Perhaps American Tower (AMT 0.81%) and Crown Castle International (CCI 1.10%) should switch names. They're both real estate investment trusts (REITs) with dominant positions in the mobile tower business, but American Tower is much more of an international player while Crown Castle is very much a domestic business.
The similarities are strong, though. Both have right around 40,000 towers in the U.S. And their total return in the past 10 years is essentially identical: 335% for American Tower to 334% for Crown Castle. (And both handily beat the S&P 500 at 267%. The chart below shows the growth of a $10,000 stake in each of these over the past decade.)
Both of these companies also are major providers of critical tower space to the big carrier networks and myriad other customers, and they both have staked their future on continuing growth in this industry.
But there are some distinct differences in where each of these companies is staking its claim, and that can be the differentiator for you to decide which of these looks the most promising.
Investment emphasis heading in different directions
Crown Castle bills itself as "the nation's largest provider of shared communications infrastructure" and describes its holdings as a "comprehensive infrastructure portfolio" made up of more than 80,000 route miles of fiber cable and 115,000 on-air or under-contract small cell nodes, along with its more than 40,000 cell towers across the country.
American Tower, meanwhile, calls itself "a global provider of wireless communications infrastructure" and currently has a portfolio of about 221,000 sites in 25 countries on six continents. And its investment strategy speaks to that diversity. For instance, in the first quarter of 2022, the company paid $30 million for 27 communications sites in the U.S., Canada, and Nigeria. And last year, American Tower made a vastly larger investment in diversifying its income stream and business model: the $10 billion acquisition of CoreSite and its 25 data centers in eight U.S. markets.
The Boston-based company's chief executive officer, Tom Bartlett, also pointed to its continued commitment to traditional cell towers. In American's first-quarter earnings announcement, Bartlett cited 5G growth in the U.S. and Europe and growing 4G coverage continuing in earlier-stage markets, saying "it is clear to us that macro towers will continue to be critical infrastructure for carrier network investments over the next decade and beyond."
Meanwhile, Houston-based Crown Castle touted continued record application activity and industry-leading organic revenue growth for its tower business, but clearly pointed to a new direction.
In the company's first-quarter earnings release, Chief Executive Officer Jay Brown said, "I believe 2022 will be an important transition year for our small cells and fiber business." The company will be focusing on scaling its small cell installations to more than 10,000 a year this year (from 5,000 in 2021) as it works through what it calls "a record backlog" of more than 60,000 of those small antenna sites used for extending networks in buildings, around neighborhoods, and more.
It was a good year and more are expected
Both companies anticipate good results for 2022. American Tower is forecasting 7.6% growth in adjusted funds from operations (FFO) from 14% growth in revenue over 2021. For its part, Crown Castle said, "We expect the deployment of 5G in the U.S. to extend our opportunity to create long-term value for our shareholders while delivering dividend per share growth of 7% to 8% per year."
Both companies have seen their share prices fall sharply and both are sound candidates for investing in the rebound eventually to come. For now, investors can take some consolation from a yield of about 2.3% from American Tower and 3.2% from Crown Castle.
American Tower is the first REIT I ever owned -- and I'm not alone -- and I probably sold it too early a couple of years ago after several years of impressive gains.
But as for choosing one, I lean right now toward Crown Castle because of its greater commitment to the small-cell market that will benefit from the continued growth of smart cities and buildings and to the fiber cable network that surging infrastructure spending is helping to push ever deeper into suburban, small-town, and rural areas across the country.
But either has been a good choice so far and likely will continue to nicely reward shareholders going forward.