Q2 2020 SBA Communications Corp Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the S. <unk> second quarter results.
During today's conference call for internal whats going only mode. We will have an opportunity for question and answer session later on.
Require assistance during the call Me Press Star then zero, an operator will assist you offline.
As a reminder, today's conference call will be recorded.
At this time I want to turn the conference over to our host Mark to receive the Vice President of Finance. Please go ahead.
Actually it.
Good evening. Thank you for joining us recipe a second quarter 2020 earnings conference call.
With me today are just stoops, our president and Chief Executive Officer.
Brendan Cavanagh, <unk>, our Chief Financial Officer.
Some of the information wheel discussions calls for looking including but not limited to any guidance for 2020 and beyond.
In today's press release in in our FCC filings, we detail material risks that may cause or future results to differ from expectations.
Our statements as of today August Threerd, and we have no obligation to update any forward looking statement statements we make.
In addition, our comments will include non-GAAP financial measure measures and other key operating metrics. The reconciliation and other information regarding these items can be found in our supplemental financial data package, which is located on the landing page of our Investor Relations website.
With that I'll now turn the call over to Brian.
Thanks, Mark good evening.
That's being produced another solid performance during the second quarter, notwithstanding continued hardship and uncertainty for many across all of our market due to cover 19.
Total cash site leasing revenues for the second quarter were $482.4 million cash site leasing revenues were 482.1 million.
Foreign exchange rate, we're at 1.3 million dollar tailwind to revenues when compared with our internal estimates for the second core.
They were however, a significant headwind on comparisons to the second quarter 2019 negatively impacting revenues by $21.4 million on a year over year basis.
Same tower recurring cash leasing revenue growth for the second quarter, which is calculated on a constant currency basis was 5% over the second quarter 2019, including the impact of 1.9% sure I.
On a gross basis same tower growth was 6.9%.
Domestic same tower crane cash leasing revenue growth over the second quarter last year was 6.7% on a gross basis at 4.5% on a net basis, including 2.2% sure 0.5% of which was related to metro leap and Clearwire termination.
Domestic operational leasing activity, representing new revenue placed under contract during the second quarter was again slower than a year ago hearing and remain similar to the first quarter and the fourth quarter 2019.
Measured pace of new bookings in the quarter was primarily due to a slower restart than we anticipated by T. Mobile following the closing of their merger with sprint while our other domestic customers were said.
However, as we haven't gotten a third quarter, we've seen a meaningful increase in application activity from T mobile and we expect to drive increased domestic organic bookings and the second half of 2020 and into 2021.
During the second quarter Amendment activity was again, a large majority of our domestic bucket.
Newly signed up domestic leasing revenue coming 69% from amendments and 31% from new leases.
Big three carriers represented 70% of total incremental domestic leasing revenues signed out during the quarter.
We again had a nice contribution to domestic leasing activity from some cap to funded rural broadband providers.
As I mentioned, a moment ago, our domestic application backlog, that's starting to grow nicely, which portends well for a steadily increasing pace of new bookings during the second half the year.
Internationally I constant currency basis same tower cash leasing revenue growth was 7.8%, including 0.5% of churn or 8.3% on a gross basis.
We continue to see leasing activity internationally, but it was a little slower overall in prior periods due to covert related spending reductions by customers and a number of our markets.
This quarter, Brazil was again, the largest contributor to international lease up.
Gross same tower organic growth in Brazil was 10.4% on a constant currency basis.
During the second quarter, 86.1% of consolidated cash site leasing revenue was denominated in us dollars.
The majority of non U.S. dollar denominated revenue was from Brazil, with Brazil, representing 10.9% of all cash site leasing revenues during the quarter and 8% of cash site leasing revenue excluding revenues from pass through expenses.
Tower cash flow for the second quarter was 394.1 million.
Arch, our industry, leading domestic tower cash flow margin was 84.3% in a quarter.
International Tower cash flow margin was 71.5% also industry, leading and was 91.1% excluding the impact of pass through Reimbursable expenses.
Adjusted EBITDA in the second quarter was $368.8 million.
Our industry, leading adjusted EBITDA margin was 72.8% in the quarter up 300 basis points from the prior year period.
Excluding the impact of revenues from pass through expenses adjusted EBITDA margin was 77.1%.
Approximately 99% of our total adjusted EBITDA was attributable to our tower leasing business and the second quarter.
Our second quarter tower cash flow margin at adjusted EBITDA margin or again, both record highs for SPX.
And the co in the second quarter was $259.9 million.
AFFO per share was $2.29, an increase of 9.6% over the second quarter 2019, and a 14.8% increase on a constant currency basis.
During the second quarter, we continue to expand our portfolio acquired 16 communication sites for $13.4 million and building a total of 79 sites in the quarter.
Subsequent to quarter, Ed we have purchased 25 communication sites and one data center for an aggregate price of $61.6 million and we have agreed to purchase 100 additional sites for an aggregate price $42 million.
We anticipate closing on the majority of these sites by the end of the year.
The data centers located in Jacksonville, Florida, and will allow us to continue to expand our knowledge of the data center business and well we believe the ultimately critical to maximizing our edge data center offerings as we continue to develop our strategy and invest in the provision of edge data centers located at our existing communicate.
On site.
Jeff will discuss in further detail in a moment.
We also continue to invest in the land under our sites, which provides both strategic and financial benefits during the quarter. We spent an aggregate of $12.9 million to buy land and easements and to extend ground lease terms at the end of the quarter, we owned or controlled for more than 20 years the land underneath the proxy.
At least 71% of our towers.
And the average remaining life under our ground leases, including renewal options under our control is approximately 35 years.
And our earnings press release. This afternoon, we included an update to our outlook for full year 2020, providing increases in all key metrics.
Outperformance against our second quarter foreign currency exchange assumptions and slight improvements and forecasted FX rates for the balance of the year have partially contributed to our increased out.
Increases due to acquisitions and better than anticipated cash basis revenue collections offset by modestly lower expected contributions from new leasing activity represented the rest of the increase in our full year outlook.
As mentioned earlier, we experienced a slower start new revenue bookings this year than we had previously expected, which ultimately slightly delays by 90 to 120 days the timing of new revenue growth from organic lease up.
However, given our increasing application backlog, our recent customer conversations and a significant network deployment obligations of some of our customers. We expect this timing delay to be just that the timing delay.
We anticipate growth and domestic bookings at each of the next two quarters and into 2021.
I'll now turn things over to Mark who will provide an update on our liquidity position and balance sheet. Thanks, Brendan we ended the second quarter with 10.7 billion of total debt at 10.2 billion of net debt.
Our net debt to annualized adjusted EBITDA leverage ratio was 6.9 times, which is down 110th of a turn since last quarter.
Our second quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 3.9 times.
On May 26, we issued an additional $500 million of senior unsecured notes as an add on to our 1 billion dollar issuance completed in February of this year.
These new notes were issued at 99.5% to par value.
And similar to the original issue they have a fixed interest rate coupon of 3.875%.
And a maturity date of February 14th 2027.
The net proceeds of this issue, which were used to repay the entire balance outstanding under our revolving credit facility and for general corporate purposes as of today, we have no outstanding balance under our revolver.
Subsequent to quarter end on July 14 through a trust, we issued $750 million a 1.884% senior tower secured tower revenue securities, which have an anticipated repayment date of January nine 2026, and $600 million up.
2.3% to 8% secured tower revenue securities, which have an anticipated repayment date of January 11th 2028.
The aggregate 1.35 billion of tower Securities have a blended interest rate of 2.081% and a weighted average life to the anticipated repayment date of 6.4 years.
Net proceeds from this offering were used to repay the entire 1.2 billion dollar aggregate principal amount up to 2015 dash one see into 2016 Dash Onesy tower securities with the remaining net proceeds being used for general corporate purposes.
The pro rated I'm, sorry, the pro forma weighted interest weighted average interest rate of our outstanding debt is 3.5%.
Our weighted average maturity is approximately four and a half years.
During the second quarter, we did not repurchased any shares of our common stock and as of today, we have 424.3 million of repurchase authorization remaining under our $1 billion stock repurchase plan.
The company shares outstanding at June Thirtyth, 2020 are 111.9 million compared to 113.1 billion at June Thirtyth 2019, a reduction of 1.1%.
In addition, during the second quarter, we declared and paid a cash dividend of $52 million or 46.5 cents per share.
And today, we announced that our board of directors declared an equivalent third quarter dividend of 46, and a half sets per share payable on September 22nd 2022 shareholders of record as of the close of business on August 20, Fiveth 2020.
With that I'll now turn the call over to Jeff.
Thanks Mark.
Good evening, everyone second quarter was another solid one for SBK, both financially and operationally, we again produced leasing revenue Tcf adjusted EBITDA and FFO that were well ahead of our expectations are Tcf and adjusted EBITDA margins were once again a.
The high bar has the highest in our company's history and our AFFO per share grew 14.8% on a constant currency basis over the second quarter last year, our business remains healthy and strong.
While we greatly appreciate our position in the Central mission critical business, we recognize that many people are suffering from the continuing impacts of the global Kobin 19 and.
When we first reported our first quarter results three months ago, we did not expect so many of the markets in which we operate to still be deep in the fight against the virus at this time, while I'm happy with our performance our top priority continues to be the health and safety of our team members customers suppliers and other members of the.
SBA family.
And SPJ most of our offices have only been opened two essential team members for the last four and a half months when we figured out how to adjust to being a largely remote workforce. We've had a relatively small percentage of our global team members test positive for the virus and we're thankful that they're all doing okay.
I'm extremely proud of the dedication and level of performance by our team members. During these very challenging times, serving our customers on our communities. We have learned how to operate safely in this environment and we will continue to do so.
In the U.S. The virus has had very little impact on our operational results things continue to be good but as you heard from brand in earlier the level of domestic operational activity or new bookings during the quarter was at a similar level to the first quarter Mis is definitely lower than we expected a few months ago primarily.
Due to a slower start than we'd anticipated from T. Mobile after the closing of their merger with sprint and we don't really see this as cobot related but T mobile choosing to initially focus on closing the boost deal with dish integrating workforces and delivering on synergies.
And typical T mobile fashion they seem to have acted quickly decisively and thoughtfully and now have the organization. They want in place to term full attention to their network development needs and obligations, although our timing was off by a quarter. So when we initially thought we would see a material increase in domestic leasing activity the anticipate.
And increases in our application backlogs have now started providing us confidence and steadily increasing bookings during the second half from 20 point.
And increased bookings will of course drive increased organic revenue growth in the period. Following these bookings were excited about our prospects because we believe that we have now just begun unnecessary phase of increase capital investment in macro networks in order to offer true Fiveg service T. Mobile has a lot to do to meet their.
Required fiveg coverage goals, including upgrading the majority of their sites with either two and a half gigahertz or 600 megahertz spectrum, and we expect to be a valued partner to them and meeting their build out objectives.
In addition to T mobile our other major domestic customers all have significant projects in process or ahead of them Hey, TNT recently lost through five you service on low band spectrum, and a number of markets and we expect both a TNT and rising and many others to be active in the current GPRS auction.
And particularly TNT and Verizon to be active in the C band auction scheduled for later this year, which we believe will be a key component of future Fiveg networks and will require new equipment at many of their existing macro sites.
In addition, our discussions with dish have been very constructive and we anticipate that they will be actively engaged and building out a nationwide fiveg network over a multiyear period.
The fact patterns are setting up very well for a busy domestic leasing and services environment for the next several years.
Internationally, we saw solid demand and most of our markets. However, we do believe there will be greater impact in our Latin American South African markets, then in the US from the co with 19 crisis. Some of our larger international customers have faced challenging economies and even government required payment deferrals from their customers.
As a result, some of our international customers have reduced anticipated capital expenditures and network expansion investment while they assess the length and severity of the pandemic in each of their markets. We view these cost reductions as temporary wireless is almost always the primary source of broadband services.
These markets and we believe that as economic conditions improve wireless capital spending will increase considerably.
And our largest international market, Brazil, we're watching closely the recent announcements from our wireless carrier customer oil regarding their plans to divest of their mobile wireless assets.
Consortium of the other three largest carriers in the market have expressed interest has submitted the most recent bid on these assets, although much needs to occur before any transactions have been consummated.
Boy mobile represents 37.6% of our total Brazil cash leasing revenue and 3.0% of our total overall cash leasing revenue.
Mobile's largest portfolio wide carrier overlap is with telefonica in Brazil with always revenue along those overlap sites, representing less than 1% of our total overall cash leasing revenue, although any transaction would likely present much less overlap exposure as the three acquiring.
Areas would be expected for regulatory reasons to split up always assets based on each carriers geographic area of greatest neat.
Oil mobile leases also have an average remaining non cancelable the term of eight years.
We continue to believe our long term prospects in Brazil will be bolstered by a shift from four major carriers, just three stronger carriers competing on the basis of network quality. We expect the resolution of always future will be a positive step toward an increased growth cycle in Brazil, and improved wireless carrier health.
We continue to favor investing in macro towers, including internationally over other types of investments over the years, we feel we have proven very adept at managing risk of international investments versus the benefits of faster growth higher targeted returns and more opportunities for investment.
At the end of the second quarter, we enjoyed industry, leading international tower cash flow margins and our most mature international investments are generating attractive returns well above our cost of capital with much growth still ahead, we're very pleased.
In addition to macro towers, we have continued to pursue other opportunities to create value around our sites, where the focus on leveraging those assets strengthening the core revenue streams.
Accessing large new customers and investing in strategic technology.
One of the areas of growth, we are pursuing as SP edge, where we are focused on using our existing tower assets to offer highly distributed local sites for edge data centers with the potential to provide low latency connectivity wireless networks. We currently have over 8000 Prequalify tower sites in the us.
Locations, where we can situate and edge data center with access to secure space power and fiber. These tower. Its data centers will provide publication options for customers computing infrastructure with connectivity to a larger metro data center for Internet for private network connectivity in order to.
Support this business, we have deployed and hedge data center at our tower site in Foxboro, Massachusetts, and we've also made investments in larger more centralized data centers that we believe will act as edge hubs for intermediate aggregation points for compute and storage last year, we added a data center, our first in West Chicago.
And just recently, we acquired our second data Center call Jacksonville's network access point or Jack snap for short located in Jacksonville, Florida.
Jack Snap is a 280000 square foot 14 megawatts facility, providing regional colocation and interconnection services to a variety of customers, including subsea cable telecommunications companies at approximately 20 fiber providers, all accessing and sharing the property.
Jack Snap will allow us to develop deeper data center capabilities and further enhance our tower edge data center value proposition through increased interconnection and operational knowledge. We're excited about the potential of this value added business line and are in discussions with a number of interested parties about a range of our expanding.
Capabilities in this area as we've said many times however for this new product offering to ever be material for SPJ, a real fiveg ecosystem needs to develop based on the increasing number of conversations. We're having we are optimistic that this will happen in the year should count.
Moving now to our balance sheet, we were able to seize on favorable capital markets conditions over the last couple of months to reduce our weighted average cost of debt and extend our maturities.
Currently have no debt maturities until 2022, and we have higher liquidity than at any time in our history, including our fully available undrawn $1.25 billion revolver.
In July we issued 1.35 billion of securities in the securitization market, including $750 million 5.5 year paper to fixed rate of 1.88% the lowest fixed price that in our history.
Our June Thirtyth leverage was 6.9 times a level I'm very comfortable.
And the strength of our balance sheet provides us flexibility to continue to be opportunistic around investment opportunities and share repurchases.
While still being while still being able to comfortably support our dividend.
We did not repurchasing shares of stock in the second quarter, because we were targeting some of the volatility we took advantage of in the first quarter, we didnt get much stock repurchases remain a critical part of our value creation strategy.
We announced today, our dividend for the third quarter on a level, 26% above our third quarter dividend last year.
Our dividend however remains at a relatively low percentage of AFFO, providing us the opportunity to continue investing an exclusive multi tenant assets producing returns well above our cost of capital.
The ace adept use of leverage throughout our history has truly differentiating us from our peers. So the clear benefit of you our equity holders.
It was another solid quarter very challenging time I want to again, thank our team members in our customers for their contributions to our success, we expect to say very busy serving our customers in our communities and we look forward to a solid and even better second half of the year and with that Nick we are ready for questions.
Yes.
Thank you if you'd like to ask a question today, maybe press one then zero on your telephone keypad.
Should hear an indication that you've been placed in Q.
We do suggested if you're using a speaker phone you pick up your handset for pressing the numbers again going forward you May press, one zero to queue up for a question.
You do have several lines in Q, we'll go first to.
Rick I'm, sorry, Prentiss with Raymond James Please go ahead.
Hi, guys Hey, Rick.
Glad to hear you and your employees and families are making through these difficult times okay.
Couple of questions first on the updated guidance Brendan I think you mentioned some of the increase was in the other category from the waterfall chart.
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Was that revenue collections or what was that I think in the usfive million or the guidance increase was closed for mother.
Yes, correct Thats.
Variety of miscellaneous things includes things like.
Higher cash basis hold over fees that we receive some a little bit higher on the structural augmentation amortization.
Even some backfilling or out of period stuff. So a lot of that was.
Outperformance in the second quarter, and a little bit of that as expected outperformance for the balance of year.
Great.
Hey can you hear me okay, yes.
Sorry about that.
Still expect to.
Give guidance for 21 on your fourth quarter call. It was some companies given on third quarter going just wondering what your thought is on 21.
We will continue the same schedule.
And when we think of the new T mobile glad to hear activity is picking up as we think about the potential for the sprint.
Decommissioning concept.
You have a preference as far as getting paid upfront being paid over time being paid.
And.
The current schedule and how do you think T mobile things about with their preference would be on how to.
The resolve the sprint's decommissioning into their integration.
Okay.
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It's interesting.
We've had.
Well there are two schools of thought amongst our shareholders. There is the.
Spread out evenly approach.
There is the.
So buys the.
NPV approach or the Max maximize out the returns over time.
And.
I don't want to get too far into.
How things will go that will be so one or two or perhaps up something of that in the middle in terms of T. Mobile I mean, there they're smart guys there they're looking for the best.
Results that will be a mix of.
Financial.
Certainty financial results speed and all the things that they need to do the two really play for the Big picture, which is the the race to be ubiquitous five Jay.
And on the dish side, you mentioned you guys are having talk so obviously looking forward to them getting actively engaged.
The gating factors from your side as far as went to ramp up the efforts with dish do they need the funding in place or just as you think about just becoming more meaningful fiveg lease or what are you looking for to occur.
You know we.
We are here at ready to go.
For dish, we worked with them for years now they're very good customer end.
When they say they're ready to go we are we're ready to go for.
Okay very good well, we again I hope you guys stay well it is difficult to them space. Thanks, Rick.
Next we have a question from tortilla Levi with few BS Your line is open.
Great. Thank you a question on the international activity you lowered the guidance a little bit, but you mentioned as we exit the year carries a slowdown in activity, especially in Latin.
Do you think current slowdown will impact next year's growth.
Hi, just generally how would you think about international growth next year and just a follow up on T mobile.
Hi.
Reconcile this slower start you so add T mobile and commentary from them that they are accelerating the build outs.
To that slides on very Karen do you think that's more of a function of maybe okcupid young girls tops or they're replacing existing two that's five men.
When they are doing that is there an upside for you. Thank you.
Well I don't think that commentary is inconsistent at all with what we're seeing now in terms of increasing applications and backlogs.
So I would say that thats consistent.
In terms of international I think given the types of populations that are being served.
In South America, and South Africa, I think you're going to.
It's going to be largely dependent on where the virus is and what stages of locked down and economic activity, you're going to see in those markets.
Okay.
Okay. Thank you.
Next we have a question from Simon Flannery with Morgan Stanley. Please go ahead.
Great. Thank you very much good evening, you talked about some good activity from some of the cost to build so maybe you could just talk a little bit about what opportunity you see from the ourself process.
Seems like there was plenty of people looking at fixed wireless solutions there.
What do you see.
In that opportunity there and then any color you could give us on with the T mobile applications, what sort of opportunities on on amendments, putting two dropped five on timo towers or putting lower bound spectrum on the sprint towers, if you've got a sense of what sort of dollars that's coming out. Thanks.
Yes.
We do what we're not going to get into that specifically Simon nuts, we don't do that because it inline with expectations.
Yes, yes.
I mean, what.
I mean, what people should take from our commentary is.
Everything's pretty much exactly like we saw its just 90 to 120 days behind where we thought of it.
And then in terms of your first question was.
Yes, we do expect opportunities to to come out of that I mean fixed wireless.
You know, it's Scott and in certain areas is going to be better for macro sites than than others. I mean, some of the applications.
Or more.
Existing poles and not necessarily.
Of course as much as some of the cash.
Yes, but we do we do see opportunities there and we think that there's going to be some some added benefit from there and all of these.
Programs, which.
This.
Unfortunately, it opened 19, saying so so much highlights the need for for increased spending and broadband role can activity.
We will we will see some incremental benefits from that in the years.
Great. Thank you.
Next we have a question from Michael Rollins with Citi. Your line is open.
Hi, Good afternoon, I was wondering if they get focused a little bit on the edge projects that you were mentioning any initiatives and a couple of question is there first.
If you could talk about the types of learnings that you're looking to extract from datacenters that you've acquired and how thats, helping you frame.
John opportunity and then the second thing is trial that you have in Massachusetts as well as.
Some of the site that you'd be prepping for the opportunity how are you thinking about.
What you can monetize the land for the opportunity for relative to what you get.
In terms of revenue per tower today. Thanks.
Well that's.
Your last question, Mike is really the the business model choice that needs to be made which is one of there's basically three options for us which is to be.
Just the basic landlord.
And ran out the pad and the.
Sure.
Basically the improvements and the connections.
Or the second will be to take the middle ground and own the shell and the infrastructure, but let somebody else on the actor electronics and operate them and then the third is run the whole thing and Thats really what the data center.
Ownership in operation is designed to allow us to.
When it really comes time to make the decision to be in a position to do the other thing that we have learned is that for the folks who will be.
At this we've learned since.
Last year and that was one of the impetus is buying this recent.
Our second data center purchase is that for all the folks who are going to be customers at the edge at the cell site. They all.
Nene and will be coming from some other larger data center repository.
So.
The it's really quite interesting how the connectivity needs to work, where large storage goes to moderate size and then ultimately out to the to the edge. So the ultimate cash so the data center connections to the ultimate add dish are going to be.
Very.
Important and Thats part of part of what we're working on here as well.
To make sure we understand and have that.
Capability operationally down and.
Whether in 10 years, we own these data centers more or less.
Yes tell you what we will we will understand.
What the relationships are between the absolute edge, which is what ultimately will be our forte and the.
The data center aggregation points, along the way that will be necessary to make it all work.
Our next question then will come from Colby.
So with Cowen please.
Great. Thank you.
Yes, we're looking at your investments combination of M&A in buybacks.
Year to date.
I guess relative to what you typically spend in the year. It seems like you're you're pretty far off the typical pace. It how do you envision the back half of the year playing out do you see enough potential M&A to get you where you want to be.
Would you anticipate stepping on the buybacks if that doesn't present itself or are you comfortable letting the leverage continue to come down a bit and then secondly, as it relates to oily.
He just international more broadly just curious if you had to take any notable bad debt reserves in the quarter.
And that May have impacted EBITDA, and then secondly, I guess as part of that.
Are you still getting payment.
With that right now thank you.
Right and I'm going to let you handle the always stuff.
What we would rather not less leverage continue to.
Come down, especially given the cost which were accessing debt and the growth that we have.
We'd rather be out investing.
Our new assets first and portfolio growth second.
But we're not.
We're not going to do stupid.
Expenditures I mean, that's always been the the the motto and then the.
Of course of action here. So there's there's a lot of things out there there that we continue to.
Look at and we'll be looking at certainly enough to make our minimum 5% portfolio growth.
We certainly have the.
Energy more than funny, there to accomplish that.
And it is our goal and belief that we will well we will get there.
But it's got to be the rights.
Okay. Thank you. Thank you.
I'm sorry, just to clarify so you think you'll still hit the 5% minimum up portfolio got but beyond that in terms of whether it's M&A or buybacks.
Yes, I guess to remind that leverage come down no.
I will work hard work hard to do that that's certainly our.
Our first choice.
But I don't have it I don't have an in the back today.
Okay.
Thanks Colby on your question with regard to Hawaii first of all in terms of bad debt reserves, we had in book any material bad debt reserves in the second quarter.
And then.
From a getting paid standpoint, they continue to pay us the full amount they tell us so no issues there.
Great. Thank you.
Next we have a question from Nick Bill deal with Moffettnathanson. Please go ahead.
Hey, Thanks for taking my questions.
Your peers, it's been a lot of time talking about returns by segment this quarter and Jeff you briefly alluded to international during your prepared remarks, I thought I'd ask you. The same you disclosed in our IC calculation your and your supplemental package what would the what would the domestic versus international split look like and maybe more importantly, when you think those numbers would look like.
When comparing assets that have comparable levels of maturity.
Hey, next Brendan so from a ROI standpoint, we're not breaking out that information specifically given the different maturity levels of those portfolios.
And tell you some general.
Directional information about which is some of it may be obvious which is the domestic ROI is obviously higher than the consolidated 10.2% number that we put out while the international is lower but some of our more mature international markets like in Central America have current ROI assays that are in the high single digits and and the.
Okay, so certain countries like Panama actually exceed the U.S. So the more mature markets having been in had been performed very very well the.
The less mature South American markets typically have ROI sees that are in the mid single digits.
We've had obviously some FX headwinds that have weighed on the Brazil numbers a little bit.
But.
Constant currency basis, that's up north of 9% so.
We expect as we kind of get into a little bit more normalized.
Time periods in terms of currency that that number will actually show very well. So it's all going to talk on.
Pretty well most in our markets that we've been profile.
Okay. Okay, that's great.
Now turning to oil I think you noted that you have an eight year average contract term with them, yes, not mistaken that's a blend of some with very long terms and maybe some with more typical terms is that correct that it's kind of a barbell distribution and if so can you describe kind of what agenda looks like.
Yes, yes, yes, so some of almost all of the white.
Leases, our leases that we acquired through leaseback scenarios they average.
Varying terms, but they're all quite long so when you look at why mobile as a whole. The average remaining term is little over eight years on those leases and then we have some why fixed wireline leases as well that are actually north of 25 years. So.
Between the two it's an extensive not time left.
Okay got it got it if I guess on one last quick one yeah, Let me Brendan let me just be clear that that eight years was the mobile yes.
I mean, even work into that calculation the wireline correct. Okay. Okay got it got that makes sense.
Then lastly margins are very strong this quarter and anything we should be aware that is going to one time or onetime in nature like lower travel expenses or anything like that.
Yes, I mean, we were slightly better I mean, you're looking at $1 million or so in the quarter of probably reduced SG in AG and things like that but it's not overly material.
Okay. Okay perfect. Thank you guys.
Next we have a question from Tim long with Barclays. Your line is open.
Thank you.
Yes, just a little bit of color. It sounds like there's been a fair amount of purchase activity in the quarter in subsequent to the quarter, maybe does what kind of a little little color on where.
So those tower assets.
We're focused and what was compelling about purchase and then just a follow up you haven't really mentioned indoor das. So just just curious of any changes in direction or momentum there. Thank you.
So.
The towers, well, yes, I mean, I'd like to say that was a lot.
But it really wasn't most of that was in the us.
And.
You know they were they were.
They were healthy multiples because they were very high quality.
Assets I mean, they're still continues to be a strong bid.
Which goes back to the.
Exchange I had with Kobe about.
That's where we want to be but thats, the yet to be very careful because prices continued to be challenging and not every tower is created.
Equal.
Yes, I'm sorry, your second question Tim.
Just on indoor Das.
Oh indoor yes, we continue to.
To move along in that area and add.
A couple properties every quarter, which doesn't sound like a lot, but it's a steady growing business and it's a it's a much more difficult business in many respects because it is absolutely a.
Custom.
One asset in time business.
Well, we are very encouraged by what's going on in the CB Rs auction I think it topped $1 billion today and that means there's and there's more I understand why interest.
And I think thats going to be very good for for that business.
Okay. Thank you.
Next we have a question from David Barden with Bank of America. Please go ahead.
Hey, guys. Thanks for taking the questions.
First just.
I think I heard you say.
When 2% domestic trend rate 50 basis points of that was the.
Quickly metro stuff.
Could you kind of.
Elaborate on what the other churn is being driven by.
The government or municipality user or M&A.
Kind of.
Historically, its been closer to 1% to 1.5% as kind of the core churn rate if you could kind of.
Elaborate on where do you see that going and then the second pieces on on dish just as you kind of lookout sounded optimistic on just the last time.
I think there quarter last year, we talked about dish that some linked it was a lot of the services side.
Is that kind of how you see the relationship beginning and then kind of evolves into the macro side.
Maybe down the road.
Some help there will be helpful. Thanks.
Yes, David on the chart.
Just as a point of clarification, obviously those percentages are same tower percentages. So they are representative of the trailing 12 month period. I think you saw a little bit of a step up in that a couple of quarters ago, and it's really the same thing that's kind of.
In there that's affecting that so were slightly above our historical 1.5%, 1.7% and its due to a variety of miscellaneous things that includes a number of smaller customers that are modifying or shutting down kind of older technologies. We have a number of sites that were never on air. So in some cases theyre not being renewed.
There is actually still some legacy consolidation churn as well related to all vestiges of all mergers, including bride and alltel.
TMT Centennial and all kinds of things that you probably long forgotten about.
So it's got some mishmash of different things.
Yeah and on this day I mean, our comments haven't changed.
Dishes publicly said that they're doing a lot of planning and prep work this year and very little Capex and spending and we've said the same thing and Theres no dish at our guidance.
But we have great relationship we talked to him all the time would do a lot of planning and and we think we're going to.
Over the years.
They have big helped to them and a good partner to that.
And it will start.
I would probably services on the on the site acquisition side of things, but we think it will certainly more two and turn into leasing business.
Awesome. Thanks, guys.
Okay.
Next we have a question from John can with RBC. Your line is open.
Thanks, very much. So you mentioned a couple of questions back about the T mobile pace being.
90 to 120 days slower than you expected. So I just wanted to.
Maybe be clear you were expecting second quarter activity that got pushed the three Q or are you expecting PQ activity that doesn't see full run rate until Fourq you.
Okay.
I was expecting widening merger was completed.
That they would fit the ground.
Running in terms of applications and activity and that and I was mistake.
What they chose to spend their time on.
Was synergies and integration and getting the.
The dish deal done at all things that.
In hindsight made tremendous sets for T mobile and had to be.
And that's basically.
What is up.
Great Great. That's helpful. And then any any kind of thoughts on the other two carriers out there in terms of just the.
The cadence in getting stronger or weaker the same.
It seems symbolizes really business as usual John.
And then lastly, just a quick question Youve both of US listed peers have ATM is in place and I'm wondering if that's something that you would consider given some of the comments you've made about international and edge of the data centers and so forth.
Hi.
Not some we've thought of real it.
So we're we're we're looking for opportunities by our stock back.
Very clear thank you very much.
Well going down to the line of Walter I check with late should please go ahead.
Hey, Jeff in terms of like companies hitting the ground running is definitely a narrative out there.
The feedback and is also going to trigger one company they have hit the ground running.
When should you already be having conversations with carriers I know C band is obviously not.
Starting until December but its couple of months away are you already having discussions with with operators would give us some indication that that.
People, but expect to win at sea man are going to be hitting the ground running.
In 2021 could that's certainly the narrative I'm just curious when we when we should expect those dialogues occur between those carriers and yourself.
I would say I would answer that question with one more wall indirectly.
Can you hear me now.
Yes, I can now.
No I mean get your answer indirectly got you.
Sorry, My second question was I thought there was give me a lump thereafter.
Indirectly was going to be yen gotcha.
Sorry.
Brazil like if you were going to buy what you own in Brazil today.
What do you think a reasonable multiple is for that business I.
I mean, I know I know, it's only like 15% of your EBITDA, but with everything that's going on in Brazil, right now currency, what the President's doing there in terms of covert and everything else.
What do you think a good comp is or what you'd be willing to pay for an asset there.
Well I'm not going to answer that because it will.
I don't know what it'll due to the to the stock I will answer the question the following.
Brazil continues to be a country that has.
And this opportunity and we are so far ahead of our operational plan. There is this is all about FX in Brazil, and everything else is great.
And if you look at where the things that you mentioned are and how they have how they have affected.
FX in Brazil, it's been a one to three punch between the precedent down there as a pandemic.
And I guess what.
What people have to.
I guess come to a referendum on.
Is is this.
The way, it's always going to be in Brazil, as it always going to.
Just appreciate at these kinds of levels and if it does then history will say that we made a mistake.
Thats simple I don't believe that I don't believe that the.
The economy the people the huge demand for wireless services. The fact that they don't have the five they have to do all the things that made us investor down there in the first place and I don't believe the currency is going to continue on a one way trip to pull local government.
And that is how that is how we think about Brazil.
Got it thank you.
Next we'll take a question from Brandon This phone with Keybanc. Your line is open.
Great. Thanks for taking the questions Jeff one for you mentioned backlog a couple of times can you talk about the type of growth you're seeing through July and really where you expect the Spanish from year over year standpoint later on this your colleagues December.
Then one for Brendan in the guidance change the guidance for new leasing domestically by $3 million does that de risk for the remainder of the year from any T. Mobile new bookings that you were expecting to get and what does that imply and the guide sense a year ago T. Mobile was sort of slowing down I would imagine didn't have much T mobile in guidance.
In the first place.
But what's in the guide for the year so for T mobile thanks.
Yes brand, it's not it's not necessarily specific T. Mobile obviously most of our guidance is based on stuff that we've already signed up so there's a portion of that that includes T mobile, although they've been slow as we've talked about the last.
A few quarters. So its contribution to the incremental growth organic growth is limited there is still solve the amount of T mobile contribution to our full year organic growth number that we are including our guidance based on activity that's happening now and we expect.
Back to happen through the balance of the year, but given the delay usually between signing and commencement of revenue. It's relatively small so it's I guess, if they did absolutely zero and they stopped today than there would be conceivably some minor amount of risk, but given the pace at which they are operating that's just not.
Likely to be the case and we feel good about our guidance.
What was your first question Brian.
You mentioned bookings a couple of times and specifically I think you mentioned sort of picking up after the second quarter ended. So I was hoping you could give us an update on where you are from a year over year standpoint in bookings.
Or even backlog of and signed lease applications from a year over year basis in July where do you expect.
To be as you finished the year.
Well, we clearly.
Expect to be higher at year end than we are today, but remember our growth rate is a trailing 12 month.
Metric so.
And.
It was it was.
It has weakened since Q3 of last year, So you need to come to expect to see that.
But in terms of backlogs we expect.
The end of Q3 to be better than ended Q2 and into Q4 to be better than in Q3.
Would you expect year over year third quarter to be better them.
Last year.
Yes, yes, yes actually.
Great. Thank you.
Next well go to Spencer Kurn.
With New Street Research your line is open.
Hey, Thanks for taking the question so just a follow up on.
Brendans comment about the $3 million that you lowered let me check out of new leasing activity guidance can you help us understand.
The assumptions that underpinned.
That level of contribution from T mobile did that.
Did that does seem they sort of reached full run rate.
By the end of the year or do you think that.
What you added baked into guidance originally you expected.
To be.
Hey, Midway point, even higher growth.
In later quarters.
And then as a follow up can you just help us understand the cadence of organic growth that you're expecting.
For the rest of the year your guidance of 4.1%.
For the year implies a slowdown.
In the back happened so.
Should we expect.
The low point to be in the fourth quarter or do you bottom sometime in the third quarter and start to come back up my Q4. Thank you.
Sure so.
Answer the second one first we do expect it to.
We expect actually the third quarter in the fourth quarter will probably be very very similar to each other but they will be the low point and obviously they will be lower than we reported from second quarter, which is implied in the full year number so you should assume somewhere.
Probably the gross number will be closer to five and a half.
Hi Fi percent range in each of the next few quarters domestically and then on the T mobile piece.
The way that it was guided to previously assumed that they were active.
In the second quarter in signing up new leases that amendments and given that it's in the second quarter, we expect and obviously a number of those particularly the amendments to convert to revenue producers before the ended the year, which obviously would have contributed to that growth number. The fact that there's been some delay their pushes.
That activity towards the latter half the year and significantly reduces the amount of the impact this year's.
Financial statement contributions so it's not significant it's basically what happens when you take.
90 to 120 days worth of activity and push it back.
The impact on the on our fiscal year, Yes, I mean, thats basically represents the reduction three $9 reduction that weve.
But in our numbers all of this is pushed back but it has a fiscal year impact.
Got it thanks.
And just one more question when you talk when you seem to Fiveg amendments.
Today.
Those coming in as a typical amendments.
Rate that you've seen historically.
Or you know is there some sort of the difference based on the type of equipment, you're seeing going up for Fiveg.
[music].
Well they are coming in as expected and remember that.
We did have experienced with this for a while with sprint.
Great. Thank you.
Thank you speakers at this time and there are no further questions in queue.
Great well, we appreciate everyone dialing in today.
And on behalf of all this year, we wish everyone.
Stay safe stay healthy and look forward to our next call in three months Goodbye.
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