Q2 2020 American Tower Corp Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the American Tower Corporation second quarter 2020 earnings Conference call. As a reminder, today's conference is being recorded.
Following the prepared remarks, we will open the call for questions if you'd like to ask a question. Please press one zero.
I would now like turn the conference over to your host the Gurkhas Laski Vice President Investor Relations. Please go ahead Sir.
Good morning, and thank you for joining American tower's second quarter 2020.
This conference call.
We have posted a presentation, which we will refer to throughout her prepared remarks.
The Investor Relations tab or website Www Dot American tower dotcom.
Before the rest of my comments I'll note that due to cope with 19 almost all the call. This morning are again dialing in mostly from different locations. So to the extent that there are any minor technical difficulties, we would ask that you bear with us.
Our agenda for this morning will be as follows first I'll quickly summarize our financial results for the second quarter.
Yeah, Tom Bartlett <unk>, President and CEO.
We'll provide an overview of our international business the associated key trends and matures.
And then finally Rod Smith, our executive Vice President CFO, and Treasurer will discuss our second quarter results and updated toward 20 outlook.
After his comments, we will take your questions.
I'll remind you of this call contain forward looking statements that involve a number of risks and uncertainties. Examples of these statements include our expectations regarding future growth.
During our 2020 outlook capital allocation and feature operating performance.
Our expectations regarding the impacts of covert no team.
Our expectations regarding the impacts of EG our decision in India.
And any other statements regarding matters that are not historical facts.
You should be aware 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 as updated at our form 10-Q for the three months ended March 31st 2020.
And then other filings we make the FCC.
We urge you to consider these factors and remind you that we undertake no obligation to update and information contained in this call sure flux subsequent events or circumstances.
No we turn to slide four of our presentation, which highlights our financial results for the quarter.
During the quarter, Oh property revenue increased 2.4% to nearly 1.9 billion.
Our adjusted EBITDA also grew by 2.4% to over 1.2 billion.
And our consolidated ample so it's consolidated ever FFO per share increased by 1.6 and work with 5% respectively.
No 124 million in $2 as southern subs.
On an FX neutral basis growth rates for property revenue adjusted EBITDA is consolidated AFFO per share would have been 8.67, 0.6 and 7.4% respectively.
Finally, net income attributable to American Tower Corporation common stockholders increased by roughly 4% to 446 million.
Or one dollar per diluted common share.
And with that I'll turn the call over to Tom.
It's actually Gore good morning, everyone.
I hope that you're all healthy and well yeah as we navigate the ongoing cobot 19 pandemic are number one priority continues to be the health and safety of our employees their families or tenants suppliers and surrounding communities. The remote work policies I mentioned on our last call. We continue to serve us well throughout our global footprint.
I'm pleased to say it there are even a few geographies where certain employees have been able to return to the office with numerous incremental safety measures in place.
Also happy to report that our business continues to perform well as we work closely with our tenants to preserve and enhance mobile connectivity. When it is needed the most and outside of FX impacts, which have moderated slightly over the last few months, we have to this point not seen material impacts from go over 19.
On our operations.
Forward, we believe we're well positioned to continue to do provide high levels of service and drive solid results.
The rest of my remarks today similar to prior second quarter calls will center on the key trends in return profiles, we are seeing across our international business and what we expect in the future.
Since we entered Brazil, and Mexico back in the late 19 nineties to provide geographic diversification to our foundational U.S. business. We've added nearly 140000 communication sites in 19 countries outside the United States, focusing on partnering with large multinational wire.
It was carriers in select markets with strong property rights rules of law and vibrant wireless industries.
Since day, one of our international expansion strategy. Our mandate has been clear the old did acquire Multitenant exclusive franchise real estate assets that will generate attractive organic growth rates, well driving margin expansion and growing returns on invested capital over the long term and do.
So with an emphasis on building leading market positions in the largest democracies across the world with the goal of positioning ourselves is either the top one or two tower company in each market.
This strategy has been underpinned by our proven risk underwriting process.
Including among other things contemplating FX movements and local country inflation trends.
We've discussed with you before all of our investments are evaluated using a 10 year Unlevered DCF model with varying IR, our hurdles due to the inclusion of appropriate risk adjustments to account for the specific local country risk the tied to that said counterparty and a host of other factors.
These hurdles range from the mid to high single digits in markets like the United States in Western Europe to the mid to high teens and some of our more nascent African markets to ensure that our shareholders are being appropriately compensated for the level of risk being soon.
This balanced approach to market risk has enabled us to evaluate each individual investment opportunity in the context of its risk adjusted return profile long term AFFO accretion potential and the NPV expected to be generated rather than utilizing a specific cap as to how big any market.
Or region can get or should get in relation to the United States.
Operationally, we are also executing a number of risk mitigation strategies. For example, our malaise include primarily local CP VI based escalators or overall portfolio has significant diversification.
And we selectively issue local currency debt, where it makes sense.
Further the vast majority of our local country generated net cash flows are denominated in local currency. We are generally reinvesting those same cash flows back into those very same markets.
Lastly, we have mechanisms in place through which we are able to pass through the cost of land to our tenants in Latin America, and the cost of fuel in power to our tenants across India and Africa, helping to further de risk significant portions of our operating expenses across these regions.
Taking all of these items into account, we believe we have a risk evaluation and mitigation framework that will enable us to continue to be successful internationally over the long term.
Within this context, the primary pieces underlying our global strategy has always been and continues to be that the evolution of network technology that we've seen in the United States will be replicated internationally likely at an accelerated pace given the lack of fixed line penetration in many.
Areas.
Our U.S. business model and international model are effectively the same so I look the same structures are comparable and the ammo laser fundamentally similar but include the risk mitigation terms I discussed earlier.
At the core our international expansion serves as a way to significantly increase our total addressable market.
As consumers gain access to advance smartphone handsets and mobile data usage increases mobile network operators continue to deploy meaningful wireless capex.
Service providers in the international markets, where we have a presence are expected to spend approximately $30 billion on their networks in 2020 in essence, doubling the Tam of our U.S. market alone.
With mobile broadband penetration growing we continue to expect to generate higher organic growth rates internationally than in the United States over the long term.
While driving meaningful expansion in our international return on invested capital.
Fundamentally we are utilizing our international strategy to increase in extend our overall global return profile.
The ongoing covert 19 pandemic has served to further highlights the criticality of wireless connectivity internationally, particularly in markets, where fixed line penetration is minimal.
Mike in the United States, where most of us or plugging into our wife I enabled fixed line connections as we work from home mobile network services, the backbone to virtually all work from home functions in these international locations.
You can imagine broad based stayed home orders in other restrictions have been implemented in these markets over the last several months have led to additional strain on existing mobile networks.
For example, Vodafone idea in India noted that they experienced a year's worth of data traffic across their network in a single week following the implementation of walk down measures.
Similarly major carriers across Latin America Africa in Europe have outlined significant spikes in data usage and regulators have allocated additional temporary spectrum and implemented other policies to help maintain connectivity.
As I mentioned earlier, we are committed to doing everything weekend to support our tenants as they deal with the strain of this increased usage on their networks.
Now I'd like to take a few minutes to discuss the attractive economics that we were driving across our international business.
In the second quarter, our international operations accounted for roughly 43% of our property revenue in about a third of our property operating profit.
Our international Tower, and Das properties drove an annualized cash gross margin of over $1.8 billion in the quarter, resulting in a nearly 9.5% NOI yield on our more than $19 billion in total international tower and Das investments as you can see on slide six of our earnings presentation.
This and Hawaii yield includes both sites.
We have recently acquired as well as sites that have been in our portfolio for a number of years benefiting from long term tenancy and revenue growth.
Our most season vintage of international sites, those built or acquired prior to 2010 is yielding approximately 24% in us dollar terms.
Illustrating the power of operating leverage within our business. We view. This type of return profile is a clear indication that international tower assets at the capacity to drive economics that are equal to or better than the United States tower model over the long term.
Importantly, I'll note that the NOI yield numbers I'm referencing today, our U.S. dollar equivalents that is they take into account any foreign currency devaluation in the numerator, while freezing the denominator at historical exchange rates in the period in which the sites were acquired or built.
Over the last 20 years, especially since 2007.
We have been steadily growing or international portfolio with a focus on macro towers in some of the largest free market democracies worldwide.
Through a combination of our highly efficient new build programs and selective acquisitions, including the Eaton towers deal. We closed at the end of last year.
We've added more than 130000 international sites in just the last decade.
Including more than 24000 sites, we've built ourselves.
Besides typically at a lower initial returns due to lower initial tenancy you can see this on the slide where sites we've added to our international portfolio between 2010, and 14 are generating yields a 10% and those added since 2015 are generating yields of around 8%.
Over time, our experience across all of our served markets has been that as networks mature additional spectrum bands are deployed and consumers obtain advanced handsets mobile data usage grows exponentially and significant additional network density becomes a necessity.
As a result, we've seen sites that have initially produce modest returns attract co locations and amendments with minimal incremental cost, thereby driving substantial upside over time no different than what we've experienced in the United States.
In Latin America, where weve owned and operated towers for now over two decades have invested approximately $8 billion and now of over 41000 sites across eight countries Fourg deployments are in full swing.
Our long time presence and scale of resulted in substantial business relationships with key operators in the region, including 18, T. American mobile number of others.
These relationships coupled with our extensive asset base has enabled us to drive average organic tenant billings growth of around 10% in the region over the last five years backed by strong levels of new business activity and the continuing appetite for mobile data.
Although organic growth rates are down a bit in 2020 in part due to falling local CVI. We continue to expect a long trajectory of solid underlying growth.
We're also focused on our new build program is network densification efforts accelerate.
In fact, we expect to construct over 500 sites across Latin America. This year and anticipate strong demand for new builds in the region over a multiyear period.
Importantly, these newbuilds typically have day, what an NOI yields in the high single digit range with just one tenant.
Average tenancy ratio or around one and a half across the region. We believe we are well positioned to drive meaningful margin in return accretion in Latin America for many years to come.
In Africa, the majority of our markets or earlier stages of the technology evolution with Fourg penetration only around 10% in average mobile data usage being a fraction of lat am numbers as a result.
We have invested approximately $5 billion across the continent and have an average tendency of around one and a half on our portfolio of nearly 19000 sites, which are yielding roughly 11%.
Importantly, we partnered with key telecom operators like Vodafone MTN and air tail to bring enhanced connectivity to hundreds of millions of people.
With extremely limited fixed line penetration young tech savvy populations and governments committed to modernizing economies do connectivity, we expect mobile broadband to play a foundational role in Africa's growth story over the next decade plus.
We also anticipate that continued organic growth or new build program through which we expect to construct well over 1000 sites. This year and our ongoing business development efforts will enable us to build on the strong foundation, we've created in Africa, as we deliver solid growth and increasing returns over the long term.
At the same time, we're making substantial progress and our commitment to reduce the mobile industries carbon footprint through our innovative power and fuel program.
In African markets, where grid power in many areas tends to be unreliable. We're now deploying next generation greener technologies, including lithium ion batteries and solar solutions.
We expect to invest more than $60 million in 2020 to enhance the uptime performance of our sites in the region, while reducing greenhouse gas emissions after deploying an excess of $100 million over the last few years.
Not only to these initiatives benefit our tenants to higher uptimes in more efficient operating capabilities, but also they represent a critical part of our commitment to being a responsible corporate Susan.
These investments have helped enable us to reduce diesel consumption by more than 25% from 2017 to 2019 across our global footprint after normalizing for portfolio growth.
Meanwhile, in Europe, where we have nearly 5000 sites between Germany, and France, and recently entered Poland by acquiring a handful of towers networks are at a fairly mature stage with fourg, having been broadly deployed over the last decade.
Organic tenant billings growth has been modest for us as expected the low single digit range and new build opportunities have been somewhat limited.
Despite this we drove an NOI yields of 8% across our European asset base as a few to largely as a result of the price discipline, we displayed when we acquired these assets.
We tend to think of our initial investments in the region is beachfront properties, allowing us to have a good position to evaluate other potential opportunities.
Consequently, we continue to look for ways to expand our European portfolio, but only at valuations that with underlying growth expectations allow us to hit our required return thresholds our entry into Poland. Although on a small scale. Initially is an example of our continued focus on finding macro tower.
Our portfolio's poised for sustainable growth in markets with attractive regulatory frameworks supportive regulators and vibrant wireless sectors all at sensible valuations.
And finally, moving to India, where we will have invested over $5 billion pro forma for redeeming our minority interests. We believe the wireless industry is now completed a much needed and long awaited consolidation to enable the deployment of Fourg technology throughout the country by the remaining carriers through this.
Process, we've experienced high levels of churn, which is reflected in our current 8% NOI yield although I'd note that the more than $400 million in cash settlement payments. We received from Tata are not incorporated in that number or the higher.
More recently, there have been pricing increases by all of the carriers in the marketplace. While the telecom regulator has indicated that it tends to be supportive of the carriers to rational spectrum policies in the Indian government continues to stress its digital India initiative.
The key near term issue that needs to get sorted out in the marketplace centers on the Aer decision by the Supreme Court.
Including finalizing the timeline as to when the wireless carrier payments are to be made particularly as it relates to Vodafone idea.
We are hopeful that India can return to being a significant growth engine for the company as it was for nearly a decade before the consolidation process kicked off several years ago.
We have several reasons for optimism in this regard as we just mentioned in the market structure is now much more rational price competition in wireless has stabilized and the regulatory environment seems constructive.
The Indian consumer has proven to have a tremendous appetite for mobile data with average smartphone usage per customer of well over 10 gigabits per month, even before the impacts of cobot 19.
That said the majority of wireless users in India are still using legacy technologies, rather than fourg in large part because the networks are ill equipped in their current state to handle fourg levels of traffic from more than 1 billion people.
To get those networks ready, we continue to believe that significant levels of incremental network spending are necessary accompanied by a material level of network densification.
With our nearly 75000 site existing portfolio and the additional sites were adding through our new build program.
We believe we are well positioned to benefit from our tenants network deployments over an extended period of time.
Additionally, we are continuing to meaningfully participate in connecting the unconnected in India to our digital village program.
With more than 150 digital villages in place today, Lauren development, we're proud to be making a difference in the areas of digital literacy E learning Tele health as well as providing enhanced access to career opportunities in many rural India and communities.
Looking forward, we believe that we have a compelling opportunity to further enhance our international business by driving organic growth focusing on operational efficiency and continuing to build and acquire sites using our proven investment of valuation methodology.
Our preference continues to be to add incremental scale to existing markets, while strengthening ties with large multinational wireless carriers, but there are a handful of additional markets that could be attractive for us as well.
We also believe there are additional opportunities to generate margin improvement as we further standardize operational processes create regional centers of excellence and further reduce our power and fuel requirements.
We also believe there will be demand for many of our innovative initiatives to extend our core platform capabilities for new and existing tenants.
So in summary, we believe that our diverse macro tower focused international portfolio positions us well for a prolonged period of solid growth in attractive returns on invested capital.
We can further augment this through disciplined selective acquisitions and new builds on a global basis.
While we expect our foundational us business to drive the majority of our cash flows for years to come we think our international operations can enhance and extend our growth trajectory by effectively doubling our total addressable market size.
The global demand for mobile connectivity shows no sign of slowing and we believe we are positioned to play a critical role in extending the reach of mobile broadband while generating strong total returns for our shareholders.
So with that let me hand, it over to ride to go through the details of our results and updated outlook Rod.
Thanks, Tom and good morning to everyone on the call I Hope you are safe and healthy.
As you saw in today's press release, we had another solid quarter throughout our global business driven by consistent demand for our mission critical tower assets before we turn to the accompanying charts I would like to highlight a few specific accomplishments for the quarter.
First we met our revenue adjusted EBITDA consolidated answer FFO, and consolidated and AFFO per share expectations, which I will discuss in more detail shortly.
Second we had solid organic tenant billings growth across our business led by Africa at nearly 10% in Latin America at over 7%.
Third we constructed more than 500 towers across our international footprint.
And finally, we further strengthened our investment grade balance sheet by issuing $2 billion in senior unsecured notes across multiple tenders with very attractive economics.
Now, let's turn to the details of our second quarter results.
Please turn to slide eight and we will review our property revenue inorganic tenant billings growth.
Although we experienced some unfavorable FX translational impact.
Merrily, resulting from the global pandemic overall, we generated solid underlying revenue growth.
In the interest of understanding our fundamental operational performance I'll be referring to growth rates for some of our key metrics on an FX neutral basis. In addition to our standard as reported basis.
As Igor mentioned earlier, our second quarter consolidated property revenue of nearly $1.900 billion grew on a reported basis by $44 million or 2.4% over the prior year period.
And on an FX neutral basis by $158 million or 8.6%.
Our USA segment represented 57% of our consolidated property revenue with international comprising the remaining 43%.
A key contributor to our consolidated property revenue was our tenant billings revenue of 1.620 billion, which grew by nearly 10% the components of our tenant billings growth included around 71 million in co location and amendments roughly 50 million in contributions from escalators.
And 72 million in day, one tenant billings from acquisitions and new bills. These positive items were partially offset by churn impacts of $46 million and $2 million and other items.
Our us property segment revenue totaled nearly 1.100 billion for the quarter and grew by $80 million or 8% over the prior year period.
Our international property revenue of nearly 806 million declined by $36 million or 4.3% as compared to last years levels, primarily due to the FX translation headwinds, we just discussed.
Moving to the right side of the slide you will see that our consolidated organic tenant billings growth was inline with our expectations at 5% for the quarter.
For our US property segment organic tenant billings growth was 4.7% comprised of new business activity, which contributed 3.7%.
Escalators, which contributed 3.2%.
Turn of 1.9% and a roughly 30 basis points negative impact from other items.
As expected this growth rate reflects a sequential deceleration driven primarily by relatively modest contributions to our new business from T mobile over the last few quarters.
With that said and as I will discuss in more detail. When we review our updated outlook, we have seen new business activity from T. Mobile begin to pick up with further deceleration anticipated towards the end of the year.
Our international property segment organic tenant billings growth was 5.4% led by Africa at nearly 10% in Latin America at over 7% Europe was just over 2%, while India was 0.4% again in line with our expectations given anticipated churn in general market conditions.
The component parts of our international organic tenant billings growth, where new business activity, which totaled nearly 7% are mostly low local inflation based pricing escalators, which contributed 3.7% and other items, which contributed around 20 basis points.
These items were partially offset by churn of 5.3% much of which was in India.
Now please turn to slide nine we will review our adjusted EBITDA in AFFO results, our second quarter consolidated adjusted EBITDA of just over $1.2 billion. It grew on a reported basis by about $28 million or 2.4% over the prior year and.
On an FX neutral basis by $90 million or 7.6%, our adjusted EBITDA margin was 63.3% off roughly 70 basis points over the prior year.
This increase was attributable to a combination of our solid organic growth diligent focus on cost controls and a favorable impact of some incremental net straight line. These favorable impacts were partially offset by approximately $21 million in bad debt reserves against certain receivables in India.
Although we operate in 20 countries, our us business again drove the substantial majority of our property segment operating profit in the quarter accounting for 68% of the total while our international business generated the remaining 32%.
Moving to the right side of the slide you can see our consolidated AFFO of $924 million grew on a reported basis by nearly $15 million or 1.6% over the prior year.
And on an FX neutral basis by around $69 million or 7.5%.
Consolidated AFFO per share of $2.07 grew on a reported basis by three cents or 1.5% over last years levels and on an FX neutral basis grew by 15 cents or 7.4%.
This growth in AFFO and AFFO per share was driven by our previously discussed growth in adjusted EBITDA as well as interest expense management careful oversight of cash taxes, and lower maintenance capital spending.
Let's now take a look at our updated expectations for 2020.
Before I get into the numbers I want to cover a few of our high level assumptions first.
He is our updated expectation regarding the post merger acceleration in new business activity from T mobile.
Our prior outlook assumed activity levels would have materially increased by now in that we would be seeing increased levels of new business from T mobile starting this month.
Although we have seen a modest increase in activity. It is not yet reached the level. We expect to eventually see based on the T Mobile's public comments.
As a result, we now expect this acceleration of new business to come much later this year. Consequently, we are reducing our us organic tenant billings growth expectations for 2020, which I will discuss in more detail shortly.
Next is our updated expectations regarding customer collections and additional reserves for some bad debt.
For the most part tenants throughout our footprint have continued to pay on time and without interruption through the pandemic.
However, in India, we have layered in approximately $65 million in additional bad debt assumptions for the full year.
This is primarily attributable to the expected timing of payments from the government owned carrier BSNL as well as the possibility that Vodafone idea future payments become interrupted or delayed as they wait a final outcome of the ongoing AG our core proceedings in India.
Additionally, we have assumed roughly $10 million, an incremental bad debt reserves for a few tenants in Africa.
Lastly, we have updated the foreign currency exchange rates in our full year outlook. The impacts of these revised FX rates on full your expectations as compared to our prior guidance are estimated to be a positive $45 million of property revenue $20 million for both adjusted EBITDA and consolidated answer.
FFO.
Aside from these adjustments are other high level assumptions remain largely consistent with our prior view as demand for our telecommunications real estate across all of our markets is expected to remain solid.
If you'll please turn to slide 10, I will now review our revised outlook Midpoints.
Our updated guidance for property revenue is 7.720 billion, which is a decrease of $30 million compared to the midpoint of our prior outlook and reflects the growth rate on a reported basis of 3.4%.
On an FX neutral basis, the growth rate is approximately 8%.
For our us segment.
We now expect property revenue of 4.380 billion, which is $35 million lower than our prior projections.
About $20 million of this decrease is attributable to the timing of T mobile activity with the remaining $50 million or so being driven by an adjustment in our noncash straight line revenue expectations as a result of an accounting true up.
For our international segment, we now anticipate property revenue of 3.340 billion, which is $5 million higher than our prior expectation.
This is being driven by roughly $45 million and favorable FX impacts along with around $10 million in other outperformance, partially offset by a 50 million dollar currency neutral decline in pass through revenues across our footprint due to lower fuel prices.
At a high level, our expectations for our international businesses are broadly consistent with our prior outlook, which demonstrates the critical nature are off of our assets as well as the effectiveness of our more than 5000 employees across the globe, we could not be more proud of the way our global teams have performed throughout this pandemic.
Moving onto the right side of the slide we now expect organic tenant billings growth to be between 4.5% and 5% on a consolidated basis.
This includes projected us organic tenant billings growth of approximately 4.5% for the full year.
As I just mentioned the change to our US expectations is driven by our adjusted timing assumptions around T mobile's activity ramp up with us rather than a fundamental change in underlying long term trends.
For our international segment, we are reaffirming our outlook for organic tenant billings growth of approximately 5%.
Moving on to Slide 11, you will see that we now expect our full year adjusted EBITDA to be $4.930 billion, which is $40 million below the midpoint of our prior outlook and reflects nearly 8% growth over the prior year on an FX neutral basis.
The drivers of this reduction in outlook are a.
Hey, roughly 75 million dollar increase to our bad debt reserves, primarily in India.
In approximately 17 million dollar reduction in net straight line.
In the 10 million dollar reduction from our services segment, which is the result of the revised outlook for T mobile activity.
These negative impacts are expected to be partially offset by a favorable FX translational impact of $20 million as well as an additional $42 million or so of general outperformance. We now anticipate throughout our business, particularly on the direct expenses NSG Nay side.
As part of our adjusted EBITDA projections, we now expect cash SG nay as a percent of total property revenue for the year to be in the high 8% range or around 7.4% excluding bad debt.
Lastly.
We now expect consolidated AFFO for the full year.
To be $3.670 billion, which is $20 million above the midpoint of our prior outlook and reflects nearly 9% growth over the prior year on an FX neutral basis, we have been able to offset the expected decline in cash adjusted EBITDA through $25 million in lower net.
Cash interest.
$10 million in lower cash taxes.
$10 million in reduced maintenance capital expenditures and about $20 million, an FX favorability.
On a per share basis, we expect to generate consolidated AFFO of $8.23 up five cents relative to our prior guidance.
Moving on to Slide 12, let's review our capital deployment expectations for the year.
Our full year dividend subject to the board approval is expected to be approximately $2 billion, resulting in an annual common stock dividend growth rate right around 20% once again.
As previously discussed in future years, you can expect our dividend to grow roughly inline with our re taxable income.
That will be consistent with our REIT requirements as well as with our internally held dividend philosophy and is likely to result in growth rates dipping below 20% beginning next year.
Subject to board discretion, we anticipate the impact of any deceleration in the growth rate to be gradual and expect our dividend to grow between 15% and 20% for each of the next several years.
We also expect to deploy nearly $1.1 billion towards our Capex program with more than 85% of that investment being discretionary this is down $25 million from our prior outlook.
With $15 million and low redevelopment lower redevelopment capex and an additional 10 million dollar decline in maintenance Capex.
We have spent roughly $757 million on M&A, so far this year, including our acquisition of Mpns minority Stakes in our joint ventures in Guyana in Uganda earlier, this year and our entry into Poland through a small transaction in late June.
The purchase of Taas remaining interest in our India business, which at current exchange rates has an approximate value of $329 million is currently pending regulatory approval in India.
We continue to expect to complete the purchase of these shares this year.
We also deployed around $56 million to share repurchases earlier in the year.
This combined with our year to date dividend declaration of $967 million brings our total capital returned to shareholders. So far this year to over $1 billion.
Finally, as a step towards ensuring we have access to a wide variety of options for raising capital we intend to implement an aftermarket stock offering program, we anticipate having the ability to from time to time sell up to $1 billion of our common stock.
It's our intention to use the proceeds for general corporate purposes, which may include investment opportunities or debt repayments among other things.
Turning now to slide 13, I will briefly discuss our investment philosophy historical capital allocation in the associated financial returns.
Since 2010, we have deployed nearly $46 billion to a combination of common stock dividends.
Our internal capital investment program.
M&A transactions and common stock repurchases.
As you can see on the capital deployment chart to the left approximately $27 billion was invested in M&A over.
Over $10 billion was returned to our common stockholders through the combination of dividend distributions in share repurchases.
Roughly $7 billion represented discretionary capital investments.
And with the remaining $1 billion being dedicated to non discretionary maintenance capital projects.
As Tom alluded to earlier, the vast majority of investments to date and then geared towards macro towers. This has been guided by our longstanding investment objectives, which have always been and continue to be focused on generating maximum total shareholder returns by driving long term AFFO per share growth and it.
Our active return on invested capital all while prudently managing risk.
Based on our significant experience in our constant review of all types of communications infrastructure, we view macro towers, whether in the United States or in select international markets as the most compelling assets for us to own as we pursue our investment objectives. Likewise as we explore innovation initiatives as a means.
As of extending our platform of communications real estate, our longstanding investment objectives in our disciplined approach will remain the same.
As you can see from our historical results our investment process has worked well for our shareholders. A key element of our success has been that our tower portfolios, regardless of where they're located share several value, creating characteristics, including the ability to monetize growth in mobile data consumption.
Significant and proven operating leverage driven by contractual escalators, new business Commencements in a high likelihood of multi tenancy and very low ongoing capital maintenance.
Lastly, the high quality nature of our model is highlighted in our consistent and attractive financial returns in the last decade, we have added more than 153000 sites many of which were less mature towers located outside the United States and came with lower day, one tenancy in margin.
Profiles.
Even taking this into account as you can see on the chart to the right. Our return on invested capital has risen by around 50 basis points over the last 10 years and stands now at nearly 11%.
We view this as a testament to our disciplined investment approach in the powerful operating leverage inherent in the tower model.
We can now turn to slide 14, and I will make a few closing remarks first we finished the second quarter with a solid set of results and believe we are well positioned as we head into the second half was 2020 and beyond.
Pro forma for refinancing activity earlier. This month, we have over $5 billion in total liquidity with an average tenor of more than six years in an average interest cost of under 3%.
This position reflects our early redemption of all of our 2020 and 2021 senior notes, which leaves us with no senior note maturities until 2022.
As Tom and I, both discussed outside of translational FX effects the impacts of the covert 19 pandemic on our business, thus far have been modest.
We are pleased to see our global infrastructure assets placed such a critical role in keeping people connected through this difficult time.
And in closing I will make two final points first we are energized about the United States as we look out over a multiyear period, we expect the new wireless landscape to drive higher levels of network deployment activity at C band spectrum becomes available dish begins rolling out their network in fiveg activity across the industry ramps.
Yep.
And second our international markets also show Great promise as our primarily large multinational tenants continue to invest heavily in their networks, including around $30 billion expected in 2020.
Networks across the globe are seeing tremendous growth in mobile data usage as consumers gain access to advance handsets and applications and we expect a long cycle of carrier capital spending to support these trends.
From our vantage point today, we continue to be excited about the future of wireless communications in the central role our real estate will play.
With that operator will you. Please open the line for questions.
Thank you, ladies and gentlemen, if you'd like to ask a question. Please press. One then zero on your telephone keypad you may withdraw your question at any time by repeating the one zero command if you're using the speakerphone. Please pick up the handset before press in the numbers. Once again, if you have a question. Please press one zero at this time and one moment. Please for your first question.
Okay.
Your first question comes from the line of Matthew Niknam. Please go ahead.
Hey, guys. Thank you for taking the question just two if I could first on the US if you can give us any additional color on what you're seeing in your discussions with the new T. Mobile whether this delay is really timing related or there have there been any changes in July vending plan on their end relative.
Earlier expectations and then just secondly on the ATM program can you just think about the investment opportunity to evaluating a little bit seeking to use equity.
Central means of funding that's relative to that.
Traditionally used given where your leverage okay. Thanks.
Hey, Matt how are you.
Tom.
On the team all those based upon everything that I think Dave said publicly I.
I think it's fair to say that it really is just timing and they're working through all of their plans. They close their deal and in April and settled there transaction with dish not that long ago. So we believe it clearly is timing and.
And in our and are looking forward to really supporting them as they continue to really build out there their network, even even further on the ATM side.
Good plumbing.
No. It really is just having more flexibility if not a significant number.
Clearly.
Compared to my General ATM programs as part of market cap. So it really is just kind of good plumbing data flexibility of having access to a number of different sources of capital.
If I could last follow up.
Hi, Rob.
I'm sorry, Matt, Yes, let me just add a couple of points on on the U.S. growth number one is everyone kind of saw the slowdown from T mobile at the towards the middle to third quarter last year now that we're almost lapping that slowed down thats, where the further away from the beginning of that slowdown the bigger impact that it has on the.
Organic tenant billings growth deceleration. So the fact that they haven't started up yet is what's.
Causing us to reduce our outlook from about 5% down about 4% to 5% and the other the other expectations in the U.S. industry remain the same so we haven't seen any changes in our expectations relative to the other carriers or anything else going on in the U.S. It really is isolated to the new T mobile and.
Timing of when they begin to spend.
That was going to be my follow ups I appreciate it. Thank you.
Okay.
Your next question comes from the line of Batya Levi. Please go ahead.
Thank you.
Follow up on the U.S. activity can you provide an update on how you think about the potential decommissioning that T. Mobile can deal I think that's been sides are.
Ill next year.
Second question on Latam, how do you think about the growth going forward given that the macro environment is weaker and the potential acquisition of oil by other carriers could potentially create some turnout JK.
Yeah, I would like to see our thoughts on how you think that could impact your growth. So over next few years. Thank you.
Hey, Bob.
With regard.
At the lactam question first I mean, we're really excited about the opportunities that we continued to see down in the market, particularly in a market like Brazil would you still so underserved I mean, you could take a look at customer sites, it's it significantly higher than what we're seeing in the United States and so we continue to see a key opportunities for further density.
Occasion.
We're our build programs are our continued to grow.
So we're actually very energized and our teams and the markets are very excited about the opportunities. There. Yeah. There is some consolidation perhaps going on in the market, but that was fully understood fully expected.
Are there really no surprises there and.
And I think the government themselves, particularly with regards to what we're seeing in and the pandemic continue to want to drive kind of activity and digital.
Connectivity in their markets. So we're quite excited about.
That and oil as you all know represents a relatively small pieces of revenues.
I'm sorry, but you are using second question on the U.S. Guide was.
On the T mobile decommissioning activity that the come that could start potentially next year.
Yeah, no you're right I mean, those those print site a vast majority of those sites come up for renewal.
At the end of next year.
We believe there obviously very well positioned sites.
And and we will like likely try to try to mitigate as much of that.
Current potential is possible and hopeful that between that the new build it's good it's going on in the marketplaces.
Well as issues expectations for building out it will be successful in terms of mitigate that but that's all part of the why did the negotiations and discussions that are going on as we speak.
Hi, Thanks, if I can.
Yes, not a couple of comments on the sprint T mobile maybe a put the merger kind of in contacts with the US market. So you know that the U.S. experiencing kind of explode and growth and.
In mobile data about 30% of year increases we've seen accelerating deployments for fiveg kind of heading our way, there's a number of new spectrums heading into the market that will have to be built out the carriers continue to invest heavily in fourg as they focus on their customer experience and strengthen their networks to handle the growing the growing.
Demands. So all that is really constructive in terms of what's happening in the U.S. landscape. When you look at T. Mobile in particular, there deal comes with pretty significant buildout requirements. So they said that they're going to spend $40 billion over the first three years build an additional 10 to 15 sites, particularly in some of the rural areas, where they are expected to.
Cover 97% of the population on low band spectrum and about 75% on mid band spectrum within three years. So they've got an awful lot of work to do this certainly going to be deploying capital. So we continue to believe that it thin and their best interests and and good for our shareholders as well to the extent that we can enter into an array.
That's right, where they can have quick access to our sites.
In potentially renegotiating away some of the churn happens.
Over time, so to spread that that potential churn, which as we continue to believe it's in the range of 3% to 4% of our overall property revenues that the overlap piece.
And we continue to.
To expect that that could be spread out over time, and we could give T. Mobile easy quick access to our sites through a holistic deal, which will help them deployed there their network.
Got it that's helpful. Thanks, so much.
Your next question comes from the line of Jonathan Atkin. Please go ahead.
Yes, I wondered if you could talk a little bit more about Brazil in kind of the directionality of the organic growth rate you talked about oil, but maybe nextel and that consolidation does that.
Represent perhaps a little bit of.
Headwind or not big enough to matter.
And that I, just wondered a little bit about India.
You talked a little bit about the.
The the bad debt provision, but if you talked about just actual leasing activity in the market.
Any any changes to kind of call out over the next couple of quarters versus what you've seen thanks.
Yes, Jami John first on.
Brazil, just kind of.
Keep getting a little bit deeper into the market.
Market that we expect the wireless capex is going to be in that $3 billion to $4 billion range. So.
Obviously, very very strong a high growth market for us.
Capex.
As a percent of carrier revenues to be around 25%.
Which is actually a bit higher than we've seen in prior years.
Consistent with last year. So we think that Thats a good sign their margins are in the 40%. So the carriers themselves I think are are quite well capitalized.
And very focused on building out their their fourg overall initiatives.
It's at the local CPI is actually been down over the last several years, so as our escalators.
In concert with it.
Thats being really reflected in some of the the Twentytwenty escalator that we're seeing this year, but vivo, Tim American mobile, including Nextel in that transaction is relatively insignificant.
Relative to our overall growth rates.
We're seeing organic Kelly tenant billings growth.
Over 8% in Q2, our churn was in that kind of them the mid ones, 1.7% for the year.
We expect for the year overall.
Billings growth of 7% so.
We're bullish on the marketplace, we think we're well positioned we have.
Really solid relationships with.
With what we expect to be kind of the three main players in the marketplace and as I mentioned before we do believe that networks are over burden there that roughly three to 4000 Sims for cell sites, it's really twice what we're seeing in the U.S. So.
The teams as I said are bullish we're building out sites, we have a lot of interesting things I think going on with the areas.
Carriers. So we're excited about what we expect in the marketplace.
On the.
On the India's side again, if you take a look at the kind of it the total.
Growth that we've seen in the market. It again is double digits on a total gross basis.
Carrier spending have continued to be strong building out their their networks.
They continue to make that network investments to support the overall usage demands I mean, I think I mentioned in some of my comments that we really remain optimistic about the the market structure is now much more rational there's price competition in wireless is actually stabilize and the regulatory environment is very very constructive.
There is a significant appetite for mobile data from a customer spec perspective, they are using over 10 gig per month.
It was even before the cobot 19 impact so.
As well as there is still using significant legacy technologies to de technologies, rather than even fourg.
So we think is that the network continue to get equipped as the government continues to expand its overall digital India strategy that theres going to be a significant amount of further densification and network investment going on in the marketplace.
And then lastly on the us.
Yes, and on the U.S., you talked about sprint T mobile at some length.
About the rest of the industry there is.
Other national carriers tend to think about in aggregates kind of their activity level.
Anything that you're expecting there that would be different compared to year to date trends.
No I mean, they've been very they've been very consistent you know I mean.
Very very steady in terms of their builds out.
You've heard them kind of tweak what they expect their overall CAC capex expectations are probably for the year, but but for us they've been very consistent we expect them to be so.
Thank you very much.
Sure John.
Your next question comes from the line of Sammy Badri. Please go ahead.
Hi, Thank you very much for the question I.
I just wanted to take a step back India and just talk about.
Some of your views on us Hyperscalers really kind of starting to navigate that reach and how that actually changes anything and then maybe perhaps just thinking about your international strategy and what you've observed in India, how that could potentially.
Happened in other markets because this at all change.
International M&A strategy or expansion strategy at all or are there region that they're going to start avoiding simply because you don't want to get tangled up in these kinds of high speed bumps along the road and trying to get your take kind of on those different dynamics there.
Yes, I think did see the.
The fact that we're seeing another number of Hyperscalers investing in India is very good. Thanks.
Significant investments being made into that into networks. They see the same things that we do in terms of the kind of that digital transformation thats going on in the marketplace and they are bringing many more applications in products to.
Consumers to those particular markets and and given that the wireline penetration is very very low in that market as well as most of the markets that that were in outside the United States.
We think that than most of that traffic to be able to utilize those applications is going to go over those wireless networks and clearly the carriers are going to want to invest in their networks to be able to support it.
No different than what we've seen here in the United States and so I think it's a very good sign candidly.
And and I would hope we would continue to see more of that kind of activity.
Being.
Occurring in the markets outside where where we have a presence.
Got it. Thank you for that color and then just to take on back to the U.S. and on prior earnings calls you've talked about the micro gave us our opportunity and probably within the last 12 months. This opportunity as quickly evolved from proof of concepts in 2019 to now fully funded VC competitors you guys have now kind of.
Got a line to the San coming to the table, so could give us an update on the micro data center opportunity within the U.S.
Well I mean, the underlying premise clearly is that we believe it.
The cloud is move into the edge and and we see this there are a number of factors that are supporting it whether you're looking at C ran.
Looking at what's going on with cloud infrastructure.
And with the deployment of Fiveg.
Thanks enterprise customers are going to be looking for low latency access.
As well as cloud kinds of capabilities out out at the edge and so we remain very bullish on the on the whole opportunity.
We do have a number of trial sites I think we have five or six trials I kind of southeast and actually out in the out in west.
And the way we're looking at it really is that there at this point in time, they're really kind of a couple of distinct trends.
That we're paying attention to first of all on the distributor compute and then more broadly on the mobile computing, where we think that the Tam is going to be significantly higher net we'll be able to create some some scale and we've talked about the distributor computer which is really where we're focused right now with regards to a number of our kind of trial sites and and that's where.
Enterprise workloads moving to the public out.
And there is a growing near term market segment news for on off Prem private cloud computing in somewhat of a hybrid solution.
So one and many of the sites that we have we have 50 kilowatts of power and we're providing kind of local compute capability for mid.
And smaller sized enterprises and so it's been it's been interesting market segment, I don't think it's actually being serviced particularly well today.
Merely that's not the big opportunity that we see going forward the big opportunities clearly on the mobile edge compute and.
And it's one where we think that we are actually going to be able to further scale, but we're really just in the earning in the early innings of it.
But the concept of the strategy is is that we expect that we'll be able to build a neutral host multi operator multi cloud data center in several thousand of our sites that we have across the country and and we do have a meet me room Slas data center in Atlanta.
Which is as I said tied to a major datacenter down in the marketplace and so we're tracking the opportunity and what it will mean to be able to.
Really develop this type of strategy, we realized that we don't have lots of his skill sets.
That are going to be required to really scale listen and so like our other kind of innovative initiatives very potentially we'll look to partner.
To be able to to be able to gain access to those kinds of skill sets and capabilities distribution software engineers those types of things to really be able to scale and grow the opportunity. So early innings as I said, but we remain quite bullish on the overall opportunity.
Got it thank you very much.
Your next question comes from the line of Ric Prentiss. Please go ahead.
Thanks, Good morning, guys.
As of today, but hope you and your family. The boys are doing okay. So this though that 19 point you as well.
Yes, Thanks, Rick Yes.
Wanted to touch on the spreads decommissioning question again, obviously CMO as a lot of dominant was they're trying to knock down in the process, but it sounded like the budgets question you guys might be more interested in spreading the effect of the churn through holistic overtime versus maybe taking a onetime payment like you did with Tata.
You know, Rick it'll come down to math right.
It's really a TBD type of event.
We expect.
Really based upon.
T. Mobile has said is that they're going to need.
Thousands of sites.
Over and above what Theyre expecting right now after the decommissioning right and so.
There are you there could be an opportunity for those those sites there could be an opportunity for those sites in the hands, if somebody else and so.
It's a bit of three dimensional chats right now in terms of work.
These transactions with.
With so all of our customers and potential customers you know I would expect that there will be churn.
Some sort I don't know if it'll be all at once or over an extended period of time, but we believe that longer term there clearly going to be a number of offsets and if you dig just take a look at the.
The wireless growth that we're seeing in the marketplace in what we would expect the amount of capital that all the carriers are looking to span and and the fact that dish is going to be coming into the into the fold. There we would expect solid growth going forward, but.
So it's really TBD at this point.
I wouldn't want to give you extensive.
That anything is certain or anything is put in concrete we continue to work all those items with our customers.
It's all math negotiation to how it plays out okay.
Right.
You mentioned, there's a couple of times there obviously, we'll all monetary this very closely.
There is a feeling that this is a lot more funding to really get the network ramp going it was a good sign this is Dave Mayo joined I think dish.
Network deployment head, but how are you thinking about when dish might be starting to show up in the process.
We look into 21 20 to 23, how given the funding is not there yet.
Well. They also have network requirements that they need to adhere to and and I think thats. The 2023 I think is the first commitments that Dave made so.
I would expect to see them.
Market and 21, I think it's a better question for T. Mobile I mean, I think it is a good.
Dine that they brought in date mail I think he'll do a terrific job there.
And.
You know time will tell in terms of what it looks like but were there to service them and support them in any way that day, they feel necessary and we think we've got a portfolio of assets that really can be helpful to them and I think they appreciate that is that as well so but I would expect it will start to see them towards ended this year.
And then 21, they're not in our forecasted or not in our guidance until we really have a more formal arrangement with them.
I understand what their demands are going to be we won't put them into our forecast.
And I apologize you might have already asked a lot of calls this morning on the AFFO guidance Slide 11 talked about a 45 million benefit to AFFO guidance from other components could genpact that what's in that 45 million that obviously offset the 45 million negative on cash EBITDA.
Yes, I mean, its its interest its maintenance capex, just cash taxes kind of that the typical group of items.
Below EBITDA that impacted AFFO that.
We're seeing some some.
Positive benefits from.
Okay and last one for me is the Crs auctions, obviously going on right now what are your thoughts about what that means, particularly maybe to the indoor space and what the opportunity might be for you guys.
Yes, we continue to be very positive on the on the indoor spot or indoor space.
We think that.
The unlicensed shared access spectrum in the U.S. and at the potential to really transform if you all the overall indoor connectivity landscape.
It improves the overall.
I am.
Clearly in and it reduces the overall total ownership costs. So we're very.
Positive Weve number of trials going on Rick as as we as we've talked about in the past, but again, it's early innings right now in terms of that what that opportunity is we have.
400, DAP locations, if you will around.
Around the country with the Tam of probably a couple of thousand.
But we think that given the cost components of being able to open up the network.
Anthony increased tenfold.
And so we're seeing what that looks like we're taking a look at what those relationships you're going to look like then.
With the landlords across the country.
But we are energized by what we think we might be able to and how we might be able to position ourselves.
Great. Thanks, so much of the breakout.
Rick I'll, just give me a couple of numbers that have backup what Tom was saying about the the AFFO. So the 45 million offsets are broken down with $10 million and lower maintenance Capex 25 million in lower net cash interest and $10 million lower cash taxes.
Your next question comes from the line of David Barden. Please go ahead.
Hey, guys. Thanks for taking my questions.
Tom I think in the in the opening comments you mentioned that you saw that CP VI.
Dipping into international markets affecting the organic growth ultimately if you could kind of put some numbers around that and then kind of another situation unfolding in Latin America is the Telefonica ran sharing agreement with 80 and T. I think theres just been a lack of certainty around what that will ultimately look like can you guys have talked about having so.
Engagement there to maybe.
Try to create a holistic or a relationship down there could you kind of update us on any.
Progress on that front, thanks, a lot.
Yeah sure Dave I think on the.
CPI side.
The escalator I think in the quarter was roughly 3.7%.
And that really again the way they work it works off into 2019.
Kind of.
The inflation numbers, which and drive what the escalator would be so our escalator is down.
And if you think about even looking at Brazil for for example, the growth rates in Brazil.
My sense were up in that kind of even that 10% range.
In the last couple of years as I recall, and we're now down in kind of that seven 8% range and so it has a significant impact if you will.
Got it going forward as you know well know, it's very volatile on a year to year basis, but it can impact the overall organic growth rates by a couple hundred basis points, one way or another with regards to Mexico.
Yes fair question in terms of Telefonica and their interest in the marketplace.
Terrific relationship with 18 team in the market.
And we're working closely with both Telefonica and 18 TV.
Right now on that transition and what that might look like over the next several several years and so it's a TBD.
During the middle of it and.
As I said, I think what really well positioned to be able to support both our customers as they transition their network.
Great. Thanks, so much.
Yes.
Your next question comes from the line of Tim Horan. Please go ahead.
Thanks, Tom regarding that do you think there's an opportunity longer term viewed it as the deploy more equipment.
As we kind of Virtualized networks, more and the characters from time to share the equipment, particularly.
The cable companies.
Entering the market, they're going to want capacity, but maybe not.
Not to deploy their own equipment I know you've done some of this in the past little niche segments, but just any thoughts around that.
Kevin you talking about Iran or.
Yes, yes.
Yes.
It's very interesting I mean, I do think.
The whole overran.
Opportunity, which we've seen in other markets by the way we've seen in other parts of the world.
Definitely starting to take hold here in the United States and ultimately we could see the large carriers looking to take certain segments of their spectrum certain segments of their technology.
And really opening it up.
You know it kind of ties to my thoughts before in terms of kind of that cloud, even becoming closer and closer to the edge keeping keep in mind that that kind of what happens behind the curtain. So that's happening back on the other ran side away from the impact on the Towerco. So.
My sense is that any opportunity for the carriers wireless carriers and potential new players in the marketplace to be able to bring down their total cost of ownership well then allow them to add more capital available to spend on the red which is really where we come in right. So we don't expect any of the kind of the old brand.
Implications due to impact at all what is happening from this site out to the device.
And as I said, if in fact, the total cost of ownership comes down as a result of the kind of the open nature of infrastructure that might allow more capital to be able to spend on where we come in which is from the tower out to the to the device and so we're cautiously optimistic on the opportunity for Orion and indeed.
Got it states as well is in many of our international markets.
And kind of related on the technology front.
Do you think carriers are still favoring macros over small cells or what you're talking to the carriers I holiday feeling on small cell deployments up at this point over the next couple of years.
You know it all comes down to band it all comes down to Densification, we don't see any any change I mean, the economics are still clearly that the macro tower.
Ken can be able to support.
Much more efficiently their customer base now they're going to be certain locations there may be certain technology certain bands.
That can be a better utilized.
Support about a small cell in his dense urban markets, but but we don't see at any any different right now the those dense urban markets in New York cities.
Kind of thing I, just because of interference you're talking about high band just like what Verizon is doing today. So.
I don't expect really come any any change to that it's going to be function a band, it's going to be a function of.
Identification of the market that they're trying to serve that really biography of what they're trying to serve.
But we don't see any any change at all in the use of small cells versus macro.
Thank you.
And your final question today comes from a line of Colby Synesael. Please go ahead.
Great. Thank you if I may and there's been some press reports of late that Vodafone idea may have kept out on June payment.
Two we some of the tower operators and I'm curious if you are one of those or if everything you're doing it's your point I think just.
Cautionary and being trying to get ahead of that except that they haven't actually made their june or perhaps July payment.
[music].
Do you think that's been a last until the Aer situation is settled or is this maybe just a month or two.
And then secondly.
Yes, I'm just curious what do you think your exit philosophy is in terms of U.S. organic growth Paul in the fourth quarter and this year and.
What does that really imply I guess for potential growth in 2021 and I'm sure. You can appreciate a lot of investors are trying to get a sense of what is that magnitude of acceleration, we could potentially thinking when we start to balance that out from the kind of try that you mentioned about trying to flatten out the churn I'm just trying to start to frame out how to think of.
Now what that could look like appreciate you don't want to give guidance, but clearly a big focus for investors.
Yes, I'll comment let me, let me try to address a couple unripe can add a few.
Comment as well.
On the whole.
Vodafone India's situation I mean, I don't want to get into two specifics.
There.
I think if you step back if you take a look at.
Where the government is I mean, you governments definitely advocated for for having three strong players and the marketplace.
There are currently working through as the other carriers are.
The Supreme Court.
In terms of where that Aer issue is going to to land.
We're hopeful that there'll be some resolution to this even over the next 30 to 45 days or so there is hearing I think and in mid August for the carriers that are no longer and providing service, but we hope for that that will provide some guidance.
For how the payments the extended payments will be made have to be made by the.
The carriers them them say themselves I mean, they've made some sizable good faith installments.
I can tell in terms of what is owed and in the marketplace.
And they are aggressively trying to restructure to save costs and compete in the marketplace. So yes, I mean, there's some slow paying going on in the marketplace. We're working very closely with them as we would be working with any.
Any customer who is going to similar situation. So more to come you saw what some of our expectations work.
Relative to how we looked at outlook.
For the balance of the year.
But kind of given the direction of the government given what we're seeing in the marketplace.
We remain optimistic and cautiously optimistic about their ability to to continue and two and to grow.
You know relative I'm, sorry call. Your question on the U.S. side was the exit rates.
It will largely be candidly a function of the kind of growth that we're going to be seeing a later in the year by the various carriers in terms of.
They are overall investments and their network.
You heard Rob talked about that we were talking about eight and overall growth rate based upon what we're seeing right now.
In kind of that four and a half ish range. So it's down a little bit again, largely tied almost exclusively guide to the timing of T. Mobile. So we're optimistic that T mobile will.
Pick up pace, and we'll see that increasing activity and the Ed I think that will bode well for going into 2021, and the whole notion of the churn relative to sprint.
As we talked about before out to TBD.
Terms of where did the math thats the line for us in where we can we best service our customers in terms of whether that will be over an extended period of time or whether that would be taken.
More upfront so more to come on that one.
Hey, Colby, maybe I'll just add a couple of comments on the on the accounts receivable issue not specific to Vodafone So Tom covered that off but just to put it into contact.
Juan Rolling into Q2, our accounts receivable has been very stable. So we didn't see any increase in our overall accounts receivable across the globe. Our DSO numbers are still in the in the mid to upper Thirtys that consist in Q2 over Q1. So we've been very pleased that not only in it.
But also in terms of that cobot 19 impacts around the globe. We've had very stable accounts receivable balances from Q1, two Q2, where our net receivables on the books at the end of Q1 was about 620 million. It's actually about 585 at the end of Q2 with that said you will see in our numbers that we took a.
Bad debt reserve charge in Q2 about 25 million.
$25 million and.
And then we also built into the back half of the forecast an additional 75 million those are both reserves at this point. So we do expect that.
Much of that will be collected it just made it may take us a little bit longer. So we're trying to be cautious for the back half of the year. I'd also let you know that we have the balances in our accounts receivable ledger that are over 90 days or 100% reserved.
Coming out of Q2, so again, we look at that as a pretty comfortable position, maybe a conservative position their reserves and not actually bad debt write offs. Yet. So we do expect to collect a lot of that is just a matter of when.
And of course Vodafone is there.
Tied to age yard, we'll see how that gets resolved here soon.
Okay.
Great. Thank you.
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