International expansions backed by strong financial results propels American Tower forward, however un-levering the balance sheet a big challenge

American Tower Corporation is a wireless and broadcast communications infrastructure company that owns, operates and develops communications sites. Its primary business includes leasing antenna space on multi-tenant communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities and tenants in a number of other industries.

Strong second quarter lays the foundation for future growth

American Tower’s total revenue for the fiscal year 2013 increased by significant 17% to $3,361 million from the prior year. Operating profit (FY2013: 1,214 million) also registered a growth coming in at 8% higher from the prior year. However Net income of 482 million in 2013 was negatively impacted by corporate SG&A, depreciation, interest expense and a loss on retirement of long-term obligations and came in 19% lower from the prior year.

EPS also faced the brunt and came in at $1.40 in 2013 a decrease of 21 cents from the prior year. However second quarter displayed a robust growth in business with continuous progress seen in financial performance largely attributed to its core organic growth as well as continued strong performance of 2013 acquisitions.

Total Operating revenues for second quarter ended June 30, 2014 amounted to $1,031 million, growing at 28% from the corresponding period in the prior year. Operating income advanced with a gain of 28% to $402 million for the second quarter. This impressive feat in operating Income propelled Net income to increase materially by 163% to $221 million for Q2 2014 from the prior year for the same period.

American tower’s focusses on cleaning it balance sheet

Company’s low net income for 2013 however did not deter the management as they rewarded the shareholders with 22% in dividends. Company’s acquisitions, the most recent being the acquisition of Global Tower Networks for $4.8 billion in 2013, resulted in higher debt. American tower’s long term obligations as at June 30, 2014 stood at $12.7 billion which however was a significant reduction of $1.65 billion as measured from the end of prior year.

Market consensus

Market estimates for American tower are overtly positive in the coming time period as all the financial metrics are forecasted to grow exceptionally. Acquisitions in emerging international markets and growth of global portfolio will portend well towards growing company’s revenue, net income and consequently its EPS. Following scale shows market outlooks for American Tower in terms of its financial performance:

Upcoming events

The Company is expected to announce its 3rd quarterly results on 28 October 2014.

Major shareholders

Following are 3 major shareholders of company:

T. Rowe Price Associates, Inc. 8.79% holding with 34.82 million shares

The Vanguard Group, Inc. 5.03% holding with 19.93 million shares

BlackRock Institutional Trust Company, N.A. 4.38% holding with 17.33 million shares

Significant change in shareholding

Following are the major shareholding transactions that took place recently:

Deutsche Investment Management Americas, Inc. buying 3.62 million shares

Deutsche Asset Management Americas selling 3.04 million shares

Growing business and expansion plans has positively impacted the stock price as seen in its ascent over the years

Company’s Annual Report 2013