American Tower Corp. (AMT)

[POEMS Reports]

What are your views on AMT?

[Research Department]

Hello,

1. Defensive business model, especially amid current global uncertainty. Its revenue is generated from long-term tower leases with major wireless carriers such as AT&T, T-Mobile and Verizon Wireless, therefore there should not be any significant impact to its business from current economic environment.

2. Shorter & longer-term growth. Current Covid situation may lead to increase in demand for cellular network usage from remote working trend. It has seen strong organic tenant billing growth for its latest quarter. Longer-term catalyst will be transition towards 5G and Internet of Things (IoT) but this will take time to play out. These catalyst may continue to drive demand for its leasing activity .

3. Dividend play. AMT has a good history of increasing its dividends. Consistent growth in operating cashflow may ensure that it has the ability to maintain or increase its dividends moving forward. Majority of its revenue is also recurring in nature, providing consistent stream of income.

Risks include weakness in some international segment. Asia and Latin America revenue fall 15% for its latest quarter. Operating profit margin has been declining y-o-y in these 2 regions too, especially in Asia, which questions whether its huge spending on the international regions can drive successful results. In the meantime, they will have to depend on its U.S business (its largest market) to hold the fort. As it is a stable dividend play, dividend yield is of main focus. With dividend yield of 1.9%, it may appears unattractive for some.

[Author]

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