Executive Summary / Key Takeaways

• American Tower Corporation ($AMT) delivered a strong third quarter in 2025, marked by double-digit growth in attributable Adjusted Funds From Operations (AFFO) per share, driven by robust leasing activity across its global tower and data center portfolios.
• The company's strategic focus on developed markets, operational efficiency, and a strengthened balance sheet, evidenced by net leverage of 4.9x (the lowest among its tower peers), underpins its compelling investment thesis.
• CoreSite, AMT's data center segment, is experiencing exceptional demand from hybrid cloud and early-stage AI workloads, consistently exceeding underwriting assumptions and driving mid-teens or higher stabilized yields.
• Ongoing 5G network densification in developed markets and 4G/5G rollouts in emerging markets, coupled with the long-term secular trend of surging mobile data consumption, provide a durable growth runway for AMT's extensive communications infrastructure.
• Despite macroeconomic uncertainties and customer disputes, AMT's disciplined capital allocation, including significant investment in high-return projects and opportunistic share repurchases, positions it for sustained long-term shareholder value creation.

A Foundation of Connectivity: American Tower's Strategic Core

American Tower Corporation stands as a global leader in communications real estate, operating as one of the largest REITs with a vast portfolio of nearly 150,000 communications sites and a highly interconnected footprint of U.S. data center facilities. The company's core business revolves around leasing space on its multi-tenant communications sites to a diverse customer base, including wireless service providers, broadcasters, wireless data providers, and government entities. This foundational model is inherently durable, underpinned by the relentless growth in mobile data consumption, which in the U.S. alone, increased approximately 35% year-over-year in 2024 for the third consecutive year. Experts anticipate this rapid growth will necessitate a doubling of overall network capacity over the next five years, driving significant demand for AMT's infrastructure.

The company's strategic evolution, guided by CEO Steve Vondran, emphasizes maximizing organic growth, expanding margins, disciplined capital allocation, and fortifying its balance sheet. This strategy has been shaped by over two decades of operational history, including foundational agreements like the AT&T Transaction (2000-2004) and the Verizon (VZ) Transaction (2015), which significantly expanded its tower footprint. More recently, the pivotal acquisition of CoreSite at the end of 2021 marked a strategic entry into the data center business, driven by a conviction in the future of edge compute and CoreSite's "right to win" in that space due to its highly interconnected ecosystem.

Technological Edge: Fueling the Digital Future

American Tower's competitive advantage is deeply rooted in its technological differentiation and operational innovation across both its tower and data center segments. In its core tower business, the company leverages advanced tools and processes to enhance efficiency and customer service. Innovations such as its "instant colocation engine," deployment of drones, and digital twin technology streamline site management and accelerate tenant deployments. These technologies contribute to faster time-to-market for carriers, improving customer satisfaction and strengthening AMT's position as a preferred partner. The company also employs sophisticated data analytics and predictive monitoring, leveraging AI, particularly in its best-in-class African power program, to optimize sustainable energy investments and drive cost efficiencies.

The CoreSite data center business represents a critical technological differentiator, especially in the context of emerging AI workloads. CoreSite's facilities are purpose-built to support AI and other high-density deployments, featuring capabilities like liquid cooling. These facilities offer a rich ecosystem of network and cloud interconnection, which is becoming increasingly vital for AI workloads that require co-location with hybrid installations. CoreSite's recognition as a Representative Vendor in the 2025 Gartner® Market Guide for Data Center Colocation underscores its technological leadership and strategic importance in the evolving digital infrastructure landscape. The company's deployment of Nokia (NOK) IP routing portfolio across its data centers further enhances its ability to support data-intensive, mission-critical applications with massive scale, reliability, and power/cooling efficiency for low-latency service delivery. These technological capabilities translate directly into a competitive moat, allowing CoreSite to command strong pricing power and achieve mid-teens or higher stabilized yields, significantly contributing to AMT's financial performance and long-term growth strategy.

Competitive Landscape and Strategic Positioning

American Tower operates in a competitive yet fundamentally attractive industry, primarily contending with other communications infrastructure REITs like Crown Castle International Corp. (CCI) and SBA Communications Corp. (SBAC), and fiber-focused players such as Uniti Group Inc. (UNIT). AMT's extensive global network, comprising over 131,000 owned and 17,000 operated towers as of September 30, 2025, provides a significant scale advantage and geographic diversification that often surpasses its U.S.-centric peers. This global reach allows AMT to capitalize on varying stages of network development worldwide, from 5G densification in developed markets to 4G and early 5G rollouts in emerging economies.

AMT's balance sheet strength, with net leverage at 4.9x as of Q3 2025, is the lowest among its tower peers, providing a superior cost of capital and enhanced financial flexibility. This allows for disciplined capital allocation and opportunistic investments, differentiating it from competitors who may face higher debt burdens or more concentrated geographic risks. While direct quantitative comparisons of all competitor financial metrics are challenging to ascertain, AMT's consistent Adjusted EBITDA margin expansion of approximately 300 basis points since 2020 demonstrates its operational efficiency and ability to convert revenue growth into strong profitability. The company's focus on long-term lease structures and strong customer relationships further enhances revenue stability and predictability, providing a competitive edge in customer retention.

Financial Performance and Operational Momentum

American Tower's financial performance in the third quarter of 2025 showcased robust growth and operational efficiency. Consolidated property revenue increased by nearly 6% year-over-year to $2,616.30 million. This was complemented by a near-record services revenue of $101.10 million, representing a substantial 93% year-over-year increase, indicative of strong carrier activity. The Data Centers segment was a standout, with revenue growing over 14% to $266.60 million, driven by record retail new leasing and consistent pricing growth.

For the nine months ended September 30, 2025, total operating revenues reached $7,907.10 million, up from $7,579.60 million in the prior-year period. Operating income for the same period was $3,685.10 million, compared to $3,436.40 million in 2024.

Adjusted EBITDA for Q3 2025 grew nearly 8% year-over-year, reaching approximately $1,815.50 million, supported by strong revenue growth and 20 basis points of cash margin expansion. Attributable AFFO per share, as adjusted, saw approximately 10% year-over-year growth in Q3 2025, reflecting robust EBITDA growth and disciplined management of below-the-line costs. The company's gross profit margin (TTM) stands at 18.11%, with an impressive EBITDA margin (TTM) of 59.90%, underscoring its highly efficient operating model.

Liquidity remains strong, with $10,654.60 million available as of September 30, 2025, including $1,950.70 million in cash and cash equivalents. Cash provided by operating activities for the nine months ended September 30, 2025, was $4,036.50 million. This robust cash flow generation, combined with a disciplined capital allocation strategy, enables the company to fund its operations, investments, and dividend distributions.

Strategic Initiatives and Future Outlook

American Tower's strategic initiatives are designed to capitalize on long-term industry tailwinds. The company is prioritizing capital deployment to developed markets, with approximately 80% of its discretionary capital expenditures directed towards these segments, including significant investment in data center development and U.S. land buyouts. For 2025, the capital plan includes $1.7 billion in total capital expenditures, with $1.5 billion allocated to discretionary projects, such as the construction of approximately 2,150 new towers and $600 million for data center expansion. CoreSite currently has 296 megawatts of power available for future development and 42 megawatts under construction, providing a substantial runway for growth.

The company's 2025 guidance reflects continued optimism. At the midpoint of its revised guidance, AMT expects attributable AFFO per share, as adjusted, to grow by approximately 7% year-over-year. Excluding FX headwinds and financing costs, this implies a growth of approximately 9%, highlighting the fundamental strength of its core operating model. Property revenue is projected to grow approximately 3% year-over-year (or 5% excluding noncash straight-line revenue and FX impacts), with Adjusted EBITDA growth of approximately 4% (or 7% excluding noncash net straight-line and FX impacts). Organic tenant billings growth is reiterated at approximately 5%, and data center growth at approximately 13% year-over-year. The company also expects to distribute approximately $3.2 billion as a common dividend in 2025.

Risks and Challenges

Despite a strong outlook, American Tower faces several pertinent risks. The AT&T Mexico dispute, where AT&T (T) Mexico is challenging lease calculations and withheld tower rents, resulted in approximately $19 million of reserves through Q3 2025, with an expected $30 million for the full year. While an interim agreement has been reached for payment of the majority of withheld rents, the arbitration is scheduled for August 2026, and future reserves are anticipated until settlement. Similarly, a dispute with DISH Wireless L.L.C. (DISH) regarding contractual obligations under their Strategic Collocation Agreement, representing about 2% of total property revenue, is ongoing, with AMT filing a declaratory judgment action to affirm the contract's enforceability through 2036.

Foreign currency risk remains a factor, particularly given AMT's extensive international operations. An adverse 10% change in underlying exchange rates could result in significant unrealized losses on intercompany debt and outstanding EUR debt not designated as a net investment hedge. Churn, primarily from the U.S. Canada property segment due to T-Mobile's (TMUS) (including legacy Sprint) contractual lease cancellations, was approximately 2% of tenant billings for the nine months ended September 30, 2025, and is expected to remain elevated through 2025. However, Q3 2025 marked the final quarter of Sprint churn, with U.S. churn expected to drop to approximately 100 basis points in Q4. Latin America is projected to experience low single-digit growth through 2027 due to ongoing carrier consolidation-driven churn, with an anticipated inflection point in 2028.

Conclusion

American Tower Corporation is a compelling investment proposition, firmly positioned at the nexus of surging mobile data demand, 5G network evolution, and the burgeoning AI-driven data center market. The company's robust Q3 2025 performance, highlighted by double-digit AFFO per share growth and strong segment contributions, underscores the fundamental durability of its business model. With a strategic emphasis on high-growth developed markets, a technologically differentiated CoreSite platform, and a strengthened balance sheet, AMT is actively shaping its future.

While macroeconomic uncertainties and customer disputes present challenges, AMT's disciplined capital allocation, proactive risk management, and relentless pursuit of operational efficiencies are designed to mitigate these headwinds. The company's leadership in critical digital infrastructure, combined with its commitment to long-term shareholder value creation, positions American Tower to continue its ascendancy, delivering sustained growth and attractive returns as the world's demand for connectivity intensifies.