The paragraph is an introduction to the American Tower First Quarter 2025 Earnings Conference Call. The operator thanks attendees and informs them that the conference is being recorded, and mentions that the call will include a Q&A session after the prepared remarks. Adam Smith, Senior Vice President of Investor Relations and FP&A, introduces himself and mentions that a presentation is available on their website. He notes the presence of Steve Vondran, President and CEO, and Rod Smith, Executive Vice President, CFO, and Treasurer. Adam highlights that the call will contain forward-looking statements that involve risks and uncertainties, advises considering these factors, and states there's no obligation to update the information after the call. He then hands the call over to Steve Vondran.

The paragraph discusses the strong start to the year for American Tower, with better-than-expected financial performance due to ongoing demand across its global portfolio despite economic challenges. It highlights the positive leasing trends and carrier activities, noting the U.S. carriers' aggressive push towards 5G upgrades by 2026, leading to increased application volumes and services revenue. In Europe, steady demand persists, while in emerging markets like Nigeria and Brazil, improved financial dynamics and regulatory requirements are driving network upgrades.

The paragraph discusses the company's monitoring of the global economic situation and its impact on emerging markets, particularly in terms of foreign exchange risks and customer events. CoreSite, a part of the company, has delivered strong quarterly results due to successful leasing and favorable pricing, with new center phases adding significant capacity. CoreSite's strategic focus on high-quality ecosystems in key markets has enhanced returns and provided stability against market changes. The company remains committed to capital allocation and portfolio management, following a strategy to reduce risk and enhance earnings, evidenced by the purchase of the DE1 data center in Denver to gain full control over its critical interconnection and cloud services infrastructure.

The paragraph discusses the company's recent sale of its South Africa Fiber business as part of its strategy to focus on core markets and products that generate consistent cash flows and shareholder returns. It highlights the company's strengths in high-quality assets, strategic partnerships, and operational excellence in both U.S. and international markets. The company leverages innovations like instant colocation, drones, digital twin technology, and sustainable energy investments, while exploring opportunities to apply successful regional strategies globally for increased efficiency and value creation.

The paragraph discusses American Tower's early-stage globalization plans aimed at streamlining operations and enhancing market synergies. The company is optimistic about leveraging its scale and core competencies to strengthen its market position despite potential economic volatility. The growth in mobile data remains resilient, boosting leasing demand for its assets. American Tower believes that its strategic initiatives, including globalization efforts and portfolio management, will enhance its strength and differentiation. Despite uncertainties, the company views these times as opportunities for growth. The speaker then hands over the discussion to Rod Smith, who notes that the company has had a solid start to 2025 with continued investment by customers in network infrastructure, driven by increasing global mobile data consumption.

In the first quarter of 2025, leasing trends remained strong, leading to a 4.7% growth in organic tenant billings. The U.S. services business saw significant revenue and profit increases due to heightened tower activity. CoreSite achieved high-single-digit revenue growth, driven by strong demand for interconnection hubs. The company focused on cost management, resulting in a cash-adjusted EBITDA margin increase of nearly 70 basis points to 68.2%. Strategic actions included the sale of the South Africa Fiber business, acquisition of a data center in Denver, and reinvestment in developed markets. They issued $1 billion in senior unsecured notes to reduce debt, decreasing floating rate debt to 4% and net leverage to 5 times.

The paragraph discusses the financial performance of a company, highlighting a slight increase in consolidated property revenue year-over-year, with a 3% growth when excluding non-cash straight-line revenue, despite facing foreign exchange headwinds. U.S. and Canada property revenue saw a slight decline but grew by 3.5% when excluding certain impacts, including a negative effect from Sprint churn. International property revenue remained flat but grew by 8% when excluding currency fluctuations, while the data center business experienced a 9% revenue increase. Organic tenant billings grew by 4.7%, with the U.S. and Canada segment showing growth of 3.6% (5% excluding Sprint churn) and international growth at 6.7%. Adjusted EBITDA rose by 1.9% (over 5.5% excluding non-cash impacts), supported by strong cash property revenue conversion, cost control, and increased U.S. services gross margins. However, attributable AFFO and AFFO per share decreased slightly due to prior-year contributions from the India business.

The paragraph discusses the company's financial performance and updated full-year outlook. It highlights a 6.6% growth in the previous year after adjusting for the sale of its India operations, attributed to efficient cost management. Although core expectations remain unchanged, the company has updated its foreign exchange assumptions, using conservative bank forecasts and recent spot rates. As a result, they have increased projections for property revenue, adjusted EBITDA, and attributable AFFO by varying amounts. The forecast for attributable AFFO per share is set at $10.44, marking nearly 5% growth year-over-year. The company reiterates its expectations for organic tenant billings growth, with various percentages across different regions. Overall, there's an emphasis on a reduction in cash SG&A and positive trends supporting margin expansion.

The paragraph outlines the company's capital allocation plans for the year, noting a slight increase due to small M&A transactions. They anticipate distributing approximately $3.2 billion in dividends and spending $1.7 billion on capital expenditures. While capital spending is increasing for development opportunities in the U.S., Europe, and CoreSite, investments in emerging markets are being reduced, with future investments focusing on site augmentation and fulfilling existing commitments. The company has a strong balance sheet with $11.7 billion in liquidity, providing financial flexibility. Despite market uncertainties, the company remains well-positioned for growth due to ongoing investments by carriers and a disciplined capital investment approach. The paragraph concludes by opening the floor to questions.

In response to a question from Matt Niknam of Deutsche Bank, Steve Vondran discusses the company's ongoing focus on portfolio optimization and globalization strategy. He states that while there is no immediate plan to divest any specific assets, the company continuously reviews its portfolio to identify non-core businesses and markets that may be considered for divestiture if the value offered exceeds the value of maintaining their cash flows. Otherwise, they will continue to operate and harness the cash flows from these assets. Vondran also notes that operations have been reorganized to ensure there is no urgent need to divest.

The paragraph discusses the company's ongoing efforts to optimize their global operations and cost structure. They are operating some markets from regional hubs and are continually evaluating their strategies for long-term value. The globalization efforts focus on reducing SG&A expenses, with Chief Operating Officer Bud tasked with identifying synergies globally. Teams are reviewing various spending categories to identify further cost-saving opportunities. Additionally, the paragraph highlights strong financial performance, with $75 million in services revenue for Q1, and an expectation of continued strong demand into Q2.

The company is targeting a revenue range of $240 million to $250 million for the full year, with lower expected revenue in Q3 and Q4 due to reduced visibility into late 2025. While there is potential to exceed these targets, the company acknowledges less clarity at the year's end. In the U.S., they aim for $165 million in new business, having achieved around $38 million in Q1, which was a slight decrease from $45 million in Q4. They anticipate a similar result for Q2, followed by an increase to over $40 million in the last two quarters to reach their goal. Jim Schneider from Goldman Sachs asks about any changes in U.S. carrier leasing activity priorities towards the year-end.

The paragraph discusses the current trends and forecasts in U.S. carrier activity related to 5G deployment. Steve Vondran notes that the activity aligns with expectations, highlighting a steady progression in the mid-band spectrum deployment, with carriers aiming for coverage between 80% to 90% over the next two years. There's ongoing amendment activity and some new colocations for increased coverage and densification, partly due to governmental requirements. The activity is broad-based, indicating continued 5G deployment until it becomes widespread, matching the predicted cycle phase. The paragraph ends with an unclear reference to globalization.

The paragraph discusses the company's approach to managing expenses and increasing long-term value. They are focusing on controllable spending areas, such as operations, maintenance, and supply chain, to impact growth and maintenance capital expenditures (CapEx). The management aims to grow adjusted funds from operations (AFFO) per share without setting specific multiyear targets, emphasizing thoughtful changes that improve customer service and automation. The company has been successfully reducing SG&A costs despite inflation, with planned reductions continuing through 2025. Overall, their strategy focuses on sustainable cost management and long-term growth rather than short-term gains.

In the conversation, Ric Prentiss from Raymond James & Associates asks about capital allocation strategies, specifically regarding stock buybacks, M&A opportunities, and the potential market in Canada. Steve Vondran responds by acknowledging that stock buybacks are a possible use for their capital, highlighting a $2 billion authorization from the Board. He emphasizes their focus on long-term value creation, comparing stock buybacks with M&A opportunities, internal CapEx, and further delevering. While they completed a small U.S. transaction, they don't see any significant opportunities currently. Vondran notes that they find the Canadian market interesting and have a well-performing small portfolio there.

The paragraph discusses a company's interest in the Canadian market, expressing a preference for disciplined evaluation of potential transactions, particularly considering terms, conditions, and valuations that would provide long-term value to shareholders. The company is willing to enter the market if the right deal arises but emphasizes patience to ensure optimal conditions. Additionally, a joking interaction between Ric Prentiss and Steve Vondran highlights the focus on terms and conditions. There is also a note on the increasing trend of colocation applications, leading to rises in both amendments and new leases.

The paragraph discusses the current state and future prospects of colocation contributions within a company's portfolio. While there is an observed increase in colocations, the impact on the overall business mix is not yet significant due to the growing base and varying deployment levels of carriers. However, there is a positive outlook for growth in colocations driven by a phase of densification and increased requests for information from carriers, indicating a potential rise in colocations over the next few years. During a discussion with Ric Prentiss, it is suggested that competitive dynamics involve other large tower firms, smaller private firms, and build-to-suits, and there may be opportunities to work with customers to improve market share. Additionally, Michael Rollins notes a higher than expected annualized EBITDA, surpassing the top of the guidance range.

The paragraph discusses factors affecting EBITDA within the context of telecommunications infrastructure deployment. Steve Vondran explains that the deployment of new colocation sites by carriers depends on geographic needs and existing tower infrastructure, with minimal overlap in most markets. In rural areas lacking coverage, more new builds occur. A company's ability to influence its market share is linked to its reputation as a reliable partner, providing excellent customer service, and being involved early in the RF design phase. For infill sites and network densification, geographic constraints play a significant role, as there is less flexibility in choosing site locations.

In the paragraph, Rod Smith discusses the company's financial performance, specifically focusing on EBITDA and AFFO results for Q1. The company exceeded its EBITDA outlook in Q1, driven by strong services outcomes, but anticipates a potential decline in services revenue in Q3 and Q4, which could affect EBITDA. Despite strong Q1 results suggesting a potential to outperform annual targets, factors like timing differences in cash taxes and maintenance CapEx lead the company to maintain its original full-year outlook, with adjustments only for FX numbers.

The paragraph is a part of a Q&A session in which Nick Del Deo from Moffett Nathanson asks two questions. The first question is about the types of services contributing to revenue growth and whether this revenue is synchronized with or a precursor to leasing activity. The second question concerns potential contractual protections if EchoStar engages in a transaction involving its spectrum. Steve Vondran addresses the EchoStar query first, stating that they expect to receive payments as per the minimum contractual commitments, and mentions they have incorporated these expectations into their growth plans. For the services question, Vondran explains that their services business includes site acquisition services, such as zoning, permitting, and engineering, which are consistent, and a larger proportion of construction services, although not nationwide.

The paragraph discusses the company's approach to construction services, which is focused on project management rather than having crews climb towers. This activity is concentrated in regions where they have strong teams. While the services business is increasing, its revenue doesn't always correlate directly with activity levels due to comprehensive agreements that dictate steady payments regardless of activity. One customer and new colocations are exceptions, experiencing variable timing of revenue recognition. Revenue lags services activity by 60 to 180 days, depending on the customer and transaction type. Despite shifts toward construction management, the company maintains margins above 50%, with a 52% margin anticipated, aligning with expectations for 2024.

The paragraph discusses the current state of the telecommunications leasing market in Latin America, highlighting both growth opportunities and challenges. Increased leasing activity is noted, particularly in Brazil, where carriers are enhancing their 5G offerings. However, other regions like Mexico are lagging in 5G deployment. The company expects low-single-digit growth in organic tenant billing growth (OTBG) over the next three years despite ongoing churn, particularly from the Oi group, which will affect both wireless and wireline services. Past churn issues related to Telefonica in Mexico and WOM in Colombia and Chile have been addressed, but they continue to monitor the situation. Despite these churn challenges, the company anticipates growth as Brazilian carriers integrate Oi and improve networks.

The paragraph discusses the company's approach to agreements with large carriers, specifically regarding comprehensive versus a la carte arrangements. Steve Vondran explains that the company is open to either form of agreement, depending on what best serves long-term value and operational efficiency. They are constantly in discussions with customers about potential deals and are comfortable continuing with either arrangement. Their focus is on maintaining strong customer relationships and driving long-term growth, as evidenced by their historical success based on agreements signed decades ago.

The paragraph discusses CoreSite's strong sales funnel and its role as an interconnection business, which distinguishes it from hyperscale and traditional colocation facilities focused on cost savings. CoreSite experiences growing demand as enterprises increasingly seek multi-cloud environments to leverage new tools, including AI. This demand comes from existing customers wanting more space and new customers seeking larger installations. Despite economic uncertainties affecting data centers and enterprise IT spending, CoreSite’s core business remains robust, with significant interest from both cloud companies and retail colocation clients.

The paragraph discusses the confidence in the retail sector and CoreSite's interconnection ecosystem, which is expected to drive leasing demand despite economic uncertainties and a slowdown in hyperscale. The speaker, Steve, expresses confidence in the demand pipeline due to continued investment in automation for cost savings. In response to a question by Michael Funk from Bank of America, Steve explains why they've held back on increasing guidance. He notes that uncertainties, such as tariffs, are more of a future risk for the U.S. rather than a 2025 risk, as most equipment is already in warehouses. However, international markets, particularly emerging markets, might be more vulnerable to macroeconomic uncertainties than developed markets.

The paragraph discusses the current economic uncertainties affecting business outlook, particularly focusing on foreign exchange (FX) rates and interest rates. Rod Smith highlights the potential benefits of current FX spot rates, predicting an increase of up to $120 million in revenue and a $70 million rise in EBITDA if these rates hold, translating to an improvement in AFFO per share figures. However, it is noted that these projections are uncertain as FX and interest rates can fluctuate, impacting future financial outcomes.

The paragraph discusses the company's efforts to strengthen its balance sheet and reduce refinancing risk. They have paid down bonds maturing this year, reduced exposure to floating rate debt to less than $1.5 billion, and have minimized refinancing risk with only a little over $2 billion in bonds left to renew. They've already refinanced $1 billion, reducing the remaining risk significantly. This positioning allows them to potentially refinance through 2025 without accessing capital markets, maintaining low floating rate exposure. The company emphasizes its strategic flexibility amid uncertainty. Additionally, there's a brief mention about service revenue growth being broad-based, not reliant on just one carrier's upgrades.

The paragraph is part of a Q&A session where Michael Funk clarifies that their services business is broadly active, not reliant on a specific carrier upgrade. Steve Vondran concurs, highlighting various activities like co-locations and amendments contributing to their business. Ben Swinburne from Morgan Stanley asks about the impact of fixed wireless growth on business activity and the outlook for accelerated growth. He also inquires about any updates on cost savings initiatives. Rod Smith responds, indicating he will address the cost savings question first, though no specific details are provided in this excerpt.

The paragraph discusses the company's cost analysis and optimization efforts, including progress on reducing SG&A expenses and exploring potential savings in operations, maintenance, development CapEx, and supply chain. It also addresses the carriers' use of fixed wireless, indicating they are currently monetizing it using existing network capacity, which does not impact the company's projections. If carriers were to invest in standalone fixed wireless infrastructure, it could present an additional opportunity for the company, though this is not currently anticipated.

The paragraph discusses criteria for inorganic growth in Europe, with a focus on the importance of a healthy carrier ecosystem and a supportive environment for colocation as a business model. It emphasizes the need for terms and conditions that ensure long-term growth viability. Steve Vondran mentions past transactions that were not pursued due to issues like monetizing amendments with anchor tenants, carriers having buyback rights, and low fixed escalators instead of CPI-linked ones. The paragraph also briefly touches on positive comments about CoreSite, suggesting inquiries about growth in metrics such as cross-connect counts and kilowatt or cabinet growth.

The paragraph discusses the criteria for selecting potential investment opportunities, particularly focusing on locations in Europe that could offer favorable conditions for growth, despite not seeing a portfolio trade with suitable terms yet. It also highlights strong performance in CoreSite, noting high revenue growth from cross-connects, elevated pricing, and a stable churn rate. The demand for services is robust, as enterprise customers are increasingly repatriating workloads from the cloud and their data centers into CoreSite. The paragraph ends with Jonathan Atkin thanking participants and Adam Smith offering to answer further questions via the Investor Relations team, concluding the conference call.

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