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spk03: Ladies and gentlemen, thank you for standing by and welcome to the SBA fourth quarter results. At this time, all lines are in a listen-only mode. Later, we will conduct a question and answer session. If you wish to ask a question over the phone lines, please press 1 then 0 at any time during today's call. If you need assistance from an operator, please press star then 0. And as a reminder, today's conference is being recorded. I'd now like to turn the conference over to Vice President of Finance, Mark DeRussie. Please go ahead.
spk04: Good evening, and thank you for joining us for SBA's fourth quarter 2020 earnings conference call. Here with me today are Jeff Stoops, our President and Chief Executive Officer, and Brendan Kavanaugh, our Chief Financial Officer. Some of the information we will discuss on this call is forward-looking, including but not limited to any guides for 2021 and beyond. In today's press release and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, February 22nd, and we have no obligation to update any forward-looking statement we may make. In addition, our comments will include non-GAAP financial measures and other key operating metrics. The reconciliation of and other information regarding these items can be found in our supplemental financial data package which is located on the landing page for our investor relations website. With that, I'll now turn it over to Brendan. Thank you, Mark. Good evening. SBA had a very strong end to the year with fourth quarter results near the high end of our outlook for all key financial metrics. Total GAAP site leasing revenues for the fourth quarter were $493 million, and cash site leasing revenues were $492.8 million. Foreign exchange rates were a $3.5 million tailwind to revenues when compared with our previously forecasted FX rate estimates for the fourth quarter. They were again, however, a significant headwind on comparisons to the fourth quarter of 2019, negatively impacting revenues by $17.7 million on a year-over-year basis. Same-tower recurring cash leasing revenue growth for the fourth quarter, which is calculated on a constant currency basis, was 4 percent over the fourth quarter of 2019, including the impact of 2 percent of churn. On a gross basis, same-tower growth was 6 percent. Domestic same-tower recurring cash leasing revenue growth over the fourth quarter of last year was 5.7 percent on a gross basis and 3.4 percent on a net basis, including 2.3 percent of churn. Domestic operational leasing activity or bookings, representing new revenue placed under contract during the fourth quarter, was at the highest levels of the year. We saw continued increased activity levels with T-Mobile during the quarter, and our domestic application backlog continues to grow. During the fourth quarter, amendment activity represented 88% of our domestic bookings, with 12% coming from new leases. The big three carriers represented 94% of total incremental domestic leasing revenues signed up during the quarter. Internationally, on a constant currency basis, same-tower cash leasing revenue growth was 6.5%, including 0.6% of churn or 7.1% on a gross basis. Our international leasing activity was similar to the third quarter, still up slightly over the first half of 2020. International leasing activity remains impacted by COVID-related spending slowdowns in some of our markets. In Brazil, our largest international market, we continued to see steady leasing activity. Gross same-tower organic growth in Brazil was 7.3% on a constant currency basis. During the fourth quarter, 85.4% of consolidated cash site leasing revenue was denominated in U.S. dollars. the majority of non-U.S. dollar denominated revenue was from Brazil, with Brazil representing 11.2% of all cash site leasing revenues during the quarter and 8.2% of cash site leasing revenue excluding revenues from pass-through expenses. Tower cash flow for the fourth quarter was $402.2 million. Our tower cash flow margins continue to be very strong, with a fourth quarter domestic tower cash flow margin of 84.2% and an international tower cash flow margin of 71.5% or 91.1%, excluding the impact of pass-through reimbursable expenses. Adjusted EBITDA in the fourth quarter was $380.6 million. Our industry-leading adjusted EBITDA margin was 71% in the quarter. Excluding the impact of revenues from pass-through expenses, adjusted EBITDA margin was 75.4%. Approximately 98% of our total adjusted EBITDA was attributable to our tower leasing business in the fourth quarter. AFFO in the fourth quarter was $280.1 million. AFFO per share was $2.49, an increase of 14.2% over the fourth quarter of 2019, and an 18.8 percent increase on a constant currency basis. During the fourth quarter, we also continued to expand our portfolio, acquiring 104 communication sites for total cash consideration of $133.5 million and building 106 sites in the quarter. Subsequent to quarter end, we have purchased 25 communication sites for an aggregate price of $8.4 million. Last week, we also closed on the majority of our previously announced acquisition from Pacific Gas and Electric. The PG&E transaction adds almost 900 existing wireless tenant licenses on over 700 utility transmission and distribution structures to our portfolio. We are entitled to 100% of all additional revenues generated from these tenant licenses through future contracted rental escalations and any amendments to the existing license agreement. In addition, we have the right to market these structures to additional tenants with a substantial majority of any additional rents retained by SBA and the balance shared with PG&E. As part of this transaction, SBA has also been granted the exclusive right to market over 28,000 additional PG&E structures with any resulting rents to be shared by SBA and PG&E under a predetermined revenue sharing arrangement. When the full transaction is closed, the anticipated cumulative purchase price is approximately $973 million, and we expect the assets to generate approximately $39.5 million in tower cash flow during the first 12 months in our portfolio. Our first quarter net debt to adjusted EBITDA leverage ratio is expected to be above our target range as a result of this transaction. but we anticipate organically reducing our leverage ratio comfortably back within our target range by year-end. We are very pleased with this acquisition, and we look forward to a long relationship with PG&E to the enhanced benefit of the wireless carrier industry, PG&E, and SBA. In addition to the assets we have purchased subsequent to year-end, we have also agreed to purchase 299 additional sites in our existing markets, for an aggregate price of $72.7 million. And we anticipate closing on the majority of these sites by the end of the second quarter. In addition to new tower assets, we also continue to invest in the land under our sites. During the quarter, we spent an aggregate of $16.4 million to buy land and easements and to extend ground lease terms. At the end of the quarter, we owned or controlled for more than 20 years the land underneath approximately 71% of our towers. and the average remaining life under our ground leases, including renewal options under our control, is approximately 35 years. Looking ahead now, this afternoon's earnings press release includes our initial outlook for full year 2021. Our outlook reflects another year of solid growth in our leasing business. Although the slower pace of new leasing activity we experienced in 2020 weighs on the organic contribution to our anticipated reported leasing revenue for 2021. We expect a higher level of domestic operational leasing activity in 2021 than we experienced in 2020. However, much of the increased activity is anticipated to occur in the latter half of the year due to ramping 5G-related investment and the timing of C-band activity from some of our largest customers and initial leasing contributions from DISH under our newly executed master lease agreements. This projected increase in leasing revenue in the second half of the year is expected to provide minor contributions to our 2021 leasing revenue, but set us up well for the next several years. Our domestic outlook does contemplate increased revenue churn levels due largely to projected sprint network rationalization by T-Mobile. Internationally, we are projecting a similar level of organic leasing activity in 2021 as we saw in 2020. as we continue to see impacts to carrier spending in these markets from COVID-19. We have also incorporated a projected increased level of international churn, which represents both the impact of carrier consolidation in Guatemala and a network reorganization and reduction by one of our customers in one specific Central American country, who we have been working closely with to address their operational needs. These items, along with normal projected churn, are estimated to negatively impact total 2021 leasing revenue by approximately $10 million. With regard to our services business, we have seen increased activity levels in the latter part of 2020, and we expect this increased activity to continue into 2021 and be sustained by the increasing domestic leasing activity we project for the second half of this year, which will be ahead of the positive leasing revenue financial statement impact from such activity. As a result, we are guiding to about a 17% increase in services revenue volumes over last year. Our full year 2021 outlook includes the projected impact of the PG&E acquisition, but it does not assume any further acquisitions beyond those under contract today. The outlook also does not assume any share repurchases other than those completed as of today. However, we are likely to invest in additional assets or share repurchases or both during the year. Our outlook for net cash interest expense and for ASFO include the impact of our recently completed unsecured notes offering, but do not contemplate any further financing activity in 2021. Finally, our outlook for ASFO per share is based on an assumed weighted average number of diluted common shares of 111.7 million. which assumption is influenced in part by estimated future share prices. With that, I will now turn things over to Mark, who will provide an update on our liquidity position and balance sheet. Thanks, Brendan. We ended the year with $11.2 billion of total debt and $10.8 billion of net debt. Our net debt to annualized adjusted EBITDA leverage ratio was 7.1 times. Our fourth quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 4.4 times. After year end on January 29th, 2021, the company issued 1.5 billion of unsecured senior notes due February 1st, 2029. These notes accrued interest at a rate of 3.125% per year and interest is due semi-annually on February 1st and August 1st of each year, beginning on August 1st, 2021. The net proceeds from this offering were used to fully redeem all of the outstanding 4% senior notes, to pay all premiums and costs associated with such redemption, to repay the amounts outstanding at the time under our revolving credit facility, and for general corporate purposes. As of today, we have $630 million outstanding under our revolver, and pro forma for the January unsecured notes issuance, the weighted average interest rate on our outstanding debt is 3.1%. with a weighted average maturity of approximately 4.7 years. During the fourth quarter, we repurchased 1.7 million shares of our common stock for $480 million, or an average price of $290.89 per share. Subsequent to year end, we have repurchased 549,000 shares for $144 million, or an average price of $262.16 per share. All the shares repurchased were retired, As of today, we have $500 million of repurchase authorization remaining under our $1 billion stock repurchase plan. The company shares outstanding at December 31st, 2020, were $109.8 million, compared to $111.8 million at December 31st, 2019, a reduction of 1.8%. That is our greatest percentage share account reduction in seven quarters. In addition, during the fourth quarter, we declared and paid a cash dividend of $51.5 million, or $0.465 per share. And today, we announced that our Board of Directors declared a first quarter dividend of $0.58 per share, or an increase of 24.7% over last quarter, payable on March 26, 2021, to the shareholders of record as the close of business on March 10, 2021. And with that, I'll now turn the call over to Jeff. Thanks, Mark, and good evening, everyone. We had a strong finish to 2020 with solid financial and operating results. The fourth quarter was our best quarter of the year in terms of organic leasing activity and services results, and we added a number of high-quality assets to our portfolio. We produced $2.49 of AFFO per share, one penny short of an annualized rate of $10 per share. Our FFO per share for the quarter represented material growth over the prior year period and demonstrates the value creation capability of this business. We also continue to invest in our company through material share repurchases, buying back 1.7 million shares in the fourth quarter, and we did not slow down as we moved into 2021. Since year end, we have signed up and closed on our large and exciting transaction with PG&E, repurchased an additional half million shares of our stock, and signed up a master lease agreement with DISH. All of these activities will have long-lasting positive implications for SBA. We've demonstrated our ability over the years to find specific targeted opportunities where we can add assets at accretive prices and bring our expertise to bear in extracting and maximizing value. We're particularly pleased with the PG&E transaction, We've added a large number of high-quality exclusive locations in Northern California to our portfolio at what we believe is an attractive price. We believe our experience and operational expertise will allow us to maximize the potential for wireless use of these assets for the benefit of both our wireless carrier customers and PG&E. With regard to our domestic leasing business, our customers are all turning their attention toward their 5G network investment plans. The significant investment in the current C-band auction is evidence of the critical role that mid-band spectrum will play in the deployment of next-generation networks and, as a result, the importance of macro tower sites in the next wave of network investment. We believe it has been well settled that a primary use of C-band spectrum will be on macro sites outside of urban markets. Activity levels have been increasing with T-Mobile as they accelerate the integration and upgrade of their network to meet their 5G coverage goals, upgrading their sites with either 2.5 GHz spectrum or 600 MHz spectrum. It has been widely speculated that Verizon, AT&T, and to some degree T-Mobile are material participants in the C-band option, which we believe will drive increased organic leasing activity levels with each of those carriers beginning later this year. and we're very pleased to announce today our entry into a new long-term master lease agreement with DISH. Our new agreement with DISH includes standardization of processes in certain terms in order to improve DISH's ability to efficiently access SBA sites in order to meet their network deployment commitments. It also provides for commitments to SBA services business and a substantial new minimum lease commitment over the next several years, securing SBA as a major infrastructure provider for DISH's new Greenfield nationwide 5G network. We're pleased to further our longstanding partnership with DISH. Internationally, our leasing activity remains steady. In the fourth quarter, we signed up 48% of new international revenue through new leases and 52% through amendments to existing leases. Notwithstanding the steady activity levels, we continue to see some impact in our Latin American and South African markets from the COVID-19 crisis. impacting our return to greater historical organic growth levels in these markets. However, wireless usage remains high and critical across all these markets, and economic conditions are improving. Eventual recovery from COVID-19, paired with a number of upcoming spectrum auctions across our international markets, should result in a return to more normalized investment by our customers, and we believe will bode well for our long-term international organic revenue growth. From a balance sheet and capital allocation perspective, we remain in a very strong position. The current low interest rate environment has provided us with opportunities to continue to reduce our weighted average cost of capital. A recently completed unsecured bond offering is evidence of our ability to take advantage of these opportunities as we were able to lock in the lowest cost unsecured debt pricing in our company's history. Markets remain very strong today, and we have a number of available financing sources As a result, we intend to stay fully invested in our business, continuing to target leverage of 7.0 to 7.5 times net debt to adjusted EBITDA. While we will be actually above our target range temporarily as a result of the PG&E deal, we expect to easily deliver back into our range later this year given our AFFO generation capability, even after our materially increased dividends. As noted earlier, we have been active in both portfolio investment and share repurchases. Even with these activities, we still have capacity for incremental investment throughout 2021 while achieving our leverage target. Our strong balance sheet and optimism about the future has allowed us to again announce a significant increase to our dividends, growing at approximately 25 percent over the per share rate we paid in 2020. On an annualized basis, this new dividend represents less than 23% of the midpoint of our 2021 AFFO outlook per share, leaving us substantial capital for additional investment opportunities. So before I wrap up, I would like to also briefly mention one other topic. At the end of the year, we issued our inaugural corporate sustainability report. which illustrates our commitment to sustainable and responsible business practices and enhances our communication of our efforts to our stakeholders. I'm very pleased with this report because it highlights our corporate-wide focus on sustainability issues that are most material to our business shareholders and the communities in which we operate. While our assets have a relatively small geographic footprint, we're continuously seeking ways to address climate-related risks and reduce our greenhouse gas emissions across our markets. Our environmental initiatives span all of our assets from towers to the rest of our wireless infrastructure, to data centers, all of our offices, and commercial vehicle fleet. Our policies and culture also ensure we conduct business according to the highest ethical standards and socially responsible business practices, and that we actively promote diversity in both our workforce and supply chain. Our longstanding philanthropic and advocacy efforts reflect our continued commitment and engagement with our local communities. And we look forward to communicating with you about our growth and continuing improvement in these areas for years to come. Notwithstanding the challenges posed by the COVID-19 pandemic, we had a solid year in 2020, growing AFFO per share 11.2% over 2019. I want to again thank our team members and our customers for their diligence and commitment during these difficult times and our contributions to our success. We look forward to another solid year in 2021 and sharing our results with you as we move through the year. And with that, Ryan, we are ready for questions.
spk03: Okay, ladies and gentlemen, if you do wish to ask a question, please press 1 then 0 on your touchtone phone. Let's begin at 1 then 0. Our first question is going to come from the line of Rick Prentice with Raymond James. Please go ahead. Your line is open. Great. Thanks.
spk05: Good afternoon, guys. Hi, Rick. Hey. A couple questions. Jeff, obviously the PG&E transactions are a pretty major transaction. Can you walk us through a little bit about 21 Guidance and how much revenue there is associated with the tower cash flow? I assume not much operating expenses at their sites. But then also take us down maybe to EBITDA, because I'd also expect not a lot of below-the-line costs.
spk04: You're right on both caps. Brendan? Yeah, Rick. So if you look at our bridge for 2020 to 2021, we've got about $40 million of non-organic revenue coming in. I would say the majority of that, $30 Five-ish million of that is coming from PG&E. Okay.
spk05: And how about on the EBITDA area? Is it in that kind of $30 million, $35 million range?
spk04: Yeah, it's within a couple million dollars because there's no – the key thing is obviously the ground rent. They own the majority of land or have rights to it, so there's really no ground rent expense at all. So the margins are extremely high on this. So the vast majority of the revenue drops through to the bottom line.
spk05: Makes sense. And then, Jeff, obviously one of the big debates out there in the marketplace right now is the growth rates in the U.S. Same-tower revenue, net organic cash, as we call it. Given the law of large numbers, churn, long-term, not to give you a $10 number like you had years ago, but can we get back into the mid-single digits? What's your view as kind of where the sustainable kind of long-term growth rate is in the U.S. side on a net organic cash basis?
spk04: Yeah, I do think we can get – I don't know if we can get to double digits, but I do think we can get to upper single digits. I think what's happening this year is, if you think about it, you've got a couple major carriers who are rumored to be heavy into the C-band options, which means that there's going to be a lot to do. and if there's going to be a lot to do, and you know there's going to be a lot to do, and you might push off what you can do today until tomorrow, and then you have one carrier in the name of DISH who's already told you very clearly when they're going to start doing things. It kind of makes, I think it's pretty clear as to the pace of things and the timing of things in 2021, but then it sets up for a very, very... attractive 2022, particularly over 2021 comparable.
spk05: Makes sense. And then how should we think about the churn impact? Dish also on your call today was talking about T-Mobile had given Dish notice that they would turn off the CDMA. I don't think they said Vol-T, but they said they would turn off the CDMA network January of 22. How should we think about the T-Mobile sprint relationship you guys have and what the churn outlook looks like?
spk04: Yeah, Rick, so, you know, we've already, I think we announced on our previous call that we've already received some non-renewal notifications from T-Mobile. And just to give you some numbers for next year, 2021 being next year, that represents about $4 to $5 million of the impact to our revenue loss. In addition to that, in our outlook, we expect, based on when leases come up and communications we've had already, that we'll probably be somewhere in an additional $3 million or so from them. As we look out over the future years, you know, right at this point, we're basically measuring it based on where we have overlapping sites and what the timing is when those leases come up. That puts the majority of determinations in terms of their financial impact for us in 2025 and 2026. We will see probably about 30% of the total exposure over the next three years. Yeah, and obviously we'll be well-suited to... talk to DISH about any of those sites that T-Mobile decides they no longer want.
spk03: Thanks, Tom. Thanks, guys. Stay well. Our next question will come from the line of John Aitken with RBC. Please go ahead. Your line is open.
spk01: Thanks very much. Yeah, I just wanted to get a sense of some of the organic U.S. growth drivers this year that you alluded to around C-band. and DISH, anything that you're seeing kind of so far this year around application activity that gives you a sense of when the timing would be around rent commencement?
spk04: And then if you don't mind also addressing some of the smaller potential drivers, U.S. cellular cable as well in the context of C-BANDT. You know, we really have not included any CBAN revenue in our 2021 guidance, leasing guidance, and the same with DISH. Now, there certainly are arguments and optimism that that could change and things could happen where we do realize that, but it's not in there today, Joe.
spk01: Okay.
spk04: And then on Rick's question about the Sprint T-Mobile, on the Keep Sites project, are you getting any sense, as you think about churn and the guidance that you gave, but any variability around where you're going to get informed about the sites that get kept as part of that? How does that kind of play into your thinking, and where are they in that process? Well, we've received information. We've received quite a bit of information already, which we've been able to share with you in our outlook, but we're not, we don't know that we've received it all.
spk03: Right.
spk04: But we've had, I mean, based on the timing of notices and things, I would tell you that I think we have, the lion's share of the information already at this point. As it relates to this year, as it relates to 2021.
spk01: Got it. Any update on SBA Edge?
spk04: Yeah, we continue to have a number of opportunities that we're pursuing to actually move forward and tie What we're focusing on, John, is the areas around the data centers to work on the direct ties between true mobile edge at the power site type facilities, which have direct connections back. And we've got a number of different things that we're working on there. And we would just ask you to stay tuned there because we think there continues to be a lot of exciting opportunities and opportunities and things that we can do there. Thank you very much. It will be not a material contributor to 2021.
spk03: Got it.
spk04: Thanks so much.
spk03: And our next question will come from the line of Walter Picek with LightShed. Please go ahead.
spk04: Hi, Jeff. Um, on past calls, you know, you and I have had these kind of dialogues about like timing of orders versus revenue and like how long it takes to execute. Um, so I'm just curious in terms of C man, shouldn't you buy the end of the second quarter, have orders if we, if you should be able to get any type of revenue, um, in calendar 2021, I mean, if not even by the end of this quarter. Can you just refresh our memory on the timing of that? Because the reason I ask, obviously, is because Verizon is out there telling people, I think, historically, that, oh, yeah, we can get SeedMan built really quickly. And I think we have to back up to those days and actually see orders. That's like nine months, maybe even more, from when they would be activated and generating revenue for you. And if you prefer not to talk about a customer, just you can submit 18 to your T-Mobile, whatever. You know what the question is. It's not quite nine months, Walt. We probably have at the absolute minimum four, but more likely six. Okay. So if we're to believe the ability to light up a C-man market, then we should be hearing from tower companies, whether you or someone else, uh c-man orders um by june 30th is that fair okay um you also mentioned the substantial minimum lease agreement um is there a time like how does that work is it meaning like they agree to x dollars in 2022 how does that work or is it just over the life they're going to pay you x which which is it It is a number of leases. You could look at it as dollars because there are certain dollar parameters that we've agreed to per lease, but it is a minimum site. Got it. So that doesn't give us any sense on timing. It's just like he told you we'll put up X thousand sites at some point over the next Y years. Well, we do have some time breaks in there. So it's a little more defined than that. But so over the life of the contract, before all the commitments are ultimately due. But it's not only until the end are they due. There are some due along the way. And then just last question, have you seen another one of my favorite topics? Have you seen any initial deployments of massive MIMO antennas? I think there was some issue in terms of ramping up production with certain spectrum bands. Maybe that has to wait to see then.
spk00: I don't know.
spk04: We've been seeing that for a while with T-Mobile on the 2.5G. Got it. So I'm sorry, I guess I should be more specific. I think there might have been issues in terms of the MIMO antenna having ports for C-band, but I guess it's why would that be occurring until the auction is over? So I'll reserve that question for a future quarter. Thanks, Jeff.
spk05: Yeah.
spk03: And our next question will come from the line of Nick Del Dio with Moffett Nathanson. Please go ahead.
spk04: Hey, thanks for taking my questions. So you guys noted that your leverage is going to be above your target post-PG&E but trend down organically over the course of the year. Does that mean that any, you know, shared purchases or M&A activity are going to be, you know, somewhat restrained through year-end? Or would you be willing to stay above your target leverage for longer if, you know, if the stock is attractively valued and you buy some or if other M&A opportunities surface? Well, it means we don't have to rush. But we would like to be, you know, at the high end of the target or below by year end. But that statement gives us quite a bit of flexibility. Yeah, we have, just to be clear, Nick, I mean, we have plenty of capacity to continue to do typical levels of M&A and buybacks and still be within our target leverage range at the end of the year. I think the key answer to your question is, are you going to rush to do it in one quarter, or are you going to wait until the end of the year to preserve maximum flexibility? And the answer is the latter. Okay. Okay. That's helpful. And then, you know, related to the DISH deal, you know, obviously one of your peers has talked about getting, you know, more than their, you know, proportionate share of business from DISH by virtue of their deal.
spk06: Do you feel like you're well-positioned to get your fair share of new business, and do you feel like you were well-served by waiting, you know, some extra time to sign the deal?
spk04: Based on the firm commitment that we have, the answer is yes. So I guess the answer to the second question is yes. Okay, that's good to hear. You know, maybe one more if I could squeeze it in. Has T-Mobile's leasing activity, you know, been recovering in the way you had expected it would a quarter or two ago, or has it come in a bit slower? No, I think T-Mobile is doing just as we thought. They're very busy, very active, very deliberate, very – they're a force. It's all very busy, and, you know, we see a strong year ahead for them.
spk03: Okay.
spk06: That's helpful. Thanks, Jeff.
spk03: And our next question will come from the line of David Barden, Bank of America. Please go ahead. Hey, guys.
spk04: Thanks so much for taking the questions. I guess first, Jeff, now that you've kind of done this PG&E deal, you know, there's been a gulf between the tower sector and utility sector for a long time that this deal seems to kind of cross. And I'm wondering if There's a new kind of total addressable market opportunity that you kind of support here as a function of that. The second question, Brendan, would be from maybe two for you, Brendan, would be first, on the international churn, is this the number around 10 million a year that's the new normal for that we should expect on a go-forward basis. And then with respect to the PG&E deal specifically, relative to that 35, is that going to be run rating at 8 to 9 in the first quarter, or does it kind of raduate up to that 35 over the course of the year? Thanks. Yeah, why don't you go first, and I'll wrap it up with a more philosophical question. Yeah, well, I'll take the last one first. On the PG&E piece, It does step up a little bit during the year, but it's relatively small, David. I would expect it to not be significant steps up. There are escalators that are built in, and we would expect a modest amount of new lease up. Obviously, we just brought these sites into our portfolio, so there will be some step up, but it'll be generally run rated at the same pace. Of course, the first quarter will obviously be materially lower than the other quarters, as we only have it in our portfolio for half the quarter. but on a run rate basis will be a very small step up throughout the year. On the international churn side, the $10 million is definitely not the new normal. There are some specific things that are driving that number up. I do expect it, though, to be elevated probably next year as well. It's hard for us to say exactly what the number will be because we are in the midst of discussions with the carriers where there's been some consolidation as well as the other customer where we've had some work with them to try and help them through some issues that they have. So I do expect that there will be additional impact next year, but the exact amount remains to be seen. But eventually we'll get through those issues, and I would not expect to be at that level long term. Yeah, in terms of whether this opens up a new – source of relationships between tower companies and utilities, David. I mean, I think it remains to be seen. It's not the first. There have been a couple other transactions between tower companies and utilities. They were not involving any of the publics, however. So this might be the third. And this one was fairly unique in particularly as to its geographic location. But we'll see. We've actually had more than a couple inquiries. Utilities have very different primary considerations that they have to think about, and it has to fit their needs. But we found certainly in the case of PG&A that it did, and I'm sure that those – characteristics could be met again and because it's never the primary and frankly can't be the primary focus of a utility company to make power leasing you know top of mind or the number one thing they think about there's always going to be an element of improvement that, you know, can be an arbitrage there for the benefit of everyone. So we'll see. We'll see. Great. Thanks, Jeff. Appreciate it, Brendan.
spk03: Thanks. Sure. And our next question will come from the line of Colby Siniso with Helen. Please go ahead. Your line is open. Great.
spk06: I just actually have two points of clarification and then just one quick question. First off, points of clarification, Jeff, when you're saying You think you can get back to high single-digit domestic growth? I said mid, I think.
spk04: I said mid, but go ahead.
spk06: I was going to ask if you were speaking about gross or net. And then my next question, just real quick, is when you said you're expecting T-Mobile churn for 2021, I heard 4 and 5, and I heard 7 and 8. Are you saying you were previously thinking 4 to 5 and now 7 to 8? And then my last question, the 299 sites that you've already committed to acquire, can you give us some color on where those sites are? Thank you.
spk04: Okay. On the Sprint T-Mobile piece, it was 4 to 5 million is the number based on what we've already specifically received notices on. The incremental 3 million is an estimate that we've included in our outlook in the churn assumptions that we put forth in our bridge, for instance. that's not yet been specifically noticed to us, but we are estimating based on what we see in terms of the timing of when those leases come due. The 299 sites that are under contract from an M&A standpoint, the vast majority of those are located internationally, but they're spread out. There are some in, I think the biggest country is South Africa, but there's some throughout Latin America as well. and uh your first question is on the growth rates um yeah i think the question was about net um and we're thinking you know we believe that there is an opportunity to see that go back up to mid levels you know above five i guess you could consider more than mid but um we think there's opportunity with all the growth that's out there the biggest challenge frankly on that colby is really about the churn the sprint team mobile churn i mean if you figure that in that that's certainly going to weigh on it but If you put that aside, there certainly is an opportunity from the growth set that's in front of us. Actually, I thought Rick's question was gross. All right, well, there you go.
spk06: So mid-level plus 5% net long-term domestic you think is a reasonable expectation? Yeah, and obviously higher than gross. And then just actually one other quick one. You said the PG&E hasn't closed completely. What else is still left to close?
spk04: There's a small number of sites. So the total purchase price is about $973 million. We've closed on $954 million of that, so the vast majority of it. There's some number of sites that have certain specific issues that have to be addressed, but we expect them to be cleaned up in the next six months, and those sites will just close later.
spk06: Got it. Thank you very much.
spk04: Yep.
spk03: And our next question will come from the line of Brett Feldman, Goldman Sachs. Please go ahead. Your line is open. Yes, thanks for taking the question.
spk04: So, you know, when we look at the expected leasing from the major wireless carriers, virtually all of the spectrum that they'll be deploying that they haven't used is at frequency ranges that's higher than what they have in their networks today. And so what that would imply is that their existing site grids are insufficient to fully utilize those bands.
spk02: And so with that as context, that sort of leads to two questions.
spk01: As you look out and expect that leasing activity is going to ramp as some of these spectrum stands get deployed, you've been very amendment heavy for a while with your leasing. I'm wondering if you expect or maybe even have visibility into that being more balanced between new co-locations versus amendments.
spk04: And then the second is, I'm wondering, do you think that perhaps the nation's power grid is insufficiently dense such that there might be an emerging opportunity for for you to step up your development of U.S. towers because historically I think that has actually been your highest return investment. Thank you. Yeah, I think, you know, amendments will always play a big role, Brett, because they're the most efficient and I think economically beneficial for our customers. And then I think existing structures will get co-location because the existing regulatory regime favors that. But yeah, there'll be some more tower stuff. There's no question, not only because of the spectrum propagation, but because I think on a perhaps totally unrelated reason, there's going to be a fair amount of emphasis on closing the digital divide and just bringing broadband to everyone, which is It's clearly going to require that some more towers get built.
spk06: If I could ask a quick follow-up just around the same concept of densification. We know your opinion around small cells, but I'm wondering if there's any other emerging areas in infrastructure, maybe rooftops, where the economics could potentially become more favorable as these mid-band spectrum ranges are being deployed versus historically?
spk04: I think it has to depend on the facts and circumstances. I believe that wherever you can get a true tower and macro site, that always gives our customers the most bang for the buck. But I do believe you will see this spectrum used in conjunction with small cells as well in areas where you just don't get towers. it doesn't mean those areas aren't going to be served. They're going to be served by alternate architecture.
spk03: Thank you. And our next question will come from the line of Phil Cusick with J.P. Morgan. Please go ahead. Your line is open.
spk02: Hi, this is Amir for Phil. Thanks for the time. Brendan, can you help us by talking about the pace of activity in 1Q21? And should we expect slower activity in 1Q than 4Q? And Jeff, can you talk about how much is built into this guidance for this view? Is that expected to be material this year?
spk04: Yeah, Amir. So our outlook for 21 does assume a pace of activity that is increasing throughout the year, so it's definitely a little bit slower is our assumption here at the beginning of the year, and it picks up in the latter half of the year. That's consistent with our comments we've been making around C-band and the DISH MLA. All those things will certainly drive more leasing activity in the latter half of the year. But even then, the impact of that to our financial statements will be limited because of the timing of signing up new agreements to when they actually start to recognize revenue. It will step up, I believe, throughout the year, but I think you'll start to see the benefits of that increase next year or late this year. And in terms specifically of DISH, while we could see some leasing revenue, there's none really contemplated in the guidance and very little contemplated in the services revenue guidance. Although, again, depending on timing, it could be better.
spk02: And with Brazil, we heard this business is slow, but this is lower activity than we kind of expected. Can you talk about the pace of activity over the last six months and what you expect it to be going forward?
spk04: Yeah, Brazil has... Had a couple of issues that have been impacting it. The overhang of the OI transaction, which is working itself through, which we think long-term will be favorable. For us, it looks like Tim will get most of those, well, not most, but the predominant amount of those assets with Claro next and then Telefine the third or the last least amount. which bodes well for us from an overlap perspective. And then obviously they've had their issues with COVID. So as those things settle out, you know, Brazil's actually expected to have quite a material jump in their GDP moving from 2020 to 2021. So as those things kind of play themselves out, yes, we do expect Brazil to get back to its best for themselves.
spk02: And one final one, if I may. With PG&E recently through bankruptcy, what's kind of the protection that you guys have if that happens again?
spk04: Yeah, we've got pages and pages and legal fees and legal fees that we're addressing that point. the structure of the deal, the regulatory posture of where we sit versus where PG&E sits, who owns the steel. I could spend quite a bit of time with you on that, or I could also just say we're covered.
spk02: That's helpful. Thank you very much.
spk03: Our next question will come from the line of Eric with Wells Fargo. Your line is open.
spk04: Great. Thanks for taking the question. I just wanted to follow up on the PG&E acquisition. Obviously, the 700 sites you acquired and then the additional 28,000 you have the right to market. Just wondering kind of the tenants per tower in that portfolio and then on that 28,000, you know, how many do you really think realistically tenants per tower do you think you can drive and co-locate ability perhaps some of those sites in terms of, you know, growing that portfolio from where it's at today?
spk01: That would be helpful. Thanks.
spk04: Yeah, there are not many tenants per tower on the 28,000 today. I don't think they've ever, frankly, been marketed. On the existing ones, I think I mentioned in my prepared comments that we have approximately 900 tenants, a little more than 900 tenants across those roughly 700 sites. It's been a totally kind of... carriers have had to seek out the appropriate PG&E folks to, which is the way it works, you know, with a type of relationship, which is why we think we could bring additional value. And to be honest with you, I can't hazard a guess on the $28,000, but I can promise you it'll be something. Okay, that's fair. And then just one more for me. It sounded like you at least had some additional capacity perhaps later in the year for either share repurchases or additional acquisitions. So kind of where you sit today, you know, the stock, you know, 20% or so down from where you were at last year. I mean, Do you think potentially share repurchases versus acquisitions, how would you think about it? It seems like power cash flow multiples continue to be, you know, greater than 30 times in many cases, and your stock's trading well under that. So I'm wondering how you kind of balance your thoughts on capital allocation given those dynamics. Thanks. Well, if we saw those type of dynamics as you described, it would – bear in favor of stock repurchases. If we saw more opportunities like PG&E, it wouldn't. Okay.
spk03: Thank you. My next question will come from the line of Simon Flannery. Please go ahead. Your line is open.
spk00: Great. Thank you very much. Just wanted to come back to Brazil. I think you'd made a comment about some important spectrum auctions in the international markets. Brazil has some coming up. What are the other ones that you're focused on? And then coming back to C-band, given the bidding, there's concerns about the amount of leverage the carriers are taking on. Do you think that might change any behavior, either in how fast they can deploy C-band or their kind of outsourcing strategies, etc.? ?
spk04: um canada has three and a half gigahertz uh tentatively scheduled for june south africa has an entire suite of 5g spectrum tentatively scheduled for next quarter uh peru has a big one for later this uh this first half uh chile um Colombia, and Brazil. In terms of the money being spent, Simon, I see that and I read that. I have to assume that our customers know exactly what they're doing. I'm sure that they do. And for that spectrum to have value to them, it has to be deployed. I don't know exactly what the cost will change for them, but ultimately it's going to have to get put out there, and that's kind of all we can work with. And whether it's one-quarter, two-quarters, or three-quarters difference, in the overall scheme of the value creation for us, it really doesn't matter.
spk03: Okay. Great. Thank you. Our next question will go from the line of Levi with UBS. Please go ahead.
spk07: Great. Thank you. In terms of the BG&E deal, can you talk a little bit about the wireless contracts, how they compare to your portfolio, maybe in terms of the tenancy mix? the length of the contract, and if we should assume there could be some T-Mobile spent churn in there. And then a follow-up on the domestic churn this year. Is the indication that you're getting from T-Mobile is mostly on the overlapping sides, but is there also any coming from sites that are in close proximity? Thank you.
spk04: On the tenant mix for PG&E, the vast majority, almost all the revenue comes from the big three wireless carriers. There is some Sprint overlap, which we obviously included any exposure to that in our underwriting assumptions. It's not particularly material, where we have both T-Mobile and Sprint on the same site, and the average remaining term for those tenants is about seven years. There's quite an extensive time runway left on that.
spk07: All right. And the sprinting mobile turn this year?
spk04: On those sites. On those sites. For this year, we're not really expecting to see any sprinting mobile turn this year. So our numbers that we gave you in our outlook don't include anything for PG&E.
spk07: I'm sorry, for your existing portfolio, the about 8 million that you cited, is that mostly coming from overlapping sites, your expectation for it? Yes.
spk04: Okay. Yes. So the 4 to 5 million that we've already been noticed on, almost all of that is on overlapping sites. The remaining 2 to 3 million is predominantly overlap sites as well.
spk07: Got it. And one more thing maybe on this. As they take out some of the equipment for the narrowband IoT network that they had put on your towers, would that show up as churn or would that be captured within the new deal that they have with you?
spk04: Well, it depends on what happens with those leases. There is a potential under our deal with them that they would transition those sites to their new architecture, in which case it would just simply be an amendment, depending on what the change was there based on the original lease. if they're actually going to cancel a lease altogether and not use that site, then it would show up as term.
spk07: Got it. Okay. Thank you.
spk03: Our next question will come from the line of Michael Rollins with Citi. Please go ahead. Your line is open.
spk02: Thanks, and good evening. A couple questions, if I could, on slide eight in the supplemental deck.
spk04: So there's been a few different questions around how you may allocate capital in 2021. And just curious, as I look at this slide, for the last four years, the range of capital allocation dollars in total has been about $1.4 to $1.5 billion. And just curious, given everything that you discussed on the call and the guidance that you outlined, is there a range of dollars for 2021 that we should keep in mind? And then you've also put the period ending leverage on this chart over the last few years.
spk06: And just curious, you know, how you look at the influences of what would get you comfortable to keeping net debt leverage at that higher end of the seven and a half times range you mentioned, you know, versus the lower end of seven times.
spk04: And just finally, I heard that $10 per share AFFO, goal mentioned that you set out to reach five years ago. I'm just curious if you have a new five-year expectation that you're considering, or you may share with us just to provide a, you know, sort of a compass of what that future direction might look like. Thanks. Yeah, I'll take the last one first, Mike. The answer is no, because of the Outstanding how close we came and how proud we are of understanding and projecting the operating components of our business, at least through the AFFO per share line, we found that the movements and interest rates in FX were beyond our prognostication capabilities. So we have declined to do that just recently. just as of yet. In terms of the amount of potential CapEx that we could spend, I mean, I don't, I could tell you we could all get to it fairly easily by looking at the EBITDA contribution that is in our outlook. And then if you bought some things versus bought some some stock back and you ended up with seven and a half times net debt to adjusted EBITDA, that would produce an amount of capital that would fill in your answer. And I don't know if that's how it's going to end up or not. It will depend on whether we choose stock repurchases or acquisitions or whether, in fact, we actually choose to end the year at seven and a half times. We may choose not to do that. And whether we do choose to do that or not, we'll continue to depend on whether we continue to see a very benign interest rate environment and whether we continue to feel as optimistic as we do today about carrier activity ramping as we move to the end of the year and into 2022.
spk06: And just in terms of the leverage, what factors get you comfortable at that high end versus low end of the range? And not just maybe in the moment, but over time?
spk04: Well, I mean, over time, that would come down. In the moment, it would be because we found things that, based on everything I just talked about, we thought would be very value-creative. We took advantage of it this year rather than letting it go by.
spk07: Thanks.
spk03: And our next question will come from the line of Spencer Kern, New Street Decent. Please go ahead. Your line is open.
spk04: Spencer Kern, New Street Decent Hey, guys. I wanted to follow up on the trajectory of new leasing activity and organic growth in the U.S. this year. So you exited or you ended the fourth quarter with gross organic growth of about 5.7%. And it looks like you're guiding to 5.9% for the year in 2021. and that should sort of steadily, you expected organic growth to steadily increase throughout the year. Can you just help us understand the cadence, sort of when you expect the low point to be and what we should expect for an exit rate for 2021 to help us understand sort of what growth we could anticipate in 2022? Yeah, Spencer, I mean, it certainly will be lower in the first part of the year, the first couple of quarters. We definitely expect to exit the year at a higher rate. Not really prepared to say exactly what that is, but at a rate that is starting to ramp back towards where we've been in the past. Obviously, we're kind of at a low, you can tell by looking at you know, our charts, the trajectory of where it's gone to. And we've talked a lot, I think, about having a slower year than anticipated last year. That certainly affects what we report, for instance, in the first quarter and second quarter of 2021. But based on our expectations for the increasing activity in the latter part of the year, I would expect that we will exit the year in the fourth quarter at a rate that is higher than the average that's implied by our guidance, and it will build into next year. Awesome. Thanks. And just one more. It looks like you've got churn increasing next year, largely as a result of Sprint and T-Mobile churn. But it still seems like normalized churn, excluding the mergers, is still hovering around 1.5%. I've always thought of the long-term opportunity for churn to fall below 1%. Do you see a runway to getting there over the next couple of years? Well, we've been there actually before. If you go back a couple of years ago, we were below 1%. But our historical range is typically between 1% and 2%. Right now we're towards the higher end of that. And, you know, I would expect that there will be times in the future where we're higher and times where we're lower. But it tends to fluctuate based on what's happening with specific carriers at specific times. Okay.
spk03: Got it. Thank you. And our next question will come from the line of Tim Long at Barclays. Please go ahead. Your line is open. Thank you.
spk04: Two, if I could. Number one, maybe just a higher-level question. Given Dish is kind of a new player and the established players look like they've spent a bunch on the CBAN auction, anything different that we're seeing or that you would expect from pricing or terms of new activity or amendments. And then second, on the CBRS and private side, have you seen any activity there starting to tick up to help as we go through 2021 and into 2022? Thank you. Yeah. So, Tim, on the DISH question, I mean, you say anything different on terms. Well, it's actually you know, very different network. It's kind of carved from the whole cloth and a clean sheet of paper. So no amendments. It'll be brand new installations of brand new cell sites, different kind of equipment. So it's really very hard to compare. It's just different. So I'm not quite sure, you know, what you're looking for in terms of comparing what the DISH terms and particularly rates are compared to, say, an AT&T or Verizon or T-Mobile. It's just different. In terms of CBRS, actually we are. And it's where it's showing up more and more frequently is as a solution to governmental, municipal, and school district providers as a an elegant and cost-effective solution to bridge some of these digital divide issues that we've all been reading about and these are some things that we've been participating in and actually are quite a bit excited about again not not material this year in terms of financial contribution but technically and certainly from a community perspective perspective. Very exciting. Okay, thank you.
spk03: Our next question will come from the line of Brandon Mispell with KeyBank Capital Markets. Please go ahead. Your line is open.
spk01: Okay, great.
spk04: Thanks for squeezing me in. Jeff, I was hoping you could quantify the year of your change in the backlog number that you referenced at the start of the call. a year over a year. Well, that was branded, I believe. Yeah, I mean, Brandon, it's hard for me to put an exact number on it, but our backlogs today are much higher than they were a year ago at this time. I can't give you a specific percentage on that. And obviously, the makeup of the backlog has a lot to do with how that plays out in terms of its financial impact. But they're definitely up. There's a lot more applications received.
spk05: Fair enough.
spk04: Different question. Jeff, maybe could you walk us through your thoughts on potentially reaching an expanded MLA with T-Mobile or even reaching one with Verizon? I guess that goes above and beyond the T-Mobile agreement today. And really, what's keeping your business from being more heavily indexed to Verizon given your exposure there is relatively low? We're not opposed to any MLA with any customer. And we never have been. It's just a question of mutual agreement. And we do have an agreement. I'm glad you corrected yourself. We do have an agreement with Q-Mobile today. It's not, I think, fully holistic. And at some point, it may get there. And we would certainly be... very open to those discussions if T-Mobile wanted that. I mean, just as we were with DISH and have been historically with Sprint and T-Mobile and others. So that's... It just takes two to tango, right? Just from my perspective, it would seem as if that there is a carrot in that you guys have 70% of your...
spk01: or sprint leases going off after the next three years, and that's, you know, 70% of their synergies.
spk04: So I guess we see a win-win coming in the near term where you can get more clarity on what the potential churn and booking or backlog activity might look like in the more near term. Well, there are probably a lot of mutually beneficial outcomes that could happen there, Brandon. I don't think I want to negotiate with you over the Argon spell.
spk03: And our next question will come from the line of Sammy Budry with Credit Suisse. Your line is open. Hi. Thank you for also squeezing me in.
spk01: I just want to make sure I get the numbers right on the churn for 2021. And I think you said $8 million of churn from the T-Mobile Sprint dynamic. And that's from your currently informed view.
spk05: Does this mean that churn could potentially come in a little bit higher than that if T-Mobile decides to accelerate some of its cost rationalizations and synergies?
spk04: Yeah, it's unlikely, Sammy, because our estimates contemplate pretty much the only things that they can do. There may be small differences, but if it's going to be different, it probably would be slightly lower.
spk01: Got it. And then my other question is to do with M&A. And I know you've targeted very specific developing markets for your M&A mandates, but given recently one of your peers making a push into Europe does this change where you may potentially be looking to do deals?
spk04: No. We actually look everywhere, but we only act where we think it's clear that we can create substantial value relative to the cost and the risk of the investment. And we will continue to look broadly and widely and probably act narrowly. Got it. Thank you. Ryan, we have time for one more question.
spk03: Okay. And that will come from the line of David Garino with Green Street. Please go ahead.
spk01: Hey, thanks, guys. Just on that comment on acquisitions, can you comment on how competitive bidding is for tower assets in Latin America? And the reason I ask is it feels like the past few tower transactions we've seen in developed countries are really sought after, and that's been reflected in the full prices that are paid. So are you seeing a similar dynamic in emerging countries?
spk04: I would say it's a little bit less pricey, David, but it's still pricey. We have to be very disciplined and very very careful and understand what you're buying. And you have to start with the premise that it's only in the United States that you have the tax shield provided by the REIT architecture, which everywhere else you're a taxpayer. All right. Thanks for that. So, Ryan, I think we're done.
spk03: Okay, ladies and gentlemen, that does conclude today's conference. I'd like to thank you for your participation. You may now disconnect.
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