American Tower Chief Financial Officer and Treasurer Rod Smith said the company is guiding for about 5% organic tenant billings growth, on average, from now until 2027 in the U.S.
Speaking at this week’s J.P. Morgan conference, Smith said the growth is coming from U.S. carriers deploying 5G equipment and from Dish Wireless’ buildout of a greenfield 5G network.
He said American Tower expects the capital cycle for 5G to be long, not measured in just one or two more years. “We're seeing, roughly speaking, about 50% of our towers now have C-band spectrum deployed.” He specified that’s not carrier specific but across AMT’s U.S. assets, on average.
“That's the beginning stages of just getting the network 5G capable, and it'll be a cycle of additional amendments to keep up with the capacity demands of the network,” said Smith.
He said cell sites can become maxed-out in terms of the amount of equipment they can support. And then carriers will want another cell tower built nearby to double the capacity and increase densification.
In terms of AMT’s revenues, the company strikes “holistic agreements” with the U.S. carriers that grant the carrier's certain usage rights over a number of years in exchange for certain fees and fee escalations. “So, our revenue is more stable. You may see pull-backs or modest, you know, speed-up of the carrier activity, but our revenue and revenue expectation stays nice and flat,” said Smith.
The holistic agreements that AMT enters with carriers relate mostly to upgrades and amendments on existing towers. He said, “Any significant level of densification could be upside to our holistic agreement to that 5% growth rate between now and 2027. For this year, we're guiding 5% organic tenant building growth in the U.S. We have about 90% visibility into that number because it's all contracted.”
In addition to mobile use cases AMT is also seeing fixed wireless access (FWA) usage, which puts more demand on the 5G networks.
“You could call it an unknown that could accelerate or shorten the time frame between launching the 5G network, getting the C-band and the wider-band spectrum deployed and when they have to start densifying the network, depending on how much fixed wireless broadband they put on the network,” said Smith.
American Tower is a global company owning about 230,000 towers in regions including North America, Latin America, Europe, Africa and Asia.