Q4 2019 Earnings Call
[music].
Ladies and gentlemen, thank you for standing by welcome to that.
As be a fourth quarter results conference call based on what participants are in listen only mode.
Later, we'll conduct a question answer session instructions will be given at that time to do require assistance. During the call. Please press Star then zero as a reminder, just conference is being recorded and now let me to introduce Vice President Finance Mark Derussy go ahead Sir.
Thank you Julio good evening, everyone and thank you for joining US recipes fourth quarter 2019 earnings conference call here with me today, our Jeff Stoops, our President and Chief Executive Officer, and Brendan Cavanagh, <unk>, our Chief Financial Officer. Some of the information, we'll discuss on those calls for booking including but not.
Limited do any guidance for 2020 it'd be on.
In today's press release and that our STC filings, we detailed material risks that may cause our future results to differ from our expectations.
Our statements are as of today February Twentyth.
We have no obligation to update any forward looking statement, we may make.
In addition, our comments will include non-GAAP financial measures and other key operating metrics.
A 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'll now turn it over to Brendan to discuss our results.
Thank you Mark good evening.
We had another solid quarter in the fourth quarter with strong operating and financial results in both our leasing and services businesses.
Total GAAP site leasing revenues for the fourth quarter for $481.1 million and cash site leasing revenues were 478.1 million.
Foreign exchange rates were inline with our estimates for the fourth quarter, but we're a headwind on year ago comparisons.
Same tower recurring cash leasing revenue growth for the fourth quarter, which is calculated on a constant currency basis was 6% over the fourth quarter of 2018, including the impact of 2.3% of churn on a gross basis same tower growth was 8.3%.
Domestic same tower recurring cash leasing revenue growth over the fourth quarter of last year was 8.2% on a gross basis and 5.6% on a net basis, including 2.6% of churn, 0.8% of which continues to be related to metro leap and Clearwire terminations.
The balance of domestic churn is from a variety of sources, including a number of smaller customers that are modifying or shutting down older technologies. Some sites that were never on air that are not being renewed and some legacy consolidation churn.
Domestic operational leasing activity, representing new revenue placed under contract during the quarter was down from the first half of the year and sequentially from the third quarter due to the industry wide slowdown as our customers a weighted resolution of the legal challenges to the sprint T mobile merger.
Amendment activity was again, the bulk of our domestic bookings with newly signed up domestically seen revenue coming 71% from amendments and 29% from new leases.
Although we had essentially no contribution to leasing activity from T mobile during the quarter. The big four carriers still represented 87% of total incremental domestic leasing revenue that was signed up during the quarter.
Our domestic application backlog is strong and we expect that the closing of the sprint T. Mobile merger will drive a significant increase in incremental leasing activity as our customers invest heavily in their future Fiveg networks.
Internationally on a constant currency basis same tower cash leasing revenue growth was 8.3%, including 0.6% of churn or 8.9% on a gross basis.
We had another solid leasing quarter internationally, although our reported same tower growth numbers are down from last quarter, primarily due to the rolling off of a very strong fourth quarter of 2018 from this trailing 12 months calculation.
This quarter, Brazil was again, the largest contributor to lease up.
Gross same tower organic growth in Brazil was 11.6% on a constant currency basis, and we continue to have contributions from all four major carriers there.
During the fourth quarter, 84.6% of consolidated cash site leasing revenue was denominated in us dollars.
The majority of non U.S. dollar denominated revenue was from Brazil, with Brazil, representing 12.1% of all cash site leasing revenues during the quarter and 8.8% of cash site leasing revenue excluding revenues from pass through expenses.
Tower cash flow for the fourth quarter was 387.4 million.
Our industry, leading domestic tower cash flow margin was 84% in the quarter.
International Tower cash flow margin was 69.7% and was 90.2% excluding the impact of pass through Reimbursable expenses.
Adjusted EBITDA in the fourth quarter was $362.4 million.
Our adjusted EBITDA margin was 71% in the quarter up 50 basis points from the prior year period.
Excluding the impact of revenues from pass through expenses adjusted EBITDA margin was 75.7%.
Approximately 99% of our total adjusted EBITDA was attributable to our tower leasing business in the fourth quarter.
Hey, AFFO in the fourth quarter was $248.8 million.
AFFO per share was $2.18 an increase of 10% over the fourth quarter of 2018 on a constant currency basis.
During the fourth quarter, we continue to invest in expanding our tower portfolio on December six we closed on the acquisition of 1313 wireless sites in Brazil purchased from Grupo tourists are for total cash consideration of 460 million U.S. dollars. These.
Towers have 1.7 tenants per tower are located in high quality population centers and in locations that geographically complement our existing portfolio well and they were purchased for less than 15 times their anticipated 2020 tower cash flow.
We're very pleased with our ability to continue adding high caliber sites to our portfolio at attractive prices.
In addition to the GTS acquisition, we acquired 23 other communication sites during the quarter for $11.7 million and we built a total of 170 sites in the quarter.
Most of the added sites were located internationally.
Subsequent to the ended the quarter, we acquired 11 additional sites for $11.9 million.
As of today, we have under contract for acquisition and anticipate closing by the end of the second quarter on 166 additional sites at an aggregate price of $97.8 million.
We also continue to invest in the land under our sites, which provides both strategic and financial benefits.
During the quarter, we spent an aggregate of $13.7 million to buy land and easements and to extend ground lease terms.
At the ended 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 our earnings press release includes our initial outlook for full year 2020.
Even with the industry slowdown in the U.S. and the second half of last year and into the first part of this year our outlook reflects another year of solid growth in our leasing business.
We expect a similar level of domestic operational leasing activity in 2020 as we experienced in 2019. However, this year is anticipated to be back half loaded, whereas 2019 was much busier during the first half of the year.
Our outlook for 2020 leasing revenue is built largely upon the operational leasing activity we've had over the last six months.
Our anticipated acceleration and lease up in the second half of this year is expected to provide minor contributions to our 2020 leasing revenue.
Similarly, although our guidance for full year 2020 services revenue is anticipated to be less than we saw during a very busy 2019, we expect to see a pickup in our services business and the second half of the year once the sprint T mobile merger has been closed.
In our international business, our outlook anticipates continued steady organic leasing contributions.
We have incorporated consensus estimates of a slight weakening in the Brazilian foreign exchange rate from where we are today.
Assuming an average FX rate during 2000 24.36, Brazilian realized one U.S. dollar.
Our full year 2020 outlook does not assume any further acquisitions beyond those under contract today and it does not assume any share repurchases at all.
We do however intends to to deploy additional capital into both portfolio growth and opportunistic share repurchases.
Our outlook for net cash interest expense and for AFFO include the impact of our recently completed unsecured notes offering as well as the repricing of our term loan completed during the fourth quarter, each of which mark will discuss in a moment.
We estimate a relatively similar level of cash taxes in 2020, as we incurred in 2019, mostly related to international taxes and state taxes, where we do not have any other wells.
Finally, our outlook for AFFO per share is based on an assumed weighted average number of diluted common shares of 114.8 million, which assumption has influenced in part by estimated future share prices.
We are excited about 2020, and particularly about the great opportunities that lie ahead for SPJ over the next several years.
Ill now turn things over to Mark who will provide an update on our liquidity position and our balance sheet. Thanks Brendan.
We ended the fourth quarter with 10.4 billion of total debt and $10.3 billion net debt.
Our net debt to annualized adjusted EBITDA leverage ratio was 7.1 times.
Our fourth quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 3.8 times.
On November 19th we repriced, our 2.4 billion dollar term loan from a coupon of LIBOR, plus 200 basis points to a new coupon of LIBOR, plus 175 basis points.
Subsequently on December 3rd we entered into a series of interest rate swaps on 1.95 billion if that term loan.
Effectively replacing both of our existing interest rate swaps.
The effect of these two species, new swaps was to reduce our swapped interest rate by approximately 30 basis points to a fixed rate of 3.78%.
Through the maturity date of the existing term loan.
After year end on February 4th we issued $1 billion of new seven year unsecured senior notes at an interest rate of 3.875%.
Our lowest cost unsecured senior note issuance ever.
Net proceeds of this offering were used to redeem all of our outstanding 2022, 4.875% senior notes.
Pay the associated call premium on those notes and repay a portion of the balance outstanding under our revolving credit facility.
As of today, the outstanding balance under our revolver is $175 million.
Pro forma for the senior note issuance the weighted average coupon or outstanding debt is 3.6%.
And our weighted average maturity is approximately four years.
During the fourth quarter, we repurchased 859000 shares of common stock for $200 million or an average price of $232.77 per share.
All the shares repurchase were retired.
As of today, we have 624.3 million of repurchase authorization remaining under our $1 billion stock repurchase plan.
The company shares outstanding at December 30, Onest 2019 are 111.8 million, which is down <unk>, 0.6% from December 31 2018.
In addition, during the fourth quarter, we declared and paid a cash dividend of 41.5 million or 37 cents per share.
And today, we announced that our board of directors declared a first quarter dividend of 46, and a half sets per share or an increase of 25.7% over the last quarter. It's payable on March 26, 2020 for shareholders of record as of the close of business on March 10th 2020 with that I'll now turn.
The call over to Jeff.
Thanks, Mark and good evening everyone.
The fourth quarter was a strong finish to a very good year for SPX, we delivered solid financial results in both our leasing and services segments, finishing at the high end of guidance per tower cash flow AFFO and AFFO per share and exceeding the high end of our guidance range for leasing revenue total revenue and adjusted.
EBITDA our full year financial results also finished above the high end of our initial 2019 guidance given in February of last year for leasing revenue services revenue tower cash flow adjusted EBITDA and FFO and AFFO per share we produced over $2 billion in revenue for the.
First time in our history, and we grew full year AFFO per share by 11.7% over 2018 and by 13.1% on a constant currency basis.
We also grew our portfolio at the high end of our 5% to 10% goal and we expanded into an attractive and exciting new market South Africa, we completed several debt transactions to improving our cost of financing with each one.
We bought back over 2 million shares of our stock at an average price of $231.87 and we began paying a quarterly dividend ahead of schedule.
All of this was accomplished notwithstanding the domestic industry wide slowdown for our customers during the second half of the year, resulting from the uncertainties surrounding the outcome of the T. Mobile sprint transaction as I said 2019 was very good year for SPX.
Looking ahead now to 2020 and beyond we're very excited about the prospects for SPX, we anticipate the resolution of the legal challenges to the T. Mobile sprint transaction will set us up for significant net network investment by our us customers involved in the transaction, including dish beginning in the second half of the year.
In order to meet their required fiveg coverage goals, the new T mobile will require meaningful upgrades across their combined portfolio deploying 2.5 gigahertz spectrum to legacy T mobile sites and 600 megahertz spectrum to legacy Sprint sites. These efforts will drive amendment activity for SPX.
Now on track to be the clear fourth nationwide facilities based carrier will need to invest heavily as well deploying a brand new fiveg network across the country.
This is bill that will drive new co location opportunities for SPX.
And Verizon and 18 to each have their own fiveg initiatives ahead, which we believe will lead them to embrace the new competitive landscape and continue to invest significantly in their own networks. The release of more fiveg enabled devices and the advent of more and more new fiveg applications will be continued catalyst for the.
A network investment required to support these technologies. The initial fiveg deployment cycle has really only just begun particularly as it relates to macro sites and the deployment of mid band spectrum and massive mimo architecture, and we expected to be a very long cycle the anticipated auctions of CB.
Rs and C band spectrum later this year will only serve to further support this upward investment trajectory over the next several years.
Outside of the us the future for our international business looks bright as well our leading market in terms of new leasing activity has continued to be Brazil, our largest international market during the fourth quarter, our presence in Brazil got even larger with the acquisition of over 1300 sites from GTS.
This acquisition brings our site count in Brazil, the almost 10000 towers, we saw activity in the fourth quarter from all four major carriers in Brazil, primarily around their fourg networks and the future prospects in this market look strong from a macro level, Brazil has seen economic stability largely restored with pension reform.
Approved inflation under control record low interest rates driven by four consecutive rate reductions and increases in foreign direct investment.
The Brazilian foreign exchange rate, however has been somewhat volatile and generally continued to weaken we are optimistic that the positive economic trends in Brazil will ultimately translate into a more stable exchange rate.
Nonetheless, our 2020 full year outlook does reflect the headwind from the Brazilian Riyadh compared to last year.
Across our other Mnner international markets, we anticipate steady leasing contributions during 2020 as well as the largest contributions to our portfolio growth.
The company wide basis, we are again targeting 5% to 10% portfolio growth in 2020.
In order to achieve this level of growth, we will have to identify one or more quality tower portfolios at appropriate price levels.
Im, particularly proud of our track record in selecting and selectively acquiring high quality assets at disciplined prices and I'm confident we will be able to continue and identifying.
And securing these types of opportunities.
In addition to portfolio growth I expect us to continue to execute well on further enhancing our capital structure as well as our capital allocation to stock repurchases and cash dividends.
The capital structure front, we had a very strong 2019, completing our largest single traunch ABS deal in the company's history at a very attractive rate repricing. Our 2.4 billion dollar term loan with a 25 basis point reduction at par and subsequent to year end closing on our lowest cost high yield issuance and company is.
Great.
During the fourth quarter. We also received an across the board increase in our credit rating from Moodys.
Evidencing not only the high quality of our business, but also the liquidity and stability in our capital structure. We continue to actively evaluate our existing capital structure and look for further opportunities to take advantage of the current low interest rate environment in order to both extend maturities and improve the cost of our debt.
Good.
Regarding capital allocation, we again had a strong year in 2019, not only growing our tower portfolio by almost 10%, but we also repurchased our stock opportunistically.
Investing over 470 million to retire over 2 million shares and we commenced paying a dividend in the third quarter. We expect to continue returning capital to shareholders through both share buybacks and dividends during 2020.
On the dividend front, we're very pleased to announce our first quarter dividend today, our dividend represents an almost 26% increase over the dividend paid out last quarter and I believe that will represent one of the highest dividend increases this year anywhere certainly in the real estate investment Trust space.
Our current dividend represents approximately only 20% of our 2020 outlook for AFFO, meaning that we have substantial capital still available for a portfolio growth and share repurchases. In addition, maintaining our leverage in the high six times low seven times range provides us with even more capital to contain.
When you investing in the business, we are positioned extremely well to take advantage of all future opportunities and continue growing a AFFO per share.
Finally, I'd like to again, thank our team members of our customers for their contributions to our success in 2019, the truly wasn't great year with their continued contributions we're very excited for a tremendous 2020 and beyond.
And with that Julio we're now ready for questions.
Ladies and gentlemen, if you wish to asked a question. Please brands. One then zero and you'll keypad you meet with Todd yourself by pressing that one zero comment again.
You are using speakerphone. Please pick up the headset may four present the numbers. Once again, if you have any questions. Please press. One then zero at this time one moment for the first question.
Thanks.
We have Jessica Kosik first question go ahead.
Hi, its Phil Cusick from JP Morgan.
It sounds like as we as we model 2020, we should think about the first half activities similar to the fourth quarter activity.
And then ramping in the back half can you give us any update on the.
The sprint T mobile or dish cadence of potential network planning and when those to start to really impact numbers. Thanks.
Lot of discussions fill but no.
No real operational activity yet of course, given the fact that there is no closing.
And.
While I believe that things will begin to move pretty quickly, particularly on the.
T mobile side dish had their own commentary yesterday as to the cadence of what they will be doing.
But on the T mobile side.
I think it will go quickly once the deal closes but.
Yes, I think we're gonna have to wait and see as to when when that happens they need to get through the California PSC and.
I think some other things.
I think theres a lot of folks ready to go but there is waiting for the starting on.
Okay.
And then separate topic can you give us any early read on the South Africa business.
How you think about that now that it's under your belt and attractiveness of other markets as you look out over the next year. Thanks.
Well, we like South Africa, Alon, I mean, well within our four years of investment there we took.
Close to 1000 towers.
I would actually be thousand today, I'm not quite sure the sale, but it's getting awful close.
To over two tenants per tower.
With a very good.
Return on investment.
Dynamic market.
Lot of room for additional Greenfield builds.
All the things we look for so we're very excited about the ability to do to grow in that market.
We will continue to look for markets like that we think there are some out there they're not.
You know.
Tens or thousands of those kinds of markets, but there are.
There are some out there we're going on.
Continue to pursue them and if you don't mind im not going to name them.
Okay, and then if I can just follow up in and be even more explicit since were almost two months into the quarter. It looks like we should be assuming that that activity and in one Q is probably even below four Q is that a good starting point.
Well I don't know if you should assume it is below but I think you should take the comments about things came to a pretty.
Abrupt slowdown at least with respect to several customers in August.
And.
The reason things came to that slowdown have not changed as of today.
Okay. Thanks, Jeff Yes.
Next question is from the Spencer Kurn from Neo straight to research.
Go ahead.
Hey, guys. Thanks for taking the question could you just remind us of your average remaining lease term with sprint.
And.
How are you thinking about approach, meaning approaching the decommissioning of Sprint's network.
See value in signing an agreement that would minimize churn or would you take a similar approach as you did with hi, Dan and coordinate steady decommissioning schedule. Thanks.
Yes, Spencer on the overlap the average remaining terms for the sprint leases on sites, where they overlap with T. Mobile is about four and a half years.
Yes.
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I am confident given the complexities of what we'll need to be accomplished by the by the new.
T mobile Spencer that we'll have an opportunity to address those issues and.
Again, we have no kind of.
Religious opposition to MLS and if it makes sense.
For.
For both parties.
As we have in the past we knew we would do well.
Great. Thanks.
And one other question.
Can you just talk about the amendment pricing that you tend to see for.
Mid band spectrum, like two to five or potentially CBR ash and C band.
And how that relates to what you've been seeing for low band spectrum over the last couple of years. Thank you.
Hi, we'll want to get too.
Specific the incidence of CB Rs amendments haven't been that.
Numerous yet.
And there's really only of course been one.
Customer that has deployed.
Mid band and the massive Mimo architecture.
And I would say the amendment pricing has been reasonable fair and consistent with.
All the other types of amendments that we've done over the years in terms of size and weight.
All the things that have kind of gone into the way we've conducted our business.
Great. Thank you.
Next question is from probably Finisar from Cowen and company go ahead.
Okay. Thank you.
Okay.
We had an expectation that churn domestically in.
In the you haven't come down or improved in 2020, Paris's 19. It doesn't look like that happening I was wondering if you can give some color around that and then secondly.
As it relates to the GTS acquisition I appreciate you gave backing sub.
15 times tower cash flow as I was wondering if you could just be more explicit and tell us what the expectation is for revenue and EBITDA in 2020. Thank you.
Yes, Colby first on the churn.
It is down slightly because in terms of same tower analysis due to.
The falling off of the iden churn that took place in the fourth quarter last year, but as we look out to next year.
Some of that reduction due to the loss the iden is being offset by a little bit of a slight elevation in Q4 churn notices that come in from a variety of miscellaneous items.
I mentioned some of those items in the scripted comments, there's a number of smaller customers that are kind of modifying or shutting down older technologies for one and example of that as we had one regional carrier who had previously entered into some leases with us for Fourg installations that we had recorded in the past as lease up.
But those were separate and apart from their pre existing leases for their threeg installations will show now decommissioning and so we've had a few slugs of things that were a little more.
And what we typically see and and because it's happening in the fourth quarter that carries over into the 2020 numbers.
Cts Cts, yes, so on GTS the numbers around tower cash flow contribution or EBITDA contribution is approximately $30 million for next year little over 30 31 million.
Now that can be affected of course by where the FX rate shakes out but.
That was our expectation.
But the guidance together and from a revenue standpoint, it's approximately.
A little more than 40.
42, it okay. Thank you.
Next question from Simon Flannery Morgan Stanley go ahead.
Okay.
Guidance.
How are you thinking about 18, TN Verizon, we obviously hard Verizon last week talking a lot about densification.
But the Firstnet project is moving along so is that fairly level year to year or any any big changes you might call out and then you touched on Crs there a minute ago, we got the auction coming up how or how are the.
Carriers, you're talking to think of deploying that is that still very much in a small cell indoor type environment or do you think there might be.
Potential to use it more broadly on Microsoft's.
First question Simon is our guidance assumes essentially.
The same are certainly materially the same contributions from may TNT and Verizon.
And in terms of the CBR S.
Primarily because of this hour and.
Which of course affects the range the CBR EPS will be more of a small cell.
Indoor but there will be some some macro uses as well and we were actually.
We have some applications for for outdoor uses so it'll be it'll be across the board, but we don't think for at least for SBK. The CB Rs spectrum will be nearly as impactful as the C band spectrum.
Great. Thank you.
Next question was from Rick Prentiss with Raymond James Go ahead.
Thanks, Good afternoon guys.
And rich.
Couple of questions. One how should we think about the process flow as far as wed applications start coming in.
With the T mobile spread merger with amendment activity that applications could turn into revenues is at a three month six month process or possibly longer.
Depends on what their you want to do.
Amendments can go.
Quicker.
Have a history of going.
Quicker.
Certainly much quicker than brand new leases.
So, yes, I would use three to six as opposed to six plus on a cola.
Make sense.
Like you said you're not.
Opposed to MLS, particularly given the complexity this thing.
As the possibility of doing.
Involving dishnet as well dish on their call talks about how theyre interested potentially in the some of the sprint decommission sites. So what's the process for them to take over those leases or we have it into an MLP.
Well.
Got it no at least as you're talking about first.
And.
We're not.
We're not anywhere close to that and then then you have.
You have to match up heights, and and terms and things like that the.
The.
My personal opinion is while there will be a lot of business from.
Dish and the freeing up of space and the.
And the inventory of what is available will be great for both dish in the and the tower industry the exact.
Matching up of existing.
Sprint or T mobile leases that are to be de commissioned.
That's that's going to be a tougher Matt.
Sure.
Makes sense.
And then I think we've heard from 18 and say that their first that project was quote maybe 75% done but less I'm sure that's probably not equal across the whole country. As you think about how much you've seen touches from 18 to can you give us an indicator of where you think they are the project based on your size.
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Yes, I think there 75% includes.
A lot of advance work.
I think from our perspective, we think it's closer to 50.
As far as touching your sites.
Yes in terms of work work yet to be done.
Okay last one from me you mentioned say vrs could be some.
Some indoor systems are small cell systems, what's your appetite given your balance sheet and your ability to put money to work on a shared infrastructure to get involved and may be neutral host indoor systems, and how big could that opportunity be it was the timeline.
Well, our our appetite for the right deal is quite large.
The.
Finding the right opportunities are.
More difficult there their asset by asset type of opportunities.
And we are we are pursuing that area. We've we've actually added some resources there because we do think there will be some good opportunities, but its a.
It's an asset by asset.
Sure.
Timeframe as far as it kind of more like a 21 event or it starts becoming noticeable then for the industry.
Well I mean, there's there's things going on now and now there are folks that are.
Building out Das systems, I think will be converted to DBRS and folks that are interested in types of technologies today that will be converted to see vrs. So it's evolving our our just just like we have always approach the tower business were very much focused on.
Looking for the best assets.
Congrats on a nice return on your stock buyback that was a very attractive obviously as.
Well thank you.
Next question was from Van Nuys, and this pillar from Keybanc capital markets go ahead.
Hey.
Thanks for taking the questions too if I could.
You guys are obviously excited about sorry, the second half of 20 point relative to the.
Second half from 29 team can you maybe just help quantify.
Cost, which you would expect to see from up increasing the backlog perspective.
From a year over year basis secondly.
You talked a lot about massive mimo antennas have you been able to sort of determining your conversations with customers how deep into the network. Those type of antennas will need to go and then maybe further be able to quantify for us what that would mean in terms of American men. Thanks.
I think they're going to go fairly deep.
To achieve true fiveg outside of the dense urban markets.
All of the work that I've seen.
Indicates that Thats, what you need in the in the in the macro world.
And you really do need to see the mid band spectrum to do it.
Which I think explains a lot of the different carrier spending patterns.
I don't want to get too much. It I think I commented enough on the amendment pricing earlier about how that gets priced.
So if you look back at Spencers question, you'll you'll have your answer there.
And in terms of had the the back.
Doug.
Oh, it all depends on when the when these deals get done I mean, these backlogs I think we'll grow very very quickly and could grow.
Good double or more.
In fairly short order.
I do believe them lot of work has already been done in terms of what needs to be done to the network.
Really question of when is the deal going to be.
Group.
And we then I do as a.
I think I said six months ago.
I think you'll see a lot of activity.
And I guess, thanks, Paul up near anything that you need to do operationally to prepare for that any limiting factors such as power climbers back then.
Make it so the growth doesn't come in as fast as you expect thanks.
You know we tend to.
Retain given our size of our company and our benefit plans were pretty good employer.
And we will tend to.
Use our tower climbers to make sure that work will get done on our towers to make sure that the amendments in the Colos our towers get done so we can prioritize there.
So we'll be okay, there will be some general.
Shortages in the industry, but I don't think it will be.
Catastrophic.
Issue, but that we always get through it as an industry.
Thank you.
Next question is from Nick del Valle from Moffett Nathanson go ahead.
Hi, Thanks for taking my questions.
Hi, so it's a very small number but can you show the number of domestic towers you owned it effectively can't accommodate another tenant.
And sure related that is there any reason a player like dish wouldn't be satisfied with the height of Erad centers you tend to have available.
Second.
Question and answer is no.
First.
I'm sure the Im sure we have some but I.
It varies 30, 40, very very small okay.
So it's.
Any material number.
Yes, I mean, the towers there our towers that require augmentations, but virtually every site we have can be augmented to accommodate additional tenants. So.
It would be de Minimis.
Okay got it and then.
When you're negotiating with an upstart network like Dash are you are you inclined to try to get some sort of guarantee from the parent company on the lease are you satisfied with the wireless operating in today's being this'll signatory.
That's probably more information than we'd like to talk about on the call.
Okay fair enough. Thank you.
Next question is from Brett Feldman from Goldman Sachs go ahead.
Thank you I guess it came out during the trial that dish has signed.
Master service agreements a cover over 30000 sites I'm not entirely sure what those are but I'm curious, whether you're a party 20 of them and if they've made any commitments to you and then second youve not done a significant amount of domestic tower. M&A recently, there is a range of reasons you said your for that in the past, but one of them, which it was just big mismatch between the valuations of private tower.
Assets in the last and where your stock was trading your stock is obviously performed a lot better I'm wondering if that's changed in mass such that there might be more opportunities to make domestic accretive acquisitions or asset quality is really the gating factor as opposed to price. Thanks.
Yep.
Brett My belief on the first question is that when dish was building out their aiotv network. They.
Did sign up a number of master agreements, including one with us and.
In the course of that a number of companies, including us submitted.
All of their portfolios.
So that dish was able to analyze those and figure out which of those.
Towers would be suitable for that project and now they're able to do the same for the broadband network. So that is what that statement was all about but that was under kind of a different.
That was under the the narrowband.
The narrowband project.
But the work that the the work that they did about how many towers that theyve analyze that would be suitable for their uses that that was true.
So your second question in terms of.
The M&A.
Some of the stuff that we announced is actually more of what we have in the pipeline is in the us actually.
And there are.
Yes, Theres still.
There's a lot of price competition still there is some.
Varying quality.
Folks who have done some things that to their terms and conditions that we don't really like but there are still some good assets out there that we will we will pursue and clearly.
As we look at.
Where we trade and things like that we would take that into consideration, but we are very interested as we always have been adding quality assets to the portfolio.
Are you finding that valuation the valuation gap is starting to closer or private multiples just expand in conjunction with the public space.
Well.
We took about a four turn jump and after the T mobile sprint.
Deal got announced I have I can't say ABSSSI private multiples dropped four turns in two ways, but.
Who knows who does.
So, let's just say hopefully the gaps closed a little bit.
Thanks for taking the questions.
[music].
Next question from David Barden from Bank of America go ahead.
Hey, guys. Thanks for taking the questions.
Just.
On the dividend hike, obviously, the percentages barely eye popping, Jeff as you pointed out the dollars aren't necessarily all that large but I was wondering if you could kind of.
Layout, where you seek to what kind of message you want to said. This is this split Sps can do is a dividend growth stock for some extended for your time is this more than just a signaling about your conviction in the next cycle would be helpful. On that and then the second question kind of related is it just given how strong the stock price.
Uhhuh has been that we've seen in last six or nine months.
At what point do you start thinking about a split to try to make it easier for more money to kind of find its way into this given that its income gross we story. Thanks.
Yeah sure Youre kind of perception your former way you kind of talked about the dividend is correct. David when you when we kind of thought about this it's more to give.
A longer higher growth trajectory.
Because as we modeled things out.
The first dividend, we would have had to pay when we got to the exhaustion in the Anna wells.
Frankly will be higher than the dividend we're paying now.
So you'd have to start out high and then of course grow it.
Not by the same pace. So by doing this weekend, we can grow it at a faster rate, which some people are gone alike. We can control our remaining at our wells and frankly, we can pay out less of our AFFO. So we think it's a win win win win which.
This is why we chose to begin to pay it early.
And even though we start small we can grow it faster.
And then on the split.
I'm ashamed to say I really hadn't thought of that do you think you think thats something we should do.
Okay.
I think people love it.
All right well will give us some thoughts [laughter].
All you analysts way.
Denmark, we can say Mark your biggest up all of this ask everybody on the mix, where you got will take you sell side Paul.
Yes.
And the next question was from Batya Levi with you'll be yes go ahead.
Q4, it too.
And in terms of the maybe given the faster growth outlook that you are expecting as we exit the year can you also remind us where you would like to be in terms of your leverage target I think as you.
Started to grow the dividend you potentially thought that you might come inside the seven level, but any updated thoughts there.
Second question on how you think your position in terms of.
Rural footprint that Timo is expected to build over the next few years and how you think about leasing amendment mix change as we exit the year into next year.
Well, if you looked at our guidance, but chip if we don't spend some money on something.
Whether its stock repurchases or portfolio growth, we're going to be in the mid sixes in leverage.
So and Thats, not where we want to but so we would want to be.
Hi, Sixs to.
Low low sevens. So that's the that's kind of the new.
The new area, I think where were where we're targeting and again, if we see something great. The by we'd be very pleased to go above that for temporary period of time.
I mean, the cash flow generation power the business is pretty amazing.
So.
On your second question I.
I think we're going to be very.
Very well positioned with T. Mobile we there are very good customer of ours, we have a close relationship we have a lot of work to do with them.
And I think we will be very active.
Partner in terms of both amendments and co locations.
Just as we were in the.
First half of last year prior to the to the August.
Sensual shutdown.
Okay. Thank you.
And speakers no more questions so far.
Great well, we really appreciate everyone joining us on kind of our year end wrap up.
And we look forward to sharing our 2020 results with you as we go thank you very much.
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