American Tower Corporation (ATC) today said it has lowered its revenue outlook for 2018 primarily due to telecom operator consolidation in India.
The estimated impacts will be $180 million on property revenue, $115 million on adjusted EBITDA and $90 million on consolidated AFFO, inclusive of an expected reduction in pass-through revenue of $60 million — from Indian carrier consolidation-driven churn.
ATC said it expects the impacts of Indian carrier consolidation-driven churn to last for several years and anticipates that churn rates in India will return to lower levels once the consolidation process is complete.
The telecom industry consolidation picked up momentum following the entry of Reliance Jio, a telecom operator promoted by Mukesh Ambani. In the latest consolidation, Vodafone and Idea Cellular are merging to become India’s largest telecom operator.
ATC said the company is reducing the midpoint of its 2018 outlook for property revenue, net income and adjusted EBITDA by $60 million, $80 million and $30 million, respectively, and reiterating the midpoint of its outlook for consolidated AFFO. Forex fluctuation will also impact its revenue outlook, ATC said.
ATC has posted revenue of $1.781 billion (+7.1 percent), property revenue of $1,749 million (+6.8 percent), adjusted EBITDA of $1,084 million (+6.2 percent) and net income of $314 million (–19.1 percent) in Q2 2018.
ATC said its operational and financial results in the second quarter of 2018 were impacted by churn driven by carrier consolidation process in India.
ATC said the adoption of unlimited data plans in the U.S. wireless market has elevated mobile data usage growth to roughly 40 percent. This is fuelling record levels of US commenced new business for American Tower, resulting in Organic Tenant Billings Growth of 7.4 percent in the second quarter.
ATC is increasing its expectations for U.S. Organic Tenant Billings Growth to approximately 7 percent in 2018.
“We also anticipate a multiyear period of elevated demand in the U.S. as our tenants invest in 4G capacity and quality while launching mobile 5G networks, enhanced Internet of Things services and other initiatives,” American Tower’s CEO Jim Taiclet said.
ATC recently added approximately 20,000 Vodafone and Idea Cellular sites. ATC spent $663 million to acquire over 10,000 telecom sites, including over 9,700 sites in India through its transaction with Idea Cellular.