BOSTON - American Tower Corporation (NYSE:AMT), a leading global real estate investment trust (REIT), has finalized the sale of its Indian subsidiary, ATC India, to Data Infrastructure Trust (DIT), backed by Brookfield Asset Management (NYSE:TSX:BAM, TSX:BAM). The deal, which was previously announced, sees American Tower receiving roughly INR 210 billion, equivalent to $2.5 billion.
The cash proceeds from the sale include about $320 million from the conversion of debentures issued by Vodafone (NASDAQ:VOD) Idea and receivables payments, after tax deductions. The remaining $2.2 billion was received at the closing of the transaction. American Tower plans to use these funds to reduce its existing debt, including repaying the term loan tied to its Indian operations.
This divestiture has led to a revision in American Tower's financial outlook for 2024. The initial projections, detailed in the company's Form 8-K dated July 30, 2024, included contributions from its India business for the full year. After the sale, these operations are now classified as discontinued. Adjusted forecasts suggest that property revenue and Adjusted EBITDA will hit midpoints of $10,830 million and $7,185 million, respectively. The anticipated Adjusted Funds From Operations (AFFO) Per Share, inclusive of discontinued operations, is projected at $10.48.
Excluding the Indian business and accounting for the interest expense savings from the use of the sale proceeds, the company estimates property revenue and Adjusted EBITDA from continuing operations would have been $9,920 million and $6,805 million, respectively, with an AFFO per Share of $9.95.
American Tower, now excluding the sold Indian assets, continues to operate nearly 148,000 communication sites worldwide and maintains a significant presence in the U.S. data center market.
Citi acted as the lead financial advisor, with CDX Advisors also providing financial advisory services to American Tower for the transaction. Legal advisory was provided by Talwar Thakore & Associates (TT&A).
The information in this article is based on a press release statement from American Tower Corporation.
In other recent news, American Tower Corporation has experienced a robust second quarter with a 5.3% increase in consolidated organic tenant billings, indicating a strong demand for its assets. This growth was boosted by its subsidiary, CoreSite, which reported double-digit revenue growth and a record cash backlog. In India, American Tower reversed $67 million of previously reserved revenue due to improved collection trends.
The company anticipates an acceleration of US tower activity in 2024, leading to significant revenue and gross profit growth. As part of its strategic focus, American Tower is shifting its investment towards developed markets. The company's full-year outlook has also been revised upwards, showcasing confidence in its ability to enhance earnings and deliver shareholder returns.
Recently, Citi, RBC Capital, and TD Cowen have revised their price targets for the company, maintaining positive outlooks based on these strong financial results and strategic initiatives. Citi reaffirmed its positive stance on American Tower stock, maintaining a Buy rating and a price target of $255.00, while RBC Capital raised its price target to $236. TD Cowen updated its price target to $239, acknowledging the company's robust second-quarter financial performance and updated full-year guidance. These recent developments indicate a positive trajectory for the company's future performance.
InvestingPro Insights
As American Tower Corporation (NYSE:AMT) navigates the post-sale landscape following the divestiture of its Indian subsidiary, investors and analysts are closely monitoring the company's financial health and market position. According to the latest data from InvestingPro, American Tower boasts a substantial market capitalization of $111.62 billion, underscoring its significant scale in the Specialized REITs industry. Despite the sale of ATC India, the company's revenue growth over the last twelve months, as of Q2 2024, remains positive at 3.89%, indicating a resilient business model capable of weathering strategic shifts. Furthermore, the company's gross profit margin during the same period stands at an impressive 71.45%, reflecting efficient operations and a strong ability to generate income from its core activities.
InvestingPro Tips reveal that American Tower has a history of rewarding shareholders, having raised its dividend for 13 consecutive years, a trend that is expected to continue with the company's net income projected to grow this year. Additionally, the company has maintained its dividend payments for 14 consecutive years, which may be a point of interest for income-focused investors. These tips are particularly relevant as they highlight American Tower's commitment to shareholder returns and its potential for continued financial growth post-sale. For more insights and additional tips, investors can refer to the detailed analysis available on InvestingPro, which includes a total of 12 tips for American Tower Corporation.
An interesting point to note is that American Tower is currently trading at a low P/E ratio relative to near-term earnings growth, with a P/E ratio of 44.74 and an adjusted P/E ratio for the last twelve months as of Q2 2024 at 37.93. This could suggest that the company's stock is valued attractively in relation to its earnings potential. However, it is also trading at a high Price/Book multiple of 28.95, indicating that the market may be assigning a premium to the company's net assets. The strong return over the last three months, with a 24.32% price total return, reflects investor confidence in the company's strategic moves and operational performance.
These financial metrics and InvestingPro Tips provide a clearer picture of American Tower's standing in the market and may help investors make more informed decisions in the context of the company's recent divestiture and future prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.