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American Tower Corp. CEO Jim Taiclet focused the REIT’s Q3 earnings call on the evolution of mobile technology and spent more of the call on the US, where the firm generates roughly two-thirds of its cash flows.
“There were many exciting and potentially impactful developments particularly on the 5G front are beginning to emerge. We continue to believe that the technology cycles driving our business in the U.S. will be largely replicated in our international markets over time, thereby lengthening and strengthening our global growth trajectory,” he said on the call.
Longstanding trends in U.S. mobile continue unabated, he added. “Unlimited data plans, advanced devices, and increasing mobile video consumption consistently result in 30% or more growth in annual mobile data consumption per year. To keep up, our mobile operator customers have added significant additional equipment to existing transmission sites, while driving forward with incremental spectrum deployments to support today’s 4G networks. These factors have led to a sustained period of robust domestic organic tenant billings growth for America Tower, and average monthly U.S. smartphone usage now stands at roughly 10 gigabytes per month, nearly doubling in less than three years.”
He explained that by 2028, 10 years roughly from now, industry estimates suggest that the total U.S. mobile data usage will be around six times 2018 levels.
“We recently concluded that the need to efficiently manage the network cost challenges that this continued explosion in mobile traffic growth creates will actually be the main driver for the deployment of 5G. Simply put, the cost per gigabyte delivered must continue to decline at roughly the same rate as the growth in aggregate traffic carried across the network that’s needed to sustain our carrier tenants’ margins. We’ve seen this pattern historically with each successive generation of technological evolution, 2, to 3, to 4G, with carriers using tools like more efficient radio technology, advanced network design, incremental spectrum deployments, and additional network density to drive down those operating costs.”