American Tower's Q3 2025: Contradictions Emerge on U.S. Cellular Exposure, Colocation Contributions, and Mid-Band Upgrades

Date of Call: October 28, 2025

Financials Results

• Revenue: Total revenue grew nearly 8% year-over-year; consolidated property revenue grew nearly 6% YOY; data center property revenue grew >14% YOY

Guidance:

• Raised full‑year property revenue outlook by $40M at midpoint (~3% YOY; ~5% YOY excluding noncash straight‑line and FX)
• Reiterate organic tenant billings growth ~5% and data center revenue growth ~13% YOY
• Increased adjusted EBITDA outlook by $45M at midpoint (~4% YOY; ~7% excl. straight‑line & FX)
• Raised attributable AFFO outlook by $50M at midpoint (~7% YOY as‑adjusted; ~9% excl. financing & FX)
• 2025 capital plan: ~$3.2B dividend, $1.7B CapEx (≈$1.5B discretionary ~2,150 towers; $600M data center)
• Assumes ~$30M revenue reserves for AT&T Mexico in 2025; net leverage ~4.9x and $2B buyback authorization

Business Commentary:

* Strong Mobile Data Consumption and Industry Tailwinds: - American Tower reported a 10% year-over-year increase in attributable AFFO per share as adjusted. - Growth was driven by robust mobile data consumption in the U.S., which rose approximately 35% year-over-year for the third straight year. - The industry tailwinds from increased demand for mobile data drove demand for the company's best-in-class tower portfolio and data center business.

• 5G Network Deployment and Services:
• The company's U.S. services contribution was a significant driver of growth, with a near record year in services activity.
• This was attributed to robust activity from the three major carriers, including the continued build-out of 5G mid-band spectrum and early phase densification.

• Strong service activity supports expectations of a healthy pipeline for future growth.

• CoreSite Data Center Performance:

• Data center property revenue grew over 14%, driven by a record quarter of retail new leasing and positive pricing actions.
• The growth reflects strong demand for hybrid cloud and multi-cloud deployments, positive pricing dynamics, and increased demand for AI-related workloads.

• This performance reinforces expectations for CoreSite to achieve mid-teens or higher stabilized yields.

• Cost Efficiency and Financial Flexibility:

• American Tower expanded its adjusted EBITDA margin by approximately 300 basis points since 2020.
• The company emphasized cost efficiency initiatives, driven by disciplined cost management and a focus on global scale and operations.
• Financial flexibility was highlighted by a strong balance sheet with a net leverage of 4.9x, low floating rate debt exposure, and a $10.7 billion liquidity position.

Sentiment Analysis:

Overall Tone: Positive

• Management said they "completed a great quarter" with "double‑digit growth in attributable AFFO per share as adjusted" and explicitly stated they are "raising our full year outlook across property revenue, adjusted EBITDA, attributable AFFO and AFFO per share." They highlighted near‑record services and record CoreSite retail leasing as drivers.

Q&A:

• Question from Michael Funk (BofA Securities): Services revenue running above expectations—how does that inform deployments in 2026? And thoughts on AT&T/EchoStar spectrum impacts on AT&T deployments?
  Response: Services activity is near‑record and likely to be a robust contributor in 2026; spectrum buys typically lead carriers to deploy (driving potential tower activity) but company will provide 2026 guidance in February.

• Question from Nicholas Del Deo (MoffettNathanson LLC): How relevant is your tower portfolio for much higher frequency bands (up to ~10 GHz) given propagation characteristics?
  Response: Higher‑frequency bands increase densification needs; towers remain the primary deployment vehicle even into 6G bands—positive long‑term demand implication.

• Question from Nicholas Del Deo (MoffettNathanson LLC): CoreSite pre‑lease share dipped to 6%—is that ebb‑and‑flow or are you saving new space for retail?
  Response: The pre‑leasing dip reflects projects moving from pre‑leasing into service (construction flow), not weaker demand or a deliberate strategic shift to retail.

• Question from James Schneider (Goldman Sachs): Can you frame the cost‑optimization opportunity (magnitude, one‑time vs phased, where it flows in the model)?
  Response: Cost program targets incremental, sustainable efficiencies across supply chain, technology and service delivery via a new COO role; benefits will layer in over time rather than as a single step change; more detail in Q4/2026 outlook.

• Question from James Schneider (Goldman Sachs): Any factors muting CoreSite upside near term given strong industry prints?
  Response: Nothing material muting CoreSite—demand, pricing and AI‑related workloads remain strong; capacity build is the main gating factor and is being expanded.

• Question from Ric Prentiss (Raymond James): Reminder of exposure to UScellular and comment on T‑Mobile saying they will reduce some cell sites—any color?
  Response: UScellular represents under ~1% of U.S. revenue (under 0.5% globally); some of that is up for renewal next year but expected churn remains in historical ~1–2% range.

• Question from Ric Prentiss (Raymond James): Would you negotiate with DISH for NPV to resolve payments sooner rather than over remaining MLA term?
  Response: Company has filed a declaratory judgment action, believes the MLA is enforceable through 2036 and will defend collectibility; open to discussions but currently litigating and prioritizing shareholder value.

• Question from Ric Prentiss (Raymond James): How should we think about M&A vs buybacks given leverage under 5x and market multiples?
  Response: Capital allocation priorities are dividend, internal CapEx then M&A vs buybacks; no compelling M&A opportunities today, buybacks are opportunistic with leverage ~4.9x and $2B authorization.

• Question from Eric Luebchow (Wells Fargo): How might additional spectrum (e.g., 3.45GHz) that can be software‑enabled affect densification demand?
  Response: Some spectrum may be initially usable via software, but over time additional spectrum drives network augmentations and densification—company sees application volumes up ~20% YOY and colocation apps up ~40%.

• Question from Eric Luebchow (Wells Fargo): Update on the customer that moved off an MLA to à la carte—any progress or return to MLA?
  Response: Company is agnostic; deployments monetize under either structure—timing is more variable à la carte, but long‑term revenue is expected regardless.

• Question from David Barden (New Street Research): Is DISH current and under what circumstances would you take a reserve? Also tower implications if space‑based players offer terrestrial service?
  Response: DISH is current today so no reserve required; lawsuit filed to protect payments. If space players resell via carriers impact is modest; direct retail from satellites could require terrestrial complements and would be upside but is not in current guidance.

• Question from David Barden (New Street Research): Could WISP disruption (fixed wireless, SpaceX, BEAD‑driven fiber) materially increase churn?
  Response: WISPs are small share of revenue and typical churn in that segment is already captured in the normal 1–2% churn assumption; not expected to materially change model.

• Question from Michael Rollins (Citigroup): How much will EchoStar (DISH) contribute to growth via contractual minimums, and is long‑term U.S. leasing growth guidance still intact (ex‑EchoStar)?
  Response: Not disclosing EchoStar contribution now; long‑term U.S. mid‑single‑digit organic leasing growth thesis remains intact; more specifics to be provided in February guidance.

• Question from Michael Rollins (Citigroup): Any plan to update the multiyear guidance now given industry changes?
  Response: Long‑term growth algorithm (mid‑single % developed markets, higher in emerging) remains the baseline; company will decide on what to update and provide more color in February.

• Question from Richard Choe (JPMorgan): What drove the $5M incremental non‑rate revenue in the U.S.? And was the QoQ data center growth dip due to churn?
  Response: The $5M was minor, non‑run‑rate items; QoQ data center variance reflects one‑time quarter‑to‑quarter fluctuations, not a material churn issue.

• Question from Benjamin Swinburne (Morgan Stanley): Any docket dates or process timing on the EchoStar litigation?
  Response: Lawsuit was just filed; no docket events to report yet.

• Question from Benjamin Swinburne (Morgan Stanley): Thoughts on CoreSite valuation, synergies with towers, and buybacks relative to asset value?
  Response: CoreSite is a strategic fit, performing very well with interconnection advantages; buybacks are opportunistic (Board authorized $2B) and decisions are driven by long‑term value, not short‑term valuation differences.

Contradiction Point 1

U.S. Cellular Exposure and Churn

It involves the exposure to U.S. Cellular and the anticipated churn due to their integration, which impacts the company's revenue expectations and operational planning.

What is your exposure to T-Mobile's site reduction plans following the UScellular deal? - Ric Prentiss (Raymond James & Associates)

2025Q3: Our exposure to UScellular is less than 1% of U.S. revenue. The U.S. exposure is expected to remain in the 1%-2% historical churn range. - Steven Vondran(CEO)

What is your U.S. Cellular exposure and potential impact on your business? What are your expectations for DISH? - Richard Hamilton Prentiss (Raymond James)

2025Q2: U.S. Cellular exposure is less than 0.5% of global and 0.5% of U.S. revenues. T-Mobile's integration will result in some churn as they seek synergies. - Steven O. Vondran(CEO)

Contradiction Point 2

Colocation Contributions and Growth Expectations

It pertains to the company's expectations regarding colocation contributions and their impact on growth, which is crucial for strategic planning and investor expectations.

What is the current colocation contribution mix and its projected trend post-2025? What are the capital allocation priorities and target regions for M&A? - Eric Thomas Luebchow (Wells Fargo Securities)

2025Q3: Colocations are expected to continue to accelerate as carriers densify their networks. This aligns with ongoing mid-band deployment and expected densification needs. - Steven O. Vondran(CEO)

What is the current colocation contribution mix and its projected trend post-2025? What are the capital allocation priorities and potential M&A regions? - Eric Thomas Luebchow (Wells Fargo Securities)

2025Q2: Colocation contributions are small but growing, representing over 10% of applications. The trend may continue, but specifics for 2026 are uncertain. - Rodney M. Smith(CFO)

Contradiction Point 3

Services Revenue Growth and Diversification

It involves differing perspectives on the sources and sustainability of services revenue growth, which affects investors' understanding of the company's future prospects.

Can you elaborate on the services driving revenue growth and EchoStar's contractual protections? - Nicholas Del Deo (MoffettNathanson LLC)

2025Q3: The services business is varied, including site acquisition and construction services. Services revenue aligns with activity levels, but there's some lag time. EchoStar's contract includes minimum commitments we expect to receive. - Steven Vondran(CEO)

What market uncertainties are preventing you from raising guidance, and how much of the service revenue growth came from one carrier's RAN upgrade? - Michael Funk (Bank of America)

2025Q1: Services revenue was $74.9 million, an increase of 19% year-over-year. Services growth is broad-based, not reliant on one carrier's upgrade. - Steven Vondran(CEO)

Contradiction Point 4

Mid-Band Upgrades and Leasing Pacing

It involves differing perspectives on the progress and timing of mid-band upgrades and the impact on leasing activity and growth expectations, which are critical for understanding the company's revenue trajectory.

How relevant is your tower portfolio for supporting higher-frequency spectrum bands? - Nicholas Del Deo (MoffettNathanson LLC)

2025Q3: The deployment of higher-frequency bands is beneficial for our tower portfolio. Towers will be crucial for these higher bands, which are necessary for 6G deployment. The increased demand for network densification driven by these bands will support our growth prospects. - Steven Vondran(CEO)

What are the latest updates on U.S. carriers' mid-band upgrades excluding comprehensive deals? What is the pacing for new leasing this year? Do you support buybacks? - Batya Levi (UBS)

2024Q4: Mid-band upgrades vary by carrier; one at over 80%, another at 65%, and the third under 50%. Sprint churn will impact growth the first three quarters, but recovery is expected by Q4. - Steve Vondran(CEO)