Atlas Arteria (ASX:ALX): Meet the ASX’s other toll road operator – a company with no exposure to Australia

Atlas Arteria (ASX:ALX) is one of two toll road operators on the ASX, with the other being Transurban (ASX:TCL). But while Transurban is mostly focused on Australia, particularly Sydney, Atlas Arteria does not anymore. We thought we’d take a look at how the two companies compare. Spoiler alert: They face many of the same issues, but their portfolios look very different.

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How Atlas Arteria came to be

Atlas Arteria (ASX: ALX) was formerly known as Macquarie Atlas Roads. It was created in 2010 out of a restructure of the Macquarie Infrastructure Group. Essentially, MIG was split into two separate listed toll-road/infrastructure groups; Atlas Arteria covers the toll-road assets.

Atlas operated under external management by Macquarie until 2019, when it internalised management (i.e. brought management in-house) after investor approval. Its legal structure is a dual‑stapled vehicle: Atlas Arteria Limited (which is Australian) and Atlas Arteria International Limited (Bermuda). The securities are stapled together so investors hold them jointly.

Atlas’ portfolio

Atlas’ key asset is the APRR (Autoroutes Paris‑Rhin‑Rhône) motorway network in France. Although the company’s stake is just over 30%, it accounts for 80% of revenues. The overall APRR concession expires in 2035–2036 (with certain parts expiring ahead of that), meaning that revenue stream will end unless extended, and it’s a regulated French asset — which makes extension far from guaranteed.

Sydney drivers, think about this. Companies like Atlas and Transurban spent big on the roads in return to operate them for 30-40 year periods…not forever, but 30-40 years. Sounds like a long time, until it isn’t. And when the time is up and the state has a choice to ‘reclaim the road’ at no cost, why not? Its the same with this French road. On top of this, France is introducing new taxes to raise money from roads and airports to encourage patronage and investment in rail networks, not to mention a tax on big companies.

And so Atlas is shifting capital into other geographies. It bought a 66.7% stake in the Chicago Skyway, a toll road that expires in 2104 (not a typo). It already owned the Dulles Greenway road in Virginia but is working hard to get a more favourable tolling regime. There’s also the Warnow Tunnel in Germany and ADELAC – a 20km commuter road between Geneva and eastern France. Obviously the challenge is that these assets are (at least not yet) generating revenues anywhere near what the APRR contributes.

Compare this to Transurban that has a higher number of assets, but the vast majority are in Sydney and are long-remaining concessions with guaranteed annual toll increases as well as potential to upgrade (traits not necessarily so with Atlas’ European assets).

A challenging macroeconomic environment, but a profitable company nonetheless

Atlas uses the calendar year and in 2024 generated a $275.3m profit (up 7.4%) off the back of $1.8bn in toll revenue (up 5.1%). Traffic grew 3% at APRR but 6% at Warnow tunnel and Dulles, but retreated 3% at Chicago. The latter was due to extreme weather events (both in winter and summer) as well as the elasticity impact of tolls.

Atlas paid out 40 cents per share in distributions (i.e. dividends) and guided to the same figure for 2025, introducing a formal policy of paying out 90-110% of free cash flow. It claimed to have achieved a 25% reduction in scope 1 and 2 emissions compared to 2019 levels, 1 year ahead of schedule and is now targeting a 46% reduction by 2030.

In the first half of 2025, it met its distribution guidance, but its net profit fell from $109.2m to $73.3m as a consequence of French taxes, even though toll revenue was up 8%. Atlas has also been facing a challenge with its Dulles road where Virginia’s Supreme Court blocked toll increases (specifically by up to 40%).

Atlas wanted to hike tolls to try and boost returns which have been disappointing since it opened. And so the company is fighting the state of Virginia and the US federally alleging it constituted taking private property without compensation (i.e. financially rather than the physical seizing of it) as well as that the blockage prevented the company from earning a reasonable return on investment. We note the tolls would likely only go towards repaying debt which is US$916m/A$1.55bn.

The bottom line with Atlas is that it is a company trying to diversify revenues but is having difficulty in doing so. Multi-decade monopolies are good in theory and practice…until they expire. And this is what Atlas is facing sooner rather than later. Of course, Transurban will have to reckon with it one day, but it will be a slower process for the company.

So which should I invest in? Atlas Arteria or Transurban

If you’re an income investor looking for higher yield now, Atlas Arteria may look appealing — its yield is relatively high. But that comes with more risk over time — particularly as its key asset (APRR) nears expiry, and with regulatory and tax exposures (especially in France).

Transurban seems to offer more stability, longer‑term certainty, more diversification, and possibly lower risk in the cash flow forecast as its concessions expire over a longer period of time and are spread out (not location-wise, but expiry-wise). That said, we only say that with confidence as it looks like the NSW government is not keen to take any steps that’d reduce TCL’s cash flows from its monopoly toll roads…for now.