AMERICAN TOWER CORPORATION This Quarterly Report on Form 10-Q (this "Quarterly Report") contains forward-looking statements relating to our goals, beliefs, plans or current expectations and other statements that are not of historical facts. For example, when we use words such as "project," "believe," "anticipate," "expect," "forecast," "estimate," "intend," "should," "would," "could," "may" or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements. Certain important factors may cause actual results to differ materially from those indicated by our forward-looking statements, including those set forth under the caption "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the year endedDecember 31, 2020 (the "2020 Form 10-K"). Forward-looking statements represent management's current expectations and are inherently uncertain. We do not undertake any obligation to update forward-looking statements made by us. The discussion and analysis of our financial condition and results of operations that follow are based upon our consolidated and condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted inthe United States ("GAAP"). The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates and such differences could be material to the financial statements. This discussion should be read in conjunction with our consolidated and condensed consolidated financial statements herein and the accompanying notes, information set forth under the caption "Critical Accounting Policies and Estimates" in the 2020 Form 10-K, and in particular, the information set forth therein under Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations." During the fourth quarter of 2020, as a result of the acquisition ofInSite Wireless Group, LLC ("InSite ," and the acquisition, the "InSite Acquisition"), we updated our reportable segments to renameU.S. property andAsia property toU.S. &Canada property andAsia-Pacific property, respectively. We continue to report our results in six segments -U.S. &Canada property,Asia-Pacific property,Africa property,Europe property,Latin America property and services (see note 16 to our consolidated and condensed consolidated financial statements included in this Quarterly Report). The change in reportable segment names was solely reflective of the inclusion ofCanada andAustralia in our business operations, as a result of the InSite Acquisition, and had no impact on our consolidated financial statements or historical segment financial information for any prior periods. Overview We are one of the largest global real estate investment trusts and a leading independent owner, operator and developer of multitenant communications real estate. Our primary business is the leasing of space on 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. In addition to the communications sites in our portfolio, we manage rooftop and tower sites for property owners under various contractual arrangements. We also hold other telecommunications infrastructure, fiber and property interests that we lease primarily to communications service providers and third-party tower operators. We refer to the business encompassing the above as our property operations, which accounted for 97% of our total revenues for each of the three and nine months endedSeptember 30, 2021 and includes ourU.S. &Canada property,Asia-Pacific property,Africa property,Europe property andLatin America property segments. We also offer tower-related services inthe United States , including site application, zoning and permitting and structural analysis, which primarily support our site leasing business, including the addition of new tenants and equipment on our sites. 35 --------------------------------------------------------------------------------
The following table details the number of communications sites, excluding
managed sites, that we owned or operated as of
Number of
Number of Operated Number of
Owned Towers Towers (1) Owned DAS Sites
U.S. & Canada :
Canada 218 - -
United States 27,252 15,370 446
U.S. & Canada total 27,470 15,370 446
Asia-Pacific: (2)
Bangladesh (3) 76 - -
India 74,727 - 946
Philippines 23 - -
Asia-Pacific total 74,826 - 946
Africa:
Burkina Faso 707 - -
Ghana 3,330 661 28
Kenya 2,725 - 9
Niger 747 - -
Nigeria 6,637 - -
South Africa 2,865 - -
Uganda 3,621 - 12
Africa total 20,632 661 49
Europe:
France 2,962 310 9
Germany 14,706 - -
Poland 44 - -
Spain 11,436 - -
Europe total 29,148 310 9
Latin America:
Argentina 480 - 11
Brazil 20,768 2,088 109
Chile 3,733 - 137
Colombia 4,981 - 6
Costa Rica 682 - 2
Mexico 9,787 186 92
Paraguay 1,438 - -
Peru 3,901 450 -
Latin America total 45,770 2,724 357
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(1)Approximately 95% of the operated towers are held pursuant to long-term
finance leases, including those subject to purchase options.
(2)We also control land under carrier or other third-party communications sites
in Australia , which provides recurring cash flow through tenant leasing
arrangements.
(3)During the three months ended September 30, 2021 , we began operations in
Bangladesh (see note 12 to our consolidated and condensed consolidated financial
statements included in this Quarterly Report).
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On January 13, 2021 , we entered into two agreements with Telxius Telecom, S.A.
("Telxius"), a subsidiary of Telefónica, S.A., pursuant to which we agreed to
acquire Telxius' European and Latin American tower divisions, comprising
approximately 31,000 communications sites in Argentina , Brazil , Chile , Germany ,
Peru and Spain , for approximately 7.7 billion Euros ("EUR") (approximately
$9.4 billion at the date of signing) (the "Telxius Acquisition"), subject to
certain adjustments. We completed the acquisition of nearly 27,000
communications sites in June 2021 and acquired the approximately 4,000 remaining
communications sites in Germany in August 2021 , for total consideration of
approximately 7.9 billion EUR (approximately $9.6 billion as of the closing
dates), subject to certain post-closing adjustments.
We operate in six reportable segments: U.S. & Canada property, Asia-Pacific
property, Africa property, Europe property, Latin America property and services.
In evaluating operating performance in each business segment, management uses,
among other factors, segment gross margin and segment operating profit (see note
16 to our consolidated and condensed consolidated financial statements included
in this Quarterly Report).
The 2020 Form 10-K contains information regarding management's expectations of
long-term drivers of demand for our communications sites, as well as key trends,
which management believes provide valuable insight into our operating and
financial resource allocation decisions. The discussion below should be read in
conjunction with the 2020 Form 10-K and, in particular, the information set
forth therein under Item 7 "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Executive Overview."
In most of our markets, our tenant leases with wireless carriers generally have
initial non-cancellable terms of five to ten years with multiple renewal terms.
Accordingly, the vast majority of the revenue generated by our property
operations during the three and nine months ended September 30, 2021 was
recurring revenue that we should continue to receive in future periods. Based
upon existing tenant leases and foreign currency exchange rates as of
September 30, 2021 , we expect to generate nearly $61 billion of non-cancellable
tenant lease revenue over future periods, before the impact of straight-line
lease accounting. Most of our tenant leases have provisions that periodically
increase the rent due under the lease, typically based on an annual fixed
escalation (averaging approximately 3% in the United States ) or an inflationary
index in most of our international markets, or a combination of both. In
addition, certain of our tenant leases provide for additional revenue primarily
to cover costs (pass-through revenue), such as ground rent or power and fuel
costs.
The revenues generated by our property operations may be affected by
cancellations of existing tenant leases. As discussed above, most of our tenant
leases with wireless carriers and broadcasters are multiyear contracts, which
typically are non-cancellable; however, in some instances, a lease may be
cancelled upon the payment of a termination fee. Revenue lost from either tenant
lease cancellations or the non-renewal of leases or rent renegotiations, which
we refer to as churn, has historically not had a material adverse effect on the
revenues generated by our consolidated property operations. During the nine
months ended September 30, 2021 , churn was approximately 3% of our tenant
billings.
Beginning in late 2017, we experienced an increase in revenue lost from
cancellations or non-renewals primarily due to carrier consolidation-driven
churn in India , which compressed our gross margin and operating profit,
particularly in our Asia-Pacific property segment, although this impact was
partially offset by lower expenses due to reduced tenancy on existing sites and
the decommissioning of certain sites. For the nine months ended September 30,
2021 , aggregate carrier consolidation in India did not have a material impact on
our consolidated property revenue, gross margin or operating profit, although
overall churn rates in India remained elevated relative to historical levels.
We anticipate that our churn rate in India will moderate over time and result in
reduced impacts on our property revenue, gross margin and operating profit. In
the immediate term, we believe that our churn rate may remain elevated as our
tenants in India evaluate how to best comply with rulings by the Indian Supreme
Court and determine their obligations under payment plans for the adjusted gross
revenue ("AGR") fees and charges prescribed by such court, as set forth in Item
1A of the 2020 Form 10-K, under the caption "Risk Factors-Our business, and that
of our tenants, is subject to laws, regulations and administrative and judicial
decisions, and changes thereto, that could restrict our ability to operate our
business as we currently do or impact our competitive landscape." We expect to
periodically evaluate the carrying value of our Indian assets, which may result
in the realization of additional impairment expense or other similar charges.
For more information, please see Item 7 of the 2020 Form 10-K under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Critical Accounting Policies and Estimates."
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Additionally, we expect that our churn rate in our U.S. & Canada property
segment will be elevated for a period of several years due to contractual lease
cancellations and non-renewals by T-Mobile, including legacy Sprint Corporation
leases, pursuant to the terms of our master lease agreement with T-Mobile US,
Inc. (the "T-Mobile MLA") entered into in September 2020 .
As further set forth under the caption "Risk Factors" in Part I, Item 1A of the
2020 Form 10-K, the ongoing coronavirus ("COVID-19") pandemic, as well as the
response to mitigate its spread and effects, may adversely impact us and our
tenants and the demand for our communications sites in the United States and
globally. We have taken a variety of actions to ensure the continued
availability of our communications sites, while ensuring the safety and security
of our employees, tenants, vendors and surrounding communities. These measures
include providing support for our tenants remotely, supporting continued
work-from-home arrangements and restricting travel for our employees where
practicable and other modifications to our business practices. We will continue
to actively monitor the situation and may take further actions as may be
required by governmental authorities or that we determine are in the best
interests of our employees, tenants and business partners.
In 2020, as a result of the impact of COVID-19 on global financial markets, we
experienced volatility in foreign currency exchange rates in many of the markets
in which we operate, although we do not expect significant impacts from exchange
rate fluctuations in 2021. If exchange rates become significantly more
unfavorable, the impact to our revenue and other future operating results could
be material. Additionally, the impact of COVID-19 on our operational results in
subsequent periods will largely depend on future developments, which are highly
uncertain and cannot be accurately predicted at this time. These developments
may include, but are not limited to, new information concerning the severity and
duration of the COVID-19 pandemic, the impact of emerging COVID-19 variants, the
degree of success of actions taken to contain or treat COVID-19, including the
availability and effectiveness of vaccines and treatments, and the reactions by
consumers, companies, governmental entities and capital markets to such actions.
Non-GAAP Financial Measures
Included in our analysis of our results of operations are discussions regarding
earnings before interest, taxes, depreciation, amortization and accretion, as
adjusted ("Adjusted EBITDA"), Funds From Operations, as defined by the National
Association of Real Estate Investment Trusts ("Nareit FFO") attributable to
American Tower Corporation common stockholders, Consolidated Adjusted Funds From
Operations ("Consolidated AFFO") and AFFO attributable to American Tower
Corporation common stockholders.
We define Adjusted EBITDA as Net income before 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.
Nareit FFO attributable to American Tower Corporation common stockholders is
defined as net income before gains or losses from the sale or disposal of real
estate, real estate related impairment charges, real estate related
depreciation, amortization and accretion and dividends on preferred stock, and
including adjustments for (i) unconsolidated affiliates and (ii) noncontrolling
interests. In this section, we refer to Nareit FFO attributable to American
Tower Corporation common stockholders as "Nareit FFO (common stockholders)."
We define Consolidated AFFO as Nareit FFO (common stockholders) before
(i) straight-line revenue and expense; (ii) stock-based compensation expense;
(iii) the deferred portion of income tax; (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 interests,
less cash payments related to capital improvements and cash payments related to
corporate capital expenditures.
We define AFFO attributable to American Tower Corporation common stockholders as
Consolidated AFFO, excluding the impact of noncontrolling interests on both
Nareit FFO (common stockholders) and the other adjustments included in the
calculation of Consolidated AFFO. In this section, we refer to AFFO attributable
to American Tower Corporation common stockholders as "AFFO (common
stockholders)."
Adjusted EBITDA, Nareit FFO (common stockholders), Consolidated AFFO and AFFO
(common stockholders) are not intended to replace net income or any other
performance measures determined in accordance with GAAP. None of Adjusted
EBITDA, Nareit FFO (common stockholders), Consolidated AFFO or AFFO (common
stockholders)
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represents cash flows from operating activities in accordance with GAAP and,
therefore, these measures should not be considered indicative of cash flows from
operating activities, as a measure of liquidity or a measure of funds available
to fund our cash needs, including our ability to make cash distributions.
Rather, Adjusted EBITDA, Nareit FFO (common stockholders), Consolidated AFFO and
AFFO (common stockholders) are presented as we believe each is a useful
indicator of our current operating performance. We believe that these metrics
are useful to an investor in evaluating our operating performance because (1)
each is a key measure used by our management team for decision making purposes
and for evaluating our operating segments' performance; (2) Adjusted EBITDA is a
component underlying our credit ratings; (3) Adjusted EBITDA is widely used in
the telecommunications real estate sector to measure operating performance as
depreciation, amortization and accretion may vary significantly among companies
depending upon accounting methods and useful lives, particularly where
acquisitions and non-operating factors are involved; (4) Consolidated AFFO is
widely used in the telecommunications real estate sector to adjust Nareit FFO
(common stockholders) for items that may otherwise cause material fluctuations
in Nareit FFO (common stockholders) growth from period to period that would not
be representative of the underlying performance of property assets in those
periods; (5) each provides investors with a meaningful measure for evaluating
our period-to-period operating performance by eliminating items that are not
operational in nature; and (6) each provides investors with a measure for
comparing our results of operations to those of other companies, particularly
those in our industry.
Our measurement of Adjusted EBITDA, Nareit FFO (common stockholders),
Consolidated AFFO and AFFO (common stockholders) may not, however, be fully
comparable to similarly titled measures used by other companies. Reconciliations
of Adjusted EBITDA, Nareit FFO (common stockholders), Consolidated AFFO and AFFO
(common stockholders) to net income, the most directly comparable GAAP measure,
have been included below.
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Results of Operations
Three and Nine Months Ended September 30, 2021 and 2020
(in millions, except percentages)
Revenue
Three Months Ended
Percent Increase
2021 2020 (Decrease) 2021 2020 (Decrease)
Property
U.S. & Canada $ 1,231.2 $ 1,122.3 10 % $ 3,695.9 $ 3,299.7 12 %
Asia-Pacific 313.5 305.2 3 893.1 863.1 3
Africa 257.4 220.0 17 741.1 651.5 14
Europe 175.8 38.7 354 308.2 107.9 186
Latin America 391.0 301.4 30 1,093.3 931.8 17
Total property 2,368.9 1,987.6 19 6,731.6 5,854.0 15
Services 85.4 25.3 238 180.1 65.0 177
Total revenues $ 2,454.3 $ 2,012.9 22 % $ 6,911.7 $ 5,919.0 17 %
Three Months Ended September 30, 2021
U.S. & Canada property segment revenue growth of $108.9 million was attributable
to:
• Tenant billings growth of $87.1 million , which was driven by:
• $43.3 million generated from sites acquired or constructed since the beginning
of the prior-year period ("newly acquired or constructed sites"), primarily
related to the InSite Acquisition;
• $34.2 million due to leasing additional space on our sites ("colocations") and
amendments; and
• $11.2 million from contractual escalations, net of churn (as discussed above,
we expect that our churn rate will be elevated for a period of several years due
to the terms of the T-Mobile MLA, beginning in the fourth quarter of 2021);
•Partially offset by a decrease of $1.6 million from other tenant billings; and
• An increase of $21.8 million in other revenue, which includes a $30.2 million
increase due to straight-line accounting, primarily due to the impact of the
T-Mobile MLA.
During the three months ended September 30, 2021 , the assets acquired pursuant
to the InSite Acquisition generated approximately $37.5 million in U.S. & Canada
property revenue.
Asia-Pacific property segment revenue growth of $8.3 million was attributable
to:
• An increase of $8.4 million in pass-through revenue; and
• Tenant billings growth of $7.6 million , which was driven by:
• $12.3 million due to colocations and amendments; and
• $6.6 million generated from newly acquired or constructed sites;
• Partially offset by:
?A decrease of $11.2 million resulting from churn in excess of contractual
escalations; and
?A decrease of $0.1 million from other tenant billings;
• Partially offset by a decrease of $9.1 million in other revenue, primarily due
to tenant settlements in the prior-year period.
Segment revenue growth included an increase of $1.4 million , attributable to the
positive impact of foreign currency translation related to fluctuations in
Indian Rupee ("INR").
Africa property segment revenue growth of $37.4 million was attributable to:
• Tenant billings growth of $26.7 million , which was driven by:
• $11.6 million generated from newly acquired or constructed sites;
• $10.2 million due to colocations and amendments;
• $3.9 million from contractual escalations, net of churn; and
• $1.0 million from other tenant billings; and
• An increase of $14.7 million in pass-through revenue;
• Partially offset by a decrease of $6.4 million in other revenue.
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Segment revenue growth included an increase of $2.4 million , attributable to the
impact of foreign currency translation, which included, among others, positive
impacts of $5.6 million related to fluctuations in South African Rand ("ZAR")
and $1.1 million related to fluctuations in Ugandan Shilling, partially offset
by negative impacts related to fluctuations in the currencies of our other
African markets, which included, among others, $2.8 million related to
fluctuations in Nigerian Naira ("NGN").
Europe property segment revenue growth of $137.1 million was attributable to:
• Tenant billings growth of $79.9 million , which was driven by:
• $78.1 million generated from newly acquired or constructed sites, primarily
attributable to the Telxius Acquisition and our agreements with Orange S.A.; and
• $2.3 million due to colocations and amendments;
• Partially offset by a decrease of $0.5 million resulting from churn in excess
of contractual escalations;
• An increase of $56.6 million in pass-through revenue, primarily attributable
to the Telxius Acquisition; and
• An increase of $0.3 million in other revenue.
Segment revenue growth included an increase of $0.3 million , primarily
attributable to the positive impact of foreign currency translation related to
fluctuations in EUR. During the three months ended September 30, 2021 , the
assets acquired pursuant to the Telxius Acquisition generated approximately
$131.9 million in Europe property revenue.
Latin America property segment revenue growth of $89.6 million was attributable
to:
• Tenant billings growth of $33.6 million , which was driven by:
• $19.2 million generated from newly acquired or constructed sites, primarily
attributable to the Telxius Acquisition;
• $8.4 million due to colocations and amendments;
• $5.5 million from contractual escalations, net of churn; and
• $0.5 million from other tenant billings;
• An increase of $25.2 million in pass-through revenue, primarily attributable
to increased pass-through ground rent costs in Brazil and the Telxius
Acquisition; and
• An increase of $16.0 million in other revenue as a result of a tenant
settlement in Brazil .
Segment revenue growth included an increase of $14.8 million , attributable to
the impact of foreign currency translation, which included, among others,
positive impacts of $12.0 million related to fluctuations in Mexican Peso
("MXN") and $4.8 million related to fluctuations in the Brazilian Real ("BRL"),
partially offset by negative impacts related to fluctuations in the currencies
of our other Latin American markets. During the three months ended September 30,
2021 , the assets acquired pursuant to the Telxius Acquisition generated
approximately $31.2 million in Latin America property revenue.
Services segment revenue growth of $60.1 million was primarily attributable to
an increase in site application, zoning and permitting services.
Nine Months Ended September 30, 2021
U.S. & Canada property segment revenue growth of $396.2 million was attributable
to:
• Tenant billings growth of $254.4 million , which was driven by:
• $129.3 million generated from newly acquired or constructed sites, primarily
related to the InSite Acquisition;
• $95.3 million due to colocations and amendments; and
• $35.5 million from contractual escalations, net of churn (as discussed above,
we expect that our churn rate will be elevated for a period of several years due
to the terms of the T-Mobile MLA, beginning in the fourth quarter of 2021);
•Partially offset by a decrease of $5.7 million from other tenant billings; and
• An increase of $141.8 million in other revenue, which includes a $138.7
million increase due to straight-line accounting, primarily due to the impact of
the T-Mobile MLA.
During the nine months ended September 30, 2021 , the assets acquired pursuant to
the InSite Acquisition generated approximately $115.8 million in U.S. & Canada
property revenue.
Asia-Pacific property segment revenue growth of $30.0 million was attributable
to:
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• An increase of $26.6 million in pass-through revenue; and
• Tenant billings growth of $14.3 million , which was driven by:
• $37.0 million due to colocations and amendments; and
• $18.3 million generated from newly acquired or constructed sites;
• Partially offset by:
?A decrease of $40.2 million resulting from churn in excess of contractual
escalations; and
?A decrease of $0.8 million from other tenant billings; and
• Partially offset by a decrease of $17.6 million in other revenue, primarily
due to tenant settlements in the prior-year period.
Segment revenue growth included an increase of $6.7 million attributable to the
positive impact of foreign currency translation related to fluctuations in INR.
Africa property segment revenue growth of $89.6 million was attributable to:
• Tenant billings growth of $66.2 million , which was driven by:
• $29.4 million due to colocations and amendments;
• $26.6 million generated from newly acquired or constructed sites;
• $7.3 million from contractual escalations, net of churn; and
• $2.9 million from other tenant billings; and
• An increase of $27.1 million in pass-through revenue;
• Partially offset by a decrease of $12.2 million in other revenue, primarily
due to an increase in revenue reserves and a decrease in tenant settlements
attributable to prior tenant cancellations.
Segment revenue growth included an increase of $8.5 million , attributable to the
impact of foreign currency translation, which included, among others, positive
impacts of $15.3 million related to fluctuations in ZAR and $4.0 million related
to fluctuations in West African Franc, partially offset by negative impacts
related to fluctuations in the currencies of our other African markets, which
included, among others, $7.8 million related to fluctuations in NGN.
Europe property segment revenue growth of $200.3 million was attributable to:
• Tenant billings growth of $109.6 million , which was driven by:
• $105.5 million generated from newly acquired or constructed sites, primarily
attributable to the Telxius Acquisition and our agreements with Orange S.A.; and
• $5.2 million due to colocations and amendments;
• Partially offset by a decrease of $1.1 million resulting from churn in excess
of contractual escalations;
• An increase of $67.0 million in pass-through revenue, primarily attributable
to the Telxius Acquisition; and
• An increase of $15.4 million in other revenue, attributable to straight-line
accounting, the Telxius Acquisition and increases in back-billing.
Segment revenue growth included an increase of $8.3 million , primarily
attributable to the positive impact of foreign currency translation related to
fluctuations in EUR. During the nine months ended September 30, 2021 , the assets
acquired pursuant to the Telxius Acquisition generated approximately $173.9
million in Europe property revenue.
Latin America property segment revenue growth of $161.5 million was attributable
to:
• Tenant billings growth of $79.9 million , which was driven by:
• $30.7 million generated from newly acquired or constructed sites, primarily
attributable to the Telxius Acquisition;
• $24.8 million due to colocations and amendments;
• $21.7 million from contractual escalations, net of churn; and
• $2.7 million from other tenant billings;
• An increase of $45.5 million in pass-through revenue, primarily attributable
to increased pass-through ground rent costs in Brazil and the Telxius
Acquisition; and
• An increase of $33.8 million in other revenue as a result of a tenant
settlement in Brazil .
Segment revenue growth included an increase of $2.3 million , attributable to the
impact of foreign currency translation, which included, among others, a positive
impact of $26.1 million related to fluctuations in MXN, partially offset by a
negative impact of $24.9 million related to fluctuations in BRL. During the nine
months ended September 30, 2021 , the assets acquired pursuant to the Telxius
Acquisition generated approximately $42.1 million in Latin America property
revenue.
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Services segment revenue growth of
Three Months Ended September
30, Percent Increase Nine Months Ended September 30, Percent Increase
2021 2020 (Decrease) 2021 2020 (Decrease)
Property
U.S. & Canada $ 1,009.8 $ 915.0 10 % $ 3,064.8 $ 2,700.0 14 %
Asia-Pacific 126.4 138.1 (8) 346.7 373.4 (7)
Africa 169.2 145.9 16 486.3 430.0 13
Europe 102.8 31.0 232 197.5 86.8 128
Latin America 267.3 205.9 30 756.3 638.7 18
Total property 1,675.5 1,435.9 17 4,851.6 4,228.9 15
Services 54.5 15.1 261 % 113.6 37.8 201 %
Three Months Ended September 30, 2021
•The increase in U.S. & Canada property segment gross margin was primarily
attributable to the increase in revenue described above, partially offset by an
increase in direct expenses of $14.1 million .
•The decrease in Asia-Pacific property segment gross margin was primarily
attributable to an increase in direct expenses of $19.1 million , primarily due
to an increase in costs associated with pass-through revenue, including fuel
costs, partially offset by the increase in revenue described above. Direct
expenses were also negatively impacted by $0.9 million from the impact of
foreign currency translation.
•The increase in Africa property segment gross margin was primarily attributable
to the increase in revenue described above, partially offset by an increase in
direct expenses of $13.9 million . Direct expenses were also negatively impacted
by $0.2 million from the impact of foreign currency translation.
•The increase in Europe property segment gross margin was primarily attributable
to the increase in revenue described above, partially offset by an increase in
direct expenses of $65.3 million , primarily due to the Telxius Acquisition.
Direct expenses were not materially impacted by foreign currency translation.
•The increase in Latin America property segment gross margin was primarily
attributable to the increase in revenue described above, partially offset by an
increase in direct expenses of $24.9 million , primarily due to the Telxius
Acquisition. Direct expenses were also negatively impacted by $3.3 million from
the impact of foreign currency translation.
•The increase in services segment gross margin was primarily due to the increase
in revenue described above, partially offset by an increase in direct expenses
of $20.7 million .
Nine Months Ended September 30, 2021
•The increase in U.S. & Canada property segment gross margin was primarily
attributable to the increase in revenue described above, partially offset by an
increase in direct expenses of $31.4 million .
•The decrease in Asia-Pacific property segment gross margin was primarily
attributable to an increase in direct expenses of $52.7 million , primarily due
to an increase in costs associated with pass-through revenue, including fuel
costs, partially offset by the increase in revenue described above. Direct
expenses were also negatively impacted by $4.0 million from the impact of
foreign currency translation.
•The increase in Africa property segment gross margin was primarily attributable
to the increase in revenue described above, partially offset by an increase in
direct expenses of $32.5 million . Direct expenses were also negatively impacted
by $0.8 million from the impact of foreign currency translation.
•The increase in Europe property segment gross margin was primarily attributable
to the increase in revenue described above, partially offset by an increase in
direct expenses of $88.1 million , primarily due to the Telxius
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Acquisition. Direct expenses were also negatively impacted by $1.5 million from
the impact of foreign currency translation.
•The increase in Latin America property segment gross margin was primarily
attributable to the increase in revenue described above, partially offset by an
increase in direct expenses of $44.9 million , including expenses related to the
Telxius Acquisition. Direct expenses also benefited by $1.0 million from the
impact of foreign currency translation.
•The increase in services segment gross margin was primarily due to the increase
in revenue described above, partially offset by an increase in direct expenses
of $39.3 million .
Selling, General, Administrative and Development Expense ("SG&A")
Three Months Ended September Nine Months Ended September
30, Percent Increase 30, Percent Increase
2021 2020 (Decrease) 2021 2020 (Decrease)
Property
U.S. & Canada $ 48.1 $ 38.3 26 % $ 129.8 $ 117.6 10 %
Asia-Pacific 21.5 24.1 (11) 52.7 90.2 (42)
Africa 16.5 18.5 (11) 52.9 56.4 (6)
Europe 12.8 5.3 142 26.3 15.6 69
Latin America 26.3 20.9 26 79.6 67.8 17
Total property 125.2 107.1 17 341.3 347.6 (2)
Services 3.8 4.2 (10) 12.1 9.8 23
Other 76.9 64.7 19 242.3 225.0 8
Total selling, general, administrative and
development expense $ 205.9 $ 176.0 17 % $ 595.7 $ 582.4 2 %
Three Months Ended September 30, 2021
•The increases in our U.S. & Canada and Europe property segment SG&A were
primarily driven by increased personnel costs to support our business, including
as a result of the InSite Acquisition in our U.S. & Canada property segment and
the Telxius Acquisition in our Europe property segment.
•The decrease in our Asia-Pacific property segment SG&A was primarily driven by
a decrease in bad debt expense of $6.7 million .
•The decrease in our Africa property segment SG&A was primarily driven by a
decrease in bad debt expense of $5.9 million .
•The increase in our Latin America property segment SG&A was primarily driven by
an increase in bad debt expense of $3.0 million , as a result of receivable
reserves with a tenant.
•Our services segment SG&A was relatively consistent as compared to the
prior-year period.
•The increase in other SG&A was primarily attributable to an increase in
corporate SG&A and an increase in stock-based compensation expense of $4.7
million .
Nine Months Ended September 30, 2021
•The increase in our U.S. & Canada property segment SG&A was primarily driven by
increased personnel costs to support our business, including as a result of the
InSite Acquisition, partially offset by lower canceled construction costs.
•The decrease in our Asia-Pacific property segment SG&A was primarily driven by
a decrease in bad debt expense of $44.5 million .
•The decrease in our Africa property segment SG&A was primarily driven by a
decrease in bad debt expense of $8.6 million .
44
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•The increase in our Europe property segment SG&A was primarily driven by
increased personnel costs to support our business, including as a result of the
Telxius Acquisition.
•The increase in our Latin America property segment SG&A was primarily driven by
an increase in bad debt expense of $11.0 million , as a result of receivable
reserves with a tenant.
•The increase in our services segment SG&A was primarily driven by an increase
in personnel costs to support our business.
•The increase in other SG&A was primarily attributable to an increase in
corporate SG&A and an increase in stock-based compensation expense of $1.3
million .
Operating Profit
Three Months Ended September
30, Percent Increase Nine Months Ended September 30, Percent Increase
2021 2020 (Decrease) 2021 2020 (Decrease)
Property
U.S. & Canada $ 961.7 $ 876.7 10 % $ 2,935.0 $ 2,582.4 14 %
Asia-Pacific 104.9 114.0 (8) 294.0 283.2 4
Africa 152.7 127.4 20 433.4 373.6 16
Europe 90.0 25.7 250 171.2 71.2 140
Latin America 241.0 185.0 30 676.7 570.9 19
Total property 1,550.3 1,328.8 17 4,510.3 3,881.3 16
Services 50.7 10.9 365 % 101.5 28.0 263 %
•The increases in operating profit for the three and nine months ended September
30, 2021 for our U.S. & Canada , Europe and Latin America property segments were
primarily attributable to increases in our segment gross margin, partially
offset by increases in our segment SG&A.
•The decrease in operating profit for the three months ended September 30, 2021
for our Asia-Pacific property segment was primarily attributable to a decrease
in our segment gross margin, partially offset by a decrease in our segment SG&A.
The increase in operating profit for the nine months ended September 30, 2021
for our Asia-Pacific property segment was primarily attributable to a decrease
in our segment SG&A, partially offset by a decrease in our segment gross margin.
•The increases in operating profit for the three and nine months ended September
30, 2021 for our Africa property segment were primarily attributable to
increases in our segment gross margin and decreases in our segment SG&A.
•The increases in operating profit for the three and nine months ended September
30, 2021 for our services segment were primarily attributable to increases in
our segment gross margin.
45
--------------------------------------------------------------------------------Depreciation, Amortization and Accretion
Three Months Ended September
30, Percent Increase Nine Months Ended September 30, Percent Increase
2021 2020 (Decrease) 2021 2020 (Decrease)
Depreciation, amortization and accretion
29 %$ 1,688.7 $ 1,401.1
21 %
The increases in depreciation, amortization and accretion expense for the three and nine months endedSeptember 30, 2021 were primarily attributable to the acquisition, lease or construction of new sites since the beginning of the prior-year periods, which resulted in increases in property and equipment and intangible assets subject to amortization, partially offset by foreign currency exchange rate fluctuations. Other Operating Expenses Three Months Ended Nine Months Ended September September 30, Percent Increase 30, Percent Increase 2021 2020 (Decrease) 2021 2020 (Decrease) Other operating expenses$ 85.2 $ 15.3 457 %$ 175.4 $ 67.7 159 % The increase in other operating expenses during the three months endedSeptember 30, 2021 was primarily attributable to an increase in impairment expense of$41.1 million and an increase in acquisition related costs, including pre-acquisition contingencies and settlements of$25.8 million . The increase in other operating expenses during the nine months endedSeptember 30, 2021 was primarily attributable to an increase in acquisition related costs, including pre-acquisition contingencies and settlements of$94.7 million , primarily associated with the Telxius Acquisition, and an increase in impairment expense of$4.5 million . Total Other Expense Three Months Ended September Nine Months Ended September 30, Percent Increase 30, Percent Increase 2021 2020 (Decrease) 2021 2020 (Decrease) Total other expense$ 49.9 $ 282.9 (82) %$ 204.5 $ 811.8 (75) % Total other expense consists primarily of interest expense and realized and unrealized foreign currency gains and losses. We record unrealized foreign currency gains or losses as a result of foreign currency exchange rate fluctuations primarily associated with our intercompany notes and similar unaffiliated balances denominated in a currency other than the subsidiaries' functional currencies. The decrease in total other expense during the three months endedSeptember 30, 2021 was primarily due to foreign currency gains of$180.5 million in the current period, as compared to foreign currency losses of$49.4 million in the prior-year period and a decrease in loss on retirement of debt of$37.2 million attributable to the repayment of our 3.300% senior unsecured notes due 2021 (the "3.300% Notes") and our 3.450% senior unsecured notes due 2021 (the "3.450% Notes") in the prior year period, partially offset by an increase of$35.2 million in interest expense. The decrease in total other expense during the nine months endedSeptember 30, 2021 was primarily due to foreign currency gains of$422.1 million in the current period, as compared to foreign currency losses of$152.7 million in the prior-year period and a loss on retirement of debt of$25.7 million in the current period attributable to the repayment of all amounts outstanding under the securitizations assumed in connection with the InSite Acquisition (the "InSite Debt"), as compared to a loss$71.8 million in the prior-year period attributable to the repayment of our 5.900% senior unsecured notes due 2021 (the "5.900% Notes"), the 3.300% Notes and the 3.450% Notes, partially offset by an increase of$49.4 million in interest expense. Total other expense during the nine months endedSeptember 30, 2021 also includes$19.5 million in unrealized gains from equity securities inthe United States . 46 --------------------------------------------------------------------------------
Income Tax Provision
Three Months Ended September Nine Months Ended September
30, Percent Increase 30, Percent Increase
2021 2020 (Decrease) 2021 2020 (Decrease)
Income tax provision $ 51.4 $ 39.3 31 % $ 174.5 $ 71.5 144 %
Effective tax rate 6.6 % 7.8 % 7.6 % 5.1 %
As a real estate investment trust for U.S. federal income tax purposes ("REIT"),
we may deduct earnings distributed to stockholders against the income generated
by our REIT operations. In addition, we are able to offset certain income by
utilizing our net operating losses ("NOLs"), subject to specified limitations.
Consequently, the effective tax rate on income from continuing operations for
the three and nine months ended September 30, 2021 and 2020 differs from the
federal statutory rate.
The increase in the income tax provision during the three months ended September
30, 2021 was primarily attributable to net additions to reserves for our
existing tax positions. The increase in the income tax provision for the nine
months ended September 30, 2021 was primarily attributable to increases in
foreign earnings, net additions to reserves for our existing tax positions and
changes in tax law in certain foreign jurisdictions in the current period. The
income tax provision for the three and nine months ended September 30, 2020
includes a benefit related to the remeasurement of our net deferred tax
liabilities in Kenya as a result of a change in tax rate.
Net Income / Adjusted EBITDA and Net Income / Nareit FFO attributable to
American Tower Corporation common stockholders / Consolidated AFFO / AFFO
attributable to American Tower Corporation common stockholders
Three Months Ended
Percent Increase
2021 2020 (Decrease) 2021 2020 (Decrease)
Net income $ 726.2 $ 462.9 57 % $ 2,126.4 $ 1,329.9 60 %
Income tax provision 51.4 39.3 31 174.5 71.5 144
Other (income) expense (166.8) 64.5 (359) (439.6) 170.8 (357)
Loss on retirement of long-term
obligations - 37.2 (100) 25.7 71.8 (64)
Interest expense 226.1 190.9 18 646.8 597.4 8
Interest income (9.4) (9.7) (3) (28.4) (28.2) 1
Other operating expenses 85.2 15.3 457 175.4 67.7 159
Depreciation, amortization and accretion 611.4 473.9 29 1,688.7 1,401.1 21
Stock-based compensation expense 28.1 24.1 17 98.0 99.0 (1)
Adjusted EBITDA $ 1,552.2 $ 1,298.4 20 % $ 4,467.5 $ 3,781.0 18 %
47
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Three Months Ended
Percent Increase
2021 2020 (Decrease) 2021 2020 (Decrease)
Net income $ 726.2 $ 462.9 57 % $ 2,126.4 $ 1,329.9 60 %
Real estate related depreciation,
amortization and accretion 550.2 421.2 31 1,516.7 1,244.0 22
Losses from sale or disposal of real estate
and real estate related impairment charges
(1) 55.4 9.9 460 64.9 54.3 20
Adjustments for unconsolidated affiliates
and noncontrolling interests (23.5) (20.5) 15 (59.7) (73.0) (18)
Nareit FFO attributable to American Tower
Corporation common stockholders $ 1,308.3 $ 873.5 50 % $ 3,648.3 $ 2,555.2 43 %
Straight-line revenue (99.6) (68.1) 46 (324.3) (178.9) 81
Straight-line expense 13.0 12.9 1 43.4 37.8 15
Stock-based compensation expense 28.1 24.1 17 98.0 99.0 (1)
Deferred portion of income tax (7.5) 20.9 (136) 53.4 (14.5) (468)
Non-real estate related depreciation, amortization and accretion 61.2 52.7 16 172.0 157.1 9 Amortization of deferred financing costs, capitalized interest, debt discounts and premiums and long-term deferred interest charges 9.7 7.9 23 27.4 24.4 12 Payment of shareholder loan interest (2) - - - - (63.3) (100) Other (income) expense (3) (166.8) 64.5 (359) (439.6) 170.8 (357) Loss on retirement of long-term obligations - 37.2 (100) 25.7 71.8 (64) Other operating expense (4) 29.8 5.4 452 110.5 13.4 725 Capital improvement capital expenditures (40.4) (26.8) 51 (93.8) (85.9) 9 Corporate capital expenditures (1.5) (2.6) (42) (3.7) (7.1) (48) Adjustments for unconsolidated affiliates and noncontrolling interests 23.5 20.5 15 59.7 73.0 (18) Consolidated AFFO$ 1,157.8 $ 1,022.1 13 %$ 3,377.0 $ 2,852.8 18 % Adjustments for unconsolidated affiliates and noncontrolling interests (5) (18.7) (25.2) (26) % (58.6) (12.7) 361 % AFFO attributable to American Tower Corporation common stockholders$ 1,139.1 $ 996.9 14 %$ 3,318.4 $ 2,840.1 17 % _______________ (1)Included in these amounts are impairment charges of$47.1 million ,$6.0 million ,$46.3 million and$41.8 million , respectively. (2)For the nine months endedSeptember 30, 2020 , relates to the payment of capitalized interest associated with the acquisition of MTN Group Limited's ("MTN") redeemable noncontrolling interests in each of our joint ventures inGhana andUganda (see note 10 to our consolidated and condensed consolidated financial statements included in this Quarterly Report). This long-term deferred interest payment was previously expensed but excluded from Consolidated AFFO. (3)Includes (gains) losses on foreign currency exchange rate fluctuations of ($180.5 million ),$49.4 million , ($422.1 million ) and$152.7 million , respectively. (4)Primarily includes acquisition-related costs and integration costs. (5)Includes adjustments for the impact on both Nareit FFO attributable toAmerican Tower Corporation common stockholders as well as the other line items included in the calculation of Consolidated AFFO. 48 -------------------------------------------------------------------------------- The increases in net income for the three and nine months endedSeptember 30, 2021 were primarily due to (i) an increase in our operating profit and (ii) a decrease in other expenses, primarily due to foreign currency gains in the current period as compared to foreign currency losses in the prior-year period, partially offset by (i) an increase in depreciation, amortization and accretion expense, (ii) an increase in other operating expense, primarily attributable to acquisition related costs associated with the Telxius Acquisition, and (iii) an increase in the income tax provision. Net income for the nine months endedSeptember 30, 2021 included a loss on retirement of long-term obligations of$25.7 million , attributable to the repayment of the InSite Debt. Net income for the three and nine months endedSeptember 30, 2020 included a loss on retirement of long-term obligations of$37.2 million and$71.8 million , respectively, attributable to the repayment of the 5.900% Notes, the 3.300% Notes and the 3.450% Notes. The increase in Adjusted EBITDA for the three and nine months endedSeptember 30, 2021 was primarily attributable to the increase in our gross margin, partially offset by the increase in SG&A, excluding the impact of stock-based compensation expense of$25.2 million and$12.0 million , respectively. The growth in Consolidated AFFO and AFFO attributable toAmerican Tower Corporation common stockholders for the three months endedSeptember 30, 2021 was primarily attributable to the increase in our operating profit, excluding the impact of straight-line accounting, which was partially offset by (i) increases in cash paid for taxes and cash paid for interest and (ii) an increase in capital improvement capital expenditures. The growth in AFFO attributable toAmerican Tower Corporation common stockholders was also impacted by changes in noncontrolling interests held inEurope andAsia-Pacific since the beginning of the prior-year period. The growth in Consolidated AFFO and AFFO attributable toAmerican Tower Corporation common stockholders for the nine months endedSeptember 30, 2021 was primarily attributable to (i) the increase in our operating profit, excluding the impact of straight-line accounting, and (ii) decreases in cash paid for interest due to the non-recurrence of the impact of previously deferred interest associated with the shareholder loan, partially offset by (i) an increase in cash paid for taxes and (ii) an increase in capital improvement capital expenditures. The growth in AFFO attributable toAmerican Tower Corporation common stockholders was also impacted by changes in noncontrolling interests held inEurope ,Asia-Pacific andAfrica since the beginning of the prior-year period. 49 -------------------------------------------------------------------------------- Liquidity and Capital Resources The information in this section updates as ofSeptember 30, 2021 the "Liquidity and Capital Resources" section of the 2020 Form 10-K and should be read in conjunction with that report. Overview During the nine months endedSeptember 30, 2021 , we increased our financial flexibility and our ability to grow our business while maintaining our long-term financial policies. During the nine months endedSeptember 30, 2021 , our significant financing transactions included: •Entry into the 2021 Delayed Draw Term Loans and the Bridge Loan Commitment (each as defined below). •Registered public offerings in an aggregate amount of$5.6 billion , including2.0 billion EUR , of senior unsecured notes with maturities ranging from 2026 to 2051. •Registered public offering of 9,900,000 shares of our common stock for aggregate net proceeds of$2.4 billion . •Increase of our commitments under (i) our senior unsecured multicurrency revolving credit facility to$4.1 billion (as amended and restated as further described below, the "2021 Multicurrency Credit Facility") and (ii) our senior unsecured revolving credit facility to$2.9 billion (as amended and restated as further described below, the "2021 Credit Facility"). •Repayment of all amounts outstanding under our$750.0 million unsecured term loan dueFebruary 12, 2021 (the "2020 Term Loan"). •Repayment of all amounts outstanding under the InSite Debt. •Repayment of420.0 million EUR (approximately$494.2 million at the repayment date) under the 2021 364-Day Delayed Draw Term Loan (as defined below). •Repayment of$500.0 million of indebtedness under our$1.0 billion unsecured term loan, as amended and restated inDecember 2019 and as further amended (the "2019 Term Loan"). As a holding company, our cash flows are derived primarily from the operations of, and distributions from, our operating subsidiaries or funds raised through borrowings under our credit facilities and debt or equity offerings. The following table summarizes the significant components of our liquidity (in millions): As of September 30, 2021 Available under the 2021 Multicurrency Credit Facility $
2,531.4
Available under the 2021 Credit Facility
2,900.0
Letters of credit
(4.4)
Total available under credit facilities, net $ 5,427.0 Cash and cash equivalents 3,277.2 Total liquidity $ 8,704.2
Subsequent to
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