Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements relating to our goals, beliefs, plans or current expectations and other statements that are not of historical facts. For example, when we use words such as “project,” “believe,” “anticipate,” “expect,” “forecast,” “estimate,” “intend,” “should,” “would,” “could,” “may” or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements. Certain important factors may cause actual results to differ materially from those indicated by our forward-looking statements, including those set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”). Forward-looking statements represent management’s current expectations and are inherently uncertain. We do not undertake any obligation to update forward-looking statements made by us.

The discussion and analysis of our financial condition and results of operations that follow are based upon our consolidated and condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates and such differences could be material to the financial statements. This discussion should be read in conjunction with our consolidated and condensed consolidated financial statements herein and the accompanying notes, information set forth under the caption “Critical Accounting Policies and Estimates” in the 2021 Form 10-K, and in particular, the information set forth therein under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

During the fourth quarter of 2021, as a result of the acquisition of CoreSite Realty Corporation (“CoreSite,” and the acquisition, the “CoreSite Acquisition”), we updated our reportable segments to add a Data Centers segment. The Data Centers segment is included within our property operations. We now report our results in seven segments – U.S. & Canada property (which includes all assets in the United States and Canada, other than our data center facilities and related assets), Asia-Pacific property, Africa property, Europe property, Latin America property, Data Centers and Services. We believe this change provides greater visibility into our operating segments and aligns our reporting with management’s current approach of allocating costs and resources, managing growth and profitability and assessing the operating performance of our business segments (see note 15 to our consolidated and condensed consolidated financial statements included in this Quarterly Report). This change applied to our business operations results beginning with the fourth quarter of 2021 and had no impact on our consolidated financial statements for any prior periods. Historical financial information included in Management’s Discussion and Analysis of Financial Condition and Results of Operations has been adjusted to reflect the change in reportable segments.

Overview

We are one of the largest global real estate investment trusts and a leading independent owner, operator and developer of multitenant communications real estate. Our primary business is the leasing of space on communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities and tenants in a number of other industries. In addition to the communications sites in our portfolio, we manage rooftop and tower sites for property owners under various contractual arrangements. We also hold other telecommunications infrastructure, fiber and property interests that we lease primarily to communications service providers and third-party tower operators, and, as discussed further below, we hold a portfolio of highly interconnected data center facilities and related assets in the United States. Our customers include our tenants, licensees and other payers. We refer to the business encompassing the above as our property operations, which accounted for 98% of our total revenues for each of the three and nine months ended September 30, 2022 and includes our U.S. & Canada property, Asia-Pacific property, Africa property, Europe property, Latin America property and Data Centers segments.

We also offer tower-related services in the United States, including site application, zoning and permitting and structural analysis, which primarily support our site leasing business, including the addition of new tenants and equipment on our sites.

The following table details the number of communications sites, excluding managed sites, that we owned or operated as of September 30, 2022:

Number of Owned TowersNumber of Operated Towers (1)Number of Owned DAS Sites
U.S. & Canada:
Canada222——
United States27,27515,339454
U.S. & Canada total27,49715,339454
Asia-Pacific: (2)
Bangladesh412——
India75,581—836
Philippines303——
Asia-Pacific total76,296—836
Africa:
Burkina Faso707——
Ghana3,53765729
Kenya3,327—9
Niger839——
Nigeria7,411——
South Africa2,969——
Uganda3,930—12
Africa total22,72065750
Europe:
France3,6863038
Germany14,759——
Poland51——
Spain11,578—1
Europe total30,0743039
Latin America:
Argentina495—11
Brazil20,6432,052121
Chile3,738—138
Colombia4,977—6
Costa Rica695—2
Mexico9,62718692
Paraguay1,445——
Peru3,9384501
Latin America total45,5582,688371

(1)Approximately 95% of the operated towers are held pursuant to long-term finance leases, including those subject to purchase options.

(2)We also control land under carrier or other third-party communications sites in Australia, which provides recurring cash flow through tenant leasing arrangements.

As of September 30, 2022, our property portfolio included 28 operating data center facilities across ten markets in the United States that collectively comprise approximately 3.1 million net rentable square feet (“NRSF”) of data center space, as detailed below:

Number of Data CentersTotal NRSF (1)
(in thousands)
San Francisco Bay, CA8940
Los Angeles, CA3670
Northern Virginia, VA5536
New York, NY2237
Chicago, IL2216
Boston, MA1143
Denver, CO235
Miami, FL247
Orlando, FL1129
Atlanta, GA2128
Total283,081

(1)Excludes approximately 0.4 million of office and light industrial NRSF acquired as part of the CoreSite Acquisition.

We operate in seven reportable segments: U.S. & Canada property, Asia-Pacific property, Africa property, Europe property, Latin America property, Data Centers and Services. In evaluating operating performance in each business segment, management uses, among other factors, segment gross margin and segment operating profit (see note 15 to our consolidated and condensed consolidated financial statements included in this Quarterly Report).

The 2021 Form 10-K contains information regarding management’s expectations of long-term drivers of demand for our communications sites, as well as key trends, which management believes provide valuable insight into our operating and financial resource allocation decisions. The discussion below should be read in conjunction with the 2021 Form 10-K and, in particular, the information set forth therein under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview.”

In most of our markets, our tenant leases with wireless carriers generally have initial non-cancellable terms of five to ten years with multiple renewal terms. Accordingly, the vast majority of the revenue generated by our property operations during the three and nine months ended September 30, 2022 was recurring revenue that we should continue to receive in future periods. Most of our tenant leases for our communications sites have provisions that periodically increase the rent due under the lease, typically based on an annual fixed escalation (averaging approximately 3% in the United States) or an inflationary index in most of our international markets, or a combination of both. In addition, certain of our tenant leases provide for additional revenue primarily to cover costs (pass-through revenue), such as ground rent or power and fuel costs.

Based upon existing customer leases and foreign currency exchange rates as of September 30, 2022, we expect to generate over $62 billion of non-cancellable customer lease revenue over future periods, before the impact of straight-line lease accounting.

Following the court rulings by the Supreme Court of India regarding carriers’ obligations for the adjusted gross revenue (“AGR”) fees and charges prescribed by such court, we continue to experience variability and a level of uncertainty in collections in India. As further discussed in Item 1A of this Quarterly Report on Form 10-Q under the caption “Risk Factors— A substantial portion of our revenue is derived from a small number of customers, and we are sensitive to adverse changes in the creditworthiness and financial strength of our customers,” our largest customer in India, Vodafone Idea Limited (“VIL”), has indicated that it would make a partial payment of its contractual amounts owed to us under tenant leases for the remainder of 2022 (the “VIL Shortfall”), including amounts owed for the three months ended September 30, 2022. For the three months ended September 30, 2022, the shortfall in payments totaled approximately $48 million. We have deferred recognition of revenue on the shortfall amount until payment is received. Recognition of revenue on any future shortfalls in payment of contractual amounts will be similarly deferred. Based on indications from VIL, we expect to defer recognition of a similar amount for the three months ended December 31, 2022, pending resolution. VIL has communicated its intent to fulfill the full amount of its contractual obligations commencing January 1, 2023, although no assurance can be given that this will occur.

On October 21, 2022, our subsidiary, ATC Telecom Infrastructure Private Limited (“ATC TIPL”), and VIL notified the stock exchange of India that both parties have board approvals in relation to an issuance of convertible debentures pursuant to which, in exchange for VIL’s payment of certain amounts towards accounts receivables, ATC TIPL shall pay equivalent amounts towards subscription to convertible debentures issued by VIL. The convertible debentures are to be repaid by VIL with interest and ATC TIPL has the option to convert the debentures into equity of VIL. The issuance of the debentures is subject to certain conditions precedent.

We are required to periodically evaluate the carrying value of our assets, or when significant changes in projected cash flows arise, which may result in the realization of impairment expense or other similar charges. For more information, please see our discussion below under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.”

The revenues generated by our property operations may be affected by cancellations of existing tenant leases. As discussed above, most of our tenant leases with wireless carriers and broadcasters are multiyear contracts, which typically are non-cancellable; however, in some instances, a lease may be cancelled upon the payment of a termination fee. Revenue lost from either tenant lease cancellations or the non-renewal of leases or rent renegotiations, which we refer to as churn, has historically not had a material adverse effect on the revenues generated by our consolidated property operations. During the nine months ended September 30, 2022, churn was approximately 5% of our tenant billings, primarily driven by churn in our U.S. & Canada property segment, as discussed below.

We expect that our churn rate in our U.S. & Canada property segment will remain elevated for a period of several years due to contractual lease cancellations and non-renewals by T-Mobile, including legacy Sprint Corporation leases, pursuant to the terms of our master lease agreement with T-Mobile US, Inc. (the “T-Mobile MLA”) entered into in September 2020.

As further set forth under the caption “Risk Factors” in Part I, Item 1A of the 2021 Form 10-K, the ongoing coronavirus (“COVID-19”) pandemic, as well as the response to mitigate its spread and effects, may adversely impact us and our customers and the demand for our communications infrastructure in the United States and globally. We have taken a variety of actions to ensure the continued availability of our communications infrastructure assets, while ensuring the safety and security of our employees, customers, vendors and surrounding communities. We will continue to actively monitor the situation and may take further actions as may be required by governmental authorities or that we determine are in the best interests of our employees, customers and business partners.

Non-GAAP Financial Measures

Included in our analysis of our results of operations are discussions regarding earnings before interest, taxes, depreciation, amortization and accretion, as adjusted (“Adjusted EBITDA”), Funds From Operations, as defined by the National Association of Real Estate Investment Trusts (“Nareit FFO”) attributable to American Tower Corporation common stockholders, Consolidated Adjusted Funds From Operations (“Consolidated AFFO”) and AFFO attributable to American Tower Corporation common stockholders.

We define Adjusted EBITDA as Net income before Income (loss) from equity method investments; Income tax benefit (provision); Other income (expense); Gain (loss) on retirement of long-term obligations; Interest expense; Interest income; Other operating income (expense); Depreciation, amortization and accretion; and stock-based compensation expense.

Nareit FFO attributable to American Tower Corporation common stockholders is defined as net income before gains or losses from the sale or disposal of real estate, real estate related impairment charges, real estate related depreciation, amortization and accretion and dividends on preferred stock and to noncontrolling interests, and including adjustments for (i) unconsolidated affiliates and (ii) noncontrolling interests. In this section, we refer to Nareit FFO attributable to American Tower Corporation common stockholders as “Nareit FFO (common stockholders).”

We define Consolidated AFFO as Nareit FFO (common stockholders) before (i) straight-line revenue and expense; (ii) stock-based compensation expense; (iii) the deferred portion of income tax and other income tax adjustments; (iv) non-real estate related depreciation, amortization and accretion; (v) amortization of deferred financing costs, capitalized interest, debt discounts and premiums and long-term deferred interest charges; (vi) other income (expense); (vii) gain (loss) on retirement of long-term obligations; (viii) other operating income (expense); and adjustments for (ix) unconsolidated affiliates and (x) noncontrolling interests, less cash payments related to capital improvements and cash payments related to corporate capital expenditures.

We define AFFO attributable to American Tower Corporation common stockholders as Consolidated AFFO, excluding the impact of noncontrolling interests on both Nareit FFO (common stockholders) and the other adjustments included in the calculation of Consolidated AFFO. In this section, we refer to AFFO attributable to American Tower Corporation common stockholders as “AFFO (common stockholders).”

Adjusted EBITDA, Nareit FFO (common stockholders), Consolidated AFFO and AFFO (common stockholders) are not intended to replace net income or any other performance measures determined in accordance with GAAP. None of Adjusted EBITDA, Nareit FFO (common stockholders), Consolidated AFFO or AFFO (common stockholders) represents cash flows from operating activities in accordance with GAAP and, therefore, these measures should not be considered indicative of cash flows from operating activities, as a measure of liquidity or a measure of funds available to fund our cash needs, including our ability to make cash distributions. Rather, Adjusted EBITDA, Nareit FFO (common stockholders), Consolidated AFFO and AFFO (common stockholders) are presented as we believe each is a useful indicator of our current operating performance. We believe that these metrics are useful to an investor in evaluating our operating performance because (1) each is a key measure used by our management team for decision making purposes and for evaluating our operating segments’ performance; (2) Adjusted EBITDA is a component underlying our credit ratings; (3) Adjusted EBITDA is widely used in the telecommunications real estate sector to measure operating performance as depreciation, amortization and accretion may vary significantly among companies depending upon accounting methods and useful lives, particularly where acquisitions and non-operating factors are involved; (4) Consolidated AFFO is widely used in the telecommunications real estate sector to adjust Nareit FFO (common stockholders) for items that may otherwise cause material fluctuations in Nareit FFO (common stockholders) growth from period to period that would not be representative of the underlying performance of property assets in those periods; (5) each provides investors with a meaningful measure for evaluating our period-to-period operating performance by eliminating items that are not operational in nature; and (6) each provides investors with a measure for comparing our results of operations to those of other companies, particularly those in our industry.

Our measurement of Adjusted EBITDA, Nareit FFO (common stockholders), Consolidated AFFO and AFFO (common stockholders) may not, however, be fully comparable to similarly titled measures used by other companies. Reconciliations of Adjusted EBITDA, Nareit FFO (common stockholders), Consolidated AFFO and AFFO (common stockholders) to net income, the most directly comparable GAAP measure, have been included below.

Results of Operations

Three and Nine Months Ended September 30, 2022 and 2021

(in millions, except percentages)

Revenue

Three Months Ended September 30,Percent Increase (Decrease)Nine Months Ended September 30,Percent Increase (Decrease)
2022202120222021
Property
U.S. & Canada$1,259.2$1,228.52%$3,727.5$3,688.21%
Asia-Pacific249.2313.5(21)845.7893.1(5)
Africa303.4257.418856.7741.116
Europe184.0175.85561.3308.282
Latin America420.4391.081,264.91,093.316
Data Centers193.72.77,074569.17.77,291
Total property2,609.92,368.9107,825.26,731.616
Services61.685.4(28)180.9180.10
Total revenues$2,671.5$2,454.39%$8,006.1$6,911.716%

Three Months Ended September 30, 2022

U.S. & Canada property segment revenue growth of $30.7 million was attributable to:

  • An increase of $28.8 million in other revenue, which included a $22.9 million increase due to straight-line accounting; and

  • Tenant billings growth of $2.0 million, which was driven by:

  • $38.1 million due to leasing additional space on our sites (“colocations”) and amendments;

  • Partially offset by:

  • A decrease of $33.0 million resulting from churn in excess of contractual escalations (as discussed above, we expect that our churn rate will be elevated for a period of several years due to the terms of the T-Mobile MLA);

  • A decrease of $1.7 million from sites acquired or constructed since the beginning of the prior-year period (“newly acquired or constructed sites”), which includes the impact of the disposition of certain operations acquired in connection with our acquisition of InSite Wireless Group, LLC (the “InSite Acquisition”); and

  • A decrease of $1.4 million from other tenant billings.

Segment revenue growth was not meaningfully impacted by foreign currency translation related to fluctuations in Canadian Dollar (“CAD”).

Asia-Pacific property segment revenue decrease of $64.3 million was attributable to:

  • A decrease of $39.2 million in other revenue, primarily due to revenue reserves of $26.1 million related to the VIL Shortfall, (as discussed above), as compared to the prior-year period, which included net recoveries of reserves; and

  • A decrease of $16.0 million in pass-through revenue, primarily due to revenue reserves of $22.2 million related to the VIL Shortfall, partially offset by an increase in fuel prices;

  • Partially offset by tenant billings growth of $8.9 million, which was driven by:

  • $7.8 million due to colocations and amendments; and

  • $5.9 million generated from newly acquired or constructed sites;

  • Partially offset by:

  • A decrease of $4.6 million resulting from churn in excess of contractual escalations; and

  • A decrease of $0.2 million from other tenant billings.

Segment revenue decline included a decrease of $18.0 million attributable to the negative impact of foreign currency translation related to fluctuations in Indian Rupee (“INR”).

Africa property segment revenue growth of $46.0 million was attributable to:

  • An increase of $57.8 million in pass-through revenue, primarily due to an increase in fuel prices;

  • Tenant billings growth of $23.5 million, which was driven by:

  • $14.2 million due to colocations and amendments;

  • $10.6 million generated from newly acquired or constructed sites; and

  • An increase of $0.1 million from other tenant billings;

  • Partially offset by a decrease of $1.4 million resulting from churn in excess of contractual escalations; and

  • An increase of $0.1 million in other revenue.

Segment revenue growth included a decrease of $35.4 million, attributable to the impact of foreign currency translation, which included, among others, negative impacts of $17.1 million related to fluctuations in Ghanaian Cedi (“GHS”), $6.0 million related to fluctuations in South African Rand (“ZAR”), $3.3 million related to fluctuations in Nigerian Naira (“NGN”), $3.3 million related to fluctuations in West African CFA Franc (“CFA”) and $2.9 million related to fluctuations in Ugandan Shilling.

Europe property segment revenue growth of $8.2 million was attributable to:

  • Tenant billings growth of $16.2 million, which was driven by:

• $9.4 million generated from newly acquired or constructed sites, primarily attributable to our transaction with Telxius Telecom, S.A. (“Telxius,” and the acquisition, the “Telxius Acquisition”) and our agreements with Orange S.A. (“Orange”);

  • $3.6 million resulting from contractual escalations, net of churn; and

  • $3.2 million due to colocations and amendments;

• An increase of $12.4 million in pass-through revenue, primarily due to an increase in energy costs; and

  • An increase of $10.4 million in other revenue.

Segment revenue growth included a decrease of $30.8 million primarily attributable to the negative impact of foreign currency translation related to fluctuations in Euro (“EUR”).

Latin America property segment revenue growth of $29.4 million was attributable to:

  • Tenant billings growth of $21.1 million, which was driven by:

  • $11.4 million from contractual escalations, net of churn;

  • $8.4 million due to colocations and amendments;

• $0.7 million generated from newly acquired or constructed sites; and

  • $0.6 million from other tenant billings; and

• An increase of $10.6 million in pass-through revenue, primarily attributable to increased pass-through ground rent costs in Brazil; and

  • An increase of $7.4 million in other revenue, primarily due to a decrease in revenue reserves.

Segment revenue growth included a decrease of $9.7 million, attributable to the impact of foreign currency translation, which included, among others, negative impacts of $4.3 million related to fluctuations in Chilean Peso (“CLP”), $3.6 million related to fluctuations in Colombian Peso (“COP”) and $1.5 million related to fluctuations in Mexican Peso.

Data Centers segment revenue growth of $191.0 million was attributable to data centers acquired in the fourth quarter of 2021, including through the CoreSite Acquisition.

Services segment revenue decrease of $23.8 million was primarily attributable to a decrease in site application, zoning and permitting and structural analysis services.

Nine Months Ended September 30, 2022

U.S. & Canada property segment revenue growth of $39.3 million was attributable to:

  • An increase of $33.4 million in other revenue, which includes a $25.4 million increase due to straight-line accounting; and

  • Tenant billings growth of $6.1 million, which was driven by:

  • $105.5 million due to colocations and amendments;

  • Partially offset by:

  • A decrease of $95.1 million resulting from churn in excess of contractual escalations (as discussed above, we expect that our churn rate will be elevated for a period of several years due to the terms of the T-Mobile MLA);

  • A decrease of $4.2 million from other tenant billings; and

  • A decrease of $0.1 million generated from newly acquired or constructed sites, which includes the impact of the disposition of certain operations acquired in connection with the InSite Acquisition;

Segment revenue growth was not meaningfully impacted by foreign currency translation related to fluctuations in CAD.

Asia-Pacific property segment revenue decrease of $47.4 million was attributable to:

  • A decrease of $34.3 million in other revenue, primarily due to revenue reserves of $26.1 million related to the VIL Shortfall; and

  • A decrease of $2.6 million in pass-through revenue, primarily due to revenue reserves of $22.2 million related to the VIL Shortfall, partially offset by an increase in fuel prices;

  • Partially offset by tenant billings growth of $29.5 million, which was driven by:

  • $28.0 million due to colocations and amendments; and

  • $17.2 million generated from newly acquired or constructed sites;

  • Partially offset by:

  • A decrease of $14.9 million resulting from churn in excess of contractual escalations; and

  • A decrease of $0.8 million from other tenant billings.

Segment revenue decline included a decrease of $40.0 million attributable to the negative impact of foreign currency translation related to fluctuations in INR.

Africa property segment revenue growth of $115.6 million was attributable to:

  • An increase of $121.2 million in pass-through revenue, primarily due to an increase in fuel prices;

  • Tenant billings growth of $78.0 million, which was driven by:

  • $41.1 million due to colocations and amendments;

  • $34.5 million generated from newly acquired or constructed sites;

  • $2.1 million from contractual escalations, net of churn; and

  • $0.3 million from other tenant billings;

  • Partially offset by a decrease of $14.9 million in other revenue, primarily due to an increase in revenue reserves.

Segment revenue growth included a decrease of $68.7 million, attributable to the impact of foreign currency translation, which included, among others, negative impacts of $34.9 million related to fluctuations in GHS, $10.5 million related to fluctuations in ZAR, $7.6 million related to fluctuations in NGN, $7.4 million related to fluctuations in CFA and $6.1 million related to fluctuations in Kenyan Shilling.

Europe property segment revenue growth of $253.1 million was attributable to:

  • Tenant billings growth of $175.8 million, which was driven by:

• $155.2 million generated from newly acquired or constructed sites, primarily attributable to the Telxius Acquisition and our agreements with Orange;

  • $11.0 million resulting from contractual escalations, net of churn;

  • $9.4 million due to colocations and amendments; and

  • $0.2 million from other tenant billings; and

  • An increase of $128.3 million in pass-through revenue, primarily attributable to the Telxius Acquisition;

  • Partially offset by a decrease of $4.8 million in other revenue.

Segment revenue growth included a decrease of $46.2 million primarily attributable to the negative impact of foreign currency translation related to fluctuations in EUR.

Latin America property segment revenue growth of $171.6 million was attributable to:

  • Tenant billings growth of $91.2 million, which was driven by:

  • $31.3 million from contractual escalations, net of churn;

  • $31.1 million generated from newly acquired or constructed sites, primarily attributable to the Telxius Acquisition;

  • $27.2 million due to colocations and amendments; and

  • $1.6 million from other tenant billings;

  • An increase of $60.1 million in pass-through revenue, primarily attributable to the Telxius Acquisition and increased pass-through ground rent costs in Brazil; and

  • An increase of $25.3 million in other revenue as a result of tenant settlements in Mexico.

Segment revenue growth included a decrease of $5.0 million, attributable to the impact of foreign currency translation, which included, among others, negative impacts of $10.8 million related to fluctuations in CLP, and $8.2 million related to fluctuations in COP, partially offset by a positive impact of $16.9 million related to fluctuations in Brazilian Real.

Data Centers segment revenue growth of $561.4 million was attributable to data centers acquired in the fourth quarter of 2021, including through the CoreSite Acquisition.

Services segment revenue growth was $0.8 million.

Gross Margin

Three Months Ended September 30,Percent Increase (Decrease)Nine Months Ended September 30,Percent Increase (Decrease)
2022202120222021
Property
U.S. & Canada$1,040.2$1,008.33%$3,096.1$3,060.21%
Asia-Pacific77.4126.4(39)317.1346.7(9)
Africa183.6169.29527.3486.38
Europe101.0102.8(2)310.7197.557
Latin America288.9267.38869.9756.315
Data Centers110.01.57,233329.84.67,070
Total property1,801.11,675.575,450.94,851.612
Services33.954.5(38)%96.4113.6(15)%

Three Months Ended September 30, 2022

  • The increase in U.S. & Canada property segment gross margin was primarily attributable to the increase in revenue described above and a decrease in direct expenses of $1.2 million.

  • The decrease in Asia-Pacific property segment gross margin was primarily attributable to the decrease in revenue described above, partially offset by a decrease in direct expenses of $2.5 million. Direct expenses also benefited by $12.8 million from the impact of foreign currency translation.

  • The increase in Africa property segment gross margin was primarily attributable to the increase in revenue described above, partially offset by an increase in direct expenses of $46.5 million, primarily due to an increase in costs associated with pass-through revenue, including fuel costs. Direct expenses also benefited by $14.9 million from the impact of foreign currency translation.

  • The decrease in Europe property segment gross margin was primarily attributable to an increase in direct expenses of $24.0 million, primarily due to an increase in costs associated with pass-through revenue, including energy and land rent costs, partially offset by the increase in revenue described above. Direct expenses also benefited by $14.0 million from the impact of foreign currency translation.

  • The increase in Latin America property segment gross margin was primarily attributable to the increase in revenue described above, partially offset by an increase in direct expenses of $11.4 million, primarily due to an increase in costs associated with pass-through revenue, including land rent costs. Direct expenses also benefited by $3.6 million from the impact of foreign currency translation.

  • The increase in Data Centers segment gross margin was attributable to data centers acquired in the fourth quarter of 2021, including through the CoreSite Acquisition.

*•*The decrease in Services segment gross margin was primarily due to the decrease in revenue described above, partially offset by a decrease in direct expenses of $3.2 million.

Nine Months Ended September 30, 2022

  • The increase in U.S. & Canada property segment gross margin was primarily attributable to the increase in revenue described above, partially offset by an increase in direct expenses of $3.4 million.

  • The decrease in Asia-Pacific property segment gross margin was primarily attributable to the decrease in revenue described above and an increase in direct expenses of $8.4 million. Direct expenses also benefited by $26.2 million from the impact of foreign currency translation.

  • The increase in Africa property segment gross margin was primarily attributable to the increase in revenue described above, partially offset by an increase in direct expenses of $103.1 million, primarily due to an increase in costs associated with pass-through revenue, including fuel costs. Direct expenses also benefited by $28.5 million from the impact of foreign currency translation.

  • The increase in Europe property segment gross margin was primarily attributable to the increase in revenue described above, partially offset by an increase in direct expenses of $159.1 million, primarily due to the Telxius Acquisition. Direct expenses also benefited by $19.2 million from the impact of foreign currency translation.

  • The increase in Latin America property segment gross margin was primarily attributable to the increase in revenue described above, partially offset by an increase in direct expenses of $60.8 million, primarily due to the Telxius Acquisition. Direct expenses also benefited by $2.8 million from the impact of foreign currency translation.

  • The increase in Data Centers segment gross margin was attributable to data centers acquired in the fourth quarter of 2021, including through the CoreSite Acquisition.

*•*The decrease in Services segment gross margin was primarily due to an increase in direct expenses of $18.0 million.

Selling, General, Administrative and Development Expense (“SG&A”)

Three Months Ended September 30,Percent Increase (Decrease)Nine Months Ended September 30,Percent Increase (Decrease)
2022202120222021
Property
U.S. & Canada$48.0$47.02%$134.3$126.46%
Asia-Pacific10.921.5(49)64.952.723
Africa19.416.51863.952.921
Europe12.412.8(3)41.426.357
Latin America26.726.3281.479.62
Data Centers15.81.11,33647.73.41,303
Total property133.2125.26433.6341.327
Services5.53.84516.612.137
Other92.576.920297.8242.323
Total selling, general, administrative and development expense$231.2$205.912%$748.0$595.726%

Three Months Ended September 30, 2022

*•*The increases in our U.S. & Canada property segment SG&A and Services segment SG&A were primarily driven by increased personnel costs to support our business.

  • The decrease in our Asia-Pacific property segment SG&A was primarily driven by a net decrease in bad debt expense of $7.8 million due to the reversal of bad debt expense for amounts previously reserved related to a tenant in India. During the three months ended September 30, 2022, the impact of the VIL Shortfall is reflected in revenue reserves as described above.

  • The increase in our Africa property segment SG&A was primarily driven by an increase in bad debt expense of $4.4 million.

*•*Our Europe property segment SG&A was relatively consistent as compared to the prior-year period.

  • The increase in our Latin America property segment SG&A was primarily driven by increased personnel costs to support our business, partially offset by a decrease in bad debt expense of $3.4 million.

  • The increase in our Data Centers segment SG&A was attributable to data centers acquired in the fourth quarter of 2021, including through the CoreSite Acquisition.

*•*The increase in other SG&A was primarily attributable to an increase in stock-based compensation expense of $11.1 million, including expense associated with certain equity awards related to the CoreSite Acquisition, and an increase in corporate SG&A, including an increase in personnel costs to support our business.

Nine Months Ended September 30, 2022

*•*The increases in our U.S. & Canada and Europe property segment SG&A and Services segment SG&A were primarily driven by increased personnel costs to support our business, including as a result of the Telxius Acquisition in Europe.

  • The increase in our Asia-Pacific property segment SG&A was primarily driven by a net increase in bad debt expense of $16.2 million.

*•*The increase in our Africa property segment SG&A was primarily driven by increased personnel costs to support our business and an increase in bad debt expense of $4.8 million.

*•*The increase in our Latin America property segment SG&A was primarily driven by increased personnel costs to support our business, including as a result of the Telxius Acquisition, partially offset by a decrease in bad debt expense of $10.4 million.

  • The increase in our Data Centers segment SG&A was attributable to data centers acquired in the fourth quarter of 2021, including through the CoreSite Acquisition.

*•*The increase in other SG&A was primarily attributable to an increase in stock-based compensation expense of $40.1 million, including expense associated with certain equity awards related to the CoreSite Acquisition, and an increase in corporate SG&A, including an increase in personnel costs to support our business.

Operating Profit

Three Months Ended September 30,Percent Increase (Decrease)Nine Months Ended September 30,Percent Increase (Decrease)
2022202120222021
Property
U.S. & Canada$992.2$961.33%$2,961.8$2,933.81%
Asia-Pacific66.5104.9(37)252.2294.0(14)
Africa164.2152.78463.4433.47
Europe88.690.0(2)269.3171.257
Latin America262.2241.09788.5676.717
Data Centers94.20.423,450282.11.223,408
Total property1,667.91,550.385,017.34,510.311
Services28.450.7(44)%79.8101.5(21)%

  • The increases in operating profit for the three and nine months ended September 30, 2022 for our U.S. & Canada, Africa and Latin America property segments were primarily attributable to increases in our segment gross margin, partially offset by increases in our segment SG&A.

  • The decrease in operating profit for the three months ended September 30, 2022 for our Asia-Pacific property segment was primarily attributable to a decrease in our segment gross margin, partially offset by a decrease in our segment SG&A. The decrease in operating profit for the nine months ended September 30, 2022 for our Asia-Pacific property segment was primarily attributable to a decrease in our segment gross margin and an increase in our segment SG&A.

  • The decrease in operating profit for the three months ended September 30, 2022 for our Europe property segment was primarily attributable to a decrease in our segment gross margin, partially offset by a decrease in our segment SG&A. The increase in operating profit for the nine months ended September 30, 2022 for our Europe property segment was primarily attributable to an increase in our segment gross margin, partially offset by an increase in our segment SG&A.

  • The increase in operating profit for the three and nine months ended September 30, 2022 for our Data Centers segment was attributable to data centers acquired in the fourth quarter of 2021, including through the CoreSite Acquisition.

  • The decreases in operating profit for the three and nine months ended September 30, 2022 for our Services segment were primarily attributable to decreases in our segment gross margin and increases in our segment SG&A.

Depreciation, Amortization and Accretion

Three Months Ended September 30,Percent Increase (Decrease)Nine Months Ended September 30,Percent Increase (Decrease)
2022202120222021
Depreciation, amortization and accretion$898.1$611.447%$2,540.4$1,688.750%

The increases in depreciation, amortization and accretion expense for the three and nine months ended September 30, 2022 were primarily attributable to the acquisition, lease or construction of new sites since the beginning of the prior-year periods, including due to the Telxius Acquisition and the CoreSite Acquisition, which resulted in increases in property and equipment and intangible assets subject to amortization, partially offset by foreign currency exchange rate fluctuations.

Other Operating Expenses

Three Months Ended September 30,Percent Increase (Decrease)Nine Months Ended September 30,Percent Increase (Decrease)
2022202120222021
Other operating expenses$52.8$85.2(38)%$98.6$175.4(44)%

The decrease in other operating expenses during the three months ended September 30, 2022 was primarily attributable to a decrease in impairment charges of $41.0 million, partially offset by an increase in integration and acquisition related costs, including pre-acquisition contingencies and settlements, of $6.6 million, primarily associated with the Stonepeak Transaction (as defined and as further discussed below). The decrease in other operating expenses during the nine months ended September 30, 2022 was primarily attributable a decrease in integration and acquisition related costs, including pre-acquisition contingencies and settlements, of $48.8 million and a decrease in impairment charges of $31.9 million.

Total Other (Income) Expense

Three Months Ended September 30,Percent Increase (Decrease)Nine Months Ended September 30,Percent Increase (Decrease)
2022202120222021
Total other (income) expense$(202.9)$49.9(507)%$(319.0)$204.5(256)%

Total other (income) expense consists primarily of interest expense and realized and unrealized foreign currency gains and losses. We record unrealized foreign currency gains or losses as a result of foreign currency exchange rate fluctuations primarily associated with our intercompany notes and similar unaffiliated balances denominated in a currency other than the subsidiaries’ functional currencies.

The change in total other (income) expense during the three months ended September 30, 2022 was primarily due to an increase in foreign currency gains of $294.0 million, partially offset by increases in net interest expense of $58.5 million, primarily due to increases in our weighted average interest rate and our average debt outstanding. The change in total other (income) expense during the nine months ended September 30, 2022 was primarily due to an increase in foreign currency gains of $689.2 million and a decrease in loss on retirement of debt of $25.3 million attributable to the repayment of all amounts outstanding under the securitizations assumed in connection with the InSite Acquisition (the

“InSite Debt”) in the prior-year period, partially offset by increases in net interest expense of $171.6 million, primarily due to an increase in our weighted average debt outstanding.

Income Tax Provision

Three Months Ended September 30,Percent Increase (Decrease)Nine Months Ended September 30,Percent Increase (Decrease)
2022202120222021
Income tax provision$36.1$51.4(30)%$66.0$174.5(62)%
Effective tax rate4.2%6.6%2.7%7.6%

As a real estate investment trust for U.S. federal income tax purposes (“REIT”), we may deduct earnings distributed to stockholders against the income generated by our REIT operations. In addition, we are able to offset certain income by utilizing our net operating losses (“NOLs”), subject to specified limitations. Consequently, the effective tax rate on income from continuing operations for each of the nine months ended September 30, 2022 and 2021 differs from the federal statutory rate.

The decreases in the income tax provision during the three and nine months ended September 30, 2022 were primarily attributable to fewer additions to reserves for our existing tax positions and reduced earnings in certain foreign jurisdictions. The decrease in the income tax provision during the nine months ended September 30, 2022 also included the reversal of valuation allowances of $79.7 million in certain jurisdictions, as compared to a reversal of $8.8 million during the nine months ended September 30, 2021.These valuation allowance reversals were recognized as a reduction to the income tax provision as the net related deferred tax assets were deemed realizable based on changes in facts and circumstances relevant to the assets’ recoverability.

Net Income / Adjusted EBITDA and Net Income / Nareit FFO attributable to American Tower Corporation common stockholders / Consolidated AFFO / AFFO attributable to American Tower Corporation common stockholders

Three Months Ended September 30,Percent Increase (Decrease)Nine Months Ended September 30,Percent Increase (Decrease)
2022202120222021
Net income$819.7$726.213%$2,413.3$2,126.413%
Income tax provision36.151.4(30)66.0174.5(62)
Other income(478.5)(166.8)187(1,109.4)(439.6)152
Loss on retirement of long-term obligations0.4—1000.425.7(98)
Interest expense294.0226.130833.0646.829
Interest income(18.8)(9.4)100(43.0)(28.4)51
Other operating expenses52.885.2(38)98.6175.4(44)
Depreciation, amortization and accretion898.1611.4472,540.41,688.750
Stock-based compensation expense39.228.140138.198.041
Adjusted EBITDA$1,643.0$1,552.26%$4,937.4$4,467.511%
Three Months Ended September 30,Percent Increase (Decrease)Nine Months Ended September 30,Percent Increase (Decrease)
2022202120222021
Net income$819.7$726.213%$2,413.3$2,126.413%
Real estate related depreciation, amortization and accretion834.6550.2522,356.11,516.755
Losses from sale or disposal of real estate and real estate related impairment charges (1)14.855.4(73)32.964.9(49)
Dividends to noncontrolling interests (2)(8.7)—100(8.7)—100
Adjustments for unconsolidated affiliates and noncontrolling interests(43.0)(23.5)83(127.1)(59.7)113
Nareit FFO attributable to American Tower Corporation common stockholders$1,617.4$1,308.324%$4,666.5$3,648.328%
Straight-line revenue(127.7)(99.6)28(350.4)(324.3)8
Straight-line expense9.413.0(28)30.743.4(29)
Stock-based compensation expense39.228.140138.198.041
Deferred portion of income tax and other income tax adjustments(27.0)(7.5)260(178.5)53.4(434)
GTP one-time cash tax settlement (3)———46.6—100
Non-real estate related depreciation, amortization and accretion63.561.24184.3172.07
Amortization of deferred financing costs, capitalized interest, debt discounts and premiums and long-term deferred interest charges12.29.72635.727.430
Other income (4)(478.5)(166.8)187(1,109.4)(439.6)152
Loss on retirement of long-term obligations0.4—1000.425.7(98)
Other operating expense (5)38.029.82865.7110.5(41)
Capital improvement capital expenditures(43.1)(40.4)7(111.5)(93.8)19
Corporate capital expenditures(3.3)(1.5)120(7.3)(3.7)97
Adjustments for unconsolidated affiliates and noncontrolling interests43.023.583127.159.7113
Consolidated AFFO$1,143.5$1,157.8(1)%$3,538.0$3,377.05%
Adjustments for unconsolidated affiliates and noncontrolling interests (6)(41.9)(18.7)124%(114.1)(58.6)95%
AFFO attributable to American Tower Corporation common stockholders$1,101.6$1,139.1(3)%$3,423.9$3,318.43%

(1)Included in these amounts are impairment charges of $6.1 million, $47.1 million, $14.4 million and $46.3 million, respectively.

(2)For the three and nine months ended September 30, 2022, primarily includes $5.5 million of distributions payable related to the outstanding Stonepeak mandatorily convertible preferred equity.

(3)In 2015, we incurred charges in connection with certain tax elections wherein MIP Tower Holdings LLC, parent company to Global Tower Partners (“GTP”), would no longer operate as a separate REIT for federal and state income tax purposes. We finalized a settlement related to this tax election in the nine month period ended September 30, 2022. We believe that these related transactions are nonrecurring, and do not believe it is an indication of our operating performance. Accordingly, we believe it is more meaningful to present Consolidated AFFO excluding these amounts.

(4)Includes gains on foreign currency exchange rate fluctuations of $474.5 million, $180.5 million, $1.1 billion and $422.1 million, respectively.

(5)Primarily includes acquisition-related costs and integration costs.

(6)Includes adjustments for the impact on both Nareit FFO attributable to American Tower Corporation common stockholders as well as the other line items included in the calculation of Consolidated AFFO.

The increases in net income for the three and nine months ended September 30, 2022 were primarily due to (i) increases in gains on foreign currency exchange rate fluctuations, (ii) increases in our operating profit and (iii) decreases in the income tax provision, partially offset by (a) increases in depreciation, amortization and accretion expense and (b) increases in interest expense. Net income for the nine months ended September 30, 2021 included a loss on retirement of long-term obligations of $25.7 million, attributable to the repayment of the InSite Debt.

The increases in Adjusted EBITDA for the three and nine months ended September 30, 2022 were primarily attributable to increases in our gross margin, partially offset by increases in SG&A, excluding the impact of stock-based compensation expense of $14.2 million and $112.2 million, respectively.

The decrease in Consolidated AFFO and AFFO attributable to American Tower Corporation common stockholders for the three months ended September 30, 2022 was primarily attributable to (i) increases in cash paid for taxes and cash paid for interest and (ii) an increase in dividends to noncontrolling interests, including $5.5 million of distributions payable related to the outstanding Stonepeak mandatorily convertible preferred equity, partially offset by an increase in our operating profit, excluding the impact of straight-line accounting. The decrease in AFFO attributable to American Tower Corporation common stockholders was also impacted by changes in noncontrolling interests held in Data Centers, Europe and Asia-Pacific since the beginning of the prior-year period.

The growth in Consolidated AFFO and AFFO attributable to American Tower Corporation common stockholders for the nine months ended September 30, 2022 was primarily attributable to the increase in our operating profit, excluding the impact of straight-line accounting, partially offset by (i) increases in cash paid for taxes and cash paid for interest, (ii) an increase in capital improvement capital expenditures and (iii) an increase in dividends to noncontrolling interests, including $5.5 million of distributions payable related to the outstanding Stonepeak mandatorily convertible preferred equity. The growth in AFFO attributable to American Tower Corporation common stockholders was also impacted by changes in noncontrolling interests held in Data Centers, Europe and Asia-Pacific since the beginning of the prior-year period.

Liquidity and Capital Resources

The information in this section updates as of September 30, 2022 the “Liquidity and Capital Resources” section of the 2021 Form 10-K and should be read in conjunction with that report.

Overview

During the nine months ended September 30, 2022, our significant financing transactions included:

  • Repayment of debt assumed in connection with the CoreSite Acquisition, including senior unsecured notes previously entered into by CoreSite (the “CoreSite Debt”).

  • Redemption of our 2.250% senior unsecured notes due 2022 (the “2.250% Notes”) upon their maturity.

  • Registered public offering in an aggregate amount of $1.3 billion of senior unsecured notes with maturities in 2027 and 2032.

  • Registered public offering of 9,185,000 shares of our common stock for aggregate net proceeds of $2.3 billion.

  • The Stonepeak Transaction (as defined and further discussed below) pursuant to which we received $2.5 billion.

  • Repayment of all amounts outstanding under the 2021 USD 364-Day Delayed Draw Term Loan (as defined below).

As a holding company, our cash flows are derived primarily from the operations of, and distributions from, our operating subsidiaries or funds raised through borrowings under our credit facilities and debt or equity offerings.

The following table summarizes the significant components of our liquidity (in millions):

As of September 30, 2022
Available under the 2021 Multicurrency Credit Facility$1,605.7
Available under the 2021 Credit Facility3,295.0
Letters of credit(28.2)
Total available under credit facilities, net$4,872.5
Cash and cash equivalents2,121.8
Total liquidity$6,994.3

Subsequent to September 30, 2022, we made additional repayments of $25.0 million under the 2021 Credit Facility (as defined below) and $570.0 million under the 2021 Multicurrency Credit Facility (as defined below), including repayments as a result of our agreement with Stonepeak in October 2022 (as further discussed below), and borrowings of $650.0 million under the 2021 Credit Facility.

Summary cash flow information is set forth below (in millions):

Nine Months Ended September 30,
20222021
Net cash provided by (used for):
Operating activities$2,511.2$4,141.0
Investing activities(1,506.2)(10,524.5)
Financing activities(960.5)8,282.8
Net effect of changes in foreign currency exchange rates on cash and cash equivalents, and restricted cash(138.2)(61.4)
Net (decrease) increase in cash and cash equivalents, and restricted cash$(93.7)$1,837.9

We use our cash flows to fund our operations and investments in our business, including maintenance and improvements, communications site construction, managed network installations and acquisitions. Additionally, we use our cash flows to make distributions, including distributions of our REIT taxable income to maintain our qualification for taxation as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). We may also repay or repurchase our existing indebtedness or equity from time to time. We typically fund our international expansion efforts primarily through a combination of cash on hand, intercompany debt and equity contributions.

As of September 30, 2022, we had total outstanding indebtedness of $38.6 billion, with a current portion of $3.0 billion. During the nine months ended September 30, 2022, we generated sufficient cash flow from operations, together with borrowings under our credit facilities, proceeds from our equity and debt issuances and cash on hand, to fund our

acquisitions, capital expenditures and debt service obligations, as well as our required distributions. We believe the cash generated by operating activities during the year ending December 31, 2022, together with our borrowing capacity under our credit facilities, will be sufficient to fund our required distributions, capital expenditures, debt service obligations (interest and principal repayments) and signed acquisitions.

Material Cash Requirements— There were no material changes to the Material Cash Requirements section of the 2021 Form 10-K.

As of September 30, 2022, we had $1.8 billion of cash and cash equivalents held by our foreign subsidiaries. As of September 30, 2022, we had $268.3 million of cash and cash equivalents held by our joint ventures, of which $218.3 million was held by our foreign joint ventures. While certain subsidiaries may pay us interest or principal on intercompany debt, it has not been our practice to repatriate earnings from our foreign subsidiaries primarily due to our ongoing expansion efforts and related capital needs. However, in the event that we do repatriate any funds, we may be required to accrue and pay certain taxes.

Cash Flows from Operating Activities

The decrease in cash provided by operating activities for the nine months ended September 30, 2022 was primarily attributable to changes in unearned revenue and increases in cash paid for interest and cash paid for taxes, partially offset by an increase in the operating profit of our U.S & Canada, Africa, Europe, Latin America and Data Centers property segments.

Cash Flows from Investing Activities

Our significant investing activities during the nine months ended September 30, 2022 are highlighted below:

  • We spent $359.1 million for acquisitions, including payments made for acquisitions completed in 2021.

  • We spent $1,236.3 million for capital expenditures, as follows (in millions):

Discretionary capital projects (1)$545.9
Ground lease purchases (2)146.3
Capital improvements and corporate expenditures (3)118.8
Redevelopment277.5
Start-up capital projects147.8
Total capital expenditures (4)$1,236.3

(1)Includes the construction of 4,539 communications sites globally.

(2)Includes $27.6 million of perpetual land easement payments reported in Deferred financing costs and other financing activities in the cash flows from financing activities in our condensed consolidated statements of cash flows.

(3)Includes $4.7 million of finance lease payments reported in Repayments of notes payable, credit facilities, senior notes, secured debt, term loan and finance leases in the cash flows from financing activities in our condensed consolidated statements of cash flows.

(4)Net of purchase credits of $11.4 million on certain assets, which are recorded in investing activities in our condensed consolidated statements of cash flows.

We plan to continue to allocate our available capital, after satisfying our distribution requirements, among investment alternatives that meet our return on investment criteria, while maintaining our commitment to our long-term financial policies. Accordingly, we expect to continue to deploy capital through our annual capital expenditure program, including land purchases and new site and data center facility construction, and through acquisitions. We also regularly review our portfolios as to capital expenditures required to upgrade our infrastructure to our structural standards or address capacity, structural or permitting issues.

We expect that our 2022 total capital expenditures will be as follows (in millions):

Discretionary capital projects (1)$835to$865
Ground lease purchases$180to$200
Capital improvements and corporate expenditures$170to$180
Redevelopment$440to$460
Start-up capital projects$270to$290
Total capital expenditures$1,895to$1,995

(1)Includes the construction of approximately 6,000 to 7,000 communications sites globally.

Cash Flows from Financing Activities

Our significant financing activities were as follows (in millions):

Nine Months Ended September 30,
20222021
Proceeds from issuance of senior notes, net$1,293.6$5,609.4
Proceeds from issuance of common stock, net2,291.72,361.8
Repayments of credit facilities, net(535.0)(559.0)
Proceeds from term loans—2,347.0
Repayments of term loan(3,000.0)(1,744.2)
Repayment of securitized debt (1)—(763.5)
Repayments of senior notes (2)(1,555.1)—
Contributions from noncontrolling interest holders (3)2,548.53,078.2
Distributions to noncontrolling interest holders (4)(3.2)(223.1)
Purchase of redeemable noncontrolling interest (5)—(2.5)
Distributions paid on common stock(1,945.9)(1,674.4)

(1)During the nine months ended September 30, 2021, we repaid all amounts outstanding under the InSite Debt.

(2)Includes the CoreSite Debt, which, as of December 31, 2021, included $875.0 million aggregate principal amount and a fair value adjustment of $80.1 million. During the nine months ended September 30, 2022, we repaid all amounts outstanding under the CoreSite Debt.

(3)For the nine months ended September 30, 2022, includes $2.5 billion of contributions received from Stonepeak in connection with the Stonepeak Transaction (as further discussed below). For the nine months ended September 30, 2021, includes $3.1 billion of contributions received from Caisse de dépôt et placement du Québec (“CDPQ”) and Allianz insurance companies and funds managed by Allianz Capital Partners GmbH, including the Allianz European Infrastructure Fund (collectively, “Allianz”), for CDPQ and Allianz to acquire noncontrolling interests in subsidiaries whose holdings consist of our operations in France, Germany, Poland and Spain (such subsidiaries collectively, “ATC Europe”) (the “ATC Europe Transactions”).

(4)For the nine months ended September 30, 2021, includes $214.9 million of cash consideration paid to PGGM in connection with the reorganization of our subsidiaries in Europe.

(5)During the nine months ended September 30, 2021, we liquidated our interests in a company held in France for total consideration of 2.2 million EUR (approximately $2.5 million at the date of redemption).

Repayment of 2.250% Senior Notes—On January 14, 2022, we repaid $600.0 million aggregate principal amount of the 2.250% Notes upon their maturity. The 2.250% Notes were repaid using borrowings under the 2021 Credit Facility. Upon completion of the repayment, none of the 2.250% Notes remained outstanding.

Offering of Senior Notes

*3.650% Senior Notes and 4.050% Senior Notes Offering—*On April 1, 2022, we completed a registered public offering of $650.0 million aggregate principal amount of 3.650% senior unsecured notes due 2027 (the “3.650% Notes”) and $650.0 million aggregate principal amount of 4.050% senior unsecured notes due 2032 (the “4.050% Notes” and, together with the 3.650% Notes, the “Notes”). The net proceeds from this offering were approximately $1,282.6 million, after deducting commissions and estimated expenses. We used the net proceeds to repay existing indebtedness under the 2021 Multicurrency Credit Facility, the 2021 Credit Facility and the 2021 USD 364-Day Delayed Draw Term Loan.

The key terms of the Notes are as follows:

Senior NotesAggregate Principal Amount (in millions)Issue Date and Interest Accrual DateMaturity DateContractual Interest RateFirst Interest PaymentInterest Payments Due (1)Par Call Date (2)
3.650% Notes$650.0April 1, 2022March 15, 20273.650%September 15, 2022March 15 and September 15February 15, 2027
4.050% Notes$650.0April 1, 2022March 15, 20324.050%September 15, 2022March 15 and September 15December 15, 2031

(1)Accrued and unpaid interest on U.S. Dollar (“USD”) denominated notes is payable in USD semi-annually in arrears and will be computed from the issue date on the basis of a 360-day year comprised of twelve 30-day months.

(2)We may redeem the Notes at any time, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes plus a make-whole premium, together with accrued interest to the redemption date. If we redeem the Notes on or after the par call date, we will not be required to pay a make-whole premium.

If we undergo a change of control and corresponding ratings decline, each as defined in the supplemental indenture for the Notes, we may be required to repurchase all of the Notes at a purchase price equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest (including additional interest, if any), up to but not including the repurchase date. The Notes rank equally with all of our other senior unsecured debt and are structurally subordinated to all existing and future indebtedness and other obligations of our subsidiaries.

The supplemental indenture contains certain covenants that restrict our ability to merge, consolidate or sell assets and our (together with our subsidiaries’) ability to incur liens. These covenants are subject to a number of exceptions, including that we and our subsidiaries may incur certain liens on assets, mortgages or other liens securing indebtedness if the aggregate amount of indebtedness secured by such liens does not exceed 3.5x Adjusted EBITDA, as defined in the supplemental indenture.

Repayment of CoreSite Debt—On January 7, 2022, we repaid the entire amount outstanding under the CoreSite Debt, plus accrued and unpaid interest up to, but excluding, January 7, 2022, for an aggregate redemption price of $962.9 million, including $80.1 million of prepayment consideration and $7.8 million in accrued and unpaid interest. The repayment of the CoreSite Debt was funded with borrowings under the 2021 Multicurrency Credit Facility and cash on hand.

*2021 Multicurrency Credit Facility—*During the nine months ended September 30, 2022, we borrowed an aggregate of $850.0 million and repaid an aggregate of $680.0 million of revolving indebtedness under our $6.0 billion senior unsecured multicurrency revolving credit facility, as amended and restated in December 2021 (the “2021 Multicurrency Credit Facility”). We used the borrowings to repay outstanding indebtedness, including the CoreSite Debt, and for general corporate purposes. We currently have $3.5 million of undrawn letters of credit and maintain the ability to draw down and repay amounts under the 2021 Multicurrency Credit Facility in the ordinary course.

*2021 Credit Facility—*During the nine months ended September 30, 2022, we borrowed an aggregate of $2.7 billion and repaid an aggregate of $3.4 billion of revolving indebtedness under our $4.0 billion senior unsecured revolving credit facility, as amended and restated in December 2021 (the “2021 Credit Facility”). We used the borrowings to repay outstanding indebtedness, including the 2.250% Notes, and for general corporate purposes. We currently have $24.7 million of undrawn letters of credit and maintain the ability to draw down and repay amounts under the 2021 Credit Facility in the ordinary course.

*Repayments under the 2021 USD 364-Day Delayed Draw Term Loan—*On April 6, 2022, we repaid $100.0 million of indebtedness under our $3.0 billion unsecured term loan entered into in December 2021 (the “2021 USD 364-Day Delayed Draw Term Loan”) using proceeds from the issuance of the 3.650% Notes and the 4.050% Notes and cash on hand. On June 10, 2022, we repaid $2.3 billion of indebtedness under the 2021 USD 364-Day Delayed Draw Term Loan using proceeds from the June 2022 common stock offering (as further discussed below) and cash on hand. On August 11, 2022, we repaid all remaining amounts outstanding under the 2021 USD 364-Day Delayed Draw Term Loan using proceeds from the Stonepeak Transaction (as further discussed below).

As of September 30, 2022, the key terms under the 2021 Multicurrency Credit Facility, the 2021 Credit Facility, our $1.0 billion unsecured term loan, as amended and restated in December 2021 (the “2021 Term Loan”), our 825.0 million EUR unsecured term loan, as amended and restated in December 2021 (the “2021 EUR Three Year Delayed Draw Term

Loan”) and our $1.5 billion unsecured term loan entered into in December 2021 (the “2021 USD Two Year Delayed Draw Term Loan”) were as follows:

Bank FacilityOutstanding Principal Balance ($ in millions)Maturity DateLIBOR or EURIBOR borrowing interest rate range (1)Base rate borrowing interest rate range (1)Current margin over LIBOR or EURIBOR and the base rate, respectively
2021 Multicurrency Credit Facility(2)$4,394.3June 30, 2025(3)0.875% - 1.750%0.000% - 0.750%1.125% and 0.125%
2021 Credit Facility(4)705.0January 31, 2027(3)0.875% - 1.750%0.000% - 0.750%1.125% and 0.125%
2021 Term Loan(4)1,000.0January 31, 20270.875% - 1.750%0.000% - 0.750%1.125% and 0.125%
2021 EUR Three Year Delayed Draw Term Loan(5)808.7May 28, 20240.875% - 1.625%0.000% - 0.625%1.125% and 0.125%
2021 USD Two Year Delayed Draw Term Loan(4)1,500.0December 28, 20230.875% - 1.750%0.000% - 0.750%1.125% and 0.125%

(1)Represents interest rate above the London Interbank Offered Rate (“LIBOR”) for LIBOR based borrowings, interest rate above Euro Interbank Offer Rate (“EURIBOR”) for EURIBOR based borrowings and interest rate above the defined base rate for base rate borrowings, in each case based on our debt ratings.

(2)Currently borrowed at LIBOR for USD denominated borrowings and at EURIBOR for EUR denominated borrowings.

(3)Subject to two optional renewal periods.

(4)Currently borrowed at LIBOR.

(5)Currently borrowed at EURIBOR.

We must pay a quarterly commitment fee on the undrawn portion of each of the 2021 Multicurrency Credit Facility and the 2021 Credit Facility. The commitment fee for the 2021 Multicurrency Credit Facility and the 2021 Credit Facility ranges from 0.080% to 0.300% per annum, based upon our debt ratings, and is currently 0.110%.

The 2021 Multicurrency Credit Facility, the 2021 Credit Facility, the 2021 Term Loan, the 2021 EUR Three Year Delayed Draw Term Loan and the 2021 USD Two Year Delayed Draw Term Loan do not require amortization of principal and may be paid prior to maturity in whole or in part at our option without penalty or premium. We have the option of choosing either a defined base rate, LIBOR or EURIBOR as the applicable base rate for borrowings under these bank facilities.

The loan agreements for each of the 2021 Multicurrency Credit Facility, the 2021 Credit Facility, the 2021 Term Loan, the 2021 EUR Three Year Delayed Draw Term Loan and the 2021 USD Two Year Delayed Draw Term Loan contain certain reporting, information, financial and operating covenants and other restrictions (including limitations on additional debt, guaranties, sales of assets and liens) with which we must comply. Failure to comply with the financial and operating covenants of the loan agreements could not only prevent us from being able to borrow additional funds under the revolving credit facilities, but may constitute a default, which could result in, among other things, the amounts outstanding under the applicable agreement, including all accrued interest and unpaid fees, becoming immediately due and payable.

*Nigeria Letters of Credit—*During the nine months ended September 30, 2022, we drew on letters of credit in Nigeria. The drawn amounts bear interest at a rate equal to the Secured Overnight Financing Rate at the time of drawing plus a spread. Amounts are due 270 days from the date of drawing. As of September 30, 2022, we had $13.0 million outstanding under the drawn letters of credit.

Stonepeak Transaction—In July 2022, in connection with the funding of the CoreSite Acquisition, we entered into an agreement with certain investment vehicles affiliated with Stonepeak Partners LP (such investment vehicles, collectively, “Stonepeak”) for Stonepeak to acquire a 29% noncontrolling ownership interest in the our U.S. data center business. The transaction was completed in August 2022 for total aggregate consideration of $2.5 billion, through an investment in common equity and mandatorily convertible preferred equity (the “Stonepeak Transaction”). We expect to pay distributions related to the outstanding common equity and mandatorily convertible preferred equity.

In October 2022, we entered into an agreement with Stonepeak for Stonepeak to acquire additional common equity and mandatorily preferred equity interests in our U.S. data center business for total aggregate consideration of $570.0 million. The transaction was completed on October 20, 2022. We used the proceeds to repay existing indebtedness under the 2021 Multicurrency Credit Facility.

As of the date hereof, we hold a common equity interest of approximately 72% in our U.S. data center business, with Stonepeak holding approximately 28% of the outstanding common equity and 100% of the outstanding mandatorily convertible preferred equity. On a fully converted basis, which is expected to occur four years from the date of the initial closing in August 2022, and on the basis of the currently outstanding equity, we will hold a controlling ownership interest of approximately 64%, with Stonepeak holding approximately 36%. The mandatorily convertible preferred equity, which accrues dividends at 5.0%, will convert into common equity on a one for one basis, subject to adjustment that will be measured on the conversion date.

Stock Repurchase Programs—In March 2011, our Board of Directors approved a stock repurchase program, pursuant to which we are authorized to repurchase up to $1.5 billion of our common stock (the “2011 Buyback”). In December 2017, our Board of Directors approved an additional stock repurchase program, pursuant to which we are authorized to repurchase up to $2.0 billion of our common stock (the “2017 Buyback,” and, together with the 2011 Buyback, the “Buyback Programs”).

During the nine months ended September 30, 2022, there were no repurchases under either of the Buyback Programs.

We expect to continue managing the pacing of the remaining approximately $2.0 billion under the Buyback Programs in response to general market conditions and other relevant factors. We expect to fund any further repurchases of our common stock through a combination of cash on hand, cash generated by operations and borrowings under our credit facilities. Repurchases under the Buyback Programs are subject to, among other things, us having available cash to fund the repurchases.

*Sales of Equity Securities—*We receive proceeds from sales of our equity securities pursuant to our employee stock purchase plan (the “ESPP”) and upon exercise of stock options granted under our equity incentive plan. During the nine months ended September 30, 2022, we received an aggregate of $21.0 million in proceeds upon exercises of stock options and sales pursuant to the ESPP.

2020 “At the Market” Stock Offering Program—In August 2020, we established an “at the market” stock offering program through which we may issue and sell shares of our common stock having an aggregate gross sales price of up to $1.0 billion (the “2020 ATM Program”). Sales under the 2020 ATM Program may be made by means of ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or, subject to our specific instructions, at negotiated prices. We intend to use the net proceeds from any issuances under the 2020 ATM Program for general corporate purposes, which may include, among other things, the funding of acquisitions, additions to working capital and repayment or refinancing of existing indebtedness. As of September 30, 2022, we have not sold any shares of common stock under the 2020 ATM Program.

Common Stock Offering—On June 7, 2022, we completed a registered public offering of 9,185,000 shares of our common stock, par value $0.01 per share, (which includes the full exercise of the underwriters’ over-allotment option) at $256.00 per share. Aggregate net proceeds from this offering were approximately $2.3 billion after deducting underwriting discounts and estimated offering expenses. We used the net proceeds to repay existing indebtedness under the 2021 USD 364-Day Delayed Draw Term Loan.

*Distributions—*As a REIT, we must annually distribute to our stockholders an amount equal to at least 90% of our REIT taxable income (determined before the deduction for distributed earnings and excluding any net capital gain). Generally, we have distributed, and expect to continue to distribute, all or substantially all of our REIT taxable income after taking into consideration our utilization of NOLs. We have distributed an aggregate of approximately $13.8 billion to our common stockholders, including the dividend paid in October 2022, primarily classified as ordinary income that may be treated as qualified REIT dividends under Section 199A of the Code for taxable years ending before 2026.

During the nine months ended September 30, 2022, we paid $4.22 per share, or $1.9 billion, to our common stockholders of record. In addition, we declared a distribution of $1.47 per share, or $684.4 million, paid on October 26, 2022 to our common stockholders of record at the close of business on October 11, 2022.

The amount, timing and frequency of future distributions will be at the sole discretion of our Board of Directors and will depend on various factors, a number of which may be beyond our control, including our financial condition and

operating cash flows, the amount required to maintain our qualification for taxation as a REIT and reduce any income and excise taxes that we otherwise would be required to pay, limitations on distributions in our existing and future debt and preferred equity instruments, our ability to utilize NOLs to offset our distribution requirements, limitations on our ability to fund distributions using cash generated through our taxable REIT subsidiaries and other factors that our Board of Directors may deem relevant.

We accrue distributions on unvested restricted stock units, which are payable upon vesting. As of September 30, 2022, the amount accrued for distributions payable related to unvested restricted stock units was $13.5 million. During the nine months ended September 30, 2022, we paid $6.8 million of distributions upon the vesting of restricted stock units.

Factors Affecting Sources of Liquidity

As discussed in the “Liquidity and Capital Resources” section of the 2021 Form 10-K, our liquidity depends on our ability to generate cash flow from operating activities, borrow funds under our credit facilities and maintain compliance with the contractual agreements governing our indebtedness. We believe that the debt agreements discussed below represent our material debt agreements that contain covenants, our compliance with which would be material to an investor’s understanding of our financial results and the impact of those results on our liquidity.

*Restrictions Under Loan Agreements Relating to Our Credit Facilities—*The loan agreements for the 2021 Multicurrency Credit Facility, the 2021 Credit Facility, the 2021 Term Loan, the 2021 EUR Three Year Delayed Draw Term Loan and the 2021 USD Two Year Delayed Draw Term Loan contain certain financial and operating covenants and other restrictions applicable to us and our subsidiaries that are not designated as unrestricted subsidiaries on a consolidated basis. These restrictions include limitations on additional debt, distributions and dividends, guaranties, sales of assets and liens. The loan agreements also contain covenants that establish financial tests with which we and our restricted subsidiaries must comply related to total leverage and senior secured leverage, as set forth in the table below. As of September 30, 2022, we were in compliance with each of these covenants.

Compliance Tests For The 12 Months Ended September 30, 2022 ($ in billions)
Ratio (1)Additional Debt Capacity Under Covenants (2)Capacity for Adjusted EBITDA Decrease Under Covenants (3)
Consolidated Total Leverage RatioTotal Debt to Adjusted EBITDA ≤ 7.50:1.00~ 10.9~ 1.5
Consolidated Senior Secured Leverage RatioSenior Secured Debt to Adjusted EBITDA ≤ 3.00:1.00~ 17.3 (4)~ 5.8

(1)Each component of the ratio as defined in the applicable loan agreement.

(2)Assumes no change to Adjusted EBITDA.

(3)Assumes no change to our debt levels.

(4)Effectively, however, additional Senior Secured Debt under this ratio would be limited to the capacity under the Consolidated Total Leverage Ratio.

Under the terms of the agreements for the 2021 Multicurrency Credit Facility, the 2021 Credit Facility, the 2021 Term Loan, the 2021 EUR Three Year Delayed Draw Term Loan and the 2021 USD Two Year Delayed Draw Term Loan, the Telxius Acquisition and the CoreSite Acquisition are designated as a Qualified Acquisitions, whereby our Total Debt to Adjusted EBITDA ratio was adjusted to not exceed 7.50 to 1.00 for four fiscal quarters following consummation of the Telxius Acquisition, which began with the quarter ended June 30, 2021, and for four fiscal quarters following consummation of the CoreSite Acquisition, which began with the quarter ended December 31, 2021. The loan agreements for our credit facilities also contain reporting and information covenants that require us to provide financial and operating information to the lenders within certain time periods. If we are unable to provide the required information on a timely basis, we would be in breach of these covenants.

Failure to comply with the financial maintenance tests and certain other covenants of the loan agreements for our credit facilities could not only prevent us from being able to borrow additional funds under these credit facilities, but may also constitute a default under these credit facilities, which could result in, among other things, the amounts outstanding, including all accrued interest and unpaid fees, becoming immediately due and payable. If this were to occur, we may not have sufficient cash on hand to repay such indebtedness. The key factors affecting our ability to comply with the debt covenants described above are our financial performance relative to the financial maintenance tests defined in the loan agreements for these credit facilities and our ability to fund our debt service obligations. Based upon our current

expectations, we believe our operating results during the next 12 months will be sufficient to comply with these covenants.

*Restrictions Under Agreements Relating to the 2015 Securitization and the Trust Securitizations—*The indenture and related supplemental indenture governing the American Tower Secured Revenue Notes, Series 2015-2, Class A (the “Series 2015-2 Notes”) issued by GTP Acquisition Partners I, LLC (“GTP Acquisition Partners”) in a private securitization transaction in May 2015 (the “2015 Securitization”) and the loan agreement related to the securitization transactions completed in March 2013 (the “2013 Securitization”) and March 2018 (the “2018 Securitization” and, together with the 2013 Securitization, the “Trust Securitizations”) include certain financial ratios and operating covenants and other restrictions customary for transactions subject to rated securitizations. Among other things, GTP Acquisition Partners and American Tower Asset Sub, LLC and American Tower Asset Sub II, LLC (together, the “AMT Asset Subs”) are prohibited from incurring other indebtedness for borrowed money or further encumbering their assets, subject to customary carve-outs for ordinary course trade payables and permitted encumbrances (as defined in the applicable agreements).

Under the agreements, amounts due will be paid from the cash flows generated by the assets securing the Series 2015-2 Notes or the assets securing the nonrecourse loan that secures the Secured Tower Revenue Securities, Series 2013-2A (the “Series 2013-2A Securities”), Secured Tower Revenue Securities, Series 2018-1, Subclass A (the “Series 2018-1A Securities”), and the Secured Tower Revenue Securities, Series 2018-1, Subclass R (the “Series 2018-1R Securities” and, together with the Series 2018-1A Securities, the “2018 Securities”) issued in the Trust Securitizations (the “Loan”), as applicable, which must be deposited into certain reserve accounts, and thereafter distributed, solely pursuant to the terms of the applicable agreement. On a monthly basis, after payment of all required amounts under the applicable agreement, subject to the conditions described in the table below, the excess cash flows generated from the operation of such assets are released to GTP Acquisition Partners or the AMT Asset Subs, as applicable, which can then be distributed to, and used by, us. As of September 30, 2022, $96.5 million held in such reserve accounts was classified as restricted cash.

Certain information with respect to the 2015 Securitization and the Trust Securitizations is set forth below. The debt service coverage ratio (“DSCR”) is generally calculated as the ratio of the net cash flow (as defined in the applicable agreement) to the amount of interest, servicing fees and trustee fees required to be paid over the succeeding 12 months on the principal amount of the Series 2015-2 Notes or the Loan, as applicable, that will be outstanding on the payment date following such date of determination.

Issuer or BorrowerNotes/Securities IssuedConditions Limiting Distributions of Excess CashExcess Cash Distributed During the Nine Months Ended September 30, 2022DSCR as of September 30, 2022Capacity for Decrease in Net Cash Flow Before Triggering Cash Trap DSCR (1)Capacity for Decrease in Net Cash Flow Before Triggering Minimum DSCR (1)
Cash Trap DSCRAmortization Period
(in millions)(in millions)(in millions)
2015 SecuritizationGTP Acquisition PartnersAmerican Tower Secured Revenue Notes, Series 2015-21.30x, Tested Quarterly (2)(3)(4)$294.916.33x$276.6$279.4
Trust SecuritizationsAMT Asset SubsSecured Tower Revenue Securities, Series 2013-2A, Secured Tower Revenue Securities, Series 2018-1, Subclass A and Secured Tower Revenue Securities, Series 2018-1, Subclass R1.30x, Tested Quarterly (2)(3)(5)$461.910.28x$536.4$545.4

(1)Based on the net cash flow of the applicable issuer or borrower as of September 30, 2022 and the expenses payable over the next 12 months on the Series 2015-2 Notes or the Loan, as applicable.

(2)Once triggered, a Cash Trap DSCR condition continues to exist until the DSCR exceeds the Cash Trap DSCR for two consecutive calendar quarters. During a Cash Trap DSCR condition, all cash flow in excess of amounts required to make debt service payments, fund required reserves, pay management fees and budgeted operating expenses and make other payments required under the applicable transaction documents,

referred to as excess cash flow, will be deposited into a reserve account (the “Cash Trap Reserve Account”) instead of being released to the applicable issuer or borrower.

(3)An amortization period commences if the DSCR is equal to or below 1.15x (the “Minimum DSCR”) at the end of any calendar quarter and continues to exist until the DSCR exceeds the Minimum DSCR for two consecutive calendar quarters.

(4)No amortization period is triggered if the outstanding principal amount of a series has not been repaid in full on the applicable anticipated repayment date. However, in such event, additional interest will accrue on the unpaid principal balance of the applicable series, and such series will begin to amortize on a monthly basis from excess cash flow.

(5)An amortization period exists if the outstanding principal amount has not been paid in full on the applicable anticipated repayment date and continues to exist until such principal has been repaid in full.

A failure to meet the noted DSCR tests could prevent GTP Acquisition Partners or the AMT Asset Subs from distributing excess cash flow to us, which could affect our ability to fund our capital expenditures, including tower construction and acquisitions, and to meet REIT distribution requirements. During an “amortization period,” all excess cash flow and any amounts then in the applicable Cash Trap Reserve Account would be applied to pay the principal of the Series 2015-2 Notes or the Loan, as applicable, on each monthly payment date, and so would not be available for distribution to us. Further, additional interest will begin to accrue with respect to the Series 2015-2 Notes or subclass of the Loan from and after the anticipated repayment date at a per annum rate determined in accordance with the applicable agreement. With respect to the Series 2015-2 Notes, upon the occurrence of, and during, an event of default, the applicable trustee may, in its discretion or at the direction of holders of more than 50% of the aggregate outstanding principal of the Series 2015-2 Notes, declare the Series 2015-2 Notes immediately due and payable, in which case any excess cash flow would need to be used to pay holders of such notes. Furthermore, if GTP Acquisition Partners or the AMT Asset Subs were to default on the Series 2015-2 Notes or the Loan, the applicable trustee may seek to foreclose upon or otherwise convert the ownership of all or any portion of the 3,528 communications sites that secure the Series 2015-2 Notes or the 5,102 broadcast and wireless communications towers and related assets that secure the Loan, respectively, in which case we could lose such sites and the revenue associated with those assets.

As discussed above, we use our available liquidity and seek new sources of liquidity to fund capital expenditures, future growth and expansion initiatives, satisfy our distribution requirements and repay or repurchase our debt. If we determine that it is desirable or necessary to raise additional capital, we may be unable to do so, or such additional financing may be prohibitively expensive or restricted by the terms of our outstanding indebtedness. Additionally, as further discussed under the caption “Risk Factors” in Item 1A of the 2021 Form 10-K, extreme market volatility and disruption caused by the COVID-19 pandemic may impact our ability to raise additional capital through debt financing activities or our ability to repay or refinance maturing liabilities, or impact the terms of any new obligations. If we are unable to raise capital when our needs arise, we may not be able to fund capital expenditures, future growth and expansion initiatives, satisfy our REIT distribution requirements and debt service obligations, or refinance our existing indebtedness.

In addition, our liquidity depends on our ability to generate cash flow from operating activities. As set forth under the caption “Risk Factors” in Item 1A of the 2021 Form 10-K, we derive a substantial portion of our revenues from a small number of customers and, consequently, a failure by a significant customer to perform its contractual obligations to us could adversely affect our cash flow and liquidity.

For more information regarding the terms of our outstanding indebtedness, please see note 8 to our consolidated financial statements included in the 2021 Form 10-K.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated and condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as related disclosures of contingent assets and liabilities. We evaluate our policies and estimates on an ongoing basis, including those related to impairment of long-lived assets, asset retirement obligations, revenue recognition, rent expense, income taxes and accounting for business combinations and acquisitions of assets, as further discussed in the 2021 Form 10-K. Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We have reviewed our policies and estimates to determine our critical accounting policies for the nine months ended September 30, 2022. We have made no material changes to the critical accounting policies described in the 2021 Form 10-K.

In October 2019, the Supreme Court of India issued a ruling regarding the definition of AGR and associated fees and charges, which was reaffirmed in March 2020, and again in July 2021 with respect to the total charges, that may have a material financial impact on certain of our customers and could affect their ability to perform their obligations under agreements with us. In September 2020, the Supreme Court of India defined the expected timeline of ten years for payments owed under the ruling. In September 2021, the government of India approved a relief package that, among other things, included (i) a four-year moratorium on the payment of AGR fees owed and (ii) a change in the definition of AGR on a prospective basis. During the three months ended September 30, 2022, our largest customer in India, VIL, indicated that it would make a partial payment of its contractual amounts owed to us under tenant leases for the remainder of 2022, including amounts owed for the three months ended September 30, 2022. For the three months ended September 30, 2022, the shortfall in payments totaled approximately $48 million. We have deferred recognition of revenue on the shortfall amount until payment is received. Recognition of revenue on any future shortfalls in payment of contractual amounts will be similarly deferred. Based on indications from VIL, we expect to defer recognition of a similar amount for the three months ended December 31, 2022, pending resolution. VIL has communicated its intent to fulfill the full amount of its contractual obligations commencing January 1, 2023, although no assurance can be given that this will occur.

We will continue to monitor the status of these developments, as it is possible that the estimated future cash flows may differ from current estimates and changes in estimated cash flows from customers in India could have an impact on previously recorded tangible and intangible assets, including amounts originally recorded as tenant-related intangibles.

The carrying value of tenant-related intangibles in India was $0.8 billion as of September 30, 2022, which represents 6% of our consolidated balance of $13.3 billion. Additionally, a significant reduction in customer related cash flows in India could also impact our tower portfolio and network location intangibles. The carrying values of our tower portfolio and network location intangibles in India were $0.9 billion and $0.3 billion, respectively, as of September 30, 2022, which represent 11% and 9% of our consolidated balances of $8.5 billion and $3.6 billion, respectively. The carrying value of goodwill in India was $0.9 billion as of September 30, 2022, which represents 7% of our consolidated balance of $12.7 billion.

During the nine months ended September 30, 2022, no potential goodwill impairment was identified as the fair value of each of our reporting units was in excess of its carrying amount.

Accounting Standards Update

For a discussion of recent accounting standards updates, see note 1 to our consolidated and condensed consolidated financial statements included in this Quarterly Report.

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