The robust demand for tower space that began materializing at the end of last year continued in early 2018. Thanks to that trend, American Tower (NYSE:AMT) delivered excellent first-quarter results. That strong start to the year has the company on pace to exceed its initial expectations for 2018.

American Tower results: The raw numbers


Q1 2018

Q1 2017

Year-Over-Year Change


$1.74 billion

$1.59 billion


Adjusted funds from operations

$807.1 million

$721.3 million


Adjusted funds from operations per share




Data source: American Tower.

A sell tower at sunset.

Image source: Getty Images.

What happened with American Tower this quarter? 

Healthy organic growth and recent acquisitions drove American Tower's results.

  • Revenue from the Latin America segment jumped 20.1% versus the year-ago period to $332 million. This segment delivered strong organic tenant billings growth of 11.7% due to aggressive network deployments in Mexico and Brazil. In addition to that, the company also benefited from a full quarter of the acquisition of KIO Network's urban telecommunication assets in Mexico.
  • The company's Europe, the Middle East, and Africa (EMEA) segment also delivered strong revenue growth, which rose 15.9% year over year to $174 million. Driving this was a 7.4% increase in organic tenant billings and the acquisition of FPS Tower in France.
  • Revenue in the U.S. rose 4.4% to $931 million due to 6.3% organic tenant billings growth thanks to significant network investments by U.S. wireless carriers.
  • American Tower's Asia segment was the lone laggard, with revenue slipping 0.9% to $273 million. While the company recently acquired 10,200 sites in India, it experienced a 4.7% decline in tenant billings due to customer consolidation there. American Tower expects to partially offset some of this weakness by acquiring additional tower sites in the country from Idea Cellular, which should close in the second quarter.

What management had to say

CEO Jim Taiclet commented the company's fast start to 2018:

The strong demand we experienced in late 2017 for our telecommunications real estate further accelerated in the U.S. as well as in our Latin America and EMEA regions in the first quarter of 2018. Notably, record levels of new business commencements, along with a robust pipeline of applications for both amendments and new colocations resulted in our increase in expectations for full year U.S. Organic Tenant Billings Growth to approximately 6.5% in 2018. Significant network investment initiatives announced by the major U.S. wireless carriers, coupled with aggressive network deployments in key markets such as Mexico and Brazil, enabled us to drive Consolidated AFFO per Share growth of nearly 10% in the first quarter while growing our common stock dividend by approximately 21%. We remain confident that our U.S. macro tower business, complemented by our franchise small cell installations, extensive international portfolio and emerging innovation initiatives will continue to drive strong growth and attractive total returns for many years to come.

As Taiclet noted, the company has experienced significant demand for additional space on its towers, which is powering strong organic growth rates. Because of that fast start and what it has coming down the pipeline, American Tower is raising its guidance for 2018.

Looking forward 

American Tower's initial forecast was that revenue would be between $6.93 billion and $7.12 billion in 2018. However, it has revised that range down to $6.87 billion-$7.06 billion due to an acceleration of carrier consolidation in India (though at the midpoint, revenue would be 6.1% higher than last year). Consolidated adjusted funds from operations, on the other hand, should be in the range of $3.18 billion to $3.28 billion, which is higher than its initial forecast of between $3.16 billion and $3.26 billion and represents an 11.3% increase from last year at the midpoint. That's mainly due to lower expenses and stronger organic growth in the U.S. It's also worth noting that this forecast excludes the impact of the acquisition of towers from Idea Cellular, which should close at the end of May. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.