AMT American Tower
Contracted escalators and sticky carriers, but leverage and a 5% risk-free rate cap the upside; fairly valued.
The story
American Tower owns a global portfolio of roughly 225k towers plus CoreSite data centers, with long-term contracts that carry built-in escalators (about 3% in the US) and a concentrated but investment-grade tenant base (AT&T, Verizon, T-Mobile). Demand comes from 5G densification and rising mobile data use, partly offset by carrier consolidation churn and slower emerging-market growth. Leverage is about 5x net debt/EBITDA, mostly fixed-rate, but refinancing at a 5%+ risk-free rate still drags on AFFO growth and keeps the multiple sensitive to rates. Revenue rose about 2.8% to 10.94B and FFO is 5.47B, in line with the previous thesis, so the drivers are unchanged.
Y1 growth of 4% reflects about 3% escalators plus modest colocation and data center growth, net of churn and higher interest cost; it is consistent with a roughly 3% revenue trend and a 3.3% 5-year CAGR. The AFFO ratio stays at 0.82: the 1.82B total capex is mostly discretionary development and land buyouts, and true maintenance capex for towers is small. Beta stays at the 0.9 anchor, and the low failure probability reflects contracted cash flows and investment-grade access to credit.
Value drivers
| AFFO growth (Y1) | 4.0% |
| Terminal AFFO growth | 3.0% |
| AFFO / FFO ratio | 82.0% |
| Beta | 0.90 |
| Failure probability | 0.7% |
| Cost of equity | 9.3% |
Valuation bridge
| PV of AFFO (explicit) | 33.98B |
| PV of terminal value | 42.63B |
| Equity value | 76.08B |
| ÷ shares → per share | $163.27 |
Projected AFFO
| Yr | FFO | AFFO | Growth | PV |
|---|---|---|---|---|
| 1 | 5.69B | 4.67B | 4.0% | 4.27B |
| 2 | 5.91B | 4.85B | 3.9% | 4.06B |
| 3 | 6.14B | 5.03B | 3.8% | 3.85B |
| 4 | 6.36B | 5.22B | 3.7% | 3.66B |
| 5 | 6.59B | 5.40B | 3.6% | 3.46B |
| 6 | 6.81B | 5.59B | 3.4% | 3.28B |
| 7 | 7.04B | 5.77B | 3.3% | 3.10B |
| 8 | 7.27B | 5.96B | 3.2% | 2.93B |
| 9 | 7.49B | 6.15B | 3.1% | 2.76B |
| 10 | 7.72B | 6.33B | 3.0% | 2.60B |
Key risks
- Rates staying high: refinancing at higher coupons squeezes AFFO growth and compresses the multiple
- Carrier consolidation and churn (Sprint/T-Mobile, Dish uncertainty) plus weaker carrier capex budgets
- FX and tenant credit risk in emerging markets (India, LatAm, Africa)
Catalysts
- Fed cuts lowering the cost of equity and refinancing cost, which would re-rate tower REITs
- CoreSite data center leasing tied to AI/interconnect demand, and a pickup in US 5G amendment activity