American Tower Corporation — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing, not a standalone fourth-quarter results report. Amounts are in U.S. dollars unless noted.
Business context
American Tower is a global REIT focused on leasing space on communications sites, with additional U.S. tower-related services and a newly expanded U.S. data center business. Property operations generated 97% of 2021 revenue. At year-end, the company owned or operated 220,131 communications sites and operated 27 data centers across 10 U.S. markets.
Financial performance and liquidity
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Total revenue | $9.357 billion | $8.042 billion | +16% |
| Operating income | $3.132 billion | $2.888 billion | +8% |
| Net income | $2.568 billion | $1.692 billion | +52% |
| Diluted GAAP earnings per share | $5.66 | $3.79 | +49% |
| Adjusted EBITDA | $5.983 billion | $5.156 billion | +16% |
| AFFO attributable to common stockholders | $4.277 billion | $3.764 billion | +14% |
| Cash provided by operating activities | $4.820 billion | $3.881 billion | +24% |
GAAP operating margin was approximately 33.5%, down from 35.9% in 2020, as operating costs, depreciation and acquisition-related expenses rose. Combined segment gross margin, a management measure, increased 15% to $6.675 billion. Net income growth also benefited from $557.9 million of foreign-currency gains, compared with $216.4 million of losses in 2020; it therefore outpaced operating-income growth. Adjusted EBITDA, FFO and AFFO are non-GAAP measures and are not substitutes for GAAP results or operating cash flow.
Cash used in investing activities was $20.692 billion, including $19.304 billion for acquisitions. Capital expenditures were $1.408 billion. Financing activities provided $16.425 billion. Year-end cash and cash equivalents were $1.950 billion; reported available liquidity was $6.147 billion, including undrawn credit capacity.
Total outstanding indebtedness was $43.5 billion, including $4.6 billion current. Contractual debt principal maturities totaled $4.57 billion in 2022 and $4.51 billion in 2023. Operating lease obligations were $12.05 billion undiscounted. The company reported compliance with its debt covenants at year-end. It paid $5.03 per share in common-stock distributions during 2021.
Material changes versus 2020
- Revenue growth reflected acquisitions and organic leasing activity. Telxius added approximately 31,000 communications sites in Europe and Latin America; acquired Telxius assets generated approximately $388.7 million of 2021 revenue.
- The December 2021 CoreSite acquisition added a data center segment and 27 facilities in total across the company’s portfolio. CoreSite was acquired for approximately $10.4 billion; its limited inclusion in 2021 results means the year’s reported data center revenue does not represent a full year of operations.
- Europe revenue increased 232%, primarily reflecting Telxius. U.S. & Canada revenue rose 9%, and Latin America rose 17%. Asia-Pacific revenue increased 5%, but segment gross margin declined 1%, largely due to higher pass-through expenses and India churn.
- Churn was approximately 4% of tenant billings, above the company’s historical 1%–2% range. India carrier consolidation and contractual T-Mobile/Sprint-related lease cancellations and non-renewals were key factors.
- Debt increased substantially to fund acquisitions. The company issued $2.4 billion of common stock and brought in approximately $3.1 billion from CDPQ and Allianz for noncontrolling interests in ATC Europe.
Outlook, risks and unusual items
- Management expects 2022 operating cash generation and available credit capacity to fund required distributions, capital expenditures, debt service and signed acquisitions. Planned 2022 capital expenditures are $2.0–$2.1 billion; expected 2022 common-stock distributions are $2.8 billion.
- The company expects continuing demand from mobile data growth, network densification and 4G/5G deployment, while emphasizing occupancy growth, selective investment, operating efficiency and balance-sheet discipline. These are expectations, not guarantees.
- Key risks include customer concentration—T-Mobile, AT&T and Verizon represented 52% of 2021 revenue—customer consolidation or financial weakness, India tenant payment and regulatory uncertainty, foreign-exchange exposure, leverage and refinancing needs, inflation and interest rates, and integration and execution risks from Telxius and CoreSite.
- Other exposures include zoning and permitting limits, changes in laws and REIT qualification, cybersecurity or data-center outages, natural disasters and climate-related costs, and the ability to renew land and data-center leases. Estimated undiscounted asset-retirement cash outlays were $4.2 billion.
- Unusual year-over-year items included $202.3 million of other operating expenses, primarily acquisition and integration related; $173.7 million of impairment charges; and a $38.2 million loss on debt retirement. No pending legal matter was identified by management as likely to materially affect consolidated financial position, results or liquidity.
Most important facts for investors to verify
- Whether organic tenant billings and colocation growth can offset elevated churn, particularly in India and under the T-Mobile agreement.
- CoreSite’s full-year contribution, customer retention, utilization and integration costs, and the return earned on the $10.4 billion acquisition.
- Debt levels, near-term maturities, variable-rate exposure, refinancing terms and covenant headroom after the acquisitions.
- The sustainability of AFFO growth and distributions relative to operating cash flow, capital needs and the REIT distribution requirement.
- Foreign-currency sensitivity: 44% of revenue was denominated in foreign currencies, and the filing estimates a 10% adverse move in outstanding euro-denominated debt could produce approximately $0.9 billion of foreign-currency losses.
- Acquisition accounting and controls: the auditor issued an unqualified opinion, but Telxius and CoreSite were excluded from management’s 2021 internal-control assessment while integration was underway.