Q3 2021 American Tower Corp Earnings Call
Alright.
Yeah.
Ladies and gentlemen.
Thank you for standing by welcome to the American Tower third 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'd like to ask a question. Please press one then zero on your telephone keypad I would now like to turn the call over to your host Igor Kozlowski, Vice President of Investor Relations. Please go ahead Sir.
Good morning, and thank you for joining American Tower's third quarter 2021 earnings conference call.
We've posted a presentation, which we will refer to throughout our prepared remarks under the Investor Relations tab of our website Www Dot American tower Dot com.
On this morning's call Tom Bartlett, our president and CEO will discuss current technology trends and how we are positioned to benefit from continued wireless technology evolution.
And then Rod Smith, our executive Vice President CFO, and Treasurer will discuss our Q3 2021 results and our revised full year outlook.
After these comments, we will open up the call for your questions.
Before we begin I'll remind you that our comments will contain forward looking statements that involve a number of risks and uncertainties.
Examples of these statements include our expectations regarding future growth.
Including our 2021 outlook.
Capital allocation and future operating performance.
Our expectations regarding the impacts of COVID-19.
And any other statements regarding matters that are not historical fact.
You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward looking statements.
Such factors include risk factors set forth in this morning's earnings press release, those set forth in our Form 10-K for the year ended December 31 2020.
And in other filings, we make with the SEC.
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 with that I will turn the call over to Tom.
Thanks, Igor good morning, everyone.
Consistent with our prior two three calls my comments today will center on the key trends driving our business now and how do we think the technological landscape will develop in the future.
I'll touch on how we are positioned to benefit as far as deployments accelerate and cloud native applications and the edge evolves, particularly in the United States. Additionally, I'll spend some time discussing our European markets, where we now have a scaled presence and are poised to create further value as technology evolves, there and then briefly cover.
We are seeing in our earlier stage international markets.
Finally, I'll outline some of the progress we've made in some of those same emerging markets and the platform expansion side, particularly with respect to our investments in sustainability and renewable energy as we continue to lead the industry into a greener future.
At a high level.
Evel much of my commentary today will sound familiar to those of you who have listened in on prior technology focus calls and we view that as a positive.
Technology is evolving and advancing right in line with our expectations and the long term secular trends that have driven and continue to drive our business remains strong.
There are also new developments in the marketplace around the overall digital ecosystem that we're excited about and our tenants continue to power ahead with their network augmentation and expansion activities.
Taken together this is a backdrop that we expect will lead to sustained attractive growth for us over the long term.
Central to this belief is the view that our core global macro tower business will be the foundation of our success and the main driver of our cash flows for the foreseeable future.
As macro towers should remain the most cost and technology efficient network deployment solution and most topography is worldwide.
Our conviction in this regard has only grown stronger over time supported by our customers significant investments and new spectrum assets record levels of wireless capex spending in markets like the United States and numerous public statements by them, indicating their intention to utilize macro sites to drive aggressive deployments of <unk>.
And other wireless technologies globally.
We continue to view mid band spectrum, which includes the recently auction C band in the two five gig band currently being deployed in the U S. As the workhorse of the true <unk> experience and we believe to be the fundamental enabler of the immersive next generation <unk> applications and use cases that are set to emerge.
As coverage improves in advanced devices penetrate the market.
Importantly, we continue to expect the propagation characteristics of the sub six gig frequencies compared to traditionally deployed mobile spectrum to necessitate significant network densification over the long term supporting a multi year period of strong growth on our tower sites.
We're seeing the leading edge of this activity in the U S. Today generating record services revenues driven by all of the major carriers as they accelerate the early stages of their respective <unk> deployments.
Further application volumes within our property business are strong supported by expected wireless capex spend in the mid $30 billion range. This year.
Industry experts to anticipate that these elevated levels of capital spending will be sustained for a number of years driven by our mobile data usage growth CAGR of more than 25% over the next five years amazingly. This follows a more than 25% CAGR for the last five years and cumulative growth.
<unk> of approximately 7500% over the last decade.
This compelling demand backdrop, coupled with the long term noncancelable leases that comprise our more than $60 billion global contractual backlog gives us confidence in our ability to drive organic tenant billings growth in the mid single digit range on average in the U S through 2027 and to <unk>.
Five higher growth rates abroad in that same period.
I'll touch on this further in a few minutes, but as a quick reminder, these baseline growth expectations exclude any material contributions from our various platform expansion initiatives.
What they do include our expectations for an extended period of solid growth in our European markets. While we are seeing similar network growth trends in the United States with early stage <unk> deployments set to accelerate in the coming years.
We expect that our newly scaled European presence will allow us to drive long term value creation as the explosion of mobile data usage across the region continues and the need for communications infrastructure accelerates as a result.
Across Germany, Spain, and France, where five G mobile subscriptions currently make up less than 5% of the total user base, we expect mobile data usage per smartphone to grow by more than 25% annually for the next five years similar to the United States and consequently expect.
Capex spend across the three markets to exceed $11 billion annually over a similar time period.
And as happened in the United States, we're already seeing this acceleration and network investment translate into elevated activity.
In fact in the third quarter normalizing for the impacts of the Telsey steel Colocation and amendment contributions to European organic tenant billings growth rose by around 200 basis points year over year.
Although we expect a significant portion of initial <unk> investments to be focused in urban locations across our European footprint, where roughly 80% of the population resides we anticipate urban oriented consumer demand to be complemented by an ongoing push from European regulators to deliver rural connectivity.
Activity, which will represent another opportunity for us to drive Colocation on our tower sites in those areas.
We believe our balance of rural and recently expanded urban assets positions us well to capture significant market share of upcoming <unk> deployments over the next decade.
Finally in our earlier stage markets across Latin America, Asia, and Africa, we continued to see solid demand for our critical infrastructure largely driven by deployments of legacy network technologies, particularly for <unk>.
While they are looking at Brazil, Mexico, India, or Nigeria consumers are rapidly increasing their utilization of smartphones, thereby driving mobile data usage growth higher.
Many of these regions existing network infrastructure is influenced insufficient to support this deluge of usage as sell side performance is challenged with increased levels of network load.
In response to these trends, we are aggressively marketing our existing assets and continue to look for additional acquisition opportunities to bolster our footprint in these markets.
But at the same time, we have significantly ramped up our new build program given the tremendous need for an entirely new infrastructure. In fact, if you take the nearly 5900 sites, we built last year and add our expected 7000 sites at the midpoint of our outlook to be constructed this year it would represent.
Went almost as many sites as the previous five years combined.
And as we laid out a few quarters ago, we are targeting the construction of up to 40% to 50000, new sites over the next five years.
With day, one NOI yields on these builds continuing to average above 10%.
We are excited about deploying significant capital to these initiatives going forward as we capitalize on the advancement of network technology across the emerging world, while helping to connect billions of people.
In addition to the core secular growth trends driving our global tower business, we are seeing indications, particularly in more mature markets like the United States or abroad evolution within the overall wireless ecosystem.
Evolution is closely intertwined with <unk> and includes an increased prevalence of cloud Native network solutions more emphasis on the various permutations of the network edge and an ever increasing intersection of the wired and wireless portions of todays converged network architecture is.
As networks Virtualized Oran. We're open ran is expected to become a more important option to improve their economics. We are now starting to see this phenomenon with dish in the United States and in Germany, where one and one has spoken extensively about its intent to utilize this technology.
By utilizing Oran carriers have the potential to optimize network design and drive cost efficiencies freeing up incremental capital to invest in Densification and other network enhancements that helped drive growth in site deployments and co locations importantly.
Importantly, the role of the tower in this evolving network design is as critical as ever.
While base station functionality will likely continue to evolve to be cloud native software agile. The radio equipment that is placed on the tower itself, which has always driven our revenue will continue to reside on the tower importantly, we believe we can leverage our extensive global distributed real estate portfolio.
Not only drive continued strong growth within our core tower business, but also to take advantage of other emerging opportunities as networks. Virtualized. This may include multi access edge computing and potential other edge cloud permutations of neutral host infrastructure at.
At the end of the day modern software driven networks are becoming smarter faster more capable and more dynamic and we are focused on ensuring that American tower is a meaningful role to play in this context on the infrastructure and real estate side of the equation.
What are the areas. We focused on is the development of the network edge or more accurately the development of multiple layers of the network edge with the need for lower latency expected to become more and more critical overtime with applications like AR VR telemedicine real time analytics autonomous.
Driving entertainment streaming you name it and many others, who are beginning to emerge. We continue to believe that this can be a meaningful opportunity for American tower.
We've done more work on the evolution of the edge the concept of multiple edge layers has come into better focus.
Today for example by far the most prevalent layer is the regional metro edge owned for the most part by the large data center companies. We're vast amounts of data processing is in centralized.
These locations provide access to cloud on ramps and are absolutely critical within today's networks.
We expect this need to be the case for the foreseeable future.
Fact is the volume of data carried across networks continues to explode, we anticipate the demand for these types of large scale facilities will only grow.
The upside of these locations as their size and capacity the downside, which to this point hasn't been all that relevant is it fairly significant network transit costs and latency built into reaching the central compute functions as the data often has to travel hundreds of miles to reach these destinations.
These transit costs and latency considerations, which we expect to become more important in the future will necessitate more edge locations as uplink data increases from Iot use cases and demands are distributed computing advance.
The next layer beyond the metro edge in our view will be the aggregation edge here youre likely to.
Post C ran hubs and future Mec applications as network virtualization advances along with distributed data processing, AI inferencing, and other compute functions, which will need reduced latency.
The major Hyperscale has continued to evolve their edge cloud platforms. So that they can extend computing capabilities deeper into the mobile access network at the aggregation edge.
The next layer beyond this which we turn the access edge is where our existing tower sites are located today.
Offering an opportunity to meaningfully enhance the value of our legacy real estate.
We expect to eventual HCV red in O ran network functions AI inferencing data caching and a variety of other next generation VR cloud native ultra low latency applications residing at these locations.
Finally, we've also identified the on premise edge, which would lie beyond even our tower sites and could eventually help support private networks smart factories and a host of other applications located at the end user site.
At the end of the day, our 20000 foot view is that all of these edge elements will need to fit together to provide a cohesive framework for full scale <unk> across the network ecosystem.
The goal for us is to figure out what the optimal linkages between the layers look like who are the key players will be and what elements of the edge, we may want to own in order to further enhance the strong long term growth, we expect from our core existing business.
To date as we seek to connect the dots we've been active with a number of trial edge compute sites at the access edge, while also operating our Colo ATL Metro datacenter interconnection facility in Atlanta.
Through these investments, we've built relationships with key existing and potential future customers have learned a tremendous amount about key demand trends and have had a front row seat for the beginning stages of the convergence of wireless and wireline networks that I alluded to earlier.
More recently, we acquired data site, a data center company, consisting of two multi tenant data centers in the Atlanta area and in Orlando.
In addition to strengthening our existing position in Atlanta. The addition of a network dense carrier hotel facility in Orlando provides us with a strong south eastern presence with a profile and characteristics that we believe will be critical in the early evolution of the metro edge as we evaluate its role in the mobile networks of the.
Future.
We expect these facilities, which have 18 megawatts of combined power and additional $4 five megawatts of expansion capacity to effectively complement colo ATL and enable us to enhance our ability to develop neutral host multi operator, multi cloud data centers to support the broader core to edge connectivity evolution in the United.
States.
We continue to believe that while a scaled application driven edge oriented business model is still likely several years away. It has the potential to be a sizeable market opportunity with meaningful potential upside not only in the United States, but also on a global basis.
Leading global <unk> are now positioning their networks with release 16, <unk> Standalone core features to explore edge cloud opportunities.
With our distributed macro site presence key markets around the world. We think we're well positioned to potentially be a provider of choice on the edge, particularly for large multinational msos and other categories of customers, maybe looking for a multi market solution.
Switching gears a bit while we believe edge compute will eventually also be relevant in emerging markets that is unlikely to happen in the immediate future.
Consequently, we have focused our platform expansion efforts across our developing regions in other areas, most notably on increasing the sustainability and efficiency of power provisioning in our sites.
As we highlighted in our recently published 2020 corporate sustainability report, we have continued to make progress toward our goal of reducing diesel related greenhouse gas emissions by 60% by 2027% from 2017 baseline.
In 2020, we achieved an additional 8% reduction from 2019, reaching 53% of the 10 year goal.
We are continuing to make solid progress in 2021 with an expectation to spend an additional $80 million towards energy efficient solutions, primarily in lithium ion and solar power across our Africa footprint.
Which will bring our cumulative spend to nearly $250 million.
And as we announced earlier this week, we are furthering our commitment to combat climate change by adopting science based targets, which we expect to help inform our future investments in sustainability.
In addition to the positive environmental benefits from these investments.
Are also delivering shareholder value through <unk> per share accretion.
Lithium ion batteries provides significant energy efficiency density and lifespan improvements over a legacy solutions and while to date <unk> benefits to American tower have largely come through fuel savings, we anticipate over time that our yields on these investments will further expand as we are able to lengthen.
Hattery and generator replacement cycles.
Having already expanded our lithium ion powered site count from 4500 in 2019 to 60 702020, we are targeting another 8000 sites by the end of 2022, and recently signed a multimillion dollars bulk battery purchase agreement in Africa in support of this goal.
Importantly, we believe that energy efficiency, the use of renewables and sustainability in our broader sense could represent an important competitive advantage for us not only from the flow through to <unk>, but also the differentiation and service quality for our customers.
We continue to view sustainability as a critical component of our company culture and will be highlighting our continued progress and future sustainability report, which I encourage all of you to read by the way.
In closing our excitement around <unk> on a global basis continues to grow.
Consumers and enterprises are using more advanced devices for more things, resulting in consistent elevated growth in mobile data usage, which in turn strange existing wireless networks, and necessitates incremental densification and network improvement.
Considerable new spectrum is being deployed new entrants in select markets are building Greenfield networks, and our macro tower oriented portfolio remains well positioned to capture a significant portion of wireless investment activity.
In addition through our platform expansion strategy, we are focused on ensuring that the company benefits from the ongoing convergence of wireless and wireline and the associated expansion of virtualization and cloud native applications throughout the network ecosystem.
Importantly, as we optimize our core business and look for ways to further enhance our growth path and the broader digital infrastructure world, we are as committed as ever to driving profitability sustainability and recurring growth.
We're energized by the future and are excited to be in a vibrant industry that is helping to connect the world.
With that let me turn the call over to Rod to go through our third quarter results and updated full year 2021 outlook Rod.
Thanks, Tom and thank you everyone for joining today's call I Hope you and your families are well.
Q3 was another quarter of strong performance for us and as you heard from Tom we are as encouraged as ever by the technological trends that underpin our long term growth potential.
Before digging into the details of our results and raised outlook I'd like to touch on a few highlights from the quarter first we closed on our strategic partnership agreements with <unk> and Allianz through which they purchased an aggregate of 48% of our ATC Europe business for total consideration of around $2 6 billion euros.
In addition, we closed the remaining 4000 calcium communication sites in Germany back in August with the transaction now fully closed and funded our teams are working to rapidly integrate the assets and we are already seeing encouraging activity on the portfolio.
We continued to strengthen our balance sheet, raising roughly $3 billion in senior unsecured notes, including our euro offering earlier this month through our financing transactions, we've been able to maintain an attractive weighted average cost of debt. While also continuing to extend our maturities as a result of this activity.
Along with a benefit from a nonrecurring advance payment received from a tenant during the quarter. We finished Q3 with net leverage of four nine times.
While we expect net leverage to increase back into the low five times range in the fourth quarter. We are right on track with our overall post healthiest Delevering path and.
And lastly, we saw another quarter of record services activity in the U S as carriers accelerated <unk> related projects.
We view this as a leading indicator of strong levels of gross leasing in our property segment as we head into 2022 and beyond and with that please turn to slide six and I'll review, our Q3 property revenue and organic tenant billings growth.
As you can see our consolidated property revenue grew by over 19% year over year or over 18% on an FX neutral basis to nearly $2 4 billion.
This included U S and Canada property revenue growth of around 10% and international property revenue growth of over 31% or 13% when excluding the impacts of the <unk> acquisition.
This strong performance is indicative of a continuation of the long term secular trends driving demand for our infrastructure assets across the globe.
Moving to the right side of the slide we also had a solid quarter organic tenant billings growth throughout the business on a consolidated basis organic tenant billings growth was nearly 5% for a second consecutive quarter as expected U S. <unk> investments from the major carriers drove healthy activity levels leading to organic.
Ganic tenant billings growth in our U S and Canada segment of over 4% comp.
Contributions from co locations and amendments were more than 3% escalators came in at three 2% and churn was just over 2%.
Moving to our international operations, we drove organic tenant billings growth of nearly 6%, reflecting a sequential acceleration of around 60 basis points.
Africa was our fastest growing region in the quarter posting organic tenant billings growth of well over 9% led by Nigeria, where we continue to see <unk> investments driving both co location activity and new site construction.
We also saw a consistent quarter in Latin America, where organic tenant billings growth was right around 7% driven by solid new business and higher escalators, primarily in Brazil.
Meanwhile, European organic tenant billings growth accelerated by around 100 basis points sequentially to nearly five 5% as expected excluding impacts from the <unk> acquisition organic tenant billings growth in the region would have been over four 5% in the quarter more than 200 basis points.
Higher than the year ago period, driven primarily by new business contributions.
This positive trend reflects both ongoing <unk> activity in early <unk> investments, leading to solid growth from both co locations and amendments.
<unk>, roughly 40 basis points sequential improvement.
Moving to the right side of the slide consolidated <unk> growth was over 13% with consolidated <unk> per share of $2 53.
Reflecting a per share growth of nearly 11%.
This was driven by strong performance in our core business contributions from new assets and around $13 million in year over year FX favorability. Our performance also reflected the benefits of our commitment to driving efficiency throughout our operations and minimizing financing costs, despite growing the portfolio by nearly <unk>.
38000 sites over the last year.
And finally, <unk> <unk> per share attributable to <unk> common stockholders was $2.49, reflecting a year over year growth rate of nearly 12%.
Let's now turn to our updated outlook for the full year I'll start by reviewing a few of the key updated assumptions first our expectations for organic growth across the business are consistent with our prior outlook.
<unk> continued to deploy meaningful capital as they invest in network quality and we are seeing numerous bands of spectrum being deployed for both <unk> and <unk>.
We are also slightly increasing our expectations for services revenue for the year to around $235 million as a result of an outsized third quarter.
Although this implies that services volumes will moderate somewhat in Q4.
Second as a result of our focus on operational efficiency and cost controls along with some one time benefits, we expect to be able to take some costs out of the business as compared to our prior expectations.
Combined with current services gross margin outperformance this will drive our adjusted EBITDA margin expectations higher for the balance of the year.
Third in India. We are encouraged by recent regulatory reforms, which we believe can provide some much needed breathing room for capital constraint carriers in the marketplace and improve the telecom environment overall.
While we believe this is a clear positive first step towards market recovery. We continue to expect flat 2021 organic tenant billings growth in the region as we further evaluate the long term impacts of these developments on the sector.
Finally, incorporating the latest FX projections, our current outlook reflects negative FX impacts of $30 million for property revenue $20 million for adjusted EBITDA and $15 million for consolidated <unk> as compared to our prior expectations.
With that let's move to the details of our revised full year outlook looking at slide eight as expected leasing trends remained strong across our global business and as a result of an increase in pass through together with some modest core property revenue outperformance, we are raising our property revenue outlook by $10 million. This represents 14%.
Sent year over year growth at the midpoint and includes $30 million in unfavorable translational FX impacts as compared to our prior outlook.
Moving to slide nine you'll see that we are reiterating our organic tenant billings growth expectations of approximately 4% on a consolidated basis. This includes roughly 3% growth in our U S and Canada segment, where five G deployments are driving solid activity levels as we exit the year.
As a reminder, we expect the first and largest tranche of contractual sprint churn to hit a run rate in the fourth quarter of this year and while we expect gross activity to remain solid our guide implies a Q4 U S organic tenant billings growth rate of negative 1% as we communicated previously.
On the international side, we continue to anticipate organic tenant billings growth in the range of 5% to 6% as carriers continue to focus their efforts on enhancing intensifying wireless networks in the face of ever rising mobile data demand.
Moving to slide 10, we are raising our adjusted EBITDA outlook by approximately $50 million and now expect year over year growth of nearly 16%.
This increase reflects continued strength in our services segment, where we now expect to see roughly $145 million in services gross margin for the year up from the 123 million implied in our prior guidance with year over year growth of more than 180% on.
On the cost side of the equation, we continue to maintain cost discipline globally, helping to drive adjusted EBITDA margins up by around 40 basis points for the full year as compared to prior expectations.
Turning to slide 11, we are also raising our full year <unk> expectations and now expect year over year growth in consolidated <unk> of roughly 15% with an implied outlook midpoint of $9 64 per share.
The flow through of incremental cash adjusted EBITDA, coupled with the continued cash tax and net cash interest benefits as compared to the prior expectations are being partially offset by around $15 million of negative translational FX impacts on a per share basis, we now expect growth of approximately 14% for the year.
Consistent with our long term growth ambitions that we highlighted at the start of the year.
Finally, <unk> attributable to ATC common stockholders per share is expected to grow by nearly 12% versus 2020, incorporating the minority interest impacts of our strategic partnership with CDP Q and Allianz in Europe.
Moving on to Slide 12, let's review our capital deployment expectations for 2021.
As you can see we remain focused on deploying capital towards assets that drive strong sustainable growth in <unk> per share coupled with a growing dividend, providing our investors with a compelling combination of growth plus yield.
Working our way through the specific categories, our first priority remains our dividend.
For the full year, we continue to expect to distribute $2 3 billion subject to board approval, which implies a roughly 15% year over year per share growth rate.
As a reminder, our dividend growth will continue to be driven by underlying growth in our REIT taxable income incorporating the impacts of M&A and other moving pieces in the business.
Consistent with our prior comments, we anticipate growing our dividend by at least 10% annually in the coming years.
Moving on to Capex, we reiterate our expectations of spending nearly $1 $6 billion at the midpoint with nearly 90% being discretionary in nature.
Driving a good portion of this discretionary capex is our continued expectation to construct 7000 sites at the midpoint. This year with the vast majority in our international markets.
Turning to acquisitions, including contributions from minority partners, we have deployed around $10 billion. So far this year, primarily for the <unk> transaction as well as for smaller transactions, including data site in total of our nearly $14 billion in expected capital deployment for the year, we expect <unk>.
Over 80% to be composed of discretionary growth Capex and M&A.
Moving to the center of the Slide you can see the composition of our $35 billion in cumulative capital deployments since the start of 2017, including our 2021 full year expectations. We continue to augment our developed market presence, which we believe positions us optimally to drive value from accelerating.
Five G deployments and next generation technology evolutions as Tom laid out earlier.
We are also allocating capital towards higher growth earlier stage markets that are typically at least five years behind the U S and Europe in their network deployments taken together, we believe that our global footprint positions us to capture multiple waves of investments across the globe over a sustained period of time.
Finally, you can see that more than a quarter or around $9 $5 billion of our deployed capital in the last five years has been distributed to shareholders in the form of dividends and share repurchases. We continue to view. These components is critical to total shareholder returns.
Moving to the right side of the chart supporting this phase of significant investment and growth has been our investment grade balance sheet.
We believe that our access to low cost diversified sources of financing has been a key differentiator and are proactively working to extend this critical competitive advantage into the future in fact, incorporating our latest financing efforts. We now have a weighted average cost of debt of around two 4% a weighted.
Average tenor of debt of approximately seven years.
And over 85% of our balance sheet locked into fixed rate instruments.
Finally on slide 13, and in summary, and.
In Q3, we continued to capitalize on our strong global demand backdrop, delivering our highest quarter of consolidated <unk> per share on record. This was driven by solid organic growth record setting services volumes disciplined cost controls strategic balance sheet management and accretive portfolio expansion as.
As we look ahead, we believe our existing global real estate portfolio is well positioned to drive long term recurring growth as carriers augment and extend their networks and with the strength of our investment grade balance sheet and diversified pool of funding sources, we expect to continue to deploy capital towards accretive investments that can enhance.
Since our growth path and enable us to create additional value.
Given our positioning at the intersection of real estate and technology in an ever more interconnected world. We are excited to continue to deliver connectivity to billions of people worldwide in a sustainable way, while driving compelling total returns for our shareholders.
With that I'll turn the call back over to the operator for Q&A.
Thank you, ladies and gentlemen, once again, if you would like to ask a question. Please press. One then zero on your telephone keypad, you will hear acknowledgment that your line has been placed in Q you may remove yourself from queue by pressing one zero again.
One moment please for the first question.
And we have a question from Michael Rollins with Citi. Please go ahead.
Well, thanks, and good morning.
Hey, my questions if I could.
The first question is on the domestic environment. Just curious if you can give us an update on U S leasing how it compared to your prior expectations entering into this year.
What that means for the average of.
Organic tenant billings growth guidance that you provided I think the average for 'twenty, one and 'twenty two was about 2% on a reported basis and about 5% on a normalized basis and then just that Tom to follow up on your comments on the edge and data centers is it inevitable that in.
American tower needs to either partner with a larger data center portfolio or directly owned or larger data center portfolio. Thanks.
Yeah. Thanks, Michael maybe Rod why don't you take the first part of the court yet.
And then I'll fill in on the on the second piece.
Okay, great. Good morning, Michael Thanks for the thanks for the question.
So in terms of the U S leasing environment, we're seeing a very strong environment certainly all the major carriers of that activity you've seen that show up.
Most notably in our services <unk>.
Environment, we've seen a tick up in the contribution from Colocation and amendment activity into our organic tenant billings growth. So that's been accelerating through.
Each of the last three quarters, just as we expected.
The outset in the year. So in terms of our expectations everything really is right in line.
With what we expected I don't want to get too deep into the second part of your question around growth in activity. When it comes to 2022, but I will just reiterate a couple of points that we've already made so.
Directionally your comments are correct, we guided to an average organic tenant billings growth in the U S for 'twenty, one and 'twenty two of around 2% you can see we're coming in here in 'twenty, one at around 3% that.
That suggests around 1% organic tenant billings growth for 2022 in the U S. So that's where we would expect to be and again I'm not providing guidance for next year, just reiterating the components of our long term plan and maybe one thing that I will kind of highlight here just briefly is that sprint churn.
Hit us in Q4 for the first time that first tranche as you heard in my comments. So sprint churn now that its active I'll just give you the numbers there again in 2020. One we are rolling off of $195 million of annual <unk>.
Rent revenue and churn in 2022 will roll off an additional 62023 will roll off another $50 million into 2024 will roll up another $70 million, so that sprint churn there that's what's really.
Causing the lower organic growth rates in our U S business next year, the gross growth, we see the environment being very strong accelerating through 2021, and we expect that to continue.
Going in just to give you a couple of the piece parts in terms of.
The impact it'll have on the fourth quarter, you will see organic tenant billings growth rates in the U S around <unk>.
Negative 1% that'll include churn for the quarter of about six 6% and embedded within that is about four 5% just from the sprint churn and of course all of this will have an impact on <unk> in.
In terms of going forward into into future years. So we've guided that our goal is to hit double digit <unk> growth on average from 2021 out through 2027 and of course, some years it'll be higher some years. It will be lower the goal really is an average and when you think about 2022 and this first tranche of sprint churn kind of.
Rolling through that's a year that I would say that it would be challenging to get to 10%.
I'll also say, Michael we haven't given up on it there are certain levers that we can pull in things that we can do within the business to maximize <unk> per share growth and we're doing all of those all of those things so that kind of puts a little bit of context around the U S activity for this year and rolling into next year.
And Michael relative to your second question you can tell that we're obviously energized and excited about the opportunity at the edge I mean, the emphasis right now is really five G and driving all of these.
Lower latency types of applications and needs out further into the market closer and closer to the end user.
We've always said.
I'm a digital transformation perspective, it's gonna be cloud basis can be connected and just could be distributed.
And we think we're in a very good competitive position given the vast amount of distribution that we have in the 25 markets that we're servicing so we're trying to position ourselves in this broader market to be able to take advantage of.
The opportunities, we're going to do it intelligently.
Our execution strategy continues to evolve we think we've done it intelligently in terms of picking up some of the metro sites.
Building out our own sites, we have some market agreements in place to drive access into those sites.
And this is going to evolve this is not going to happen overnight as you well know and so we've got partnerships in place to be able to look at this we're going to be able to hopefully leverage some of those partnerships.
And we'll just continue to monitor the best approach in terms of being able to best position ourselves to be able to take advantage of this opportunity.
We've done that in the past in terms of being smart in terms of where we allocate capital to these types of investments.
Will it take the form of partnerships owning further owning more metro sites.
Unclear at this point in time.
That will continue to evolve as the market continues to evolve, but we do think we're we're in a really good position in terms of being able to leverage our <unk>.
Our real estate.
Our exclusive real estate and to be able to take advantage of that neutral host model.
Thanks.
You bet.
Next we move onto the line of Simon Flannery with Morgan Stanley. Please go ahead.
One moment please.
Okay.
And Mr. Flannery. Your line is now open I apologize okay. Thank you good morning.
Firstly I wonder if you could give us a little bit more color on the advanced payment looks like about close to $1 billion, what's going on there or is that something that we will see again and then there's been a lot of talk about supply chain and we're seeing higher inflation, particularly in markets like Brazil.
Are you seeing any pressure on your customers in terms of their ability to source radios to source tower crews.
The cost of that that might impact some of the installs and to your MLR is protect you from any delayed installs any color around that would be great.
Great. Thanks for thanks for the question and good morning, Thanks for being on the call.
These minutes prepayment, we're not I'm not going to provide details around that I will say it was a little over $1 billion from one of our customers. It really is just a prepayment for.
Lease payments going out over let's say the next 12 months. So it will kind of run through our financial statements pretty quickly and there's nothing more to it than just a a prepayment of the next 12 months kind of leasing fees.
So from our perspective it it's not it's not a big deal. It helps with liquidity it brought our leverage down a little bit you saw we ended a little bit below five times in terms of leverage so it wasn't a bad thing for us to do but it's a pretty simple transaction and I wouldn't want you to read anymore into it than than that.
In terms of supply chain, you know Tom May want to add a few comments here, but from a supply chain, we see no major impacts at this point certainly across our business as you can see in our services business, we continue to hit higher and higher levels of activity and bringing our our outlook up again to the another consecutive quarter here. So we've got access to the cruise.
Also seen our margins expanding in the services business in particular and in the U S. We're not building a tremendous amount of towers. So we certainly don't have any any restrictions or challenges from that perspective, one place I would say going into 2022, we will be keeping our eye on crew availability and labor and things like that.
If the environment stays the way it is we should be fine if things get worse, we'll need to keep our eye on it we do buy a lot of generators. We have generated orders out that are already in place that bring us out into the beginning to the middle of 2022. So from that perspective, we know we're going to get the materials, we need to we expect to get the materials, we need them.
I feel pretty good about that but in the second half of 2022 again, we'll continue to watch the supply chain issues.
To the extent that there are.
Any issues that get worse, we'll continue to keep an eye on it and kind of pull the levers, but from where we sit now we don't think we will we don't see anything hitting US right now we don't expect any challenges through the middle of 2022 and beyond that its too early to comment we'll just keep our eye on it.
Great. Thank you.
And our next question is from Matt nickname with Deutsche Bank. Please go ahead.
Hey, Thanks for taking the question.
One on India, I guess, there's some.
Better organic growth this quarter, a return to positive growth I think for the first time since Q 'twenty. So can you maybe talk a little bit more about the overall demand backdrop across your carrier customers and whether I guess, maybe to drill in a little bit more churn was about a couple million dollars lower than what we've seen in terms of recent run rate and so I'm wondering if the $14 million we saw this.
Quarter cause maybe a better run rate then I'll think about it and start modeling going forward. Thanks.
Yeah. Thanks, Thanks for the question and good morning, So we did see organic tenant billings in Asia kind of turn a corner hearing and get the positive. So we posted a <unk>, 7% positive growth rates, we're still looking for the full year to be right around zero and as we as we look at the <unk>.
The market, we remain optimistic in terms of the gross activity. So the way that even that 0.7.
Organic tenant billings for the quarter I'll give you a little bit of a breakdown. There. So we're seeing high single digits nearly double digit organic new business, that's been pretty consistent for them.
At least six to eight consecutive quarters and based on where they are in their development and kind of transitioning from <unk> to <unk> networks, we expect that that that gross demand should continue the escalators are locked in right around 2% two 2% or so so we have that accounting and we have seen a moderation in a pretty sharp decline here year.
Over year in terms of the churn rate. So a year ago Q3 churn in India was about 13, 5% its down out of about seven 5%. We think thats certainly a very favorable sign and one that we expected to see and we hope to continue to see that going forward in terms of the you did see that there was some there was some.
The good news from the government in terms of regulatory support for the industry and we think that that will help the market in general the whole sector as well as the carriers, particularly the ones with the AGR dos, but all the carries even with your spectrum.
Fees strengthen their own balance sheets kind of regrouping and gear up for competition in this in the sector there and to invest in their networks. So we are optimistic about going forward growth rates than what we would expect let's call. It high single digit organic growth.
Churn levels there in the mid single digits, and hopefully moderating down overtime.
Rob can I just follow up with one other question I wanted to sneak in is on capital improvement Capex, it's been trending lower I think year to date, you've only done.
The $100 million, but I think the guide is for about $185 million for the year I'm, just wondering what's been driving the lower <unk>.
Capital equipment Capex year to date, and then is it fair to assume that a much larger step up that could weigh on <unk> and <unk>.
Yeah, so the cap the cap maintenance there is.
It's going to pop up in Q4, I think you see that you just mentioned that in terms of our guide. It really is just timing and it's the timing issue that we've seen in prior years. So if you look back at our last year spread of maintenance Capex, you'll see kind of the same the same sort of cycle. It is a cash capex.
So it does lag a little bit in terms of the activity. So you see this.
So kind of spike in leasing activity, that's coming that's running through our services revenue and then you kind of see following on from that Youll see a.
And in the maintenance Capex that we that we run through to support the towers and maintain everything.
Oh the tower sites. So it really is just a timing issue Matt.
Great. Thank you.
And next we have a question from Eric Loop Powell with Wells Fargo. Please go ahead.
Great. Thanks for taking the question.
If you could talk about Verizon real quickly I think your holistic pricing structure with them expires at the end of this year. So I'm wondering if you could update us on the nature of conversations with them around that aspect of the MLA and then secondly on the European side nice to see the improvement in organic tenant billings growth.
Could you just kind of talk about how the outperformance is coming from whether that's churn from telefonica versus new bookings and then on the new bookings front.
Any update on conversations with one by one as they contemplate the new build and how you think you're positioned there. Thanks.
Yeah. Thanks for the question I'll take the first part there and so from.
When you look at our our business over in Europe. We are very pleased with the trajectory of the growth rates over there you've seen a couple of sequential quarters of increased.
Organic growth rates, just as we expected to see now that the market has kind of.
Seen a reduction in churn, they're gearing up for <unk>.
Deployments. So that's been that's been really good to see in terms of the piece parts of the organic tenant billings certainly the telefonica additional sites plays a role in there one of the biggest ways that it that it plays in early on it's still very early in terms of bringing those assets in but I think we've talked before about the the ASP.
They're in Europe that.
They basically have a long term contract and that there aren't other Kennedy.
Material other tenants on there so there's really very little churn that will that's possible on that portfolio. So we have very low churn expectations on that portfolio and it's a big chunk of revenue that certainly helps kind of inflect the growth rates to go up higher.
And then in terms of the question with drilling 101, we really don't want to comment on ongoing negotiations, but but negotiations continue there I can assure you.
And we will move on to the line of David Barden with Bank of America. Please go ahead.
Hey, guys. Thanks, so much for taking the questions.
First raw.
Just to follow up on the Europe situation you know at our conference last month, you kind of talked a little bit about how you perceive.
The European marketplace being right per incremental consolidation I was wondering if you were Tom could kind of elaborate a little bit on how you see the European market evolving.
As it matures from a tower.
Third party infrastructure provider perspective, and then.
You could elaborate a little bit on what is going on now with telefonica.
In Mexico, and its network sharing agreement with AT&T and how that relationship between the two of them is evolving for.
Yes.
Yeah, David It's Rob I can start and Rodkin can add and you know with regards to Europe.
We think we have a really solid position in them and in a few of the critical markets. We've got good scale in the market you've got a great relationship, obviously with Telefonica and an orange.
In particular, and and and so we're energized by the type of growth that we're now seeing in the marketplace.
We continue to look at opportunities to further build scale.
Not just in the three markets that we're in.
It also if there are other opportunities, but only if it makes sense like everything else that the that we do and so there are I think a lot of opportunities in the region.
And and we're evaluating them as you would expect.
And to the extent that there's some opportunities there to secure some of that portfolio to gain further scale.
Even in the markets that we're in and relationships with key customers, we'll clearly look to do that and so Europe is as we've said in an area or part of the world that we look to continue to to further develop if it make if it makes sense with.
With regards to that.
To telefonica.
Again, we've got a great global relationship with them.
Theyre positioning to an M D.
And theyre going to have some time for that to be able to.
For that to occur.
There will be some churn overtime.
But the contract that we have with them I think goes out for several years at this point in time.
So we'll continue to monitor that and we manage these types of events I think quite well over over our history and and I'm sure we'll do that here.
Thanks, Tom.
Sure.
And our next question is from Ric Prentiss with Raymond James. Please go ahead.
Good morning.
Hey, Rick.
Couple of questions guys first I appreciate you guys breaking out the attributable <unk> really think that's important to focus investors on cash to common and we continue to exclude non cash amortization from Europe organically. So appreciate that accounting stuff.
First question, we've got a lot on interest rates and inflation can you talk a little bit about how you guys are viewing the interest rate environment and inflation environment. How it affects your financials any potential deals like data was just asking about just the fundamentals of the business a little bit of primer on interest rates of inflation as you see it.
Yeah.
Yes, sure Rick I'll, let our bottling. Thanks for the question I'll, Oh I'll take that one so that's at interest rates for so you've seen us Rick over the last several quarters, even the last couple of years.
Very active in the in the capital market is very active in terms of our debt structure capital structure and different things like that so we've been focused on strengthening our strengthening our balance sheet in a very proactive way. So we now have our average maturities out over about seven years with an average cost of debt down to about $2 four.
Sure.
<unk> or so and 85% of our debt is now fixed out over the long term. So that's that's a heavier weighting towards fixed to variable compared to our kind of standard financial policy. So we've been preparing.
For an environment, where interest rates may tick up so we think from an interest rate perspective, our balance sheet is very solid and in ready for it. There's nothing we can do about preventing interest rates from rising we do think they may rise over time modestly, but we're very well prepared for it and the other thing I would add is in terms of global capital allocation and looking to.
To invest capital the strength of our balance sheet really does represent a competitive advantage for us, particularly at a time when interest rates may be rising. So we will keep an eye on that and look to be very opportunistic as we go forward from that perspective, and then when you think about inflation rates one of the ways, you'll see that run through our businesses as many of our call.
Tracks internationally.
Particularly in.
In Africa, and Latin America are all geared towards inflate.
Inflation rates in the escalator is adjusted based on inflation rates, so as and when we see higher levels of inflation in the in the international markets will see higher levels of growth as well in the U S. I'd remind you that our escalators are fixed at around 3% that's been consistent for a long time, so we're pretty well insulated from.
Interest rates rising in the U S from a balance sheet perspective, but we still lock in that revenue growth of 3% on the U S escalator.
I think your prepared remarks, you talked a little bit about acquisition opportunities even outside of Europe.
What about Europe also to think about how you view the potential opportunities in Africa, Latam or other markets as far as portfolios coming up and what makes for attractive intelligent decisions as you kind of alluded to it.
Rick It comes back to the same model that we've been executing for the last.
Last decade.
It's looking to build up scale looking at the counter party looking at the market itself and then looking at the transaction itself. What additional capital has got to go into the to.
So the portfolio to be able to ensure that we can support a second or a third China. What is the growth profile look like.
There are probably a dozen different <unk>.
Elements of that evaluation that go into deciding.
Whether in fact, we would be interested and then driving what that prices. We've used the same 10 year discounted cash flow approach.
And and continue to use it obviously the variables change.
But largely the actual numbers, but largely the variables themselves from a quality from a quality prequalification perspective are the same and so.
We'll look at those and look at all of those opportunities, we think about globally how to allocate capital.
And any change in the pipeline and close deals going on and what might be changing that pipeline as far as potential deals.
Yeah.
You talked about the pipeline of transactions Yep Yep.
I mean, they you know they there.
Been very consistent I mean, the pipeline itself there are.
As more activity as you've seen.
And as you report on in Western Europe.
And but you know in terms of the pipeline in terms of the opportunities. They remain relatively consistent overall, if you look at our total portfolio of the last count I did we own about a third of the inventory in all of the markets and so there's still a lot of opportunity in the markets that we're that we're in.
Given how.
Carriers are existing customers carriers are looking at continually looking at trying to monetize their portfolio, a smaller tower COSE or looking for opportunities to exit there is private capital involved in some of those smaller tower codes and so they're looking to.
<unk> some of their funds.
Some increased.
Opportunity in Southeast Asia.
It's going on as we speak as you've all seen but but it's been the pipeline has been very consistent I would say, where it's a little bit outsize as probably all of the noise that's going on in Western Europe.
And there just seems to be a lot of activity going on on there as you've seen as we've seen in all of it even though all of the public comments and so it was probably a bit of an outsized.
Pipeline in that region, but other other than that it's been very consistent.
So it's never dull.
Pardon me.
Right.
Yeah, Hey, Rick you mentioned attributable maybe I'll just give you a couple of data points. There because we have you've seen over the last quarter or so we've had a few moving pieces with closing the <unk> transaction and numerous tranches. We also brought in private capital and maybe a good time to just kind of level set that so for the full year. We're looking you can see in our <unk>.
Resignation in terms of <unk> attributable attributable to our minority shareholders is about 100 million that breaks down $75 million roughly for the European business and about 25 for the India business. The way our partners kind of breakdown as you know CDP Q owns 30% of our year.
Grow our European business in Allliance owns about 18% of that business P. G. GM holds about 17% in Germany and about 13% in in Spain, We have Macquarie as a partner over in India. They own about 8% now is a good time to kind of think about the run rate aspect of that minority interest when you look.
At Q4, now that all the dust settles, we think the run rate a good ballpark run rate is about 40 million for Q4. So if you annualize that you get a range of $1 50 to $1 60 that would be attributable to the minority interest partners. The one word I would say is we will we did receive the put for Macquarie you've seen that in our filing.
So we will eventually close on that and that'll be an adjustment to the numbers at that at that time.
It really helps thanks, Rod I think it's important to focus on that thinking.
Yeah.
And next we'll go to the line of Jon Atkin with RBC. Please go ahead.
Thanks very much.
I wanted to ask about Latin America, I'm hearing an echo here.
Okay.
The churn has ticked up.
In recent quarters, and I imagine some of that might be telefonica, but wonder if you can provide some color on what's driving that.
Yeah, Jonathan Good morning. Thanks for the question I don't want to go through the churn carrier by carrier, but I think you do know that there there are a few customers.
In Latin America that are exiting the business or that have been consolidated so we do have the next though.
Exit down and in the in.
In the Brazil area, we do have telefonica kind of transitioning to the <unk>.
In that in the Mexico market and moving onto the AT&T side some of that churn has begun <unk>.
Seen a kind of a bump up in our non run rate activity in Latin America for some decommissioning in Brazil that is related to the nextel sites coming down that will continue into next year. So youll see a bump up in churn and then you'll also see kind of a bump up in that.
In that non run rate as well and then there are you will see some some benefits to some of the churn that comes through a settlement payments.
And there are a few other smaller customers, but that probably gives you a flavor of kind of who's there and kind of what's happening in Latin America from a churn perspective.
And then on Nigeria, I, just was hoping that you could give us a little bit of both.
Qualitative view as to the hill tailwind and headwinds to expect as it pertains to organic growth you, obviously have a little bit of a different portfolio than.
That IHS given how you entered the market, but how do you think about that.
Or what are the factors to keep in mind around organic growth in Nigeria going forward.
Yeah, I think in Nigeria.
<unk> seen very strong growth for the last several quarters here, we expect that to continue.
Got a great portfolio in Nigeria, with with a solid anchor tenant with MTN in there as a partner of ours.
So that's been really good I would say that as long as the economy and in the economy in Nigeria is largely driven by fuel prices as long as that is good I think we're we're in really good shape, because we've got a great portfolio in the in the in the country and the carriers will continue to invest capital and build out sites, we've got a pretty robust build program there. So.
<unk> seen the guide was 7000 sites that we expect to build is a good chunk of those in Africa and Africa, a lot of them are in Nigeria. So I would say that we are very bullish on Nigeria in terms of the growth rates, we're seeing high single digit if not double digit organic growth rates in Nigeria as long as the economy.
There continues to roll forward I think we're in really good shape and that's largely I believe based on fuel pricing.
Lastly, I think you were asking about horizon ended the holistic MLA.
If you had any kind of response to that.
Hey, John.
It's consistent with what we've said in the past I think.
Relationship with with Verizon I can't comment on any anything specifically relative to negotiations or those types of things.
But.
We want to be able to service, our customers and be strategic to them as as makes sense for them.
And so we'll look to continue dialog and and if you.
If if theyre looking for more Ala Carte type of pricing will go in that direction, if theyre looking for renewal of the <unk>.
<unk> will go in that direction so.
More to come but but they're very they're very active in the marketplace. There.
We are very aggressive in terms of building out their network and I think we've seen it they talked about it.
And are there they're doing a terrific terrific job and we're here to support them. However, we however, best we can.
Thank you.
Okay.
Next we go to Nick del Deo with Moffett Nathan. Please go ahead.
Hey, Thanks for taking my questions.
One on <unk> and then one on domestic spectrum deployment. So first.
How long does it take you typically get acquired carrier own sites or I guess, Nick is tell us your quasi carry our own sites.
I'll get into your systems and effectively marketed so that you really see the least improvements from being independently owned flow through and will it happened faster than normal for Telsey essence again, they were kind of quasi independent before you pick them up.
And then second in the U S. We oftentimes.
Talk about urban markets seen activity first.
With spectrum deployments, especially for like the upper mid band.
Spectrum that the carriers are deploying today in force.
Or are you seeing that play out in practice across your portfolio or is it more even than we might suspect.
You know I tell.
Yes, I can say tell you day, one we were marketing those sites.
Okay. So.
Whereas as aggressively as we possibly can in terms of providing those sites out to our customers. The I mean, the integration has gone really well I.
I think and it takes time from a system perspective and getting that.
<unk> organized getting them into systems, and integrating systems and things like that that can that can take six months to a year.
But that doesn't prevent us from marketing those sites to to our customers and making them available to all of our customers will be aggressive from a from a capital perspective to the extent that there are some sites that we need to attend to from.
From a structural perspective to be able to support them, but but as I've I've said all along I mean, this was a really terrific lead built portfolio.
And that was one of the attractions to the portfolio to begin with.
So we're being as aggressive as we can to really be able to take advantage.
The sites, particularly in markets like Germany, and Spain, where we're five G is really picking up.
From a from a U S perspective.
Youre right I mean, if you go back to even the old analog days I mean, you know that.
The markets were generally built up from your urban markets, because that's where you're able to get the best Bang for the Buck when you're rolling out capital. This one though I would say with five G is broader I mean it is it is a.
A goal to get nationwide coverage for all the customers.
Then to continue to fill it in.
As demand and as capacity requirements are are required.
What what's.
Not a surprise to us and then I know I read reiterate in my comments the macro towers as is the main asset.
Our customers are deploying <unk> and I never had any doubts of that simply because I mean I've been involved in the industry for 30 years. So the macro tower is the best way for our customers to get that signal out to their customers and so we're seeing that but we are seeing it more across the entire.
Country again as customers are really trying to be able to get.
To that nationwide coverage.
Yeah.
Got it thanks Tom.
You bet.
And ladies and gentlemen, we have time for one final question. That's time excuse me, Tim Horan with Oppenheimer. Please go ahead.
Hi, Thanks, guys, just two clarification and one question on <unk>.
Companies pay when they installed the equipment or you know what the MLA is do you have.
Regardless of whether or not to install equipment. One secondly, Tom you've been able to kind of raise prices in the us about.
About double the inflation rate historically now right now its almost half the inflation rate do you think over time.
Would have the ability to kind of increase prices faster than inflation and then lastly lastly.
You mentioned a lot of new technologies out there are any that you think are a risk to the business model that you're concerned about or watching thanks.
But I'm not sure.
Ahead, Rod you take that first I think the first one Tom around the payment cycle and equipment installation. So Tim I would say that it really works in a variety of ways, depending on which contracts youre talking about and how it's structured.
Certainly on a on a pay by the drink type of an a la carte contract carriers would would pay us a lease by lease as and when they install the equipment or probably better more precisely said when the when the contract gets executed and the commencement date.
Is triggered and that's typically when the when the building permit has pulled in construction starts or certainly by the time that the equipment is installed if you're looking at more of a holistic transaction then there's a disconnection between.
Fees and exactly when equipment is put on you've heard us say it before and the holistic type of environment, we price out activity over a multiyear period, we we know exactly what the carriers want to do and what they are willing to pay for we give them those rights and we put a payment cycle to it as well, which we which we spread.
It out over time, and a little bit more of a consistent manner. So it's not as volatile as the activity. So in that context, you may see payments hit before equipment is installed and you can also see payments. It after the equipment is installed it really depends on the payment timeline that's in the holistic deal.
Yeah, Tim on on the other two questions you know relative to technology, we have a number of technology consultants that we can we use that I talk with weekly.
As well as all of our own internal we continue as I said before I believe that that macro site is the most efficient way for customers worldwide to be able to deploy their networks and continue to be so so and as I.
Just as I, just mentioned and as what you've seen from our customers talking about rolling out <unk>, it's all on the macro sites.
So the answer to the question on the on the technology side is no. We don't see any any competing technologies that will get in our way there from an from an inflation perspective near 95% of our of our contracts in the United States are on a fixed.
The escalator and my sense is that Thats.
It's a it's a very important element of of our agreements and that's going to continue to stay there going to be some years when it may be a bit higher although it's a it hasnt been for many many years and so generally it's underneath it but it's also consistent with how we look at our land.
In terms of the landlord as well so it's a balance as well between the land landlords as well as are our customers. So I don't think that there's any unique opportunity to be able to really change that.
Well no we were really price our contracts, where it makes sense for our customers to want to be on our sites and so we continue to look at our our pricing along those lines.
Thank you.
And I will turn the call back to the speakers for any final closing comments.
Great. Thanks, Julia and thank you everyone for joining the call have a good rest of your day.
Thank you ladies and gentlemen.
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