The paragraph introduces the American Tower Fourth Quarter and Full Year 2024 Earnings Conference Call. The conference is hosted by Adam Smith, the Senior Vice President of Investor Relations, FP&A, and includes presentations from Steve Vondran, the President and CEO, and Rod Smith, the Executive Vice President, CFO, and Treasurer. It mentions the availability of a presentation on their website and states that the call will cover forward-looking statements related to future growth, capital allocation, and operating performance. Additionally, it highlights the presence of certain risk factors that could affect future results and advises that the company is not obligated to update the information after the call.

The CEO of American Tower reflects on their first year in the role, emphasizing the company's strong asset portfolio and operational capabilities in a robust business driven by increasing mobile network demand. Over the past year, they have seen significant activity, with carriers enhancing 4G and 5G networks and a record leasing year for their CoreSite data center business. The CEO's expectations for sustained 5G network investments have been met, with AI-driven demand offering further opportunities for growth. Strategic priorities were set to focus on financial strength, operational efficiency, and disciplined capital allocation to enhance customer value and ensure long-term earnings durability. These initiatives aim to address challenges like carrier consolidation and market volatility, positioning the company well for 2025 and beyond.

The company is on track to maintain its 5 times leverage target this year, showing progress from its initial deleveraging plan after acquiring CoreSite in 2021. This achievement is supported by margin expansion through reducing recurring SG&A costs by $35 million in 2024 compared to 2023, aided by efficiency initiatives and the globalization of functions like finance, IT, and HR. The recent appointment of Bud Noel as COO aims to further enhance efficiency and margin expansion by leveraging global expertise. Additionally, Rich Rossi will lead the U.S. and Canada business. The company plans to assess its global operating structure over the next few months and set long-term efficiency targets, while managing its global portfolio and capital deployment to mitigate geographic risks and align with its strategy and core competencies.

The company has exited its business operations in India and sold its land interests in Australia and New Zealand. It plans to divest its South Africa fiber business soon. By 2025, it expects 75% of its unlevered AFFO to come from developed markets such as the U.S., Canada, and Europe, emphasizing a strategy focused on these areas and minimizing emerging market exposure. This approach, coupled with increased cash flows from top operators and reduced emerging market risk, aims to enhance return predictability. The company is poised to leverage growing mobile data demand, as 5G data traffic is expected to rise significantly by 2030. In 2024, they have seen increased 5G application activity with major U.S. customers upgrading their sites to mid-band spectrum.

The paragraph discusses the continued growth and investment in 5G networks, highlighting the commercial benefits such as improved network quality, customer retention, and stronger average revenue per user (ARPU). It notes that while there may be a slight decline in tenant billings growth in the U.S. and Canada for 2025, this is due to timing issues rather than a decrease in demand. The 5G investment cycle aligns with expectations, and over the next five years, network capacity is expected to more than double due to increased usage and data demand. Achieving this will require network densification and additional spectrum, as existing resources will only meet about half of this new capacity need. The text projects an active year of 5G investment in 2025, with a wireless capital expenditure of approximately $35 billion, indicating higher spending compared to the 4G era.

The paragraph discusses the growing demand and investment opportunities in telecommunications infrastructure, driven by increased data consumption and the expansion of 5G mid-band coverage, particularly in Europe, Latin America, and Africa. It highlights the need for continued investment in network capacity, utilizing various infrastructure solutions like macro towers, small cells, and satellites, especially in remote areas. Additionally, the CoreSite business is experiencing strong demand and pricing resilience, with a focus on interconnection-centric colocation and AI-related demand, supporting sustainable long-term growth and stabilized yields.

The paragraph outlines the company's strategy to maintain growth and meet customer needs by enhancing their value proposition for both customers and shareholders. They aim to remain the leading operator of towers and real estate, offering benefits like service quality and speed of deployment. For investors, the focus is on maintaining a high-quality portfolio, making prudent investments, and achieving efficiency and high returns. The company plans to further globalize its operations to achieve economies of scale, cost savings, and create value across its markets. Capital management will focus on funding opportunities with the best long-term returns.

The company is prioritizing investment in developed market platforms, allocating over $600 million for data center development with high-yield prospects and exploring smaller investment opportunities. They are reducing capital expenditure in emerging markets, with just over $300 million planned for 2025, focusing primarily on constructing 1,650 committed tower sites for strategic customers. As these commitments are fulfilled, new investments will shift to developed regions. Despite global economic uncertainties, demand for connectivity remains strong, and American Tower is well-positioned to support customer needs through its global asset portfolio. The company is committed to long-term growth and returns by leveraging its strong balance sheet, high-quality asset management, and exceptional customer service in the wireless and technology industries.

In the paragraph, Rod Smith discusses the strong closure of 2024 and their expectations for 2025. He highlights several key points: solid demand for U.S. assets with an increase in applications in Q4, emphasizing the importance of mid-band spectrum and 5G deployment; consistent international business growth through the construction of around 1,000 new sites, particularly in Europe; and significant demand in the U.S. data center business, leading to a revenue growth of nearly 10% in Q4. The company achieved a 200 basis point expansion in cash-adjusted EBITDA margin through effective cost management and emphasizes continued cost efficiency as a priority for 2025. Additionally, efforts were made to strengthen their investment-grade balance sheet.

In Q4, the company addressed part of its 2025 debt refinancing by issuing $1.2 billion in senior unsecured notes with a 5.2% average coupon and 7.5-year tenor. Their 2025 plan aligns with net leverage targets, and they started the year with strong liquidity and reduced floating rate debt exposure. In January, they improved their bank facilities' margin pricing by 12.5 basis points, optimizing capital costs. Property revenue grew nearly 1% (3% FX-neutral), supported by tenant billings, site construction, and U.S. data center growth. Adjusted EBITDA rose approximately 2% (over 4% FX-neutral). Cost management led to a $35 million reduction in cash SG&A and a 140 basis point cash margin expansion to 66.8%. AFFO per share increased by nearly 7% (over 9% FX-neutral). The company remains committed to efficiency and supports a positive 2025 outlook.

The paragraph discusses the company's 2025 strategic plan and financial outlook. It highlights solid recurring revenue growth driven by strategic cost management across various areas, despite challenges such as FX devaluation and refinancing interest costs. The company aims for a mid-to-high single-digit growth rate but acknowledges potential volatility due to FX and interest rate changes. A recent agreement to sell fiber assets in South Africa is expected to enhance the portfolio, with the sale projected to close by March 1 and the annualized contributions from these assets detailed. The 2025 outlook forecasts a 5% organic tenant billings growth company-wide, with slightly higher growth expected without the impact of Sprint churn, and outlines expectations for growth in the U.S. and Canada.

The paragraph discusses various growth projections and factors affecting the company's performance across different regions for 2025. Overall growth is impacted by Sprint-related churn, which may suppress growth to below 4% for the first three quarters before rebounding to over 5.5% in Q4. In Africa and APAC, growth is projected at 12% driven by escalators and new business, offset by reduced churn. Europe expects 5% growth supported by escalators and new business, partially offset by churn. Latin America's growth is around 2%, negatively impacted by carrier consolidation churn. Organic tenant billings support property revenue growth, but FX adjustments and one-time revenue benefits reductions create complexities. Additionally, the U.S. data center business shows strong growth of nearly 12% at the midpoint.

The paragraph discusses the financial growth and strategic plans of a company for 2025. Cash property revenue growth is leading to an adjusted EBITDA increase of around 1% year-over-year and over 3% on an FX-neutral basis. The U.S. services segment is expected to improve gross margins by nearly $30 million. The business anticipates reducing cash SG&A expenses by about $20 million and benefiting from operating leverage and lower bad debt. Attributable AFFO per share is projected to grow by over 4% to $10.40 in 2025, supported by effective cash management despite $80 million in net interest headwinds. The company plans to resume mid-single-digit dividend growth, equating to $3.2 billion distributions, and deploy $1.7 billion in capital, focusing on developed market platforms, data center investments, and tower construction with 2,250 new sites planned.

The company is seeing a moderate year-to-year increase in overall capital spending, focusing on development opportunities in the U.S., Europe, and CoreSite, while reducing spending in emerging markets. For 2025, investments in regions like Latin America, Africa, and APAC will concentrate on enhancing sites to meet obligations with leading carriers through new builds. Since acquiring CoreSite, the company has positioned itself to achieve sustained earnings growth, manage market risks, and maintain financial flexibility for growth opportunities at a favorable capital cost. With $12 billion in liquidity, including $10 billion in bank capacity, and plans to keep floating rate debt exposure below 10%, the company is prepared for $3.7 billion in note maturities in 2025. Despite ongoing market volatility, including interest rate and FX uncertainties, the company’s strategic actions in 2024 have strengthened its position for long-term growth and shareholder returns. The company is now opening the floor for questions.

Michael Rollins inquires about the domestic leasing environment, specifically the mix of colocations (COLO) versus amendments, and how it impacts book-to-bill metrics for the OTPG through 2025. He also asks about the multiyear growth opportunity and whether annual growth remains in the mid-single-digit range through 2027. Steve Vondran responds that there are no changes to their long-term guidance for 2023-2027. He explains that the OTPG is affected by a subtle mix, not solely by COLOs versus amendments, noting a sequential decrease in contracted use fees. They still anticipate organic tenant billings growth from use fees, amendments, and new leases. Despite one customer not having a comprehensive agreement for amendments, there’s a robust activity pipeline from the three national carriers, showing a healthy mix of amendments and new colocations, including network expansion in rural areas and early densification efforts.

The paragraph discusses the financial outlook related to organic tenant billings growth and revenue timing. There is a noted change in the revenue mix for 2025, with a decreased reliance on comprehensive use fees, making revenue more dependent on timing factors. Front-end loaded use-right fees contrast with other revenues that arrive throughout the year. Variability in revenue commencement can significantly impact the OTPG metric, prompting a conservative guidance of greater than or equal to 4.3%. This outlook aligns with previous expectations of around 5% growth from 2017 to 2024. In the current guidance, 2 percentage points of growth result from churn, with half of that from non-repeating Sprint churn, suggesting future growth potential. The guidance timeframe mentioned is 2023 to 2027.

In the paragraph, Steve Vondran discusses the strategic acquisition and current performance of CoreSite, a data center business. He emphasizes that CoreSite was acquired due to its strong business model and potential future advantage as the industry shifts towards edge computing. Despite concerns over the difference in market perception between data centers and towers, Vondran is focused on maximizing CoreSite's value. He suggests that as long as CoreSite continues to provide value, the company plans to maintain ownership and grow it. However, if the strategic alignment changes in the future, they may reconsider their position.

The paragraph discusses the company's strategy and future plans regarding the evolving edge ecosystem and its connection to multi-cloud environments and AI inferencing. The company believes that having a highly interconnected ecosystem is crucial for the success of edge computing. They are well-positioned to capture future demand but are open to reassessing if another owner could provide more value. Additionally, Rod Smith talks about the company's strategic land purchases under their towers in the U.S., highlighting an increased investment from $144 million in 2024 to $200 million in 2025. They aim to secure long-term leases or ownership of land under their best towers to ensure stable revenue, with currently over 70% of towers having such long-term security.

The paragraph discusses the company's strategy for securing future revenue through extending and purchasing leases for land under towers in the U.S., achieving high returns. Simon Flannery thanks the operator, and Batya Levi inquires about domestic tower upgrades, new leasing pacing, and capital allocation. Steve Vondran responds, providing general information about carrier upgrades to mid-band 5G and hints at the varying progress among different customers. He also mentions that the Sprint churn will significantly impact the new business cadence throughout the year.

The paragraph discusses the impact of Sprint churn on the OTPG metric and organic tenant billings for the first three quarters of 2024, resulting in slightly lower growth rates before improving in the year's final quarter. The section anticipates stable volumes of applications on their sites for 2025, potentially more concentrated at the beginning of the year, though uncertainties remain due to carriers finalizing their plans. Rod Smith explains that Sprint churn will significantly impact organic tenant billings in the early quarters, starting at a $30 million quarterly run rate and decreasing to around $10 million by Q2. Sprint churn contributes to about more than half of this impact. Additionally, new business is expected to decrease from $180 million in 2024 to between $165 million and $170 million in 2025.

The paragraph outlines the company's financial strategy and outlook. It acknowledges a temporary dip in financial performance from the end of last year into the first half of the current year but anticipates modest acceleration by the end of the year. The company projects a reduction in leverage to around or below 5 times by early 2025, which will grant them full financial flexibility. Despite the uncertainty in the macroeconomic environment, particularly with interest rates, the company plans to make strategic decisions regarding capital allocation. These may include further debt reduction if beneficial for shareholders. However, there are also intentions to invest in growth opportunities in developed markets that meet hurdle rates and generate long-term value. Additionally, they are considering mergers, acquisitions, and share buybacks, aiming to maximize shareholder value over the long term. The company assures that it will be disciplined in its approach to capital deployment and remains open to various strategies for generating shareholder value. At the end, there is a transition to the next speaker, Rick Prentiss, who expresses a farewell to Simon.

Steve Vondran discusses the financial performance and future prospects of data centers and AI's potential impact on network towers. The data centers, acquired through CoreSite, are achieving mid-teens stabilized yields, a figure consistent with their performance before acquisition. Vondran emphasizes that maintaining these high underwriting standards ensures a solid investment in data centers. Regarding AI, he notes that its impact on towers is uncertain, especially as mobile and desktop computing converge. Current AI interactions on mobile devices are not bandwidth-intensive, but emerging video AI applications like those from OpenAI, Google, and Adobe could increase network demand as they become more popular on mobile devices.

The paragraph discusses the growth and strategic positioning of a company's data center business, highlighting accelerated revenue growth, strong pricing power, and increased demand, which has led to higher average monthly recurring rents. The company is being selective about new entrants to ensure they fit into their ecosystem. Modest increases in capital expenditure (CapEx) have driven the backlog to over $80 million, supporting sustained revenue growth. The company is increasing capital investments in Europe and the U.S. tower business while reducing development investments in Africa, Latin America, and the Asia-Pacific region.

In the paragraph, a discussion takes place regarding potential mergers and acquisitions (M&A) related to tower deals. Rick questions Steve Vondran about any changes in the availability of portfolios that might be of interest for M&A, but Steve indicates there is nothing currently promising. He emphasizes that for an M&A opportunity to be considered, it must be strategically important and create significant value, more so than stock buybacks. Steve suggests that small domestic portfolios might be of interest if they can leverage their marketing strengths better than competitors, but they will maintain a high standard before approving any M&A. Following this, Ric Prentiss thanks Steve for the update and an operator introduces Nick Del Deo from MoffettNathanson, who appreciates the opportunity to ask questions and mentions Steve's success in achieving cost efficiencies.

In the paragraph, Steve Vondran discusses American Tower's focus on improving long-term efficiency, particularly through SG&A savings and operational optimizations. Initially, the company concentrated on reducing SG&A costs by streamlining certain functions and regionalizing operations. The appointment of Bud as COO aims to enhance this efficiency on a global scale, as the company had previously focused on rapid, decentralized growth. While they achieved some initial savings, they are now targeting further cost reductions in operations, maintenance, utilities, and supply chain. However, Vondran does not provide specific savings targets or timelines, as the process is still being evaluated.

The paragraph discusses ongoing efforts to enhance operational efficiency and financial stability within a company. Bud is working on a project to identify potential savings, though detailed figures are not yet available. Rod Smith emphasizes that SG&A efficiency is just one aspect of a broader multi-year strategy aimed at driving organic growth, operational efficiency, improving earnings quality, and strengthening the balance sheet. The company has sold several assets, including its India business and land in Australia, and plans to sell its fiber business in South Africa. These efforts, along with reducing floating rate debt to 3% and an S&P credit rating upgrade, reflect the company's focus on strategic priorities and cost management.

The paragraph discusses the demand patterns for CoreSite's data center campuses, historically concentrated in the Bay Area, L.A., and Northern Virginia. Steve Vondran notes that while these areas continue to see strong demand, successful ecosystem development efforts have made other markets like Chicago and New York equally desirable. He mentions plans to expand into new markets, such as Miami and Denver, to create similarly attractive campuses, citing their business model of creating a curated customer mix and ecosystem. The result is a more balanced distribution of demand across CoreSite's markets compared to when the company was publicly traded.

In the paragraph, Jim Schneider from Goldman Sachs asks about the U.S. carrier activity related to fixed wireless access and whether carrier customers are dedicating new capacity specifically for that purpose. Steve Vondran responds by saying that fixed wireless access is being served by existing wireless networks, and there aren't separate networks being built for it. While it's hard to isolate demand specifically tied to fixed wireless, Vondran is optimistic about carriers’ increasing targets for fixed wireless customers and their positive business returns. Schneider then inquires about potential growth in Europe, referencing a forecast of organic growth of about $10 billion (5%) and asks if there's potential for acceleration and if there are any M&A opportunities in that region. Vondran thanks him for the question but does not provide further details.

The paragraph discusses the long-term outlook for the European market, projecting a mid-single-digit growth rate. Growth factors include CPI-linked escalators and rural area expansions mandated by the government. Europe lags behind the U.S. in mid-band 5G penetration, currently at 45%, but deployment is expected to continue. Carrier consolidation is occurring, potentially strengthening remaining carriers financially. For mergers and acquisitions, the company is cautious and prioritizes right pricing and favorable terms. Despite competition, they remain optimistic about Europe's market potential but are selective about investments.

The paragraph discusses the company's approach to acquiring the Telefonica portfolio, emphasizing a cautious and disciplined strategy to ensure long-term value creation. The speaker expresses cautious optimism about growth opportunities in Europe but hasn't found anything compelling enough yet to pursue aggressively. Richard Choe from JPMorgan inquires about the services business's 30% growth and margin contribution. Steve Vondran responds, noting a good backlog of projects for 2025, driven by regular services related to deployment and a growing focus on niche construction services, which are not offered nationwide but are designed to serve specific customers and markets effectively.

The paragraph discusses future construction and activity expectations, noting increased activity year-over-year and limited predictability for services due to variability. The company is monitoring developments for the year's second half. Regarding their Canadian business, they have a small presence with a few hundred towers, experiencing positive growth. The Canadian market, characterized by significant network sharing, now sees more differentiated networks being built. The company is cautious about expansion, emphasizing that any growth must meet strict conditions and financial criteria, similar to its approach in Europe. The focus remains on growth opportunities and ensuring any expansion aligns with their strategic and financial goals.

Adam Smith thanked participants for joining the call and encouraged them to contact the Investor Relations team with any further questions. The operator then closed the conference, thanking everyone for their participation and instructing them to disconnect.

This summary was generated with AI and may contain some inaccuracies.