Steven Vondran
President and Chief Executive Officer at American Tower
Thanks, Adam. Good morning, everyone, and thanks for joining the call. When I stepped into the CEO role about a year-ago, I expressed my excitement about leading American Tower through its next era of growth and evolution. We have an exceptional portfolio of assets, unmatched operating capabilities, and we're in what I believe to be one of the most durable businesses catalyzed by ever-increasing mobile network demand. Over the past year, activity across our platform has highlighted the criticality of our communications assets in meeting growing demand.
As carriers in our US and European markets deployed mid-band spectrum assets, emerging market players densified 4G networks and began rolling out 5G and our CoreSite data center business delivered yet another record year of new leasing. My original perspective of the 5G cycle requiring continued network investments necessary to support coverage has been realized and bolstered with incremental optimism through the next phase of AI-driven demand, which I believe will benefit our towers and data centers and unlock synergistic value between the two at the edge.
Last year, I also laid out a set of strategic priorities centered on-balance sheet strength, efficiency, portfolio quality and capital allocation discipline, all meant to further enhance our customer value proposition and strengthen the durability and quality of earnings for our shareholders over the long-term. Certain headwinds in 2024 underscore the importance of these initiatives, which better prepare us to weather challenges like care consolidation and FX and interest-rate volatility. And although these global risks persist, thanks to significant efforts undertaken by the talented members of our global team, we're entering 2025 in a stronger position and we'll remain focused on pursuing these strategies to prioritize higher-quality earnings and sustain growth.
We're currently on-track to maintain our five times leverage target on a recurring basis this year, which is an acceleration from our initial deleveraging plan following our acquisition at the end of 2021. In addition to managing our debt and capital structure, our net leverage profile was further supported by margin expansion, which was largely driven through systematic reduction of recurring SG&A costs. Cash SG&A, excluding bad debt, reduced by approximately $35 million in 2024 as compared to 2023, supported by various efficiency initiatives, including the thoughtful globalization of company-wide functions like finance, IT and HR.
Most recently, we appointed Bud Hill as our Chief Operating Officer, a role that will advance our efforts in driving efficiency and margin expansion by ensuring that we effectively leverage global operating expertise and apply the best of our processes, tools and capabilities across all of our regions. At the same time, we were happy to further leverage our exceptional bench strength and announced Rich Rossi, who spent over 20 years with American Tower to lead the US and Canada business. Importantly, with these changes, we aim to further elevate the quality of business functions in customer service and anticipate further enhancing our already attractive margin profile along the way.
We'll use the next several months-to diligently assess the optimal global operating structure and in time, we'll communicate long-term efficiency targets. We've already made significant progress and we have a long runway of opportunities still ahead. Over the past year, we continue to actively manage our global portfolio and forward-looking capital deployment priorities to rightsize geographic risk and ensure a strong synergistic fit between our strategy, core competencies and assets. Most notably, as we discussed on the 3rd-quarter call, we exited our India business and has since sold our modest land interest in Australia and New Zealand. We also recently signed an agreement to divest our South Africa fiber business and plan to close that transaction this quarter.
We believe the quality of our earnings and growth profile is at a material premium to where we stood only a few years ago. In 2025, we expect our developed markets, which consist of our US, Canadian and European operations along with CoreSite to contribute about 75% towards our unlevered AFFO. And we expect to further expand this portion through continued prioritization of capital to these developed segments. We've also increased the proportion of global tower cash flows derived from top operators in each market. Combined with reduced emerging market exposure, this should translate to a more attractive and predictable return profile moving forward.
Our stronger portfolio and focused capital allocation plan, paired with our best-in-class global operating capabilities and alignment with market leaders better enables us to benefit from positive industry trends. Global demand for mobile data continues to climb. The roughly 35% of mobile data traffic that runs over 5G networks today is expected to increase to 80% by 2030, prompting carriers to enhance and expand their increasingly stressed networks. Currently, with 5G upgrades, it improves spectral efficiency and subsequently with incremental sell sites that will densify their footprints in areas identified as needing additional capacity.
In our US tower business, we've observed four quarters of sequential acceleration in application activity over the course of 2024, exiting the year with our big three customers having upgraded an average of 65% of their sites within our portfolio with mid-band spectrum, up from just over 50% a year-ago. Carriers have begun to highlight the commercial benefits associated with our 5G investments, translated to enhanced network quality, customer retention and stronger ARPUs with commentary suggesting another active year of network investment in 2025. In fact, although we're between the two peaks of the 5G investment cycle coverage and capacity, the 2025 outlook for wireless capex spend is expected to return to higher levels again, totaling approximately $35 million, which is roughly $5 billion above the average annual spend during 4G.
Now as Rod will speak about in a moment, although we anticipate the positive momentum in US activity to continue into 2025 with a solid pipeline supporting it, our outlook for organic tenant growth in the US and Canada steps down modestly compared to 2024. This is a function of the cadence of our contracted use fees and also the commencement timing associated with non-contracted new business such as new co-locations outside of our MLAs or a customer that may not be under a comprehensive agreement, not a softening in-demand. So-far, the 5G investment cycle is largely in-line with our expectations. With recent care, commentary, dialogue and activity further reinforcing our conviction and sustain higher capex needs moving forward.
Over the next five years, underwritten by projected total mobile network profit growth of over 15% annually given the existing service terms, we expect the required network capacity to more than double with more connected devices, data-intensive applications and growing uplink transmission requirements, placing significant strength in the networks. Today, we'd expect roughly half of this incremental capacity need to be solved through current spectrum holdings and realized spectral efficiency. That leaves a sizable capacity gap that can only be resolved through densification, additional spectrum coming to-market or a combination of both.
In addition, mainstream use of new applications such as multimodal AI could further exacerbate capacity shortages and prompt even more activity. Taken altogether, we see an attractive addressable market that our portfolio is well-equipped to accommodate with equipment upgrades, co-locations and selective new site development over the next several years and beyond. Similar trends generally hold true internationally where true 5G mid-band coverage continues to progress each year and stands at roughly 45% in Europe, 15% in Latin-America and 10% in Africa.
Data consumption has grown at a CAGR of around mid-teens relatively 20% across these regions since 2020 and we've seen a corresponding increase in-cell site density that complements existing site upgrade efforts. Importantly, these mid-band coverage stats illustrate the need for continued investment over the next several years. As we anticipate similar annual data growth across these same geographies, carriers will continue to utilize the most cost-effective ways to bolster their network capacity and coverage, which will include a mix of macro towers, rooftop sites, small cells and in remote areas where terrestrial networks are not economically efficient satellites.
In our CoreSite business, the team delivered a tremendous quarter of results to round out another exceptional year. These results reinforce the strength of the demand and pricing durability for interconnection-centric retail-oriented co-location. And while we continue to evaluate hyperscale, we remain convinced of our core business model and the tangible demand catalyst we see today, including AI-related demand. This allows us to stay disciplined in our lease-up approach to ensure a high-quality customer mix at the right economics and supports our continued long-term expectation of mid-teens or higher stabilized yields.
To build-on this momentum in 2025 and beyond and continue to meet the growing needs of our customers across our global platform, we'll maintain the following priorities. First, we continue to evolve our value proposition to our customers and our investment opportunity to our shareholders. I firmly believe that we're the best operator of and distributed real-estate in the world, which allows us to pass along certain benefits and efficiencies to our customers, including power as a service, security and monitoring, data and asset quality, customer service delivery, speed of deployment and a suite of services capabilities.
Additionally, I recognize that investor attraction to American Towers and equity option requires that we operate the highest-quality portfolio with strategic fit among our geographies, demonstrate trustworthy stewardship of shareholder capital through disciplined investments and leverage an operating structure that yields outsized efficiency, margins and returns. We have an incredibly talented team that lets us do that and further globalizing our organization will drive additional economies of scale, civilization and global automation for our savings across multiple business functions, ensuring that we're able to continue demonstrating synergistic value-creation across our 20-plus markets at an exciting time in global connectivity.
Next, and as Rod will discuss in more detail, we'll continue to actively manage our capital to prioritize funding of opportunities that yield the most attractive risk-adjusted rates of return over the long-term. We're continuing to direct most discretionary capital towards our developed market platforms, including over $600 million for data center development on existing campuses underwritten at mid-teen stabilized yields with some optionality to pursue smaller tuck-in inorganic opportunities where appropriate and also the construction of 600 tower sites in Europe where we anticipate low double-digit day-one yields.
At the same time, we're reducing emerging market discretionary capex to just over $300 million in 2025, a reduction of over 60% from 2021 and over 15% compared to 2024. Spend across our Latin-America and African APAC segments will be primarily focused on the construction of about 1,650 previously committed tower sites for strategic customers underwritten at mid-teens day-one NOI yields. We expect this number to come down over-time as we satisfy those commitments and redirect new discretionary capital to developed regions. In conclusion, macroeconomic uncertainty persists across the global landscape, but consumer demand for connectivity and bandwidth-intensive applications and the associated network requirements remain resilient.
The macro tower remains the most cost-effective manner to deliver a gigabyte of mobile data and our global portfolio of assets and leading capabilities exceptionally equips us to support our customers' multi-year investment needs. Further, we've taken appropriate steps to ensure a higher degree of durable growth and returns generated by our leading business. I'm confident that our focus in operating and actively managing the highest-quality global portfolio of assets, offering best-in-class customer service and delivery through our experienced global teams and leveraging our investment-grade balance sheet positions American Tower to profit from attractive long-term secular demand trends across the wireless and technology industries and drive sustained quality growth and returns for our shareholders over the long-term.
Now I'll turn it over to Rod to discuss full-year '24 results and our 2025 outlook. Rob?
