Mobil data continues to be one of the more significant growth trends within the global economy, and that trend was on full display when American Tower (NYSE:AMT) reported its third-quarter results on Thursday morning. The global telecom tower REIT delivered strong double-digit growth in revenue and cash flow thanks to growing both its tower portfolio, as well as the number of tenants on each tower.

American Tower results: The raw numbers

 

Q3 2015 Actuals

Q3 2014 Actuals

Growth (YOY)

Revenue

$1.2 billion

$1.0 billion

19.2%

Adjusted Funds from Operations

$558 million

$460 million

21.4%

AFFO/share

$1.31

$1.15

13.9%

Data source: American Tower.

What happened with American Tower this quarter? 
American Tower connected on a great quarter.

  • Revenue grew thanks to robust growth in the company's domestic rental and management segment, which delivered 21.8% year-over-year revenue growth, to $808 million. Meanwhile, organic core revenue growth, which adjusts revenue for a number of items including foreign currency fluctuations, one-time charges, and revenue from new properties, was up 6%.
  • The company's international segment also delivered strong growth of 16.5%, to $405 million, with revenue from organic core growth up 10.7%.
  • Growth in adjusted funds from operations was primarily driven by both new acquisitions, as well as new tenants added to legacy towers.
  • During the quarter, the company spent $946 million to acquire five tower sites in the U.S., and 6,206 sites internationally.
  • Subsequent to the end of the quarter, the company agreed to acquire a 51% interest in Viom Networks, which owns 42,000 towers in India, for approximately $1.2 billion. The company expects the transaction to close by the middle of next year, and immediately be accretive to AFFO per share.

What management had to say 
In commenting on the quarter, CEO Jim Taiclet said:

Our nearly 14% growth in AFFO per Share in the third quarter was fueled by continuing exponential growth in mobile data demand in both the U.S. and in our international markets. We believe that this growth in demand will go on for many years to come, driven by a combination of lower cost smartphones proliferating around the world, additional spectrum being deployed for mobile data and the competitive imperative for mobile operators to steadily invest in their networks.

According to technology research company Gartner (NYSE:IT), mobile data usage worldwide is expected to grow by 59% in 2015. Further, Gartner sees mobile data traffic more than tripling by 2018. Because of this, Gartner is advising that communication service providers rethink data caps to meet consumer needs, and to win more market share. That's a trend that would clearly benefit American Tower because it would suggest that its customers would expand their presence on its towers to meet consumer needs, thereby pushing organic core revenue even higher.

Looking forward 
Due to this robust projected growth in data demand, as well as the expansion of its portfolio via acquisitions, American Tower sees its strong growth continuing. For the full year, the company expects revenue to grow by 16.1% at the midpoint of its guidance, while AFFO is expected to grow even faster, at 17.1%. Further, the company already has a head start on driving 2016 growth with the pending acquisition of Viom Networks, setting itself up to continue to benefit from the explosive growth of data around the world.

Matt DiLallo owns shares of American Tower and has the following options: long January 2017 $80 calls on American Tower. The Motley Fool owns shares of and recommends American Tower. The Motley Fool has the following options: long January 2017 $80 calls on American Tower. The Motley Fool recommends Gartner. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.