Q1 2020 Earnings Call
[music].
Ladies and gentlemen, thank you for standing by welcome to the American Tower Corporation first quarter 2020.
This conference call.
This time all participants are in listen only mode. Later, we'll conduct a question answer session. If you should have question throughout the duration of the call. Please press one than zero yourself what keypad.
Should require assistance from the operator at any time. Please press star followed by the zero.
As a reminder, today's conference is being recorded or knowledge on the conference over to your host Youre Kieslowski Vice President of Investor Relations. Please go ahead Sir.
Good morning, and thank you for joining American Tower's first quarter 2020 earnings conference call.
We have poster presentation, which we will refer to throughout our prepared remarks under the Investor Relations tab of our website Www Dot American tower dotcom.
Before the rest of my comments I'll note that due to covert 19.
All of US on the call. This morning are dialing in remotely from different locations.
So to the extent there any minor technical difficulties on the call. We would ask that you bear with us.
Our agenda for this morning will be as follows.
First of all quickly summarize our financial results for first quarter.
Yes, Tom Bartlett, our president and CEO.
Provide some brief commentary on our U.S. business.
Next Rob Smyth or executive Vice President CFO and Treasurer.
I will discuss our Q1 2020 results an updated 2020 hour.
And finally, our executive Chairman, Jim take what will share a few closing remarks.
After these comments, we will take your questions.
I'll remind you that this call will contain forward looking statements when involve a number of risks and uncertainties.
Examples of these statements include our expectations regarding future growth.
Including our 2020 outlook capital allocation and future operating performance.
Our expectation regarding the impacts of cobot 19.
Our expectations regarding the impacts of the EG our decision in India.
And any other statements regarding matters that are not historical facts.
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 31st 2019.
In other filings to make the FCC.
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 first quarter.
During the quarter property revenue increased 10.5% to nearly 2 billion.
Our adjusted EBITDA grew by 14.1% to 1.3 billion.
And our consolidated AFFO <unk> consolidated AFFO per share increase by roughly 5% to 907 million in $2.03 respectively.
These consolidated AFFO metrics were impacted by onetime cash interest charge of approximately $63 million associated with our purchase of MTS minority Stakes in each of our joint ventures in Ghana, and Uganda during the quarter.
Absent this onetime item consolidated AFFO and consolidated AFFO per share would have grown by more than 12%.
Finally, net income attributable to American Tower Corporation common stockholders increased by roughly 4.4% to 415 million or 93 cents per diluted common share.
And with that I'll turn the call over to Tom.
Thanks, Igor good morning, everyone. I Hope you are all staying safe and well.
Typically in our first quarter earnings call, we would talk exclusively about or U.S. business and how it is positioned in the market.
But given that there is nothing typical in the world in which we live today.
I'd like to first discuss how we are navigating the cold it 19 pandemic, including its historical impact on the global economy.
Our number one priority continues to be the health and safety of our employees their families our tenants suppliers and surrounding communities.
Most of our team members globally are working from home.
To facilitate this we bolstered our idea environment to support more remote work and establish alternative business processes and solutions to overcome the need to have work accomplished from our office or at our established operational centers.
We're practicing social distancing in a few instances where certain employees need to be in the office.
I provided added equipment and supplies for those considered essential and needed to be out at our sites supporting our tenants.
We're also in the process of establishing our overall guidelines of procedures for an eventual return to work in our offices across the globe.
These guidelines will adhere to government directives and be supplemented by reasonable and practical criteria based on local situational needs in circumstances.
The reopening process will be based on safety readiness levels. It will not commence until I'm certain we have complete access to the necessary critical resources and supplies.
I also want to emphasize that well immersed in all this activity and uncertainty relative to just how long. This crisis will west we remain focused on continuing to meet the needs of our tenants.
To that end I want to know that to this point the direct effects of the virus on our core business outside of translational FX impacts have been modest.
Well, we're continually monitoring the cobot 19 impacts our business model globally is demonstrated its resiliency and stability.
Now more than ever our infrastructure is incredibly critical to ensure our tenants are able to keep their customers connected.
As a result in many of our served markets, including the United States. We have received official priority designations that enable tower related work to continue largely uninterrupted.
In a few locations, we have experienced some limitations and restrictions, particularly with respect to newbuilds and other discretionary tower work.
In fact in certain locations new construction is currently prohibitive.
Well these impacts if so far been modest we do expect some slight delays in her new build pipeline and co location activity in certain areas, but do believe these delays will be temporary.
All in all our business and operational focus will continue to be to prioritize actions projects and capital allocation initiatives that extend deepen and secure conductivity throughout our served markets. We are proud to help deliver meaningful connectivity the billions of people around the world at a <unk>.
Certain time like this and are focused on maintaining its continuity.
This then brings me to the original topic I wanted to cover with you. This morning, and that's of our business here in the United States.
In 2020 at the midpoint of our outlook, our U.S. business is expected to represent about 57% of our consolidated property revenues and around two thirds of our consolidated property operating profit.
The U.S. operation is the foundation of our consolidated business and we'll continue to be four for many years to come.
Mobile data usage growth of at least 30% per year has driven significant levels of co locations in amendments and our U.S. assets over the last decade, and we expect that growth to continue for the foreseeable future.
Fact, according to industry estimates the average U.S. smartphone user consumed around nine gigabytes per month in 2019, which is up some 450% from just five years ago.
Incredibly by 2025 that same user is projected to consume over 45 gigabytes per month.
To account for the strain that this usage growth will create on mobile networks. We believe that our tenants will continue to invest significant amounts of capital into our infrastructure.
Over the last five years. This spending has averaged upwards of $30 billion per year.
In fact, it's increased over the past 20 years as each new technology generation has been deployed dating back to two Gi and we would expect that number to remain steady if not rise over the next few years, particularly given the recent completion of the sprint T mobile merger.
A significant portion of our tenants network investments in future years is expected to be Fiveg focused and I will take some time to cover our latest high level thoughts around fiveg and what that might mean for our business in a moment.
But first I'd like to spend a few minutes laying out the key characteristics and return profile of our U.S. business.
Our U.S. portfolio comprised of nearly 41000 sites has been created over the last 20 plus years through a number of M&A transactions complemented by our internal new build program.
We've consistently focused on sites with premier locations significant capacity for lease up attractive land lease arrangements modest requirements for ongoing maintenance capex.
Perhaps the single biggest driver of value and these assets over the long term that's been the tenant lease contracts are master lease agreements that accompanied him, which we have purposely designed to both deliver compelling value to the tenant and secure attractive economics for American tower.
Our requirement for exclusive franchise real estate locations in mission critical areas has supported our ability to implement these contract structures to generate a consistent recurring growing base of cash flow.
As you can see on slide six that focus on tower and other franchise real estate assets has resulted in sustained attractive organic tenant billings growth for American tower.
Averaging more than 6% over the past five years.
The combination of strong co location and amendment trends annual contractual escalators and consistently low churn in the U.S. had been key drivers of this growth.
As weve capitalize on the deployment densification of Fourg networks across the country.
We have translated this strong organic tenant billings growth into attractive and Hawaii yields across our portfolio, particularly for assets that we've owned over the long term.
For example, we're generating yields of 24% on sites, we own prior to 2005 and yields of 17% on sites added to the portfolio from 2005 to 2010.
Assets added after 2010, including those smart GGP and rising transactions and Hawaii yields averaged around 6% as at the end of the first quarter.
We believe there is significant upside and this vintage of sites as additional equipment is deployed particularly given the expected acceleration of Fiveg rollouts over the next few years.
Our U.S. tower leadership team has done a terrific job managing our base of assets in the U.S., having locked in more than $28 billion and contractually committed revenue as of the ended the first quarter.
Margins in this business, including all of the M&A completed over the last several years I've continued to expand with the property segment operating profit margin coming in at nearly 79% in Q1, accompanied by cash as DNA as a percentage of revenue yes, 4.1%.
Additionally, our U.S. business ROI see has continued to rise over the last 10 years, well, we have nearly doubled our asset base.
We now have around 3000 tenants in the U.S., including a vertical segment focusing on non traditional tenants.
This segment, although still in relatively early stages of development generated more than 15% of our non M.L.A. related U.S. no business in the quarter.
From an operational perspective over the past year. Our U.S. team has been focused on automating tasks to reduce cycle times implementing a fleet of drones to secure more accurate data on her sites and implementing several new innovative contract structures, providing process efficiencies for both ourselves and our tenants and reducing the need.
For site specific evaluations.
From a macro industry perspective.
Over the next few years, we see several trends unfolding in the U.S. first we believe the cloud is going to come closer to the I'd.
Second Fiveg will be deployed using a number of different spectrum bands, depending upon the specific areas coverage and capacity requirements, which will look like some of labeled like a three layer cake.
Opening up the network to allow for a multitude of different customer experiences.
And third the variety of end user devices and applications is expected to grow faster than we could possibly imagine.
In addition to much of this activity should enable our customers to be able to wires lead transmit data at a lower cost per bit.
The overall increase in our tenants, resulting value proposition driven by continued Fourg and Fiveg network deployments on our infrastructure will we expect continued to increase our in Hawaii yields and returns on invested capital.
Well, we expect to have fourg related infrastructure on our sites for years to come we believe ubiquitous fiveg deployments are also on or doorstep.
What is interesting is that in fact each of the major carriers have initially deployed fiveg in their own unique ways.
Multiple spectrum bands had been it will continue to be deployed spanning the range from high band millimeter wave in cities to low band like 600 megahertz in rural areas and will ultimately be coupled with mid band spectrum support their customers' needs around suburbs and highway corridors.
Importantly, we continue to believe that the majority of the sub six gigahertz spectrum deployments throughout the country will be on macro towers that mid band spectrum will be a critical component of our tenants Fiveg networks.
We continue to expect mid band deployments to accelerate beginning in the second half of this year, it's a new T mobile builds out more of its two and a half gig spectrum.
For the foreseeable future as I mentioned, we're also expect spending on Fourg networks to continue given that the migration to the user base from Fourg to Fiveg will take a number of years.
Bottom line, we believe that as a result, a tremendous amount of incrementally more complex equipment should end up on our towers across the U.S. over the next five to 10 years, allowing our business to continue to excel.
As I mentioned, we believe that over the next several years the cloud is going to get closer to the edge.
We're already seeing this trend from the major Hyperscalers and as a result continue to evaluate the opportunities that might be there for us.
What will also be interesting is how the hyperscale and cloud service providers will interact and positioning themselves with the carriers. So as a result, we continue to explore trials and partnerships with a variety of different players, including Hyperscalers cloud service providers carriers datacenter companies and equipment suppliers to see just tower.
Our infrastructure may plug into this new environment.
Using our existing set of assets on the edge datacenter front, we continue to learn about the rapidly evolving edge ecosystem through our ownership of the Metro interconnect facility in Atlanta and initial deployments of several try alleged data facilities that are tower sites.
At a high level, we continue to believe that as information generation and processing progressively moves to the network edge, particularly with respect to advanced Io T. applications, there will be a greater need for lower latency Sue distributed storage and compute functionality in close proximity to both wireless and wireline and consumers.
[music].
It's compute offerings may eventually serve autonomous vehicle networks interactive and immersive media delivery cloud gaming in any number of other products and services were lower latency is a must indoor data needs to be closer to the consumer machine, where we believe the opportunity for us can truly scale.
And while the potential for a scaled mobile AD solution is likely several years away. We are seeing initial positive indications of customer interest in our assets and are also having numerous conversations with a number of parties that are likely to play a significant role in the edge going forward.
One such example is with Microsoft through their Azure, Ed zones program, where we're now in named partner.
As time goes on and we're hopeful that other partnerships will develop to help us accelerate the development of the edge data model.
On the indoor connectivity side, we continue to explore ways to leverage carrier grade Wi Fi Fourg and Fiveg in Crs spectrum to create converged networks.
These targeted neutral host solutions can make sense in a much broader array of venues than traditional das.
So in other words drastically increasing the total addressable market.
We've been part of the Crs Alliance for many years and have several Crs based deployments throughout the country.
As demand for better faster and more secure network connectivity continues to accelerate in apartment buildings class a office space and other similar locations. We are positioning American tower to hopefully play a meaningful role in satisfying that demand.
Here again, we're likely at least a few years away from potentially scaling seem to be aerospace neutral host systems, but are already seeing positive indications of demand for fixed wireless access private networks and other solutions and these types of locations.
As we look at these and other U.S. based innovation opportunities I went to underscore that our investment criteria in philosophy remains the same.
We're looking for scalable exclusive multi tenant franchise real estate digital infrastructure opportunities that have the potential to deliver consistent sustainable recurring growth for us with returns that rival those of our existing tower model.
Taking these innovation initiatives together with our high performing existing U.S. business, we are energized about the future.
The secular trends driving demand for space on our franchise real estate assets continues to accelerate and we believe were optimal lead position to convert that demand into attractive total returns for our stockholders over the long term.
Further our businesses performed extremely well through a variety of economic capital market cycles, and we are confident that American tower will again stand and deliver through the current turmoil.
With that turn the call over to ride to go through our results for the quarter and our updated full year outlook.
Right.
Thanks, Tom he could wanting to everyone on the call. Thank you for joining.
Before I dive into our first quarter results I'd like to also taking moment in acknowledged the koby 19 pandemic that is affecting all of US my thoughts and best wishes go out to our employees tenants vendors into each of you on the call. This morning.
I Hope you all are safe and healthy through this difficult time.
Let's now turn to our first quarter results as you saw in today's press release, we began 2020 with a solid quarter as mobile data consumption continues to grow across the globe. In fact in many of our markets, particularly internationally mobile data traffic has increased as a result of covert 19.
Highlighting the importance of wireless services everywhere and the critical nature of our global portfolio of communications real estate.
To start I'd like to note a few of our first quarter achievements, specifically, we met our expectations for organic tenant billings growth rates across the globe led by Africa, and 9.3% Latin America at 7.5% and the U.S. at 5.6%.
We grew our property revenue and tenant billings by more than 10%.
We expanded our adjusted EBITDA margin.
By 230 basis points over the prior year, we made substantial progress integrating the more than 8000 sites. We acquired at the end of 2019 in Africa and Latin America.
We've built approximately 1000 new sites.
Strengthened our balance sheet, and now have $5.4 billion and liquidity pro forma for our new term loan from earlier this month.
And we grew our common stock dividend by 20% again.
Before we discuss the details of our full year outlook, let's first spend a few minutes reviewing our financial and operational results for the first quarter.
Please turn to slide eight we will review our property revenue intervening billings growth.
For the quarter, you can see that our underlying growth remains solid throughout our markets.
Due to strong demand for our assets across the globe and on an FX neutral basis, we met our internal expectations for revenue.
As Igor mentioned earlier, our first quarter consolidated property revenue of approximately 1.970 billion grew by $187 million or 10.5% or Q1 of last year.
This included a headwind of roughly $48 million from unfavorable FX translation.
Our U.S. segment represented 55% of both our consolidated property revenue and the corresponding growth, while our international segments accounted for the remain 45%.
As always has been the case the critical components of our consolidated property revenue are those items that impact our recurring billings revenue, including around $79 million in co locations and amend it similar levels of prior quarters are consistent and reliable contractual escalators, which added $50 million.
Our day, one incremental tenant billings, resulting from our returns based and disciplined capital investments, which contributed $72 million and includes M&A and newbuilds.
These positive items were partially offset by at least non renewals or churn, which reduced our tenant billings revenue by $49 million for the quarter.
Looking at our major business segments, our U.S. property.
Segment revenue totaled nearly $1.1 billion for the quarter and grew by $104 million or 10.5% over the prior year period.
Our international property revenue of $883 million grew by $84 million or 10.5%.
Over last years levels.
As expected we saw solid demand from our major carrier tenants around the globe. This demand was driven by the carriers need to continually invest in their networks in order to keep pace with the exploding growth in mobile data consumption.
Moving to the right side of the slide.
You will see that our consolidated organic tenant billings growth also met our expectations coming in at 5.4% for the quarter.
For our U.S. property segment organic tenant billings growth was 5.6% comprised of new business activity, which totaled 4.5%.
Pricing, escalators, which totaled 3.3% and churn up 2% in a roughly 23% negative impact from other items, which partially offset the items I mentioned above.
As expected this growth rate reflects.
A deceleration from prior quarters, partially driven by the impact that the pending sprint T mobile merger had on new business activity levels.
Now that the merger has closed we stand ready to support the new T mobile as it begins to invest significant capital and to perform the Ernest work of integrated too complex networks deploying diverse spectrum holdings and servicing more than 100 million subscribers, all while preparing for a fiveg future.
Regarding our international segment organic tenant billings growth was 5.1%.
By Africa at more than 9% in Latin America and 7.5%.
Europe totaled just about 2% well he came it was a decline of around 1%, which was inline with our expectations given anticipated churn and market conditions.
The component parts of our international organic tenant billings growth or new business activity, which totaled 7%.
Our mostly local inflation based pricing escalators, which totaled 3.6%.
Other items, which contributed around 20 basis points.
In partially offsetting these increases was churn of 5.8% largely attributable to previously anticipated cancellations in India.
Turning to slide nine you can see our first quarter consolidated adjusted EBITDA of nearly 1.3 billion grew by $157 million or 14.1% over the prior year period.
As a result of our continued focus on driving organic growth, adding new assets in managing costs throughout our business. Our adjusted EBITDA margin was six dollarsthree, 0.8% for the quarter, which was up 230 basis points compared to Q1 of last year.
I will also note that these results include the impacts of around $16 million in incremental that debt recorded in India due to slums, some slow payments of accounts receivable from certain tenants, including government on the S and now.
We think it's likely we will collect these receivables in the future but for now we have provided for them by increasing our bad debt reserves.
In addition, our adjusted EBITDA growth was negatively impacted by approximately $26 million or 2.3% for FX fluctuations as compared to Q1 of last year.
Our U.S. property segment operating profit.
$858 million grew by $105 million or nearly 14% over the year ago period.
While our international property segment operating profit of $448 million grew by $62 million or 16% over last years level.
As a result, our U.S. segment represented 66% of our property segment.
Operating profit in the quarter and 63% of the corresponding growth.
While international accounted for the remaining 34% in 37% respectively.
Moving to the right side of the slide.
You can see our consolidated AFFO of $907 million grew by $45 million were 5.3% over the year ago period.
Consolidated AFFO per share of $2.03 grew by nine cents, 4.6% over last years levels.
It is important to consider that the consolidated AFFO results include the impact of a one time cash interest expense charge totaling $63 million as a result of our purchase of MTN stake in each of our joint ventures in Guyana in Uganda.
Absent this nonrecurring charge, our consolidated AFFO and AFFO per share growth would have been 12.6% and 12.4% respectively.
As a reminder, we now expect the gap between consolidated after FFO and AFFO attributable to common stockholders to be modest in future years. As a result of these new already stake purchases and are expected to purchase of the remaining tottus stake in our India business, which is anticipated for later this.
Last year.
Moving to slide 10, let's now take a look and our updated expectations for 2020.
To start I will address a few of the business issues that required capital consideration as we updated our full year outlook.
First and foremost is the coated 19 pandemic.
Although its full year impact on the world has not yet unknown to date on a constant currency basis, we have experienced only modest impacts.
In fact in many of our international markets.
Markets that have little or no fixed line infrastructure, our tenants are actually seen increases in mobile data consumption across their networks.
Which may increase demand for our sites over time.
As stated earlier this highlights the world's growing reliance on wireless services and evidences the critical nature of our global portfolio of communications real estate.
With that said Cobot 19 has caused global financial turmoil in material moves and many foreign exchange rates relative to the U.S. dollar.
Of course, these FX moves are having a negative impact on our updated full year outlook.
Ill discuss the detail of those impacts shortly.
But as a general context of the current FX volatility I will note that we routinely review our hedging policies and often engaged to help and specialized external advisers and doing so.
Although we have hedged purchase prices for certain international transactions in the past historically, we have concluded that the potential benefit of actively hedging our ongoing translational FX exposure are not worth the real economic cost.
Instead, we rely on natural hedges such as the portfolio effect of our 19 markets. Our reinvestment of locally generated operating cash flow through newbuilds, and M&A activity and select issuances of local currency debt.
In addition, most of our tenant leases in international markets have equal local inflation based escalators.
Or are denominated in us dollars.
At this stage, we do not anticipate any significant changes in our approach to hedging, but as always we continue to evaluate our options.
Next in the U. S T mobile recently completed its merger with sprint.
As a result, we continue to anticipate an acceleration of spending from the new T mobile to begin in the second half of the year.
In addition beyond 2020, we believe this industry shift may result in a sustained increase in wireless.
Industrial capital spending as Fiveg deployed deployments ramp and dish deploys its network.
We believe we are well positioned to benefit from the future Fiveg deployments as carriers continue to focus on network quality.
Finally in India. The Supreme Court recently reaffirmed the fees penalties and interest assessments associated with the previous ruling on the definition of adjusted gross revenues.
Although the total liability has been reaffirmed we don't yet know the pacing and duration of the required payments on the part of the carriers, particularly in the context of the current covert 19 situation.
Taking these updated considerations and our assessment of market conditions into account and based on the proven resilience of our global business. Our total property revenue outlook on a constant currency basis is unchanged.
However for foreign currency exchange rate fluctuations as compared to our prior outlook are expected to negatively impact reported property revenues for the full year by approximately $300 million.
For organic tenant billings growth, we are reiterating our outlook across most of our geographic segments.
However for Africa, we now expect organic tenant billings growth of around 9%.
For the year down from 11% in our initial outlook.
This is being driven by reclassification of certain revenues out of tenant billings, rather than a shift in the underlying fundamentals of our Africa business.
Looking at Slide 11, you'll see that we are also affirming our underlying expectations for adjusted EBITDA at the midpoint of our outlook.
Outside of an FX translational impact of approximately $165 million.
This includes the expectation that cash SG day as a percent of total revenue will be right around 8%.
Lastly, we are reiterating our expectations for consolidated AFFO for the year.
On an FX neutral basis.
We continue to carefully manage our cash interest expense and cash taxes, while converting the vast majority of our cash adjusted EBITDA growth into consolidated and AFFO growth.
As a result outside of roughly $140 million or 32 cents per share and unfavorable FX translation impacts our consolidated AFFO and AFFO per share projections are unchanged.
Although we are not surprised by how well our business has performed during the covert 90 pandemic. We will continue to monitor events closely as the full impact of this crisis develop.
I would also note that to the extent that local market measures like shelter in place orders are prolonged we could eventually experienced some timing issues regarding new business, commencements newbuilds or even accounts receivable collections.
Flipping to slide 12, I'd like to now briefly discuss our capital allocation plans for the year, which remained broadly consistent with our prior view.
Our full year dividend declaration subject to the approval of our board is expected to be approximately $2 billion, resulting in annual common stock dividend growth rate right around 20% once again.
We also expect to deploy $1.2 billion towards our Capex program.
With 85% of that investment the discretionary.
As a result of covert 19, and the associated FX impacts, we now expect a reduction of $50 million from our prior capex outlook.
This includes a $30 million reduction in redevelopment capex.
$5 million in lower maintenance, capex, and $50 million and lower development capital spending.
In part due to delay of construction of approximately 1000 Newbuilds in India.
In the first quarter, we deployed $524 million to buy MTN minority Stakes in each of our joint ventures and got in Uganda.
And have air marked another $328 million at March 30, Onest 2020 exchange rates for our pending purchase of times remaining interest in our India business.
In addition, we have spent roughly $49 million on other M&A. So far this year and have deployed about $55 million through April 22nd to share repurchases.
Given our strong balance sheet and current liquidity, we expect to find the entirety of our 2020 capital deployment plans with cash on hand cash from operations and modest levels of revolver borrowings.
We also expect expect too.
Explore additional opportunities to extend and ladder.
Our debt maturities and reduce our overall cost of borrowings.
As a result, we anticipate continuing our long track record of generating strong consolidated and for FFO per share growth, while simultaneously growing our return on invested capital.
Turning now to slide 13, I'll briefly summarize the strength of our investment grade balance sheet and our current liquidity position, which we believe is unmatched in our sector.
As of the end of the first quarter, we had more than $1.3 billion in cash and $2.9 billion available.
Under our revolving credit facilities.
Subsequent to the ended the quarter, we completed an additional one year term loan of nearly $1.2 billion, increasing our liquidity on a pro forma basis to more than $5 billion.
Our net leverage at the end of the quarter was 4.4 0.6 times inline with our targeted range and consistent with our historical levels. Our weighted average cost of debt was around 3.1% and our weighted average debt tenant was over five years.
Regarding our debt maturities for 2020 subsequent to the end of the quarter, we announced the redemption of our 750 million dollar, 2.8% unsecured notes, leaving us with just $350 million in remaining maturities this year.
As a result of our prudent financial policies that have been implemented and enhanced over the last decade, and the overall stability and resilience of our business. We believe we are in an extremely strong financial position amid the current market turmoil.
We expect this to enable us to continue to be opportunistic with respect to investing in growth, including M&A opportunities on a global basis.
If you please turn to slide 14, I'll conclude my comments with a brief summary.
Despite the global pandemic, we had a good start to 2020 as we achieved solid organic tenant billings growth expanded our margins and ROI see started integrating the portfolios acquired at the end of 2019 and once again increased our quarterly dividend by 20%.
We further strengthened our investment grade balance sheet, increasing our current liquidity to $5.4 billion and positioning ourselves to comfortably fund our 2020 capital deployment plan, while expanding our global tower portfolio through opportunistic M&A.
And finally.
Outside of the translational FX impacts of the Coven 19 endemic our outlook remains largely unchanged highlighting the critical nature of wireless services everywhere as mobile data consumption continues to grow a dramatic pace across the globe.
With that let me turn the call over to Jim.
Thanks, Rod and good morning, everyone can reach view on the call today, I wish you and yours safe and healthy path through the Cobot 19 pandemic as Tom stated earlier, our top priority in American Tower is the health and safety of our global workforce.
Our dedicated employees and managers throughout the company are committed to keeping critical telecommunications infrastructure fully operational and functional in their communities.
The senior executive team and management throughout HTC are doing everything they can to support our global teams and this essential work.
Our company is also contributing to those communities financially so our philanthropy and CSR programs and through the American Tower Foundation.
This includes everything from working in Boston, Massachusetts, with local and state support funds for citizens and meet the funding and donating P to health workers throughout the U.S.
To helping with the government of India's Cobot 19 recovery fund and many more.
In addition, commerce Secretary Ross and I have agreed to immediately pivot the entire near term work effort of the U.S., India, CEO Forum, which we co chair toward Cobot, 19 relief and recovery efforts and the world's two largest democracy.
We are fully engaged with the Geoeye and our Indian counterpart companies in this effort.
As HTC as executive Chairman I've been offering guidance regarding our covert 19 response, while also working very closely what Tom to ensure a smooth and seamless management transition.
As I move toward completing my nearly 20 year tenure at American tower.
I'm tremendously confident in Threeq he respects.
Toms ability to lead our highly capable executive team and the business into a successful and prosperous future.
The continuing vibrancy of our stand and deliver strategy and its ability to deliver strong performance in returns to our investors.
And the ongoing demand drivers for mobile infrastructure will underpinned strong growth rate Tc for many years to come.
Lastly, I would like to thank our investors and analysts many of whom are on this call today for your confidence in our team during the many years, but I have been privileged to lead it.
I fully expect the Tom will now lead the company a longer trajectory of our standard deliver strategy to even greater heights in the future.
And now I'll turn it back over to Tom for some closing thoughts before we go to QNX.
Hey, Thanks, Jen before we move on to Q today I like the first recognize our board chairman Jim Taiclet for his incredible leadership judgment and friendship over these last 20 years over that period, our business has grown from operating ingest three markets generating about a billion dollars in revenue.
15 sites to where we are today.
That ended up itself is amazing at a testament to his leadership, but it's the way he has guided us and built this culture that in my mind will forever be his legacy and might compass for where we go from here So Jim I'd like to say on behalf of all your investors and employees. We thank you.
Okay. Operator, please now let's open the lines first and today.
Of course, and ladies and gentlemen, if you wish to ask a question at this time. Please press one zero on your telephone keypad.
Withdraw your question at anytime by repeating the one that zero commands once again, if you have any questions. At this time. Please press one them zero.
Our first question today comes from the line of Feldman with Goldman Sachs. Please go ahead.
And congrats Tom and Rod well earned and congrats and thank you Jim Obviously stats you go but I do feel like this transition is natural and seamless and I do think that speak volumes about the quality of the organization that you've built and the legacy you leave behind that so I want to take advantage of this this opportunity at one last question.
When you have already we're starting to to design the companies expand to international strategy, which is I don't know 13 14 years ago, you talked about a range of risk that the company was willing to take the rain distresses that you thought you were designing your international operations to absorb and while I'm certainly you Didnt anticipate this exact situation I was hoping you can.
Maybe remind us of those risk parameters distress points that you design the business for us it as we watch this pandemic unfold weakness thats for ourselves whether these these changes are within scope or whether adjustments are going to need to be made thank you.
Sure Brian Thanks for your time comments I'll start it off and maybe turn it back over to Tom to because the plan ahead, but the range of risks that we anticipated was based on.
The fundamental risk we had at the time much were eight.
Single country single product company.
It had really large growth ambitions and I think to risk mitigate that very high concentration of U.S. power market that we bought on as you described at a 15 years, Florida.
Diversification class. So we diversified among currencies conference countries customers markets et cetera to try to as you would do create a portfolio that grew over time that would mitigate risk and grow faster than otherwise the quota and that's really the framework around what we've been doing for all of that time since 2000.
Seven or so so I think within that context, I could let Tom described how he and perhaps rod thinks that this could play out given the cope at 19, I think it's still within our framework frankly, Brett let me last time to comment.
Oh, Thanks, you have and thanks, Brett as well for further comments I think as Tim said I mean.
What.
Kind of supports an underwriting the overall international strategy is at the same business model is we have in the United States, It's not a new set of products and services.
And so it it allows us to take a model that we built in the United States in terms of how we look at and and infrastructure.
How we actually look at the master lease agreements and being able to take that off shore into those large emerging.
Market economies could be able to drive growth. The other piece that didn't talk about what they diversification.
We underwrite these investments operationally, which I'll spend a minute at effect.
Thought that it made it but but it's a very diversified portfolio and so we are scattered around and 19 markets 18 of what's your outside the United States a and we also think that that serves as a useful way for us to be able to kind of underwrite the risk.
Third as we're at large and comments our customers are the largest telecommunications companies around the world. So it and we're not dealing with consumers are not dealing with with a number of small players. These are the large 18, tiet and Verizon is outside of out of the United States.
And operationally you know when we look at the investments that themselves. We're looking at them over a very long period of time sort of a 10 year discounted cash flow and we underwrite them with a risk adjusted cost of capital. So we are carrying for a lot of the the risks that you would normally see.
And they have escalators in them that are CP VI based utilizing local that we're reinvesting that cash back into the business and so we think if we're able to do this in a very balanced away very diversified away or we're going to be able to successfully enjoy the growth that we're seeing from these markets that as you well.
Though are anywhere from three to five years behind the U.S. from a technology perspective, So we think thats a sound approach a balanced approach again to be able to kind of leverage all the opportunity we see offshore.
Yeah, and Tom I like that one more point, we've still got about two thirds or more of the cash flow coming from the U.S. So it's grown just as rapidly in fact.
As the international has on the cash flow basis, all through it so thats 15 year period, and so it wasn't so much mitigation that we ended up with which what was really turbocharging gross than keeping a similar risk profile based on the diversification.
Thanks, Jim Jim if I could add Mike.
If I could just add a couple of comments there in terms of our ability to build new assets in these international markets. When we build new assets those are our highest yielding investment and we've been able to.
We've been able to build a lot of assets around the globe more than 4000 sites last year and this year, we expect to build even more than that so it's a way for us to kind of expand our horizon and be able to deploy significant capital in the most productive way possible.
Thanks, guys.
Yeah, we do have a question from the line of Ric Prentiss with Raymond James. Please go ahead.
Thanks, Good morning, guys, well the world certainly rest changed.
Well certainly changed in the last two months since your Fourq you call.
First I am glad to hear I Hope you are fading away you in your employees. They say from this crazy time I'll add my comments, just say, Jim I remember that non deal road show in San Francisco, let's be almost 20 years ago. As you were starting in the World wasn't Chaos then too. So you guys have navigated very strongly.
So congrats to Tom as broad as well.
Hello.
From a business standpoint.
[music].
Obviously, nothing Thats changed at Sprint T. Mobile merger has closed finally dish boost might be closing soon how should we think about the timing of working with them and what's going to be a very complicated process of integrating networks do we think of M.L.A. is do we think a holistic approach is and how long do those.
Generically speaking how long does it take to kind of worked through these complicated.
Master lease agreements.
You know Rick I think with my first of all thank you for a for your comments in your and your thoughts.
T mobile and spreads have been working you know and thinking about I think their network deployment plans for for sometime now.
So now that the deal is fun is in fact close you know, we're now able to sit down with them in a meaningful way to talk about a number of different contractual structures with them.
I mean to this point, we've seen some level of increase in the pipeline British still awaiting the bulk really what we would expect to eventually come through as they ramp up their network deployments and so we would expect that as we've said more and the second half of the air to start up some of the other more significant volumes, but these are multiyear a master lease.
It's agreements that Mr. This agreement structure that we would put in place clearly we would.
Entertain all of our traditional holistic agreements, where we think its makes sense for us as well as makes sense for T mobile and sprint, but I think you couldn't be assured that there are.
Significant conversations going on as we speak a T. Mobile is very anxious to get going in terms of being able to meet a lot of their.
Network commitments and there will be very aggressive I am sure.
And and we are very much committed to being there and and we'll want to tailor. The IMO eight to really be mutually advantage to to both of us and so that kind of.
And those events will be going I'd heavily I would suspect over the over the next to 60 to 90 days.
Great and Jim You mentioned your CEO panel, but committee in India, GPS India jointly working together on the covert 19, great effort.
Updated thoughts on when the pacing of the payments in the AG our issue in India might be.
Oh, I'm seeing cobot 19, as kind of put things on a back burner, but I know we get a question a lot of times about when will the carriers no the pacing of that payment any thoughts.
I recognize justino, just as an update I think as as a as Rod really mentioned I mean, the process has largely been put on hold.
As they have so many things as a result, and the ongoing kogut pandemic.
And so my sense is that I mean, there and as you know whole lockdown.
And the country itself. So it's really status quo as we sit right now I'm you know, we anticipate second half of the air there will be further hearings to discuss the payment timeline for dues and things like that but but everything is really on old as at this point in time.
Make sense again, I'll close with thoughts and hopes improve so those family and employees make it through this crazy time, thanks for taking my questions.
Thanks, Rick.
Thanks, Rick can you too.
Great. Thanks for your support it's Jim over those last 20 years in getting your deep understanding of our company up so depending what Tom said on India very quickly is that telecommunication and digital infrastructure industry is one of us significant.
Workstreams up this group and we've got great talent on both sides between American Tower C. Neonatology Bharti Airtel is Mike sub co chair for that.
Groupon Telecom and also not around John shot to shock running who just like co chair for the entire effort at Indiana with Tata, We have really basement, great progress on telecom in general we've got that on the top shelf the government of India's consideration us to strengthen this industry and I think the Aer right.
Solution will ultimately be excluded and how that industry has strengthened it is becoming increasingly important during this crisis as you can imagine there has it is here.
Thanks.
And we do have a question for the line of Michael Rollins with Citi. Please go ahead.
Thanks, and good morning, I also want extend my congratulations and thank Jim.
Paul Congratulations timing rod on your new roles.
Thanks, Michael next step back.
You're welcome.
Taking a step back to.
Some comments you discussed and expanding the addressable market for revenue and this is something that the company has been looking at quite some time is there way. So just further.
Some numbers on the long term opportunities to expand revenue whether its.
Wishing the cloud to the edge with your towers, leveraging Crs, we didnt adapt strategy and potentially augmenting that.
And maybe some of the other initiatives that you've been pursuing any international market. Thanks.
Yes, no thanks, Michael and thanks for the thanks for your congratulations as well you know we did set out.
Revenue goals internally and we've actually talked about them externally.
At a that within a 10 year period and this is a goals that we actually set back in 17, we would generate probably incremental billion at half dollars.
Innovation related events.
And activities and fundamentally they're really two principal elements of the those innovation initiatives first of all to be utilizing exclusive real estate rights and would be multi tenant so very much related to our existing tower business. If it kind of step back and you think about our innovation strategy, it's really based upon.
Again, this neutral multi tenant connectivity platform.
I'll refer to it with our own stack that includes exclusive real estate passive infrastructure power transport compute layers and again I refer to that it's kind of as our APC stack on our existing or on a new platform that we are currently building platform HTC. If you will I'm not a marketing guy Michael but platforming T SEC.
You know everything that we're trialing from our edge computing initiatives power initiatives are in building initiatives. The ones that you are referring to it and the kind of the multitude of international access and transport initiatives largely they're largely fiber based are really meant to be constructive as we really build out. This stack. If you will on this plan.
Form so it's not a vertical point solution, but really a broad her I kind of a horizontal platform. If you will capable of providing a really a myriad of connectivity services. So if you think about 2020, we have three or four kind of major initiatives going on again.
Building out the stack if you will this platform. If you will end. The first one is when you refer to its kind of building out our in building capabilities, we're trying to drive down the traditional das cost that we've.
Developed and.
Segment that we've developed over the last 20 years, and we're really trying to open it up to increase the overall Pam So we're using CBRN spectrum and that really opportunities to increase the tendency as well as increase the off load.
From our customers.
We're also trying to more fully developed what we call our transport layer of the of the stack and we're looking at fiber to the curb shared.
Shared initiatives to really facilitate multi service providers that we're doing that largely down in Latin America.
You also referred to and we're doing additional work on developing it exploring the our edge based distributed compute and mobile lets computing opportunities and I mentioned some of those in my remarks, but.
We're really trying to leverage our our Colo hcl asset and certain sites in our U.S. portfolio.
And finally kind of routing it out we're really trying to improve our overall power layer of the stack. We continue to develop a hybrid shared power solution really using historical diesel fuel generator power with with new lower cost solar and battery pack. So it's a it's a bit of a double click on many of the.
She has a buck but clearly we're at the early stages.
Development of this stack if you will.
We do think again, it's a very.
Effective way too to look at our ability to leverage our existing core set of assets and to be able to offer new types of services to existing customers as well as two new types of customers around the globe. So we'll talk more broadly about that I think on an upcoming color second or third quarter call, we take or deeper dive into a lot of the innovation and.
But but we're well on our way.
And we're very focused and we're doing it I think very efficiently or not throwing money against the wall. Here. If you will in terms of building out we're being very focused but were and where as you know I think that we have a CTO that we brought in a couple of years ago, There's really providing an overlap in overall oversight on these over at all.
Initiatives that we have so.
It's had more to come and a won't feel this back even further and at a couple of quarters.
Thank you Tom I called out a couple of.
Oh, sorry, Mike I, just had a couple of things to what what Tom outlined so I would just add that you know the strength and resilience of our underlying business really does help support our ability to be inquisitive and opportunistic when it comes to innovation, So our strong and kind of consistent adjusted EBITDA margins.
North of 63%, our consistent double digit revenue growth and the fact that our return on invested capital is north of 11% that strat that strength in the core underlying business combined with our very strong balance sheet again, the liquidity position that rent at 5.2 billion and pretty low cost of debt at 3.1% that bounce.
In sheet strength is ready to go to work and really does support our ability to be inquisitive when it comes to innovation.
Thank you just a quick follow up.
Risks that the activity in the booking.
On the back half the as you described but there are labor constraint actually get the infrastructure on to all of this site and so therefore, there could be the possibility.
An elongated book to bill cycle entering into 2021.
Hey, Michael sure I mean that there could always be we haven't seen that necessarily a you know we're we're obviously.
Given kind of the essential ticket, so we're able to be out at the sites but.
You know it could be effective on or could affect our build to suit program. For example, we've actually come back.
A bit on the build to suit program, we think that those sites will ultimately be deployed.
But the timing could be affected by.
Construction personnel from being at at the site that we are considered essential.
Personnel.
So where we think that.
We won't see significant delays there, but the but you know if this continues to go along and a and if it.
Intensifies sure that could delay some some of the a growth that we've seen in the business, but more specifically I think it's around built to suit.
Yeah, and Tom I would just that I think from our from an industry leadership position. We were I think at instrumental what does this round table in the U.S.U.S. India's steel farm, therefore in India to get us in both countries that are critical infrastructure designation not only for our own company, but for our suppliers.
And that's still needs to be pour through a little bit more deeply in India, but in the U.S. I think it's pretty effective right now so I expect Mike that we'll have a fairly capable center force available to us as well our carrier customers as a result of some of that leadership.
Yeah, I think it brings.
Quite everyone at our initial thoughts was would there be some issues from a supply chain perspective, and it's not necessarily bringing in bring big radios and things antennas and but it's usually that 50 cent part of it might get in a way of actually.
Deploying a infrastructure and we haven't seen that at this point in time, but.
And we don't anticipate it but you know as I said. This continues on we think we're in a good spot, but and our customers are good spot, but time will tell.
Thanks.
And we do have a question from the line of Spencer Kurn with New Street Research. Please go ahead.
Hey, guys. Thanks for taking my question I'm, just wanted to inquire about the permitted landscape and then periods dislocation.
First of all have you seen any any better valuation.
On on some international portfolios in this current dislocation and.
I was hoping you could elaborate on.
Your experience in a prior.
Periods of market turmoil have you found that these are these present opportunities for you.
To expand a more rapidly than you've been able to.
Periods, where markets are tight thank you.
No Spencer you know, we always you're looking at.
Opportunities M&A opportunities as you know we have business development teams around the globe.
And it's a fairly.
Lengthy.
Number of opportunities that are out there if you will.
You know, whether theyre covert 19 related or not.
You know there continue to be a lot of assets out there.
Up for sale.
Back into 2008, 2009 timeframe there was a significant amount of growth there or companies that were just a distressed and looking to monetize their their assets.
And we actually were pretty aggressive back at the time and picked up some sizable assets and so we'll see I think where it's so early stages. If you will in terms of a pandemic in terms of its impacting a particular companys financial position.
As Rod mentioned before we have as a sizeable liquidity position at this point in time. So I think we're really well position to be opportunistic here, but we'll go back to our fundamental investment policy in the way, we look at deals and we'll continue to manage and monitor it that way and so.
I will tell we just closed two transactions at the end of last year, which were currently integrating and it's going very well.
And so we'll continue to see how how the year pans out, but as I said I think what a good financial position to be able to the strike at some of these to the extent they become available it makes sense to us.
Great. Thank you.
Sure.
And we have a question for the line of David Burton.
With Bank of America. Please go ahead.
Let me go everywhere else sentiments congrats.
As a successful career and congrats Tom and Rod on your guidance elevation.
[music].
Actually I guess.
Tom I guess the question I want to ask you is.
You know the question I've been getting from a lot of investors, which is.
What is Tom Bartlett American tower.
Look like.
In five years.
Versus you know how Jim take with American tower might have looked.
You know where where's your ambition.
What does your strategic goal Jim a few years ago came up with this idea that you wanted to double the size of the company you achieved that goal.
We know what are you ready or are you able to articulate what your vision now for the company might be and how that might be similar or different from the vision that we've kind of all understood American powerhouse.
And then.
Let me just at that.
Yeah no. Thanks, David Thanks for your congrats as well you know, we've got an excellent strategic and tactical blueprint.
I believe and that's in place that Jim and I and the rest of my colleagues, we developed and there were currently executing we refer to it as is our stand and deliver strategy and as you know there for key elements of it theres industry leadership Theres, a focused innovation process, one that I just talked about a few minutes ago its enhancing our efficiency.
Initiatives, it's and it's a continuing drive for growth profitable growth sustainable growth, both organically and Inorganically I think that to the way we that we have consistent so consistently thought about creating.
Shareholder value based upon sound principles around capital allocation and investment criteria, our dividend policy. The way, we manage our balance sheet is absolutely sound. So I mean, I I don't see any changes.
So the way that we've been operating the business.
And clearly no changes to the blueprint that we really have and place.
I think that the existing team is outstanding and so now it's up to us to continue to execute well we adjust it.
You know and tweak it as that market evolves absolutely.
As we have continually doing.
It has we have done over the last 10 15 years, if we need to just as I say just as we always habit, but the fundamentals are solid I mean, I don't have any you know grandiose notions that okay, we're going to be a 20 billion dollar business by.
2025, if that happens terrific, but.
But we're just going to continue to keep our heads down.
Really move on the strategy that we've got in place I think that there is I was talking a few minutes ago. I think there are lot of really interesting elements of our innovation strategy, which I think are going to increase the auto overall addressable market that we're going to be able to.
To take our fair share.
And we're going to continue to globalize.
We're a very good and very.
Big International business, you know I think that there are opportunities for us to continue to globalize, particularly when you look at some centralized global business operational centers that we had been so I think there are a lot of things that we can do on the efficiency side.
And on the leadership side no agenda is really it's got big shoes to fill in the leadership side and I think we've got a lot of opportunity and continue to really push the envelope in terms of how we're positioned at all the markets that were in but when you kind of step back and you look at our inventory we own about a third of the inventory the assets. If you will have the 20 market night.
In markets that we're in so there's a lot of opportunity for a inorganic growth and I think we've got a great business model to enjoy organic growth going forward. So I think we've got the fundamental pieces in place as I said, we'll tweak it and adjusted.
Based upon where that where the market is and how the market evolves, but feel very good about the blueprint that we've got in place.
Thanks, and David to bring it to bring it full circle when we embarked on our international strategy you know seven it actually positioned us to have has the circle close in say 2017 through 2025, it gave us the opportunity to potentially expand our us the met domestic business.
Because our innovation program could kick in over the U.S. and our international portfolios. It gave us a.
Character that no other tower company in the world as well, we can work with new types of customers like Hyperscalers like Big real estate owners that span countries and more the only one that can take that dimension.
Of an innovation program on digital infrastructure and circling back to the United States and maybe even grow faster here over the coming years than we otherwise would have put out the standard deliver strategy and in the international assets belief that so I think there's some real blue skies here for Tom and the team to pursue onto the strategy and I agree.
With that I don't perceive any big deviations from that based on the fact that this is the same exact team that put the strategy together executed at for 12 plus years with the people on the call. We have right now so I think we're going to be up having really exciting times at HTC going forward.
That's great. Thank you for that Jim appreciate it and I look everybody.
Thanks, David.
Yes.
And we do have a question from the line of Simon Flannery with Morgan Stanley. Please go ahead.
Thank you very much good morning, let me add my congratulations and best wishes to the team.
On the mobile computing can maybe you can just give us some sense of what you're seeing in the current market environment. We've seen strong demand for interconnection sector in the covert world, what's going on with the Colo business you have today and as you think about it.
Taking advantage for that opportunity do you think you need to add additional assets more or across the country and then the other markets to expand on that opportunity.
Yes, Thanks, Simon and thanks for your congrats as well you know I think we kind of step back and you take a look at our our overall edge computing and initiatives I really look at it and kind of two pieces first of all from a pure distribution.
Or distributed compute perspective, you know those are aware, we've actually had some.
Early on successes and this is where we're actually putting cages out at our particular sites and we're offering edge computing to enterprise smaller enterprise mid midsize enterprise accounts, where they're looking to two perhaps moved to the public cloud and just looking for some of their workloads to.
More distributed so that's the kind of the easy element and the easy piece that I think weve experienced.
And then the second more complicated peaks candidly is on the kind of traditional mobile edge computing.
And I see this from a number of different elements I see this from the datacenter side, we're obviously looking at it from the Hyperscaler side.
And this is where we're looking at the opportunity for a lower latency types of needs a that we think they're going to be ultimately developing out at the at the edge.
And how we might be able to participate in that and so we have as you know the Colo LTL.
Facility that we picked up a couple of or last year really.
And we're looking to interconnect that offering it kind of access to the cloud and trying to interconnect it back to our own.
Sites themselves with the compute power that we're putting out at the sites to see what that ecosystem. If you will looks like I don't actually know how this is all ultimately go into a pan out I don't know the relationships that were going to see what the hyperscalers as well as with the carriers, we see a lot of initiatives going on between NATO, Amazon and Google.
Goal in Azure in terms of how they're looking at the C ran and how they're working with 18, T. and Verizon and getting further and further out to the edge.
We think that we have some very valuable assets that can be part of that overall solution.
And we're looking to be able to kind of leverage the assets that we have to be able to support that but you know this is going to be something that I as I mentioned before it's going to take a while to figure out how to scale I.
I don't think that without.
The kind of that the whole vehicle element here with all the Io t. element here that it's really going to be something that we can scale officially but that's probably three to five years away. So we're participating in a number of different trials.
I said, we're taking advantage of this kind of distributed compute capability and we're trying to figure out how we might fit into the overall.
Mobile edge computing environment going forward, so more to come on that.
But as I said I think we've got some very valuable assets there that can play a meaningful role in some way.
Great. Thanks, Rob.
And we do have a question for the line of Colby Synesael with Cowen. Please go ahead.
Great. Thank you and also just want to extend that congratulations to everyone. I guess just my first question you'd mentioned some counterparty risk in India I'm just curious if there's any other areas that you think we should be paying attention to or that you're paying attention to particularly in the coven 19 environment.
And I guess somewhat related you mentioned.
The international markets at least right now you're actually seeing increased usage, particularly in countries, where their wireline networks aren't as strong E.
Do you think that that will ultimately translate into incremental revenue are you starting to have those conversations now.
Although on the opposite side of things you actually think that given some of the economic pressure that some of those international markets are going to be seeing we could actually start to see the opposite where they actually start to pull back on some of their investments just trying to get it better sense of what is winning out. Thank you.
You know Colby.
That particular question.
Thank because of the the lack of the wireline presence I think the government themselves, they're going to continue to put pressure on the the carriers themselves.
To ensure that you know there conductivity that continues.
And.
You know as Jim said, we've been audits and tables with weapon and talking with some of our our customers. There I mean, they had their all essential and they're incredibly important in terms of ensuring that there are customers are connected particularly with this.
Disease that is the ice is so isolation area. So yeah, I think that that demand is going to continue there is driving kind of walk through some of our growth rates were looking at kind of that seven 8% growth rate in Latin America, and you know up high single digit growth rate in Africa. So we're I believe that that kind of Kentucky.
The growth is actually going to continue there will there be issues associated with collections and delays and things like that in an act we haven't seen it candidly, but you know to the extent that this continues you know sure that could always be something that will.
We might see but it but I'd say, we're monitoring it closely we have obviously very close relationships with our customers. Our infrastructure is critical to their ability to be able to continue to meet the needs of their customers. So you know I think we'll we'll be able to manage through that.
But we're monitoring it and we'll watch it very closely and work with our customers to be able to for all of us to be able to get through this up hand pandemic.
On your on your first question you know could there be delays and organic growth and we mentioned some of the delays and the built to suit program.
The collections issues that we're seeing and India.
You know, we've been managing and monitoring those for for many years.
And so we're working again with our customers. We've got an incredible management team in place there who have really terrific relationships with our customers and so we'll work with them.
But but ultimately I think we're in a good position.
Again kind of given the critical nature of our infrastructure and and that being infrastructure, that's really going to allow the us all to kind of get through this plant.
Pandemic itself so.
You know.
And then Tom if I can just add one one additional point on the collections issue in India Colby that you that you raised so when we think about our customer base globally. It is a very strong customer base large multinational carriers most of which are investment grade carriers. When you look at our collections and when you go through the press release and you see.
The increase in our accounts receivable.
The vast majority that increase comes from India, and India I'd point to one customer in particular, which is BS and now which is a government owned.
Entity and that entity has a long history of paying their bills. So we do expect that when the government funding comes through.
And that could be impacted because of the cobot 19th situation in India. When that comes through we do expect that those receivables will be paid through that customer again, our local teams in India that have a very close relationship with BS now.
They've been through this before.
That carrier pays their bills from time to time, they do half that they do have to wait for government funding. However.
Great. Thank you.
Thanks, Colby I think we have time for one more question.
Operator.
And we do have a question for the line of Brendan Misspell with Keybanc capital markets. Please go ahead.
Great.
I appreciate you guys squeezing me in.
Couple of Great question.
Can you guys quantify for us the backlog in terms of movies applications that are signed but not on air in the first quarter on a year over year basis.
And maybe some color on how that trajectory has maybe changed through April here after T mobile close second.
Can you give us what the kicker was on the M.L.A. from equal key this quarter that may not repeat in the second quarter and third maybe just a bigger picture question on Fiveg.
Have you seen enough from your customers for you to see what like a standard configuration that they're going to put up for fiveg and what that might mean from an amendment standpoint in the U.S. Thanks.
Yeah sure sure Brian Let me take the kind of the Fiveg question and then.
Ill ask arrive to.
To manage through the other married questions that that you asked here on the Fiveg side I think all the carriers themselves as I mentioned, if it taken it kind of their own unique approach to being able to to deploy it I mean, if you take a look at that horizon on the millimeter wave you know there and 34 cities 17 NFL.
Savings on the other sub six they're talking about using dynamic spectrum sharing you know stated timelines 18, TV and the millimeter you know they deployed Fiveg and I think roughly 35 cities, they're adding new fiveg cities. This year it sizable amount of millimeter.
Wave spectrum as well.
And then into sub six.
You know there are providing fiveg and I think upwards of 100 markets using kind of low band five Jay.
And T mobile have also taking a very different approach.
Largely leveraging their sub six spectrum now with.
Spread with or two and a half gig kind of sitting on top of a lot of their 600 megahertz spectrum, but they also have a sizable amount of millimeter wave spectrum. So I think all of the carriers have taken very different approaches.
Ultimately will be circling around kind of this.
Three level layer cake.
I've talked about before where its you know at the very base level kind of the subs two gigahertz level. Good propagation limited capacity, but really be able to get kind of nationwide coverage. The mid band, which we've talked about Crs and C band, which we think will ultimately be.
Auctioned off this year, you know improved capacity lower propagation.
And then the millimeter wave and they'll look at millimeter wave is as being that spectrum that use for dense urban and urban markets. So I think the carriers themselves as they've always had are going to leverage the spectrum that they have they're going to try to put their hands on more spectrum as they always have to be able to come up with this kind of this three.
Level approach to being able to deploy fiveg and and as I said, it's I think it's on our doorstep.
And it will be seeing it over the next several years get get built out I think some of the forecasts are saying that by 2025 or 2026.
70, some odd percent of the traffic will be fiveg based so I just think they're going to continue to to look at various forms of spectrum and it's a propagation characteristics are very different as you all know, but they'll take advantage, but given the kind of geography that they're looking to support.
And ride on the other.
Yes sure Tom So thanks for the question Brendan I'll.
I'll address the organic growth and what we expect kind of going forward. So if you look at our Q1.
Earnings we came in for organic tenant billings growth. The total company was about 5.4% you asked was about 5.6% international came in at 5.1%.
If you look at our outlook for the full year, we're expecting total organic tenant billings growth to be about 5% in the U.S., we expected to be about 5% and internationally. We also expect it to be about 5%. So certainly from that perspective, we do expect they kind of a deceleration in those growth rates throughout the quarter.
So I do think Gil you will see that in the first quarter here, we'll post the highest organic tenant billings growth.
Compared to the next three quarters for the year in order to come down to hit those those full year organic tenant billings growth rates that we talked about.
Of course, those organic tenant billings growth I guess I would point up brand that a big contributor to the organic tenant billings this year as what happened last year. So we still see.
A good level of activity coming into the year the timing of when that activity comes in is a little bit.
There's a timing issue between quarters, particularly when you think about some of our larger us customers that are under MLP agreements, where the timing of their increases.
On a quarterly basis could certainly isn't smooth. So we end up which is a good thing for us with a bump in Q1, which gives us a full year benefit for a lot of those increases but in the next few quarters, we will have a lower increase but it doesn't that won't necessarily be able to translate into lower activity or lower demand for this type is really just the timing.
The new business increases.
As per our large malaise.
So I think that's kinda in a nutshell without going too much further into individual customers. You know, we do expect a deceleration I think if you look at our organic tenant billings growth rates in our outlook.
We're going to come in right around those levels. That's our best guess at this point and again when you see that the deceleration it's not because of a drop in activity levels, It's really mostly driven by the timing of some of the increases for our malaise.
Okay, great. Thank you everybody for being with US. This morning, I know, we went a little bit late but I really do appreciate you are hanging in there with us and again as we've all said being safe really in this environment and that keep her family sates, social distance and be well and I look forward to catching up again, thanks again.
And ladies and gentlemen that does conclude your conference for today. Thank you for your participation and for using Eighttwenty Conferencing service you may now disconnect.
We're sorry.
And your conference is ending now please hang up.