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MarketScreener Homepage  >  Equities  >  Nyse  >  American Tower Corporation (REIT)    AMT

AMERICAN TOWER CORPORATION (REIT)

(AMT)
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American Tower REIT : CORP /MA/ MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

10/29/2020 | 03:16pm EST
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 ended December 31, 2019 (the "2019
Form 10-K"), as updated in Part II, Item 1A of our Quarterly Report on Form 10-Q
for the quarter ended March 31, 2020 (the "Q1 2020 Quarterly Report").
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 in the 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 2019 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 2019, as a result of recent acquisitions, including
our acquisition of Eaton Towers Holdings Limited ("Eaton Towers," and the
acquisition, the "Eaton Towers Acquisition"), and changes to our organizational
structure, we reviewed and changed our reportable segments to divide our EMEA
segment into two separate segments, Africa property and Europe property. We now
report our results in six segments - U.S. property, Asia property, Africa
property, Europe property, Latin America property and services. We believe this
change provides more visibility into these operating segments and better aligns
our reporting with management's current approach of allocating costs and
resources, managing growth and profitability and assessing the operating
performance of our business segments. In evaluating financial performance in
each business segment, management uses, among other factors, segment gross
margin and segment operating profit (see note 15 to our consolidated and
condensed consolidated financial statements included in this Quarterly Report).
The change in reportable segments had no impact on our consolidated financial
statements for any periods. Historical financial information included in
Management's Discussion and Analysis of Financial Condition and Results of
Operations has been adjusted to reflect the change in reportable segments.
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 this business as our property
operations, which accounted for 99% of our total revenues for the nine months
ended September 30, 2020 and includes our U.S. property, Asia property, Africa
property, Europe property and Latin America property segments.
We also offer tower-related services in the 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.
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The following table details the number of communications sites, excluding managed sites, that we owned or operated as of September 30, 2020:

                                             Number of
                           Number of         Operated            Number of
                          Owned Towers       Towers (1)       Owned DAS Sites
U.S.                       25,157            15,445                 402
Asia:
India (2)                  73,499                 -               1,070
Africa:
Burkina Faso                  707                 -                   -
Ghana                       3,251               665                  28
Kenya                       2,157                 -                   9
Niger                         721                 -                   -
Nigeria                     5,573                 -                   -
South Africa (2)            2,740                 -                   -
Uganda                      3,339                 -                  12
Africa total               18,488               665                  49
Europe:
France                      2,508               309                   8
Germany                     2,211                 -                   -
Poland (3)                     26                 -                   -
Europe total                4,745               309                   8
Latin America:
Argentina (4)                 110                 -                  10
Brazil (4)                 16,776             2,255                 104
Chile                       2,911                 -                  22
Colombia (2)                4,993                 -                   4
Costa Rica                    654                 -                   2
Mexico (5)                  9,451               186                  92
Paraguay                    1,426                 -                   -
Peru                        1,897               424                   -
Latin America total        38,218             2,865                 234


_______________
(1)Approximately 95% of the operated towers are held pursuant to long-term
finance leases, including those subject to purchase options.
(2)In India, South Africa and Colombia, we also own fiber.
(3)In June 2020, we launched operations in Poland through our acquisition of
communications sites from Electronic Control Systems Spó?ka Akcyjna.
(4)In Argentina and Brazil, we also own or operate urban telecommunications
assets, fiber and the rights to utilize certain existing utility infrastructure
for future telecommunications equipment installation.
(5)In Mexico, we also own or operate urban telecommunications assets, including
fiber, concrete poles and other infrastructure.
We operate in six reportable segments: U.S. property, Asia 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 15 to our
consolidated and condensed consolidated financial statements included in this
Quarterly Report).
The 2019 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 2019 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."
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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, 2020 was
recurring revenue that we should continue to receive in future periods. Based
upon foreign currency exchange rates and the tenant leases in place as of
September 30, 2020, we expect to generate over $58 billion of non-cancellable
tenant lease revenue over future periods, before the impact of straight-line
lease accounting. This includes the additional $17.1 billion in future minimum
rental receipts expected under non-cancellable operating lease agreements in
connection with our entry into a new master lease agreement with T-Mobile US,
Inc. ("T-Mobile" and the agreement, the "T-Mobile MLA") in September 2020. 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 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, 2020, 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 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, 2020,
aggregate carrier consolidation in India did not have a material impact on our
consolidated property revenue, gross margin or operating profit.
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 expect that our churn rate may remain elevated as our
tenants in India evaluate the recent court rulings by the Indian Supreme Court
and determine their payment plans for the adjusted gross revenue ("AGR") fees
and charges prescribed by such court, as set forth in Item 1A of the 2019 Form
10-K, as updated in Part II, Item 1A of the Q1 2020 Quarterly Report, under the
captions "Risk Factors-A substantial portion of our revenue is derived from a
small number of tenants, and we are sensitive to adverse changes in the
creditworthiness and financial strength of our tenants" and "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 2019 Form
10-K under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Critical Accounting Policies and Estimates."
Additionally, we expect that our churn rate in our U.S. 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 the T-Mobile MLA.
As further set forth under the caption "Risk Factors" in Part I, Item 1A of the
2019 Form 10-K, as updated in Part II, Item 1A of the Q1 2020 Quarterly Report,
the recent 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, requiring work-from-home arrangements and
travel restrictions 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.
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As a result of the impact of COVID-19 on global financial markets, we have
experienced volatility in foreign currency exchange rates in many of the markets
in which we operate. We estimate that the adverse impact from changes in foreign
currency exchange rates on our consolidated revenue and operating profit in the
current period, as compared to the three months ended September 30, 2019, was
approximately $89 million and $50 million, respectively, and as compared to the
nine months ended September 30, 2019, was approximately $251 million and $138
million, respectively. If exchange rates continue at their current levels, 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 of COVID-19, the
degree of success of actions taken to contain or treat COVID-19 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) 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
                                       34
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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.
                                       35
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Results of Operations
Three and Nine Months Ended September 30, 2020 and 2019
(in millions, except percentages)
Revenue
                                           Three Months Ended September 30,       Percent Increase        Nine Months Ended September 30,        Percent Increase
                                               2020                2019              (Decrease)               2020                2019              (Decrease)
Property
U.S.                                       $  1,122.3$ 1,095.9                       2  %       $  3,299.7$ 3,089.4                       7  %
Asia                                            305.2              312.5                      (2)              863.1              922.5                      (6)
Africa                                          220.0              148.2                      48               651.5              433.6                      50
Europe                                           38.7               33.3                      16               107.9              100.4                       7
Latin America                                   301.4              331.7                      (9)              931.8            1,010.6                      (8)
Total property                                1,987.6            1,921.6                       3             5,854.0            5,556.5                       5
Services                                         25.3               32.0                     (21)               65.0              100.1                     (35)
Total revenues                             $  2,012.9$ 1,953.6                       3  %       $  5,919.0$ 5,656.6                       5  %


Three Months Ended September 30, 2020U.S. property segment revenue growth of $26.4 million was attributable to:
• Tenant billings growth of $44.1 million, which was driven by:
• $28.1 million due to leasing additional space on our sites ("colocations") and
amendments;
• $16.5 million from contractual escalations, net of churn; and
• $2.7 million generated from sites acquired or constructed since the beginning
of the prior-year period ("newly acquired or constructed sites");
• Partially offset by a decrease of $3.2 million from other tenant billings;
• Partially offset by a decrease of $17.7 million in other revenue, which
includes a $19.3 million decrease due to straight-line accounting, primarily due
to the prior period impact of our master lease agreement entered into with AT&T
Inc. in August 2019 (the "AT&T MLA"), partially offset by the impact of the
T-Mobile MLA in the current period.
Asia property segment revenue decrease of $7.3 million was attributable to:
• A decrease of $0.4 million in pass-through revenue;
• Partially offset by an increase of $6.6 million in other revenue, primarily
due to tenant settlement payments attributable to prior tenant cancellations,
partially offset by a decrease in straight-line accounting, and an increase of
$3.6 million in tenant billings, which was driven by:
• $16.7 million due to colocations and amendments; and
• $4.3 million generated from newly acquired or constructed sites;
• Partially offset by:
?A decrease of $17.2 million resulting from churn in excess of contractual
escalations; and
?A decrease of $0.2 million from other tenant billings.
The segment revenue decline included a decrease of $17.1 million attributable to
the negative impact of foreign currency translation related to fluctuations in
Indian Rupee ("INR").
Africa property segment revenue growth of $71.8 million was attributable to:
• Tenant billings growth of $60.1 million, which was driven by:
• $51.3 million generated from newly acquired or constructed sites, primarily
due to the Eaton Towers Acquisition;
• $6.4 million due to colocations and amendments; and
• $2.4 million from contractual escalations, net of churn.
• An increase of $13.9 million in pass-through revenue; and
• An increase of $8.7 million in other revenue.
                                       36
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Segment revenue growth included a decrease of $10.9 million attributable to the
negative impact of foreign currency translation, which included, among others,
$4.5 million related to fluctuations South African Rand ("ZAR"), $2.9 million
related to fluctuations in Nigerian Naira ("NGN"), and $2.5 million related to
fluctuations in Ghanaian Cedi ("GHS").
Europe property segment revenue growth of $5.4 million was attributable to:
• Tenant billings growth of $2.1 million, which was driven by:
• $1.4 million generated from newly acquired or constructed sites, primarily
attributable to our agreements with Orange S.A. ("Orange"); and
• $1.1 million due to colocations and amendments;
• Partially offset by a decrease of $0.4 million resulting from churn in excess
of contractual escalations;
• An increase of $1.3 million in other revenue; and
• An increase of $0.1 million in pass through revenue.
Segment revenue growth included an increase of $1.9 million attributable to the
positive impact of foreign currency translation related to fluctuations in the
Euro ("EUR").
Latin America property segment revenue decrease of $30.3 million was
attributable to:
• A decrease of $4.7 million in other revenue;
• Partially offset by an increase of $11.0 million in pass-through revenue and
an increase of $26.3 million in tenant billings, which was driven by:
• $10.6 million generated from newly acquired or constructed sites, primarily
due to the transaction in Chile and Peru with Entel PCS Telecomunicaciones S.A.
and Entel Peru S.A. (the "Entel Acquisition");
• $8.0 million due to colocations and amendments;
• $6.7 million from contractual escalations, net of churn; and
• $1.0 million from other tenant billings.
The segment revenue decline included a decrease of $62.9 million attributable to
the negative impact of foreign currency translation, which included, among
others, $42.3 million related to fluctuations in Brazilian Real ("BRL"), $15.2
million related to fluctuations in Mexican Peso ("MXN") and $2.6 million related
to fluctuations in Colombian Peso ("COP").
The decrease in services segment revenue of $6.7 million was primarily
attributable to a decrease in site application, zoning and permitting services.
Nine Months Ended September 30, 2020U.S. property segment revenue growth of $210.3 million was attributable to:
• Tenant billings growth of $151.2 million, which was driven by:
• $107.7 million due to colocations and amendments;
• $41.5 million from contractual escalations, net of churn; and
• $11.0 million generated from newly acquired or constructed sites;
• Partially offset by a decrease of $9.0 million from other tenant billings; and
• An increase of $59.1 million in other revenue, primarily due to an $82.4
million increase due to straight-line accounting as a result of the T-Mobile MLA
and the full year to date impact of the AT&T MLA and an increase in termination
fees, partially offset by decreases in back-billing and site inspection fees and
an increase in revenue reserves.
Asia property segment revenue decrease of $59.4 million was attributable to:
• A decrease of $14.5 million in other revenue primarily due to a decrease in
tenant settlement payments received attributable to prior tenant cancellations;
and
• A decrease of $11.3 million in pass-through revenue;
• Partially offset by an increase of $14.1 million in tenant billings, which was
driven by:
• $55.1 million due to colocations and amendments; and
• $15.2 million generated from newly acquired or constructed sites;
• Partially offset by:
?A decrease of $55.6 million resulting from churn in excess of contractual
escalations; and
?A decrease of $0.6 million from other tenant billings.
The segment revenue decline included a decrease of $47.7 million attributable to
the negative impact of foreign currency translation related to fluctuations in
INR.
                                       37
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Africa property segment revenue growth of $217.9 million was attributable to:
• Tenant billings growth of $182.3 million, which was driven by:
• $153.7 million generated from newly acquired or constructed sites, primarily
due to the Eaton Towers Acquisition;
• $17.2 million due to colocations and amendments;
• $10.5 million from contractual escalations, net of churn; and
• $0.9 million from other tenant billings;
• An increase of $50.5 million in pass-through revenue; and
• An increase of $16.9 million in other revenue.
Segment revenue growth included a decrease of $31.8 million attributable to the
negative impact of foreign currency translation, which included, among others,
$14.2 million related to fluctuations in ZAR, $9.5 million related to
fluctuations in GHS and $5.3 million related to fluctuations in NGN.
Europe property segment revenue growth of $7.5 million was attributable to:
• Tenant billings growth of $3.9 million, which was driven by:
• $2.9 million due to colocations and amendments;
• $2.0 million generated from newly acquired or constructed sites, primarily
attributable to our agreements with Orange; and
• $0.1 million from other tenant billings;
• Partially offset by a decrease of $1.1 million resulting from churn in excess
of contractual escalations;
• An increase of $3.4 million in other revenue; and
• An increase of $0.2 million in pass-through revenue.
Segment revenue growth was not meaningfully impacted by foreign currency
translation related to fluctuations in EUR.
Latin America property segment decrease of $78.8 million was attributable to:
• A decrease of $21.5 million in other revenue, primarily due to the
nonrecurrence of an $11.6 million tenant settlement payment from Mexico in the
prior year period;
• Partially offset by an increase of $32.5 million in pass-through revenue and
an increase of $81.6 million in tenant billings, which was driven by:
• $33.0 million generated from newly acquired or constructed sites, primarily
due to the Entel Acquisition;
• $27.5 million due to colocations and amendments;
• $18.2 million from contractual escalations, net of churn; and
• $2.9 million from other tenant billings.

The segment revenue decline included a decrease of $171.4 million attributable
to the negative impact of foreign currency translation, which included, among
others, $109.7 million related to fluctuations in BRL, $41.2 million related to
fluctuations in MXN, $10.0 million related to fluctuations in COP and $8.2
million related to fluctuations in Chilean Peso.
The decrease in services segment revenue of $35.1 million was primarily
attributable to a decrease in site application, zoning and permitting services.
                                       38
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Gross Margin
                                            Three Months Ended September
                                                        30,                     Percent Increase        Nine Months Ended September 30,        Percent Increase
                                               2020              2019              (Decrease)               2020                2019              (Decrease)
Property
U.S.                                       $   915.0$  888.4                       3  %       $  2,700.0$ 2,494.0                       8  %
Asia                                           138.1             134.6                       3               373.4              378.3                      (1)
Africa                                         145.9              96.5                      51               430.0              275.0                      56
Europe                                          31.0              26.4                      17                86.8               80.1                       8
Latin America                                  205.9             228.1                     (10)              638.7              700.1                      (9)
Total property                               1,435.9           1,374.0                       5             4,228.9            3,927.5                       8
Services                                        15.1              20.3                     (26) %             37.8               64.6                     (41) %


Three Months Ended September 30, 2020
•The increase in U.S. property segment gross margin was primarily attributable
to the increase in revenue described above and a decrease in direct expenses of
$0.2 million.
•The increase in Asia property segment gross margin was primarily attributable
to a decrease in direct expenses of $1.3 million, primarily due to a combination
of (i) lower land rent costs, partially due to site decommissioning, (ii) a
decrease in property taxes and (iii) lower security and monitoring costs,
partially offset by (i) an increase in costs associated with pass-through
revenue, including fuel costs, and (ii) the decrease in revenue described above.
Direct expenses also benefited by $9.5 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 $26.6 million, primarily due to the Eaton Towers Acquisition.
Direct expenses also benefited by $4.2 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 $0.3 million. Direct expenses were also negatively impacted
by $0.5 million from the impact of foreign currency translation.
•The decrease in Latin America property segment gross margin was primarily
attributable to the decrease in revenue described above and an increase in
direct expenses of $11.9 million, primarily due to the Entel Acquisition. Direct
expenses also benefited by $20.0 million from the impact of foreign currency
translation.
•The decrease in services segment gross margin was primarily due to the decrease
in revenue described above, partially offset by a decrease in direct expenses of
$1.5 million.
Nine Months Ended September 30, 2020
•The increase in U.S. property segment gross margin was primarily attributable
to the increase in revenue described above, partially offset by an increase in
direct expenses of $4.3 million.
•The decrease in Asia property segment gross margin was primarily attributable
to the decrease in revenue described above, partially offset by a decrease in
direct expenses of $27.1 million, primarily due to a combination of (i) lower
land rent costs, partially due to site decommissioning, (ii) lower security and
monitoring costs and (iii) lower costs associated with pass-through revenue,
including fuel costs. Direct expenses also benefited by $27.4 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 $75.1 million, primarily due to the Eaton Towers Acquisition.
Direct expenses also benefited by $12.2 million from the impact of foreign
currency translation.
                                       39
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•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 $0.7 million. Direct expenses were also negatively impacted
by $0.1 million from the impact of foreign currency translation.
•The decrease in Latin America property segment gross margin was primarily
attributable to the decrease in revenue described above and an increase in
direct expenses of $37.5 million, primarily due to the Entel Acquisition. Direct
expenses also benefited by $54.9 million from the impact of foreign currency
translation.
•The decrease in services segment gross margin was primarily due to the decrease
in revenue described above, partially offset by a decrease in direct expenses of
$8.3 million.
Selling, General, Administrative and Development Expense ("SG&A")
                                                 Three Months Ended September                                 Nine Months Ended September
                                                              30,                    Percent Increase                     30,                    Percent Increase
                                                     2020              2019             (Decrease)               2020              2019             (Decrease)
Property
U.S.                                             $    38.3$  44.5                     (14) %       $   117.6$ 128.4                      (8) %
Asia                                                  24.1             33.1                     (27)              90.2             77.4                      17
Africa                                                18.5             13.7                      35               56.4             40.8                      38
Europe                                                 5.3              6.0                     (12)              15.6             17.3                     (10)
Latin America                                         20.9             23.5                     (11)              67.8             75.0                     (10)
Total property                                       107.1            120.8                     (11)             347.6            338.9                       3
Services                                               4.2              3.4                      24                9.8              8.8                      11
Other                                                 64.7             63.7                       2              225.0            203.1                      11
Total selling, general, administrative and
development expense                              $   176.0$ 187.9                      (6) %       $   582.4$ 550.8                       6  %


Three Months Ended September 30, 2020
•The decrease in our U.S. property segment SG&A was primarily driven by lower
travel and discretionary spending as a result of the COVID-19 pandemic and
stay-at-home orders.
•The decrease in our Asia property segment SG&A was primarily driven by a
decrease in bad debt expense of $4.7 million.
•The increase in our Africa property segment SG&A was primarily driven by
increased personnel costs to support our business, including due to the Eaton
Towers Acquisition in Africa.
•The decrease in our Europe property segment SG&A was primarily driven by
decreased personnel costs and lower travel and discretionary spending as a
result of the COVID-19 pandemic and stay-at-home orders.
•The decrease in our Latin America property segment SG&A was primarily driven by
the benefit of foreign currency translation on SG&A, partially offset by
increased personnel costs, including to support our fiber business.
•The increase in our services segment SG&A was primarily driven by an increase
in personnel costs, partially offset by lower travel and discretionary spending
as a result of the COVID-19 pandemic and stay-at-home orders.
•The increase in other SG&A was primarily attributable to an increase in
stock-based compensation expense of $0.5 million and an increase in corporate
SG&A.
                                       40
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Nine Months Ended September 30, 2020
•The decrease in our U.S. property segment SG&A was primarily driven by lower
travel and discretionary spending as a result of the COVID-19 pandemic and
stay-at-home orders.
•The increases in our Asia and Africa property segment SG&A were primarily
driven by increased personnel costs to support our business, including due to
the Eaton Towers Acquisition in Africa, and increases in bad debt expense of
$15.7 million and $4.8 million, respectively, as a result of receivable reserves
with certain tenants.
•The decrease in our Europe property segment SG&A was primarily driven by
decreased personnel costs, lower travel and discretionary spending as a result
of the COVID-19 pandemic and stay-at-home orders and a decrease in bad debt
expense.
•The decrease in our Latin America property segment SG&A was primarily driven by
the benefit of foreign currency translation on SG&A, partially offset by
increased personnel costs, including to support our fiber business.
•The increase in our services segment SG&A was primarily driven by an increase
in personnel costs, partially offset by lower travel and discretionary spending
as a result of the COVID-19 pandemic and stay-at-home orders.
•The increase in other SG&A was primarily attributable to an increase in
stock-based compensation expense of $10.9 million and an increase in corporate
SG&A.
Operating Profit
                                            Three Months Ended September
                                                        30,                     Percent Increase        Nine Months Ended September 30,        Percent Increase
                                               2020              2019              (Decrease)               2020                2019              (Decrease)
Property
U.S.                                       $   876.7$  843.9                       4  %       $  2,582.4$ 2,365.6                       9  %
Asia                                           114.0             101.5                      12               283.2              300.9                      (6)
Africa                                         127.4              82.8                      54               373.6              234.2                      60
Europe                                          25.7              20.4                      26                71.2               62.8                      13
Latin America                                  185.0             204.6                     (10)              570.9              625.1                      (9)
Total property                               1,328.8           1,253.2                       6             3,881.3            3,588.6                       8
Services                                        10.9              16.9                     (36) %             28.0               55.8                     (50) %


•The increases in operating profit for the three and nine months ended September
30, 2020 for our U.S. and Europe property segments were primarily attributable
to increases in our segment gross margin and decreases in our segment SG&A.
•The increase in operating profit for the three months ended September 30, 2020
for our Asia property segment was primarily attributable to an increase in our
segment gross margin and a decrease in our segment SG&A. The decrease in
operating profit for the nine months ended September 30, 2020 for our Asia
property segment was primarily attributable to a decrease in our segment gross
margin and an increase in our segment SG&A.
•The increases in operating profit for the three and nine months ended September
30, 2020 for our Africa property segment were primarily attributable to
increases in our segment gross margin, partially offset by increases in our
segment SG&A.
•The decreases in operating profit for the three and nine months ended September
30, 2020 for our Latin America property segment were primarily attributable to
decreases in our segment gross margin, partially offset by decreases in our
segment SG&A.
•The decreases in operating profit for the three and nine months ended September
30, 2020 for our services segment were primarily attributable to decreases in
our segment gross margin and increases in our segment SG&A.
                                       41
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Depreciation, Amortization and Accretion

                                                Three Months Ended September
                                                             30,                    Percent Increase        Nine Months Ended September 30,        Percent Increase
                                                    2020              2019             (Decrease)               2020                2019              (Decrease)

Depreciation, amortization and accretion $ 473.9$ 442.8

                      7  %       $  1,401.1$ 1,328.6

5 %



The increases in depreciation, amortization and accretion expense for the three
and nine months ended September 30, 2020 were primarily attributable to the
acquisition, lease or construction of new sites since the beginning of the
prior-year period, including due to the Eaton Towers Acquisition and the Entel
Acquisition, 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
                                               2020             2019             (Decrease)              2020             2019             (Decrease)
Other operating expenses                    $   15.3$ 34.7                     (56) %       $   67.7$ 83.5                     (19) %


The decreases in other operating expenses during the three and nine months ended
September 30, 2020 were primarily attributable to decreases in impairment
charges and losses on sales or disposals of assets of $21.7 million and $20.9
million, respectively. The decrease in other operating expenses during the nine
months ended September 30, 2020 was also attributable to a one-time benefit in
Brazil during the period. During the three and nine months ended September 30,
2020, these items were partially offset by increases in acquisition related
costs, including pre-acquisition contingencies and settlements, primarily
attributable to the Eaton Towers Acquisition, of $4.0 million and $16.3 million,
respectively.

Total Other Expense
                                          Three Months Ended September                                 Nine Months Ended September
                                                       30,                    Percent Increase                     30,                    Percent Increase
                                              2020              2019             (Decrease)               2020              2019             (Decrease)
Total other expense                       $   282.9$ 186.3                      52  %       $   811.8$ 579.6                      40  %


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 increase in total other expense during the three months ended September 30,
2020 was primarily due to an increase in foreign currency losses of $48.3
million and an increase in loss on retirement of long-term obligations 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").
The increase in total other expense during the nine months ended September 30,
2020 was due to foreign currency losses of $152.7 million in the current period,
as compared to foreign currency gains of $13.7 million in the prior-year period,
and a loss on retirement of long-term obligations of $71.8 million in the
current 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, as
compared to a loss on retirement of long-term obligations of $22.2 million
during the nine months ended September 30, 2019, primarily attributable to the
repayment of our 5.050% senior unsecured notes due 2020 (the "5.050% Notes").
                                       42
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Income Tax Provision
                                            Three Months Ended September                                 Nine Months Ended September
                                                         30,                    Percent Increase                     30,                     Percent Increase
                                                2020              2019             (Decrease)               2020               2019             (Decrease)
Income tax provision                        $   39.3$ 36.7                       7  %       $   71.5$ 100.3                     (29) %
Effective tax rate                               7.8    %          6.8  %                                    5.1    %           6.9  %


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, 2020 and 2019 differs from the
federal statutory rate.
The increase in the income tax provision during the three months ended September
30, 2020 was primarily due to a change in estimates. The income tax provision
for the three months ended September 30, 2020 includes a net benefit of $5.9
million due to a $25.3 million benefit related to the lapse of the statute of
limitations on certain unrecognized tax benefits, which was partially offset by
additions to unrecognized tax benefits during the period. The decrease in the
income tax provision during the nine months ended September 30, 2020 was
primarily attributable to the remeasurement of our net deferred tax liabilities
in Kenya as a result of a change in tax rate and also includes a net benefit due
to reductions in the amount recorded for unrecognized tax benefits.
Net Income/Adjusted EBITDA and Net Income/Nareit FFO/Consolidated AFFO

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