{
  "docId": "019dd923-622c-750b-8b96-1aee342c3a73",
  "docSlug": "10dc4f9f3e31",
  "documentTitle": "American Tower (AMT)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
  "documentKindSlug": "research-note",
  "documentKindLabel": "Research note",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2013-07-17 00:00:00",
  "orientation": "portrait",
  "aspectRatio": 0.77272725,
  "pageNumber": 23,
  "pageCount": 118,
  "prevPage": 22,
  "nextPage": 24,
  "slideType": "scenario_table",
  "function": "analyze_data",
  "density": "overcrowded",
  "nDataPoints": 24,
  "notes": "The slide illustrates a financial distortion where capital expenditure is effectively disguised as operating revenue, leading to higher reported margins but lower actual investment returns.",
  "elementsJson": [
    "paragraph",
    "kpi_table"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b96-1aee342c3a73/23",
  "deckHref": "/decks/019dd923-622c-750b-8b96-1aee342c3a73",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b96-1aee342c3a73.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-1aee342c3a73#slide-23",
  "components": [
    {
      "bbox": null,
      "kind": "callout",
      "text": "As shown below, by increasing the price it pays for the tower, AMT increases its EBITDA margin from 60.0% to 73.3%.",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd952-e6ef-7018-b1f1-2b7223ccd024",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.055,
        "w": 0.677,
        "x": 0.175,
        "y": 0.42
      },
      "kind": "list",
      "text": "US$100,000 market purchase, 10-year leaseback at US$1,000 per month.\nUS$125,000 purchase, 10-year leaseback at US$1,250 per month.\nUS$150,000 purchase, 10-year leaseback at US$1,500 per month.",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "5b2549b1-6660-4115-a4b5-86b478212cc0",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "metric",
      "text": "EBITDA margin: 73.3%",
      "attrs": null,
      "subkind": "primary",
      "toolName": "Quantification",
      "toolSlug": "quantification",
      "confidence": null,
      "componentId": "019dd952-e6ef-7018-b1f1-2e1b7282b699",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.045,
        "w": 0.704,
        "x": 0.148,
        "y": 0.112
      },
      "kind": "paragraph",
      "text": "If AMT is buying a tower from a carrier, two other major factors come into play: the age of the tower, and its construction quality. Both of these will determine whether AMT needs to spend money, and how much, in order to co-locate tenants on the tower.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "2d4a2c3f-d5a5-4683-bfdf-de677b1d4870",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.095,
        "w": 0.704,
        "x": 0.148,
        "y": 0.177
      },
      "kind": "paragraph",
      "text": "Assume for the sake of simplicity that Carrier A owns a single tenant tower - in other words, it is the only tenant. After making allowances for any maintenance cap ex, AMT determines that it is willing to pay US$100,000 for the tower with a market rent back of US$1,000 per month with CPI escalators. If Carrier A realizes that AMT is a deep-pocketed aggressive company with low funding costs, it might tell AMT that it wants $150,000 for the tower. AMT might very well pay that inflated price, but in exchange it would receive inflated rent.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "8d084c95-da18-4516-8e1b-8f827c231d18",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.075,
        "w": 0.704,
        "x": 0.148,
        "y": 0.668
      },
      "kind": "paragraph",
      "text": "As shown in the table below, the IRR drops as AMT pays above market price, assuming that there is a linear relationship between overpayments and over-rents. We explain how we calculate these IRRs below. (We analyze AMT's IRRs in four overseas markets infra, concluding that investments in all four should be significantly impaired, and that the investments return less than government bonds.)",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "e4d1d373-68f7-4200-8a61-d876d820fccd",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.1,
        "w": 0.562,
        "x": 0.219,
        "y": 0.563
      },
      "kind": "table",
      "text": "Purchase Price 100,000 125,000 150,000\nRevenue 12,000 15,000 18,000\nOpEx 4,800 4,800 4,800\nEBITDA 7,200 10,200 13,200\nEBITDA Margin 60.0% 68.0% 73.3%",
      "attrs": null,
      "subkind": "data",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "0dd6f7c3-ef8d-4b3d-9309-b6185b93da43",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.06,
        "w": 0.238,
        "x": 0.381,
        "y": 0.775
      },
      "kind": "table",
      "text": "Market IRR 10.24%\n1.25x Market IRR 9.68%\n1.5x Market IRR 9.20%",
      "attrs": null,
      "subkind": "data",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "cc658451-9c1b-42de-b3fe-8c8e5ccbfcf9",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.015,
        "w": 0.588,
        "x": 0.148,
        "y": 0.338
      },
      "kind": "title",
      "text": "How Lending Distorts AMT's Income Statement",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "1fc84de0-94f0-47f5-8992-5e44b855e8ad",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [
    {
      "name": "Waterfall chart",
      "slug": "waterfall-chart",
      "agent": null,
      "layer": "slide",
      "matchId": "4bd5fafd-eff9-4783-b9de-cad5ab4071e4",
      "evidence": "The table and waterfall chart show how AMT's EBITDA margin changes with different purchase prices.",
      "confidence": 0.7
    }
  ],
  "frameworks": [],
  "arcBeats": [
    {
      "to": 40,
      "from": 21,
      "beatId": "7e3c52c2-f559-41d8-a93f-84ccf2558966",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "The Struggle",
      "beatSlug": "overcoming-monster-the-struggle",
      "evidence": "The document highlights several issues with AMT's international business practices",
      "position": 1,
      "confidence": 0.8,
      "parentBeatName": "Development",
      "parentBeatSlug": "development"
    }
  ],
  "loops": [
    {
      "to": 40,
      "from": 21,
      "name": "Iceberg",
      "slug": "10-iceberg",
      "bestFor": "Consulting, complex problem solving, organizational change",
      "matchId": "6f6b6973-bc46-4657-b055-a785308b56f3",
      "evidence": "The document highlights several issues with AMT's international business practices",
      "position": 1,
      "objective": "Highlighting issues with AMT's international business practices",
      "structure": "The Symptom (Visible) -> The System (Hidden) -> The Root Cause",
      "confidence": 0.8,
      "description": "Reveal that the visible problem is merely a symptom of a deeper root cause"
    }
  ],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}