American Tower Announces Verizon Tower Portfolio Transaction. February 6, 2015

Transcription

1 American Tower Announces Verizon Tower Portfolio Transaction February 6, 2015

2 Forward-Looking Statements This presentation contains statements about future events and expectations, or forward-looking statements, all of which are inherently uncertain. We have based those forward looking statements on management s current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to, statements regarding the proposed closing of the transaction described herein, expected financial projections for the portfolio and the impact on our consolidated results, the anticipated closing date, the expected cash consideration and the expected sources of funds to pay for the transaction described herein and other previously announced transactions. These forward-looking statements involve a number of risks and uncertainties. For important factors that may cause actual results to differ materially from those indicated in our forward-looking statements, we refer you to the information contained in Item 1A of our Form 10-Q for the quarter ended September 30, 2014 under the caption Risk Factors and in other filings we make with the Securities and Exchange Commission. We undertake no obligation to update the information contained in this presentation to reflect subsequently occurring events or circumstances. Definitions are provided at the end of the presentation and reconciliations to GAAP measures are available on our website at 2

3 Transaction Creates Leading Nationwide Network AMT s U.S. Portfolio Will Consist of Over 40,000 Towers Verizon Legacy AMT Investing $5.056B upfront for ~11,500 towers or approximately $440K per tower. 3

4 Verizon Portfolio Overview Significant Collocation Opportunity with Strong Existing Tenant Base Highlights Initial 10-year Verizon anchor lease term, with renewal options thereafter Existing average tenancy of ~1.4 tenants per tower Expected year 1 financial impact (1) : Revenue of $410M Gross Margin of $235M SG&A as % of revenue expected to be 5% ~$220M in projected start-up capital over three years (1) Year 1 refers to first 12 months of operating results post-closing. Definitions are provided at the end of this presentation and reconciliations to GAAP measures can be found at 4

5 Transaction Highlights Consideration $5.056 billion upfront cash consideration AMT will have the option to purchase the leased towers primarily between 2034 and 2047 for aggregate option payments of approximately $5.0 billion Portfolio Acquiring approximately 165 domestic towers and the rights to approximately 11,324 additional towers Historically under-leased, with average tenancy of 1.4 tenants per tower Capacity for additional tenants without augmentation Growth Enhancing Expected to lengthen AMT s ability to sustain strong organic core growth in the U.S. Expected to drive long-term AFFO accretion Financing Expected to be financed in a manner consistent with maintaining AMT s investment grade credit rating AMT has obtained committed financing for the transaction Increases infrastructure available to support deployment of new spectrum Transaction is expected to close in 1H Definitions are provided at the end of this presentation. 5

6 Proven History of Integration Capabilities U.S. Portfolio Growth VZ GTP SSI (1) ~28k Towers Added in 10 Years PF (2) ~12k ~40k SSI and GTP fully integrated within established timelines post closing Achieved greater than expected synergies with SSI and GTP transactions Disciplined transactions support AMT s robust revenue growth 5 Year Revenue CAGR of ~7.4% on SSI towers September 2014 YTD Organic Core Revenue Growth of 10.3% for GTP portfolio (1) SSI represents Spectrasite. (2) Pro forma for Verizon transaction. Definitions are provided at the end of this presentation. 6

7 Pro Forma Global Portfolio Highlights (1) 60,000 50,000 Tower Count International U.S. Rental & Management Revenue AT&T Verizon 40,000 30,000 27% 22% Sprint T-Mobile 20,000 10, PF 3% 3% 5% 5% 8% 12% 15% Telefonica Airtel TIM MTN Other Pro forma global tower count of ~100K towers, with ~1.8 tenants per tower and over $30B of non-cancellable revenues Diversified portfolio of assets across select markets, poised to benefit from carrier network investments Over 50% of pro forma total rental and management revenue from investment grade tenants Committed to Promoting Collocation Model to Enable Deployment of High Speed Broadband (1) Pro forma reflects the impact of the Company s recently completed BRT acquisition in Brazil and the impact of the Company s pending transactions with Verizon in the US, TIM in Brazil and Airtel in Nigeria. (2) AT&T Revenue reflects pro forma adjustment for the acquisition of DirectTV, Iusacell and Nextel Mexico. 7

8 AMT s Strong Track Record of Investments (1)(2) Rental and Management Segment Revenue Adjusted EBITDA AFFO Per Share ROIC $3.9B $ % $2.6B 9.0% $1.4B ~16% CAGR $1.0B ~15% CAGR $1.51 ~16% CAGR +140 BP 2007 LTM Q LTM Q LTM Q Q14A Deployed nearly $19B for capex, acquisitions and cash returns to stockholders since 2007 Added over 47,000 towers since the beginning of 2007 Focused on driving sustainable, profitable growth Maintaining a strong balance sheet remains a top priority (1) 2007 cash tax in AFFO and ROIC calculations has been adjusted to exclude a cash tax refund received in 2007 related to the carry back of certain federal net operating losses. (2) LTM Q314 represents last twelve month results as of 9/30/ Q14 metrics have been annualized for the calculation of ROIC. Annualized calculations may not be indicative of actual annual results. Definitions and reconciliations are provided at the end of this presentation. 8

9 Key Takeaways American Tower continues to pursue its growth strategy in support of its vision to be the premier independent owner, operator and developer of wireless and broadcast communications real estate globally American Tower s 2015 Strategic Investments (1) : Represent tower portfolios which are under-utilized with significant opportunity for future growth Solidify AMT as a leading U.S. and global tower operator Are collectively expected to be modestly accretive to AFFO per Share initially and increasingly accretive over the long term (1) Include Verizon, TIM Brazil and Airtel Nigeria transactions. Definitions are provided at the end of this presentation and reconciliations to GAAP measures can be found at 9

10 Appendix Appendix

11 Recent/Pending Transactions (1) Transaction (Currency) BRT (BRL) TIM (BRL) AIRTEL (USD) VERIZON (USD) Country Brazil Brazil Nigeria U.S. # of Towers ~4,700 ~6,500 ~4,800 ~11,500 Annual Revenue ~240M BRL ~435M BRL ~$255M ~$410M Annual Gross Margin SG&A as % of Revenue ~190M BRL ~191M BRL ~$91M ~$235M <2% <2% ~11% ~5% Estimated Closing Closed in Q414 1H H H 2015 Transaction Price ~2.3B BRL ~3.0B BRL ~$1.1B ~$5.06B (1) All transactions subject to customary post-closing adjustments. Revenue and gross margin reflect year one figures, which refer to first 12 months of operating results post-closing. Definitions are provided at the end of this presentation and reconciliations to GAAP measures can be found at 11

12 Pro Forma US Portfolio Highlights Portfolio Revenue Land Management Tower Count BTA Rental Revenue Profile Remaining Ground Lease Term ~11.5k 40k+ 100% 61% ~29k Legacy AMT Verizon Pro Forma 50% 0% > Top 50 Category 1 15% AT&T 13% 29% Verizon Sprint 19% 24% T-Mobile Other 29% 10% <10 years years 20+ or owned 96% of sites in suburban and rural locations 54% of sites in the top 100 BTAs Average tower height of 204 feet Average tenancy of ~2.2 per site 85% generated from Big 4 54% from investment grade tenants Average remaining term of ~7 years Non-cancellable revenue of ~$18B Average escalator of ~3% Average remaining term on leases is 22 years Only 9% of sites have revenue shares 12

13 AMT Domestic Portfolio Detail (1) Height (feet) % 1% 28% 40% 14% 39% Tower Type 8% 8% 30% 36% 37% 5% 16% 22% 38% 28% 46% 25% 39% 34% (2) AMT Spectrasite GTP Verizon Domestic Proforma (2) AMT Spectrasite GTP Verizon Proforma Monopole Self-Support Guyed Other 33% 11% 17% 39% BTA Ranking 20% 9% 42% 40% 34% 13% 11% 13% 11% 15% 12% 15% 58% 33% 34% 41% Key Takeaways: Average tower height of 204 feet pro-forma for transaction Monopole and self-support towers comprise 72% of pro forma domestic tower portfolio 56% of pro forma sites in Top 100 BTAs (2) AMT Spectrasite GTP Verizon Proforma Top Over 150 (1) As of 9/30/2014. (2) Represents all other AMT towers. 13

14 AMT Domestic Portfolio Financial Detail 6.8 Revenue per Tower per Month ($k) (1)(2) (1) 82% 81% Gross Margin % 78% 57% 77% (3) (2) AMT Spectrasite GTP Verizon Domestic Proforma AMT Spectrasite GTP Verizon Domestic Proforma September 2014 YTD Organic Core Growth 8.5% 10.3% 10.0% Spectrasite GTP AMT Domestic (4) Key Takeaways: Average revenue per tower of ~$5.5k per month with pro-forma gross margin % of ~77% Expect both to increase as VZ portfolio is leased up GTP portfolio has outperformed legacy assets and Spectrasite portfolio continues to generate good growth despite maturity of assets (1) Calculated based on trailing twelve month performance. (2) Excludes straight-line revenue. (3) Represents all other AMT towers. (4) Represents all AMT towers built or acquired on or before 12/31/

15 Definitions Adjusted EBITDA: Net income before Income (loss) on discontinued operations, net; 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. Adjusted Funds From Operations, or AFFO: NAREIT Funds From Operations before (i) straight-line revenue and expense, (ii) stock-based compensation expense, (iii) the non-cash portion of our tax provision, (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 interest, less cash payments related to capital improvements and cash payments related to corporate capital expenditures. AFFO per Share: Adjusted Funds From Operations divided by the diluted weighted average common shares outstanding. Segment Gross Margin: segment revenue less segment operating expenses, excluding stock-based compensation expense recorded in costs of operations; depreciation, amortization and accretion; selling, general, administrative and development expense; and other operating expenses. International rental and management segment includes interest income, TV Azteca, net. 15

16 Definitions Straight-line expenses: We calculate straight-line ground rent expense for our ground leases based on the fixed non-cancellable term of the underlying ground lease plus all periods, if any, for which failure to renew the lease imposes an economic penalty to us such that renewal appears, at the inception of the lease, to be reasonably assured. Certain of our tenant leases require us to exercise available renewal options pursuant to the underlying ground lease, if the tenant exercises its renewal option. For towers with these types of tenant leases at the inception of the ground lease, we calculate our straight-line ground rent over the term of the ground lease, including all renewal options required to fulfill the tenant lease obligation. Straight-line revenues: We calculate straight-line rental revenues from our tenants based on the fixed escalation clauses present in non-cancellable lease agreements, excluding those tied to the Consumer Price Index or other inflation-based indices, and other incentives present in lease agreements with our tenants. We recognized revenues on a straight-line basis over the fixed, non-cancellable terms of the applicable leases. 16

17 Reconciliations (In millions. Totals may not add due to rounding.) RENTAL AND MANAGEMENT SEGMENT REVENUE Q13 1Q14 2Q14 3Q14 LTM Q314 Rental and Management Segment Revenue $1,426.0 $923.9 $960.1 $1,005.8 $1,011.1 $3,900.9 RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA Q13 1Q14 2Q14 3Q14 LTM Q314 Net income $56.6 $73.9 $193.3 $221.7 $206.6 $695.5 Income from equity method investments (0.0) Income tax provision Other expense (20.7) Loss (gain) on retirement of long-term obligations (3.0) (0.7) Interest expense Interest income (10.8) (4.2) (2.0) (2.3) (3.9) (12.4) Other operating expenses Depreciation, amortization and accretion Stock-based compensation expense ADJUSTED EBITDA $979.3 $600.1 $640.5 $682.2 $666.0 $2,

18 Reconciliations (In millions except percentages and per share amounts. Totals may not add due to rounding.) AFFO RECONCILIATION Q13 1Q14 2Q14 3Q14 LTM Q314 Adjusted EBITDA $979.3 $600.1 $640.5 $682.2 $666.0 $2,588.8 Straight-line revenue (69.7) (41.7) (31.2) (33.1) (31.9) (138.0) Straight-line expense Cash interest (227.5) (138.5) (139.9) (143.1) (144.7) (566.1) Interest Income Cash paid for income taxes (35.3) (28.5) (19.1) (16.7) (16.6) (80.9) Dividends Declared on preferred stock (4.4) (7.7) (12.1) Capital Improvement Capex (29.2) (20.2) (17.2) (17.2) (15.8) (70.5) Corporate Capex (12.7) (5.8) (5.2) (3.9) (5.7) (20.6) AFFO $642.4 $378.2 $439.3 $473.9 $459.8 $1,751.2 Divided by weighted average diluted shares outstanding AFFO Per Share $1.51 $0.95 $1.10 $1.19 $1.15 $4.38 RETURN ON INVESTED CAPITAL (ROIC) RECONCILIATION 3Q14A Annualized Adjusted EBITDA $2,664.0 Annualized Cash Taxes (66.4) Annualized Improvement and corporate capital expenditures (86.0) Numerator $2,511.6 Historical Gross Property and Equipment 11,556.7 Historical Goodwill 4,014.3 Historical Gross Intangibles 8,654.5 Denominator $24,225.5 Return on Invested Capital 10.4% 18