(Reuters) -Real estate investment trust American Tower beat fourth-quarter revenue estimates due to recovering demand for its leasing business from telecom and wireless carrier clients, sending its shares up 6.7% in early trading on Tuesday.
However, the company’s annual forecast and fourth-quarter numbers for adjusted funds from operations (AFFO), a key measure of cash flow, came in below market estimates.
Leasing activity in the U.S. is gradually picking up after a slowdown wrought by wireless providers completing their initial deployments of 5G networks. Telecom majors are now expanding their networks to accommodate a growing subscriber base.
“American Tower has long-term agreements with U.S. service providers that spread lease payments over time, enabling steady revenue growth,” said David Heger, analyst at Edward Jones.
The wireless infrastructure provider reported fourth-quarter total revenue of $2.55 billion, beating analysts’ estimates of $2.53 billion, according to data compiled by LSEG.
“While the macroeconomic environment remains challenging, demand for connectivity across our global platform continues unabated,” said CEO Steven Vondran.
American Tower leases space on its communication sites to wireless service providers, radio and television broadcasters, and other firms that need network infrastructure.
Its main customers include telecom giants such as AT&T, Verizon and T-Mobile.
The Boston, Massachusetts-based company’s total property revenue increased 2% to $2.48 billion in the fourth quarter.
American Tower expects annual AFFO to be between $10.31 and $10.50 per share, below analysts’ estimates of $10.57, according to data compiled by LSEG.
Its AFFO for the quarter ended December 31 grew 10.5% to $2.32 per share, also missing estimates of $2.40.
(Reporting by Priyanka.G in Bengaluru; Editing by Devika Syamnath)
