American Tower (AMT)

Business Overview

American Tower is the global benchmark in tower REITs: almost entirely contractual rent on passive infrastructure, with most of the portfolio outside North America. At 31 December 2025 the company owned 149,686 communications sites; 107,462 (71.8%) sat outside the U.S. and Canada. FY2025 property revenue was $10,305 million. Not all of it is towers: the 30 U.S. data centres bought as CoreSite in 2021 earned $1,053 million, about a tenth of property revenue and the fastest-growing part of it.

Carriers rent space on a tower under a tenant lease, typically five to ten years with renewal options. The tower itself usually stands on ground the REIT rents from somebody else, and that ground lease is a cost rather than a revenue line. Rent rises through escalators written into the tenant lease and through amendments when a carrier adds equipment, neither of which requires finding a new occupier. That is why tower REITs are read on organic tenant billings growth and on AFFO rather than on occupancy: the tower stays put, and the revenue compounds on the lease stack already attached to it.

In FY2025 the U.S. and Canada segment grew organic tenant billings 4.2%. The international segments printed 3.0% (Latin America), 5.1% (Europe) and 12.9% (Africa and APAC), lifting the consolidated figure to 5.1%. Reach for the segment, not the headline, when comparing American Tower to a domestic peer: the consolidated 5.1% blends a fixed U.S. escalator with leases indexed to local inflation in economies where inflation is high, so it is not the same measurement as Crown Castle's or SBA's domestic rate.

How Tower Economics Work

Escalators and churn set organic growth; AFFO sets dividend capacity. American Tower discloses both legs on filed bases.

Lease escalators. U.S. tenant leases escalate at a fixed percentage averaging roughly 3% a year; international leases more often track a local inflation index or a hybrid of index and fixed. The escalator is not a forecast, it is in the contract. But it is a gross number, and organic growth is what is left after tenants leave. On the U.S. and Canada segment, where the 3% applies, the arithmetic reconciles: 3.0% of escalator less 2.0% of churn plus about 3.2 points of colocation and amendments gives the reported 4.2%. Colocation is doing more work than the escalator net of churn. See the tower escalator guide.

Churn on a billings basis. American Tower divides tenant billings lost by prior-year tenant billings, and FY2025 churn on that basis was approximately 2%. It is an annual figure, which matters, because data centre operators quote churn per quarter. It is also consolidated, blending a domestic rate with international portfolios that churn far faster, so it is not a reading on either. Peers measure something different again: Crown Castle's 0.7% headline strips out the Sprint and DISH departures. The churn guide lays out the bases side by side.

AFFO as the dividend-capacity metric. Maintenance capital on a steel tower is small next to a data centre's, so AFFO lands close to FFO and reads as a fair proxy for what can fund a dividend. FY2025 AFFO was $10.76 a share, and at the 10 June 2026 price of $191.28 that is a P/AFFO of roughly 17.8x, inside the ~15x to 22x tower band. One caution the sector rarely prints: Nareit defines FFO, and states that there is no consensus definition of AFFO, so each filer draws its own line between maintenance and growth capital. Compare the multiple, and read the reconciliation before ranking on it. The AFFO for towers guide works through the deductions.

The escalator is booked before it is paid. Accounting spreads the total contracted rent evenly across the life of a lease, so a lease that steps up 3% a year books more revenue in its early years than the carrier has handed over. That gap, straight-line rent, sits in reported revenue with no cash behind it, and reversing it is one of the standard deductions on the way from FFO to AFFO. Revenue growth is therefore the wrong line to judge a tower REIT on.

Geography changes what the escalator is worth rather than adding a hedge. A fixed 3% step is a nominal number: it lifts the rent 3% whether inflation runs at 1% or 8%, so in an inflationary decade the landlord's rent rises every year and still buys less than on the day the lease was signed. The 71.8% of sites outside the U.S. and Canada mostly sit on index-linked leases, which do hold real value. They also move with something nobody can forecast and are earned in currencies the shareholder does not spend, on top of the sovereign and regulatory exposure a domestic tower REIT never takes.

What to Watch in the Financials

Organic tenant billings growth, by segment. Watch the 4.2% U.S. and Canada line rather than the 5.1% consolidated one, because the consolidated figure can be flattered by inflation in a country whose currency is falling at the same time. Watch the colocation leg inside it too, since that is where a carrier capex pause shows up first.

Churn on tenant billings. The consolidated ~2% is the number to track year on year. It cannot be ranked against a domestic peer's rate, since it blends a low domestic figure with much higher international ones, and it cannot be set against a data centre's quarterly churn at all.

Net leverage. End-FY2025 net leverage was 4.9x (net debt $35,746 million divided by annualised Q4 adjusted EBITDA $7,274 million). That sits below the ~5x to 6x normal band for investment-grade tower REITs and well inside the >7x caution threshold. Balance-sheet capacity is not the binding constraint on the model today.

International mix. Africa and APAC organic tenant billings growth at 12.9% in FY2025 is the outlier segment. Whether that pace normalises or whether slower regions drag the blended rate is the geographic question embedded in a 71.8% international site count.

Valuation Framework

Towers are read on P/AFFO. At $191.28 on 10 June 2026 against $10.76 of FY2025 AFFO a share, American Tower traded on roughly 17.8x, in the middle of the ~15x to 22x band the three tower REITs have printed.

A tower's cash flow is long, contracted and slow to change, and the further out cash sits the harder a change in the discount rate hits its present value. Leverage stretches the effect further. So the stress test that matters is not on the towers but on the multiple: hold AFFO at $10.76 and move to the 15x floor of the band and the share is worth $161, about 16% below the June price, with nothing at all having happened to a single lease. That is the duration risk in a long-dated rent stream, and it is why tower REITs do not behave like the bond proxies they are sometimes taken for.

American Tower's own position in the band is a trade of geography, where international indexation buys growth and hands back currency and sovereign risk.

Key Risks

The tenant list is short, and it shrinks in blocks. In any one country the rent comes from a handful of national carriers. When two of them merge, the combined company inherits two overlapping networks and spends years switching off the duplicate sites, so rent that looked contracted vanishes at the next renewal. That is not hypothetical here: management put U.S. and Canada organic growth above 5% but for the Sprint decommissioning, against the 4.2% it actually reported. Churn of 2% is a normal-year number, and carrier consolidation is not a normal year.

The land is usually not theirs. Most towers stand on ground rented from a farmer, a council or a specialist landowner, escalating on its own terms and coming up for renewal on a schedule the tower owner does not set. It is the one significant cost in the structure the company does not control, which is why all three majors have spent years buying the freehold under their own sites.

International exposure. Index-linked escalators hold real value where fixed ones do not, but they tie results to local currency and regulation across Latin America, Africa, APAC and Europe. Organic billings growth is reported before currency effects, so a headline 12.9% in Africa and APAC is what the towers earned locally, not what reached the income statement in dollars.

Rate sensitivity. At 4.9x net leverage, refinancing cost matters even for an investment-grade borrower, and 96% of the debt is fixed-rate, so the exposure arrives as maturities roll rather than all at once. The larger effect is on the multiple rather than the interest bill, as the valuation section works through.

What the Screening Shows

Against the Infrastructure & Digital REITs Primer thresholds:

• Organic growth: 4.2% in the U.S. and Canada, 5.1% consolidated, FY2025. Passes on the sector's core operating screen on either measure.
• Churn: ~2% of tenant billings a year, on the company's own definition. A blend of a lower domestic rate and higher international ones, so not comparable to a domestic peer's figure.
• Leverage: net leverage 4.9x, below the ~5x to 6x sector norm and well inside the >7x level that needs explaining.
• AFFO: $10.76 per share FY2025; P/AFFO ~17.8x at 10 June 2026. Mid-band on tower comps.
• Scale: 149,686 sites, 71.8% international; the largest site count of the three tower REITs.

Sub-5x leverage, a mid-band multiple and organic growth ahead of the escalator clear the screens comfortably. Two things have to keep holding. Colocation has to keep supplying the three points that turn a 1% escalator-less-churn base into 4.2%, since that is the leg nobody files and the leg that stops first when carriers pause spending. And the international book has to deliver its indexation in currencies that survive the trip back to dollars.