American Tower Corporation (REIT)

Ladies and gentlemen, thank you for standing by. Welcome to the American Tower fourth quarter and full year 2020 earnings conference call. As a reminder, today's conference call is being recorded. Following the prepared remarks, we will open the call for questions. If you'd like to ask a question, please press one then zero. I would now like to turn the call over to your host, Igor Kislovsky, Vice President of Investor Relations.

Please go ahead, sir. Good morning. and thank you for joining American Tower's fourth quarter and full year 2020 earnings conference call. We've posted a presentation, which we will refer to throughout our prepared remarks under the investor relations tab of our website, www.americantower.com. Our agenda for this morning's call will be as follows. First, I'll quickly summarize our financial results for the quarter and full year 2020. Next, Tom Bartlett, our President and CEO, will provide a strategic update on our long-term growth trajectory. And finally, Rod Smith, our Executive Vice President, CFO, and Treasurer, will discuss our 2020 results and 2021 outlook. After these comments, we will open up the call for your questions. Before I begin, I'll remind you that this call will contain forward-looking statements that involve a number of risks and uncertainties. Examples of these statements include our expectations regarding future growth, including our 2021 outlook, capital allocation, and future operating performance, our expectations regarding the impact of COVID-19, our expectations regarding the impacts of the AGR decision in India, our expectations regarding our pending Telseus transaction, and any other statements regarding matters that are not historical fact. you should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward-looking statements. Such factors include the risk factors set forth in this morning's earnings press release, those set forth in our Form 10-K for the year ended December 31, 2019, as updated in our Form 10-Q for the three months ended March 31, 2020, and in other filings we make with the SEC. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained in this call to reflect subsequent events or circumstances. Now, please turn to slide four of our presentation, which highlights our financial results for the fourth quarter and full year 2020. During the quarter, our property revenue increased 10 percent to $2.1 billion. Our adjusted EBITDA grew by 13%, nearly $1.4 billion. And our consolidated AFFO and consolidated AFFO per share increased by 8.9% and 8.8%, respectively, to $936 million and $2.10. On an FX-neutral basis, growth rates for property revenue, adjusted EBITDA, and consolidated AFFO per share would have been 13.4%, 15.9 and 11.9 percent, respectively. Finally, net income attributable to American Tower Corporation common stockholders decreased by roughly 35 percent to $365 million, or 82 cents per diluted common share. The decrease included the impact of approximately $181 million in impairment charges in the quarter across several markets as well as the non-recurrence of certain income tax benefits in India from 2019. From a full-year perspective, our property revenue increased 6.5 percent to nearly $8 billion. Our adjusted EBITDA grew by 8.7 percent to approximately $5.2 billion, and our consolidated AFFO and consolidated AFFO for share increased by 7.6 and 7.5 percent, respectively, and nearly $3.8 billion and $8.49. On an FX-neutral basis, full-year growth rates for property revenue, adjusted EBITDA, and consolidated AFFO per share would have been 10.8%, 12.3%, and 11.6% respectively. Finally, net income attributable to American Tower Corporation common stockholders decreased by about 10.4%, to $1.7 billion, or $3.79 per diluted common share. Again, impacted by the impairment charges in the fourth quarter and the non-recurrence of certain income tax benefits in India from 2019. And with that, I'll turn the call over to Tom.

Thanks, Igor. Good morning, everyone. As you just saw from our posted results, we finished 2020 with another strong quarter and have solid momentum heading into 2021. Globally, the secular trends in mobile that we've leveraged to deliver sustainable long-term growth are firmly intact, as advancing mobile technology modernizes economies, transforms the lives of billions of people, and connects us during an unprecedented pandemic. Our extensive communications real estate portfolio is well-positioned to serve as the fundamental backbone of today and tomorrow's modern wireless networks, and we're excited about our path forward. But before I get into our future expectation, I want to first briefly summarize our last five years of performance and highlight the key drivers of those results as a form of a backdrop to what we expect going forward. Turning to slide six of our presentation, you can see that from 2015 to 2020, we generated an 11% CAGR for consolidated property revenue, adjusted EBITDA, and consolidated AFFO per share. These results were supported by attractive organic tenant buildings growth rate, which averaged 6% in the U.S. and 7% internationally. Additionally, over the last five years, we have meaningfully enhanced our global new build program, creating a platform that enabled us to construct nearly 5,900 sites just this past year and almost 17,000 sites since the start of 2016. Our focus on new site construction, together with our proven discipline M&A strategy, has resulted in the addition of nearly 100,000 new sites over the last five years, further lifting our returns and growth trajectory. Concurrently, we grew our annual common stock dividend by more than 150%, from $1.81 per share in 2015 to $4.53 per share in 2020, adding another attractive element to our total return formula. The consistency of our performance over these last five years speaks to the fact that our stand and deliver strategy is working. The four pillars of this strategy, operational efficiency, growing our assets and capabilities, extending our platform, and driving industry leadership have continued to pay dividends across our global asset base. We firmly believe that the continued implementation of these strategic priorities will result in sustainable long-term growth generation, and that remains our focus. In other words, while we are obviously mindful of and realize the importance of our quarterly numbers, the way that we run the company is fundamentally designed to optimize returns over a much longer planning horizon. And we believe our results speak for themselves. This philosophy is evidenced by, among other things, our strategic long-term contracts, such as the T-Mobile agreement that we signed in September. In the immediate term, that deal will result in some elevated churn. But over the longer term, we expect it to create tremendous value for our stockholders while helping to secure a significant share of industry leasing activity in our sites and supporting the deployment of 5G across the country. Our recently announced Celsius transaction is another good example of our stand and deliver construct in action. Our financial strength, proven capital allocation strategy, and objective of gaining scale in the most attractive markets globally enabled us to identify what we believe to be a unique opportunity for long-term value creation in Europe. And overall, as we expand our global platform, As is typical with our investments, this transaction is expected to be immediately accretive to consolidated AFFO per share. However, most of the accretion in shareholder value will be realized over time as we generate LISA, construct additional sites to round out the portfolio, and drive higher margins. Additional future upside may come, we believe, from our platform expansion initiatives, particularly in markets like Germany. where we anticipate that edge computing will be important for carriers and enterprise accounts themselves as they seize the benefits of 5G. And the ability to be in a unique position to be able to provide a global platform of well over 200,000 sites in over 20 countries pro forma for Celsius to global MNOs, hyperscalers, enterprise accounts, and data center companies should drive additional value over time. Our Stand and Deliver commitment also drives our focus on industry leadership, particularly in the area of ESG, including, among other things, our increasing use of renewable energy, reduction of our emissions, and numerous human capital initiatives designed to ensure that we remain as not only a preferred employer, but also a positive driving force in our communities. This was particularly relevant this past year as we enhanced our commitment to diversity throughout the company committed funds to help counter social injustice and structural inequities, and sought additional opportunities to make a positive impact, including initiatives to help bridge the digital divide through programs like our digital villages. Our culture at American Power is extremely important to me personally, as well as the rest of our executive team. And while we clearly have more to do, I'm proud of the tremendous strides we have all made together over the last few years. Looking forward, we expect our continued execution of Stand and Deliver to result in similarly attractive long-term sustainable growth for American Power and compelling total returns for our stockholders. Moving to slide seven, you can see that the U.S. and Canada organic tenant fillings growth will continue to be a critical component of our long-term success. Having said that, as I just mentioned, We will have elevated levels of U.S. churn beginning in the fourth quarter of this year, and particularly in 2022, which will result in average U.S. organic penne fillings growth rate of around 2% across the next few years. This is due to the legacy sprint network being substantially decommissioned by T-Mobile, and the fact that unlike our peers, we have been able to eliminate churn to date as a result of previous master lease agreements. Adjusted to exclude these cancellations, our expected U.S. organic pentafillings growth through 2022 would average around 5%. As part of that growth, we expect our gross new business commencements to accelerate beyond 2020 levels, given the deployment of new technology, new spectrum, and new market entrants. What's even more interesting for us, in line with our focus on long-term growth, is the organic trajectory beginning in 2023. As you can see in the slide, from 2023 through 2027, we expect organic tenant fillings growth to accelerate to, on average, at least 5% on a reported basis, and at least 6%, excluding the impact of the remaining legacy spring churn. Importantly, much of this growth is contractual, in part driven by escalators on existing leases, which will continue to average more than 3% per year and in part represented by future new business that we have locked in through contractual framework like our agreement with T-Mobile. Said another way, the majority of our expected baseline future organic growth in the United States through 2027 is contractually guaranteed today. This is further supported by our expectations that churn in the U.S. will be lower than historical levels once the legacy sprint leases fully roll off in 2024. The non-contractually guaranteed components of these projections are based on the assumption that annual wireless capex in the U.S. will be slightly higher than current levels through 2027 as 5G deployments take hold and as new spectrum, like C-band, is deployed. This, in many ways, mirrors what has occurred in the past with new technology rollouts, where CapEx levels have risen with each new G. We continue to believe that the carriers have a mandate to deploy 5G as quickly as possible, given it is the most cost-effective way for them to address the tremendous growing levels of mobile data traffic streaming across their networks. As a result, we expect to see meaningful incremental densification and amendment activity for the foreseeable future driving strong growth. Importantly, we've not layered in any material assumptions around a potential new entrant outside of DISH, and we have assumed only modest contributions from edge computing and other platform expansion initiatives within these numbers. We are working diligently to unearth additional meaningful opportunities that can drive further upside to our growth rate. Turning to slide eight, We are also reiterating our aspirational goal of delivering average annual double-digit consolidated AFFO per share growth for the next seven years, including initial guidance of around 8.5% growth for 2021. We expect the U.S. organic growth I just referenced to be an important component of our AFFO trajectory. In addition, similar to what we have seen in the past, Our expectation is for international organic kind of buildings growth rates to be at least 200 basis points higher than the U.S. over the long term, further enhancing our consolidated AFFO share growth. Many of our international markets are in earlier stages of technology development, have little to no fixed line penetration, and require tremendous incremental investment in their wireless network infrastructure to support future densifications. The criticality of wireless in these locations has been further highlighted during the ongoing pandemic, as have the limitations of current network infrastructure. As a result, we expect that as carriers ramp their network investments, our emerging market organic growth rates will continue to be very attractive. Meanwhile, in more advanced markets like Germany, we are now seeing early stages of 5G buildups. which we believe will result in a long pathway of attractive growth as well. Importantly, we expect organic growth in Germany to accelerate meaningfully over the next several years. Furthermore, we expect recent and future M&A, together with our accelerating new build program, to drive additional value. This includes our pending Telstra deal, several recently closed transactions in the United States, as well as the nearly 5,900 sites we constructed in 2020 and the roughly 6,500 sites we expect to build in 2021. In fact, based upon the demand we are seeing for new sites across our international business, we are targeting the construction of 40,000 to 50,000 new towers over the next five years, with day one NOI yields continuing to be extremely attractive. And on the M&A side, we expect there to be numerous additional opportunities for us to deploy capital towards high-quality assets with attractive counterparties and favorable economics. As in the past, we expect M&A to be a key piece of our future growth story. Enhancing operational efficiency, another pillar of Stand and Deliver, will also be a key area for us as we seek to drive continued double-digit growth and consolidated AFFO share. As we incrementally globalize the business, we are creating shared service centers, optimizing various back office processes, sharpening our pencils on site-level services like energy provision, and focusing resources on further enhancing and improving our customers' experience with us. Utilizing drone technology and our instant colo initiatives are examples of how we are both scaling more efficiently and increasing the value proposition for our customers. We remain laser-focused on driving margin improvement throughout the business, which should translate into continued high conversion rates of adjusted EBITDA to consolidated AFFO. Finally, we continue to believe that our leading investment-grade balance sheet is a key differentiator for the company and expect that it will be an important component in achieving double-digit consolidated AFFO per share growth The investment-grade debt markets remain extremely attractive from both a rate and access perspective, and we feel good about our ability to not only complete value-additive refinancing transactions, but also to fund accretive M&A in the future. We remain fully committed to our investment-grade credit rating and expect it to be an important element of our future success. In conclusion, we believe that we are exceptionally well-positioned to extend our long track record of driving strong growth and attractive returns, particularly at a point in time when mobile broadband connectivity globally has never been more critical. We have tremendous visibility into our future baseline growth trajectory, including having roughly $59 billion in contractually committed revenues supported by long-term, mutually beneficial, comprehensive master lease agreements with key tenants. We also expect to have some interesting opportunities to further enhance that baseline through platform expansion initiatives like edge computing, power as a service, and other potential sources of upside. Moreover, we believe that our unmatched geographic diversification of distributed sites has the potential to set us apart from the competition, particularly in the context of an increasingly global tenant base, cross-border infrastructure deployments, and an even more connected and digitally driven world. We firmly believe we have the right strategy, the right macro tower-oriented asset base, and the right management team to move American Tower forward into the 5G era and beyond. With that, let me turn the call over to Rod to go through our 2020 results and the details of our 2021 outlook.

Rod? Thanks, Tom, and good morning, everyone. I hope you and your families are all doing well. As you can see from our press release and presentation, we had another solid year and finished 2020 on a high note, posting another strong quarter of performance across our global business. This included constructing a record number of high return new sites, completing two sizable and accretive acquisitions in the U.S., strengthening our already strong balance sheet, and achieving higher than previously expected consolidated AFFO per share growth. Our mission-critical power portfolio, ability to execute across our global footprint, disciplined, reliable, and proven approach to capital allocation, and strong balance sheet all position us to achieve the long-term predictable growth that Tom referenced earlier. As part of that growth path, we expect to have a strong year in 2021. But before I get into the details of our 2021 expectations, I'll spend a few minutes on our financial results for the quarter and the full year 2020. As you can see on slide 10, we reached double-digit growth in property revenue, adjusted EBITDA, and consolidated AFFO in the fourth quarter on an FX neutral basis. Our fourth quarter consolidated property revenue of $2.1 billion grew on a reported basis by $191 million, or 10% over the prior year period, and on an FX neutral basis by $256 million, or 13.4%. We generated consolidated organic tenant billings growth of 4.4%, including 4% in the U.S. and 5.2% in our international market, led by Africa at 9.4% and Latin America at more than 7%. As expected, U.S. organic tenant billings growth pulled back a bit in Q4, due primarily to the flow-through impacts of slower activity levels earlier in the year. Meanwhile, in international markets, we completed the construction of approximately 2,900 new sites, which nearly doubled the previous American Tower record set in Q3 of 2020. Adjusted EBITDA growth was 13% in the quarter, with adjusted EBITDA margins up by over 150 basis points year-over-year due to organic growth, cost controls, and straight-line benefits. We translated that strong adjusted EBITDA growth to solid consolidated FFO and consolidated FFO per share growth of nearly 9%, or about 12% on a currency neutral basis. On slide 11, you can see that our full year consolidated property revenue growth was 6.5%, including organic tenant billings growth of 4.8% and total tenant billings growth of 9.7%. In total, we outpaced our initial property revenue outlook on a currency-neutral basis, by more than $130 million. Our organic tenant buildings growth included 4.5% in volume growth from co-locations and amendment activity, with another 3.3% generated through escalators. Churn was just under 3%, and there was a negative 10 basis point impact from other items. For the year, we commenced over $19 million in gross new monthly business, with nearly $10 million of that in the U.S. Our U.S. and Canada property revenue grew nearly 8%, supported by organic tenant billings growth of 4.6%, contributions to tenant billings from new assets of less than 1%, and approximately $135 million in higher straight-line revenue. With respect to organic tenant billings growth, volume growth from co-locations and amendments contributed 3.5% to the full-year growth rate, while pricing escalators contributed 3.2%. This was partially offset by churn of about 1.7% and a negative impact of roughly 30 basis points from other items. Our international property revenue grew by nearly 5%, or by around 14.5% on a currency-neutral basis, as meaningful network capital was again deployed globally by large multinational tenants. International organic tenant billing growth was 5.1%, with co-location and amendment revenue driving 6.5% growth, while escalators contributed nearly 3.6%. Other run rate items added 20 basis points, while churn, concentrated in India, was just over 5%. Finally, the day one revenue associated with the more than 23,000 sites we've added through M&A in our new build programs over the last two years contributed nearly 5% to our global tenant billings growth. This includes the impact of our nearly 5,900 new bills in 2020, which generated average day one NOI yields of over 12%. Moving to slide 12, for the year, adjusted EBITDA grew by nearly 9%, with adjusted EBITDA margin increasing to 64.1%, a year-over-year expansion of over 150 base points. This increase was primarily driven by strong underlying revenue growth, net straight-line benefits, and continuing cost efficiencies throughout the business. On an FX neutral basis, we exceeded our initial 2020 outlook for adjusted EBITDA by around $150 million. These adjusted EBITDA results included continuing progress in fuel management, particularly in Africa, where we reduced our diesel usage by more than 45 million liters in 2020. As of the end of the year, we had more than 7,000 sites with lithium-ion batteries and over 3,000 with solar. We also grew consolidated AFFO and consolidated AFFO per share by nearly 8% in 2020 as a result of our previously discussed growth in cash-adjusted EBITDA. This growth was also supported by our disciplined capital market strategy. We avoided the credit market disruption caused by COVID-19 between March and May and while taking full advantage of improved conditions thereafter. In fact, despite closing over $9 billion in M&A since the start of 2019, we were able to reduce our cash interest expense by approximately $40 million, maintenance capex by more than $10 million, and kept cash taxes flat 2020 versus 2019. On a currency neutral basis, these strategic efforts and effective management of our cost structure facilitated consolidated AFFO per share growth of roughly 11.6%, exceeding our initial expectations for the year by more than 23 cents per share. Now let's take a look at our expectations for 2021. Before we dig into the numbers, I'd like to summarize a few of the key high-level assumptions surrounding our projections. First, both in the U.S. and in our international markets, We expect gross new business additions to our recurring monthly run rate to be above 2020 levels. This is due to a mix of contractually committed revenue growth, particularly in the U.S., and continued solid demand for tower space internationally. Carriers are expected to deploy new technologies and new spectrum while densifying their networks to keep up with rapidly growing mobile data usage around the world. Second, we expect churn to be somewhat elevated this year due to a combination of of T-Mobile lease cancellations in the U.S., primarily in the fourth quarter, and holdover churn in India. In the U.S., we expect that churn will be just over 3% for the full year, including 6.5% in Q4 specifically. This includes scheduled cancellations as part of our agreement with T-Mobile, some legacy Sprint and Clearwire churn outside of the MLA, and normal cost cancellations of around 2%. Of the roughly $375 million in total annualized legacy spring churn that we expect over the next four years, more than 50%, or just under $200 million, will hit our run rate in 2021, with the vast majority churning off October 1st. Given this is an annualized number, we will incur a quarter of the impact in 2021, with three-quarters of it coming in 2022. In India, we expect churn to be roughly 11% in 2021, which is down about 3% versus 2020, but still higher than historical level. Similar to 2020, this churn is primarily being driven by holdover consolidation impact and the effects of the AGR case. We continue to work closely with the Indian wireless carriers as they plan for the future and are optimistic that churn rates in India will continue to trend down over the next several years. Finally, I would note that we have excluded the impact of our pending Celsius transaction and its associated financing from our outlook per historical practice. We continue to expect the deal to close in multiple tranches beginning late in the second quarter, and we'll plan to layer on the deal impact into the future outlook update. As a reminder, we expect Celsius assets to be immediately accretive and consolidated AFFO for share. Taking these assumptions into account, as you can see on slide 13, We expect consolidated property revenue to grow by nearly 8% at the midpoint of our outlook, supported by solid overall levels of organic new business and contributions from new assets. Our U.S. and Canada property revenue is expected to grow by 8%, with anticipated international property revenue growth of 7.5%, including an approximately 1% positive impact on foreign currency translation. We expect organic new business to, again, be a critical component of our overall growth in 2021. And on a consolidated basis, our outlook assumes more than $23 million of gross new business monthly run rate added across our power and DAS assets in 2021, up about 20% as compared to 2020. Turning to slide 14, in the U.S. and Canada, we are projecting organic tenant billing growth of around 3%. as 5G deployments continue to gather steam and network densification efforts progress. On a gross basis, we expect monthly new business run rate added in 2021 to exceed what we added in 2020 by more than 15%. However, we will see elevated churn from T-Mobile beginning in Q4, and we will also see some carryover effects in slower activity levels in 2020, particularly earlier in the year. As a result, our organic tenant billing growth in the U.S. and Canada is expected to be lower than last year. I would note that these projections don't include significant contributions from DISH, nor do they assume material C-band deployments until quite late in the year. As we saw in the recently concluded C-band auction, there is a huge premium being placed on mid-band spectrum by the carriers, and we continue to expect that the majority of mid-band deployments will be on macro tower sites, We're enthusiastic about the potential impact of these deployments on our U.S. and Canada growth, particularly in 2022 and beyond. Moving on to Latin America, we expect organic tenant buildings growth of around 7% for the year, broadly in line with what we saw in 2020. Demand trends remain solid, with carriers focused on approving and extending 4G networks as mobile data usage accelerates. Additionally, we expect escalators across the region to be around 130 basis points higher than last year, due primarily to certain contractual arrangements in Brazil on some of the tenant leases. Partially offsetting these items is expected churn of nearly 3% in the region, due primarily to a settlement agreement we reached with Brazil related to legacy Nextel leases and some Telefonica churn in Mexico in the second half of the year. On the inorganic side, we expect to further accelerate our new build program and anticipate constructing around 600 sites, a year-over-year increase of almost 50%. Incorporating contributions from these new sites, we expect Latin America tenant billings to grow by around 7.5% for the full year. Meanwhile, in Africa, 2021 organic tenant billings growth is expected to be more than 8%. We anticipate gross new business monthly run rate added to be up roughly 70% year-over-year, with Nigeria leading the way in terms of higher activity levels. Partially offsetting this are escalators that we anticipate will be around 70 basis points lower than last year, in churn of about 3%, up about 140 basis points versus 2020. The escalators are largely a function of local CPI, while the slightly elevated churn is primarily reflects some carrier consolidation in South Africa. We also expect another year of significant new build activity in Africa with 1,300 new builds planned for 2021. In total, we expect to drive tenant buildings growth of more than 13% in the region. In Europe, we expect organic tenant buildings growth of over 3% in 2021, up from 2.2% in 2020. The acceleration is being driven by the combination of higher levels of expected new business and slightly lower churn as carriers advance their network deployments. We are starting to see some of the growth that drives our optimism around the Celsius assets in our existing European business. Germany's gross organic tenant billings growth in Q4 of 2020 was nearly 7% and is expected to continue at that level into 2021. with further accelerations anticipated in future years. Finally, in India, we expect organic tenant buildings growth to be roughly flat in 2021, broadly similar to what we saw in 2020. While we believe the wireless industry consolidation process is essentially complete, there remains some uncertainty with respect to the exact path forward post-AGR. As a result, our outlook for 2021 incorporates the expectation that we will again see higher than historical levels of churn. In addition, while new monthly run rate added from new business is expected to be slightly up versus 2020, due to the activity being mostly in the second half of the year, it will not fully impact our organic growth in 2021. As a result, although we expect churn to be 11% down from nearly 14% in 2020, overall organic tenant buildings growth is projected to be similar. Long term, we remain optimistic with respect to our India business. There is a tremendous amount of work that needs to be done to bring networks across the country up to 4G standards, and our portfolio is well positioned to capture that activity. From a structural perspective, we think there is a path to an eventual return to high typical organic tenant billings growth rates in the high single digits. What is less clear is the specific timing of that growth acceleration. which will depend on a number of factors in the marketplace. As we learn more and as the trajectory becomes clearer, we will plan to keep you all updated. Turning to slide 15, at the midpoint of our outlook, we expect adjusted EBITDA to grow by almost $485 million, or nearly 9.5%. This includes continued high-margin flow-through over organic growth, as well as the impacts of accretive M&A transactions completed in 2020. along with built-to-suit activity and a full year of our recent MLA agreement with T-Mobile. In addition, we expect to target areas in our business where we can take additional efficiencies, including power and fuel, where we are continuing to invest in more efficient equipment and renewable energy solutions. Our cash SG&A expense as a percent of total property revenue is expected to be around 7.3%, down from just over 8% in 2020. and we anticipate further reductions in the future. Finally, our adjusted EBITDA expectations include an estimated positive impact of around $27 million from the effects of FX translation. Moving to the next slide, we expect to convert our adjusted EBITDA growth into year-over-year growth in consolidated AFFO of around $322 million, or 8.5%. This includes $358 million from FX-neutral cash-adjusted EBITDA growth, benefits from lower cash interest costs due to the recent refinancing initiative, and about $23 million in favorable translational FX impacts. Partially offsetting these items is a $62 million increase in FX-neutral cash taxes versus the prior year. as well as a slight increase in total maintenance capex. On a per share basis, we expect consolidated AFFO growth to be nearly 8.5% for the year, setting the stage for us to achieve double-digit per share growth if we drive some outperformance versus current expectations. Moving on to slide 17, let's review our capital deployment in 2020 and our expectations for 2021. In 2020, we deployed about $2 billion for our dividends. while spending roughly $1.1 billion on CapEx, with more than 85% of that being discretionary. Part of that discretionary spend was to build nearly 5,900 sites throughout our global footprint, a new record for American Tower. We spent around $5.5 billion, including the assumption of debt, to acquire new assets and additional stakes in our Africa and India businesses from JV Partners, and we also dedicated about $56 million to buyback. In total, we deployed nearly $9 billion in 2020, a record year for American Tower, while staying within our leverage targets and simultaneously strengthening the balance sheet. We again expect to deploy capital in a consistent, balanced manner in 2021. This includes $1.4 billion committed to CapEx, again, largely discretionary, and about $2.3 billion allocated towards our dividend, assuming a growth rate of around 15% and subject to board approval. Included in our discretionary CapEx spend is the expected construction of 6,500 new sites worldwide, an increase of more than 600 sites compared to 2020. Day one, NOI yields on these builds are expected to continue to average more than 10%. In new builds, CapEx remains as our highest return investment with solid anchor tenant credit quality. In addition, and as I'll talk more in a minute, We expect to close our pending Telseus acquisition this year for total consideration of about $9.4 billion. Including this transaction, we expect that roughly 90% of our total capital deployment in 2021 will be in investment grade rated geographies with investment grade carriers. As you can see on the right side of the slide, our discipline to capital allocation strategy coupled with solid operational execution and a strong balance sheet has enabled us to drive consistent, reoccurring long-term growth in consolidated AFFO per share, and we expect more of the same this year. In fact, in 2021, we expect our 2020 investments in new builds in M&A to generate around 15 cents in incremental consolidated AFFO per share. We continue to believe that both consolidated AFFO per share growth and attractive returns on invested capital are critical to our creation of long-term sustainable stockholder value. Now, turning to slide 18, I will discuss our financing plans for the pending TELSIUS acquisition. As a reminder, this transaction is transformational for our European business, as it delivers significant scale in key markets, is expected to drive some of the highest organic tenant billings growth rates available in the region, and based on our analysis, represents the best portfolio of tower assets that has come to market in Europe. The total consideration will be approximately $9.4 billion, and we anticipate completing the purchase in 2021 through multiple closings. We expect the first closing to consist of a large portion of the European assets in late Q2, with the remaining assets in Europe and Latin America closing in late Q3. Of course, this timeline may shift as the regulatory process unfolds. As we communicated when we announced the deal, we plan to finance the transaction in a manner consistent with maintaining our investment grade credit rating. We anticipate this will include bringing our net leverage, which stood at five times at the end of 2020, up to the high five times range temporarily. Importantly, we are committed to organically delevering back down to a level consistent with our stated financial policy of three to five times net leverage over a multi-year period. On the debt funding front, we expect to utilize a combination of our recently upsized revolving credit facilities and new Euro-denominated term loans and plan to opportunistically consider long-term sources, including senior unsecured notes. The balance of the total consideration is expected to be funded with equity, which may include common stock issuances, mandatory convertible preferred instruments, and or private capital, raised through the sale of minority stakes of our European subsidiary to one or more private investment partners. On the private capital side, we are currently engaged in discussions with a select group of premier strategic investors who not only can provide capital, but also have considerable experience in telecommunications infrastructure and in the European region specifically. We are encouraged by our progress on this front, and if terms are sufficiently attractive, are optimistic that we can complement a public equity issuance with a high-quality strategic private capital raise As always, through this process, we remain disciplined and focused on minimizing dilution to our common stockholders while optimizing our long-term value creation objectives. On slide 19, and in summary, 2020 was a very strong, resilient year for American Tower with solid organic growth, operational efficiencies providing high conversion rates, record new build activity, accretive M&A, and continued value creation for our shareholders. Looking forward, we are excited about the long-term potential of our business. Our comprehensive portfolio is well positioned to capture meaningful lease-up as new spectrum assets and new network technologies are deployed globally. In the U.S., activity is ramping up, and we expect to continue to create significant value through the master lease agreements with key tenants. We stand ready to quickly integrate the new Telseus assets this year and and leverage our expanded European presence for significant future growth, which will complement our operations in other less mature markets. Taking into account continued strong tailwinds from secular growth trends in mobile, we expect to be able to deliver attractive, sustainable growth in revenues and cash flows for years to come, while driving compelling total stockholder returns. And with that, operator, will you please open the line for questions?

Thank you. Ladies and gentlemen, if you'd like to ask a question, please press 1 then 0 on your telephone keypad. You may withdraw your question at any time by repeating the 1, 0 command. If you're using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, please press 1 then 0 at this time. And one moment, please, for your first question. Your first question comes from the line of Brett Feldman. Please go ahead.

Yes, thank you for taking the question and just a few about the outlook we provided for domestic organic tenants' billings growth. First, you mentioned that you do expect that gross activity is likely to increase from here. One of your peers outlined to you that that will begin in the second half of this year. I'm wondering if that's the same assumption you've embedded in your outlook. I'm also curious how sensitive your outlook is to that. I think at this point, You have an MLA with all of your major customers, and so perhaps the variability here is narrower. And then just on churn, I think you suggested a non-Sprint churn was going to be in the 2% range this year, which is a bit above trend. I'm wondering if there's anything we need to focus on. And then I believe T-Mobile has indicated they're going to be shutting down the Sprint CDMA network, I think, starting next year. Is that captured in your churn assumptions as well? Thank you.

Thanks, Brett. So I'll take that. This is Rob Smith. Thanks for the question. So with regards to our U.S. organic tenant buildings growth as we roll into 2021, let me hit a couple of the component drivers that will be factors, including the new business. So as you saw in the presentation, we expect to have organic tenant buildings growth of around 3% for 2021. That's down from about 4.6% in 2023. There's a few factors driving that. The first one is that our monthly run rate newbiz is anticipated to increase by about 15% year over year. So that's going to drive some growth there in our organic tenants' billings growth. That obviously is being offset by a couple of factors. One is, as you mentioned, the sprint churn. So we do expect to begin to see sprint churn in Q3 of 2021. And as you saw in the presentation and some of our prepared remarks, We are expecting over the next four years to have about $375 million of annualized print churn. The vast majority of that ends up coming in beginning in the fourth quarter of 2021. So we'll see churns beginning in the fourth quarter. That'll represent about $200 million of annualized run rate that'll begin to come off or come off in Q4 of 2022. That has a drag on organic tenant's billing growth of almost 180 points, and that explains a big chunk of that step down between year over year. The next piece that I would highlight is the activity levels coming out of 2020. So everyone knows there was kind of a slowdown from T-Mobile and Sprint in 2020, began in 2019 and went into 2020. That slowdown has flow-through effects into 2021, which also impact our growth rate. And that is going to impact the beginning of the year, the first half of the year, more than the second half of the year. So that's probably consistent with what you may have heard from some other folks. And then the final, you know, piece is just the size of our base is getting bigger. And that usually brings down growth by about 20 bits. So we have that as well. And then I would, you know, the final point I would make on the organic tenant buildings growth is our organic tenant buildings growth is not that sensitive to the timing of activity and even other network decommissioning now because it's mostly made up of contracts that have minimum levels of activity and predefined turn reductions and those sorts of things. So there's not a lot of variability in our numbers from that perspective. And then in terms of the sprint, I guess I addressed the sprint, you know, turn numbers. So I think that probably addressed that part of your question, Brett.

Okay, and was there anything outside of spring churn? It sounded like that might be a little higher this year. I wasn't sure if that was a one-shot deal or something else.

No, I think the way you framed it up is correct. We expect churn, normal churn, to be within that 1% to 2% range, pretty consistent, nothing abnormal there. And then the spring churn, again, that begins in Q4, we'll have about 100 basis point hits. So when you think about that, all in, our annual churn will be in the range of 3%, a little bit above what our normal range is. And, again, as you see the quarters unfold in 2021, the fourth quarter will be where you'll see kind of that big bump up in the churn numbers. And then, of course, that churn will take one quarter of that in 2021, and then there will be flow-through effects from that churn into 2022 where we'll get three-quarters of that churn in 2022. And that, of course, will have a flow-through negative impact on the 2022 growth numbers. And it's correct?

Yes.

Yeah, and gross new business is accelerating as we head into 2021, and we expect that to continue into 2022. It's really the churn that will partially or fully offset that in 2021 or 2022.

Got it. And just to be clear, all of this T-Mobile related is currently the churn. It captures everything you expect it to do with the integration, including anything you're doing with the CDMA network. Is that correct?

That's correct. Yep, it's all predefined and contracted.

And actually, Brett, I would just add, as I mentioned before, you know, when we get through this churn, because then we have this, you know, really locked in kind of growth rates with our key customers, we would expect the churn really to fall off quite a bit, significantly, actually, and kind of the 23 to 24 to 27 kind of timeframe, which is reflective in some of the growth rates that I laid out for a long-term perspective.

Thank you. Your next question comes from the line of Michael Rollins. Please go ahead.

Thanks, and good morning. Tom, if I could just briefly follow up on a comment that you just made. You talked about the committed growth that you have with key customers. You also talked about that earlier in the call when you were talking about the 5-7-2023-2027 growth. So are there additional long-term deals that you've recently – renewed or entered into with carriers other than T-Mobile that is contributing to that visibility and to that long-term guidance. And then just secondly, one of the questions that's come up is how to think about AFFO per share growth when you're experiencing the peak churn from the Sprint deal in 2022. Is there anything that investors should be mindful of as, you know, you're looking for that long-term target you described, but, you know, coming out of 21 and into 22 with that elevated sprint churn that you and the team were just describing.

Yeah, no, hey, Michael, thanks for the questions. You know, with regards to your first comment, I mean, there are no new MLAs that, I mean, we already have MLAs in place with the major carriers. So, There's nothing else that's driving that, which I think is what your question was. You know, the most significant MLA that we've recently managed is clearly with T-Mobile. And so that's what's really impacting, if you will. And as I mentioned, you know, over two-thirds of over the planning period that we're talking about, two-thirds of our growth rates are locked in. And so, you know, we have a tremendous visibility in terms of what that's going to look like. And as I mentioned, we have $59 or $60 billion of already contractually committed revenue on the books. So that gives us, I think, some really good comfort in terms of what we would expect. On top of that, we will also have the large Celsius transaction that will kick in, as Rod said, throughout the year. And so we'll have that benefit continuing forward, which kind of gets into your second question. We've looked at, as I mentioned previously, in my comments. In our last five years, we're talking about double-digit growth rates in terms of AFFO per share. I'm compensated candidly on the bulk on AFFO per share growth, as well as return on invested capital. So those are two critical benchmarks for myself and my team. So we obviously spend a lot of time working through all of the elements of those. In 2022, yeah, there is going to be the drop of the the T-Mobile churn that we're going to see. We know what it is. We're working on, you know, opportunities now to be able to mitigate a lot of that as we go into 2022. We put out an initial guide for 2021 at that 8.5% level. You know, we are all hoping that we're going to be able to improve on that for 2021, particularly as we bring on kind of the Telstra's transaction. And then we're working through what 2022 will look like, but clearly are committed to driving that double-digit FFO for share growth over the long period of time, as we've done in the past. And so we've had historically consolidations going on. As you know, we've had consolidation churn in India over the past. No doubt that the T-Mobile sprint churn is a large item. for us that we need to address, but our teams are working on it diligently right now, and we're trying to work through that. But clearly, we are committed to driving that double-digit kind of growth.

Thanks. And just one other quick follow-up. Rod, when you were talking about the AFO for share expectation for growth in 2021, you referred to the possibility of upside opportunities. Are those operational, financial in nature? You know, what would be the factors, and there's a line on the slide that talks about the potential path that double-digit growth gives upside opportunities to initial outlook materialize. Thanks.

Yeah, Michael, I think there's a lot of additional opportunities there. Certainly some are operational, driving down expenses, bringing up our margins. We continue to kind of work on that on a regular basis. There are potential for additional acquisitions as well as integrating the acquisitions that we've already announced, particularly the Insight transaction in the Celsius to drive additional growth. Capital markets activity and where rates go certainly will be interesting to us as we continue to pay down higher-cost debt and replace it with lower-cost debt, those sorts of things, as well as driving business through new business around the globe certainly could help. So there's a number of things. And, you know, we always remain focused on trying to drive upside relative to our plans and outlook. So we'll just continue to do that.

Thank you.

Your next question comes from the line of Rick Prentice. Please go ahead. Thanks. Good morning, guys. I hope you continue to do well.

Thanks. Morning, Rick. First, appreciate all the details. Short-term, long-term guidance really helps set the table here as far as what we're looking at. I think a couple of the extra questions. First, you mentioned DISH is fairly modest as far as in the 21 guidance. What should we think about? Will you be able to get your fair share of DISH leases with or without an MLA? Yes.

Yes. Next question.

Pretty clear.

Yeah, and I would also confirm, Rick, that... No, hey, Rick, I mean, I don't mean to be a wise guy. You know, we have. I mean, if you take a look at over the last several years, particularly in the United States, you know, we've gained more than our fair share of business from our customers. And it's a function of a number of things. And it's also a function of the contracts that we have in place with them. I like to think it's also a function of the level of service that we're providing and and the quality assets that we have. But we have been able to demonstrate that kind of outperformance. And, you know, we stand ready to support DISH, and however they're going to be rolling out their network. And we know the teams well, and they're a smart team. You know, Dave Mayo is a smart guy, smart operator, and we're working very closely with them. And so we're looking forward to it. And as I said, kind of given the location and given the quality assets, I am confident that we will gain at least our fair share of activity from DISH.

Great. And I think in your prepared remarks, you also mentioned that you've not layered in any new entrants beside DISH. Is that an illusion to maybe cable operators starting to deploy some CBRS? Or what might that comment also imply?

You know, it kind of covers the waterfront, right? I mean, who knows? I mean, yes, clearly. whether there are cable codes or some of those that might be looking to move off of some of their MVNOs. We see that happening in other markets, and we see that happening in Germany, for example, and MVNO has a strong relationship with Telefonica is going to be looking to build out their network in Germany. So it's so hard to say who might be looking to do that. I think with the deployment and the new technology, who knows even whether the hyperscalers or who might else be coming into the marketplace wouldn't surprise me, and I don't think it would surprise you either. So it's kind of a blanket statement. We just don't know what we don't know relative to other players coming into the market, so we haven't included them clearly in any of our forecasts.

And speaking of MVNOs in Germany, any thoughts about timing to get some agreements in place with a holistic approach in Germany, given the new portfolio and particularly the rooftops you're getting?

Yeah, you know, we've been working with all of the players in the market for several years, obviously, and most recently since we have a new potential entrant into the market, just as with every other one of our customers working very closely. I think that the assets that we now have and the presence that we now have in Germany gives us a really good platform to be able to support this existing MD&O and new build in Germany. And I think as Rod said, we're really excited about some of the organic growth that we expect to see in the region, particularly in Germany, as they've just gotten through their 5G spectrums and as we see new entrants coming into the marketplace. And now with the presence that we have there, particularly with the rooftops, we now have that dense urban area covered. which we didn't have before. So I think it really positions us well to be able to capture new business.

Makes sense. Last one for me is modest edge assumption. When does edge become real, and is it going to time out the same in the U.S. as it is in Europe?