CORPORATE OVERVIEW. American Tower Corp. operates the largest independent portfolio of wireless
communications and broadcast towers in North America, based on the number of towers and revenue.
The company's primary business is leasing antenna space on multi-tenant communications towers to
wireless service providers and radio and television broadcast companies. The tower portfolio provides
AMT with a recurring base of leased revenues from its customers and growth potential to add more tenants
and equipment to these towers from its unused capacity. AMT also continues to expand its operations
in Mexico, Brazil, and India, and plans to close on the acquisition of 4,450 towers in India in the third
quarter.
PRIMARY BUSINESS DYNAMICS. Rental and management of the antenna sites is AMT's principal business,
and accounted for 97% of revenue in the second quarter of 2010. AMT operated a tower portfolio of
about 28,035 multi-user sites in the U.S., Mexico, Brazil, and India, as of June 30, 2010. The company signs
service providers to long-term leases of usually five to 10 years that contain annual lease rate escalations
of 3%-5%. Sprint Nextel, AT&T Wireless, and Verizon Wireless accounted for roughly 52% of AMT's 2009
tower revenue, putting AMT in a prime position for further market expansion projects, in our view. AMT
could also benefit from increased data usage that will require service providers to add capacity to cell
sites, as well as from carriers that expand their networks. Carriers such as Leap Wireless, MetroPCS, and
Clearwire are currently expanding their networks, and we believe this will boost growth. In addition, U.S.
carriers spent close to $20 billion on 700MHz spectrum, and we believe they will use the spectrum to deploy
4G service starting in 2010 and continuing for several years.
International growth should benefit AMT in 2010, by our analysis. AMT has about 2,616 wireless towers
and approximately 199 broadcast towers in Mexico, about 1,640 wireless towers in Brazil, approximately
2,871 sites in India, and 113 sites in Chile. Mexico, Brazil, and India accounted for roughly 15% of revenue
in 2009.We expect Mexico and Brazil to conduct 3G spectrum auctions in 2010 and then to deploy 3G networks.
We think these markets will continue to provide significant growth, as we believe they are also
seeing significant data growth, which could lead to additional capacity requirements.
An additional growth area is India, which we believe had a penetration rate of around 35% at the end of
2008 and is poised for strong growth. AMT entered into a build-to-suit agreement in India with an initial
plan for 200 towers for $15 million, or roughly $75,000 per tower. AMT completed its first 52 towers in India
during the 2008 third quarter and purchased XCEL Telecom Private Limited in May 2009. These new build
towers will initially have one tenant with capacity for at least three and possibly four. Just after the end of
the third quarter, AMT purchased 326 tower sites in India. In February 2010, AMT announced plans to acquire
Essar Telecom, which has roughly 4,450 towers in India, with approximately 1.8 tenants per tower.
We believe India presents a very attractive opportunity going forward.
IMPACT OF MAJOR DEVELOPMENTS. In August 2005, AMT issued approximately 181 million shares valued
at $3.1 billion in a merger with SpectraSite. The transaction resulted in the combined company having a
portfolio of 22,600 communications sites.
In May 2006, AMT announced it was conducting an internal review of its historical stock option granting
practices. A securities class action lawsuit was filed in U.S. District Court (MA) against the company and
its officers related to this matter. On December 13, 2007, AMT said it paid $14 million to settle the action,
and all claims were dismissed.
In June 2008, CFO Brad Singer announced he was leaving the company to take the role of CFO with Discovery
Communications, LLC. In March 2009, AMT named Thomas Bartlett as its new chief financial officer.
Mr. Bartlett has roughly 25 years of experience and was formerly the controller at Verizon.
In March 2009, AMT announced plans to acquire Indian tower company XCEL Telecom Private Limited and
its 1,700 tower sites in India. The deal closed in May 2009.
FINANCIAL TRENDS.We believe AMT has the ability to meet its working capital needs and debt interest
payments through its cash generation and available credit facilities. As of June 30, 2010, AMT had $4.2 billion
of total debt outstanding, representing about 55% of its total capitalization. The company has a net
debt to EBITDA ratio of 3.0X, well below peers. In February 2007, AMT obtained $550 million of additional
borrowing capacity, followed by another $500 million in October 2007 and $350 million in the first quarter of
2008.
We believe the company can fund its planned capital expenditures of between $300 million and $350 million
for 2010, which includes the construction of approximately 1,200 to 1,600 new wireless towers and $50
million of land purchases.
AMT completed its $1.5 billion stock repurchase plan by repurchasing 8.9 million shares of Class A common
stock for roughly $385 million in the fourth quarter of 2007. The company purchased 3.5 million shares
for $144.8 million in the second quarter of 2010.