AMT - Embedded Expectations Analysis - 2021 10 19
American Tower Corporation (REIT) (AMT:USA) currently trades above recent averages relative to UAFRS-based (Uniform) earnings, with a 40.0x Uniform P/E, implying bullish expectations for the firm. However, management may be concerned about the sustainability of revenue growth and communications site demand, the potential of the Telxius deal, and expectations for the DISH partnership.Specifically, management may lack confidence in their ability to continue leveraging a passive approach to outsourcing carrier networks, utilize their build program to expand scale in Europe, and meet revenue guidance for their DISH partnership. Moreover, they may be concerned about the impact of carrier consolidation on churn rates, the sustainability of organic billings growth and overall revenue growth going into 2022, and the implications of the splitting of the Oi portfolio in Brazil. Furthermore, management may be overstating the potential of the Telxius deal to generate euro-dominated revenues and yield a stronger competitive position in the European market, as well as the capabilities of their existing global portfolio to position them for sustainable growth. They may also have concerns about the sustainability of global demand for their communication sites, the 5G deployments of major U.S. carriers, and the amount of proceeds they will receive from their
agreements with CDPQ and Allianz. In addition, they may also have concerns about mix issues in services driving down implied margins, the strength of the revenue commitment for their contract with DISH, and finishing the rest of 2021 strong.
American Tower is a holding company. Through its subsidiaries, the company is a real estate investment trusts and an independent owner, operator and developer of multitenant communications real estate. The company's primary business is the leasing of space on communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities and tenants in a number of other industries. The company also provides tower-related services, including site acquisition, zoning and permitting and structural analysis, which primarily support the company's site leasing business, including the addition of new tenants and equipment on its sites.
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