated AFFO per Share and our dividend for many years to come."

Matt DiLallo owns shares of American Tower and has the following options: long January 2018 $80 calls on American Tower and short October 2017 $120 calls on American Tower. The Motley Fool owns shares of and recommends American Tower and Crown Castle International. The Motley Fool has the following options: short October 2017 $120 calls on American Tower and long January 2019 $80 calls on American Tower. The Motley Fool has a disclosure policy.

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