American Tower Corporation reported a strong third quarter, with revenue up 7.7 percent.

The US tower giant reported revenue of $2.71 billion, as total property revenue jumped 5.9 percent.

The company also reported that net income for the quarter increased 216.9 percent to $913 million, which it said was primarily due to foreign currency losses in the prior year period.

American Tower reported significant growth for its data center business, with property revenue up 14 percent.

"Leasing activity across our US and international towers remains robust as carriers invest in network coverage and capacity, and in our data center business, strong hybrid-cloud demand, favorable pricing, and rising AI-related workloads drove a strong quarter, including a record quarter of signed retail new leasing," said Steven Vondran, CEO, American Tower.

One such area of success has been around network upgrades carried out at its tower sites. The company has around 42,000 towers in the US, and nearly 150,000 globally.

In the US, American Tower has highlighted further 5G upgrades as an opportunity for additional revenue growth.

"On average, approximately 75 percent of our towers have been upgraded with 5G equipment, so there’s still considerable runway for growth as carriers complete their 5G coverage rollouts and shift their attention to network quality with densification activity," said Vondran, during the company's earnings call.

He added that the company has seen more traction in 4G and 5G networks in some of its international markets and expects to "capture future upside" as its less mature markets lease up over time.

Spectrum deployment will drive more revenue growth

The Federal Communications Commission (FCC) has, notably, been reauthorized to auction spectrum following the spectrum lapse in March 2023. That said, no date has been earmarked for the next spectrum auction.

Vondran is confident more business will come the way of the towerco through the sale of more spectrum in the US.

"We're seeing robust activity across the board. And that's continued build-out of the 5G mid-band spectrum throughout the networks, and also some early phase densification that we're seeing as well," he said.

High-profile spectrum deals have also got American Tower optimistic, he added, in particular AT&T's $23 billion acquisition of spectrum from EchoStar.

"What we've typically seen with the carriers is that when they buy spectrum, they want to deploy it. And there is certainly a lot of opportunity to continue to deploy mid-band 5G on our sites. And so we're looking forward to working with AT&T and helping them in what they decide to do next year," said Vondran.

Data center growth

American Tower's focus on data centers has also driven financial gains at the company.

For the quarter, American Tower's data center firm CoreSite signed record retail new leasing revenue, as it noted larger deployments at these data centers were driven by strong demand for hybrid cloud and multi-cloud deployments.

To date, CoreSite operates 30 US data centers.

The tower company also reported that it has seen significant demand from early-stage AI-related workloads like inferencing, machine learning models, and GPU-as-a-Service for neoclouds.

"It's becoming increasingly important for AI workloads to be co-located with hybrid installations," noted Rodney Smith, executive VP, CFO, and treasurer, American Tower.

"Our CoreSite facilities are perfectly suited for this as they have a rich ecosystem of network and cloud interconnection, coupled with purpose-built capacity design to support AI and other high-density deployments with features like liquid cooling."

For the full year outlook, American Tower expects data center growth of 13 percent year-on-year.

While CoreSite focuses on traditional data center markets, American Tower is also expanding its Edge data center footprint.

It operates several small Edge colocation sites – branded as Access Edge data centers – at existing tower locations in Pittsburgh, Pennsylvania; Jacksonville, Florida; Atlanta, Georgia; Austin, Texas; and Denver and Boulder, Colorado.

American Tower has also notably deployed Edge data centers across some of its towers in the US. The firm opened its Edge data center in Raleigh, North Carolina.

Vondran anticipates the Edge will provide further opportunities for the company.

"Look, we think that CoreSite is a great fit with American Tower. And we still believe the long-term synergies of having towers and a highly interconnected ecosystem will ultimately play out with opportunities at the Edge for us. So we believe in that future."