Q4 2022 American Tower Corp Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the American Tower fourth quarter and full year 2022 rooms conference call.
[noise] Minder 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 followed by zero on your device now I would now like to turn the call over to your host Adam Smith Senior Vice President of Investor Relations. Please go ahead Sir.
Good morning, and thank you for joining American towers fourth quarter and full year 20 twenty-two earnings conference call.
We have posted a presentation, which we will refer to the router prepared remarks under the Investor Relations tab of our website Www Dot American tower dotcom.
Oh. This morning is called Tom borrowed our president and CEO will provide an update on our strategy and then Rod Smith, our executive Vice Presidency, iPhone Treasurer will discuss our 20 twenty-two results and 20 twenty-three outlook.
After these comments, we woke up the call for your questions.
Before we began I'll remind you that our comments will contain forward looking statements that involve a number of risks and uncertainties exam.
Examples of these statements include our expectations regarding future growth, including our 20 twenty-three outlook capital allocation in future operating performance.
Ah collections expectations associated with Vodafone the idea in India and any other statements regarding matters that are not historical facts.
You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward looking statements.
Such factors include the risk factors set forth in this morning's earnings press release.
That will be set forth in our upcoming Form 10-K for the year ended December 31st 2022 and in other filings, we make with the S E 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 with that I'll turn the call over to Tom.
Thanks, Adam and thanks to everyone for joining the call. This morning.
Five years ago, when we rolled out the stand and deliver strategy that would guide us over the following decade, we emphasized driving the business forward through four key pillars, enhancing operational efficiency growing our assets and capabilities investing in innovation and platform extensions and augmenting Indus.
Sri leadership.
Since that time, we've seen carriers across our global footprint invest over $300 billion in network assets and methodically deploy next generation networks to support rapidly increasing data demand in their served markets.
Our commitment to execute on each pillar of stand and deliver not only are lined with our customers needs in this context, but it also enhances American towers position to serve as a strategic provider of critical infrastructure for the networks are the future.
So before highlighting the key strategic objectives will focus on in 2023 and over the next several years I'd like to spend a moment reviewing achievements from the past five years. It had driven our success to date.
On the operational front, we've signed comprehensive master lease agreements with T mobile AT&T dish and most recently Verizon in the United States. These.
These agreements represent a commitment to a mutually beneficial predictable growth path and strategic alignment between American tower and its customers. While also demonstrating the value in criticality of our nationwide 43000, plus site portfolio to support four G. Five G in future network Jenny.
Durations.
Such agreements also bring with them efficiency innovations designed to deliver simplicity and leasing processes and accelerated time to market for the carriers.
To extend on these benefits we've invested in technologies to build a holistic standardized dataset mapping the vast majority of our U S assets, which can be leveraged to eventually bring application cycle times down to a matter of hours.
We believe this type of capability will be a particularly attractive customer value proposition in the context of a five G densification cycle and what we believe can be scaled across our global footprint overtime.
Our focus on operational efficiency is extended throughout our international business as well now.
Notably since the beginning of 2018, we've invested nearly $350 million, primarily in Africa unimproved site level performance through our power as a service program. This.
This includes the installation of lithium ion batteries and solar arrays for primary and backup power delivery, which has resulted in a sizeable reduction and average fuel consumption per site across our African portfolio and as extended the replacement cycles of critical power sources, all while providing over.
And 99.9% average up time for our customers networks.
At the same time, we've established centralized procurement organization that aims to drive down material costs, and we've leveraged shared best practices and our scale and a multinational operator to strengthen our global vendor relationships.
By streamlining these critical operational functions, we've been able to continue to drive solid investment returns on our capital deployments and efficiently need the infrastructure needs of our customers all against the challenging backdrop of price volatility and supply chain disruptions.
In fact since the start of 2018, we've added nearly 26000 sites to our international portfolio through new builds more than two times the volume of the previous five year period.
Today D side to contributing approximately $250 million in tower cash flow and and NOI yield of approximately 21%.
Demonstrating meaningful expansion from the already attractive low double digit day, one yields we typically see on these new build opportunities.
On the M&A front, we've executed a number of transactions that have been transformational in terms of delivering additional critical scale, an existing and new markets ahead of major network investment cycles, the benefits, which we are seeing in our results and forward looking expectations today.
These include insight in the United States, the Eden portfolio in Africa, as well as Telsey as in Europe , and Latin America, which augmented our scale in Germany and provided entry to Spain in a leadership position just as five G investments were beginning to ramp up on the continent.
More recently through our efforts to selectively expand our platform and physician American towers, a market leader in the next generation of network architecture development. We entered the data center space the acquisition of course site.
Of course, I'd delivers an interconnection and cloud Onramp rich platform as well as exposure to a resilient high demand communications infrastructure business, which we believe will deliver strong performance as demonstrated by its record signed new business in 2022.
And provide accretive returns on a standalone basis over time.
Importantly, we believe the combination of quartz site and American towers platform and distributed tower real estate physicians asked to enhance the value of our existing assets as the edge proliferates.
Finally, I'm, particularly proud of the steps we've made towards augmenting our leadership in several areas.
Organizationally, we've made E S. G Corps to our operations through initiatives such as our commitment to science based targets localized DNI initiatives designed to facilitate an inclusive organization for our employees and stakeholders and through the growth of our digital communities program, which has now reached more than 400 K.
<unk> and serves more than 335000 people across 15 countries.
As I mentioned on this call last year were also a member of the Edison of lines 1 billion lives challenge.
Which provides us the opportunity to contribute to the development of affordable and accessible digital health care Finance and education solutions for communities and need.
Over the past year, we've developed partnerships with health care providers that have resulted in the launch of several telehealth locations that provide primary preventative and specialty teleconsultation services in underserved areas.
While this is just one positive first step we believe that we've achieved over the last year clearly demonstrates the value. We can create in the communities. We serve through a commitment to multi stakeholder collaboration and partnerships and we hope more organizations will join us in efforts like these over the coming years.
Which brings us to today and our focus for 2023 and beyond.
We believe we're poised to build on and accelerate the successes of stand and deliver that we've achieved thus far.
As I mentioned in the opening our teams are focused on key strategic objectives that will continue to guide our operations and management teams that American tower over the next several years the.
The first of these is to leverage our premier platform of assets to drive strong recurring growth, both organically and through our disciplined capital allocation framework and our investment grade balance sheet as we seek to capture new business opportunities against the backdrop of secular demand trends that remain as strong as ever.
We refer to this internally as scale the core.
To this and we expect an acceleration or organic growth in 2023, representing an improvement of around 100 basis points relative to our prior five year average.
Gaining with R. U S and Canada segment, the benefits of our comprehensive Mla's an ongoing five G deployments are driving an expectation for organic kind of billings growth of approximately 5% in 2023, including approximately $220 million in year over year co location, an amendment growth.
Which would be a record year for American tower by a significant margin.
We also see a path to solid organic growth and our international segment led by regions like Europe , and Africa, where we're capturing activity from multiple network upgrade and Densification cycles and are realizing that benefits F. C. P. I linked escalators on a vast majority of our leases.
This will be complemented by what we expect to be yet another year, a solid new build activity primarily in international markets, where concurrent four G and five G network Rollouts continue to drive strong demand for new infrastructure.
And in our data centers business, where we're entering 2000 twenty-three with record backlog will continue to focus on driving increasing growth both on an organic basis and through high yield development opportunities that are ongoing today.
Operationally our teams are working to continue to build on the many efficiency and growth initiatives. We developed in recent years, which hits on another key objective within the organization being the most trusted strategic partner for our customers.
The most concrete example of our efforts in this front probably the long term Multimarket agreement, we recently announced with Airtel in Africa, which includes a meaningful newbuild pipeline Ah joined commitment to build in accordance with new low carbon emissions guidelines, which were calling green sites and a partnership framework.
To enhance the impacts of both companies digital communities in kiosks programs on the continent.
This agreement exemplifies the benefits of our scale best in class operations and ability to deliver innovative solutions, while advancing both American tower, and our customers long term sustainability and fossil fuel consumption reduction targets.
Going forward will continue to work on building alignments with our global customers to leverage our scale to execute on opportunities to drive growth and maximize shareholder returns and a sustainable and responsible way.
This includes an effort to accelerate our platform extensions as.
As I mentioned previously demand trends in the data center space remain robust driven by digital platforms, leveraging distributed computing and by the early stages of a sustained enterprise migration, Vermont Prem two hybrid I T N multicloud architectures.
As a result, we see a long runway of opportunity to drive strong returns by investing in the expansion of our existing course, I'd campuses and leveraging the open cloud exchange to extend their interconnection rich ecosystem.
At the same time, we're working to position our combined platforms for outside success as demand for the workloads and compute functions are drawn closer to the end users at the mobile edge.
And as we evaluate opportunities to accelerate growth through platform extensions going forward will continue to focus on how we can leverage our core competencies in real estate power provision and connectivity to drive incremental value to the ecosystem, while delivering increasing shareholder returns.
Meanwhile, as a management team where laser focused on positioning our global teams for the future, while growing and maintaining a healthy cultural foundation.
These together represent perhaps our most critical key objectives as our world class team members are the most valuable asset It American tower.
As we positioned the company to be a market leader in an evolving landscape, we recognize the developing empowering and retaining diverse and talented team members is fundamental to our success as a company.
Through this lens, we renewed our focus on management development and Institute region specific programs designed to support a balanced life for our teams amongst many other initiatives.
We also appreciate the facilitating a culture that is inclusive equitable is not only shown to drive better decision, making in business outcomes, but more importantly, it's the right thing to do for the people who dedicate so much of their time to growing this business and delivering value to our customers and shareholders.
In summary, the longterm secular demand trends underpinning growth in our industry remain resilient.
We believe are optimally positioned to capitalize on the successes of our stand and deliver strategy date and were more energized than ever as we look to execute on our initiatives in 2023 and deliver strong sustainable returns for many years to come.
With that I'll turn the call over to arrive to discuss our 2022 results and expectations for 2023 <unk>.
Rod.
Thanks, Tom Good morning, and thank you for joining today's call before I dive into our 20 twenty-two results and expectations for 2000 twenty-three I would like to highlight a few key accomplishments from the past year and provide an update on several developments in India. Since our last earnings call first demand and operational performance across our global portfolio.
Joe remain as solid as ever we close the year on a positive note with co location, an amendment tenant billings growth contributions of over 4% in queue for.
In particular are U S and Canada property segment delivered its strongest quarter since Q1 of 2020, and we have a clear line of sight to continued acceleration into 2000, twenty-three, which I will discuss shortly.
Organic growth was complemented by the construction of nearly 7000 sites in America tower record, including over 2003 hundred sites built in queue for our highest level over the past eight quarters with an average day, one NOI yield of over 12%.
Moreover, during its first full year of ownership by American Tower, Coresite delivered record new business selling nearly double the number of megawatts compared to the previous trailing two year average demonstrating the value of the companies interconnection and cloud Onramp rich ecosystem.
This robust growth was driven by increased demand from high quality, new logos and expansions from existing customers driven by secular tailwinds of digital transformation and the demand for hybrid I T solutions.
Furthermore, since the announcement of course site acquisition, we successfully executed on our permanent financing plan at attractive terms, including through the issuance of common equity in senior notes as well as our strategic partnership with stone peak. These financing activities reduced our leverage from 6.8 times at the end of 2021.
To 5.4 times at the end of 2022 and moved us closer to our target range of three to five times neck.
Next I'd like to take a moment to cover the latest developments in India.
As anticipated Vodafone idea or vil continued making partial payments in Q4 of 20 twenty-two consistent with our outlook, resulting in total revenue reserves of approximately $38 million for the quarter and around $87 million for the year.
Recently, we were pleased to see the completion of the Indian government's conversion of the adjusted gross revenue interest balances to equity in V. I L. We view this as a reaffirmation of the government's commitment to support a three player private carer telecommunications market and a critical first step towards the possibility of more stabilized collections from V. I L.
However, although vil had committed to pay their billings in full in 2000 twenty-three and make payments for outstanding balances from prior years in early twenties twenty-three they've communicated that they would continue to make partial payments for that reason. We believe it is prudent to include revenue reserves against their annual billings and other contracted obligations in.
[noise] or twenty-two twenty-three outlook, which we've assumed at $75 million. We will however remain focused on collecting what we are contractually old in full over the course of the year.
In the meantime, we have work to incrementally better position American tower, and our receivables balance while also demonstrating the level of support for vil in India's wireless market. This includes the expectation to convert approximately $200 million, an existing vil receivables into optionally convertible debentures pending Vodafone idea.
Shareholder approval.
Closing disagreement we would have elevated the seniority of our preexisting receivables balance and established an additional level of liquid collateral at American towers option and finally, as we remain focused on stabilizing or India business collecting are outstanding in future receivables in full and assessing the positioning of our globe.
<unk> portfolio, we are currently exploring various strategic options, including the potential sale of an equity stake in our India business as always any decision taken will include careful consideration of the growth opportunity and risk profile in the market going forward valuation and the optimal portfolio in capital stir.
Rupture mixed for American tower, and its stakeholders, we will certainly keep our investors informed of any developments as we move forward with that let's dive into the details of our full year 2022 results.
Turning to slide six full year consolidated property revenue growth was nearly 15% and nearly 18% on an F X neutral basis, which included a contribution of approximately 11% growth from calcium and coresite and negative impacts of approximately 2% and 1% from sprint churn in revenues.
Earth taken associated with Vil, and 20 twenty-two respectively.
Organic Kenneth billings growth for the full year came in at 3.2% in line with expectations complemented by solid growth from Newbuilds with actual volumes coming in at the upper end of our prior outlook range for the year.
In the United States, and Canada property revenue growth was nearly 2% with organic tenant billings growth of just over 1% in line with expectations, including approximately $150 million or 3.4% from cold locations and amendments.
Escalators added another 3% consistent with historical trends. This growth was partially offset by churn of around 5%, which consisted of roughly 1% in normal course, churned with the balance being driven by sprint.
Or international property revenue grew by nearly 13% into.
International organic tenant billings growth was 6.6% led by Europe at 8.4% and followed by Latin America at 7.9% Africa at 7.7% in APAC at 2.6%.
Overall Colocation an amendment growth for the full year was around 5%, while 6% came from escalators, partially offset by just over 4.5 per cent of germ.
The result of decommissioning agreements in Latin America carrier consolidation in Africa, and customer specific churn in APEC.
Finally, our data center segment contributed over $765 million to our total property revenue in 2022, including a record year of new business from Coresite as I previously mentioned.
Moving on adjusted EBITDA grew around 11% to over $6.6 billion or around 13% on an FX neutral basis for the year.
Growth was supported by solid contributions from Kelsey is syncor site and strong flow through of top line growth achieved through effective cost management.
On a consolidated basis adjusted EBITDA margins were down around 190 basis points as compared to 2021, primarily due to the impacts of the vil reserves and sprint churn in the U S higher pastor revenue due to rising fuel costs and the lower margin profile of newly acquired assets, which we believe.
Are well positioned to drive meaningful margin expansion over time.
Moving to the right side of the slide attributable after fall in attributable FFL per share grew by approximately 5.6% and 3.5% respectively, including over 11% growth on a per share basis in queue for for the year. Both metrics included over 2% in headwinds associated with F X.
Attributable a F F O per share of $9.76 exceeded the original 2022 outlook mid point laid out a year ago by six cents. Despite absorbing the negative impacts of incremental vil reserves, right driven interest costs and effects relative to our initial assumptions.
Now before I discuss the details of our outlook for 2000 twenty-three I will start by summarizing a few key highlights and assumptions.
First as we've previously communicated we expect a meaningful step up in U S and Canada organic Kenneth billings growth driven by an acceleration in new business Backstopped by the comprehensive Emily we have signed over the last few years together with the sequential improvement in contracted sprint churn.
Internationally, we expect a strong year of organic Kenneth billings growth across most of our regions driven by continued strength in organic leasing trends along with contributions from CPI based escalators, particularly in Europe and Africa.
As we've communicated over the past couple of quarters.
Growth in Latin America will be moderated by churn headwinds associated with a continuation of telefonica churn in Mexico in oil churn in Brazil, where we'll see some staggered impacts over the next several years.
Second and as I mentioned earlier, we have factored into our guide an expectation for a continuation in vil collections volatility, resulting in an assumption of $75 million in revenue reserves for the year.
Third given the unprecedented rise in interest rates over the course of 2022, which saw the one month LIBOR increased by more than 400 basis points and 10 year treasuries increased by around 250 basis points from the beginning to the end of the year. We expect 2023 to have one time outside.
<unk> negative growth headwinds associated with financing costs.
Key components driving this assumption include elevated costs on our floating rate that into a lesser extent the refinancing of our 20 twenty-three senior note maturities as well as the full year impacts of our 20 twenty-two equity related initiatives, including our common equity issuance in the incremental minority interest in preferred.
<unk> associated with our partnership with Soapy taken together, we have assumed a roughly 8% headwind two attributable F. F O per share growth associated with financing costs in 2000 twenty-three neck.
Next our initial outlook reflects estimated negative translational ethics impacts of approximately $151 million for property revenue $64 million for adjusted EBITDA in $47 million for attributable F F O as compared to 2022.
And finally looking beyond the challenges I mentioned associated with interest rates Vil reserves and FX. Our core business continues to demonstrate strong performance and resiliency, representing nearly double digit year over year growth at the attributable F. F O level. While this performance is fueled by the solid organic leasing trends.
We're seeing across our global portfolio.
It's further amplified by exceptional conversion rates through a F. F O achieved through a keen focus on cost management across our business with that let's dive into the numbers.
Moving onto the details of slide seven at the mid point of our outlook. We expect total property revenues of nearly $10.8 billion representing growth of approximately 3% or approximately 4% absolutely incremental reserves assumed for vil in 2023. Our guide includes expected cash revenue growth of around 203.
$30 million in the U S and Canada and $245 million of FX neutral growth in our international regions. Excluding the 2000 twenty-three vil reserves of $75 million. We also expect data centers to contribute roughly $55 million of growth in cash revenue to the property said.
<unk> in 2000 twenty-three lastly, as I mentioned in my earlier remarks, we anticipate a modest FX headwind of just under 1.5% to consolidated growth.
Turning to slide eight we expect organic growth to contribute meaningfully to our property revenue growth assumptions, starting with the U S and Canada, we anticipate organic tenant billings growth of approximately 5% or greater than 6%. Excluding sprint churn. This expectation includes record levels of year over year Colocation an amendment growth.
Of around $220 million, a nearly 50 per cent increase over the levels achieved in 2022, and a 60% increase as compared to the trailing three year average.
Of the $220 million over 90% is locked in through MLA, driven use right see commencement in carryover growth on.
On the churn side of the equation after incurring the largest impact of sprint churn last year, we expect churn of around 3% in 2000, twenty-three, including an approximate 1% impact associated with sprint, which would represent a year over year improvement of over 200 basis points in the segment.
Moving to Latin America, we expect organic tenant billings growth of greater than 2% for the year driven by relatively consistent co location, an amendment activity and continued solid contributions from CPI based escalators of approximately 8%.
This escalator rate does represent a step down from 20 twenty-two levels as we saw inflation in markets like Brazil moderate in 2022 as compared to 2021 as we've previously highlighted higher churn of around 8% is partially offsetting gross growth due to the expected continuation of telefonica churn in Mexico.
So in the early part of what we expect to be staggered Oi churn in Brazil.
Similar to last year, we do expect to receive some settlement payments from Califont go over the course of the year, which will be captured outside of the organic tenant billings growth metric, we've assumed approximately $50 million and 20 twenty-three payments as compared to the over $80 million, we received from Telefonica, Mexico and next.
Now Brazil in 2022.
Journey to Asia Pacific, we're guiding to approximately 4% organic Kenneth billings growth and 20 twenty-three, including churn of around 4%, which is around 70 basis points lower than the 2022 churn rate.
We expect co location, an amendment growth contributions to ramp up compared to 20 twenty-two coming in around 6% fuelled by the rollout of five G. Networks. However, it is important to note that the reserves we've assumed for vil in our guide reside outside of this metric consistent with past practices.
Turning to Europe , 2000, twenty-three organic tenet billings growth is expected to be 7% to 8%, which is slightly lower than 20 twenty-two due to the mathematical benefits realized last year, given calcium was only in the prior year base for a partial year. However, this does suggest a solid acceleration.
Off our queue for 20 twenty-two organic growth rate of around 6%, which represents a more normalised comparison.
On the Colocation, an amendment front, we anticipate 2% to 3% growth while growth from escalators stand at roughly 6%, reflecting the benefits of CPI linked to escalate as across the majority of our European footprint.
<unk> is expected to decline to around 1% reaping the benefits of the lower chirp profile of our recently acquired Telsey his portfolio.
Finally in Africa, we expect a solid acceleration off of 2022 with expected organic tenant billings growth of approximately 9%. This includes co location, an amendment contributions of around 6% along with escalators of around 10% and expected 450 basis point increase from <unk>.
2022 levels. This will be partially offset by an expectation of elevated churn of greater than 6% as carrier consolidation continues to work its way through the financial metrics.
Moving on to slide nine at the midpoint of our outlook, we expect adjusted EBITDA growth of approximately 4% and around 5% absentee incremental reserves assumed for vil in 2000 twenty-three while absorbing approximately 1% in F X headwinds, we expect this growth to be achieved through solid cash conversion.
Rates of 85% to 90% the result of prudent cost controls across the business in the expectations for another strong year from our U S services business.
Turning to fly 10, we expect attributable F F O per share to decrease by 16 cents on a reported basis, while remaining flat year over year absentee impacts of the twenties twenty-three vil revenue reserves.
As mentioned, we expect growth to be meaningfully impacted by financing costs, which include a rate driven increase to cash interest expense along with the incremental full year impact of minority interests and preferred distributions associated with R. U S data center business to.
Together with a common equity share issuance in 2022 financing costs are expected to provide a significant one time growth headwinds of approximately 8% in 2000 twenty-three.
As I mentioned earlier absentee impacts of financing costs F X in the 2023 Vil reserves, our core business is demonstrating solid growth contributions of around 9%.
Moving on to Slide 11, I'll review, our capital plans for 20 twenty-three in our balance sheet progress and priorities for the upcoming year.
In 2023, we will continue to deliver returns to our shareholders through the growth of our dividend and subject to board approval, we expect to distribute approximately $3 billion representing in approximately 10% year on year growth rate on a per share basis. In addition, we expect to deploy around 1.7.
<unk> billion dollars in Capex of which 90% will be discretionary.
This will largely be spent continuing the success of our Newbuild program internationally, which assumes the construction of around 4000 sites at the midpoint.
We also expect data center capital to increase modestly as we seek to replenish the record capacity sold in 2022 and maintain appropriate levels of sellable capacity.
Moving to the right side of the slide as you can see we made tremendous progress towards strengthening our balance sheet over the course of 2022, putting US ahead of the deleveraging path, we committed to with the rating agencies, which actually afforded us the flexibility to repurchase a modest number of our shares in queue for.
Throughout 2000 twenty-three, we will continue to be guided by our longstanding financial policies as we execute on our financing plans. This includes the refinancing of maturing debt, while leveraging our strong liquidity position as needed to remain opportunistic as we access the capital markets. Finally, we remain committed to our investment grew.
<unk> credit rating and our priorities over the course of 2000 twenty-three and into 2024 remain on deleveraging our balance sheet back down to the three to five times range consistent with our recent comments at this time, we do not see any material M&A in our pipeline that would alter these areas of focus.
Turning to slide 12, and in summary, we delivered strong results in 2022, demonstrating the resiliency of our business model in the face of various macro related and customer specific challenges are global portfolio of assets, an operational capabilities continued to prove critical and meeting the growing demands of our.
Customers and the customers. They serve we saw record newbuild volumes internationally and record leasing within our Coresite business inexperienced a steady acceleration in Colocation, an amendment growth as we exited 2022, which we expect to continue into 2000 twenty-three.
As we look ahead, we expect a further build on the successes of the recent years and leverage our portfolio to drive strong reoccurring growth on the back of consistent secular technology trends for many years to come.
With that operator, we can open up the line for questions.
Okay, ladies and gentlemen, if you'd like to ask a question. Please press one then zero on your telephone keypad.
Your first question comes from the line of Simon Flannery from Morgan Stanley . Please go ahead.
Great. Thank you very much good morning, I'm told me you talked about scaring the core and brought just talked about no material M&A Piper.
Pipeline. Thanks for that just give us a little bit more color. If your coat on on how you see the portfolio today and it's just a mix of assets that you once you've obviously talked about potential monetize some of India, but any kind of areas, where you feel like you're overexposed or underexposed.
How long this is sort of a approach not doing large deals likely too fast and then you talked about the strong results and course size you did buy some land there I've noticed your future development pipeline potential goes up quite significantly probably as a result of that just give us some colors. How do you think about beyond just incremental street something.
Larger given the opportunity to see to see their thanks.
Yeah sure sign me he got a lot a lot going on in that that question, but let let me try to appeal. It back in and then remind me if five.
[noise] anything out you know with regards to scale. The core really comes down to the really three pieces. One is to just do what we do every day that servicing our customers and driving that organic growth and we've really been very focused on that in the in the U S. As you saw.
Spectation tour 2023, and beyond because those large scale relationships that we put in place.
With our critical carriers in the United States are long term in nature and so you know we now have a very predictable growth path in the U S and the U S is the foundation of.
Of our entire business and and what I've always said is that we we enjoyed the benefits of diversification because they're going to be some markets that are going to grow significantly others that are going to grow less so simply because they.
The methodology that all of our customers use for bills are different and they all form those different sine waves as as we've talked about in the past and we can if you can layer on all those side path you know you're able to get some predictable rates of growth and so.
We're excited about coming out of a of 22 strongly we expect you know higher rates of growth and twenty-three and in particular within the United States.
From a total portfolio perspective, we're constantly looking at.
Where where are we can maximize value and we are in 26 countries today and there could be certain market there where it may just makes sense for us from a number of different perspectives for us to Peel back some of those assets don't have anything in mind as we speak or we're constantly evaluating that that kind of.
Kind of what we do and with regards to to India.
India is a market, where they're going to have a higher population in China. If not now very soon thereafter, they have huge penetration huge data usage.
And it's a market that we would like to be able to continue to keep our towing because we continue to believe that there is significant growth there to the extent that we can bring in a third party player to to monetize a <unk> particular part of the asset and reallocate some of that capital and some other parts of the market will will look at that you know.
Clearly opportunistic and we look at every kind of available opportunity as as we speak.
With regards to our data center business.
Course I had.
Had a terrific 2022, 22 record sales and 22.
And they're replenishing capacity, where the needed we've added gland in Denver, and New Jersey, where we needed. Some some additional runway, but we've got a significant amount of capacity in in the Hopper. We're building out another 30 megawatts of capacity under construction, we've actually got a third of that already pre.
At least and we have 224 megawatts for future future development. So you know there.
There is an incredible demand as you well know as as we've heard from from other competitors in the market for interconnection hubs and that's what I really referred to as as corsage not co location to show it it's an interconnection hub creating.
Opportunities for new logos, we added a over 100 logos last year and and were you know really excited about the opportunity and the demand that we see in the market for activity relative to our data center business in the United States.
Did I Miss anything.
Well I guess just in terms of scale M&A, you've you've obviously you've done a lot of deals over the years, if you'll get back down into that three to five times elaborate just that one we think about your potentially looking at a larger tables again.
You know you know.
Interesting. So I mean, we have a lot of different.
Ways of being able to secure M&A and we demonstrated that really with what we've done in Europe .
Capital, even even in the United States.
In terms of private capital. So I think the capital is there for us it yeah. It is a function that our our our objective is to Delever you know I I really do want to get that down to that the five times kind of kind of leverage into that remains a top priority for for the business, but on on top of that we want to continue to defeat or build program. We can.
Record.
<unk> last year, we have a strong build program. This year there with regards to the I mean, there's still a significant difference between the the evaluation that you know the bed me ask.
And and there's nothing out there that's compelling as we see it today and so our our focus continues to be on as I said, what we do everyday driving organic growth driving efficiency you see we expect margin improvement and twenty-three versus 22 and supporting our build program.
Our our customers are very active Ah around the world from from a build perspective and I think in the last several years, we brought on by 25, we built like 25000 sites.
And so there is a significant opportunity there and the returns are incredibly compelling that new build programme. So as I said, there's just nothing at this point in time that we see out there. That's that's interesting really from from an M&A perspective, and we continue to just keep our heads down in terms of you know.
Funding or build programming and Delevering our business.
Alright, Thanks, a lot.
Mmm.
Next question comes from the line of Rick Princess from Raymond James. Please go ahead.
Thanks, one moment.
Eric.
A couple of questions I'll give it to you part by part first as we think about the guidance and thanks for all the color there how should we think about the news Canada. The pacing throughout the year is it gonna rammed through the air does it start high and come down as a kind of balance, but hopefully question everybody's trying to figure out what is happening with pacing and 23 in the U S. A Canada.
Actually Ricky it's going to be very consistent very very linear throughout the year and enjoy largely you know at the function of the kind of relationships and the agreements that we have in place, but we would expect it to be very consistent.
In the U S throughout the year.
Okay.
Question to extrapolate from that is last year at this time, we kind of laid out some thoughts on longer term leasing activity in the U S. Canada 2023 through 27.
Above five per cent, and then excellently above equal above six per cent how're you feeling about that exiting twenty-three you're looking at 24 25, 26, 27 days you gave us a year ago.
Yeah exactly the same.
No I mean it it as we have said as we have predicted as way of thought and again it comes down to largely the relationships.
We have with our customers, we see strong demand coming out I still think we're in the early innings really with with five G. Our customers on average or probably not about half of our sites. So there is a significant amount of opportunity there, but but it also comes down to the types of relationships and the arrangements that we have with regards to our our M. L. A so.
You know we are underscoring really what we had said a year ago relative to growth coming out of 23 through 27.
Alright, and the last one for me taking that to the bottom line attributable episode per share last year. At this time I mentioned that 21 to 27, maybe above.
At or above 10 per cent, we've had a couple of tough years here with sprint churn twenty-three, we've got financing costs still some India reserves. How do we think you know throw away 21 to 27, and just say hey, So we look at 23 is a new base point, how are you feeling about the ability of the <unk> of course trigger lay off the phone per share dividend per share from this point onward.
Well I mean, you got a couple of questions and they're you know we're not going anywhere we're not focused on entered rolling out a longterm guide at this point as you would expect but but you know there have been some significant macro environment changes that happened.
Around the world that that we used to underwrite kinda that double digit expectation, which I think is what you're you're referring to but I'm not letting the.
Put off the gas and the business. Okay. We're not we're not changing anything at this point in time, our core growth as as Rogers walk through really remains really really strong and and and we don't have any expectations for that kind of growth.
Diminishing <unk>, we we see kind of four G. Five G being rolled out you know across all of our of our footprints, which really gives us a lot.
Comfort in terms of being able to suggested that growth is gonna continue now also having the types of relationships that we do with our customers in the United States helps underpin a lot of that growth.
The interest rates Rod walk through the impact of rates, it's kind of a reset and twenty-three believe it to be kind of more of a of a one off if you will in twenty-three. So we will remain really bullish on on going forward as I said I'm not gonna talk about longterm guide, but I'm not letting me get let let the foot off the gas at all.
Within the business with regards to our of our good and program as you all know your Ah read expert you know our policies just followed our our <unk> and and it's been very consistent we've been able to enjoy you know double digit rates of growth on our dividend for the better part of the last 10 years actually.
Which has been very supportive and we continue to be we continue to feel that our dividend is an important part of our total shareholder return. So we're looking at a 10% return 10 per cent dividend is rod talked about this year, it's difficult really to to predict what that might be dependent on what we.
Bring into the <unk>, what's not in the Reed, obviously, what kind of M&A. This out there it could drop a little bit too high single digits, but but again, we continue to expect it to grow significantly and as I said, it's an important piece of our over <unk> overall total shareholder return.
Alright, thanks, so much everyone to stay well.
You bet.
Your next question comes from the line of Michael Rawlins from City. Please go ahead.
Thanks, and good morning, just a couple of follow ups. So first and maybe it's just a slightly different question on the U S.
But you outlined the percentage of revenue tied to comprehensive deal and just curious to know.
Jack where the flex could be in U S performance, Bolton 2023, and maybe going forward as you think about your ganic leasing.
Growth potential of the U S. P S.
And then.
Thinking a little bit more about the percentage of revenue that you have tied the comprehensive deals uhm you shared a lot over the last couple of years and how the U S has been shaping up on that Friday can you share with us how other region.
In terms of a percent of revenue tied to comprehensive deals and as you work with your customers are their aspiration that you have in different market.
Get that to certain levels over time thanks.
Hey, Michael Good morning. This is rod I'll I'll start here and talk and certainly certainly join until it's been in the U S.
If it is really strong and our.
<unk> revenue in the U S is underpinned through what we refer to as the holistic agreements, which I think everyone is very.
Familiar with but we've seen contributions from cold locations and an amendment arrived for about $150 million and 22 up to $220 million in twenty-three that drives about a 5% contribution to our organic Kenneth Billings Road.
Uhm and as Tom mentioned in his previous answer we see about 90 per cent of that locked in for 2023 and the longterm. Rick asked about you know, we are continuing to target equal to or greater than 5% between twenty-three out to 27, and a fair amount of that activity both the underlying revenue.
And the revenue growth is locking as part of the good deals and of course as we move beyond 2023 that 90 per cent will come down maybe go about two thirds or so by the time. It yet you know in the outer ears, and that's just a function of getting closer to the end of some of the agreements and chances are some agreements will be rewritten so.
Sort of along the way so we feel really good about the visibility we have into the U S.
<unk> and the and the strength that we're seeing in the U S market, particularly because of our athletes and the way that we drive the agreement now your question kind of refers to flex and I I think what you mean, there is where's the potential upside in and of course, there is the potential upside to the extent that is faster uptake on five.
G utilization in the U S and it that requires carriers to densify. The networks are a little bit quicker than we see a faster conversion to more co locations in your amendments going forward that could certainly provide some uptight upside uhm and then depending on just to build up some of the carrier and and you know certainly dish comes to mind is a bill that I would agree.
<unk> network to the extent that they go beyond their minimum commitments with us that could certainly be some upside as well. So I would really kind of watch you know certainly watch dance I would watch the other carriers and see the five G utilization when some of these new applications come up with five G will see what kind of bandwidth constraints that puts on networks and when <unk>.
<unk> may end up happening, but it's a pretty exciting time in the U S market, particularly when you look at the the five G networks and potential applications coming down with like.
That kind of covers off the the appointment new at the U S. Sleeping when you think about our international business. We don't have holistic deals in the same way and a material fashion outside the U S and much more traditional dream more of an Ala carte kind of pay as you go around the globe. So that's what I would say about that that.
Michael.
Thanks very much.
You're welcome.
Your next question comes from the line of David Burden from Bank of America. Please go ahead.
Hey, guys. Thanks, so much for taking the questions Uhm.
So I guess the first one would be.
Tom Thank you for your commentary around.
You know kind of the the the commitment to deleveraging and I think he said quote unquote, there's nothing compelling out there quote unquote significant differences between bit and ask on the buy side of that equation. So to the extent that that is true is is that what's informing your openness now too.
Looking at an equity sale of of the India market, meaning that if if things are too expensive to buy maybe now's the right time to sell and is that exclusive to the Indian market or as you look across the portfolio could you make the same argument that may be is an interesting time to monetize Latin America or.
Other pieces of that.
Part two of that would be is now the right time to think about this given the situation with a V I L or should we wait.
Until that situation, maybe resolve itself and then we think about.
And equity sale, and then rod if I could.
So you you went out of your way to mention that.
The financing impact.
On the <unk> attributable are fulfilled for sure calculation as can be about 8% for the year absent that an absent the provisions for V. I L. You know we might be seeing a an underlying eight to nine per cent of a of a full growth for sure is.
Is is that our takeaway for how we think about 2024 that.
Obviously other things aside and in the fundamentals across the world that are starting point for for thinking about 2024 isn't isn't eight to nine per cent, if a full growth business. Thanks.
Okay, Dave you've got a bunch of stuff packed in there sorry.
[laughter] nope nope relative to the M&A in India, There's there's not a direct connect between between the two they are somewhat mutually exclusive types of decisions and.
And.
You know and it really becomes again part of a broader portfolio.
Kind of conversation relative to.
What what we think may make sense for the portfolio in terms of driving.
Further value over over time, India is really just you know kind of an opportunistic.
Yeah at this point in time, and and really it were and explore and kind of exploration mode. At this point a number a number of things going on there and and and to the extent that there is again a value creation opportunity for us. So we can continue to enjoy the the growth of the of the market and and utilize that.
Capital and in other parts of the world, including using it to the further delever, perhaps more even more quickly than we would have otherwise thought is.
It's not a bad thing so there there I I understand that kind of connection that you're drawing there, but I'm not really looking at them and that way and I really do believe believe the paths are are separate.
Good morning, David I'll take the the next one here on the on the eighth at fault for sure. But also you can see in the charge that we laid out uhm, we have at the phone per share going from $9.76 to really down to $9.60.
I'm on a attributable base it as we mentioned the financing costs you can see it on the chart there the 315.
50 million represents about 68 cents of that are about an 8% headwind. The four O. Five is what's coming from our regional businesses, including our corporate call centers.
And that you know that four O five represent about a 9% grow so that kind of a core growth rate that we're generating from our operating.
The effects headwinds in about 1% and then B I L represents about two per cent headwind and when you put it all together you get through a negative two per cent road, but to the extent that the financing impacts here really are one time, which we expect we expect interest rates that kind of this year and then or in the middle of this year, maybe trend down towards.
Next year, assuming they stay flat or even decline and become a tailwind extra that certainly would be a good back but that could remove that 8% Edwin Donna <unk> B I L situation immediate both are somewhat unpredictable Ah, but if you put those aside we feel really good about our global off.
Writing business in that upper single digit growth rate in this environment and of course with these uncertainties around F X and maybe recessions in the U S and other places will watch and see how that unfolds, but absent the volatility in India Absently Outback.
The financing headwind, we feel very good about an apple a single digit sort of a girls break from our operating units and that's all driven and underpinned by growth in mobile data consumption around the globe and the need for cower space in our portfolio is just really well positioned to benefit from that.
Okay, great. Thank you guys I appreciate it thanks.
<unk>.
Your next question comes from the line of Phil Cusick from J P. Morgan and please go ahead.
Hi, This is Richard fulfilled.
Just wanted to follow up on the <unk>, what do you see as the most attractive markets right now.
Internationally.
Yeah. When it comes to our built program Richard I mean, we're going to build about 4005. This year. That's the expectation you know the biggest chumps here really come from Africa, and India in the range of 16 1700, five each in those areas in Europe , where we're gonna drive just over 400.
And Latin American maybe just under 300 sites, there's an opportunity to build in all of these markets and we get really good <unk> in these markets kind of across the board. So it's not just about the volume of sight, certainly we like the idea of increasing our footprint.
Europe in particular, driving more bills that with very highly credit quality customers and really attractive economy. So you know the four last 400 or 505 full bill there are very attractive to us, but as Tom talked about with scaling the core any way when we have management teams in assets and customers to the extent we can add.
<unk> <unk> kernel Capex program with high NOI yells it creates a lot of value for our shareholders longterm. It's good for our customers as well. So we think all of these markets are trapped in terms of our ability to build new app, but.
You know just adding adding onto that I wanted a really interesting I think parts of the build is what we're doing in Africa, because we're really focused on building building green sites in Africa, with with Erato and really leveraging a lot of the power and fuel competencies that that we've created in that market.
We brought in solar to over 15000 size, we bought overlooking mine and over 19000 sites, we produce 5 million liters of diesel over the last several years and so there's an incredible competency that we're building with regards to power the service in that marketplace, and we were able to bring that then onto those green sites.
We're building in conjunction with our transit with the agreement with Airtel. So that's that's a particular interest that we're really excited about over the next couple of years.
And coming back to the U S. You said about the carriers are about 50% of your sites are five G. When can we see I guess more justification activity do you.
Think that's coming at the end of this year or into next year.
You know I'm I'm sure that there are certain pockets of the United States, where we're already seeing some densification going on in the marketplace and so you know I would expect that to continue as penetration continues with five G said they tend to keep in mind, it's in a carriers best interests to deploy out five G.
Because it's going to lower their overall cost of providing service and so you know as as activity continues to drive in as applications continued to develop and get deployed you'll start to see that densification, but so as I said I think it's it it is already going on and I would expect that you know over the next two to three years, where will see it.
Increase even in the notification within the market also keep in mind that encouragement using you know slightly higher spectrum bands and so given the.
The prepared to be given the the propagation characteristics, they're gonna be requiring higher levels of identification as a result of that as well.
Thank you.
Your next question comes from the line of Eric <unk> from Wells Fargo. Please go ahead.
Great. Thanks for squeeze them, yet so I just wanted to check in on on the latter M business I. Obviously as you mentioned some term turn impacts this year, maybe you could kind of break out the impact from Telefonica Annoy and your guide and what type of visibility you have insurance beyond 2023, when some of these events may resolve and we could see organic growth.
Go back to you would kind of historical upper single digit ranges and then secondly, just the balance of your questions broad obviously.
Increase in interest expense, maybe you could talk about how you're thinking about managing the balance sheet. This year in terms of fix flooring mix, whether there's you know the possibility of turned out with some additional phone you're right that do you have any inverted yield curve or accessing the secured Margaret or anything else. You were looking at to you know help drive that down. Thank you.
Yep sounds good Eric so when it comes to Latin America, I guess, what I would point to as our you know our guide on organic Kenneth Billings growth is a little bit higher than than 2% that comes in a few pieces that the gross new business is gonna be.
The mid single digits, let's call it around three per cent or so we're also seeing higher escalators at around 8% and we do have a headwind of churn uhm I'm about 8% as well that's the bits and pieces in terms of getting into that that growth right. So you can see that your number is baily how do we do think it's temporary and we do think it will work through it over the next.
Couple of years and get back to more compelling overall growth in in the market and when it comes to the charred pieces in our guide specifically when you look out here in 2023 telephonic is really the biggest peace and I don't Wanna get too detailed in terms of of customers, but I think everyone knows what's happening in Mexico with Telefonica.
And and then joining ATT his name being over there. So that's driving a fair amount of the the churn we're also seeing.
Some charm remaining from American mobile early through the Nextel assets that will purchase down in Brazil. Those are the two things other than.
Smaller churn smaller customers kind of throughout the region, but it's really the next <unk> telefonica in.
And the bigger piece and then the the piece really is gonna be out over time. So there are a couple of things that I would say about Oy Oy in total is about 100 miles of revenue for us and represent about 1% of our overall, our overall business up about a third of that is <unk>.
In with their landline business, which we fully expect that that the landline business avoid will keep those sites over time. The other two thirds, we have on average five to six years remaining.
On the.
On the link there so that'll be kind of overtime will see you or does not have a significant impact today that we're seeing but that may start on holding this year and into next as we negotiate with the three players too kind of carved up the boy, but it'll probably extend into a multiyear period in terms of of getting through Oi. So that's kind of what's.
Happening in in Latin America relative to the churn issues.
And then.
Yeah on the balance read a couple of <unk> and then I would say I mean, we have a longstanding policy is when it comes to fixed and floating we run 80 20 were pretty much there at the end of 2022, we expect to stay in and around that range and but we can be opportunistic I think he's Sara S. At the very end of 2021.
Just before interest rates began to rise we were fairly aggressive in terms of terming out floating right balance as we got our floating rate uhm percentage down to closer to 10%.
You know what <unk> all about.
About 90 or just over 90 per cent on sixth we did that very purposefully to take advantage of the low rates both in the U S bond market and the euro market and that was just the head of purchasing the data center business on December 28th 2021. So we can be flexible there in terms of managing the balance sheet going forward we have about.
$3 billion in bonds that will refinance this year will look it up a variety of opportunities to do that that could come in the form of getting into the U F capital market <unk>, we can do that our parts of that in the European markets and of course will be balancing short term and long term rates, we could stay on the shorter end of the curve.
And with the expectation that rates may come down in the next couple of years and then we go out longer when the rates are more attractive. We can also secure some of the death upon the balance sheet to the extent, we refinance it and maybe carve up some savings from that perspective as well. So there are a lot of opportunities in terms of looking at the market does.
Lots of consider in terms of where we expect <unk> to head, but as I said earlier in one of my last comments, we do expect that.
<unk> will probably peak here in the U S. This year, maybe even drift down later in the ear and will continue to watch the market and interest rates and economy see what we expect to be happening next year, but will be looking at the poker and all the different capital opportunities that we have in front of us so to make the very best decisions going for.
Or.
Great. Thanks for.
You're welcome.
Your next question comes from the line of but Yeah Levi from UBS. Please go ahead.
Great. Thank you I'm just following up on India, and specifically for Vodafone can you size the partial payments out there, making right now there's been a change in the pacing and if there are any adjustments to the pricing of their contract with you and just going back to evaluating strategic options.
For India, it's been a challenging market, but potentially there is some improvement how how'd you <unk> on the right what valuation you would take versus the your longterm growth assumptions in that region. Thank you.
Yeah, I'll take the the India reserve questions. So you can see in our outlook for 2023, we are.
We are calling out a specific reserve the V. I L of about $75 million Uhm, that's up against on a revenue reserve basis from 2022, we reserved close to $100 million to.
Really the last two quarters and 20 twenty-two what I can tell you is the percentage I don't Wanna get into a percentage of revenue that they're paying and those sorts of things, but I will highlight as in January they're paying us a little bit more than they were paying us in the in the end of 2022. So we are seeing some improvement in terms of the collections through V I.
And we do expect that that improvement will kind of continue and it will collect even a little bit more from a variety of their commitments to us as we look out over the balance of 2023, we do expect them to be getting back closer to an increasing their their payments to us towards the end of the.
Yeah. So we do expect to see some improvements going in that direction, that's kind of what I would say in terms of the contract. We haven't really written any any M. L. As our leasing contract with them. We have entered into the 200 million dollar convertible debenture, which also have some terms and conditions.
<unk> that call out specific time periods in terms of went payment to do it also have some additional terms and conditions around staying current with leasing fees within the mla's and those sorts of things. So there's that that additional agreement, which gives us a few additional kind of safety nets or or.
Safety belts here, but the situation there is volatile we're focused on trying to support V. I L. Through this period, we we're very encouraged by the government conversion, we think that could be the beginning of better things for V. I L. In terms of raising additional capital going forward and we're focused on long term value creation, and having a V I L. As a partner in India over the long term.
And they were on your second question can you remind me what it was that yeah with improvement in India. Why is this the right time to look for you know strategic options in the in the region.
Yeah, I would say, it's really just being opportunistic kind of looking at the market certainly India has been volatile the last few.
Phew ears, and maybe even a little bit longer than that but as we said in the prepared remarks, we look at all of our portfolio App. It's around the globe kind of on a constant basis and evaluate growth opportunity valuations and other and other things. So we are in the process of looking at strategic.
We can maybe we haven't made any decision at this point, but we are kind of going through a a process in evaluating things then uhm, it's really around being opportunistic we do believe that the the marketing inter.
Interesting market and does hold them upside, but there's also a fair amount of volatility that we have experienced.
So we'll be looking at a number of things and when and if we conclude and make any decisions will certainly let everybody know.
Okay. Thank you.
You're welcome.
Your next question comes from the line of Nick they'll deal from S. P. P. Moffett Nathan. Please go ahead.
Hey, good morning, guys. Thanks for taking my questions. If you don't first just to follow up on the on the India question.
Tom you've emphasized how important new site bills are you into your growth outlook into returns you get with them. Obviously, there's a step down in your bill plan and twenty-three versus 22 and it looks like the driver is primarily India.
It does that explicitly tie into your review that.
India's a more volatile potentially less appealing market. Then you then you once believed or something else driving that that downshift.
No, it's really not as a matter of fact, it if you saw the numbers coming in from the field in terms of what they expected to build it significantly higher candidly and what I. What we do is we we bracket that back and and look at the opportunity and and look at where.
We can drive the the most value there so there's nothing going on there with the <unk> with regards to the the pullback on on sites by the way you know that we will see different levels of Seinfeld.
And each one of the country's just like we see different levels of cold those amendments depending upon what densification looks like and what the carriers, but now I would read into anything in terms of the pullback in India of new Bill for 2023.
Okay. Okay. That's helpful. And then let me be turning to core site you know since you've had it for a little more than a year. It seems like things are going consistently your underwriting maybe even a bit better I I I guess bigger picture you know any key learnings you'd highlight now that you've had a chance to have deep discussions with a core sites customers in your <unk>.
You know your tower customers about the.
The vision for how you could integrate those assets or or add them work together and and I guess more generally any any adaptations of refinements to your plan.
Versus a year ago that you'd want a highlight.
Yeah, no nothing nothing specific I mean, we we have a fair amount of history and that kind of in the that particular part of the infrastructure business. We knew that we knew what the model was that <unk> was delivering on with their with their customers and how significant interconnection was in terms of.
Driving value for their customers as well as for the cloud service operators.
And that demand continues.
And it's a significant barrier to entry for for others to be able to compete against them you.
You know I'm continually incredibly impressed with the team and and how they think about returns and how they think about their relationships with with the customers.
So you know, but that wasn't surprised because I thought that candidly you know through the whole entire due diligence process. So I knew the quality of of the group. We did enjoy significant growth in 2022, which I think just goes to the strength of the team and straw strength of the the value proposition that.
They are offering their customers and we believe that near I'm twenty-three, there's gonna be another another strong year.
We still have as you would expect a significant amount of energy around what the edge will ultimately look like we have a create an advisory board. We have a lab setup, we have plans to to start to look at the building out some of that capacity, we've identified about a thousand sites.
Within the United States, they can handle up to over a meg of capacity and through the relationships that you know we've been able to develop really through course site with the cloud we remain you know.
Really optimistic about what that opportunity is going to look like and and how we're gonna be able to drive incremental business to our towers site, which is in it of itself a has a strong competitive barrier given the the ownership that we have <unk> of of the land and of the site and so we're very excited about it if there's nothing in our.
Guide you know relative to performance coming from that activity and as we've said, it's it's gonna be a multi year rollout.
But we think that you know as a result of the the course I'd assets as well as our tower records were really an equally position to be a meaningful part of the puzzle as the edge continues to develop so as I said I I think we would just continue to underscore what we originally had thoughts and.
And we're continually working very methodically in terms of trying to become that linchpin for rolling out that kind of a capability.
Okay.
<unk>, Okay <unk> onto what Tom says ear as we wait for the <unk> for the edge develop the core core site businesses performing exceptionally well and right in line with our expectations you hurt US talk earlier about the record two business that we achieved in 2022 with some strong demand from enterprise.
[noise] summers on those core data center assets that we have around the country. A few of the key metric here you know we are being escalations right around three per cent on our rental space, which is right in our target range, we think cash mark to market adjustments for twenty-three go up beyond where they were in 2022, so they're gone from about two per cent up to maybe three.
Three and a half per cent. So that certainly goes back drunk and can use the in and around 6.5%, which is on the low end of our range interconnection growth. We expect in 2023 to be in the 6% to 8% range kind of right in line with where we would expect it to be in our development Capex is coming in at around 360 million for 20.
Twenty-three and much of that is to replace capacity that we sold in 2022 through those record new business numbers that we will be deploying in 23 and 24, replacing that capacity is really where the the capex is is being deployed so we're we're seeing very good results in <unk>.
Really strong demand from that core core site business again, as we look to work to develop the edge.
Okay. That's a great color. Thank you both.
Okay.
And that's all the time, we have for questions today I would now like to turn the conference back to your speakers for any closing remarks.
I appreciate everybody joining a call. If you have any questions. Please feel free to reach out to myself or the investor relations team. Thanks, everyone.
Ladies and gentlemen that does conclude your conference for today. Thank you for your participation in for using AT&T teleconference. You may now disconnect.
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