SBA Communications Corporation

Thank you for your patience and holding, and welcome to the SBA First Corridor Results Call. At this time, all participants' phone lines are in a listen-only mode, and later it will be an opportunity for a question. If you'd like to queue up today, please press 1 followed by 0 at any time. Just a brief reminder, today's conference is being recorded. Now happy to turn it over to VP of Finance, Mark DeLucey.

Good evening, and thank you for joining us for SBA's first quarter 2021 earnings conference call. Here with me today are Jeff Stoops, our president and chief executive officer, and Brandon Cavanaugh, our chief financial officer. Some of the information we'll discuss on this call is forward-looking, including but not limited to any guidance 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, April 26th, and we have no obligation to update any forward-looking statements 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 of our investor relations website. With that, I will now turn the call over to Brendan to discuss our first quarter results. Thank you, Mark. Good evening. SBA had a strong start to the year, with first quarter results ahead of internal expectations for most of our key financial metrics. Total GAAP site leasing revenues for the first quarter were $505.1 million, and cash site leasing revenues were $504.5 million. Foreign exchange rates were generally in line with our previously forecasted FX rates estimates for the first quarter. They were, however, a significant headwind on comparison to the first quarter of 2020, negatively impacting revenues by $12.6 million on a year-over-year basis. Same-tower recurring cash leasing revenue growth for the first quarter, which is calculated on a constant currency basis, was 3.6% over the first quarter of 2020, including the impact of 2.4% of churns. On a gross basis, same-tower growth was 6%. Domestic same-tower recurring cash leasing revenue growth over the first quarter of last year was 5.6% on a gross basis and 3.1% on a net basis, including 2.5% of churn. Domestic operational leasing activity, or bookings, representing new revenue placed under contract during the first quarter, was modestly lower sequentially than the prior quarter. But on the heels of our newly signed agreements with Verizon Wireless and DISH, we have seen substantial increases in our domestic new lease and new amendment application backlogs. These backlog increases are supportive of significant increases in domestic operational leasing activity throughout the balance of this year. During the first quarter, amendment activity represented 77% of our domestic bookings, with 23% coming from new leases. The big three carriers represented 86% of total incremental domestic leasing revenues signed up during the quarter. Internationally, on a constant currency basis, same-tower cash leasing revenue growth was 6.1%, including 1.3% of churn, or 7.4% on a gross basis. International leasing activity remained steady during the first quarter. In Brazil, our largest international market, we had another solid quarter of leasing activity. Gross same-tower organic growth in Brazil was 8.5% on a constant currency basis. During the first quarter, 85.3% of consolidated cash site leasing revenue was denominated in U.S. dollars. The majority of non-U.S. dollar denominated revenues was from Brazil, with Brazil representing 11.1% of all cash site leasing revenues during the quarter, and 8.1% of cash site leasing revenue excluding revenues and pass-through expenses. Tower cash flow for the first quarter was $411.8 million. Our tower cash flow margins continue to be very strong with a first quarter domestic tower cash flow margin of 84.4% and an international tower cash flow margin of 70.8% or 91% excluding the impact of pass-through reimbursable expenses. Adjusted EBITDA in the first quarter was $390.1 million. Our industry-leading adjusted EBITDA margin was 71.2% in the quarter. Excluding the impact of revenues from pass-through expenses, adjusted EBITDA margin was 75.6%. Approximately 98% of our total adjusted EBITDA was attributable to our tower leasing business in the first quarter. Our services business had a very strong first quarter with $43.6 million in revenue and a higher contribution to adjusted EBITDA than any quarter in 2020. Activity levels have picked up materially. The increasing activity levels with our carrier customers have led to increases in our services backlog and a resulting increase in our full-year outlook for site development revenue. ASFO in the first quarter was $286.3 million. ASFO per share was $2.58, an increase of 13.2% over the first quarter of 2020, and a 16.2% increase on a constant currency basis. During the first quarter, we also continued to expand our portfolio acquiring 731 communication sites, including wireless tenant licenses on 697 utility transmission structures from the previously announced PG&E transaction for total cash consideration for all sites of $975.5 million. We also built 62 new sites in the quarter. Subsequent to quarter end, we have purchased or agreed to purchase 413 additional sites in our existing markets for an aggregate price of $110.2 million. And we anticipate closing on the majority of the sites under contract by the end of the third 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 $6.5 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 updated outlook for full year 2021. We have increased our outlook for most of our key metrics from the outlook previously provided with our prior quarter earnings release. In addition to our increased outlook for site development revenue, which I mentioned a moment ago, we have also increased our outlook for full-year site leasing revenue. The majority of this increased leasing revenue outlook is due to our recently signed global amendment and agreement with Verizon Wireless. One component of this agreement involved the extension of the current lease terms across our existing lease agreements with Verizon, resulting in average non-cancellable terms of approximately eight years. These term extensions increased our outlook for straight-line revenue for 2021 by approximately $22.5 million. While we anticipate higher levels of operational leasing activity throughout the year as a result of the Verizon agreement that will contribute to improved organic leasing revenue growth in future years, we do not expect it to materially impact our previously provided 2021 outlook for tower cash flow and adjusted EBITDA. With regard to site leasing revenue, in addition to the Verizon straight line impact, we also increased our outlook for better leasing revenue projected and for other increases in straight-line revenue associated with term extensions separate from the Verizon agreement. We anticipate our domestic same-tower revenue growth will begin to increase in the second half of the year and that we will exit 2021 at the highest rate of the year. Our updated outlook for adjusted EBITDA and ASFO incorporate increased expectations for contributions from our services business, And ASFO is also projected to benefit from slightly better non-discretionary capital expenditures and cash taxes than we previously anticipated. Our customers' ramping efforts around 5G give us great confidence in our projected growth. As is always the case, our full-year 2021 outlook does not assume any further acquisitions beyond those under contract today. And 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 rest of the year. Our outlook for net cash interest expense does 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 $111.4 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 quarter with $12.1 billion of total debt and $11.9 billion of net debt. Our net debt to annualized adjusted EBITDA leverage ratio was 7.6 times. This leverage ratio is elevated slightly above our target range of 7.0 to 7.5 times due to the PG&E acquisition during the first quarter. Our first quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 4.4 times. On January 29th, 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 the outstanding 4% senior notes, to pay all premiums and costs associated with such redemption, and to repay the amounts outstanding at the time under the revolving credit facility and for general corporate purposes. As of today, we have $530 million outstanding under our revolver, and the weighted average interest rate of our outstanding debt is 3%, with the weighted average maturity of approximately 4.3 years. During the first quarter, we repurchased 654,000 shares of Econostop for $168.9 million, or an average price of $258.33 per share. All shares repurchased were retired. As of today, we have $475.1 million of repurchase authorization remaining under our $1 billion stock repurchase plan. The company shares outstanding at March 30, 2021 were $109.3 million, compared to $111.6 million at March 31, 2020, a reduction of 2%. In addition, during the quarter, we declared and paid a cash dividend of $63.4 million, or $0.58 per share. And today, we announced that our board of directors declared a second quarter dividend of $0.58 per share, payable on June 15, 2021, to shareholders of record as of the close of business on May 20, 2021. With that, I'll now turn the call over to Jeff. Thanks, Mark, and good evening, everyone. As you have heard, we had a strong start to the year with solid financial and operating results. Activities in the first quarter provide a solid foundation for the rest of 2021 and for the next couple of years. During the quarter, each of our largest domestic customers provided public disclosures expanding upon their 5G deployment plans, making it clear that upgrades to their existing macro networks will be a key component of their network investment strategies over the next several years. We've begun to see direct evidence of this with significant growth in our leasing application backlogs and increasing volumes in our services business. In fact, our services business had its biggest quarter in nearly seven years. And notwithstanding that strong first quarter performance, our services backlogs have continued to grow substantially, setting us up to have our best services year in a very long time. Increased services volume and backlog are due to growing network planning and deployment efforts by our largest customers and are supportive of our anticipated growth in domestic organic leasing activity over the coming quarters. Our growing leasing application backlogs further support our expectations around future new leasing activity. Since our last earnings call, the results of the C-band auction were disclosed. Verizon, AT&T, and T-Mobile were all meaningful participants in the auction. Verizon and AT&T both paid premium prices for A-block Spectrum, a clear indication that the ability to move quickly in building out the top markets is a priority for them. On April 1st, we signed a new global agreement with Verizon to facilitate their 5G network build-out, including the deployment of their newly acquired C-band spectrum. This new agreement addresses several items, including the extension of committed terms under our existing agreements with Verizon, establishing equipment-specific pricing, terms and conditions for upgrades to Verizon's existing leases, and establishing parameters and volume incentives for new site leases. We are excited to expand our existing strong partnership with Verizon, and we believe both Verizon and SBA will benefit from years of incremental new business between our organizations. The agreement with Verizon, as well as the substantial minimum lease commitment under our new master lease agreement with DISH, and our existing activity levels and building backlogs with both T-Mobile and AT&T are all part of the foundation for a strong couple of years of heightened activity. Our domestic leasing backlogs are as high as they have been in quite some time. We have not incorporated any material amount of revenue from these climbing backlogs in our 2021 outlook because of the timing uncertainty and lines between application execution and the future is certainly bright in this regard. In addition to the exciting events around our domestic leasing and services businesses, our international leasing activity also was solid during the first quarter. During the quarter, we signed up 50% of new international revenue through new leases and another 50% through amendments to existing leases. We had strong leasing results in Brazil and South Africa. our two largest international markets, notwithstanding continuing challenges in these markets from the COVID-19 pandemic. We believe the underlying fundamentals for wireless network growth are strong in these markets. And once we see a return to normalcy due to increased vaccine availability and other steps to reduce the COVID impact in these markets, we will be well positioned for increased network investment and organic leasing growth. In addition to our first quarter operational successes, we also made advances through positive capital allocation and opportunistic financing activities. As discussed on our prior call, we added a large number of high-quality assets to our portfolio through the PGA transaction during the quarter. And while it's only been about two months since we closed on the majority of this transaction, we're very pleased with what we're seeing so far. We have received significant interest from our customers around these sites, and we have established a very positive working relationship with PG&E, which should allow us to maximize these opportunities through providing efficient access to these assets for our customers. In addition to the PG&E transaction, we have closed and placed under contract a number of new, high-quality assets that should be supported of incremental future organic growth. We also continue to deploy capital into share repurchases during the quarter, successfully deploying almost $170 million to opportunistically take advantage of dislocations in our stock price while also effectively managing our leverage ratio. I'm particularly pleased that we were able to finish the quarter with a net debt to adjust the EBITDA leverage ratio of 7.6 times, just above our target range of 77.5 times. We knew that we would be above our target range temporarily due to the PG&E transactions, but we are ahead of schedule in de-levering back into our target range due to our strong first quarter results. In fact, on a pro-corner basis, for a full quarter's contribution to PG&E, to EBITDA for PG&E, we would have reported leverage of 7.5 times for the first quarter. This result demonstrates the tremendous ability of our company to quickly organically de-lever even after substantial capital investments. During the first quarter, we also completed a $1.5 billion unsecured bond offering at the lowest price for unsecured debt in our history. This combination of steadily growing EBITDA and access to low-cost debt gives us great confidence in our longstanding approach to leverage and capital allocation as a key component to growing AFFO per share and creating incremental shareholding value. Our access to low-cost debt continues today, I'm confident we will have other opportunities to improve our cost of debt financing during this year. In the first quarter, we produced $2.58 of AFFO per share, over 16% higher than the first quarter of last year on a constant currency basis. We also increased our first quarter dividend by 25% over the prior year, while still achieving a very low AFFO per share payout ratio of 22.5%. Our ability to manage our balance sheet, optimize our operations, and opportunistically allocate capital will allow us to continue to generate long-term returns for our shareholders that capitalize on the quality and foundation of the strong underlying network of our business. So I want to close with some comments about our performance through the pandemic. We're currently operating our Boca Raton headquarters representing about 33% of our global workforce at 50% capacity with plans to fully return to the offices at 100% by early July. Our other offices are at varying attendance percentages with U.S. offices generally at higher levels of attendance than our international offices. I can thankfully say that the pandemic has had no material impact on our U.S. business and internationally I believe we have navigated the pandemic as well as anyone. In every case, we have worked carefully with local healthcare experts and our team members to prioritize safety first. I could not be more proud of the way we have navigated this pandemic to achieve focused safety of our team members and meeting the needs of our customers and communities. I want to thank our team members and our customers for their commitment, collaboration during these challenging times, and their contributions to our success. We look forward to an exciting rest of the year and sharing our results with you next quarter. And with that, Justin, we are now ready for questions. Thank you.

And just a reminder, ladies and gentlemen, if you'd like to fill up here for questions, go ahead and press 1 followed by 0 now.

First, we go to the line of John Atkin, RBC. Your line is open. Thanks very much. So I was interested in whether you have seen any actual equipment installed on your U.S. towers of kind of the C-band or O-land variety.

And then I had a kind of a bigger question, bigger picture question about escalators, which historically have been fixed. And we get a lot of questions sometimes about why that couldn't eventually become more CPI-based over time in kind of the core U.S. business. Thanks.

So on C-band type things, I'll just speak generically, John. Signed leases and amendments, yes. Actual installs, yet, no. And you shouldn't read anything more into that other than the typical time it takes to go from execution to installation. And on the fixed escalators versus variable, I mean, that's an age-old question. It obviously depends on which side of the historical inflation you fall on as to what you prefer. It's been discussed, and in every case that I know of in the U.S., people have landed on the fixed escalator concept. So I don't know what really to tell you beyond it's a regular topic of discussion, and fixed is the way folks have gone.

Got it. And then, any more color you could provide on Brazil and just kind of macro topics, economy, carrier landscape, sector?

Brazil is struggling still with COVID. There's no question. The economy is feeling the effects. I believe I saw that the employment rate in Brazil is now currently around 15%. Our folks are optimistic that better times are shortly ahead, but we'll need to see all that. I will say that notwithstanding the overall bleaker environment there, certainly compared to the U.S., our business and our operations continue to do just fine. So we're obviously thankful for that and communicating key need there, and carriers continue to answer that need. But in general, it's, I mean, you know, everyone reads the same things that I do and the same folks I talk to. They still have some room to go in terms of improving their COVID position. Lastly for me, just on the PG and the assets, are there any kind of metrics around, you know, portion of the portfolio that is a legitimate quantity for lease up? What types of use cases you're finding when people do submit a lease application? And just how to kind of think about the growth profile there. Well, obviously all the ones that we've talked about are in use. We have interest in some of the other 28,000 that are currently not in use. And the demand has been both for amendments by existing customers and new leases. So we're pretty pleased with how things have gone the first couple months. Justin, I think we're ready for our next question.

Next up, we have Michael Rollins of Citi. Your line is open.

Hi, thanks, and good afternoon. Just first, just following up on your comments regarding the activity levels. With the Verizon deal in the books, and you've had a couple more months of discussions and activity, is 1Q the trough for domestic organic growth, site leasing growth that was reported at 5.6%

And how do you think about what the peak range could be for this metric, again, now that you have a couple more months of conversations and agreements?

And then just secondly, are there any updates on the possible timing for merger-related churn relating to the T-Mobile and Sprint deal? Thanks. Hey, Mike, on the same-tower growth rates, Q1 is certainly right around the top. It's possible that Q2 also would be at a similar level based on what we've got in mind today. You know, a lot just as a reminder, that metric is a calculation based on the trailing 12 months, so it's really backward looking. And a lot of the increasing significant increases we've seen in the organic leasing activity has just started to happen recently here. And so I expect that it will it'll start to increase in the second half of the year and we'll exit the year at a higher rate and, frankly, continue to increase as we move into next year. As far as how high could it be, you know, I can't really say for sure. I think on our previous call we talked about on a net basis getting to mid-single digits. I think that that is certainly achievable. You know, the big question mark is the timing of the churn. question, which is about the Sprint T-Mobile overhang. The numbers that we gave on our previous call are still pretty much the same. Nothing's occurred that would make us change our expectations. Just as a refresher, on this year, we have about $8 million or so of impact 2021 is what we're anticipating. We've already incurred a decent portion of that. So that's probably about the right number for this year. Next year is expected to be a little bit bigger, closer to $30 million of impact next year before it steps down the following couple of years to somewhere around $10 to $15 million per year until we see the biggest impact potentially in 2025 and 2026. Having said all that, that's an estimate based on the timing of when the overlapping leases come up for their maturity dates. It's certainly possible that T-Mobile's plans will change in terms of what sites they need to keep. And so we'll have to keep our eyes on that, and we'll certainly inform you if anything changes.

Next up, we have a line from JP Morgan. Your line is open. Hey, guys. Thanks. Can you help us think about activity ramping from this year to next year as we go from the guided activity and talking about an exit run rate accelerating from here? I just want to pull the churn discussion out and really think about what activity could be doing. Thanks.

Well, it's clearly going to accelerate, Phil, as the seed band spectrum gets clearer. Verizon themselves stated that one of the reasons for the dream was to be able to get ahead of the actual clearing and have the equipment already in place and ready to go. But I think it's a practical matter. There will be a fair amount of just-in-time delivery of new C-band equipment as it relates to when they get the spectrum cleared. And, you know, AT&T's commentary was that much of their C-band spending was not even going to occur until the beginning of 2022. So if you take what our customers have said at face value, we should move through this year and continue to grow as we move through 2022.

If I was in 2019, as a good example of what happens when two carriers are really spending, do you think 2022 activity could be better than that 63 million in 2019?

I mean, it could. We don't want to get too far ahead of ourselves, but I don't, if you take your premise of all four carriers being very, very busy, I think 2022 will be that year.

Yeah. Okay. Last thing, the service this quarter, you know, just really strong. Anything that we should think of that's sort of like a one-timer or not repeatable in the second quarter, or is that a good new one, right?

I don't know how long you take it out, but there's nothing that we know of today as to why Q2 should be materially different.

Good. Thanks, Jeff. Yeah. Next we have the line of Spencer Kern, New Street Research. Your line is open.

Hey, guys. Thanks for taking the question. I was wondering if you could elaborate on the deal you struck with Verizon. One of your peers signed a more holistic deal where a certain amount of revenue was contracted annually. And you guys didn't. So I was curious, you know, why did you take that approach? We historically have thought it best for all parties to operate on a more a la carte basis, Spencer. So you're correct. Our straight line only includes the results of the term extensions. It does not include any type of use rate because that's a different deal. And that's just the way we historically have run the business and like to do things. I don't know if it's any more complicated than chocolate versus vanilla. Well, it's worked out favorably for you in the past, so we'll have to see how things shake out. And one follow-up. In your prepared remarks, I think you said that you didn't include any benefit from the increase in your backlog that you saw this quarter because of the uncertainty around the commencement timing. Is it the case that you had already baked in some impact of the C-Bend into the guide and the application that you saw this quarter basically met your expectation? Or is it the case that, you know, if these sites do commence, it could be incremental to your expectations that you laid out last quarter? Yeah, hey, Spencer, it's Brendan. We did certainly expect and included our original guidance and increasing amounts of leasing activity throughout the year. The backlogs are supportive of that. And the big question mark, which we did mention in our comparison to Mark's, is just simply the timing of those applications turning into signed agreements and then the next step of the signed agreements getting dates at which the rents would kick in. And so, you know, we've got certain assumptions we've made around how that's going to play out. It certainly will be increasing as we move to the rest of the year, but that was already assumed. So, you know, to the extent that we are off at all and it is a little bit faster, I guess it could be higher. But I think as we get later in the year, the potential for that to be a material impact is very limited.

Next, we have the line of Rick Prentice and Raymond James. Your line is open.

Great. Hey, Rick. Hey, Tom. I was a little surprised that the cash taxes changed. How did you get there?

You broke up a little bit. I think you're asking about the change in our cash taxes. Yeah, so the cash taxes for the balance of the year, it's actually in part due to expected benefits that we have now from the PG&E acquisition in terms of amortization of that asset that was not, I think, fully when we gave the original guidance because that deal actually just closed right before we gave the last guidance. So that's something we're going to benefit from. And the other things that affected it are fairly minor differences in some of our international markets. But PG&E was really the biggest difference.

As we think longer term, how should we think about cash taxes and other ones?

uh well you know obviously as a i mean they're going to go up yeah they're certainly going to go up um you know it's interesting because as a reef we obviously have uh limited federal cash uh taxes at any point. But there are currently state cash taxes that we do pay because we're not paying our full ASFO out as a dividend. So there's some opportunity to improve on that front. But on the other side, the more impactful thing will be our international taxes, which as we continue to grow in those markets and some of the depreciation shields run off, you'll see the cash taxes in the international markets climb.

Makes sense. And how do you think about the CBRS opportunity? What's the timing and size of being able to put capital work?

The timing is now. The primary, I think, interest right now will come from municipalities, private networks, We're actually building some school systems to help bridge the digital divide that are focused on CBRS. And while some of our cable customers are also active, I think in terms of the national wireless carriers, they're going to focused really on the mid-band and used the CBRS stuff really as more of a niche solution for them. So the biggest opportunities really are with CBRS in particular are outside of the national wireless carriers today.

Makes sense. And have you thought about giving us a table showing Sprinter as far as colo versus other sites? as one of your peers did recently?

We haven't thought about it, but we will think about it.

That'd be great. All right. Thanks, guys. Stay well.

Okay, thank you. I think, first of all, how do you think that will change over the end of the year and maybe into next year or as C-VAN becomes more of the mix down the road? And how does the average amendment revenue compare to higher rates? Thank you.

You broke up on a lot of that, and I don't think any of the three of us here heard everything you said. Could you try that again?

Sure. I'll try again. I was asking about the amendment revenue mix. I think it was 77% this quarter. How do you think about that trending towards the year end and maybe with the C-band deployment becoming a bigger part of the mix? And if you could give us an average in terms of how do these amendment revenues compare on a monthly basis now versus prior upgrades?

Okay. The 77 percent, and this is purely a guess, but I'm going to guess it goes down as we hit year end, mostly because all the dish business is going to be new leases. So that's probably going to, to the extent it changes, it'll be for that reason because most of the other activity is from the other three carriers is definitely going to be amendments. And in terms of the pricing, we really never get into that, but I will tell you that based on a load and a –

a usage basis um the pricing is entirely consistent with what our history has been okay all right maybe one quick follow-up uh the new tower purchases 413 can you tell us where they were and um um how was the m&a activity in those in those markets those are

Those are actually under contract, most of those, Batya, and they're mostly located internationally in existing markets of ours.

Got it. Okay. Thank you.

Next, we have the line of David Barden, Bank of America. Your line is open.

Hey, guys. Thanks so much. I guess a few questions. So... On the services activity, in the past we've had, you know, one or two carriers being the driver of that. I guess how democratically distributed would you describe services activity running out of expectation at this stage being? I guess the second question was just on this commencement question mark, you know, some of the comments that John Stanky made about, quote, unquote, skittishness with respect to supply chain. You know, any observations, Jeff, maybe that you guys have from your perch as to how you see the probability, the confidence interval around accelerating to be given those questions for the start?

Thanks.

Yeah, on your last one, well, your first one, it's still not too democratically spread out. It's still our services revenues are still disproportionately coming from a few actors, which actually is good because we have the opportunity to expand that base as we move through the year. In terms of your second question, we haven't really seen any supply issues yet, David. That's not to say if somebody says that they're out there, they are. We haven't seen them yet. And in terms of what it's going to mean for us, as I think we've explained many, many times, once a lease or amendment is executed, when it actually begins to accrue revenue is the later, or excuse me, the earlier of the date certain or when we actually install the equipment. So We're all rooting for fast equipment availability and dates of install that are earlier than the specified end date in the contract. If that happens, we'll begin to accrue greater revenue earlier. Right now, as we think about life and how this year and next year is going to play out, we're not really thinking about equipment delays. Okay, great. And then if I could do one more follow-up. Just in light of the PG&E deal, obviously now that that's kind of ripened and closed, has there been an elevated or any amount of inbounds from other corners of the world looking to kind of do what PG&E has done? Or was that more of a forced situation that was kind of unique? Well, PG&E had its own unique needs, but we have had many, frankly, inquiries from other utilities around the country. Okay, good.

Thank you, Ted. Thanks. Next, we have the line of Nick Belzio, Moffitt & Stevenson. Your line is open. Hey, thanks for taking my questions. You know, first, returning to the PG&E sites, If you think back to other assets you've acquired that may not have been adequately marketed, about how long did it take them to kind of hit their stride and start seeing the benefits of being plugged into your sales engine?

Was it basically right away, or did it take a little time? No, it always takes time. It always takes time. I mean, six months to a year to really get to the point where it's just like a homegrown asset. Okay. Okay, that's helpful. And then maybe one on the M&A front. There's a lot of talk of higher capital gains taxes this year.

Would you expect that to potentially increase the pool of towers for sale in the U.S.?

Or are you not hearing much on that front? It has historically, Nick. So I would expect it to do so again. But I don't know that the magnitude will be so great that it will be like a a tsunami of deals. But clearly there will be tax sensitivity if the capital gains rates are increased.

Okay. So maybe you pick up a few more, but not enough to really change the trajectory or anything.

I wouldn't say we're going to get to 20% portfolio growth off of tax law changes.

Okay. Fair enough. Thank you, Jeff. Next, we have Tim Long of Barclay. Your line is open.

Thank you. Two questions, if I could. First, I think you guys mentioned something on CVRS and kind of digital divide and some benefits there. Could you talk a little more broadly about some of the government push for more rural broadband and what you think that might mean overall for your business? And then second, can you just update us on any updated developments on CVRS kind of the old whole-edge compute data center world where we know you guys are kind of kicking the tires right now? Thank you. Yeah. The government's involvement in broadband and bringing broadband to more rural areas is, you know, right in the middle of that, Tim. The initial bills have been mostly focused on fiber because they are trying to establish a minimum uplink and downlink speed, which for fixed wireless today is not available. And there's a tremendous amount of lobbying going on right now to basically free that money up for wireless as well as fiber. And that all remains to be seen. In addition, the other aspect of the legislation that's been proposed is it's mostly for CapEx. And we've tried to make it clear through our industry channels that it's really not CapEx that you need. There's a lot of CapEx out there. If somehow the relief could be structured in a way that guarantees rental payments at OpEx for periods of time, then I think you really have something that's going to be impactful for our industry. So the work that we're doing so far actually has not revolved so much on any federal programs. There is an e-race program that is for education that is federally administered that's part of it. Mostly we have been working with county school districts and actually private funding that's interested in economic development to make this stuff happen. So we're excited about the potential. What we've done to date hasn't really involved much, if any, federal funding because that cake is still not baked yet. The edge compute, you know, it continues to be a focus of ours. I continue to think it's going to bear a lot of fruit. We actually have two new customers and two new facilities that are under construction since our last call. But what really needs to happen, and we've been very clear on this, I think, from day one, is you need to have a use case world where you need computing power right at the cell site. And that's But we're not there yet. I think we're going to get there. But until we get there, that's when you're really going to know that the edge computing opportunity is the good one that we think it's going to be.

Thank you very much. Next, we have Walter of LightShed. The line is open.

Thanks. Jeff, I want to go back to Phil's question. He was drilling on 22. But do you think 22 is the peak year for Cologne amendments? I don't know. I mean, we'll see. It all depends on how quickly our customers want to spend. You had AT&T saying they're not really going to start their C-band work until 2022. So, I mean, it could be, but it also may not be. But I think Phil had it drilled down pretty nicely in the 60 versus 63, whatever. So you have a good sense of what 22 is and how much of Verizon and maybe a matter of dish and stuff like that's in there. So I'm just curious if you think there's much left over to take that number even higher in 23. Yeah, I don't think we – I mean, I would disagree that we know enough now to have – 2022, you know, fully baked and compare that to what ultimately will be the full build-out plans for our customers. And those are going to be multi-year. That's not just a two-year gig. And it's not even really starting until late this year, the earliest. So the more we talk, the less I'm prepared to say 2022 will be the time. Yeah. Got it. And then, Brandon, I think when you were talking about, I mean, the last two quarters, you gave us a good sense of the churn that was ordered out of T-Mobile and Sprint. So I think you reiterated that eight-ish number, nine-ish, whatever. But I think, Brandon, you also mentioned a lot of that has already been loaded in the first quarter. So, I mean, was it a couple of million in Q1 of that eight-ish or nine that has already kind of hit your numbers? Yeah, it was a little less than $2 million. It was probably about $1.8 million or so. So it'll be a little bit bigger. So, yeah, I mean, we saw a bunch of these releases that ended right at the end of last year or the beginning of this year. So that piece we already knew about. And then there's some other, you know, extra pieces that we're assuming happened that may or may not, but they're relatively small. So when you talk about, Brandon, the mid-single-digit growth, is it, Should we think about that including that sprint number or next mobile number, or is it after that? Yeah, long-term, the question that I was answering was what do we think it could get to in terms of the organic growth rate? Okay. So, yes, that's a net number. Including spring, because obviously that spring churn is going to start cranking up. Yeah, but in any given year, obviously in any given year, it could be higher or lower because the spring churn is lumpy. So depending on the year, some years will be below that, and I guess conceivably it could be higher than that if you had really low churns and high lease of them. Okay. I just hope it's not like a Dave. It's like a Dave Schaefer long-term, where it's like that number we're always waiting for. And then last question is, are they using massive monolant tenants in terms of their new leaf activity, or are they using a more traditional approach? More traditional. Gotcha. Thank you very much. Sure.

Next, we have Brett Feldman from Goldman Sachs. Your line is open.

Yes, thank you. Two questions, if you don't mind. You know, we're talking a lot about C-band, and historical conventional wisdom has always been higher frequencies are more useful in dense areas and less dense areas, and your portfolio seems to skew a little more less dense. Now that you actually have insight from some conversations with carriers about how you're thinking about using the c-band what level of visibility or confidence do you have that they're actually going to go to all of the towers they currently use with you in markets where they hold c-band licenses and upgrade them to support c-band or do you think there's some towers where it won't fit and the other side of it if you're gonna put your optimist hat on is what extent do you actually think they're going to increase their density with you being going on sites they maybe historically if not as they the toy c band and then the second question if i just sort of think back on some of the earlier uh questions before it sounds like you really haven't changed your approach to your leases you know you're sticking with fixed escalators you still like hollow cart and there are some emerging operators uh who have signal that maybe that has created opportunity for them, that they've been able to get into some spaces where maybe you're not winning business because you haven't been as flexible? How have you gotten comfortable with that tradeoff as you went through this last iteration of major negotiations? It doesn't seem like you really budged a lot. Well, I would put out our historical results as the reason why we're comfortable with that and our first quarter results and where we will be this year and where we'll be next year. and kind of leave it at that. In terms of the, you know, your first question on density, I think we've seen enough so far to know that it's going to be fairly broad. I mean, I would never tell you to count on 100% of every lease, but it is going to be broad. It's going to be, you know, closer to 100 than it is to 50. And we won't really know I think until we get into it a little bit, particularly with the existing carriers, as to how much new leasing will come about this, because clearly they're all pursuing co-locations first, because that's faster, it's cheaper, it's just a smart way to go about it. And it'll be a little bit of time before we see the demand for new leases. But it'll be like anything else. I mean, if the demand is good enough and there's money to be made, they're going to co-locate.

Thank you. Next, we have Eric Hrubchung of Wells Fargo. Your line is open.

Thanks for taking the question. Just wanted to follow up on that last point. You mentioned in the Verizon deal there were some parameters around new site builds, and it seems like recently the big free wireless carriers haven't done as much with the public power codes on new builds. So do you see an opportunity beyond just the initial amendment activity for new sites, either with Verizon or any of the other carriers, or is it just too early to call at this point? No, we definitely see an opportunity, and this agreement will facilitate that.

Okay, great. And then just one more for me.

I'm just wondering in the initial discussions with the C-band winners, your large customers, do you see any amendment opportunity beyond just C-band radios, perhaps then looking at lower frequency spectrum upgrades to support uplink to allow them to get better propagation out of their mid-band spectrum? Yes. I mean, there's a variety of requests and equipment configs that go about this. It's not just strictly C-band radios. A big part of this is the massive MIMO antennas. That's different than what your question was, but we're seeing a whole variety of different things, Eric, of which really the unleashing of the C-band has now given everybody the reason to go

back to the macro networks that they knew was coming so here we are so great thank you next we have colby cinderella your line is open uh great thank you um i appreciate with the verizon mla uh that there's not a use fee but i'm curious in deals like that if you uh put in place some type of an incentive uh to potentially you know go on to x amount of their sites faster than otherwise, and if, for example, they do that, they get pricing lower than they might otherwise. I'm just curious if there's those types of structures and deals like this.

We do have an incentive, Colby, and you say deals like this. I mean, this is the first global master agreement we've ever done with Verizon, so

Okay, but I guess to your point, there's an incentive that if they, you know, go on to X amount of sites by X amount of date, it would be more cost-effective on a per-site basis than if they took longer.

Yes. X amount, X price, X date equals X discount.

Got it. And then secondly, Brendan, I'm curious if there's any more refi opportunities. Obviously, that was a nice savings. And then lastly, I'm just curious what drove the AFO beat. I think that's where, in terms of revenue, that's where we saw the biggest beat. And if I just take your first quarter number and annualize that, that already gets me to the midpoint of your 2021 guidance. Just curious if there's anything one time in there. Thank you.

Yeah, Colby, so we find opportunities. There definitely are opportunities, without a doubt. We have some debt that is reaching points where it can be refinanced, and based on the current market environment, we would expect to be able to refinance it at better rates than we're currently paying on several of those instruments. So, you know, I'd just say stay tuned because we're constantly looking at that, and I would expect us to take advantage of those opportunities. On the AFFO beach, You know, I think you're referring to basically our increase in our outlook for it in addition to the B. But, yeah, I mean, I guess they're one time in some sense. One of the main contributors was in the services area, which we already talked about. We actually had a very strong quarter, so the margin contribution from services was very high. That's not a recurring business, so I guess you could call it one time, but we do expect to continue to throughout the year based on the backlogs that we have.

And I guess to that point, just to interrupt you, I'm sorry, and I guess I think Cusick asked this, but are you seeing a similar margin profile to that as well?

Yes.

Yes.

Okay.

We are. And that is subject to shift a little bit depending on the mix of SIDAC-type work versus construction. Construction is typically a little bit lower margin, but... Right now, most of the work that's happening is a lot of it's pre-construction, so I would expect that to stay similar. As we get towards the latter part of the year, you probably start to see more construction work, and so maybe the margin starts to shift down slightly at that point. The projects have much higher volumes. That's right. And then, you know, other contributions on AFFO, you know, it's a couple different things. We obviously had a little bit better cash taxes, which we talked about on an earlier question. We also had lower non-discretionary capex than we had expected. We even lowered our guidance for the full year slightly for that as well. It's a mix of each of those things, and frankly, on the per share number, the share buybacks helped a little bit as well in reducing our share count. So a mix of all those things.

Okay. And, I mean, I guess the point, though, is that when I look at your taking that number, I already get to the midpoint of your guide, so it would seem that that number should be going up through the course of the year.

Yeah, I mean, some of it's timing related. I mean, we did do well in the first quarter in certain areas like the CapEx and, frankly, even our SG&A costs that we expect both of those items to be a little bit higher as we move through the year. So some of it's just a timing issue. But overall, we were able to improve our full year guidance in part because of the performance in the first quarter.

Got it. Thank you. Next, we have Lana Brand in this form of KeyBank Capital Markets. Your line is open.

Great. Two questions. Jeff, question for you. Can you quantify the year-over-year change in the backlog of signed but not commenced new leases? And I guess when was the last time backlogs were this high? And the second question was around the minimum commitment that you would have with BISH. How did the minimum commitments trend throughout the life of the contract? Thanks. Well, they do have certain time periods which we're not going to disclose. So there's X business by Y date. And so it's broken out in more discrete periods over the contract. So there's definitely incentives and commitments to move things along during the life of the lease. In terms of... The dollar volume and the backlogs, we generally internally talk about backlogs in terms of the number of amendments and the number of leases. And, you know, where we are today versus where we were a year ago, which is, remember, we hadn't even got to the T-model sprint, or maybe we just got to the finish line right about now. I mean, they're They're more than twice as high. It's a different time. And I guess when was the last time that backlogs were this high? It's been a few years. It's been a number of years. I mean, we've had periods. Obviously, when you go back to the LTE upgrades, they were high. They probably were higher than they are now, although we're still building, and that may be very well. be eclipsed in future here but if you go back a couple of years ago when T-Mobile was particularly active we saw some higher levels but you know we're definitely at a high level by historical standards even if it's not the highest and it's continuing to build which is the most well a recent high yeah yeah I mean the LTE the one thing we've made clear before is back going from 3G to 4G the the average amendment price was much higher than the heavy equipment modes that were being added. We certainly expect volumes to rival that, but pricing will be a little bit different this time around, given the less heavy additional weight loads that are being requested as part of the upgrades.

Thank you for taking the questions.

Thank you. Next, we'll come from Damon Green Street. Your line is open.

Hey, thanks, guys. Question for you on data center. So since the start of the year, we've seen a pickup in the number of transactions. Have you guys evaluated any other acquisitions since the one last summer in Jacksonville? And what's the company's appetite to grow the data center footprint?

We have a greater appetite provided that it comes along with edge deployments at our cell sites. So as that continues to grow and as we continue to demonstrate the synergy between a regional data center and the next centers at our power sites, which is what we're beginning to now experience in Jacksonville in particular, We would continue to look. We're very mindful of what we are, though. We're a wireless infrastructure company. And these regional data centers, if any, would be pursued only because of the success or the perceived success we'll be having around the cell sites.

That's helpful. And then is that just in the U.S. you would be looking, or can we see you guys look internationally as well?

No, the concept applies everywhere.

Great. Thank you. And the final question comes from the line of Matthew Nickman of Doja. Your line is open.

Hey, guys, thanks for squeezing me in. Can you give any more color in terms of the latest you're seeing from BISH and when we should anticipate them to maybe become a more meaningful driver for cash financing revenue growth in upcoming quarters?

And then one housekeeping item maybe for Brendan, if you can give us a contribution from a revenue and power cash flow perspective from PG&E and 1Q, and should we effectively double that into TQ given the full quarter? Thanks. Yeah, on the PG&E one, I believe the contribution was somewhere between $4 and $5 million of seller cash flow and only slightly higher on the revenue side because the costs are very limited there. And you should pretty much double that because it closed pretty close to the middle of the quarter. Yeah. And on DISH, Matt, a lot of side leases. Yeah. times 10 for applications, so tremendous amount of activity. But whether we see revenue out of that this year or not will depend solely on how quickly DISH moves through the site acquisition, permitting, construction phase of things. And that's – I can't give you any more guesstimate than what I've said because that's what it would be. That's what's going to drive revenue recognition this year is the pace of the installs for DISH. But it's all moving in the right direction. Understood. Thank you. Thank you. And thanks, everyone, for joining us. We think it's going to be a great year, and we look forward to sharing our progress with you next quarter.

Ladies and gentlemen, this concludes the presentation for this afternoon. Thank you for all your participation.