American Tower Adds Stonepeak as Investor in its Cloud-to-Edge Data Center Strategy

American Tower has advanced its data center strategy on several fronts, consolidating its CoreSite acquisition with its data center assets, and lining up infrastructure investor Stonepeak for a $2.5 billion equity stake in its data center business.

American Tower Adds Stonepeak as Investor in its Cloud-to-Edge Data Center Strategy

American Tower is working toward a future in which its network of 43,000 communications towers across North America will serve as extension of the cloud, bringing content from massive server farms to the edge of the network.

Data centers will be the connective tissue in the company’s vision for edge computing, which is why American Tower paid $10.1 billion to acquire data center operator CoreSite last year. That strategy has moved ahead on two fronts in recent weeks, as American Tower has consolidated its data center assets and lined up an equity partner with deep pockets.

  • In June, CoreSite expanded its reach to Atlanta and Orlando, integrating three data centers American Tower acquired from Colo-Atl and DataSite, including a facility at the 55 Marietta Street carrier hotel in Atlanta. The CoreSite data center portfolio now includes 27 data centers in 10 markets, with more than 450 networks, 23 native cloud on-ramps and 35,000 interconnections.
  • Last week infrastructure investor Stonepeak acquired an equity position in the American Tower data center platform, paying $2.5 billion for a 29 percent stake. The companies said the deal will kick off a “new long-term strategic partnership,” with American Tower overseeing the day-to-day management of its U.S. data center business, while Stonepeak will obtain certain governance rights.

The CoreSite deal was a bold move into the data center business for American Tower, which is the world’s largest owner of wireless infrastructure with more than $7 billion in annual revenue. It has been actively exploring opportunities in edge computing that would allow it to monetize edge capacity at its thousands of tower sites. But American Tower has discovered the current gateway to the edge is the core of the network, where CoreSite is an experienced player.

“The primary goal in acquiring CoreSite is to make our towers more valuable, and have them be better positioned to drive as much value as possible out of the future networks,” said Rod Smith – Executive Vice President, Chief Financial Officer and Treasurer of American Tower, in a recent presentation at NAREIT. “The ability to drive these cloud on-ramps out to the tower sites is really the upside.

“We’re not interested in just growing a data center business so that we run towers and data centers,” Smith added. “We think more and more things will be cloud-centric, so the cloud companies will want to get more cloud on-ramps distributed throughout the U.S. As we look at our tower portfolio, that’s a perfect place to put smaller, more convenient cloud on-ramps for the cloud companies all over the U.S., hundreds or maybe thousands of those. Our tower sites could be perfect places for the cloud companies to place their on-ramps.”

Shift From Centralized to Distributed

The $2.5 billion equity investment by Stonepeak, along with a sale of $2.4 billion of common equity, completes the financing of the CoreSite acquisition, which closed at the end of 2021.

“In Stonepeak, we’ve found a like-minded partner, with deep communications infrastructure experience and a long-term investment philosophy that aligns with the principles of American Tower and our longer-term strategy in the data centers segment,” said Tom Bartlett, American Tower’s President and CEO. “While this transaction supports the equity financing component for our previously completed CoreSite acquisition, it also creates a platform through which growth opportunities can be strategically evaluated and financed, with American Tower and Stonepeak committed to executing on opportunities as the 5G ecosystem continues to develop.”

Stonepeak Infrastructure Partners (SIP) acquired Cologix in early 2017, calling it “a marquee platform to enter the data center and interconnection market in North America.” SIP also backs Digital Edge, a Singapore-based company that operates data centers and interconnection businesses in Asia.

“We view (the American Tower investment) as a great fit for our core infrastructure strategy,” said Andrew Thomas, Managing Director and Co-Head of Communications at Stonepeak. “The platform is strategically positioned to be at the forefront of the continued shift from a traditional centralized infrastructure model to a cloud-based, connected and distributed digital infrastructure model and we are excited to partner with the American Tower team to help accelerate investment behind this trend in the years to come.”

Integrating Colo-Atl, DataSite

In June, CoreSite expanded into the Atlanta and Orlando markets with the integration of three American Tower assets:

  • Atlanta AT1 (55 Marietta Street NW, Atlanta, GA, 30303),
  • Atlanta AT2 (1130 Powers Ferry Place, Marietta, GA, 30067)
  • Orlando OR1 (9701 S. John Young Parkway, Orlando, FL, 32819).

All three data centers, which have a combined total of more than 250,000 square feet, now also offer access to the Open Cloud Exchange (OCX), CoreSite’s software-defined networking platform which provides fully managed, direct and secure connections into all of the major cloud service providers.

“With a long-standing track record of operational excellence in these markets, these facilities have been serving Atlanta- and Orlando-area businesses for years and now operate as an integral part of the broader data center ecosystem within CoreSite,” said Juan Font, President of CoreSite and SVP, U.S. Tower Division of American Tower. “The Atlanta and Orlando teams are equipped with the technical, security, remote hands and customer service expertise organizations rely on to future-proof their digital businesses.”