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American Tower does not expect consolidation in Europe to materially affect its anchor tenants and said it has limited exposure to churn from some of the carriers that could potentially be involved in consolidation
In sum – what to know:
Telefónica anchors portfolio – American Tower says its European position benefits from its partnership with one of the region’s strongest carriers.
Consolidation creates opportunity – The company says weaker carriers that consolidate into stronger operators may increase network investment, creating additional sales opportunities.
Selective expansion continues – American Tower remains interested in additional European markets but says it will only expand where it finds the right terms and conditions.
American Tower Corporation sees European carrier consolidation as a potential opportunity for its tower business, rather than a significant threat to its existing portfolio.
Speaking at the recent Goldman Sachs Communacopia + Technology Conference, Steven Vondran, president and chief executive officer of American Tower, said the company was deliberate about entering Europe and ultimately established its position through a partnership with Telefónica. That relationship, he said, gives American Tower confidence in the resilience of its European portfolio.
“We were very patient before we decided to enter Europe. We sat on the sidelines because a lot of the deals that we saw didn’t have the right terms and conditions or didn’t have the right counterparties and things like that. And so when we did enter, it was with Telefonica as a partner,” the executive said.
Vondran said American Tower does not expect consolidation to materially affect its anchor tenants and has limited exposure to churn from some of the carriers that could potentially be involved in consolidation.
Instead, he sees consolidation as an opportunity in some cases because weaker carriers that have not been investing as heavily in their networks can become part of stronger operators with greater capacity or willingness to invest.
“On the contrary, it’s an opportunity for us. And when you look at some of the consolidation that’s happened, you got weaker carriers who are not investing in their networks as much. They’ve consolidated to a stronger carrier and they are investing now. And so we’re actually seeing the opportunity to increase our sales into these new carriers,” the executive said.
Vondran also cautioned against treating Europe as a single market. American Tower evaluates individual countries separately and currently feels particularly positive about the three countries where it has a presence, he said.
“So Europe in general, we tend to generalize it as a continent. It’s really, each individual country has its own investment case. And so when we think about Europe as a business, we feel very good about the three countries that we’re in. There are other countries that would be attractive If we found the right terms and conditions in the portfolios, but we really haven’t found that opportunity yet,” he said. In Europe, American Tower has presence in Spain, Germany and France.
The company is also expanding its European tower footprint through new builds. Vondran said American Tower has an agreement with Telefónica that underpins much of this activity and that the new sites provide a good yield from the anchor tenant while expanding the company’s footprint.
The company’s broader international strategy is also becoming more selective. Vondran said American Tower has been reducing its exposure to emerging markets because of the greater volatility associated with those markets, rather than because it does not believe they offer growth. The objective, he said, is to generate the best risk-adjusted returns with the strongest growth prospects.
