Post on 27-Mar-2018
transcript
American Tower Announces Verizon Tower
Portfolio Transaction February 6, 2015
Forward-Looking Statements
This presentation contains statements about future events and expectations, or “forward-looking statements,”
all of which are inherently uncertain. We have based those forward looking statements on management’s
current expectations and assumptions and not on historical facts. Examples of these statements include, but
are not limited to, statements regarding the proposed closing of the transaction described herein, expected
financial projections for the portfolio and the impact on our consolidated results, the anticipated closing date,
the expected cash consideration and the expected sources of funds to pay for the transaction described herein
and other previously announced transactions. These forward-looking statements involve a number of risks
and uncertainties. For important factors that may cause actual results to differ materially from those indicated
in our forward-looking statements, we refer you to the information contained in Item 1A of our Form 10-Q for
the quarter ended September 30, 2014 under the caption “Risk Factors” and in other filings we make with the
Securities and Exchange Commission. We undertake no obligation to update the information contained in this
presentation to reflect subsequently occurring events or circumstances. Definitions are provided at the end of
the presentation and reconciliations to GAAP measures are available on our website at
www.americantower.com.
2
Transaction Creates Leading Nationwide Network AMT’s U.S. Portfolio Will Consist of Over 40,000 Towers
3
Investing $5.056B upfront for ~11,500 towers or approximately $440K per tower.
• Verizon
• Legacy AMT
Verizon Portfolio Overview Significant Collocation Opportunity with Strong Existing Tenant Base
4
Definitions are provided at the end of this presentation and reconciliations to GAAP measures can be found at www.americantower.com.
› Initial 10-year Verizon anchor
lease term, with renewal options
thereafter
› Existing average tenancy of ~1.4
tenants per tower
› Expected year 1 financial impact(1):
› Revenue of $410M
› Gross Margin of $235M
› SG&A as % of revenue
expected to be 5%
› ~$220M in projected start-up
capital over three years
Highlights
(1) Year 1 refers to first 12 months of operating results post-closing.
Transaction Highlights
5
Portfolio
› Acquiring approximately 165 domestic
towers and the rights to approximately
11,324 additional towers
› Historically under-leased, with average
tenancy of 1.4 tenants per tower
› Capacity for additional tenants without
augmentation
Transaction is expected to close in 1H 2015.
Growth Enhancing
› Expected to lengthen AMT’s ability to
sustain strong organic core growth in
the U.S.
› Expected to drive long-term AFFO
accretion
› Increases infrastructure available to
support deployment of new spectrum
Consideration
› $5.056 billion upfront cash
consideration
› AMT will have the option to purchase
the leased towers primarily between
2034 and 2047 for aggregate option
payments of approximately $5.0 billion
Financing
› Expected to be financed in a manner
consistent with maintaining AMT’s
investment grade credit rating
› AMT has obtained committed financing
for the transaction
Definitions are provided at the end of this presentation.
Proven History of Integration Capabilities
› SSI and GTP fully integrated within established timelines post closing
› Achieved greater than expected synergies with SSI and GTP transactions
› Disciplined transactions support AMT’s robust revenue growth
› 5 Year Revenue CAGR of ~7.4% on SSI towers
› September 2014 YTD Organic Core Revenue Growth of 10.3% for GTP portfolio
6
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
U.S. Portfolio Growth
2004 2014 PF(2)
SSI(1)
GTP
VZ
~28k Towers Added in 10 Years
~12k ~40k
(1) SSI represents Spectrasite.
(2) Pro forma for Verizon transaction.
Definitions are provided at the end of this presentation.
Pro Forma Global Portfolio Highlights(1)
22%
15%
12% 8%
5%
5% 3%
3%
27%
Rental & Management Revenue
AT&T
Verizon
Sprint
T-Mobile
Telefonica
Airtel
TIM
MTN
Other
0
10,000
20,000
30,000
40,000
50,000
60,000
2007 2008 2009 2010 2011 2012 2013 2014PF
Tower Count
International U.S.
(1) Pro forma reflects the impact of the Company’s recently completed BRT acquisition in Brazil and the impact of the Company’s pending transactions with
Verizon in the US, TIM in Brazil and Airtel in Nigeria.
(2) AT&T Revenue reflects pro forma adjustment for the acquisition of DirectTV, Iusacell and Nextel Mexico.
› Pro forma global tower count of ~100K towers, with ~1.8 tenants per tower and over $30B of non-cancellable revenues
› Diversified portfolio of assets across select markets, poised to benefit from carrier network investments
› Over 50% of pro forma total rental and management revenue from investment grade tenants
7
Committed to Promoting Collocation Model to Enable Deployment of High Speed Broadband
AMT’s Strong Track Record of Investments(1)(2)
8
$1.4B
$3.9B
2007 LTM Q314
Rental and Management Segment Revenue
~16%
CAGR $1.0B
$2.6B
2007 LTM Q314
Adjusted EBITDA
$1.51
$4.38
2007 LTM Q314
AFFO Per Share
9.0%
10.4%
2007 3Q14A
ROIC
~15%
CAGR
~16%
CAGR
(1) 2007 cash tax in AFFO and ROIC calculations has been adjusted to exclude a cash tax refund received in 2007 related to the carry back of certain federal
net operating losses.
(2) LTM Q314 represents last twelve month results as of 9/30/2014. 3Q14 metrics have been annualized for the calculation of ROIC. Annualized calculations
may not be indicative of actual annual results.
+140 BP
› Deployed nearly $19B for capex, acquisitions and cash returns to stockholders since 2007
› Added over 47,000 towers since the beginning of 2007
› Focused on driving sustainable, profitable growth
› Maintaining a strong balance sheet remains a top priority
Definitions and reconciliations are provided at the end of this presentation.
Key Takeaways
American Tower continues to pursue its growth strategy in support of its vision to be
the premier independent owner, operator and developer of wireless and broadcast
communications real estate globally
American Tower’s 2015 Strategic Investments(1):
› Represent tower portfolios which are under-utilized with significant opportunity for
future growth
› Solidify AMT as a leading U.S. and global tower operator
› Are collectively expected to be modestly accretive to AFFO per Share initially and
increasingly accretive over the long term
9
Definitions are provided at the end of this presentation and reconciliations to GAAP measures can be found at www.americantower.com.
(1) Include Verizon, TIM Brazil and Airtel Nigeria transactions.
Appendix
Appendix
Recent/Pending Transactions(1)
Transaction (Currency)
BRT (BRL)
TIM (BRL)
AIRTEL (USD)
VERIZON (USD)
Country Brazil Brazil Nigeria U.S.
# of Towers ~4,700 ~6,500 ~4,800 ~11,500
Annual Revenue ~240M BRL ~435M BRL ~$255M ~$410M
Annual Gross
Margin ~190M BRL ~191M BRL ~$91M ~$235M
SG&A as % of
Revenue <2% <2% ~11% ~5%
Estimated Closing Closed in Q414 1H 2015 1H 2015 1H 2015
Transaction Price ~2.3B BRL ~3.0B BRL ~$1.1B ~$5.06B
11
(1) All transactions subject to customary post-closing adjustments. Revenue and gross margin reflect year one figures, which refer to first 12 months of
operating results post-closing.
Definitions are provided at the end of this presentation and reconciliations to GAAP measures can be found at www.americantower.com.
29%
24% 19%
13%
15% AT&T
Verizon
Sprint
T-Mobile
Other
Category 1
Pro Forma US Portfolio Highlights
› 96% of sites in suburban and rural
locations
› 54% of sites in the top 100 BTAs
› Average tower height of 204 feet
› Average tenancy of ~2.2 per site
12
Portfolio Revenue Land Management
LegacyAMT
Verizon ProForma
~11.5k 40k+
~29k
Tower Count BTA
Top
50
>100
› 85% generated from Big 4
› 54% from investment grade tenants
› Average remaining term of ~7 years
› Non-cancellable revenue of ~$18B
› Average escalator of ~3%
› Average remaining term on leases
is 22 years
› Only 9% of sites have revenue
shares
10%
29%
61%
<10 years 10-20 years 20+ or owned
100%
50% 100
0%
Remaining Ground Lease Term Rental Revenue Profile
39% 58%
33% 34% 41%
17%
13%
12% 15% 15%
11%
9%
13% 11% 11%
33% 20%
42% 40% 34%
AMT Spectrasite GTP Verizon Proforma
BTA Ranking
Top 50 51-100 101-150 Over 150
AMT Domestic Portfolio Detail(1)
13
(1) As of 9/30/2014.
(2) Represents all other AMT towers.
(2)
› Key Takeaways:
› Average tower height of 204 feet pro-forma
for transaction
› Monopole and self-support towers comprise
72% of pro forma domestic tower portfolio
› 56% of pro forma sites in Top 100 BTAs
(2)
(2)
223
184 208
189 204
AMT Spectrasite GTP Verizon DomesticProforma
Height (feet)
28% 46%
25% 39% 34%
40%
39%
36%
37% 38%
28% 14%
30% 16% 22%
3% 1% 8% 8%
5%
AMT Spectrasite GTP Verizon Proforma
Tower Type
Monopole Self-Support Guyed Other
AMT Domestic Portfolio Financial Detail
14
8.5% 10.3% 10.0%
Spectrasite GTP AMT Domestic
September 2014 YTD Organic Core Growth
(1) Calculated based on trailing twelve month performance.
(2) Excludes straight-line revenue.
(3) Represents all other AMT towers.
(4) Represents all AMT towers built or acquired on or before 12/31/2012.
(3) (2)
(4)
› Key Takeaways:
› Average revenue per tower of ~$5.5k per
month with pro-forma gross margin % of ~77%
› Expect both to increase as VZ portfolio is
leased up
› GTP portfolio has outperformed legacy assets
and Spectrasite portfolio continues to generate
good growth despite maturity of assets
(1)(2) (1)
82% 81% 78%
57%
77%
AMT Spectrasite GTP Verizon DomesticProforma
Gross Margin %
6.8
8.1
4.3
2.5
5.5
AMT Spectrasite GTP Verizon DomesticProforma
Revenue per Tower per Month ($k)
Adjusted EBITDA: Net income before Income (loss) on discontinued operations, net; Income (loss)
from equity method investments; Income tax benefit (provision); Other income (expense); Gain (loss)
on retirement of long-term obligations; Interest expense; Interest income; Other operating income
(expense); Depreciation, amortization and accretion; and Stock-based compensation expense.
Adjusted Funds From Operations, or AFFO: NAREIT Funds From Operations before (i) straight-line
revenue and expense, (ii) stock-based compensation expense, (iii) the non-cash portion of our tax
provision, (iv) non-real estate related depreciation, amortization and accretion, (v) amortization of
deferred financing costs, capitalized interest, debt discounts and premiums and long-term deferred
interest charges, (vi) other income (expense), (vii) gain (loss) on retirement of long-term obligations,
(viii) other operating income (expense), and adjustments for (ix) unconsolidated affiliates and (x)
noncontrolling interest, less cash payments related to capital improvements and cash payments
related to corporate capital expenditures.
AFFO per Share: Adjusted Funds From Operations divided by the diluted weighted average common
shares outstanding.
Segment Gross Margin: segment revenue less segment operating expenses, excluding stock-based
compensation expense recorded in costs of operations; depreciation, amortization and accretion;
selling, general, administrative and development expense; and other operating expenses.
International rental and management segment includes interest income, TV Azteca, net.
15
Definitions
Definitions Straight-line expenses: We calculate straight-line ground rent expense for our ground leases based on the
fixed non-cancellable term of the underlying ground lease plus all periods, if any, for which failure to renew the
lease imposes an economic penalty to us such that renewal appears, at the inception of the lease, to be
reasonably assured. Certain of our tenant leases require us to exercise available renewal options pursuant to
the underlying ground lease, if the tenant exercises its renewal option. For towers with these types of tenant
leases at the inception of the ground lease, we calculate our straight-line ground rent over the term of the
ground lease, including all renewal options required to fulfill the tenant lease obligation.
Straight-line revenues: We calculate straight-line rental revenues from our tenants based on the fixed
escalation clauses present in non-cancellable lease agreements, excluding those tied to the Consumer Price
Index or other inflation-based indices, and other incentives present in lease agreements with our tenants. We
recognized revenues on a straight-line basis over the fixed, non-cancellable terms of the applicable leases.
16
Reconciliations (In millions. Totals may not add due to rounding.)
17
RENTAL AND MANAGEMENT SEGMENT REVENUE
2007 4Q13 1Q14 2Q14 3Q14 LTM Q314
Rental and Management Segment Revenue $1,426.0 $923.9 $960.1 $1,005.8 $1,011.1 $3,900.9
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
2007 4Q13 1Q14 2Q14 3Q14 LTM Q314
Net income $56.6 $73.9 $193.3 $221.7 $206.6 $695.5
Income from equity method investments (0.0) 0.0 0.0 0.0 - 0.0
Income tax provis ion 59.8 36.2 17.6 21.8 10.4 86.1
Other expense (20.7) 58.5 3.7 16.5 34.0 112.7
Loss (ga in) on reti rement of long-term obl igations 35.4 0.7 0.2 1.3 (3.0) (0.7)
Interest expense 235.8 139.4 143.3 146.2 143.2 572.1
Interest income (10.8) (4.2) (2.0) (2.3) (3.9) (12.4)
Other operating expenses 9.2 35.9 13.9 12.8 11.2 73.7
Depreciation, amortization and accretion 522.9 244.8 245.8 245.4 249.1 985.1
Stock-based compensation expense 54.6 15.0 24.6 18.8 18.3 76.7
ADJUSTED EBITDA $979.3 $600.1 $640.5 $682.2 $666.0 $2,588.8
Reconciliations (In millions except percentages and per share amounts. Totals may not add due to rounding.)
18
AFFO RECONCILIATION
2007 4Q13 1Q14 2Q14 3Q14 LTM Q314
Adjusted EBITDA $979.3 $600.1 $640.5 $682.2 $666.0 $2,588.8
Stra ight-l ine revenue (69.7) (41.7) (31.2) (33.1) (31.9) (138.0)
Stra ight-l ine expense 26.7 8.4 9.5 7.9 12.4 38.1
Cash interest (227.5) (138.5) (139.9) (143.1) (144.7) (566.1)
Interest Income 10.8 4.2 2.0 2.3 3.9 12.4
Cash paid for income taxes (35.3) (28.5) (19.1) (16.7) (16.6) (80.9)
Dividends Declared on preferred stock - - - (4.4) (7.7) (12.1)
Capita l Improvement Capex (29.2) (20.2) (17.2) (17.2) (15.8) (70.5)
Corporate Capex (12.7) (5.8) (5.2) (3.9) (5.7) (20.6)
AFFO $642.4 $378.2 $439.3 $473.9 $459.8 $1,751.2
Divided by weighted average diluted shares outstanding 426.1 398.6 399.1 399.6 400.4 399.4
AFFO Per Share $1.51 $0.95 $1.10 $1.19 $1.15 $4.38
RETURN ON INVESTED CAPITAL (ROIC) RECONCILIATION
3Q14A
Annual ized Adjusted EBITDA $2,664.0
Annual ized Cash Taxes (66.4)
Annual ized Improvement and corporate capita l expenditures (86.0)
Numerator $2,511.6
Historica l Gross Property and Equipment 11,556.7
Historica l Goodwi l l 4,014.3
Historica l Gross Intangibles 8,654.5
Denominator $24,225.5
Return on Invested Capital 10.4%