American Tower Shares Rise on Lease Agreement With T-Mobile
Shares of American Tower Corporation AMT rose 3.9% on Sep 15, indicating investor optimism on the new master lease agreement that it inked with its tenant T-Mobile U.S. Inc. TMUS. The lease provides revenue-growth visibility for American Tower. Hence, the company has updated its 2020 outlook.
The lease enables T-Mobile to access American Tower’s U.S. sites, facilitating fast and efficient deployment of broad 5G service across the nation. With this, the tenant can serve the wireless needs of the United States over the long term, while at the same time increasing 5G coverage and enhancing speed across the country.
Notably, American Tower’s extensive portfolio of communication sites and macro tower, consisting of 41,000 properties in the United States, have liked enabled it to lock this deal. Further, the agreement strengthens the partnership and will drive significant value for both companies over the long term.
In fact, per its 8-K filing, with an average non-cancellable term of nearly 15 years on leases, American Tower secured around $17 billion in expected additional contractually-committed revenues over the said term. Moreover, the lease is expected to increase 2020 straight-line revenues by $95 million.
The company has therefore updated outlook for the current year. Accordingly, it expects total property revenues of $7,750-$7,880 million, as compared with $7,655-$7,785 million mentioned earlier.
Net income is estimated to be $1,845-$1,925 million, up from the previously stated $1750-$1830 million. Moreover, adjusted EBITDA is expected to lie between $4,985 million and $5,065 million, higher than $4,890-$4,970 million stated earlier.
Per T-Mobile management, “wireless mobility has never been more critical for consumers and businesses alike, and as technology continues to advance into 5G and beyond, that will only increase”. Hence, the agreement is a strategic fit for both companies.
In a bid to navigating the challenges posed by the coronavirus outbreak, many companies embraced remote-working environment. This has driven a spike in cellular network usage and network-intensive applications for video conferencing and cloud services. Also, 5G network’s low latency and high speed is the need of the hour, driving the need for the faster buildout of 5G wireless networks and additional network investments.
Tower REITs like American Tower, Crown Castle International Corp. CCI and SBA Communications Corporation SBAC play a vital role in providing the critical infrastructures needed for a seamless connection. Hence, cell-tower REITs are likely to enjoy strong demand and leasing activity in 2020.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
American Tower Corporation REIT (AMT) : Free Stock Analysis Report
Crown Castle International Corporation (CCI) : Free Stock Analysis Report
SBA Communications Corporation (SBAC) : Free Stock Analysis Report
TMobile US, Inc. (TMUS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
