American Tower Corporation: An Overview November 2012
Forward-Looking Statements Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements concerning our goals, beliefs, strategies, future operating results and underlying assumptions. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those described in Item 1A of our Form 10-Q for the nine months ended September 30, 2012 under the caption Risk Factors and other filings we make with the SEC. We undertake no obligation to update the information contained in this presentation to reflect subsequently occurring events or circumstances. Definitions are provided at the end of the presentation and reconciliations to GAAP measures are available on our website at www.americantower.com. 2
Investment Highlights Solid Business Model Fundamentals Long-term revenue e stream Manageable ageab e costs s Strong customer base Secure e real estate e assets s Long-Term Demand Drivers Affordability of leasing model Solid market fundamentals Global diversification Consistent Financial Performance Strong top-line growth Consistent cash flow based returns Conservative balance sheet 3
Solid Business Model Fundamentals 4
Company Overview American Tower is a leading independent owner of telecommunications real estate and approximately 98% of its income is generated from leasing its properties. We provide the real estate necessary for today s wireless communications networks Operated by American Tower AMT TEN TEN Tower structure constructed of galvanized steel with the capacity for multiple tenants Land parcel owned or operated pursuant to long-term leases AMT TEN TEN Operated by Tenant TEN Antenna equipment, including microwave equipment Tenant shelters ete s containing base-station stat equipment e and HVAC, which tenants own, operate and maintain Coaxial cable AMT 5
American Tower s Presence (1) We have over 50,000 properties across ten markets: United States, Brazil, Chile, Colombia, Ghana, India, Mexico, Peru, South Africa and Uganda U.S. 21,668 Mexico 5,562 India 10,116 Peru 475 Colombia 2,847 Brazil 4,311 Ghana 1,908 Uganda 1,031 Chile 1,180 South Africa 1,601 (1) Tower counts are as of September 30, 2012 and exclude in-building and outdoor distributed antenna system networks. 6
Revenue Growth: Tower Leasing Adding additional tenants, equipment and upgrades yields additional revenue, while costs remain relatively l flat 7
Sample Tower Economics (1) One Tenant Two Tenants Three Tenants Construction/Upgrade ti Costs ($ in US) $225,000 - - Tenant Revenue $20,000 $40,000 $60,000 Operating Expenses (incl. ground rent, prop taxes, etc.) $12,000 $13,000 $14,000 Gross Margin $8,000 $27,000 $46,000 Gross Margin (%) 40% 68% 77% Gross Margin Conversion Rate (2) - 95% 95% Return on Investment (3) 4% 12% 20% (1) For illustrative purposes only. Does not reflect actual financial data of American Tower. (2) Calculated as the incremental gross margin divided by the incremental revenue generated by adding an additional tenant. (3) Calculated as Gross Margin divided by Construction/Upgrade Costs. 8
Recurring Long-Term Revenue Stream Tenant Lease Characteristics: Typical lease structures include an initial term of 5 to 10 years with multiple 5-year renewal periods thereafter Contracts have annual embedded escalators: In the U.S., escalators are typically fixed at approximately 3.5% on average In our international markets, escalators are typically based on local inflation indices Pricing is based on key factors such as: Location Amount of equipment placed on the tower Square footage leased on the ground Leases are typically non-cancellable: Approximately $19 billion of non-cancellable, contracted revenue over future periods, as of September 30, 2012 Historically i low annual revenue churn of approximately 1-2% Tenant lease renewal schedule as of September 30, 2012: 81.5% 2.3% 5.5% 2.8% 3.0% 5.0% 2012 2013 2014 2015 2016 2017+ 9
Fixed Cost Profile Direct Costs of Operations Include: Ground rent Monitoring Insurance Real estate taxes Utilities Site maintenance Pass-Through Expense: Our international markets typically pass through a portion of their operating expenses to the tenant In Latin America, we typically pass through ground rent, while in India and EMEA, we typically pass through fuel costs Fixed Cost Structure of Towers: Accommodating additional tenants requires minimal additional operating costs 10
Capital Requirements Revenue-Maintaining Capital Expenditures Capital Improvements Includes spending on lighting system and fence repair and ground upkeep. Historically low levels of approximately $500 and $1,500 per site per year in our international and U.S. markets, respectively. Corporate Capital spending primarily on IT infrastructure. Revenue-Generating Capital Expenditures Redevelopment Capital spending to increase capacity of towers (e.g. height extension, foundation strengthening, etc.). Investment payback period is typically one to two years, and the cost is typically shared with the tenant. Ground Lease Purchases Capital spending to purchase land under our sites. Discretionary Capital Projects Capital spending primarily for the construction of new communications sites. Historical Capital Expenditures ($ in millions) $160 $151 3Q11 4Q11 1Q12 2Q12 3Q12 Revenue-Maintaining Capex Revenue-Generating Capex 11
Diverse Global Tenant Base (1) I t ti lc t Mi (2) Tower Revenue Distribution International Customer Mix (2) Brazil International 31% AT&T 18% Sprint-Nextel 15% Other Domestic (2) Verizon 18% T-Mobile 11% 7% Chile Colombia Ghana India Mexico Peru South Africa Uganda % of Tower Revenue (1) 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Approximately 80% of our revenues are generated from our top 15 tenants; over 50% of our revenues are generated from investment grade tenants. (3) AT&T Sprint Verizon T-Mobile Telefonica MTN Nextel Int'l Clearwire Iusa Metro PCS Vodafone Leap Cell C America OI Movil Investment Grade Non- Investment Grade (1) Data as of the quarter ended September 30, 2012. (2) Other domestic includes additional voice/data providers, broadcast companies, etc. (3) Represents top 10 international customers as of September 30, 2012. 12
Commitment to a Secure Real Estate Portfolio Land Characteristics: We currently own or operate under a capital lease approximately 29% of the land under our U.S. towers Annual escalators: approximately 3% in the US, and typically based on local inflation rates internationally Other US land characteristics (1) : The average remaining ground lease term is approximately 22 years Our landlord base is highly fragmented Approximately 90% of our ground leases are held by landlords who own one single site Average term extensions are over 20 years U.S. ground lease renewal schedule as of September 30, 2012: 0.3% 0.4% 0.5% 0.5% 0.7% 0.7% 0.6% 1.8% 1.5% 1.7% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (1) As of the quarter ended September 30, 2012. 13
Long-Term Demand Drivers 14
Carrier Lease-Build Decision (1) Significant economic incentive exists for carriers to choose a collocation model over building their own site Significant time to market advantage from leasing space on an existing tower site Building a site may involve years of work to secure ground interests and zoning approvals An Example PRESENT VALUE OF CARRIER NETWORK BUILD-OUT ALTERNATIVES Term Carrier Build Tower Lease Savings 5 years $286,638 $89,575 $197,062 10 years $333,079 $158,720 $174,359 15 years $368,070 $212,094 $155,976 20 years $394,433 $253,293 $144,140 CARRIER BUILD SCENARIO $225,000 construction cost, $1,250 monthly operating expenses with 3% annual escalator, 9% Weighted Average Cost of Capital (WACC) TOWER LEASE SCENARIO $1,800 monthly lease with 3.5% annual escalator, 9% WACC (1) For illustrative purposes only. Does not reflect actual financial data of American Tower. 15
Demand Driver Highlights Primary Revenue Impact New Lease Revenue Amendment Revenue (Increase to existing leases) New entrants Spectrum auctions Data network deployments Growing wireless penetration (Voice network deployments) 16
Global Demand Drivers Spectrum Auctions Carriers typically obtain spectrum via government-held spectrum auctions In order to deploy this spectrum carriers must invest in their wireless tower network, which results in the addition of network equipment to their existing tower sites as well as the addition of new tower sites Subscriber Growth Growing demand for wireless services stimulates additional network investment from carriers In order to meet this growing subscriber demand, carriers must deploy additional network equipment on their existing tower sites as well as new tower sites Increased Data Adoption Wireless data adoption continues to expand rapidly as a result of new handsets and wireless applications which encourage entertainment services These types of services are highly bandwidth-intensive and place significant burden on carriers networks In order to meet these growing demands while delivering quality service to their subscribers, carriers must continue to deploy additional network equipment to their existing tower sites as well as new tower sites 17
U.S. Growth Market Opportunities U.S. Smartphone and Connected Devices 1 Projections (Units, Millions) 2011 Data Usage by Device: U.S. (MB per Month) 2,131 220 496X 157 149 120 133 90 107 60 107 68 25 42 2010 2011 2012 2013 2014 2015 # of Smartphones # Connected Devices 4.3 35X 120X 150 517 Feature Phones Smartphones Tablets Laptops/netbooks Connected Devices (1) (1) Connected Devices include both wholesale consumer electronics devices with embedded cellular radios such as laptops, tablets, USB modems, e-readers, portable gaming devices, digital picture frames, portable navigation devices, MP3 players and digital cameras, as well as commercial devices with built in cellular radios such as manufacturing equipment sensors, shipment monitoring devices, utility monitoring equipment, etc. Source: Altman Vilandrie & Company analysis, Cisco VNI Mobile 2012, SNL Kagan. 18
Consistent Financial Performance 19
Long-Term Strategy American Tower remains focused on driving return on invested capital 20
Consistent Growth in Revenue and Profitability ($ in millions) $266 $237 $3 346 $524 $464 $698 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Rental and Management Revenue Rental and Management Gross Margin Adjusted EBITDA Solid operational execution has led to robust performance in key business metrics (1) CAGR is calculated over a period of 5.75 years. Definitions are provided at the end of this presentation and reconciliations to GAAP measures can be found at www.americantower.com. 21
Cash Flow Based Returns Adjusted Funds From Operations ($ in millions) Return on Invested Capital $1,196 9.0% 10.7% $642 (1) (2) (1) (2) 2007 2008 2009 2010 2011 2012E 2007 2008 2009 2010 2011 2012E Strong operational results and disciplined investments continue to drive AFFO and ROIC growth (1) 2007 cash tax in AFFO and ROIC calculations has been adjusted to exclude a cash tax refund received in 2007 related to the carry back of certain federal net operating losses. (2) Reflects Midpoint of 2012 Outlook. Definitions are provided at the end of this presentation and reconciliations to GAAP measures can be found at www.americantower.com. 22
Solid Balance Sheet Position Net Leverage Ratio (1) Highlights 3.8x 3.4x 35 3.5x 4.0x 3.8x Continue to manage capital structure within target leverage range Liquidity of ~$2.4 billion as of September 30, 2012 Expect to opportunistically access capital markets to extend maturities and increase liquidity 2008 2009 2010 2011 Q3 2012 Maturity Schedule September 30, 2012 (2) ($ in millions) $750 $1,000 $1,750 $129 $1,000 $67 $1,000 $600 $500 $700 $300 $500 $700 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Senior Notes US Secured Debt(3) Revolving Credit Facility Available Term Loan (1) 2011 reflects Q4 2011 annualized while Q3 2012 reflects Q3 2012 annualized. (2) Excludes approximately $489.4 million of subsidiary debt and other debt, primarily comprised of capital leases. (3) Anticipated repayment dates. Definitions are provided at the end of this presentation and reconciliations to GAAP measures can be found at www.americantower.com. 23
Definitions Adjusted EBITDA: net income before: income (loss) from discontinued operations, net; income from equity method investments; income tax provision (benefit); other income (expense); loss on retirement of long-term obligations; interest expense; interest income; other operating expenses; depreciation, amortization and accretion; and stock-based compensation expense. Adjusted Funds From Operations: Funds From Operations before straight-line (revenue) expense, stock-based compensation expense, non-cash portion of tax provision, i non-real estate related depreciation, i amortization i and accretion, amortization i of deferred financing costs, debt discounts and capitalized interest, other (income) expense, loss on retirement of long-term obligations, other operating (income) expense, less cash payments related to capital improvement capital expenditures and cash payments related to corporate capital expenditures. Churn: revenue lost when a tenant cancels or does not renew its lease, and in very limited circumstances, such as a tenant bankruptcy, reductions in lease rates on existing leases. Funds From Operations: Net income before real estate related depreciation, amortization and accretion. Gross Margin: segment revenue less segment operating costs, excluding stock-based compensation expense. International rental and management segment includes interest income, TV Azteca, net. Gross Margin Conversion Rate: the percentage that results from dividing the change in gross margin by the change in revenue. Net Leverage Ratio: net debt, defined as total debt less cash and cash equivalents, divided by last quarter annualized Adjusted EBITDA. Return on Invested Capital: Adjusted EBITDA less improvement and corporate capital expenditures and cash taxes, divided by gross property, plant and equipment, goodwill and intangible assets. Straight-Line Revenue: we calculate straight-line rental revenues from our tenants based on the fixed escalation clauses present in non-cancellable lease agreements, excluding those tied to the Consumer Price Index or other inflation-based indices, and other incentives present in lease agreements with our tenants. t We recognized revenues on a straight-line basis over the fixed, non-cancellable terms of the applicable leases. 24
Further Information Available For more information on the tower industry and American Tower, please refer to our Introduction to the Tower Industry and American Tower presentation, which can be found in the Investor Relations section of our website under Presentations and Webcasts. This presentation provides an overview of the tower business model and information on American Tower s operating performance and financial strategy. 25