Earnings call transcript: American Tower Q2 2025 misses EPS forecast, stock dips

American Tower Corporation (AMT), a prominent player in the Specialized REITs industry with a market capitalization of over $100 billion, reported its second-quarter 2025 earnings on July 29, revealing a significant miss on earnings per share (EPS) expectations, despite a slight revenue beat. The company’s EPS came in at $0.78, falling short of the $1.68 forecast, resulting in a 53.57% negative surprise. In contrast, revenue reached $2.63 billion, slightly above the anticipated $2.59 billion. Following the earnings release, American Tower’s stock price fell by 4.23% in pre-market trading. The company maintains a strong dividend track record, having raised its dividend for 14 consecutive years, with a current yield of 3.03%.

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Key Takeaways

• American Tower’s EPS of $0.78 missed the forecast by a wide margin.
• Revenue of $2.63 billion slightly exceeded expectations.
• Pre-market stock price dropped by 4.23% following the earnings announcement.
• The company raised its full-year outlook for property revenue and adjusted EBITDA.
• Strong performance in the CoreSite data center business and ongoing 5G deployments.

Company Performance

American Tower demonstrated resilience in its revenue generation, achieving a 1.2% year-over-year growth in consolidated property revenue, contributing to its impressive 74.55% gross profit margin. According to InvestingPro’s analysis, the company maintains a "GOOD" overall financial health score, particularly strong in profitability metrics. The company’s focus on expanding its data center business and 5G deployments has been pivotal. However, the significant miss in EPS indicates challenges in controlling costs or other operational inefficiencies.

Financial Highlights

• Revenue: $2.63 billion, up 1.54% from the forecast.
• Earnings per share: $0.78, down 53.57% from the forecast.
• Adjusted EBITDA grew by 1.8% year-over-year.
• Organic tenant billings increased by 4.7%.

Earnings vs. Forecast

American Tower’s actual EPS of $0.78 was significantly below the forecasted $1.68, marking a 53.57% negative surprise. This substantial deviation from expectations may reflect operational challenges or unexpected expenses during the quarter. Conversely, revenue slightly exceeded the forecast by 1.54%, suggesting strong sales performance.

Market Reaction

Following the earnings announcement, American Tower’s stock fell by 4.23% in pre-market trading, with the price dropping to $215.42. This decline reflects investor disappointment with the earnings miss, despite the revenue beat. The stock remains within its 52-week range, with a high of $243.56 and a low of $172.51. Based on InvestingPro’s Fair Value analysis, the stock appears overvalued at current levels, though analysts maintain a bullish outlook with price targets ranging from $217 to $288.

Outlook & Guidance

The company has raised its full-year outlook for property revenue, adjusted EBITDA, and AFFO. American Tower anticipates an attributable AFFO per share of $10.56, representing approximately 6% growth year-over-year. The company continues to invest in its U.S. and European markets, with a focus on data centers and 5G network deployments.

Executive Commentary

CEO Steve Vondrin emphasized, "Demand for our tower leasing, services, and data center businesses, combined with FX tailwinds, has led us to raise outlook for property revenue, EBITDA, and AFFO." CFO Rod Smith added, "Everything’s on the table for us, and we will be making decisions in the best interest of our shareholders over the long term."

Risks and Challenges

• Slower conversion of leasing to commencements could impact revenue growth.
• Potential impact of fixed wireless technology on tower business.
• Economic uncertainties in emerging markets may affect growth projections.
• Fluctuations in foreign exchange rates could impact financial performance.
• Competitive pressures in the data center and telecommunications sectors.

Q&A

During the earnings call, analysts inquired about the slower leasing conversion rates and the strategic importance of CoreSite’s performance. Executives addressed concerns about the impact of fixed wireless technology on their tower business and detailed their capital allocation strategy, emphasizing potential share buybacks and debt reduction.

Full transcript - American Tower Corp (AMT) Q2 2025:

Conference Operator: Ladies and gentlemen, thank you for standing by. Welcome to the American Tower Second Quarter twenty twenty five Earnings Conference Call. As a reminder, today’s conference call is being recorded. Following the prepared remarks, we will open the call for questions. I would like to turn the call over to your host, Kate Reeb, Senior Director of Investor Relations.

Please go ahead.

Kate Reeb, Senior Director of Investor Relations, American Tower: Good morning, and thank you for joining American Tower’s second quarter earnings conference call. We have posted a presentation, which we will refer to throughout our prepared remarks under the Investor Relations tab of our website, www.americantower.com. I am joined on the call today by Steve Vondrin, our President and CEO, and Rod Smith, our Executive Vice President, CFO, and Treasurer. Following our prepared remarks, we will open up the call for your questions. Before we begin, I’ll remind you that our comments will contain forward looking statements that involve a number of risks and uncertainties.

Examples of these statements include our expectations regarding future growth, including our 2025 outlook, capital allocation, and future operating performance, and any other statements regarding matters that are not historical facts. You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward looking statements. Such factors include the risk factors set forth in this morning’s earnings press release, those set forth in our most recent annual report on Form 10 ks, and in other filings we make with the SEC. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained in this call to reflect subsequent events or circumstances. With that, I’ll turn the call over to Steve.

Steve Vondrin, President and CEO, American Tower: Thanks, Kate. Good morning, everyone, and thanks for joining the call. As you can see from our results, 2025 continues to be a good year. Demand for our tower leasing, services, and data center businesses, combined with FX tailwinds, has led us to raise outlook for property revenue, EBITDA, and AFFO. These results highlight the ongoing strength of our global businesses and the durability of mobile network demand that underpins it.

And American Tower continues to offer a predictably compelling value proposition for investors against a volatile macroeconomic backdrop. I’ll briefly share a few highlights and trends before Rob discusses more detailed results and outlook. Mobile data consumption continues to climb, driving increased demand for network capacity in every region where we operate. We see this demand catalyze activity across our extensive tower footprint and drive network upgrades as the sun setting of legacy radios faster than we’ve seen in early g cycles. Carriers in developed markets continue to expand and mature their five gs networks as they work with aggressive coverage and quality targets between now and the end of the decade, while emerging market players actively complete their four gs rollouts and selectively yet increasingly pursue the five gs cycle.

In our developed tower markets, which consist of The US, Canada, and Europe, mobile traffic growth rates are anticipated to slightly outpace global averages over the next five years. And increasingly data intensive and uplink use cases like mobile video, AI, and new devices will continue to stress networks and prompt both mid band coverage and capacity driven five gs activity across our tower footprint and rooftop sites. In The US, we see the five gs cycle playing out in line with our original expectations as carriers continue site upgrade activities work toward twenty twenty six five gs coverage goals and begin early densification oriented colocation activity to improve network quality. We still see significant differences in mid band rollout progress across our portfolio, positioning us well to capture substantial new business for both amendments and colocations, with the latter comprising an increasingly material share of application mix for certain big three customers. On a combined basis, total application volumes increased more than 50% year over year, representing strong broad based demand for ourselves.

Our US services business posted a near record quarter propelled mainly by out sales construction services, signaling our customers increasing recognition of the quality, efficiency, and overall value that we provide through our best in class offerings. Next, our Europe business also continues to trend in line with expectations, benefiting from a healthy overall operating environment and strong customer agreements that provide both growth and insulation from various customer shifts across the region. Midbank coverage now stands at just about 55% of the markets where we operate, which is slightly ahead of the continental average and leaves a significant runway for more coverage oriented activity as carriers pursue 2,030 rollout targets. Additionally, spectrum extensions and related coverage obligations in Germany should unlock long term investment and yield future growth benefits and in the near term are bringing energy and momentum to five gs rollout activity. In our emerging markets, we’ve raised our outlook due to a mix of FX tailwinds and core leasing outperformance.

Our Africa business continues to post robust growth results, benefiting from a stabilized lower churn care landscape, better consumer pricing in key markets, and supportive demand dynamics. Five gs maturity remains limited in the region, with most activity focused on four gs rollouts and densification. But we do see early five gs deployments continue to progress in select urban areas propelled by use cases of fixed wireless. Activity has improved in markets like Nigeria, where higher consumer prices are supporting better carrier economics and unlocking stronger levels of network investment. Growth in Latin America remains muted relative to historical trends, and our expectations for persisting low single digit growth through 2027 remain unchanged.

However, consolidation has normalized in Brazil, and new activity is anticipated across the more stabilized three player market as carriers work to fulfill regulator commitments in the region and realize better margins from higher ARPUs. Our outlook for the region has modestly increased, along with some improvements in markets like Brazil, we’re seeing continued elevated levels of churn as carriers rationalize the infrastructure required through consolidation activity. Moving to our data center business, we continue to see exceptional performance from CoreSite and have increased our 2025 expectations to reflect new growth attributable to the recently acquired DE1 facility, as well as elevated demand and pricing from our broader portfolio of interconnection data center facilities. Hybrid and multi cloud IT architecture requiring secure low latency interoperability remains a primary driver of demand. The early phases of AI related workloads, including inferencing, machine learning models, and GPUs as service represent a fast growing component of ForeSite’s leasing.

Capacity constraints from high absorption rates and continued AI driven demand from both very large hyperscale players across the wider market and the enterprise customers that value our interconnection ecosystem are driving a sustained favorable pricing and pre leasing environment that we expect to continue into the foreseeable future. These tailwinds have enabled us to remain selective in our customer mix to curate high quality ecosystems while exceeding our initial underwriting assumptions. We plan to continue to prioritize funding CoreSite on a success basis and in line with our capital allocation strategy to replenish supply and facilitate future growth. Overall, our outlook is generally looking up as we enter the 2025, But we remain focused on delivering our differentiated value proposition and staying true to our stated strategy. Our experienced team is well versed in addressing certain ebbs and flows across our global footprint.

Our strategic long term focus enables us to benefit from the durability of tower leasing and growing mobile data and computing demand trends. Our superior global portfolio, best in class services and customer delivery, high quality balance sheet, protected contracts, and highly disciplined approach to capital allocation already enable us to extract significant value from the global tower landscape. But we remain motivated to continuously improve and deliver even more compelling returns to our stakeholders. Now I’ll hand it over to Rod to discuss second quarter results and our revised 2025 outlook. Rod?

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: Thanks, Steve, and thank you all for joining the call. As noted in this morning’s press release, we had a strong second quarter driven by resilient demand across our global portfolio. We are well positioned to benefit from growing mobile data consumption and confident in our ability to sustain growth through the second half of the year. Before diving into our Q2 results and our revised full year outlook, I’ll share a few highlights. First, leasing momentum remains strong, resulting in consolidated organic tenant billings growth of 4.7%.

Our U. S. Services business had a near record quarter while application volumes among the big three were up over 50% year over year. This was primarily driven by amendment upgrades and a 200% year over year increase in colocations. CoreSite also had an exceptional quarter with double digit revenue growth and gross margin expansion fueled by hybrid cloud demand and AI related use cases.

Strategically, we closed the acquisition of our DE1 data center asset in Denver and deployed over 75% of our discretionary capital in developed markets, rising to over 85% when including acquisition capital. Finally, we strengthened our balance sheet by issuing €500,000,000 in senior unsecured notes at 3.625%. Proceeds were used primarily to pay down existing debt. At quarter end, floating rate debt was approximately 7% of our total outstanding debt and net leverage stood at 5.1 times. Turning to second quarter property revenue and organic tenant billings growth on slide six.

Consolidated property revenue grew 1.2% year over year and more than 3% when excluding non cash straight line revenue despite absorbing more than 70 basis points of FX headwinds. Year over year growth was negatively impacted by 2% due to a change in non recurring revenue in the current period relative to the prior year. US and Canada property revenue declined by more than half a percent and grew approximately 3% when excluding non cash straight line revenue despite absorbing more than 100 basis points of Sprint churn. International property revenue grew approximately 1% year over year and approximately 3% when excluding the impacts of foreign currency fluctuations. Finally, property revenue in our data center business grew over 13%.

Moving to the right side of the slide, consolidated organic tenant billings growth was 4.7% driven by solid demand across our global portfolio. In our US and Canada segment, organic tenant billings growth met our expectations at 3.7 and greater than 5% when excluding Sprint related churn. Our international segment drove 6.5% in organic tenant billings growth, a modest step down from Q1 twenty twenty five, reflecting generally consistent leasing trends paired with slightly lower contributions from escalators and churn. Turning to slide seven, adjusted EBITDA grew 1.8% and approximately 4.5% when excluding non cash net straight line despite absorbing approximately 90 basis points of FX headwinds. Growth was positively impacted by continued direct expense management resulting in a high conversion of cash property revenue and a greater than 100% increase in U.

S. Services business gross profit, partially offset by the flow through of non recurring revenue benefits in the prior year period. Increased bad debt associated with Latin America customer collections and other non recurring and timing related costs. Cash adjusted EBITDA margin declined 40 basis points year over year, partially driven by a higher contribution from U. S.

Services. Moving to the right side of the slide, attributable AFFO and attributable AFFO per share declined by approximately 6.76.8% respectively, primarily due to more than $65,000,000 of prior year revenue reserve reversals in our India business. On an as adjusted basis normalizing for the sale of India, attributable AFFO per share growth was approximately 2.4% driven by the high conversion of cash adjusted EBITDA growth to AFFO through the effective management of below the line costs, partially offset by flow through of non recurring revenue benefits in the prior year period previously mentioned. Now turning to our revised full year outlook. As you will see on the next few slides, our core year to date results and expectations for the second half of the year are contributing to improvements across property revenue and adjusted EBITDA compared to our prior outlook.

In addition, our revised FX assumptions are providing tailwinds of 130,000,000, 80,000,000 and 55,000,000 to property revenue, adjusted EBITDA and attributable AFFO respectively. As a result, we are raising our expectations for property revenue, adjusted EBITDA, attributable AFFO and attributable AFFO per share by approximately $165,000,000 $120,000,000 $55,000,000 and $0.12 respectively compared to our prior outlook. At the midpoint, our expectation for attributable AFFO per share is $10.56 or approximately 6% year over year growth on an as adjusted basis. Turning to slide eight, we are increasing our expectations for property revenue by approximately $165,000,000 compared to our prior outlook, which includes $130,000,000 of FX tailwinds, dollars 15,000,000 of consolidated core property outperformance and $20,000,000 of additional upside consisting of an approximately $25,000,000 increase in straight line revenue partially offset by an approximately $5,000,000 decrease in pass through revenue. Consolidated core property outperformance includes upside from international and CoreSite, including incremental contributions from our recently acquired DE1 asset.

Outperformance was partially offset by slower commencements compared to initial expectations related to a customer in The U. S. Which affect organic tenant billings growth expectations that I will touch on in a moment. Moving to slide nine, we are reiterating our organic tenant billings growth expectations of approximately 5% on a consolidated basis. We have revised our expectations for The U.

S. And Canada organic tenant billings growth to approximately 4.3, reflecting slight timing differences due to modestly slower than initially anticipated pacing of new business. Importantly, while the timing of commencements could result in some quarter to quarter variability, it does not change our overall expectations to capture the new business. In addition, we are reiterating our organic tenant billings growth expectations of approximately 5% for Europe, raising our expectations for Africa and APAC to greater than 12% due to solid carrier activity and slightly lower churn expectations and raising our expectations for LATAM to greater than 2% driven by modestly higher than expected contributions from CPI linked escalators. Turning to slide 10, we are increasing our adjusted EBITDA outlook by $120,000,000 compared to our prior outlook driven by the conversion of property revenue, services gross profit and FX tailwinds, partially offset by non recurring expense items, including incremental bad debt associated with certain Latin America customers.

Moving to slide 11, we are raising our expectations for AFFO attributable to common stockholders by $55,000,000 at the midpoint or $0.12 on a per share basis. Cash adjusted EBITDA outperformance and FX tailwinds are partially offset by increased minority interest and maintenance capital. Our revised attributable AFFO per share midpoint is $10.56 Year over year AFFO per share growth is now expected to be approximately 6% on an as adjusted basis. Turning to slide 12, we are modestly revising our 2025 capital plans, which include approximately $1,700,000,000 in capital expenditures, down $20,000,000 compared to prior outlook and contemplates a 100 site reduction in Latin America and consistent data center spending. We continue to expect to distribute approximately $3,200,000,000 to our shareholders as a common dividend, which remains unchanged from our prior expectation and subject to board approval.

Moving to the right side of the slide, our balance sheet is strong, providing financial flexibility and optionality, including $10,500,000,000 in liquidity and low floating rate debt exposure. Turning to slide 13 and in summary, we’re pleased with our results through the 2025 which highlights the criticality of our assets, the resilience of our business model, and the outstanding execution of our talented employees. We are confident in our ability to deliver sustainable growth and long term shareholder value. And with that operator, we can open the line for questions.

Conference Operator: Thank you so much. And as a reminder to get in the queue, simply press And it’s from the line of Michael Rawlings with Citi. Please proceed.

Michael Rawlings, Analyst, Citi: Thanks and good morning.

Analyst: So first, I’m curious if

Michael Rawlings, Analyst, Citi: you could dig further into the different observations for domestic leasing. You talked about the increase in applications from amendments and colodentification, but also the delay in commencements from one of your customers. So can you talk about a little bit more about how that’s affecting the second half of the year? And is that setting up 2026 to be a better year and to get some of these benefits to come through? And then secondly, was just curious if you could provide an update on the opportunities to extract an incremental layer of efficiency within the business.

Thanks.

Steve Vondrin, President and CEO, American Tower: Yeah. Thanks, Mike. I’ll take both of those. So when you look at the The US leasing environment, what we’re excited to see is the increase in application volume that we expected from the beginning of the year. And so that’s playing out in line with our expectations.

So if you look across the board, we’re seeing a healthy level of activity. We’re seeing continued increases in the pipeline and we’re seeing an increase in the new co locations on that. So that’s all very positive. We’re excited to see that. And that’s indicative of very healthy leasing environment.

And in terms of kind of what we were expecting in our pipeline, the volume that we were expecting, from our customers is consistent and the pricing is consistent. What has been a little bit slower than we expected is the conversion from one of our customers of that leasing into commencements and that the customer is not on the holistic agreement. And so when we did our forecasting, we had a certain cadence that we thought that we were gonna see in there and they’re just moving a little bit slower than we expected. So from our perspective, you’re talking a few million dollars of in a year is all in the difference. And that OTBG metric is very sensitive to the timing of commencements on it.

But when you look at the health of the business and the fact that we’re gonna get that new business, we’re very confident in that. We’re not seeing anything that would indicate a pullback. We’re not seeing the pipeline of applications dry up. We’re not seeing them cancel projects or anything like that. It’s just a little bit slower cadence in terms of signing leases, getting them back and getting the equipment installed.

So from our perspective, there’s nothing on that that indicates anything other than a robust leasing pipeline. We’ll read ’26 guidance to ’26. If you think about kind of the variables going into 2026, a good pipeline is important. And that’s what we’re seeing is a pipeline that’s kind of supportive of our long term guide that’s there. We do have less contracted revenue going into the next couple of years than we had the prior years.

So we are more dependent on that activity based, revenue commencement. And so we are excited to see that pipeline continue to build. That’s positive for us. We are still expecting churn to trend down. Now that’s not considering The US cellular, transaction, which has now been approved.

So that’s something we’re gonna be launching at the variable looking into the next couple of years and see how that’s gonna affect it. But overall, I’d the pipeline’s healthy and we’ll wait to give guidance on twenty sixth when we get there. As for your second question in terms of the extracting value, I’ve given Bud till close to the end of the year to give me guidance on that. But the efforts are progressing very well. And we’ve had, some very good receptivity across the globe to our globalization efforts and the team is seeing opportunities there.

And just to kind of set expectations in terms of what that’s gonna look like, we’re looking at our total addressable spend, so that’s including direct expenses, O and M, SG and A, growth CapEx, supply chain, all those different areas in it. And the overall goal that we’ve set ourselves is to have a continuously increasing gross margin in our tower business. So, you know, you probably shouldn’t expect to see like a, you know, a huge decrease in direct expenses. Some of that is just, the cost of doing business, but the goal is to bend the curve down so that those are growing slower than our revenue in every geography on a consistent basis. And so as Bud works through what this looks like, it’ll be kind of a multi year goal that we set up to bend that cost curve down to give us better margin expansion than what we would see otherwise on that.

So we’ll continue to work through that. And again, I’ve committed to you guys by the end of the year, we’ll get some targets out there. But so far, everything is kind of aligning up with what we thought we were gonna see when we started this journey. And we feel very good about that, in terms of what we’re gonna be able to create in terms of value creation over time.

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: Hey, Michael. This is Rod. I can add just a couple of quick points here for you, to follow-up on Steve’s comments. Regarding new business, all the things that Steve mentioned around timing in The U. S, you’ll see that play out in our numbers primarily in new business and organic tenant billings growth.

You know, we were at a projection of about 165,000,000 or slightly better for new business. With this revised timing of the pacing of some of the deployments, that number is expected now to be more like 160. And it is a timing related issue, as Steve, mentioned. And what that does is it affects OTBG in a very modest or subtle way. Our original guide was equal to or greater than 4.3% in The U.

S. We’ve adjusted that to approximately 4.3% just to reflect the fact that we could be at 4.3% or slightly below because of this mild, timing. So just to give you a little bit of numbers there. And then I would just make one quick comment on SG and A for the full year of 2025. We expect to be roughly flat on SG and A excluding the bad debt.

And that’s after absorbing things like a few legal fees for some of the customer issues that we have in Latin America, as well as managing through the very robust business in CoreSite. There is some added SG and A there to support that double digit growth. So you’ll see us absorbing that and also keeping SG and A flat with a few other kind of timing issues in there.

Analyst: Thanks very much.

Conference Operator: Thank you. Our next question comes from Rick Prentiss with Raymond James. Please go ahead.

Rick Prentiss, Analyst, Raymond James: Hey, good morning guys.

Steve Vondrin, President and CEO, American Tower: Good morning Rick. Hey Rick.

Rick Prentiss, Analyst, Raymond James: Hey. A couple of questions. Follow-up Steve, you mentioned US Cellular T Mobile deal now is approved. Can you frame for us what that USM exposure you think might be and the timing for that? And then obviously more speculative, just maybe an update on DISH, what you’re seeing there and what the exposure is there.

Steve Vondrin, President and CEO, American Tower: Sure. So with respect to UScellular, in absolute terms, not the overlap, but the total amount of new business we have with US Cellular, it represents about less than a half a percent contribution to our property revenues or global property revenues and less than 1% to our US and Canada property revenues. So it’s relatively small exposure overall. And if you look at that portfolio, what we don’t know yet is what T Mobile plans to do with those sites. And so as we’re looking out over the next couple of years, a lot of it depends on what their plans are.

We haven’t been able to have discussions on that because the

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: deal wasn’t approved yet. So that’s kind

Steve Vondrin, President and CEO, American Tower: of worst case scenario. We certainly wouldn’t expect to lose all of that. But there will be some of that that they’re gonna wanna turn off of as part of their synergies and we’ll work with them on that some more of the way we have in the past. And so as that closes and we have those conversations, we can get can give you guys a little bit more visibility into it, over time. And by and by the way, that those percentages of total revenue, not new biz, that’s total revenue that less than half a percent of property revenues and half a percentage of US and Canada revenues on that.

With respect to DSH, we continue to watch the situation like everybody else does and to see what’s happening there. We think there have been a few positive developments in terms of some of things that they said publicly that they’re doing. So we feel pretty good about that. The overall exposure to dish is they represent about 2% of our global over 2% of our global revenues, slightly over, over 4% of our US revenues. And that’s again, total exposure for that portfolio.

But again, what we’re seeing is the same thing you guys are seeing. The headlines are slightly positive lately. So we’re optimistic and hopeful that they’ll work through their situations and continue to deploy. Hey, Rick, if I

Rick Prentiss, Analyst, Raymond James: could add Go ahead, Rod.

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: Sorry. Just regarding the churn, since you brought up churn, I’ve been looking forward to saying this for a few years here. But just to remind everyone that we are in our final year of the Sprint churn. So when you think about the churn percentages for Q3, we were at a little over 2%, maybe 2.3% total churn in our U. S.

Business. As we work through the churn this quarter for Sprint, it won’t be in our Q4 numbers or any numbers beyond that. And we expect churn as a percent to drop down to about 100 basis points or maybe even below for Q4. And then probably stay in that lower end of our range between 12% as a churn number, kind of staying at the lower end of that, closer to 1% for a little while, excluding the things Steve just talked about in terms of, U. S.

Cellular.

Rick Prentiss, Analyst, Raymond James: A lot of discussion lately about direct to device satellite connectivity. You guys own a piece of ASTS. Update us a little bit about what you’re seeing in direct to device and what you think it might mean US versus international.

Steve Vondrin, President and CEO, American Tower: Yeah. We continue to see direct to device as the complementary technology to the macro cell networks. Delivering bandwidth via macro towers continues to be the cheapest way to deliver bandwidth to the customers no matter where they are. So we don’t view it as a threat at all to our business in The US or internationally, quite frankly. The places where satellite is gonna be ideal are places that have lower population densities than what the carriers would like to cover through macro towers.

So when you think about the Grand Canyon or rural Montana, those are places where that’s gonna be an excellent way to provide coverage. And we don’t have towers there and frankly, I don’t wanna build towers there because there’s not a good business case for doing that. Same thing internationally. If you look at Sub Saharan Africa, there are gonna be places that are much better served by satellite. Again, we don’t have towers in those areas and don’t wanna build towers in those area.

So, overall, we believe it’s complementary, not competitive. So if think about where the satellite coverage is optimal, it’s less than a 100 pops per site, know, person of the research that’s kind of been cited out there. So, we view it as a nice niche market. We’re happy with our investment in AST. We’re really happy with the, ringside seat that we have to see how this plays out.

And, and it’s all playing out just the way we thought. No threat and complimentary and might make a nice little profit on our investment there.

Rick Prentiss, Analyst, Raymond James: Great. Thanks, guys.

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: Thanks, Rick.

Conference Operator: Thank you. One moment for our next question, please. And it’s from the line of Nick Del Deo with MoffettNathanson. Please proceed.

Analyst: Hey, morning guys. Thanks for taking my questions. First, just to dig in a bit more into your prior comments, Steve, regarding the customer that’s moving a bit slower than you had expected. Just to be clear, is this just a lengthening of the book to bill cycle? So they’re kind of applying and signing leases that expected, but it’s just dragging it in terms of when they get on air?

Or are you seeing the applications come in with a bit of a delay?

Steve Vondrin, President and CEO, American Tower: No. It’s exactly what you said. It’s the book to bill cycle is a little bit longer. The application pipeline continues to be healthy. It’s just not moving along as quickly as we anticipated it to do.

Analyst: Okay, okay. So it’s in your backlog is just purely timing then? Exactly. Okay, great. And then maybe switching to CoreSite, could you talk a little bit about CoreSite’s position in the supply chain and kind of the risk management strategy you have in place?

In particular, I’m thinking with the jump in demand for a lot of key components to support big projects from both established new players, I’m curious as to whether it’s becoming at all more challenging for CoreSite to kind of keep its place in line.

Steve Vondrin, President and CEO, American Tower: Well, a lot of the supply chain challenges really started during COVID. And so that whole supply chain process lengthened several years ago, we had to adjust our strategy then. So we started pre buying those long lead time items several years ago. And the way you secure your place in line is you gotta pay. So you put a deposit down on that equipment.

And so we’ve been very proactive in looking at that over time and and securing those places. The other component that we’re watching very closely like everyone else is is the effect of potential tariffs on some of those supplies because a lot of those components can only be sourced overseas. And what we’re doing to protect ourselves there is building a contractual, mitigation so that if there are an increase in costs when we’re doing the pre leasing, that we have a mechanism to adjust that to make sure that we’re getting that mid teens stabilized yield that we’re underwriting on things. So I feel very good about the actions the team teams have taken to be able to secure that. And for all of our kind of development pipeline that we have in view and the things that we’ve planned out, we’re we’re secure on that.

It it may make it challenging to accelerate things from the pace that we originally wanted. You know, we’d like to accelerate some of this development because the demand environment is so healthy right now. And it does make that a little bit more challenging, but we are finding ways to do that, you know, in some circumstances as well. So certainly a challenge out there that we’re all all facing, but something that I felt like the team has done a good job of getting ahead of.

Analyst: Okay, great. And sorry, can I ask one quick housekeeping item on the CoreSet front as well? Anything you can share about the inorganic contribution from the Denver Gas and Electric Building acquisition, both financials and what it may have meant for interconnection ads, which looks like they may have had an inorganic bump.

Steve Vondrin, President and CEO, American Tower: Let me talk about the acquisition kind of more broadly. And then I don’t know if we have any financials that we’re not gonna share at hand right now, but that building was one where where we already had a presence. It was a leased facility for us, but we didn’t have the whole building. And so we had the opportunity to buy the whole building. And, you know, if you have a chance to take that interconnection hub and make it owned versus leased and pick up some incremental new business and incremental interconnection along the way.

That’s always a good thing to do. So we’re very happy that we have the opportunity to do that. And it is the most highly interconnected site, in that Denver area. So it gives us another kind of feather in our cap in terms of that portfolio. And Rod, I’m not sure if we put any public numbers out on the acquisitions or something you want to share on that or not going to get it?

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: Yeah, just a couple of points that I would make for you, Nick. So we did close on the DE three. We have it in our outlook. I think I made a couple of comments in the script there. But you can assume that there’s roughly $10,000,000 in property revenue in our updated outlook coming from DE1.

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: Okay. Great. Thanks,

Conference Operator: guys. Thank you. Our next question is from Jim Schneider with Goldman Sachs. Please go ahead.

Nick Del Deo, Analyst, MoffettNathanson: Good morning. Thanks for taking my question. Maybe just a quick follow-up on the data center business and then wanted to ask about LATAM. On the data center side of things, DE1 $10,000,000 of property revenue this year. Is that a good run rate to use for next year?

Or could we expect a bigger kind of run rate contribution for the full year of 2026? And maybe just kind of talk about directionally whether you expect the overall CoreSite business to sort of grow the same better or decel, next year relative to this year on an organic basis?

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: Yes. Thanks for the question, James. So the $10,000,000 is the in year number that reflects the fact that we completed the acquisition, you know, earlier this year in Q2. So with that said, there would be a full year impact next year. So you’d want to prorate that.

But I don’t want to get into any more details around what the exact impact would be for next year. Regarding, you know, CoreSight, you can pick up in Steve’s comments, his prepared comments, as well as mine. The CoreSight business continues to perform very strongly with revenue growth up in the 13, better than 13% for the quarter. We expect a very similar number, of revenue growth for the full year. That double digit growth also extends down into interconnection growth, which is a key element of that business.

So we expect interconnection revenue to grow by double digits. We also are seeing margin expansion in the business. As I mentioned earlier on this call, we have a little bit higher SG and A in CoreSite to support the demand that we’re seeing in all the new business that we’ve booked. So you’ll see a slight bump up in SG and A, but our operating profit margin is also expanding year over year this year by about 100 basis points. So the business continues to perform exceptionally well based on the last several years of either near record new business or record new business as we had in 2023 and then again in ’24.

We expect that double digit growth to continue for the next couple of years based on, kind of exhausting that backlog and delivering all those new business contracts. So we couldn’t be more pleased with the performance, of CoreSite, not just the last several years, but going forward as well.

Nick Del Deo, Analyst, MoffettNathanson: Thanks. And then as a follow-up, maybe if you can kind of talk about the LatAm business. Sounds like things are stabilizing or potentially improving there. Are we at a point where you can call a bottom in LatAm? And to what extent could you expect some significant acceleration heading in 2026?

Thank you.

Steve Vondrin, President and CEO, American Tower: Yeah, we’re still anticipating to have a low single digit growth for the next couple of years there. So through 2027, we’re gonna continue to deal with the dynamics of that market where you have a higher churn. We’ve had taken a little bit of a reserve on some collections issues there as well. And as that market continues to go through the challenges of consolidation and what’s happening there, it’s gonna be a challenge for the

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: next couple of years. And it’s

Steve Vondrin, President and CEO, American Tower: all the things we’ve talked about, things like Oi in Brazil and some of the consolidation in some of the other markets there. So, you should expect to see that continue to be a challenge for the next two years. And we think that the inflection points really going to happen in 2028. That’s when we see things getting, significantly better for us there.

Nick Del Deo, Analyst, MoffettNathanson: Thank you.

Conference Operator: Thank you. Our next question is from Michael Funk with Bank of America. Please proceed.

Michael Funk, Analyst, Bank of America: Yes. Hi. Hi. Good morning. Thank you for the questions.

So just coming back to the conversion from leasing to commencements from the one customer, just wondering if anything in your experience, in the past, it could inform our view on on the timing and what might move that forward.

Steve Vondrin, President and CEO, American Tower: It really just comes down to their priorities and and what they’re trying to accomplish and how they’re incentivizing their teams. So there’s nothing specific that I would point to in this circumstance. When you look at kind of the relative positioning of the three major carriers, we have one that’s got about 85% of our sites are upgraded to mid band five gs, one’s at about 70% and one’s still at about 50%. And that implies quite a bit of work to do to get to that kind of upper nineties percentage, which is where we think we’ll end up with mid band five gs on the site. And so, we were doing our forecast at the beginning of the year, the way we construct that is we’re going based on what the pipeline looks like, what we’re hearing the priorities are from the people in the field.

And then, you’re only talking about a relatively small slowdown in that conversion rate. So major catalyst that we’re seeing on it. And I don’t wanna speculate as to the reason because no one’s given us a reason for it. I think it could just be the pace at which they’re doing the deployments. So there’s nothing in this from kind of a prior GE or prior deployment that I would look at and say there’s an there’s a comparison of this.

It’s just a little bit of a slow start to the year, quite frankly.

Michael Funk, Analyst, Bank of America: Okay. So so not nothing to point to either on the on the labor side, equipment provisioning, or if it’s simply a capital budget decision, nothing to really point to there?

Steve Vondrin, President and CEO, American Tower: There’s nothing pervasive. I mean, I’m sure every site has its own story, but but there’s no there’s no kind of general trend there.

Michael Funk, Analyst, Bank of America: Okay. And I think in prepared remarks, you mentioned, made some comments about Europe, particularly Alex, that’s actually unchanged. I thought you mentioned Germany. Can you dig in a bit more on what you’re seeing in Europe and expectations for that region?

Steve Vondrin, President and CEO, American Tower: Sure. I’ll touch on Ron if you want to jump in. We continue to see the European carriers, steadily deploying mid band five gs on their sites. And there’s kind of a mixed bag in terms of how far along they are in that. But there are some targets in the EU to get to a certain percentage of mid band five gs deployment by 02/1930.

So there’s still quite a bit of work left to do there. So what we’re seeing on that front is we’re seeing our anchor tenants continue to do amendments to get there. And we’re seeing some continued deployments by other carriers. There is some consolidation that’s happening in a few markets and our exposure that’s relatively It’s zero, but it’s relatively modest in terms of what that consolidation churn could be. And that will slow down some of those carriers and other deployments a little bit.

But overall, the leasing pipeline there is consistent with what we had in our underwriting for the deal originally. It’s consistent with our kind of mid single digit organic growth in Europe that we’re expecting to see. So overall, it’s kind of right in line with what we thought and none of the, consolidations or other news in the market is concerning us at this point.

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: Great, thanks for the question. Nick, if I could just add a, or I’m sorry, Michael, I just add a couple of comments around the stability of the revenue growth expectations in particularly the organic growth. So, it’s a solid kind of steady, mid single digit organic new biz, let’s call it in around 3.5% contribution to organic tenant billings growth comes from that new business. That’s pretty consistent with where it was last year. I think across most of the markets there, have CPI linked escalators, that add a little bit more to that, another 2.5% or so.

And one of the other very important elements is that the churn percentage is historically pretty low. And the way that our contracts work, particularly with one of our largest customers, we expect that churn percentage to be below 100 basis points kind of going forward. It’s been there, for a couple of years since the acquisition. So you put all those things together and you get a very reliable and durable organic tenant billings growth in the mid single digits, again, in a very high quality market, high quality economies there with high quality counterparties. So again, the acquisition that we did in Europe and our general Europe business is very steady, very solid and, of a high quality.

Michael Funk, Analyst, Bank of America: Very helpful color. Thank you.

Conference Operator: Thank you. Our next question is from Eric Liptak with Wells Fargo. Please proceed.

Kate Reeb, Senior Director of Investor Relations, American Tower0: Great. I appreciate the question.

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: Rod, I think

Kate Reeb, Senior Director of Investor Relations, American Tower0: you talked about a 200% increase in colocations year over year. So I’m just curious what the mix is in your guide for this year, how that might trend after 2025? And then I wanted to touch on capital allocation as well. With leverage kind of around five times now, how are you thinking about buybacks versus M and A, going forward? Maybe just a quick review of what multiples and what regions you might be interested in?

Thanks.

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: Yep. Sounds good, Eric. So regarding the co location, increase in terms of its contribution, I would start off by saying co location contributions continue to be relatively small in the grand scheme of things. You know, let’s call it, just over 10% of our applications, that have been coming in are colocation applications. Now that’s up, you know, from where it was, you know, in the recent past year.

So we are seeing a shift of towards colocations, but it’s on small numbers. To put it in the grand scheme of things, it’s, if you think about applications being up in the 18,000 range or even a little bit higher, You know, you’re talking a few thousand, a couple thousand colocations, 2,500 to 3,000 colocations kind of in total. So we are seeing hundreds of additional colocations, but it’s not thousands yet. So I would put it in the category of we’re seeing the beginning of a shift towards colocations, the beginning of an increase towards colocation as a bigger contributor to our new business. This may be the beginning of densification, but it’s still early days.

And with that said, I wouldn’t want to predict where that’s going to go, in ’twenty six or beyond. We’ll just have to wait and see what the carrier plans are, when they get to full five gs kind of across the board, and when they may actually turn, to more densification.

Steve Vondrin, President and CEO, American Tower: Before we go to next question, I would just jump in and say, just refer back to the percentage that I gave earlier of about 50, about 75, about 85% going, they’re already at a mid band five gs. That still implies a good sized pipeline of amendments. So we would expect amendments to be a large portion of our pipeline going forward, but we do expect this continued trend of more co locations to continue to accelerate. We do think densification is starting. I’ve talked about this on our last call, the conversations we’re having with carriers and the data requests that they’re putting in, are definitely supportive of the idea that we will continue to see densification as they continue to flip their networks and they become stressed.

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: Yep. And then Eric, regarding your question around capital allocation, so you are correct in pointing out that we’re above 5.1 times, leverage for the end of Q2. We still are marching towards, five point zero or below by the time we get into the second half of the year. So we’re on pace with that and the plan there is unfolding perfectly fine. One of the elements of being at 5.1 now is with the strengthening Euro up against The U.

S. Dollar. That did drive an increase in our European the amount of U. S. Value in our European debt, which does impact leverage slightly.

So we’re at about 5.1 times. We want to push that down towards five or below. And once we are there, and I would say we’re close enough to be there that we’ve already regained some financial flexibility, let’s call it full financial flexibility. So with that said, let me highlight what our capital allocation priorities are. First and foremost, we fund the dividend.

That dividend in the last couple of quarters has represented a 5% growth rate. We’ve talked in the past that we would expect, because we’re a REIT, that our dividend growth will largely be in line on average over multiple years with our AFFO growth. So you can think of that, the context there. We do expect to fund the dividend with a growth that’s sort of in line with our AFFO growth on average. That’s priority number one.

Number two is we have a CapEx program with internally generated projects that we prioritize because we like the returns, the contribution to the business, the long term value that that capital can drive for our shareholders. We invest this year about $1,700,000,000 It’s been between 1.5 and $2,000,000,000 over the last few years. We expect that to continue as we have a robust pipeline of places to put that capital. And again, we think it’s a compelling use of capital to drive shareholder value. And then beyond that, we have options to either reduce debt and delever well below five times or we could deploy that capital towards more inorganic growth through M and A.

And I think you know our priorities there around looking to expand and increase exposure to, our developed markets, which, US, Europe and CoreSite as well. And then beyond that, it’s, share buybacks are an option. So we will always be toggling between and evaluating reducing debt, M and A, and share buybacks with an eye towards making the decisions really on a quarterly basis, an annual basis that drives the most shareholder value that represents the best opportunity at that time. And you may see us kind of bounce back and forth here and there. We’ve talked many times about the capital programs, but I also want to highlight the fact that within our capital programs, that $1,700,000,000 that actually represents, some of our priorities where we’ve decreased the amount of capital investments in some of our emerging markets.

At the same time that we’ve increased capital investments in The U. S, in our data center business and even in Europe. So you see our priorities showing up within our capital spending. But what I would say in the final comment here is everything’s on the table for us, and we will be making decisions, in the best interest of our shareholders over the long term. That certainly could include share buybacks, delevering or, when and if we see compelling M and A, we’ll certainly look at that.

Kate Reeb, Senior Director of Investor Relations, American Tower0: Great. Thanks, guys.

Conference Operator: Thank you. Our next question is from the line of Benjamin Swinburne with Morgan Stanley. Please proceed.

Kate Reeb, Senior Director of Investor Relations, American Tower1: Thanks. Good morning. Morning. Steve, wondering if I know you get this question a lot, so I figured I’d ask it given the performance of Corusites continues to be impressive and accelerate. Just the strategic lens that you guys look at this business within American Tower, particularly as you talk about kind of value maximization.

Does the fact that business is performing better make you more or less interested in exploring strategic options or just any change in your philosophy as you watch the business perform well would be helpful to hear, as you guys think about maximizing value on this business.

Steve Vondrin, President and CEO, American Tower: Sure. Well, just to remind everyone that the reason that we bought CoreSite, was because we believe that when you look at where the skate to where the puck is going to use a Boston analogy on that, We think that edge compute is a huge opportunity to drive value to our tower portfolio over time. And we believe that owning the access to the interconnection environment that that edge has to be connected to gives us a right to win in that space. And our initial timing of that was a little bit off. It’s developing slower than we thought it was going to, but we are confident and probably more confident today than we were even back then that the edge is gonna develop the way we envision that doing.

And one of the ways that we’re seeing that is the wireless carriers are now talking about edge and doing local breakout. That’s actually appearing at the edge and you’re starting to see them express more interest in the space. So we still think that that strategic reason for buying CoreSite holds true. When you look at the asset itself, the way we underwrote that investment is we underwrote it as a standalone. So meaning we weren’t putting the value of the edge into the value of the asset when we

We were just looking at the underlying business and said, you know, can we make that work on a business case? And we were confident that we could. So in a way, the edge was kinda gonna gonna be the, the gravy on top of the investment, but it was the strategic reason for doing it. The assets performing better than our underwriting and some of that is derived from AI and what’s happening in the whole ecosystem where it’s taking up a lot of the capacity there. That’s driven up pricing, which has helped us to underwrite better yields and continue to curate our customer mix the way we like to, but actually at least faster.

So it is performing exceptionally well as a standalone asset. That doesn’t really change my assessment of what we’re gonna do with the asset over time. It really comes down to what’s gonna create the most value for our shareholders. We still think the edge is a compelling play that will develop over time. And if for some reason that doesn’t, then we’ll make the assessment about what to do with CoreSite.

Our focus in the meantime is to maximize the value of CoreSite. And so we continue to invest what we need to invest to maximize that value. We set up a private capital partnership to give us flexibility in terms of how we finance it. So there’s never a situation where CoreSite feels like it can’t do what it needs to do to maximize that growth. And so, we think that we’re doing all the right things to create the most value for the shareholders regardless of what ultimate decision of CoreSite is down the line.

Kate Reeb, Senior Director of Investor Relations, American Tower1: Got it. That’s very helpful. And just maybe one more. I thought it was interesting last week AT and T, I thought, sounded more excited about fixed wireless than I’d heard them in the past. Their growth in that business is accelerating and talked about opening up more mid band for that product.

Are you seeing I know, again, you don’t see that directly in the business, but any sense in the application activity or anything else with AT and T or your other carriers on fixed wireless starting to be a more clear tailwind towards capacity needs for your customer base?

Steve Vondrin, President and CEO, American Tower: At this point, all of our customers say that they’re using fallow capacity in the network to support fixed wireless. And there’s nothing that we’re seeing that differs from what we heard from the customers publicly on that. I think where you would see that over time is if you start seeing rural sites that typically didn’t get multiple amendments in the four g cycle, get multiple amendments in the five g cycle, that might be an indication. We’re not seeing that yet. We’re not seeing any standalone fixed wireless installations at this point.

However, as you point out, all the customers are becoming more bullish on it. I’m very bullish on it. I come from a rural area where you don’t have good broadband. So I’m actually excited to see it expand in my home state. And I think that, if you look at the number of subs they’ve got, the ARPUs they’re getting, to me that’s indicative that they could make this a separate business that could support incremental investment.

And if and when that happens, that’s incremental to our base case in terms of what we would see in terms of activity on our site. So that could be an upside for us. We’re not seeing it yet, but I do hope that we do see that over time.

Kate Reeb, Senior Director of Investor Relations, American Tower1: Great, thank you.

Conference Operator: Thank you. Our next question is from Ari Klein with BMO Capital Markets. Please proceed.

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: Thanks and good morning. Maybe just on the services business, which has been Curious if you could talk to what’s been underpinning that because, you know, they’re having higher periods of activity with closed services level. Is there anything new there or different that you’re doing? And where do we kinda go from here?

Thank you.

Steve Vondrin, President and CEO, American Tower: No. The the services business, it’s it’s indicative of two things. The first is a robust application pipeline. And so there there’s a segment of our services that we do for all of our customers kinda nationwide. And that’s things like acquisitions, zoning and permitting, engineering services, things like that.

And that component is really volume driven. So we see the application volumes go up that gives good tailwinds of the services business there. There’s another piece of it that’s a little bit bigger chunk of the pie this year, which is construction management, which we don’t do everywhere. We don’t do it for everyone. It’s very much a niche business that we do where we have really capable teams in place or our customers are asking for that turnkey service because it lowers their total cost of ownership.

It increases the value proposition there. And so that’s a little bit bigger piece of the pie, but what you should read in terms of our service business this year is it gives us the indications of a healthy pipeline and that we’re getting some good business in the construction management. And that construction business comes in a little bit lower margin. So you you will over time, if that continues to grow, see some compression in the margin on the services business, but it’s all still a very healthy business and it’s it’s good for us because it it is some incremental cash flow, but it also increases customer satisfaction and stickiness.

Rod Smith, Executive Vice President, CFO, and Treasurer, American Tower: Thank you.

Conference Operator: Thank you. And this concludes our q and a session for today. I will turn the call back for final remarks.

Kate Reeb, Senior Director of Investor Relations, American Tower: Thanks everyone for joining the call today. Please feel free to reach out to the Investor Relations team with any questions. Thanks.

Conference Operator: Thank you. And this concludes our conference for today. Thank you all for participating and you may now disconnect.

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