American Tower forecasts low growth in LatAm ‘for the next few years’

Under pressure from the consolidation of telcos, forex effects and macroeconomic uncertainties, American Tower (ATC) forecasts that its Latin American operations will continuing on a trajectory of low growth for the foreseeable future.

The company is the market leader and biggest provider of towers and sites for mobile operators in the region.

“We believe that [Latin America] will come back to high single-digit growth, but for the next few years we are projecting low single-digit growth there,” CFO Rod Smith told investors in a 3Q24 earnings call.

In the quarter, Latin America delivered a 1.7% year-on-year increase in tenant (site leases) revenue for the company, the lowest of all its geographies.

Smith attributes the poor growth forecasts to the consolidation of telecom operators in the region through acquisitions and “some challenges with the law," among other factors such as FX impacts.

In Q3, American Tower made provisions in its balance sheets related to distressed telco WOM Colombia. The operator, which is a small client, accounting for 1.5% of ATC’s Latin American property revenues, is in a judicial recovery process like its sister company WOM Chile.

In the third quarter, the prevision resulted in revenue reserves of US$13mn, including US$8mn recognized as bad debt expense.

“Any outcome of the potential reorganization is uncertain and it would be premature to speculate, but we began recognizing revenue on a cash basis and reserved a portion of outstanding revenue as bad debt,” said the CFO.

On a positive note, ATC managed to agree a deal with another distressed carrier, Brazil’s Oi, regarding towers and real estate assets. Oi is another customer undergoing a judicial reorganization. its mobile operations were sold to local competitors.

“We are increasing our expectations for property revenue from continuing operations by approximately US$15mn… primarily driven by our datacenter segment and the one-time customer settlement in Brazil, and partially offset by WOM-related reserves and an anticipated delay in certain non-run rate reimbursements in the US,” said Smith.

Forecast and portfolio

American Tower maintained its full-year guidance of 1.5% organic growth in tenant billings for Latin America after the group lowered it the previous quarter.

The metric consists of leases from towers and sites that the company has owned since the beginning of the same period of the previous year together with leases on new sites.

Latin America was the sole geography to have the outlook lowered. The projected annual growth is also the lowest among the company’s geographies. 

Overall, ATC ended September with 48,247 sites deployed across Latin America, marginally up from the 48,242 it had at end-June. The portfolio includes towers, in-building sites and outdoor distributed antenna systems (DAS).

Brazil alone accounted for 22,675 of the total, inching up by five sites in the quarter, followed by Mexico (9,695, up by nine).

Next was Colombia (4,958, down by eight), Peru (4,424, down by two), Chile (3,821, up by one), Paraguay (1,452, up by one), Costa Rica (712, up by one) and Argentina (510, flat). 

Considering only towers, the company built 27 in 3Q24 and 98 in the first nine months of the year in Latin America. That compares with 46 and 96 in the same periods of last year.

Last year, ATC missed its tower deployment target for Latin America.

In 2023, the company planned to deploy around 300 sites in the region of a total of 4,000 worldwide. However, ATC ended the year with 210 towers built in Latin America.

REVENUE AND CLIENTS

Overall, Latin America represented 16.3% of ATC’s property revenue for the quarter, increasing its contribution from the same quarter of last year.

Telefónica is its biggest international client, and upped its share to 10% of the company’s total property revenues in 3Q24.

Other major clients with Latin American operations are AT&T (3% of revenues), América Móvil (2%), Telecom Italia (2%), as well as Chile's Entel, Millicom and Altán, each accounting for 1%.

American Tower had 148,000 communications sites in place worldwide at the end of September, 42,000 of them were in the US and Canada and over 106,000 in international markets.