Q2 2021 American Tower Corp Earnings Call
Yeah.
The sudden gentlemen, thank you for standing by welcome to the American Tower.
Second quarter 2021 earnings conference call. As a reminder, today's conference call is being recorded following the prepared remarks, we will open the call for questions. If you would like to ask a question. Please press..1 then zero you will hear acknowledgment that your line has been placed in Q I.
I'd like to turn the call over to your host Igor Kozlowski, Vice President of Investor Relations. Please go ahead.
And thank you for joining American towers second quarter, 2021 earnings conference call.
We've posted a presentation, which we will refer to throughout our prepared remarks under the investor.
I would now the tab of our website Www Dot American tower Dot com.
On this morning's call Tom Bartlett, our president and CEO will provide the strategic update on our international business with the focus on our newly expanded European portfolio.
And then Rob.
<unk>, our executive Vice President CFO, and Treasurer will discuss our Q2.2021 results and revised full year outlook.
After these comments, we will open up the call for your questions.
Before we begin our mind you that our comments will contain forward looking statements.
Rob small of a number of of risks and uncertainties.
Examples of these statements include our expectations regarding future growth.
Putting our 2021 of the outlook capital allocation and future operating performance.
Our expectations regarding the impacts of COVID-19.
Our expectations.
<unk> regarding the closing of the remaining telsey of sites.
Our expectations regarding the closing of our signed agreements with CDP to an audience.
And any other statements regarding matters that are not historical facts.
You should be aware that certain factors may affect us in the future and could cause actual.
<unk> 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 the.
The as set forth in our form 10-K for the year ended December 31, 'twenty 'twenty.
And in other filings, we make with the SEC.
C C.
We urge you to consider these factors and remind you that we undertake no obligation to update the information contained in this call to reflect subsequent events or circumstances and with that I'll turn the call over to Tom.
Thanks, Igor good morning, everyone I hope that you are all.
P and well.
As is typical in our second quarter calls my remarks today will center on our international business, which now spans more than 171000 communication sites and accounted for 37% of our property segment gross margin in the second quarter.
Given our recent Chelsea is transit.
All Hilton I'll focus much of my commentary on our European portfolio, but I do want of first cover some of the key tenants that drive our global strategy and touch on a few important metrics for our international business as a whole.
Since entering Brazil, and Mexico more than 2 decades ago to.
To provide.
Actually graphic diversification to our foundational U S assets, we've oriented our international growth of around partnering with large multinational wireless carriers in select markets with strong property rights solid rules of law and vibrant wireless industries.
Since day, 1 of our international expansion.
The IGT has been clear.
Squire construct and market franchise real estate assets to drive strong organic growth long term margin expansion and compelling total returns and do so with an emphasis on building leading market positions and the largest democracies around.
The world in various stages of wireless technology development, all while driving enhanced connectivity for billions of people and being a good corporate citizen bottom line. Our goal is to replicate the model we built in the United States to increase the slope of the growth curve and extended.
As a result of our adherence to these core principles and the tremendous contributions from our global leadership teams and employees, we have been able to drive solid results across our international business over the last decade Maher.
The markets outside the United States have made meaningful contributions to our long track.
Of generating strong organic growth, while delivering double digit annual consolidated <unk> per share growth and attractive returns on invested capital.
In fact as of the end of the second quarter International sites that we've owned and operated since before 2010.
We're generating U S dollar of NOI yields of 30% with our oldest vintage of sites in Latin America, driving NOI yields closer to 40%.
And the international sites, we built and acquired since 2010, excluding the <unk> assets that we just closed are generating an.
<unk> record U S dollar NOI yields of 10% with what we believe to be substantial future upside potential.
Further on sites, we've constructed ourselves internationally across all vintages, the NOI yield as of the end of the second quarter was 25% demonstrating the tremendous return potential of our.
Admiral program.
Finally, it's important to note the just as we've done in the past we expect to focus on constructing sites for high quality, primarily investment grade tenants as we drive toward our goal of 40 to 50000, new builds worldwide over the next 5 years, we're focused.
New billion generating strong growth and returns internationally, but also in doing so in a sustainable way. This is reflected in our accelerating power related investments in lithium ion battery storage solar and other clean energy solutions as we seek to reduce our global carbon footprint and lead.
Not overall telecom industry to a greener more sustainable future.
Moreover, we believe that shared use of renewable energy combined with storage has the potential to reduce operating costs over time, which can benefit the entire telecom ecosystem as demand for mobile data usage continues to rise.
In addition, we're working to make a positive difference in our markets through programs like our digital communities initiative, which seeks to expand access to education and technology to underserved populations by leveraging power and connectivity at our tower sites to date. This program has enabled well over 100.
The <unk> thousand students across 6 markets the gain critical access to the internet, while developing digital literacy skills and has recently garnered recognition from the U N World Summit on information Society.
Looking forward by working with partners of the World Economic Forum and other stakeholders.
Hundreds of that could meaningfully expand the reach of our digital communities efforts as part of our overall commitment to making a positive difference in our served markets, particularly given the critical need for pervasive mobile broadband connectivity.
This criticality for broadband connectivity was amplified by the COVID-19 pandemic.
We expect squarely within our belief that the network technology evolution, we've seen in the United States will be replicated internationally and that as owners and operators of mission critical communications real estate, our sites will be at the forefront.
Mobile data usage continues to grow rapidly and as <unk> networks outside of.
Interest rates are upgraded to <unk>, we expect network densification in the augmentation to take center stage, resulting in long term sustainable predictable growth for us.
Importantly, the international Tower model, just like the U S business is predicated on optimizing operating leverage shining.
The value additive strategic long term contracts and providing high levels of service to our customers, while carefully and selectively deploying capital to high quality accretive growth investments.
With mobile network operators across our international markets spending upwards of $35 billion in wireless Capex.
Of the United Willie and the need for communications infrastructure, only expanding we believe we position ourselves for long term success.
1 critical element of our international strategies of balanced approach to market selection we.
We've always thought to not only diversify the business from the perspective of the United States versus the international.
But also to drive diversification within our international operations themselves as a result, we operate in the mix of developed and developing markets and as I mentioned earlier have exposure to multiple concurrent technology cycles throughout our operations.
<unk> been quite purposeful and ensuring that we are not too overweight.
Andy 1 market or region and that is reflected in our portfolio today.
Our recent Telsey. This transaction is a clear reflection of this long held strategy.
Not only were we able to secure what we believe to be premier asset centered in 2 highly attractive European countries with the.
The deal also enabled us to further.
In emerging market presence with communication sites in more mature markets.
In fact on a total company run rate basis around 60% of our property revenue is now derived from developed technology advanced markets.
We expect the incremental diversification, we have gained through the <unk> deal.
<unk> of our benefits over the long term on many fronts.
The <unk> with deeper access to the attractive European capital market, both public and private. The addition of incremental euro denominated revenues and of course of much stronger competitive position on the continent itself.
So with that I'd like to now take a deeper dive into why we're so.
So excited about our European business, and particularly our newly scaled presence in Germany and Spain.
We've always said that we view the concept of Europe being a singular tower market is a misnomer.
And that remains true today Europe is collection of vastly different markets with highly variable characteristics.
On the regulatory of wireless market structure, and historical network development sides, among others and.
And we've seen this reflected in many portfolios we've evaluated over the years that we ultimately did not acquire.
To that point, our Telsey as transaction is less of an indication of the sea change across Europe as a whole.
<unk> much more a reflection of the assets themselves being superior in our view.
The wireless market structure and dynamics regulatory regimes in carrier Capex trends in Germany, and Spain are favorable and Telefonica is of high quality anchor tenants.
We also performed significant due diligence on the sites.
And the accompanying contracts both from the customer side and on the landlord side and view the outcome of that diligence is a positive differentiator as compared to some of the other portfolios we've evaluated.
As a result, we are confident that we can drive attractive economics across the portfolio, including high margin flow through from <unk>.
Colocation and amendment growth complemented by a Newbuild program, we expect will further accelerate over the next few years the.
This confidence is underpinned by strong underlying wireless market trends in both countries mobile data usage from 2019 through 24 for example is projected to grow at a CAGR.
And 25% in Germany, and Spain, similar to the United States.
Meanwhile, our booth and then relatively steady over an extended period of time, the mobile network operators are solidly profitable and <unk> device penetration like in the United States is still in its infancy.
Wireless market structure.
Dr of were also favorable with significant carrier consolidation, having already occurred leading 3 major income and carriers in Germany, and 4 in Spain <unk>.
Frequently we believe the downside risk related to further consolidation in these markets is modest for us.
Critically carriers in both Germany and Spain.
Jane possess significant spectrum assets across multiple bands from.
For instance, the 3 incumbents in Germany, along with 1 of 1 all have at least 50 megahertz in the 3 and a half to 3.7 gigahertz range, which is now starting to be deployed from <unk> Rollouts. Meanwhile, in Spain, all 4 major carriers.
<unk> is of at least 80 megahertz in the same globally harmonized mid band range, along with significant spectrum assets from 800 megahertz of 2.1 gigahertz and 700 megahertz spectrum coming to auction shortly.
Further between the 2 markets mobile wireless carriers are spending more than 6 billion.
Dollars in wireless Capex annually with the new entrant in Germany, and accelerating <unk> deployments potentially leading to enhanced capex deployment in the future.
Finally over the last several years on line.
In many other European markets Communications site counts had been increasing and we believe the substantial.
<unk> further densification efforts will be necessary to augment existing <unk> deployments and upcoming <unk> Rollouts just.
Just like in the United States is higher band spectrum is deployed from <unk> networks will need to become denser to provide a true <unk> experience with our expanded footprint focused in the urban areas, where these deployment.
<unk> are likely to be concentrated we are well positioned to drive strong growth over a number of years.
In fact, as we laid out when we announced the transaction we are confident in being able to deliver organic tenant billings growth at least in the mid single digits on the European Telsey sites over the next several years and likely beyond.
Appointment this growth rate trajectory would be roughly 2 times, what our legacy European business of generating today.
On the surface that may seem like a disconnect with peeling back the onion a bit reveals that the math is quite straightforward.
A large part of the difference is driven by churn on our legacy sites, we are working through the impacts.
Some carrier consolidation and as a result of our churn rates over the past few years have been in the 2.5% to 3% range on the Telsey sites on the other hand, we expect minimal cancellations for the foreseeable future given most of the existing tenancies represented by Telefonica with an average noncancelable lease term of between 7.
Years simply put even without assuming any inflection in demand from 5 or new entrants that churn differential alone should put us solidly in the mid single digits for organic tenant billings growth on the Chelsea sites and to the extent that there is an uptick in activity from <unk> and the other dynamics I referenced earlier.
We believe that we have the potential to outperform that range over time.
1 of the key elements that we expect the backstop. The strong growth is the fundamental structure of both of our tenant leases of our rooftop and ground leases. This has been a much debated topic across the region and we've seen a variety of different contract terms in various portfolios.
And we've evaluated over the years.
In many cases those terms in our view were such that future growth and profitability would have been significantly constrained. This is not the case in the Chelsea assets, which was a critical element of why they were so attractive to us.
There are revenue shares in placed on certain sites.
And there are some capacity constraints with respect to a portion of the rooftop assets, but overall, we expect to drive conversion rates on organic growth that will be nearly comparable to what we've seen in the United States, which is extremely important for us.
An additional element of our European business that I wanted to address is our plans for future expansion.
It is we believe that we know of the scale, we need to be successful in both Germany, and Spain with more than 26000 sites between the 2 markets pro forma for the additional German rooftops, we expect to close over the next week or so we are solidly established as a significant player in European Communications real estate.
Further we expect the leverage our Newbuild program to drive additional scale over time in the region, including 2400, or so contracted bts sites in Germany, and we anticipate building over the next 3 to 5 years.
The <unk> driven densification accelerates the need for new sites in select markets.
We continue to grow.
On the M&A front, we expect to continue to use our long standing proven capital deployment methodology to evaluate potential transactions in the future.
We have been patient deliberate and selective in Europe to this point and that will continue going forward each portfolio.
<unk> will be examined on its own merits with long term growth potential <unk> per share accretion and long term return on invested capital continuing to guide our M&A strategy.
With CDP Q and Allianz, joining PGM as our strategic partners in the region. We believe that we are in a better position.
Position than ever to prudently expand the business through M&A should the right opportunities present themselves and if not we will do what we have always done deploy capital elsewhere or the global basis to drive the best possible risk adjusted return across the business we.
We also believe that our broader European footprint.
Further enhance the competitive advantage that we derive from our worldwide shared infrastructure platform does.
Digital transformation on a global scale is being driven by cloud computing and ubiquitous connectivity and we believe that our existing and future distributed real estate can play a pivotal role in providing mission critical.
Occasions with access to the cloud on ramp required to support them.
1 example of this is on the edge compute side, whereas significantly expanded presence in Europe rounds out our position as a global provider of edge compute solutions to support the transition to cloud native telecom functions similar to the.
Conflates.
We are still years away from the deploy meaningful capital in and generating significant revenue from edge compute in Germany, Spain, and France, but the same long term trends pointing to a sizeable market opportunity in the U S. Also exists in these markets.
In addition, we are continuing to explore.
The added smart smart city connectivity private and share to indoor networks and other innovative next generation solutions based on Wi Fi Oran and 5 G.
In closing, we continue to believe that our comprehensive existing global portfolio and ability to be flexible strategic and selective.
<unk> with respect to future international growth investments positions us well for a prolonged period of solid sustainable growth.
With our newly expanded presence in the continent, Europe is going to be a significantly more important component of this path forward.
We're also excited about adding high quality.
Strategic partners in the region to potentially further enhance our growth profile.
While the rest of our international business spread across attractive markets in various stages of wireless technology deployment continues to provide meaningful opportunities for both organic and inorganic growth.
Taken together.
Either with our foundation of U S asset base. We believe this diverse international portfolio will not only help us drive compelling returns over the long term, but will also enable us to bring critical mobile broadband connectivity to billions of people advancing our vision of making wireless communications possible everywhere.
Yeah.
With that let me hand, it over to Rod to go through the details of our results and the updated outlook Rod.
Thanks, Tom and thank you everyone for joining today's call I Hope you and your families are well.
As you saw in our press release, we had a strong second quarter driven by solid global demand for our.
<unk> sites as carriers continued to deploy meaningful capital to augment and extend their networks, we expect carriers across our global portfolio to spend upwards of $70 billion in capex for the full year, which is expected to support attractive growth for our global business before getting into the details of our second quarter results and.
Everywhere full year outlook I want to touch on a few key achievements for the quarter first we closed on approximately 27000 sites across Europe, and Latin America as part of our calcium acquisition and are on track to add the remaining 4000 or so chairman of rooftop sites in early August.
Overall, including.
The telsey of steel other small scale M&A in our Newbuild program, we expanded our global site count by nearly 15% in the quarter.
We financed the <unk> transaction and what we believe to be an optimal way, including agreements to add <unk> and Allianz as strategic minority partners.
In Europe.
We also raised approximately $2.4 billion in the euro debt markets at highly attractive rates and issued more than $2 billion in common equity we are well positioned to continue to deploy growth capital while at the same time effectively managing our leverage and maintaining our strong investment grade balance sheet.
Finally, as expected demand for both existing and new assets across our global footprint accelerated in the quarter with sequentially higher organic growth and continued strong newbuild activity. In addition, we booked a record quarter in our U S services segment, reflecting an attractive demand environment that can.
With our existing comprehensive MLA as is expected to drive higher levels of gross new business in our property segment in the coming quarters.
With that please turn to slide 6 and I'll review, our Q2 property revenue inorganic tenant billings growth as you can see our consolidated property revenue of $2.2 billion grew.
By approximately 18% year over year or nearly 16% on an FX neutral basis. This included U S property revenue growth of 13% and international property revenue growth of 24% or 19% on a constant currency basis.
These growth rates reflect the advantages of.
Our global diversification and our ability to benefit from multiple concurrent deployments of network technology around the globe.
Growth was also favorably impacted by 1 month of contributions from the Telsey of sites.
S. M&A transactions that closed late in 2020 higher levels of pass through of straight line revenue and.
And some non recurring settlements and revenue reserve reversals.
Moving to the right side of the slide organic growth was again, a significant contributor to our overall revenue growth.
On a consolidated basis organic tenant billings growth was 4.8%, reflecting a sequential acceleration of around 70.
70 basis points. This included a step up in our U S and Canada growth from 3.6% last quarter to 4.4% in Q2, driven primarily by the flow through of activity under our comprehensive MLA.
We saw a nearly 20% sequential acceleration in the contribution of co locations.
And amendment activity to organic tenant billings growth.
Escalators were over 3% and churn was 1.9%.
<unk> activity in the marketplace continues to advance and all of the major U S carriers were active in their deployments during the quarter.
Outside of the U S and Canada, we drove.
Tenant billings growth of 5.3% up from 5% last quarter.
Latin America led the way with the organic tenant billings growth of 8.4% driven by solid new business Commencements in higher escalators, primarily in Brazil Org.
Organic tenant billings growth across our African markets was 8.
2%, including 11% growth in Nigeria, where we continue to benefit from an MLA signed last year with the major customer. We also had a solid quarter in Europe with organic tenant billings growth rising more than 100 basis points sequentially to 4.4%, notably our legacy German.
Or gains drove gross organic growth of more than 8% driven by accelerating <unk> deployments and continuing investments in <unk>.
Meanwhile, in India, we saw an organic tenant billings decline of 1.7% essentially flat to the first quarter.
This.
<unk> fairly healthy gross new business activity, but also continued elevated levels of churn.
Turning to slide 7 our Q2, adjusted EBITDA grew nearly 22% or around 20% on an FX neutral basis to $1.5 billion.
Adjusted EBITDA margin was 64.2 percentage.
Business up 90 basis points over the prior year, driven by continued organic growth prudent cost controls throughout the business and benefits from higher levels of straight line revenues.
Cash SG&A as a percentage of total property revenue was around 7.7%.
Moving to the right side of the slide.
Sedated <unk> growth was nearly 19% with per share growth of about 17%.
<unk> solid organic trends contributions from our newly acquired and constructed assets and cost controls throughout the business along with cost efficient balance sheet management and about $20 million in FX favorability.
Percent were the main drivers of this growth.
On an FX neutral basis consolidated <unk> growth would have been over 16% and consolidated <unk> per share growth would have been around 15%.
<unk> attributable to A&P common stockholders per share was $2.39.
<unk>, reflecting a year over year growth rate of right around 19%.
Let's now turn to our raised outlook for the full year.
I'll start by reviewing a few of the key updated assumptions first we have layered in the impacts of the more than 27000 telsey of sites we've closed to.
The date as well as the remaining 4000 telsey as rooftop sites in Germany that we expect to purchase in the first week of August.
Second we have assumed that our agreements with CDP Q and all of the aunts close in mid Q3.
We expect to receive over $3 billion in total proceeds from these transactions and after the closing.
<unk> will own 30% of ATC Europe with Allianz owning 18%. This is higher than the initial 10% that we discussed as all of the ounce has exercised its option to increase its stake in the business.
Additionally, P. G. G M has converted its prior holdings and ATC Europe.
The minority stakes in our local German and Spanish operating companies.
Given this more meaningful minority interest component. We've added net income attributable to <unk> common stockholders in the <unk> attributable to AMC common stockholders as outlook metrics and would expect of feature both in our financials.
The annual reporting going forward.
Finally, as a result of recent favorable FX trends in many of our markets. Our current outlook reflects positive FX impact of $41 million for property revenue $26 million for adjusted EBITDA and $20 million for consolidated <unk>.
Europe compared to our prior expectations.
With that let's move to the details of our increased full year expectations. As you can see on slide 8 we are now projecting consolidated year over year property revenue growth of nearly 14% at the midpoint up 6% versus our prior outlook the increase.
As <unk> approximately $383 million in total revenue from <unk>.
Including $141 million and pass through.
Further we now expect about $58 million in additional pass through revenue throughout the rest of the business, mostly due to higher fuel prices in India.
As well as $19 million or so in higher global straight line revenue.
Moving to slide 9 Youll see that as part of our property revenue outlook increase we are raising our organic tenant billings growth projections on a consolidated basis to around 4% up from between 3 and 4% premium.
<unk> closely as the result of higher growth expectations internationally.
In the U S. We're maintaining our projections for approximately 3% organic tenant billings growth, including the impacts of sprint churn in Q4.
We continue to expect 5 deployments to drive accelerating gross new business activity.
Activity and believe we have a long runway of solid growth ahead of us as carriers invest in network densification over a multiyear period.
In Latin America, we're raising our organic tenant billings growth expectations to over 7% for the year as customers continue to increase their mobile data usage and carriers.
Previous respond with incremental network investments. Despite some continued challenges associated with COVID-19.
As compared to our prior outlook, we now expect slightly lower churn across the region. Although we do still expect churn to trend higher in the back half of the year as some carry of consolidation occurs in.
<unk> from like Mexico.
We continue to drive value additive contractual arrangements in the region and recently signed a significant co location deal with a major customer in Columbia, which we expect to inflect growth higher in that market in the coming quarters.
Meanwhile, in Africa, we are reaffirming our.
The expectations of organic tenant billings growth in excess of 8% as we continue to see encouraging leasing trends in the region.
As I alluded to earlier growth rates in Nigeria are especially strong where we are continuing to benefit from an MLA signed last year with a major customer this along with solid trends.
Mark is the African markets are expected to drive an acceleration in regional organic tenant billings growth to above 9% in the second half of the year.
Moving on to Europe, we now expect organic tenant billings growth of over 5% for the full year up around 150 basis points versus our prior outlook. This is being.
Driven primarily by 2 factors first we expect higher levels of gross new business in our legacy Europe business, where we're continuing to see strong 5 G driven activity, particularly in Germany.
Organic tenant billings growth for our legacy European assets is now expected to come in at above 4%.
<unk> up more than 50 basis points as compared to our prior expectations and second the collocation and amendment growth that we expect to see in the second half of the year on the <unk> assets, which is included in our organic tenant billings growth metric is driving another 100 basis points or so of upside we view this.
It did activity as reinforcing our long term expectations for compelling growth on the <unk> assets.
Finally in India, we continue to expect roughly flat organic tenant billings for the year.
We are seeing encouraging levels of growth activity in the market, but also continued elevated levels of churn.
And while we remain optimistic that the market will return to solid growth over the long term, we're not expecting a significant inflection point in growth in 2021, which is consistent with our prior outlook.
Moving to slide 10, we are raising our adjusted EBITDA outlook and now expect year over year growth of.
<unk>, 15%, including a $183 million contribution from the <unk> assets.
Roughly $26 million in positive translational FX impacts as compared to our prior outlook and about $20 million in higher net straight line.
In addition, we now expect $25 million in incremental.
It'll expected services gross margin as services activity in the U S continues to outstrip our expectations.
For the year, we expect to book roughly $105 million in services operating profit from total services revenue of $220 million.
These positive items are being partially offset by roughly 30 million.
And incremental bad debt assumed for the full year, the majority of which is in India.
Overall collections trends in the market remains solid, but we are taking a slightly more conservative approach for the back half of the year within our projections. The remaining bad debt is focused in Mexico. We're all Pan has recently filed for the equivalent.
Of chapter 11.
<unk> bankruptcy.
Given its government backing and recent progress within the business, we remain optimistic on the prospects of collecting billings with all of <unk> in full but because we expect the collections to be slow.
We have made the bad debt entries for now consistent with our historical approach and similar.
<unk> instances.
Turning to slide 11, we are also raising our expectations for full year consolidated <unk> and now expect year over year of growth of nearly 14% with an implied outlook midpoint of $9.50 per share.
The flow through of incremental cash adjusted EBITDA as well as.
Around $20 million in FX tailwind are being offset by approximately $15 million $31 million and $25 million in.
The mental maintenance Capex cash taxes, and net cash interest expense, respectively, primarily driven by the <unk> transaction.
On a per share basis.
We now expect growth of right around 12% for the year.
Finally, <unk> attributable to ATC common stockholders per share is expected to grow by nearly 10% versus 2020. This takes into account the expected closing of our transactions with CDP Q and Allianz in mid Q3.
And the corresponding minority interest impacts.
The growth rates for the attributable metric is about 2% lower than our projected consolidated <unk> per share growth, primarily due to the fact that the onetime cash interest expense items associated with our prior African joint venture in 2020 did.
Apply to the F F O attributable to ATC common stockholders.
Notably across both of these metrics, we are well positioned to meet our target of driving double digit growth for 2021.
Moving on to Slide 12, let's review, our updated capital deployment expectations for 2020.
<unk>, which now contemplate the <unk> transaction and reflect our consistent focus on driving strong sustainable growth in <unk> per share.
First we continue to expect the dedicated approximately $2.3 billion towards our dividend in 2021, implying a year over year growth rate of around 15% subject to board approval.
It did not with regards to Capex, we are raising our overall projections by $125 million at the midpoint. This includes around $65 million in startup capex attributable to the telsey of sites as well as 65 million in additional deployment capex as part of our revised expectations of constructing.
10000 sites this year up from our previous outlook of 6500.
We continue to drive highly attractive returns through our Newbuild program and including our revised 2021 expectations. We have added around 24000, new sites since 2016, notably our average day, 1 NOI yield.
<unk> unbilled, so far this year of been 11%.
We are also adding $15 million in maintenance Capex as we are accelerating a few maintenance projects over the rest of the year. This is being partially offset by about $20 million and lower anticipated land capex.
On the acquisition front, we have.
Set of just under $9 billion. So far this year, primarily on the <unk> transaction and expect to spend another $600 million in early August to purchase the remaining 4000 telsey as rooftop sites located in Germany.
Of our nearly $14 billion in expected capital deployment for the year over 80.
Percent is composed of discretionary capex and M&A.
On the debt side of the equation. We ended the second quarter with net leverage of 5.7 times and expect that metric to trend down into the mid 5 times range. After closing the CDP Q and Allianz steak sales.
We remain firmly committed to our investment grade rating and continue to expect that solid long term adjusted EBITDA growth will allow us to naturally delever to the upper end of our 3% to 5 times range over a multi year period.
Over the next few quarters, we expect to be opportunistic in evaluating.
Waiting the potential benefits of terming out a portion of our floating rate debt into long term fixed rate instruments as we continually work to optimize our balance sheet.
Looking back over the last decade, we have utilized this strategy to essentially reduce our weighted average cost of debt by half to 2.4%.
Sent as of Q2.
Turning to slide 13.
I want to take a few minutes the highlight several elements of our disciplined capital deployment strategy holding in on 2 international regions, where we have been quite active recently Europe and Africa.
Since the end of 2019, our most transformational.
International investments have been in Africa through our acquisition of Eaton towers, and most recently in Europe through the Telsey of steel.
The chart to the left shows organic Colocation and amendment contributions in both regions have been accelerating.
More importantly, we expect gross Colocation and amendment activity.
Oh and remain at elevated levels over a multiyear period positioning us well to drive strong growth and attractive returns across our recently acquired assets in both regions.
In addition to acquiring high quality strategic site portfolios. We have also been of ramping up our newbuild programs across both regions as you can see.
See in the Middle chart on the slide in fact, we've gone from constructing an average of less than 100 sites annually back in the early 2000 tens to a forecast of around 600 sites in 2021, primarily in Africa importantly, the return characteristics of these bills have remained extremely attractive.
<unk> through the average day, 1 NOI yields of approximately 10% expected this year.
As you can also see yields have risen sharply on older vintages of Newbuild sites as a result of the strong lease up trends I, just mentioned and we expect to continue to drive meaningful Colocation and amendment revenue on.
<unk> sites in the future.
Further we continue to focus on building and leasing sites the high quality large investment grade tenants, who we believe will drive the bulk of the network investments in these regions for the foreseeable future. We anticipate the demand for Newbuild across Africa, and also in Europe, where we have inherited.
Of our new bid a robust pipeline with Telefonica is part of the <unk> acquisition to remain strong as carriers address their coverage and capacity needs to meet <unk> and <unk> demand.
We are also focused on growing our business sustainably, while driving industry leadership and innovation a perfect example of this is what.
Her doing in Africa, with energy efficiency and renewable energy whereby the end of 2021, we will of invested upwards of $250 million on lithium ion batteries solar power solutions and other energy efficient technology, while we are still fairly early in the overall progression of these investments the.
We've been the results have been compelling with average diesel consumption per site declining by around 35%, coupled with improved battery and generator of efficiency and elevated uptime levels that we believe are best in class.
Through these initiatives not only are we earning an attractive return on investment, but we are also helping to.
Build and enhance a sustainable global digital ecosystem.
This approach to capital deployment in Africa, and Europe is indicative of our overall global investment philosophy.
We continue to look for compelling opportunities to deploy capital and responsible sustainable ways, where we can generate attractive long.
Term returns and solid growth, while partnering with large multinational mobile network operators as they bring enhanced connectivity to their customers.
And we believe that the global diversification that we've built into the business will benefit us for years to come.
Finally on slide 14 and in summary.
Q2 was another quarter of solid organic growth margin expansion meaningful newbuild activity and consistent dividend growth. This was achieved while closing on and beginning to integrate the vast majority of our <unk> acquisition issuing over $2 billion in euro denominated debt at record low rates completing a successful.
From the equity issuance and partnering with 2 world class strategic investors in <unk> and Allianz.
For all of this I would like to offer a huge thank you to our nearly 6000 global employees, including those who have recently joined us from Telsey us their.
Their hard work unwavering dedication and.
In numerous talents have positioned us extremely well to continue driving compelling total returns for our stockholders.
We look forward to finishing 2021 strong and are more excited than ever about our long term growth trajectory based on the continuing global rise in mobile data demand and our durable competitive.
<unk> advantage throughout our served markets.
With that I'll turn the call back over to the operator for Q&A.
Ladies and gentlemen, as a reminder, if you would like to ask a question. Please press..1 then zero on your telephone keypad once again, 1 of them zero on your telephone keypad.
Our first question goes to the line of Ric Prentiss with Raymond James. Please go ahead.
Hey, good morning, guys.
Correct.
Good morning for some of them for you. Good morning does the summer for you guys and has been 1 of the Barry I. Appreciate you guys breaking out the the guidance between consolidated.
Proportionate of F. S O I think of as you know that's where the 3 things we adjust for from the assets out of Fad, but looking at that item. The 110 million of minority interest adjustment for calendar 'twenty, 1 how should we be thinking about what that magnitude of it looks like when you have a full year of the minority interest in Europe, just as we think into.
The number of 23, what should that Delta would be looking like.
Right Yeah.
Yeah, absolutely so that 1 there Rick let me give you the.
Let me give you the big pieces of what's actually driving those numbers and of course its healthiest is in there.
It tells you is in there.
The 22 proportionate share of box 2021, so of the 110 million roughly the vast majority of that of course was all in the in the accounts.
The only other 1 is with Halcyon and then PJM of course, which we now have gone in in our Germany, and Spain areas.
For the full we have the small minority interest in India, that's about 8% of the business. There. So the way to think about the the $10 million roughly $85 million of that or so is healthy as the remainder of India. So think about the $85 million in and being incur roughly I guess 7 months of the year and then you can.
Extrapolate from that but of course tells you is going to grow into next year, we're not giving guidance next year, but that'll give you some indication of kind of where they had and put it in the right magnitude.
Thank you Richard.
Yes, sorry, Tom the 7 months.
Of our mid third quarter.
Yeah.
I'm, sorry, Rick I missed the question.
So Chelsea is for 7 months or is it just mid third quarter would it be more like 5 months from there.
Mid third quarter.
I'm sorry, Tom go ahead.
I was just kind of say Rick maybe if you kind of step back and think about it going forward. My sense is it'll be really proportional to 'twenty.
2021 going going forward, so unless some other M&A transaction drives kind.
Kind of a similar mix of allocated capital is as tells us but makes sense going forward will be similar to the 'twenty 1.
Okay.
The other things we adjust for from <unk> to Fad is.
Prepaid amortization of revenue and we like the fact that you guys exclude that from the organic growth.
Net noncash prepaid amortization revenue did tick up in the quarter it looks like.
Spike in Europe as well.
$48 million in the quarter.
This noncash prepaid amortization revenue either.
Items is that something also we should think is that like a good run rate going forward, maybe $50 million of quarter $200 million per year.
Okay.
Yeah, it might work out.
If you take that 1 but.
Yeah, Yeah, I think there's nothing significant there that that's going to vary. So I think you can think about that.
As a run rate going forward for at least the.
The future here.
Yeah and of course, there's whole bunch of changes and as we do think back back of change, but barring any other material changes that would drive that you can think about that as a run rate.
Okay. It makes sense, obviously much lower than 1 of your peers is looking about 500.
We ended the year in that noncash items, but I appreciate the breakout on these items and stay busy and when.
Well.
Ex Rick you too.
And our next question is from Simon Flannery with Morgan Stanley. Please go ahead.
Good morning.
Tom I Wonder if you just give us a little bit of color you've done a lot of deals how does the calcium initial and integration go any kind of initial learning solution reactions. There and I think you also made some comments in your opening remarks about.
The new growth areas, 1 of them being private networks, we've seen electric utility.
50, <unk> signed some deals to to work with private spectrum.
Where are you seeing most interest there and.
When do you think that starts to scale.
Yeah, Hey, Thanks, Simon Hope hope Youre doing well on the integration front I mean, it it's going very very well I mean, we do have a lot of experience.
With.
These types of transactions, but I'm really proud of of the teams working through obviously of different difficult pandemic.
In terms of getting getting things done, but but all early signs are really positive force the people the the teams the expertise.
You've seen some of the.
The the outer size even results in the quarter.
And the expectation for the year.
As a result of what we're seeing in both of.
Of those critical markets for us from that from a European perspective, the Tam is large.
We see new spectrum being deployed so far.
<unk> growth.
It is strong.
The organic growth that we see in particular, even in Germany is stronger than the than we originally even had thought.
And from a portfolio of perspective, we have done a lot of due diligence as I mentioned and as Rod mentioned on the site themselves, we know them quite well.
And they are continuing.
<unk> to perform just like we thought.
So as I said in my remarks in our view of this was the best portfolio, there with really solid high quality anchor tenants.
Tenants.
Everything is going very very well for us.
And we're expecting the good strong year and then.
The strength going.
Into 'twenty 2 I think the organic billings growth is is going to continue to uptick.
And it'll be stronger out of the back end of this year.
Leading us into providing great foundation for growth in 'twenty, 2 so really all the very positive on the.
The private network side, we continue to.
Okay.
The number of different initiatives utilizing different spectrum and and so you know I don't know how quickly theyre going to be rolled out candidly our assignment and we're participating as I said, we have a sizable group you know looking at what the opportunity could be.
Have.
The significant das networks.
As you well know and we're really looking at how can we.
My great them to kind of the next technology.
We'd like to be able to lower the overall cost in the <unk>.
And use that we're in and so we're looking at available spectrum and looking.
King of technology, but we're still really in the at the early stages of that deployment, where in the CVR S alliances.
As you well know and taking advantage of that knowledge and seeing whether there are opportunities leveraging that technology that spectrum to be able to even increase the overall value proposition that we have for our customers.
Yeah.
Great. Thanks, a lot.
You bet.
And our next question is from Matt nickname with Deutsche Bank. Please go ahead.
Hey, guys. Thank you for taking the question.
2 on the U S. First off just I guess broadly nice bump up sequentially in terms of Colo and amendment active.
Customers wondering could you give us any more color in terms of drivers, whether it's broad based across carriers and how to think about the potential for sort of incremental improvement from here.
And then within that maybe just thinking about dish on a more go forward basis any updates you can give us in terms of discussion you're having with them.
And does the new agreement they've got with AT&T impact if at all how you think about their network builds opportunity. Thanks.
Hey, Matt Good morning, I'll I'll start here and Tom can jump in kind of as we go. So yes, we are seeing an uptick in activity in.
And just lastly, as you suggested we we expected that so where were actually realized and kind of what we expected. When you look at the full year in terms of the gross new business that we expect the drive in the U S. On the incremental monthly run rate, we expect that to be more than the 2025% growth rate for the U S. So we expect.
In the you had kind of monthly run rate addition to be strong. It is broad based so we see activity through all of the carriers. The 1 thing that I would point out is with dish we will see.
Revenue from their activity on our organic tenant billings really begin to impact the numbers in 2022, not so much in 2021.
Expected of them, but they are certainly out of active doing the planning for the network, they're active in our services business, which you saw the numbers. This morning, we're increasing our services outlook the $220 million that's up again from our prior outlook of 175, which was up from our original 101 of them. So that's the early indication of where youre seeing that that level.
The activity, but where we're excited about what we see in the U S. We're excited about that incremental monthly run rate growth new business growth of north of 25% and we do think that given the new C band spectrum and everything that's going on that we're at the beginning of a multiyear.
Stretch of activity that we expect to see in the U S.
Level of it.
Well can I just just.
All of the both of them services I think the implied.
Margin is about it.
Little under 50% traditionally you've done I think we'll kind of 60% so any.
On maybe what's driving that delta.
Yeah. It really I mean, I think you can think about it Matt is just the mix.
The issue in terms of the types of services that we're actually doing it's and it's actually a little higher than what you are suggesting our original outlook at the gross margin for services in around 54%. It's still in the mid fifties with the latest guidance with the 220.
Milligan, we have about 120 of $125 million of directs that we're assuming.
Assuming.
But if you did see any inflection there in the margin it would really be a mix issue with the services, we're not seeing anything from a labor cost or labor shortages, that's driving any kind of an impact on our services business things are working very well and a lot of it is done internally.
Got it thank you.
Yes.
Our next question is from David Barden with Bank of America. Please go ahead.
Hey, guys. Thanks for taking the questions I guess, 2 if I could the first of all it is.
Maybe Tom or Rod.
You know the the availability of private capital sort of really change the complexion of your footprint in Europe.
C. G. G M and then the scaling up with itself. The steel now with all of you also seem to be true is that kind of money at that kind of skill available only in the developed markets or true that those relationships or new relationship pivot and kind of change the complexion of some of the work you're doing in the emerging markets.
Europe, starting from next and I guess the the second question is Tom in your opening remarks, you mentioned that Brazil.
<unk> was doing well improving even I think that that was.
A part of it.
Unknown factor with respect to the oil situation you know the carriers kind of splitting up.
Asset down there is.
Is that is that the American tower specific thing or it's just the entire wireless market irrespective of the way situation just doing better. Thanks.
Yeah sure Dan on the first 1.
Obviously very opportunistic in terms of.
Looking at various forms.
Of of capital.
But I can tell you that the.
Pension funds infra funds are there is a an extensive amount of capital that's available in all of the markets that are that we're servicing so yeah. It is there and we'll take a look at whether it makes sense for us whether they are the right partners.
<unk> for us.
Our intent here looking in diversifying the pools of capital that we're using is to provide a platform for us to be able to expand and.
And expand aggressively if if it makes sense to do so.
So in Europe.
We've set ourselves up with I think really solid.
<unk> in the marketplace and it really provides a very efficient platform for us to be able to to expand the transactions need to be there.
To make sense for us and all of those things, but but having those kinds of partners and that kind of capital available.
Really I think is.
Helps us significantly in terms of being able to expand in those areas quickly.
And with regards to Brazil.
Brazil in and do a shout out to our teams in Brazil.
Because we think that the splitting of the OE portfolio is going to be a long term positive for.
Marketplace.
Candidly there are better funded carriers it picked up those particular assets and it rationalized the.
The portfolio is down there are quite a bit in the other spectrum is in the hands of.
Of the entities kind of customers in the market that really wanted to deploy it and and really want to advance the technology.
<unk> deployments in the marketplace. So we think it's that particular.
The transaction event in the marketplace was a net positive force and and as I said I remain.
Really optimistic on the opportunities in the marketplace.
And in the way our teams are really taking advantage of it.
Thanks, Tom.
You bet day.
And our next question is from Tim Horan with Oppenheimer. Please go ahead. Thanks.
Thanks, guys 2 questions..1 can you maybe just talk about the benefits of the private finance partners of going private as opposed to just buying your public stock and.
And secondly.
Congratulations on the lithium batteries and I know you've been doing some fiber backhaul is there a way over time to move into more and more active elements of the carrier networks to get more outsourcing of the carrier networks and <unk>.
I guess would that be a net positive and particularly in emerging markets.
Thanks.
Sure.
Yeah on the.
On the private.
Capital.
No we looked at the private capital is a very cost effective way of aligning ourselves with very attractive partners with deep pools of cash to be able to position us and provide us with the platform for some sizable growth going forward now and that's not an indication that we've got deals in the hopper.
By the kind of ready to roll on.
But there are some significant the portfolios in the marketplace that may make sense for us going going forward, we'll look at each 1 individually and whether it does but but having that pool of capital.
It makes sense from a diversification perspective I'm big on diversification as you can see through our portfolio.
Or the broad sense of diversification between you.
U S or internationally within the international with developed and developing markets and I think that rule proves true for forms of capital.
We wanted to ensure that we've got access into all different forms of capital that's available to us.
And take advantage of that going forward.
So that's really I think on the on the capital side.
On the active versus passive.
We.
<unk> been very successful on the.
On the passive side of this in the end.
<unk> and.
Our intent is to try to continue to stay in that type of of roll in and leverage that kind of of model. There are certain elements on the active side that we are involved the power. For example, we have a number of initiatives.
And many of our more actually all of our markets from a power perspective, so I'm on the primary power.
Side, where we're the primary supplier of of.
The power in markets like Africa, and India, and so from that standpoint, we are part of the kind of the active management.
Of of ensuring that their networks are running properly and we've done a as ray pointed out we've done some <unk>.
So significant investments.
<unk> in areas, whether it's in solar of lithium.
To be able to improve.
Our capabilities and to be able to offer that value to our customers as well as of generate value for ourselves as well as generate value for some of the IV.
From an eco perspective.
And the.
In those markets.
And really provide kind of of sustainable platform going forward. We're also very involved in the secondary power side you look at the United States for example in your developed markets.
<unk> of generators in those markets.
And providing secondary.
<unk> power and backup.
For our customers there and we're even looking from a power perspective is kind of of virtual power source from of storage perspective.
We might be able to provide particularly in our international markets as we continue to really leverage solar.
As well as lithium.
We've already been exploring with wind we of site there that have solar panels, where we've deployed 50.60000 panels in the region.
And we've got wind turbine so we're trialing of lot of different.
The things and we're working with the number of different external parties to really be able to leverage their expertise.
But when you start to get up into the real active side of the.
Of the network as I said.
We have really tried to stay away from that.
And we will continue to do so our customers are looking for more involvement in that area.
That hasnt been our strength.
Going going there and but I mean to the extent that there are opportunities and it makes sense for us and we get the right resources and talent to be able to do so we will look at it but that's not part of our major strategy right now.
Yes.
You bet James.
And our next question is from Jonathan Atkin with.
RBC. Please go ahead.
Thanks, a question on U S and on India. So you asked the growth outlook was unchanged at 3% I just wondered.
If theres any operational or maybe non operational factors to think about.
As we kind of head into the year, the second half of the year.
It might lead to.
Maybe some upside or is so much locked in under Msas that you clearly don't expect much variability. So that's the U S question and then for India, you kind of laid out why you're kind of.
Zero percent number, but if it were to.
TVA during the second half of the year.
Would it be due to higher gross activity or lower churn, which is the more plausible outcome for India.
Okay.
Yeah, Jonathan this is Brian So I'll take the first 1 year of certainly so in the U S. We're projecting organic tenant billings growth rate in that 3% range. It's.
So we did not change that in the outlook and I'll just highlight a couple of things. The first 1 is we are seeing an acceleration in activity in Colocation and amendment in the U S. Net were very excited about but that is that acceleration was contemplated when we executed the MLA that we have in place so a lot of that.
Ben can you just kind of built in price and and and within our guidance. So we think certainly for this year at very stable. We also gave longer term guidance for the U S.
You can go back and refer to a lot of in that guidance you can see that the growth rate in the U S are accelerating over the next several years.
Your line.
I think for the sprint churn so the other point that I would make is we do have the spring churn that will begin to roll off in Q4 of this year the largest effect the single year effect that we'll see from that will be in 2022. It will continue out to 2024. So it will be 4 years of kind of sprint churn and again.
Again, the biggest impact will be in 2022, but youll see it in our numbers and in the end of this year, but that's all baked in within our within our 3% organic tenant billings outlook. So we couldn't be more excited about the U S and its trajectory going forward and once we get through the sprint churn.
Respecting kind of an.
An acceleration and again I would ask you to go back and refer to our longer term guidance and you'll see what I'm, what I'm, referring to in terms of the outlook.
And the acceleration in overall organic growth that we are expecting over the long term.
And just on <unk>.
Oh go ahead, right I was going to say.
Can fill in if I.
Some pieces on the on the India question, it's probably tough to kind of have any major inflection given the already halfway through.
Candidly the pandemic held back a little bit of our built.
In Q2, and so I would expect actually of pickup in our build program. So at least from a from an inorganic.
Ganic perspective in the second half.
You saw of churn did drop a bit.
In the end.
Of the quarter from prior year, and so I would continue to kind of expect that going forward, but but generally speaking I wouldn't expect any major inflections, 1 way or the other.
In the market.
Thank you.
Yeah.
Next we have a question from Colby <unk> of sale with Cowen. Please go ahead.
Great just a follow up on the new Colo and amendment expectations from the United States.
This year I think on your fourth quarter earnings call. You guys had said that you thought that number would be up about 15%.
The year.
Over year that number I think it was 134 million in 2020 and in response to Matt's question I thought you might of been mentioned 20, or 25%, but I might have gotten that confuse I was just looking for clarification and then secondly, Rob you mentioned the opportunity to do some refis in the back half of the year I'm presuming that's not included in your current.
Per share guidance range.
Wondering if you could help try to quantify or size the.
The amount of debt that you could potentially look to refinance thank you.
Yeah, Colby so I'll just.
Clarify here on the run rates of the U S.
I spoke earlier on the call. It's the monthly run rate incremental addition, that'll be up around.
Current percent of just north of 20%.
That's the that's the driver of that is really the long term value creator.
That you should be thinking about.
Is that the team first of all of what you had guided to earlier still in place.
I'm trying to think yeah of the 50% of.
<unk> 20 per day.
Okay.
And then all of the refi question as always looking to be opportunistic in terms of refi.
As you probably know we cleared of all of our senior note maturities for 2021.
Think about refinancing we're really looking into 2000.
So from flu and again, we'll be opportunistic we'll look at the rates, we'll look at where the market is.
Do our calculation and will execute when and if and only if it's.
It's accretive and good for our shareholders to do so in terms of just giving you a rough scale, we have next year and the getting.
In and around 1 point.
The 5 billion maturing so that's probably.
What you might look at in terms of of refinancing. If we were to do anything later this year that would take out any kind of senior notes for 2022.
Great. Thank you.
Okay.
And our next question comes from Nick del Deo.
With Moffett Nathanson. Please go ahead.
Hey, good morning, Thanks for taking my questions.
1 in Europe, 1 in the in Mexico.
First of all are the tells his leases structured is as traditional leases of Msas and do you find that the carriers in Europe are gravitating towards the 1 structure versus the other and I guess at.
It is the distinction matter.
And then second in the in Mexico, You noted in your prepared remarks that the Red come party of all of our bankruptcy.
And you touched on the near term financial impact can you dimension of what sort of contribution you have seen from them over the last few years and beyond collecting the receivable that are that are currently outstand.
The end of the day kind of how you expect things to play out as it relates to new business going forward.
Yes sure sure so in terms of the.
Make sure I got the questions here. So in terms of the structures in Europe, There's really no significant differences in terms of the the structure of the contracts in Europe.
And in the U S. The fourth any contract net minor differences, but structurally there is similar and nothing that would drive any impact it would be noticed in terms of the numbers and those sorts of.
Issues in terms of in Mexico Alton.
Alton have filed bankruptcy, so we're kind of working through.
True that I'll point out a couple of things here number 1 is they do have of remaining term on the leases that is quite long. So we have about 6 years remaining on all of their leases they might make up about 9 percentage of Mexico revenue and so that's kind of the size that they are in terms of the in terms of the business there and it's less.
Then less than 1% close to a half a percentage of the overall company revenue with all of that said just because they filed for bankruptcy doesn't mean that they're going to the market. So we'll be working through that with them and and and.
And hope that they will restructure and stay in play I think they are an important player in the Mexico market, they're supported by the.
And they have had a fair amount of of success other than the fact that their overall balance sheet need some need some support so we do expect them to continue but that will be kind of up to them as we move forward.
And if for any reason they did exit we of that 6 year protection, then that service still needs to be provided so those customers would have to move.
Move on to another network and that could potentially drive higher capex from that perspective to support that customer base was on a different network.
All right got it thank you rod.
Youre welcome.
Our next question is from Bob <unk> with UBS. Please go ahead.
Great. Thank you a follow up.
For the U S. Can you provide some color on what's your long term guidance had assumed for dish network sales and how you think the income to dish wholesale deal it would impact that thank you.
Good morning, Matthew So yeah, we don't think that the of the the new dish deal will impact.
The longer term guidance, let me highlight here.
In terms of our longer term guidance I don't want to get into the specifics around dish in any specific contract terms. They were in our longer term guidance. So what we laid out was organic tenant billings growth of at least.
4% on average over the next several years.
The year that encompasses 2021 out through 2027, if you normalize that for the sprint churn it goes up to about 5%.
There are 2 important chunks there in terms of time periods. If you isolate the 2021 and 2022 time period, we're looking at.
At an average organic growth rate of about.
The 2% in the U S, including the sprint churn that we've all discussed normalizing for that it would be up around 5%. If you take that next step out to 2023 to 2027, we're projecting greater than 5% even with the residual.
Churn from sprint and normalize the that were.
Effecting greater than 6% growth between 2023 and 2027, so dishes in there we're building site for them today revenue will start to them in 2022 and ramp over the next few years, they're in that longer term guidance and you can see that longer term guidance is higher in the out years than it is in the earlier because we do expect to see accelerate.
And of build there as.
As the carriers build out <unk> kind of across the U S and deploy the new spectrum.
Great just 1 follow up to the extent that influences those the outs negotiate spectrum is that a potential amendment to the current MLA or do they have sort of flexibility.
<unk>, yes, we're working through those issues I don't want to I don't want to talk about the specifics in that contract will lead that.
Between us and dish and AT&T, the kind of figure out.
But we'll be working with with Jason with AT&T to figure out exactly what it means we do believe the dishes intent is to build the network substantially.
In the U S. That's what our dreams contemplates and the 1 thing that I would say is there is a firm revenue commitment within the contract that.
That would not change depending on their and altered build strategy. There. So we do certainly of that protection, but we're very optimistic in terms of dishes intent to build the network and our position.
Positioned to capture revenue, there and support them and help them get that network build.
Got it thank you.
And I will turn the conference back over to Mr. Kozlowski for final comments.
Thank you Leah and thank you everybody for joining the call today have a great rest of your day.
Ladies and gentlemen that does conclude your conference for today. Thank you for your participation and for using AT&T teleconference services you may now disconnect.
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