American Tower Falls Short of Expectations Due to Rental Decline in Q3 Revenues
American Tower Corporation, a real estate investment trust and wireless infrastructure provider, reported lower-than-expected revenue for the third quarter. This was primarily due to a decline in leasing activities. The company, which leases space in communication areas to organizations such as wireless service providers and broadcasters, indicated that reduced spending by telecommunications companies amid economic uncertainties is the reason for the drop in leasing activities.
The decreased demand for tower space led American Tower to reassess its annual adjusted funds from operations (AFFO) revenue forecast. The company now anticipates the AFFO to be between $9.86 and $10.03 per share, which is lower than analysts' projections of $10.59 per share according to LSEG data.
The revised AFFO estimate does not include the financial impact of the sale of ATC Europe to Brookfield Asset Management, which was not part of the previous forecast. This sale is a significant transaction that affects the company's financial outlook.
In the third quarter, revenue from the real estate segment, which includes site leasing, fell by 1% to $2.47 billion. Overall, American Tower's total revenue was $2.52 billion, below LSEG's estimate of $2.76 billion.
Major customers such as AT&T, Verizon, and T-Mobile, which significantly contribute to the real estate segment revenue in the U.S. and Canada, were impacted by the decline in leasing. In response to these challenges, American Tower also revised its total real estate revenue forecast for 2024, now expecting it to be between $9.89 billion and $9.98 billion. This represents a decrease from the previous range of $11.1 billion to $11.28 billion.
For the third quarter, American Tower reported an AFFO of $2.52 per share, which was slightly below the estimated $2.58 per share. The company's performance reflects a cautious spending trend among telecommunications companies in an uncertain economic environment.