Q2 2024 American Tower Corp Earnings Call

Ladies and gentlemen, thank you for standing by. Welcome to the American Tower second quarter 2024 earnings conference call. As a reminder, today's conference call is being recorded.

Adam Smith: Following the prepared remarks, we will open the call for questions. If you'd like to ask a question, please press 1 then 0 now. I would now like to turn the call over to your host, Adam Smith, Senior Vice President of Investor Relations and FP&A. Please go ahead, sir.

Adam Smith: Good morning, and thank you for joining American Tower's second quarter earnings conference call. We have posted a presentation, which we will refer to throughout our prepared remarks under the investor relations tab of our website, www.americantower.com.

Speaker Change: I'm joined on the call today by Steve Vondran, our President and CEO , and Rod Smith, our Executive Vice President, CFO , and Treasurer.

Unknown Executive: Following our prepared remarks, we will open the call to 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 2024 outlook, capital allocation, and future operating performance, as well as our expectations for the closing of the sale of our India business. Such factors include the risk factors set forth in this morning's earnings press release. 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.

Speaker Change: Following our prepared remarks, we will open up the call for your questions.

Speaker Change: Before we begin, I'll remind you that our comments will contain forward-looking statements that involve a number of risks and uncertainties.

Speaker Change: Examples of these statements include our expectations regarding future growth, including our 2024 outlook, capital allocation, and future operating performance.

Speaker Change: Our expectations for the closing of the sale of our India business, and the expected impacts of such sale on our business.

Speaker Change: Collections, Expectations in India, and any other statements regarding matters that are not historical facts.

Speaker Change: 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 forebooking statements.

Speaker Change: Such factors include the risk factors set forth in this morning's earnings press release.

Speaker Change: Those set forth in our most recent annual report on Form 10-K and other risks described in documents we subsequently file from time to time with the SEC.

Speaker Change: 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.

Speaker Change: With that, I'll turn the call over to Steve.

Steven O. Vondran: Good morning, and thanks to everyone for joining the call today. As you can see in our Q2 results and our revised full year outlook, we've continued to build on the strength we saw in the underlying business at the outset of the year, with further validation of our initial expectations for strong activity across our platforms in 2024.

Speaker Change: I want to start today's remarks by thanking our teams across the world for their commitment to operational excellence and dedication to maximizing sales, bringing down costs, and expanding margins across the portfolio.

Unknown Executive: My comments today will focus on our latest views on our international portfolio and aim to address some of the recurring questions related to our international strategy in both developed and emerging markets that we've received from investors in recent months. Second, by exporting our successful U.S. model through investments in a diversified portfolio of assets that balance various risks and return profiles, we expect to expand and augment our long-term growth potential. On the operational front, I can confidently tell you that we have the best operating teams in each geography across our portfolio, and we've overcome operational risks on a consistent basis through our shared global expertise and experience.

Speaker Change: My comments today will focus on our latest views on our international portfolio and aim to address some of the recurring questions related to our international strategy in both developed and emerging markets that we've received from investors in recent months.

Speaker Change: As we've communicated in the past, our international investment thesis is too broad.

Speaker Change: First, we see that the fundamentals that have driven performance in the U.S., such as ongoing exponential growth in mobile data consumption and a business model that benefits from tremendous operating leverage, generally hold true across international markets.

Speaker Change: Second, by exporting our successful U.S. model through investments in a diversified portfolio of assets that balance various risk and return profiles, we expect to expand and augment our long-term growth potential.

Speaker Change: Executing on this thesis has resulted in a footprint that includes diverse and sometimes complicated geographies.

Speaker Change: Entering these markets as a U.S. business involves creating value while solving for two types of risk, operational and financial.

Speaker Change: On the operational front, I can confidently tell you that we have the best operating teams in each geography across our portfolio, and we've overcome operational risks on a consistent basis through our shared global expertise and experience.

Speaker Change: In many cases, we leverage operating challenges to create new business opportunities, enhance existing or introduce new competitive advantages.

Unknown Executive: This capability has been demonstrated through our reliable speed to market delivery on new tower builds, a global reputation and sophisticated regulatory approach that has afforded opportunities to effectively assess new markets and assets, and the development of innovative powers of service models that provide best-in-class network uptime and supports initiatives among American Tower, our M&O customers, and the communities we serve to deliver cleaner telecommunications networks. This is one of the key synergies American Tower brings an unmatched global knowledge and support platform to create value through operational synergies. Our investors benefit from our ability to utilize that platform to realize expanded market share of new business, drive best-in-class margins, and leverage cost-to-capital advantages derived from our global balance sheet.

Speaker Change: This capability has been demonstrated through our reliable speed-to-market delivery on new tower builds.

Speaker Change: A global reputation and sophisticated regulatory approach that has afforded opportunities to effectively assess new markets and assets.

Speaker Change: and the development of innovative powers-of-service model that provides best-in-class network uptime and supports initiatives among American Tower, our M&O customers, and the communities we serve to deliver clear telecommunications networks.

Speaker Change: This is one of the key synergies American Tower brings, an unmatched global knowledge and support platform to create value through operational excellence.

Speaker Change: Our investors benefit from our ability to utilize that platform to realize expanded market share of new business, drive best-in-class margins, and leverage cost-to-capital advantages derived from our global balance sheet.

Speaker Change: When you take all these together, these benefits translate to an enhanced value of the assets under the American Tower umbrella, commanding a premium relative to the market implied sum of the parts on a comparable basis.

Unknown Executive: And where this has not held true, we've taken corrective actions, which I'll touch on a little bit later. In many cases, those financial risks have, quite frankly, outpaced what we originally underwrote and, together with care and consolidation, have contributed to financial results in certain emerging markets that fall short of our standards.

Speaker Change: And where this is not held true, we've taken corrective actions, which I'll touch on a little bit later.

Speaker Change: As I mentioned in previous remarks, our exposure to financial risk has been more acute in our emerging market portfolio, particularly over the past several years, as global macroeconomic factors have had an outsized impact on emerging markets.

Speaker Change: In many cases, those financial risks have, quite frankly, outpaced what we originally underwrote, and together with care and consolidation, have contributed to financial results in certain emerging markets that fall short of our standards.

Speaker Change: We're taking action to improve those results.

Speaker Change: We've talked previously about our focus on cost controls, and I'm happy to say that those are paying off. At the midpoint of our guidance this year, we anticipate savings of over $40 million in SG&A, including bad debt, relative to 2023.

Unknown Executive: Our emerging market footprint has been a meaningful contributor to our cost efficiency progress to date, where we're shifting our focus from aggressively growing those portfolios to maximizing the return on our investment. We've also previously commented on raising the hurdle rates for the deployment of additional capital in those markets. With an expanded developed market platform, inclusive of the US and Canada, we've been able to more than double our discretionary capital in those markets over the same period.

Speaker Change: Our emerging market footprint has been a meaningful contributor to our cost efficiency progress to date, where we're shifting our focus from aggressively growing those portfolios to maximizing the return on our investments.

Speaker Change: We've also previously commented on raising the hurdle rates for the deployment of additional capital in those markets.

Speaker Change: These proactive actions and a refined strategic focus have corresponded to an expected 2024 reduction of over 40% in discretionary capital across Latin America, Africa, and APAC compared to 2021.

Speaker Change: Conversely, in parts of our developed markets, such as Europe and now poor site, we're underwriting compelling mid-team U.S. dollar yields. We're increasing our investments alongside our capital partners.

Speaker Change: With an expanded developed market platform inclusive of the U.S. and Canada, we've been able to more than double our discretionary capital in those markets over the same period.

Speaker Change: As a result, as you can see on slide six, the allocation toward emerging markets has reduced from around two-thirds of our total in 2021 to less than a third in our 2024 guidance.

Speaker Change: You'll likely see that number continue to trend down as we satisfy some of our previously contracted obligations in certain markets.

Speaker Change: Complimenting our approach to discretionary capital allocation and supporting our proactive steps to enhance our global portfolio, in 2023 we divested non-core, subscale, or underperforming assets like Mexico fiber and our pull-in operations. And earlier this year we announced our pending exit from India.

Unknown Executive: Additionally, over the past several years, we've further expanded our developed market exposure through our M&A focus across the US and Europe, just to name a few examples of the key strategic actions we've taken to date. Pro forma for the anticipated sale of our Indian business, our attributable AFSO exposure to emerging markets will be approximately 25%.

Speaker Change: Additionally, over the past several years, we've further expanded our developed market exposure through our M&A focus across the U.S. and Europe , all just to name a few examples of the key strategic actions we've taken to date.

Speaker Change: Co-former for the anticipated sale of our India business, our attributable AFSO exposure to emerging markets will be approximately 25 percent.

Unknown Executive: As a result of these actions, and those I'll touch on later, we believe our emerging market operations and our business as a whole are in a better position to deliver the higher quality, sustainable earnings growth that makes investing in communications infrastructure so compelling. But, that doesn't mean that you should assume that we plan to divest any particular market. Meanwhile, the continued operation of these portfolios means that we retain the optionality to reinvest in those markets if economic conditions and growth outlooks evolve.

Speaker Change: As a result of these actions, and those I'll touch on later, we believe our emerging market operations and our business as a whole are in a better position to deliver the higher quality, sustainable earnings growth that makes investing in communications infrastructure so compelling.

Speaker Change: However, given the impacts of the financial risks and the stability and quality of earnings our investors rightfully demand from the tower and communications infrastructure models, we expect to further reduce our relative exposure to emerging markets over time as we continue to focus on incremental investments in developed economies.

Speaker Change: Now that doesn't mean that you should assume that we plan to divest any particular markets.

Speaker Change: Our full management team and our board regularly assess all options, including divestitures, and we're going to remain opportunistic as we continue to actively manage our portfolio.

Speaker Change: We believe today that more long-term value is created by continuing to operate these portfolios, expand our gross margins, and reduce capital intensity, while repatriating cash flows to fund other global priorities, such as deleveraging, paying our dividend,

Speaker Change: Develop market investments with the highest quality return profiles, and looking ahead to potential for share buybacks.

Speaker Change: Meanwhile, continued operation of these portfolios means that we retain the optionality to reinvest into those markets if economic conditions and growth outlooks evolve.

Unknown Executive: With that in mind, here's what we're focused on in our international segment going forward. First, just as in the U.S., owning and operating the highest quality assets and partnering with leading carriers in each market helps provide more stable growth and reduce long-term earnings volatility resulting from consolidation. This is a critical lesson learned from our experience in India, where consolidation posed significant headwinds to growth over a multi-year period.

Speaker Change: With that in mind, here's what we're focused on in our international segment going forward.

Speaker Change: First, just as in the U.S., owning and operating the highest quality assets and partnering with leading carriers in each market helps provide more stable growth and reduce long-term earnings volatility resulting from consolidation.

Speaker Change: This is a critical lesson learned from our experience in India, where consolidation posed significant headwinds to growth over a multi-year period.

Speaker Change: Today, the vast majority of our revenues in Europe , Africa, and Latin America come from leading customers with competitive in-market scale.

Unknown Executive: Meaningful enhancements to our counterparty profile over the past several years have come in part due to carrier consolidation, but also as a result of proactively aligning growth initiatives and capital allocation, whether through development or M&A, toward doing business with market leaders. And we remain committed to growing with Tier 1 global M&Os across our footprint. In some cases, particularly where growth capital is not required, we may also support network rollouts of new entrants or smaller operators.

Speaker Change: Meaningful enhancements to our counterparty profile over the past several years have come in part due to carrier consolidation, but also as a result of proactively aligning growth initiatives and capital allocation, whether through development or M&A, toward doing business with market leaders.

Speaker Change: And we remain committed to growing with Tier 1 global MNOs across our footprint.

Speaker Change: In some cases, particularly where growth capital is not required, we may also support network rollouts of new entrants or smaller operators. However, any time we assess expansion capex for carriers that fit this profile, the underwriting standards will be adjusted to account for potential incremental risks on a case-by-case basis.

Unknown Executive: However, any time we assess expansion capex for carriers that fit this profile, the underwriting standards will be adjusted to account for potential incremental risks on a case-by-case basis. Next, scale is perhaps the most critical component of the international value creation flywheel.

Speaker Change: Next, scale is perhaps the most critical component of the international value creation flywheel. At a high level, our scale allows us to operate more profitably by leveraging shared overhead and a global balance sheet that creates cost of capital advantages.

Unknown Executive: At a high level, our scale allows us to operate more profitably by leveraging shared overhead and a global balance sheet that creates a cost of capital advantage. Importantly, SCALE also enables us to develop nationwide agreements that present a differentiated go-to-market solution for leading M&Os at contract terms that we view as critical. In particular, securing full lease-up rights on the assets we acquire, including the ability to monetize both co-location and remit activity, is crucial to our ability to drive long-term organic growth. Over the past decade, we've encountered stale leaseback opportunities with restrictive contract terms that limit lease-up monetization. These terms are non-starters for us.

Speaker Change: Importantly, SCALE also enables us to develop nationwide agreements that present a differentiated go-to-market solution for leading M&Os at contract terms that we view as critical.

Speaker Change: In particular, securing full lease uprights on the assets we acquire, including the ability to monetize both collocation and amendment activity, is crucial to our ability to drive long-term organic growth.

Speaker Change: Over the past decade, we've encountered stale lease-back opportunities with restrictive contract terms that limit the lease-up monetization. These terms are non-starters for us.

Unknown Executive: Similarly, while recent currency devaluations in certain markets have exceeded our initial underwriting expectations, CPI-linked escalators have proven to be a critical tool to help mitigate long-term currency risk over the last decade. As we look forward to the balance of 2024 over the next several years, we believe we're uniquely positioned to create differentiated value for our customers. To maximize the benefits of the scale portfolio we have in place, we're reinforcing a customer service-driven approach to everything we do.

Speaker Change: Similarly, while recent currency devaluations in certain markets have exceeded our initial underwriting expectations, CPI-linked escalators have proven to be a critical tool to help mitigate long-term currency risk over the last decade.

Speaker Change: As we look forward to the balance of 2024 and the next several years, we believe we're uniquely positioned to create differentiated value for our customers.

Speaker Change: To maximize the benefits of the scale portfolio we have in place, we're reinforcing a customer service driven approach to everything we do. And our internal departments in each region are focused on supporting our sales team's ability to find new business with market leaders and deliver strong organic growth.

Unknown Executive: And our internal departments in each region are focused on supporting our sales team's ability to find new business with market leaders and deliver strong organic growth. Furthermore, our global model allows our best-in-class operating teams to remain flexible in addressing the ebbs and flows of demand through cross-border shared resources, allowing for sustained speed to market delivery for our customers, while also supporting our focus on cost management.

Speaker Change: Further, our global model allows our best-in-class operating teams to remain flexible in addressing the ebbs and flows of demand through cross-border shared resources, allowing for sustained speed to market delivery for our customers while also supporting our focus on cost management.

Unknown Executive: To that end, we remain committed to extending the global efficiency and cost management achievements we've made to date. Since 2018, and at the midpoint of our 2024 outlook, we expect to reduce cash SG&A excluding bad debt as a percentage of revenue by roughly 210 basis points in Europe, Africa, and Latin America. We are now in the process of further globalizing our business functions to identify additional areas where we can leverage scale and technology to support continued growth and customer service in the most cost-efficient manner.

Speaker Change: To that end, we remain committed to extending the global efficiency and cost management achievements we've made to date. Since 2018, and at the midpoint of our 2024 outlook, we expect to reduce cash SG&A excluding bad debt as a percentage of revenue by roughly 210 basis points in Europe , Africa, and lifetime in aggregate.

Speaker Change: We're now in the process of further globalizing our business functions to identify additional areas where we can leverage scale and technology to support continued growth and customer service in the most cost-efficient manner.

Unknown Executive: In closing, we believe we have an opportunity to leverage our learnings from the last two plus decades of global operations to continue managing and developing a best-in-class business that's capable of delivering high quality, long-term earnings growth. We're going to continue actively managing our portfolio to ensure a compelling mix of geographies and assets that are well positioned to support and monetize growing data demand, and where our operating capabilities can continue to serve as a sustained competitive advantage. As our actions have demonstrated over the past year, we're prepared to make appropriate strategic decisions to ensure that we have a portfolio of the highest quality.

Speaker Change: In closing, we believe we have an opportunity to leverage our learnings from the last two-plus decades of global operations to continue managing and developing a best-in-class business that's capable of delivering high-quality, long-term earnings growth.

Speaker Change: We're going to continue actively managing our portfolio to ensure a compelling mix of geographies and assets that are well-positioned to support and monetize growing data demand, and where our operating capabilities can continue to serve as a sustained competitive advantage.

Speaker Change: As our actions have demonstrated over the past year, we're prepared to make appropriate strategic decisions to ensure that we have a portfolio of the highest quality.

Unknown Executive: Going forward, we believe that through a focus on maximizing organic growth, disciplined and flexible reinvestment of cash flows into growth opportunities, and further leveraging our global scale to maximize profitability and returns, we can provide a value proposition that can't be replicated elsewhere, translating into expanded returns on capital over time. With that, I'll hand it over to Rod to discuss future results on a revised outlook. Thanks, Steve.

Speaker Change: Going forward, we believe that through a focus on maximizing organic growth,

Speaker Change: Disciplined and flexible reinvestment of cash flows into growth opportunities, and further leveraging our global scale to maximize profitability and returns, we can provide a value proposition that can't be replicated elsewhere, translating into expanded returns on capital over time.

Speaker Change: With that, I'll hand it over to Rod to discuss future results and revised outlooks.

Rod: Good morning, and thank you for joining today's call. As highlighted in this morning's press release, we had a strong second quarter, driven by resilient demand for our assets and resulting in robust performance across several key areas. Given the critical nature of our global portfolio and the growth trends in mobile data consumption, we head into the back half of the year confident in our ability to drive strong growth, execute on our cost management initiatives, enhance our quality of earnings, and deliver compelling total shareholder returns.

Rod: Thanks, Steve. Good morning, and thank you for joining today's call.

Rod: As highlighted in this morning's press release, we had a strong second quarter, driven by the resilient demand for our assets and resulting in robust performance across several key areas.

Rod: Given the critical nature of our global portfolio and the growth trends in mobile data consumption, we head into the back half of the year confident in our ability to drive strong growth, execute on our cost management initiatives, enhance our quality of earnings, and deliver compelling total shareholder returns.

Rod: Before I discuss the specifics of our Q2 results and revised full year outlook, I'll summarize a few of the highlights. First, activity levels on our tower assets remain strong. Our consolidated organic tenant building growth of 5.3% continues to demonstrate the strength of the fundamentals that fuel our business, and our U.S. services segment performed in line with our expectations for accelerating tower activity in 2024, with revenues and gross profit each increasing over 50% versus Q1 and more than double that of Q4 of 2023.

Speaker Change: Before I discuss the specifics of our Q2 results and revised full year outlook, I'll summarize a few of the highlights.

Speaker Change: First, activity levels on our tower assets remain strong. Our consolidated organic tenant buildings growth of 5.3% continues to demonstrate the strength of the fundamentals that fuel our business.

Speaker Change: And our U.S. services segment performed in line with our expectations for accelerating power activity in 2024, with revenues and gross profit each increasing over 50 percent versus Q1, and more than double that of Q4 of 2023.

Speaker Change: Next, CoreSite executed another exceptionally strong quarter with double-digit revenue growth, their second-highest quarter of signed new leasing in the company's history, and record cash backlog.

Speaker Change: Additionally, our data center projects currently under development are roughly 60% pre-leased, four times the historical average, providing confidence and visibility to an accelerated pathway to realizing CoreSite's best-in-class returns on invested capital.

Rod: Furthermore, in India, the positive collection trends we saw over the last several quarters continued in Q2, allowing us to reverse approximately $67 million of previously reserved revenue and clear the majority of the outstanding AR we have with a key customer. Additionally, we made further progress in accelerating certain payments included in the approximately $2.5 billion of potential total proceeds associated with our pending sale of ATC India. In the quarter, we repatriated more than $210 million back to the U.S., and we are in the process of repatriating an additional approximately $20 million, largely associated with the monetization of the VIL OCD's net of fees. To date, total accelerated proceeds stand at approximately $345 million, inclusive of funds received in Q1, and we expect the remaining proceeds, potentially of approximately $2.1 billion, to be received at closing.

Speaker Change: Furthermore, in India, the positive collection trends we saw over the last several quarters continued in Q2, allowing us to reverse approximately $67 million of previously reserved revenue and clearing the majority of the outstanding AR we have with a key customer.

Speaker Change: Separately, we made further progress in accelerating certain payments included in the approximately $2.5 billion of potential total proceeds associated with our pending sale of ATC India.

Speaker Change: In the quarter, we repatriated more than $210 million back to the U.S. And we are in the process of repatriating an additional approximately $20 million, largely associated with the monetization of the VIL OCD's net of fees.

Speaker Change: To date, Total Accelerated Proceeds stands at approximately $345 million, inclusive of funds received in Q1, and we expect the remaining proceeds, potentially of approximately $2.1 billion, to be received at closing.

Rod: As we make progress towards closing, which we continue to target in the second half of 2024, we anticipate incurring incremental costs within the business between SG&A and Maintenance CapEx, a modest offset to the upside realized through strong collections. Finally, we continue to effectively execute on our balance sheet initiatives, highlighted in the quarter by the issuance of 1 billion euros of euro denominated senior unsecured notes at a weighted average cost of 4%. The proceeds were used to pay down floating rate debt, lowering our ratio back to 89% fixed to 11% floating.

Speaker Change: As we make progress towards closing, which we continue to target the second half of 2024, we anticipate incurring incremental costs within the business between SG&A and maintenance CapEx, a modest offset to the upside realized through strong collections.

Speaker Change: I will touch on these items and how they impact our outlook later.

Speaker Change: Finally, we continue to effectively execute on our balance sheet initiatives.

Speaker Change: Highlighted in the quarter by the issuance of 1 billion Euro denominated senior unsecured notes at a weighted average cost of 4%. The proceeds were used to pay down floating rate debt, lowering our ratio back to 89% fixed to 11% floating.

Rod: Turning to second quarter property revenue and organic tenant billings growth on slide eight, consolidated property revenue growth was 4.6% or over 6.5% excluding non-cash straight line revenue while absorbing roughly 230 basis points of FX headwinds. U.S. and Canada property revenue growth was approximately 1% or over 4% excluding straight line revenue and includes an approximately 1% negative impact from sprint churn. International revenue growth was approximately 7% or over 12%, excluding the impacts of currency fluctuations, which includes an over 8% benefit associated with improved collections in India.

Speaker Change: Turning to second quarter property revenue and organic tenant buildings growth on slide eight, consolidated property revenue growth was 4.6% or over 6.5% excluding non-cash straight line revenue while absorbing roughly 230 basis points of FX headwinds.

Speaker Change: U.S. and Canada property revenue growth was approximately 1% or over 4% excluding straight line and includes an approximately 1% negative impact from sprint churn.

Speaker Change: International revenue growth was approximately 7% or over 12% excluding the impacts of currency fluctuations, which includes an over 8% benefit associated with improved collections in India.

Rod: Finally, data center revenues increased over 12% as demand for hybrid and multi-cloud IT architecture continues unabated, AI-driven demand picks up, and the backlog of record new business signed over the last two years continues to commence. Moving to the right side of the slide, consolidated organic tenant building growth was 5.3%, supported by strong demand for our assets across our global portfolio. In our US and Canada segment, organic tenant building growth was 5.1% and over 6% absent sprint-related churn.

Speaker Change: Finally, data center revenues increased over 12% as demand for hybrid and multi-cloud IT architecture continues unabated. AI-driven demand picks up and the backlog of record new business signed over the last two years continues to commence.

Speaker Change: Moving to the right side of the slide, consolidated organic tenant buildings growth was 5.3 percent, supported by strong demand for our assets across our global portfolio. In our U.S. and Canada segment, organic tenant buildings growth was 5.1 percent and over 6 percent absent sprint related churn.

Rod: We expect a relatively similar growth rate in Q3 before a step down in Q4 as we commence the final tranche of contracted sprint churn, all supportive of our 2024 outlook expectation of approximately 4.7%. Our international segment drove 5.5% organic tenant buildings growth, reflecting additional moderation in CPI-linked escalators as expected and a sequential step down in co-location and amendment contributions, most notably in APAC. However, in Europe, we saw another quarter of accelerating new business, moving organic tenant buildings growth in the region to 5.7%, and giving us confidence to modestly raise our full-year outlook for the segment, which I'll touch on shortly.

Speaker Change: We expect a relatively similar growth rate in Q3, before a step down in Q4 as we commence the final tranche of contracted sprint churn, all supportive of our 2024 outlook expectation of approximately 4.7%.

Speaker Change: Our international segment drew 5.5% in organic tenant billings growth, reflecting additional moderation in CPI-linked escalators, as expected, and a sequential step-down in co-location and amendment contributions, most notably in APAC.

Speaker Change: However, in Europe , we saw another quarter of accelerating new business.

Speaker Change: moving organic tenant buildings growth in the region to 5.7% and giving us confidence to modestly raise our full year outlook for the segment which I'll touch on shortly.

Rod: Turning to slide 9, Adjusted EBITDA grew 8.1%, or nearly 12%, excluding the impacts of non-cash straight lines, while absorbing approximately 210 basis points in FX headwinds. Cash-adjusted EBITDA margins improved approximately 300 basis points year-over-year to 64.7 percent, which includes a roughly 80 basis point benefit in the quarter associated with the India Reserve reversals as compared to Absent these one-time items, we're continuing to demonstrate meaningful cash margin improvements supported by the inherent operating leverage in the tower model and continued cost management throughout the business. In fact, cash SG&A excluding bad debt declined approximately 2.5 percent year-over-year in the quarter.

Speaker Change: Turning to slide 9, adjusted EBITDA grew 8.1% or nearly 12% excluding the impacts of non-cash straight line, while absorbing approximately 210 basis points in FX headwinds.

Speaker Change: Cash, adjusted EBITDA margins improved approximately 300 basis points a year over year to 64.7%, which includes a roughly 80 basis point benefit in the quarter associated with the India Reserve reversals as compared to a drag of nearly 50 basis points in the year-ago period.

Speaker Change: Absent these one-time items, we're continuing to demonstrate meaningful cash margin improvements supported by the inherent operating leverage in the tower model and continued cost management throughout the business.

Speaker Change: In fact, cash SG&A excluding bad debt declined approximately 2.5% year-over-year in the quarter.

Rod: Moving to the right side of the slide, attributable AFFO and attributable AFFO per share grew by 13.5 percent and 13.4 percent, respectively, supported by a high conversion of cash-adjusted EBITDA growth to attributable AFFO. Now, shifting to our revised full year outlook, I'll start with a few key updates. First, as I mentioned earlier, we've had a strong start to the year. Core performance remains solid, and our continued focus on driving cost discipline and margin expansion across the business is paying off through exceptional conversion rates of top-line results to adjusted EBITDA and AFFO.

Speaker Change: Moving to the right side of the slide, attributable AFFO and attributable AFFO per share grew by 13.5 percent and 13.4 percent respectively, supported by a high conversion of cash-adjusted EBITDA growth to attributable AFFO.

Speaker Change: Now, shifting to our revised Full Year Outlook, I'll start with a few key updates.

Speaker Change: First, as I mentioned earlier, we've had a strong start to the year. Core performance remains solid, and our continued focus on driving cost discipline and margin expansion across the business is paying off through exceptional conversion rates of top-line results through adjusted EBITDA and AFFO.

Speaker Change: As you'll see in the next several slides, our core results to date and expectations for the remainder of the year are contributing to outperformance across key metrics for 2024 as compared to our prior expectations.

Rod: Having now come off several consecutive quarters of solid collections in India, we've reassessed expectations for the year. In our prior outlook, we had assumed nearly $50 million in revenue reserves from Q2 to Q4, or just over $16 million per quarter. As I mentioned earlier, through positive collections in Q2, we reversed $67 million of previously reserved revenue, translating to an upside of $84 million as compared to our prior outlook assumption for the quarter.

Speaker Change: Next.

Speaker Change: Having now come off several consecutive quarters of solid collections in India, we've reassessed expectations for the year. In our prior outlook, we had assumed nearly $50 million in revenue reserves from Q2 to Q4, or just over $16 million per quarter.

Speaker Change: As I mentioned earlier, through positive collections in Q2, we've reversed $67 million of previously reserved revenue, translating to an upside of $84 million as compared to our prior outlook assumptions for the quarter.

Rod: We now have confidence to fully remove our previous reserve assumption for the second half of the year, representing an incremental $32 million in upside, which, together with Q2 results, is driving an outlook-to-outlook increase of around $116 million across property revenue, adjusted EBITDA, and attributable AFFO. Finally, we have revised our FX assumptions, providing an incremental headwind of $51 million, $33 million, and $28 million to property revenue, adjusted EBITDA, and attributable AFFO, respectively.

Speaker Change: We now have confidence to fully remove our previous reserve assumption for the second half of the year.

Speaker Change: representing an incremental $32 million in upside, which, together with Q2 results, is driving an outlook-to-outlook increase of around $116 million across property revenue, adjusted EBITDA, and attributable AFFO.

Speaker Change: Finally, we have revised our FX assumptions, providing an incremental headwind of $51 million, $33 million, and $28 million to property revenue, adjusted EBITDA, and attributable AFFO, respectively.

Rod: Turning to slide 10, we are increasing our expectations for property revenue by approximately $20 million compared to the prior outlook. Outperformance includes $116 million associated with positive collection trends in India, partially offset by a decrease of $45 million, which consists of a decrease of $58 million in pass-through, primarily due to fuel costs, net of an increase of $13 million in straight-line revenue. Consolidated core property revenue remains unchanged, with certain offsetting movements between segments.

Speaker Change: Turning to slide 10, we are increasing our expectations for property revenue by approximately $20 million compared to prior outlook.

Speaker Change: Outperformance includes $116 million associated with positive collection trends in India, partially offset by a decrease of $45 million, which consists of a decrease of $58 million in pass-through, primarily due to fuel costs.

Speaker Change: Net of an increase of $13 million in straight line revenue.

Speaker Change: Consolidated core property revenue remains unchanged with certain offsetting movements between segments. Growth was partially also offset by 51 million dollars associated with negative FX impacts.

Rod: Growth was partially also offset by $51 million associated with a negative FX impact. Moving to slide 11, expectations for Consolidated, U.S. and Canada, Total International, and APAC Organic Tenant Buildings growth remain unchanged. However, we have raised expectations for Africa to greater than 12% and Europe to approximately 6%, up from 11% to 12% and 5% to 6%, respectively. In addition, we have lowered our expectations for Latin America to greater than 1.5%, down from approximately 2%.

Speaker Change: Moving to slide 11, expectations for International and APAC Organic Tenant Buildings growth remain unchanged.

Speaker Change: However, we have raised expectations for Africa to greater than 12% and Europe to approximately 6%, up from 11-12% and 5-6% respectively.

Speaker Change: In addition, we have lowered our expectations for Latin America to greater than 1.5%, down from approximately 2%.

Rod: Turning to slide 12, we are increasing our adjusted EBITDA outlook by $130 million as compared to the prior outlook. Outperformance is driven by the flow-through of FX-neutral property revenue upside and direct expense savings, partially offset by additional SG&A costs in India and $33 million of FX headwinds. Moving to slide 13, we are raising our expectations for AFFO attributable to common stockholders by $85 million at the midpoint and 18 cents on a per share basis, moving the midpoint to $10.60.

Speaker Change: Turning to slide 12, we are increasing our adjusted EBITDA outlook by 130 million dollars as compared to the prior outlook.

Speaker Change: Outperformance is driven by the flow-through of FX-neutral property revenue upside and direct expense savings, partially offset by additional SG&A costs in India and $33 million of FX headwinds.

Speaker Change: Moving to slide 13, we are raising our expectations for AFFO attributable to common stockholders by $85 million at the midpoint and 18 cents on a per share basis, moving the midpoint to $10.60.

Rod: Cash-adjusted EBITDA outperformance is partially offset by incremental maintenance CapEx split between the U.S. and Canada, where we're prioritizing certain incremental projects, and India. Growth is partially offset by $28 million in FX headwinds; excluding India, outperformance on an FX-neutral basis was $27 million as compared to prior outlook.

Speaker Change: Cash-adjusted EBITDA outperformance is partially offset by incremental maintenance CapEx split between the U.S. and Canada, where we're prioritizing certain incremental projects, and India.

Speaker Change: Growth is partially offset by 28 million dollars in FX headwinds. Excluding India, outperformance on an FX neutral basis was 27 million dollars as compared to prior outlook.

Rod: Turning to slide 14, you'll see our capital allocation plans remain relatively consistent, including unchanged expectations for our 2024 dividend distribution, which is subject to board approval. On the capital program side, we are increasing our plan for 2024 by $55 million, which includes $30 million associated with maintenance CapEx, as I previously mentioned, and additional success-based development investments in our U.S. data center business to maximize sellable capacity on the back of ongoing record demand. Additionally, we have reallocated certain discretionary capital buckets, including an increase towards our strategically important U.S. land acquisition program, partially offset by savings and redevelopment.

Speaker Change: Turning to slide 14, you'll see our capital allocation plans remain relatively consistent, including unchanged expectations for our 2024 dividend distribution, which is subject to board approval.

Speaker Change: On the capital program side, we are increasing our plan for 2024 by $55 million, which includes $30 million associated with maintenance CapEx, as I previously mentioned, and additional success-based development investments in our U.S. data center business to maximize sellable capacity on the back of ongoing record demand.

Speaker Change: Additionally, we have reallocated certain discretionary capital buckets, including an increase towards our strategically important U.S. land acquisition program, partially offset by savings and redevelopment.

Speaker Change: Moving to the right side of the slide, we remain focused on strengthening our balance sheet and accelerating our pathway to additional financial flexibility. This commitment is demonstrated through our successful execution in the capital markets, including the issuance of over $2 billion in fixed rate debt since the start of the year.

Speaker Change: A Strategic and Disciplined Approach Towards Our Capital Deployment Priorities, highlighted through reductions in discretionary capital spend in each of the last several years.

Speaker Change: Together, with a rebalancing of strategic priorities between geographies and risk profiles and a continued cost focus across the business.

Speaker Change: These strategic actions have translated into meaningful progress towards achieving our net leverage target in an improved fixed-to-floating-rate debt profile over the past 24 months.

Operator: Turning to slide 15, and in summary, we are pleased with our execution through the first half of the year, demonstrating the strength of the fundamentals that underpin our business through solid organic growth and a diligent focus on cost management throughout our company. Combined with our prudent approach to capital allocation, while reinforcing and enhancing our balance sheet strength and financial flexibility, we believe we are well-positioned to drive strong, sustainable growth and long-term shareholder value while being a best-in-class operation for our stakeholders across the globe.

Speaker Change: Turning to slide 15, and in summary, we are pleased with our execution through the first half of the year, demonstrating the strength of the fundamentals that underpin our business through solid organic growth and a diligent focus on cost management throughout our company.

Speaker Change: Combined with our prudent approach to capital allocation, while reinforcing and enhancing our balance sheet strength and financial flexibility, we believe we are well-positioned to drive strong sustainable growth and long-term shareholder value while being a best-in-class operation for our stakeholders across the globe.

Operator: With that operator, we can open the line for questions. Okay, ladies and gentlemen, if you'd like to ask a question, please press 1 and 0 on your telephone keypad. You may withdraw your question at any time by repeating the 1-0 command.

Speaker Change: With that, Operator, we can open the line for questions.

Speaker Change: Okay, ladies and gentlemen, if you'd like to ask a question, please press 1 and 0 on your telephone keypad. You may withdraw your question at any time by repeating the 1-0 command.

Speaker Change: If you are using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, please press 1 and 0 at this time. And one moment, please, for your first question.

Speaker Change: Your first question comes from the line of Simon Flannery from Morgan Stanley . Please go ahead.

Simon William Flannery: Thanks a lot. Good morning, Steve. Thanks for the comments on the international strategy approach. I was wondering if you could just give us a little bit of an update on how you're seeing the opportunities to do additional M&A in the U.S., Europe, and other developed markets. What are you seeing in terms of interesting properties?

Simon William Flannery: Thanks a lot. Good morning, Steve. Thanks for the comments on the international strategy approach.

Simon William Flannery: I was wondering if you could just give us a little bit of an update on how you're seeing the opportunities to do additional M&A in the U.S., Europe , other developed markets. What are you seeing in terms of...

Unknown Executive: When the SBA last night was talking about potential for material deals, are you seeing the same sort of thing here? How are valuations looking? And then, kind of related to that on data centers, you're continuing to invest heavily in that business. Do you see opportunities for inorganic expansion beyond some of the small tuck-ins you've done either in the U.S. or in Europe? Thank you.

Speaker Change: Interesting properties. When the SBA last night was talking about potential for material deals, are you seeing the same sort of thing here? How are valuations looking?

Speaker Change: And then, kind of related to that, on data centers, you're continuing to invest heavily in that business. Do you see opportunities for inorganic expansion beyond some of the small tuck-ins you've done, either in the U.S. and or Europe ? Thank you.

Unknown Executive: Yeah, thanks, Simon. So with respect to material M&A in the U.S. and Europe, there are some rumors of portfolios coming available. And so I won't comment on any specific portfolios out there. But what I would reiterate is we're very focused on our current capital allocation priorities, and in particular, de-levering down below 5. Now, we did get below 5 this quarter as a result of some of the one-time items, but that'll likely go up above 5 next quarter.

Speaker Change: Yeah, thanks, Simon.

Speaker Change: So with respect to the material M&A in the U.S. and Europe , you know, there are some rumors of portfolios becoming available.

Speaker Change: And so I won't comment on any specific portfolios out there, but what I would reiterate is...

Speaker Change: You know, we're very focused on our current capital allocation priorities, and in particular de-levering down below 5. Now we did get below 5 this quarter as a result of some of the one-time items, but that'll likely go up above 5 next quarter, so we're focused on getting durably below 5.

Unknown Executive: So we're focused on getting durably below 5. And we're also focused on our internal CapEx programs and the other capital priorities we've laid out. And at this point, we haven't seen anything that we've evaluated that would take us off those priorities. So there's nothing that we're evaluating today that would be compelling for us to say, That's great.

Speaker Change: And we're also focused on our internal CapEx programs and the other capital priorities we've laid out there.

Speaker Change: And at this point, we haven't seen anything that we've evaluated that would take us off those priorities. So there's nothing that we're evaluating today.

Speaker Change: that would be compelling for us today. And, you know, just as a reminder, anything that we would buy would need to be better than buying back our own stock. So when we look at those acquisition opportunities, we have to see an opportunity for that 1 plus 1 to equal 3 versus...

Unknown Executive: So while we're very interested in trying to grow our portfolios in the U.S. and Europe, and you know, pretty much in the developed markets that we're in, we aren't seeing opportunities today that look to be the right price, the right asset group for us to see that kind of synergy that we've given that opportunity. Having said that, our teams are always evaluating everything out there, and anything that comes to market, we'll evaluate it.

Speaker Change: You know, just kind of a growth for growth's sake. So while we're very interested in trying to grow our portfolios in the U.S. and Europe and, you know, pretty much in the developed markets that we're in.

Speaker Change: We aren't seeing opportunities today that look to be the right price, the right asset group, for us to see that kind of synergy that would give us that opportunity today. Having said that, our teams are always evaluating everything out there, and anything that comes to market we'll evaluate, and if that evaluation changes, we'll let you guys know.

Unknown Executive: And if that evaluation changes, we'll let you guys know. When it comes to CoreSight, we have a lot of opportunity to invest in our existing campuses, and that's going to give us the best return with the lowest risk of any CAPEX that we can deploy. And just to put a fine point on it, we've got 44 megawatts under construction today, and 61% of that's pre-launch. And so, you know, there's quite a bit of CapEx going into those campuses today that we feel very confident that we're going to get our mid-teens stabilized yields or better on those campuses that we're investing in. There are some tuck-ins. Miami is one example.

Speaker Change: When it comes to CoreSite, you know, we have a lot of opportunity to invest in our existing campuses and that's going to give us the best return with the lowest risk.

Speaker Change: of any CAPEX that we can deploy. And just to kind of put a fine point on it, we've got 44 megawatts under construction today and 61% of that's pre-leased.

Speaker Change: And so, you know, there's quite a bit of CapEx going into those campuses today that, you know, we feel very confident that we're going to get our mid-team stabilized yields or better in those campuses that we're investing in.

Unknown Executive: And whenever you see us do that, the reason for us to do a tuck-in market like that is to try to build a new business. We're very committed to our business model. We think it gives us the most resilient asset, the one that has the most durability over time and the best. And if we can create more campuses that have high interconnection, cloud on-ramps, and that ecosystem that commands a premium in the market, we'll try to develop those.

Speaker Change: There are some tuck-ins, Miami is one example, and whenever you see us do that, the reason for us to do a tuck-in market like that is to try to build a new campus.

Speaker Change: We're very committed to our business model. We think it gives us the most resilient asset, the one that has the most durability over time and the best returns.

Speaker Change: And if we can create more campuses that have high interconnection, cloud on-ramps, and that ecosystem that commands a premium in the market,

Unknown Executive: Now, those take time to develop, and so we do start..., and that's what you're more likely to see. Again, we're very committed to our business model of being an interconnection. The numbers, in the grand scheme of things, are meaningful, albeit modest, but we do have the ability to... to dynamically allocate that capital. And just because you see our CapEx program go down somewhat, it doesn't mean we're not leaning into the very best opportunities to deploy. Great. Very clear. Thanks. Your next question comes from the line of Michael Rollins from Citi. Please go ahead. Thanks, and good morning.

Speaker Change: We'll try to develop those. Now, those take time to develop, and so we do start small, and that's what you're more likely to see with us.

Speaker Change: Again, we're very committed to our business model of being an interconnection hub, and there aren't many inorganic opportunities that would contribute to that model.

Speaker Change: If something did come available that fit that profile, we'd look at it. But today, we think we have ample opportunity to invest in that core business that's performing so well for us.

Rod: Hey Simon, good morning. This is Rod. Maybe I'll just add and compliment what Steve is saying with a couple of numbers on CapEx for the data center business.

Simon William Flannery: Notwithstanding the fact that our overall CapEx program year-over-year has come down because of our capital priorities and the focus on balance sheet strength, delevering, all the things Steve talked about.

Simon William Flannery: Notwithstanding that decline, we have increased our investments, our CapEx investments in CoreSight.

Speaker Change: for $24 over $23. By roughly $100 million, we did the same $23 over $22. So we are seeing very compelling opportunities. We are following those and leaning in. The numbers in the grand scheme of things are meaningful, albeit modest, but we do have the ability to...

Speaker Change: You know, to dynamically allocate that capital, and just because you see our CapEx program go down somewhat, it doesn't mean we're not leaning into the very best opportunities to deploy CapEx.

Speaker Change: Great. Very clear.

Speaker Change: Your next question comes from the line of Michael Rollins from Citi. Please go ahead.

Michael Ian Rollins: A couple of questions. First, I'm just curious if you can unpack a bit more of what you're seeing in the U.S. leasing environment with respect to geography, the types of activity between densification and amendments, and where AMP may be differentiating itself and its results relative to the commentary that we hear from some of your competitors. And then secondly, just curious, you know, your current view on dividend policy exiting 2024 and how that should relate to the level and growth of AFFO per share over time. Thanks.

Michael Ian Rollins: Thanks and good morning. A couple questions. First, I'm just curious if you can unpack a bit more of what you're seeing in the U.S. leasing environment with respect to geography, the types of activity between densification and amendments.

Speaker Change: And where A&T may be differentiating itself and its results.

Speaker Change: relative to the commentary that we hear from some of your competitors. And then secondly, just curious, you know, your current view on dividend policy exiting 2024 and how that should relate to the level and growth of ASFO per share over time. Thanks.

Unknown Executive: Sure, thanks for the question. So in the U.S., we're seeing 2024 play out much as we expected. We've seen a modest increase in application volume in Q2 over Q1. It is fairly broad-based. The main driver continues to be our carrier customers continuing to build out their 5G networks, so it is... largely still amendment-driven, although we do see an uptick somewhat in new collocations over prior years. And while we're not getting specific about individual carriers, we would say that over half of our sites are now upgraded with mid-band 5G, but one cares ahead of the other.

Speaker Change: Sure. Thanks for the question. So in the U.S., we're seeing 2024 play out much as we expected. We've seen a modest increase in application volume, Q2 over Q1. It is fairly broad-based. The main driver continues to be our carrier customers continuing to build out their 5G networks. So it is...

Speaker Change: largely still amendment-driven, although we do see an uptick somewhat in new collocations over prior years. I wouldn't point to that as quite a densification phase yet. There's still a lot of room for the carriers to continue to

Speaker Change: to expand their 5G presence.

Speaker Change: And while we're not getting specific about individual carriers, we would say that over half of our sites are now upgraded with mid-band 5G, but one carrier's ahead of the other two. And we have one that's over 80 percent, one that's...

Unknown Executive: So there's a lot of runway for them to continue to roll out mid-band 5G. With respect to our services guide, we are holding our guide for the year. Now, there's always a degree of risk in that services guide because it's near-term, but what we're seeing in our application flow and our services pipeline is supportive of that full-year guide. So we do still feel good about the U.S. activity levels, you know, kind of hitting those levels that we saw at the beginning of the year.

Speaker Change: A little over 60% now and one that's a little bit further behind. So there's a lot of runway there for them to continue to roll out mid-band 5G.

Speaker Change: Across the Portfolio, and we expect them to continue to do that.

Speaker Change: With respect to our services guide, we are holding our guide for the year. Now, there's always a degree of risk in that services guide because it's near-term, but what we're seeing in our application flow and our services pipeline is supportive of that full-year guide.

Speaker Change: So, we do still feel good about the U.S. activity levels.

Unknown Executive: I believe the carrier capital spin projections are right in line with that $34 to $36 billion. We feel good about the U.S., and we think we're going to continue to see that growth up there. We're also seeing usage patterns by the consumer continue to drive demand on those networks, and we're seeing the continued drive for that 20 to 30 percent uptick in consumer demand that's going to continue to put pressure on the networks. And we're seeing that 5G is working for the carriers. It's letting them produce more gigabytes at lower costs.

Speaker Change: You know, kind of hitting those levels that we saw at the beginning of the year. I believe the carrier capital spend projections are right in line with that kind of $34-$36 billion, is what they've said publicly.

Speaker Change: And that's again supportive of a level of development that we think is typical of this phase of a build. So we feel good about the U.S. and we think we're going to continue to see that uptick.

Speaker Change: We're also seeing usage patterns by the consumer continue to drive demand on those networks. And we're seeing the continued drive of that 20 to 30 percent uptick in consumer demand.

Speaker Change: that's going to continue to put pressure on the networks, and we're seeing that 5G is working for the carriers. It's letting them produce more gigabytes at lower cost.

Unknown Executive: So we think that that's going to continue to be a compelling business proposition for them to build fires, and with the addition of fixed wireless and some of the positive trends we're seeing in ARPUs and things like that, we're very confident that the U.S. market will continue to grow and build and that diversification phase will come. Oh, sorry, the dividend question. Hey, Michael, this is Rod.

Speaker Change: So we think that that's going to continue to be a compelling business proposition for them to build 5G. And with the addition of fixed wireless and some of the positive trends we're seeing in ARPUs and things like that, we're very confident that the U.S. market will continue to grow and build and that densification phase will come.

Rod: Good morning. Thanks for the question. Regarding the dividend, you know, as everyone on the call knows, we held our dividend flat in 2024. That was really one of the many things that we retrieved. I'm getting them back. Is everyone all set on the call? Please go ahead.

Speaker Change: Oh, sorry, the dividend question.

Rod: Hey, Michael, this is Rod. Good morning. Thanks for the question. So regarding the dividend, you know, as everyone on the call knows, we held our dividend flat in 2024. That was really one of many things that we did. I retrieved them. I'm getting them back.

Unknown Executive: Great, thank you. So I'll start over, Michael. Thank you. This is Rod.

Speaker Change: Does everyone want to sit on the call? Please go ahead.

Speaker Change: Thank you. So I'll start over, Michael. Thank you. This is Rod. So regarding the dividend, everyone on the call knows that in 2024, we chose to hold the dividend flat. The reasons behind that really was given the macroeconomic backdrop, the uncertainty around rates.

Rod: So regarding the dividend, everyone on the call knows that in 2024, we chose to hold the dividend flat. The reasons behind that really were given the macroeconomic backdrop, the uncertainty around rates, we decided to favor balance sheet strength, operational growth, and organic growth. And it was one of many things that we decided to do as we leaned into delevering. We really focused on driving organic growth.

Speaker Change: We decided to favor balance sheet strength, operational growth, organic growth.

Speaker Change: And it was one of many things that we decided to do as we leaned into delevering. We really focused on driving organic growth. We were focused on expanding margins, controlling direct expenses, focused on actually reducing SG&A, becoming more efficient, reducing costs.

Rod: We were focused on expanding margins, controlling direct expenses, focused on actually reducing SG&A, becoming more efficient, reducing costs, and reducing our overall CapEx program and our CapEx investments, holding the dividend flat, and putting the extra funds that we had into delevering and into reducing exposure to floating rate debt in the environment. So that was one of many things that we did. When you think about going forward beyond 2024, of course, it's too early to talk about specific guidance for 2025 or beyond. I would remind you and everyone that we target our dividend distribution to equal about 100% of our pre-tax income. That's an important point.

Speaker Change: and reducing our overall CapEx program and our CapEx investments.

Speaker Change: I'm holding the dividend flat and putting the extra funds that we had into de-levering and into reducing exposure to floating rate debt in the environment so that was one of many things that we did. When you think about going forward...

Speaker Change: into beyond 2024. Of course, it's too early to talk about specific guidance for 25 or beyond. I would remind you and everyone that we're a REIT. We target our dividend distribution to equal about a hundred percent of our pre-tax income. That's an important

Rod: From a long-term perspective, I would say that we see pre-tax income growing in line with AFFO and AFFO per share growth on average and over time. So you can think about the trajectory in terms of the growth rate of the dividend being similar to the trajectory in the growth rate of AFFO and AFFO per share. That doesn't mean it will match every single year, but over a multi-year period and on average, we believe that it will match up pretty well.

Speaker Change: From a long-term perspective, I would say that we see pre-tax income growing in line with AFFO and AFFO per share growth on average and over time. So you can think about the trajectory in terms of the growth rate of the dividend being similar to the trajectory and the growth rate of AFFO and AFFO per share. That doesn't mean it will match every single year, but over a multi-year period and on average we believe it will.

Rod: Certainly, the dividend is a meaningful piece of the overall total shareholder return that we look to deliver. And, as always, anything with respect to our dividend is approved by the board. Yes. So that's kind of the way we think about it. We would expect that the dividend growth would resume in 2025 based on what we're seeing in the numbers going beyond. It's helpful. Thank you. Hey, good morning, guys.

Speaker Change: matchup pretty well.

Speaker Change: Certainly, the dividend is a meaningful piece of the overall total shareholder return that we look at.

Speaker Change: to deliver. And as always...

Speaker Change: Anything with respect to our dividend and dividend policy needs to be approved by the board, certainly. So, you know, that's kind of the way we think about it. We would expect that the dividend growth would resume in 2025 based on what we're seeing, you know, in the numbers going beyond 2024.

Speaker Change: That's helpful. Thank you.

Speaker Change: You're welcome.

Speaker Change: Your next question comes from the line of Rick Prentiss from Raymond James. Please go ahead.

Unknown Executive: A couple of questions on my side. Thanks for the update on the India collections process; nice to get that money on hand. And what's left at closing? How should we think about the status of that approval process? And then how long, once you get through the competitive committee in India, would it take to close the transaction? You know, at this point, Rick, there's no update on that.

Richard Hamilton Prentiss: Thanks. Good morning, guys.

Richard Hamilton Prentiss: A couple more questions.

Richard Hamilton Prentiss: Hey, couple questions on my side. Thanks for the update on the India collections process. Nice to get that money on hand.

Richard Hamilton Prentiss: and what's left at closing.

Unknown Executive: We're still waiting for the approval, and what we've said consistently is we believe it'll be the second half of the year closing. I probably wouldn't want to tie it to a month end or a quarter end, too, just for accounting purposes. Yeah, if we had that choice, Rick, we probably would.

Speaker Change: You know, at this point, Rick, there's no update on that. We're still waiting for the approval. And what we've said consistently is we believe it'll be the second half of the year closing.

Speaker Change: So, not sure when that's going to come out, it's hard to predict, but we do still anticipate getting that in that relevant time frame. In terms of closing afterwards, I think you could expect that to occur in four to six weeks afterwards, somewhere in that time frame.

Speaker Change: I probably want to tie it to a month end or a quarter end too just for the accounting purposes probably.

Unknown Executive: We'll see. We'll see exactly how it unfolds. Sure, I'll give you a little bit of color on that.

Speaker Change: Yeah, if we had that choice, Rick, we probably would. We'll see. We'll see exactly how it unfolds.

Richard Hamilton Prentiss: Okay, second question. Thanks for the update on the mid-band spectrum deployment in the U.S. That's helpful to see kind of at least some...

Speaker Change: Over half the sites and how it kind of varies by carrier. Internationally, any update there when your competitors, peers, suggested that obviously international is way behind those kind of numbers? Any broad stroke as far as 5G deployment internationally is at?

Unknown Executive: I think it depends on the geography that you're in. If you look at Europe, they've been able to deploy it to a large proportion of the population there. High 80s, low 90s, Spain and Germany, for the most part, that's a combination of Low and Mid-Band Spectrum.

Speaker Change: Sure, I'll give a little bit of color on that. I think it depends on the geography that you're in. If you look at Europe ,

Speaker Change: They've been able to deploy

Speaker Change: 5G

Speaker Change: to a large proportion of the population there, I think, you know.

Speaker Change: High 80s, Low 90s in Spain and Germany for the most part. That's a combination of low and mid-band spectrum. So there's still a runway of continued opportunity there to get the mid-band deployed there. I don't have specific stats on the percentage of mid-band because it's a little bit more nuanced in that market.

Unknown Executive: So there's still a runway of continued opportunity there to get the mid-band. I don't have specific stats on the percentage of mid-band because it's a little bit more, And in France, we have one carriage a little bit further ahead in terms of 5G than the other. So it's a little bit. When you look at Africa, you are seeing some 5G deployments in some of the major cities, but it's still pretty new.

Speaker Change: And in France we have one carat that's a little bit further ahead in terms of 5G than the other, so it's a little bit of a mixed bag there.

Speaker Change: When you look at Africa, you are seeing some 5G deployments in some of the major cities, but it's still pretty nascent there.

Unknown Executive: They're still focused on their 4G networks, enhancing those and improving the network quality. But we do think that you'll see 5G being deployed there, especially where the population centers are in time. So there's still some runway there for those 5G networks. In Latin America, there is a little bit of 5G that's been deployed in Brazil and a couple of other markets, but most of those markets are a little bit further. And even in Brazil, I'd say it's probably nascent in terms of fiber.

Speaker Change: They're still focused on their 4G networks, augmenting those and improving the network quality over time. But we do think that you'll see 5G being deployed there, especially where the population centers are over time. So there's still some runway there for those 5G upgrades to occur in Africa. In Latin America,

Speaker Change: You have a little bit of 5G that's been deployed in Brazil and

Speaker Change: and a couple of the other markets, but most of those markets are a little bit further behind.

Speaker Change: And even in Brazil, I'd say it's probably nascent in terms of the 5G deployments today.

Unknown Executive: In many of those markets, there's been a delay in getting 5G spectrum in the hands of the carriers; some of that is auctions that have been delayed, and some of it is carriers pushing for a lower entry price there. Opportunity there, you know. The other thing that's happening in Brazil is that the incumbents there are still integrating the oil assets they bought and that, so I'd say. We are starting to see some green shoots in some of those markets where they need those cheaper gigabytes that 5G delivers, and we're seeing some deployments there, but there's a lot of runway.

Speaker Change: In many of those markets, there's been a delay in getting 5G spectrum in the hands of the carriers. Some of that is auctions that have been delayed, and some of it is the carriers pushing for a lower entry price there. And so I think as we see that play out over time, we'll continue to see that.

Speaker Change: The other thing that's happening in Brazil is the incumbents there are still integrating the OEA since they bought, and that's depressing the activities there a little bit, and they deal with those integrations and combining those networks together. So I'd say it's...

Speaker Change: You know, very consistent with the way we kind of view the international markets, that they're a little bit behind the developed markets and deployment of 5G. We are starting to see some green sheets in some of those markets where they need those cheaper gigabytes that 5G delivers, and we're seeing some deployments there, but there's a lot of runway ahead to deploy it there.

Unknown Executive: And the last one for me, I think on the cost management side, is site decommissioning kind of one of the things that's helping to drive that? It looked like some significant decommissionings in the US and Canada, maybe it's related to Sprint Towers that are naked once they get off them, but just maybe a little update on what you're doing with decommissioning towers and how that's benefiting costs and how we should think about running that forward. Yeah, thanks, Rick.

Speaker Change: And the last one for me, I think on the cost management side, is site decommissioning kind of one of the things that's helping to drive that? It looked like...

Speaker Change: Some significant decommissionings in the U.S., Canada, maybe it's related to sprint towers that are naked once they get off them, but just maybe a little update on what you're doing with decommissioning towers and how that's

Speaker Change: benefiting costs and how we should think about running that forward.

Unknown Executive: We're looking at everything in terms of cost management. And our goal is to enhance our margin profile by direct cost savings in addition to SG&A. So what you're seeing there is exactly what we need to save the optics on those and do it right. Rod, did you want to touch on some of the other elements?

Speaker Change: Yeah, thanks Rick. We're looking at everything in terms of cost management.

Speaker Change: And, you know, our goal is to enhance our margin profile by direct cost savings in addition to SG&A. So what you're seeing there is exactly what you would expect. We're looking at that portfolio and where we have...

Speaker Change: Underperforming assets that we don't think are going to see near-term activity, we are decommissioning those to save the op-ex on those and doing what's right. So we are doing some accelerated work there.

Rod: Yeah, I'll just add in there, in terms of the decommissioning, I think you'll see in the numbers. In LATAM, we took down about 250 sites; in the U.S., we took down about 300. That's just normal portfolio pruning and managing the portfolio from time to time. We certainly have sites without tenants on them here and there, and we'll try to lease those up again, and if it doesn't work, we end up taking them down to save the cost. So that is a driver, but it's not the only, you know; it's not the only driver.

Rod: Rod, did you want to touch on some of the other elements?

Rod: Yeah, I'll just add in there, in terms of the decommissioning, I think you'll see in the numbers, in LATAM we took down about 250 sites, in the U.S. we took down about 300. That's just normal portfolio pruning and managing the portfolio.

Unknown Executive: We're also seeing lower land rent escalations, which was certainly good. We're doing some things with property tax, which resulted in a one-time reduction, which was certainly good. And in our CapEx, we're leaning into investing in our ground leases and reducing ground expense. So that's another area where we're allocating capital the most. Creative in Value Creating Opportunities

Speaker Change: Seeing lower land rent escalations, that was certainly good. We're doing some things with property tax, which resulted in a one-time reduction.

Speaker Change: which was certainly good. In our CapEx, we're leaning into investing in our ground leases and reducing ground expense, so that's another area where we're allocating capital to the most.

Unknown Executive: So we're seeing lower land rents based on capital allocation. So there's a number of different things that are playing into that direct cost reduction. Great. Appreciate the call, Eric.

Rod: Creative and Value Creating Opportunities, so we're seeing lower land rents based on capital allocation. So there's a number of different things that are playing into that direct cost reduction.

David Barden: Thanks, guys. Yeah, thanks, Eric. Your next question comes from David Barden from Bank of America. Please go ahead.

Unknown Executive: Thanks so much for taking the question. So, you know, you guys made this bold prediction about activity levels and services accelerating through the course of the year. But not everyone, I think, is seeing the same thing.

Speaker Change: Hey guys, thanks so much for taking the questions.

Speaker Change: So, you know, you guys made this bold prediction about activity levels and services accelerating through the course of the year. Not everyone, I think, is seeing the same.

Unknown Executive: Assuming that the Service Revenue Guide is still $195 million, you know, it implies yet another big step up into the second half on a quarterly basis. But, you know, the temptation would then be to extrapolate that as a leading indicator for leasing activity. But, as I understand it, you know, the MLAs kind of already contemplate all that. So, you know, buy the drink bottle; this activity might foreshadow some increased leasing. But because of the MLAs, you might not see that same kind of sensitivity.

Speaker Change: Assuming that the Service Revenue Guide is still $195 million, it implies yet another big step up into the second half on a quarterly basis. But the temptation would then be to extrapolate.

Speaker Change: that is a leading indicator for.

Speaker Change: Leasing Activity, but as I understand it...

Speaker Change: You know, the MLA's kind of already contemplate all that, so, you know, buy the drink bottle.

Speaker Change: This activity might foreshadow some increased leasing, but because of the MLAs, you might not see that same kind of sensitivity. So if you could kind of validate that perspective, and then I guess a related question is the holistic MLA that you guys signed.

Unknown Executive: So, could you kind of validate that perspective? And then, I guess, a related question is the holistic MLA that you guys signed with AT&T in September 2019. Theoretically, if it's a five-year term, it's going to be coming up for renewal or not in the third quarter. You've highlighted that these holistic MLAs typically have far shorter durations than your underlying kind of core MLAs.

Speaker Change: Theoretically, if it's a five-year term, it's going to be coming up for renewal or not in the third quarter. You've highlighted that these holistic MLAs typically have far shorter durations than your underlying kind of core MLAs. I was wondering if you could talk a little bit about...

Unknown Executive: I was wondering if you could talk a little about what this means for the business outlook in the second half and into 2025. Thanks. Let me start with the services piece of that. So our Q1 services gross margin was about twice what our Q4 2023 was, and our. Q2 is about 50% up from Q1, so we are seeing acceleration in that service. And again, we believe from the pipeline that we're looking at today that we're on track to hit our full year. Services Guide on that.

Speaker Change: Our Q1 services gross margin was about twice what our Q4 2023 was, and our Q2 was about 50% up from Q1, so we are seeing acceleration in that services business.

Unknown Executive: And again, there's risk in that services pipeline, and we've seen it play out a couple of times in the past, but our teams are confident at this point that we're on track to be able to. With respect to our MLAs, what we were, what we've disclosed is that we had one customer that rolled off the MLA earlier. We haven't really talked specifically about anything beyond that. Because we've telegraphed that pretty clearly.

Speaker Change: And again, we believe from the pipeline that we're looking at today that we're on track to hit our full year services guide on that. And again, there's risk in that services pipeline, and we've seen it play out a couple times in the past, but our teams are confident at this point that we're on track to be able to do that.

Speaker Change: With respect to our MLAs, what we've disclosed is that we had one customer that rolled off the MLA earlier this year, and so we haven't really talked specifically about anything beyond that.

Unknown Executive: Get an idea that that's where we are. Those comprehensive portions are typically three to five years, so it's not just five years. There's a different range.

Speaker Change: Because we've telegraphed that pretty clearly, I think you can get an idea that that's where we...

Speaker Change: Those comprehensive portions are typically three to five years, so it's not just five years. There's a different range on those.

Unknown Executive: And since we do have one customer that's off of that kind of use-right fee that underpins the Smoothing Out of Growth over time, that customer is a little bit more dependent on the volume, so there'll be a little bit more. [inaudible] If getting into another holistic type agreement makes sense, we will, and if we don't think it does, we'll stay and pay for the drink, and we're very comfortable with that ability to monetize. With respect to the... activity and how that translates into our organic growth.

Speaker Change: And since we do have one customer that's off of that kind of use right fee that underpins

Speaker Change: that are smoothing out a growth over time, that customer is a little bit more dependent on the volumes that they're doing, and so there will be a little bit more peaks and valleys in terms of activity with them, but we're convinced that we're fine either way on that. We take a long-term view of these agreements.

Speaker Change: If getting into another holistic type agreement makes sense, we will, and if we don't think it does, we'll stay and pay for a drink, and we're very confident in our ability to monetize it that way.

Speaker Change: With respect to the...

Speaker Change: The activity and how that translates into our organic growth over time, you know, it's too early to be giving kind of a 2025 guide at this point, we'll do that in February like we always do.

Unknown Executive: It's too early to be giving kind of a 2025 guide at this point. We'll do that in February like we always do. But, you know, we are encouraged by the growth that we see in terms of the activity by the care. We do have one major customer who is off the list for a portion of their agreement. They still don't have an underlying MLA.

Speaker Change: But, you know, we are encouraged by the growth that we see in terms of the activity by the carriers. We do have one major customer who is off the holistic portion of their agreement. They still have an underlying MLA, but the holistic portion is expired.

Unknown Executive: And so if those volumes continue, that's. We also have what we call our vertical market segment, which is smaller, and that's also very, and we're seeing good activity there as well. So we're encouraging. You know, when we look at, you know, out into the future, we do have a level of contractually locked-in growth for 2025, right, via our comprehensive MLA, similar to what we see in 2024, as well as consistent growth from the escalator of about 3% On the churn side, in 2025, we're going to continue to see a level of elevated spread. The final tranche of that sprint churn commences in Q4 of this year.

Speaker Change: And so, if those volumes continue, that's a positive. We also have what we call our vertical market segment, which are smaller customers.

Speaker Change: On the churn side, in 2025, we're going to continue to see a level of elevated spread churn. The final trotch of that spread churn commences in Q4 of this year. That's about $70 million of annualized monthly run rate. That will impact our growth rates through Q3 of next year.

Unknown Executive: That's about $70 million in annualized monthly run rate, and that will affect our growth rates through Q3 of next year. In terms of kind of the swing factors that you would see in terms of 2020, you know, there's a portion of the growth that's not locked in via the comprehensive MLAs. Again, I mentioned that. We also have our eye on the timing and scale of any potential churn from U.S. cellular over the next couple of years in the event that that deal is approved and closed.

Speaker Change: In terms of kind of the swing factors that you would see in terms of 2025.

Speaker Change: You know, there's a portion of the growth that's not locked in via the comprehensive MLAs. Again, I mentioned one of the big three carriers and the vertical markets, so that's a swing factor.

Speaker Change: We also have our eye on the timing and scale of any potential churn from a U.S. cellular over the next couple of years in the event that that deal is approved and closes. We'd expect the overlap to be modest, but the timing and the scale of that churn could put some pressure on rates temporarily.

Unknown Executive: We'd expect the overlap to be modest, but the timing and the scale of that churn... Pressure on Rates Temporary. And who knows, we could end up signing another conference of MLAs or another agreement that would also potentially impact what that number looks like. So there's a number of swing factors for 2025, and that's why we can't really give guidance until we get to February. But at the end of the day, we're still confident that we're going to have continued growth supportive of our longer-term guidance. Thanks Steve, you're really helpful. I appreciate it. Your next question comes from the line of Matt Niknam from Deutsche Bank. Please go ahead.

Speaker Change: And who knows, we could end up signing another conference of MLA or another agreement that would also potentially impact what that number looks like. So there's a number of swing factors for 2025 and that's why we can't really give guidance until we get to February .

Speaker Change: But at the end of the day, we're still confident that we're going to have continued growth supportive of our longer term guide.

Speaker Change: Thanks Steve, you're really helpful. Appreciate it.

Speaker Change: Your next question comes from the line of Matt Niknam from Deutsche Bank. Please go ahead.

Matthew Niknam: Hey guys, thanks so much for taking the questions. One question, one follow-up. Steve, you spoke a little bit about emerging markets making up roughly 25% of AFFO per share today. Where do you see that going over time and how does that inform forward uses of discretionary capital in your M&A strategy? And then just to follow up, maybe for Rod, if you can quantify the benefit to property taxes that you saw in the quarter and just clarify if it's one-time in nature or not. Thanks for the question. Let me just clarify, the 25% is pro forma for the India trend. It's a little bit higher today.

Matthew Niknam: Hey guys, thanks so much for taking the questions. One question, one follow-up first.

Matthew Niknam: Steve, you spoke a little bit about emerging markets making up roughly 25% of

Matthew Niknam: AFFO Preshare today. Where do you see that going over time?

Rod: And how does that inform forward uses of discretionary capital in your M&A strategy? And then just to follow up maybe for Rod, if you can quantify...

Rod: the benefit, the property taxes that you saw in the quarter

Speaker Change: in nature or not. Thank you.

Speaker Change: Thanks for the question. Let me just clarify that 25% is pro forma for the India transaction.

Unknown Executive: Once we close the India transaction, we'll be at roughly $25,000. And as we look at some of the macroeconomic conditions, particularly the FX headwinds that we've been seeing. That's kind of given us the choice to start pivoting a little bit more away from the exposure to those emerging market economies, given what we're seeing in the macroeconomic conditions. So what we're doing is pivoting more of our discretionary CapEx to the developed markets. This isn't a new thing; we've been doing that for the last several years.

Speaker Change: So, it's a little bit higher today. Once we close the Indy transaction, we'll be at roughly 25%. And as we look at some of the macroeconomic conditions, particularly the FX headwinds that we've been seeing.

Speaker Change: That's kind of given us the choice to start pivoting a little bit more away from the exposure into those emerging market economies, given what we're seeing in the macroeconomic.

Speaker Change: So what we're doing is pivoting more of our discretionary CapEx to the developed markets. This isn't a new thing. We've been doing that for the last several years, and we haven't done an emerging market transaction in quite a few years now. And the bulk of our CapEx has been going toward developed markets.

Unknown Executive: We haven't done an emerging market transaction in quite a few years. The bulk of our CapEx has been going toward... What that will do if that trend continues, and we expect it will reduce that emerging market exposure. We're not setting a kind of line in the sand today for where we think it should be, but we do think... to work that percentage down over time by focusing on our development. Having said that, we will continue to support our tier one M&Os in those markets.

Speaker Change: What that will do if that trend continues, and we expect it to, is it will reduce that emerging market exposure over time.

Speaker Change: We're not setting a kind of line in the sand today for where we think it should be, but we do think it's appropriate to work that percentage down over time by focusing on our developed markets. Having said that, we will continue to support our Tier 1 M&Os in those markets.

Unknown Executive: Discretionary CapEx Investments where it makes sense or where they meet the return criteria that we set out for those markets. But in terms of, transcription by CastingWords We've given our desire to reduce, Hey, Matt, Rod here.

Speaker Change: [inaudible]

Speaker Change: Thank you for joining us.

Rod: So on one of the charts, you can see on the adjusted EBITDA, we're showing roughly a $50 million benefit to Outlook on cash and gross margin. The way to think about that is much of that is driven by benefits, or improvements in that direction. Line.

Speaker Change: Hey Matt, Rod here. So on one of the charts you can see on the adjusted EBITDA, we're showing roughly a $50 million benefit to Outlook.

Matthew Niknam: on cash, gross margins.

Matthew Niknam: The way to think about that is much of that is driven, almost all of that is driven by benefits.

Rod: From a high level, think about it as a 50-50 mix in terms of what may be run rate and what may be... One time in nature, and then when you think about that roughly a Quarter of the entire piece was a property tax accrual. But there's a lot of other kind of nits and naps and things going through that section there, Things like the accelerated e-commerce we just talked about with Rick and the land purchases So, roughly the $49 million of improvement in cash gross margin, think of it 50-50 as one time versus... durable and reoccurring going forward, and property tax one-time benefit was roughly a quarter. Awesome, Thank you. Your next question comes from the line of Jim Schneider from Goldman Sachs. Please go ahead. Good morning.

Matthew Niknam: or improvements in that direct expense line from a high level, think about it as 50-50 mix in terms of

Matthew Niknam: What may be run rate and what may be...

Matthew Niknam: one time in nature.

Matthew Niknam: And then when you think about that, roughly a quarter of the entire piece was a property tax accrual. But there's a lot of other kind of nits and nats and things going through that section there.

Speaker Change: Things like the accelerated e-commerce we just talked about with the rent and the land purchases, as well as just some operational improvements around the way we do R&M and contractor management and other things. Roughly the $49 million of improvement in cash gross margin, think of it 50-50 as one time versus...

Speaker Change: durable and reoccurring going forward and property tax one-time benefit was roughly a quarter of the whole thing.

Speaker Change: Awesome, thank you.

Speaker Change: You're welcome.

Speaker Change: Your next question comes from the line of Jim Schneider from Goldman Sachs. Please go ahead.

Jim Schneider: Thanks for taking my question. Steve, you delivered a relatively concise message on the strategy for international markets and emerging markets, in particular, and the higher hurdle rates for organic investment. Can you maybe just comment, broadly speaking, whether you would be more likely to dispose of some of those non-core emerging market assets if they were able to fetch higher multiples in the market? And then, secondly, you also delivered a pretty clear theme around higher returns and portfolio optimization. Can you maybe quantify for us what your consolidated returns and ambitions are, where they are relative to where they stand today? Sure, I'll hit the first part of that; Rod can hit the second.

Jim Schneider: Good morning. Thanks for taking my question. Steve, you delivered a relatively concise message on the strategy for international markets, and emerging markets in particular, and the higher hurdle rates for organic investment. Can you maybe just go over that a little bit?

Speaker Change: Comment on, you know, broadly speaking, whether you'd be more likely to dispose of some of those non-core emerging market assets if they were able to fetch higher multiples in the market. And then secondly,

Speaker Change: You know, you also delivered a pretty clear theme around higher returns and portfolio optimization. Can you maybe quantify for us, what are your consolidated returns and emissions, or where they are relative to where they stand today?

Speaker Change: Sure, I'll hit the first part of that, Rod can hit the second. We always are looking to actively manage our portfolio. So the management team and the board regularly review our portfolio and look at the assets under our management. And we're always looking to say what's going to create the best long-term shareholder value.

Unknown Executive: We're always looking to actively manage our portfolio. So the management team and the board regularly review our portfolio and look at the assets under our management, and we're always looking to say what's going to create the best long-term shareholder value. And so when you think about some of the benefits that American Tower brings to these portfolios, I touched on this a little bit in my prepared remarks, but I'll reiterate. We have operational excellence across the globe, and that operational excellence lets us drive best-in-class margins; it lets us optimize the amount of new business we get, so organic growth is better under American Tower, and so we believe that we create a lot more value for those assets that are under our umbrella than anybody else.

Rod: And so when you think about some of the benefits that American Tower brings to these portfolios, I touched on this a little bit in my preparatory remarks, but I'll reiterate it.

Rod: We have operational excellence across the globe.

Rod: And that operational excellence lets us drive best-in-class margins, it lets us optimize the amount of new business we get so the organic growth is better under American Tower, and so we believe that we create a lot more value for those assets that are under our umbrella than anybody else can.

Unknown Executive: Now, where that doesn't hold true, if we think that somebody else can create more value, we would look at divesting it, and that's what we do. So, absolutely price is one of the considerations that would factor in when we think about, you know, whether a disposition would create more value than. At this point, we think the best thing that we can do is keep those assets under our umbrella, continue to operate them in the way that we do, and continue to focus on the gross margin and the growth of the organic revenue there.

Rod: Now where that doesn't hold true, if we think that somebody else can create more value, we would look at divesting it, and that's what we do with India.

Rod: So, absolutely, price is one of the considerations that would factor in when we think about

Rod: You know, whether a disposition would create more value than continue to operate it. But at this point, we think the best thing that we can do is keep those assets under our umbrella, continue to operate them in the way that we do, and continue to focus on the gross margin and the growth of the organic revenue there.

Unknown Executive: And if we ever do decide that a disposition is more desirable at that point, it's going to be more valuable because we've created more cash flow on the asset. So right now, that's where our decision point is. But we'll always be nimble, and we'll always look.

Rod: And if we ever do decide that a disposition is more desirable at that point, it's going to be more valuable, because we've created more cash flow on the assets. So right now, that's where our decision point is, but we'll always be nimble, and we'll always look to...

Rod: Maximize Long-Term Value Now there are some subscale portfolios and some ancillary businesses that, you know, we would think about. If you look at what we've done over the past couple years, we did divest Mexico fiber, we did divest Poland, because it was sub-scale, the other because... We thought somebody else could maximize that business. And so when you look at some of those portfolios and our overall portfolio, you know, that's the type of thing that we think about, but there's no process we've announced today and nothing I would point to on any scale. Hey, Jim, Rod here.

Rod: Now, there are some subscale portfolios and some ancillary businesses that, you know, we would think about. If you look at what we've done over the past couple of years, we did divest Mexico Fiber, we did divest Poland, one because it was subscale, the other because...

Rod: You know, we thought somebody else could maximize that business better. And so when you look at some of those portfolios in our overall portfolio, you know, that's the type of thing that we think about. But there's no process we've announced today, and nothing I would point to of any scale that, uh...

Rod: I'll just hit on your return on invested capital questions. So one thing I would point out right, right at the start here is that we do give in the disclosures the NOI yield and US dollar terms for vintage. So I think you've probably seen that, but dig into it. There's a lot. One thing I would point out is that the NOI yields in U.S. dollar terms are typically higher than the U.S. when you're looking at these emerging markets.

Rod: that we would think would make sense in the short term.

Rod: Hey Jim, Rod here. I'll just hit on your return on Investor Capital.

Jim Schneider: So one thing I would point out right at the start here is we do give in the disclosures the NOI yield in U.S. dollar terms for vintage. So I think you've probably seen that, but dig into that, there's a lot of interesting information in there.

Jim Schneider: One thing I would point out is that the NOI yields in U.S. dollar terms typically are higher than the U.S. when you're looking at these emerging markets. So for built to suits and other investments, that's been

Rod: So for built-to-suits and other investments, that's been the case, and it needs to be because we, as Steve talked about, have risk-adjusted return requirements, of course, not just per region but by country and even deal-specific. Detailed country level cost of capital that we calculate will require a spread over that that could be meaningful to, you know, compensate for other things that we see either in the market or in the portfolio

Jim Schneider: That's been the case, and they need to be, because we, as Steve talked about, have risk-adjusted return requirements, of course, not just per region, but by country, and even deal-specific. So we do require...

Steven O. Vondran: An additional spread, a risk-adjusted spread, sometimes even over and above the...

Speaker Change: Detailed country level cost of capital that we calculate will require a spread over that. That could be meaningful to

Speaker Change: You know, to compensate for other things that we see, either in the market or in the portfolio.

Rod: So that certainly is key. But when you look at, you know, that analysis, you'll see that the vintage analysis shows that the NOI yields over time go up. Certainly, when you think about the emerging markets, you know, we're looking at low teens here and heading upwards. We would expect them all to be in the upper teens, and certainly, in places like Africa, you know, above 20% over time would certainly be where we would target that.

Speaker Change: That certainly is key. But when you look at, you know, that analysis, you'll see that the vintage analysis shows that the NOI yields over time go up. Certainly, when you think about the emerging markets.

Speaker Change: You know, we're looking at low teens here and heading upwards, we would expect them all to be in the upper teens and certainly in places like Africa, you know, above 20% over time.

Speaker Change: would certainly be where we would target that.

Rod: So broadly speaking, you've heard us say it before, but when you think about Africa, we're looking for high teens, north of 20% returns, and then, depending on the country, it can even be higher on the high end of that and even higher.

Speaker Change: So, you know, broadly speaking, you've heard us say it before, but when you think about Africa, we're looking for, you know, high teens, north of 20% returns, and then depending on the country, it can even be higher, you know, at the high end of that and even higher.

Rod: Today, we're below that, but if you look at our return on invested capital across the region, as reported, we're in the mid-teens for return on invested capital, but these are long-term assets. So our focus on driving organic growth, margin expansion, you know really driving SG&A costs and being super efficient when it comes to the way we operate in the markets, including Africa but LATAM, and even India while we have it. In combining that, coupling it with very disciplined CapEx programs, maybe even lower CapEx programs, are all meant to drive return on invested capital up for us so that we can reach our hurdle rate and get beyond it.

Speaker Change: Today we're below that, but if you look at our return on invested capital across the region, as reported, we're in the mid-teens for return on invested capital. But these are long-term assets, so our focus on driving organic growth, margin expansion, you know, really driving SG&A costs, being super efficient when it comes.

Speaker Change: to the way we operate, you know, the markets, including Africa, but LATAM and even...

Speaker Change: and even India while we have it.

Speaker Change: In combining that, coupling that with very disciplined CAPEX programs, maybe even lower CAPEX programs.

Speaker Change: are all meant to drive return on invested capital up for us so that we can reach our hurdle rate and get beyond it. And again, these are long-term assets. And Latviam is in maybe a little better of a position, but similar. You know, they're in the low teens from a return on invested capital.

Rod: And again, these are long-term assets, and LATAM is in maybe a little better of a position but similar. You know, they're in the low teens from a return on invested capital. The requirements there are going to be more in the mid-teens, not necessarily north of 20%.

Speaker Change: The requirements there is going to be more in the mid-teens, not necessarily north of...

Rod: So you may recall, we've done a fair amount of building and acquiring there over the last several years. So again, the focus on operational execution and excellence in these markets. I really talk about that. We plan that, and we drive that in the business to help accelerate these returns on invested capital over the long term. But these are long-term assets, and we're very bullish on the underlying fundamentals of the business, not just in the U.S., Europe, and in Corsite, but the fundamentals underpinning the operating results across LATSAM in Africa are very good. In Europe, we're actually seeing an acceleration in new business. You know, contributions in Organic Tenant Billings are 24 with 23.

Speaker Change: 20%.

Speaker Change: So, you may recall, we've done a fair amount of building and acquiring there over the last several years. So, again, the focus on operational execution and excellence in these markets, we...

Speaker Change: Really talk about that. We plan that and we drive that in the business to help accelerate these returns on invested capital.

Speaker Change: over the long term. But these are long-term assets and we're very bullish on the underlying fundamentals of the business, not just in the US, Europe , and Corsite, but the fundamentals underpinning the operating results across LATAM in Africa are very good. In Europe we're actually seeing an acceleration in new business.

Rod: So that is certainly a very positive sign. Hopefully, that addresses the question. Yes, thank you. Your next question comes from the line of Eric Luebchow from Wells Fargo. Please go ahead.

Speaker Change: Lieutenant Billings, 24 of a 23, so that is certainly a very positive sign.

Speaker Change: Hopefully, that addresses the question, Jeff.

Jeff: Yes, thank you.

Jeff: Your next question comes from the line of Eric Luebchow from Wells Fargo. Please go ahead.

Eric Thomas Luebchow: Great, thanks for taking the question. I wanted to touch on the data center segment with CoreSight. You mentioned you had your second highest bookings quarter this quarter. So could you talk about what the demand backdrop looks like there? Do you see more larger footprint opportunities tied to either cloud or AI? Or is your performance more related to kind of traditional enterprise workloads?

Eric Thomas Luebchow: Great, thanks for taking the question. I wanted to touch on the data center segment with CoreSight. You mentioned you had your second highest bookings quarter this quarter, so could you talk about what the demand backdrop looks like there? Do you see more larger footprint opportunities tied to either cloud or AI, or is your performance more related to kind of traditional enterprise workloads?

Unknown Executive: Yeah, thanks for the question. I'll address demand, and I'll address who we're releasing to as separate issues. We're seeing broad-based demand from a lot of different sectors. Part of that is because there's a scarcity of supply in some of the markets.

Speaker Change: Yeah, thanks for the question. I'll address demand and then I'll address who we're leasing to as separate issues. We're seeing broad-based demand from a lot of different sectors. Part of that, there's a scarcity of supply in some of the markets that we're in.

Unknown Executive: But our key customer base that's driving long-term demand and our core site continues to be enterprises that are deploying hybrid cloud deployments. And we see a very long tail of that. And it's probably helpful for me to talk a little bit about how we curate our customers. Coresight doesn't just lease to just anybody who wants to lease space in their apartment, particularly when we're looking at our scale and hyper-scale space that's available.

Speaker Change: But our key customer base that's driving long-term demand in CoreSight continues to be enterprises that are deploying hybrid cloud deployments, hybrid cloud technology.

Speaker Change: And we see a very long tail of that business. It's probably helpful for me to talk a little bit about how we curate our customer mix.

Speaker Change: doesn't just lease to just anybody who wants to lease space in their facilities, particularly when we're looking at our scale and hyperscale space that's available. We want to lease to customers that help build the ecosystem.

Unknown Executive: We want to at least the customers that help build them, And that's why we are pretty selective in terms of who we lead, because hybrid cloud deployment is the perfect type of customer to help build. We are seeing demand for AI, and the inferencing layer of AI is perfectly suited for a highly interconnected... ecosystem like Coresight because it helps distribute the content that the AI is generating. And so we do see some demand there.

Speaker Change: And that's why we are pretty selective in terms of who we lease to. And so that hybrid cloud deployment is the perfect type of customer to help build that ecosystem.

Speaker Change: We are seeing demand from AI, and the inferencing layer of AI is perfectly suited for a highly interconnected ecosystem like CoreSight because it helps distribute the content that the AI is generating.

Unknown Executive: We're being selective in terms of who we're willing to lease to in that. We do recognize that not all customers are kind of built the same in that space, and we want to make sure that we're partnering with people who have good long-term businesses. But what's driving the overall demand is just a general scarcity of supply there, but we're continuing to lease to that core customer base, expanding our enterprise reach for hybrid cloud deployments, a little bit of AI, continuing to serve a lot of the customers that we already Great Thanks, Steve. And just one follow-up for Rod.

Speaker Change: And so we do see some demand there. We're being selective in terms of who we're willing to lease to in that.

Speaker Change: We do recognize that not all customers are kind of built the same in that space, and we want to make sure that we're partnering with people who have good long-term business plans there.

Speaker Change: But what's driving the overall demand is just a general scarcity of supply there, but we're continuing to lease to that core customer base, expanding our enterprise reach for hybrid cloud deployments, a little bit of AI.

Speaker Change: and then continuing to serve a lot of the customers that we already have there as they expand their needs. And those are the primary drivers from who we are leasing to.

Rod: You touched on the deleveraging path and the potential for buyback. So as we look into 25, any kind of early reason why, you know, what key variables you may look at when making that decision, whether it's, you know, ASFO yields versus implied cost of capital or any other variables to keep in mind, and when the buyback conversation may become a little more tangible. Yeah, it's a good question, Eric. I would say, first off, we saw in the numbers that we're at about 4.8 times levered. Our stated range is three to five times that.

Speaker Change: Thanks, Steve. And just one follow-up for Rod. You touched on the deleveraging path and the potential for buyback. So if you look into 25, any kind of early reason how, you know, what key variables you may look at when making that decision, whether it's, you know,

Speaker Change: ASFO yields versus implied cost of capital or any other variables to keep in mind and when, you know, the buyback conversation may become a little more tangible.

Rod: So we're below that. We're also at about five times. Leverage for Q1 and Q2 was materially supported or helped by some one-time, non-recurring benefits. With that said, and Steve alluded to this earlier, we do expect leverage to tick back up to 5.0 or 5.1 during Q3. We'll see where that goes, but we're very confident that we are on the right path, driving towards getting to that 5.0, and we will get there, most likely, you know, in the second half of this year. If not, they're very likely to be... next year.

Rod: Yeah, it's a good question, Eric. I would say, first off, you saw in the numbers, we're at about 4.8 times levered. Our stated range is 3 to 5 times, so we're below that. We're also at about 5 times at the end of Q1.

Rod: Leverage for Q1 and Q2 were materially supported or helped by some one-time, non-recurring...

Rod: With that said, and Steve alluded to this earlier, we do expect leverage to tick back up to 5.0 or 5.1.

Speaker Change: During Q3 and Q4, we'll see where that goes, but we're very confident that we are on the right path, driving towards getting to that 5.0, and we will get there, most likely, you know, the second half of this year, if not the very beginning.

Rod: So with that said, we do feel as though we'll be in a position to have financial flexibility and kind of manage the business without a hyper-focus on de-levering. And with that said, we'll be very disciplined. We'll be looking at all of our capital allocations, including our CapEx programs, not in general but specifically country by country, deal by deal, asset by asset. There are some compelling things that we can invest our capital in, you know, as Steve outlined in his Strategic Prepared Remarks and in some of the Q&A, so the CapEx programs are still very much supportive of long-term total shareholder returns, so that's an opportunity. When it comes to buybacks, buybacks, you know, have to create more shareholder value over the long-term than deploying them towards CapEx or an M&A program or delevering.

Rod: of next year. So with that, we do feel as though we'll be in a position to have financial flexibility.

Rod: and kind of manage the business without a hyper-focus on the de-levering.

Rod: And with that said, we'll be very disciplined. We'll be looking at all of our capital allocation.

Rod: Options, including our CapEx programs, not in general, but specifically country-by-country, deal-by-deal, asset-by-asset, and there's some compelling things that we can invest our capital in.

Rod: You know, as Steve outlined in his

Rod: So, we've got a lot of kind of strategic prepared remarks and in some of the Q&A. So, the CapEx programs are still very much supportive of long-term total shareholder returns.

Speaker Change: That's an opportunity.

Speaker Change: When it comes to buybacks, the buybacks, you know, it has to create more shareholder value over the long term than deploying it towards CapEx or an M&A program or delevering. There are simple ways to look at it in terms of just you buy back a share of stock as the yield, you know, above or below the cost of debt. We'll certainly be looking at that, but longer-term growth rates are really important, too, on our own business as well as where we invest. So we'll be looking at the returns, you know, beyond day one.

Rod: There are simple ways to look at it in terms of just your buyback, a share of stock is the yield, you know, above or below the cost of debt. We'll certainly be looking at that, but longer-term growth rates are really important, too, for our own business as well as where we invest, so we'll be looking at the returns, you know, beyond day one, as well. But, rest assured, we will be doing a lot of work, being very opportunistic and disciplined when it comes to capital allocation across the board, and buying back shares will be one of the options that we have in our tool kit that we'll be continuing to evaluate. Thanks guys. Your next question comes from the line of Nick Del Dio from Moffett Nathanson. Please go ahead. Hey, good morning.

Speaker Change: as well, but rest assured we will be doing a lot of work, be very opportunistic and disciplined when it comes to capital allocation across the board and buying back shares will be one of the options that we have in our toolkit that we'll be continuing to evaluate.

Speaker Change: Thanks, guys.

Speaker Change: You're welcome.

Speaker Change: Your next question comes from the line of Nick Del Dio from Moffett Nathanson. Please go ahead.

Nicholas Ralph Del Deo: Thanks for taking my questions. You know, first, going back to CoreSight. Yeah, I think you're planning your first aggregation edge data center in Rally. And I also saw a footnote that you're launching a JV with Stone Peak in Denver. So I guess, can you talk about what you're hoping to achieve with those projects, the rationale for the deal structure in Denver, and whether we should expect more projects like these in the coming years?

Speaker Change: Hey, good morning. Thanks for taking my questions.

Speaker Change: You know first going back to

Speaker Change: I think you're planning your first aggregation edge data center in Raleigh, and I also saw a footnote that you're launching a JV with Stone Peak in Denver.

Speaker Change: So I guess, can you talk about what you're hoping to achieve with those projects, you know, the rationale for the deal structure in Denver, and whether we should expect more projects like these in the coming years?

Nicholas Ralph Del Deo: Sure, those are two very different projects, so I'll start with Raleigh. The Raleigh Data Center is really being done by our U.S. Tower Division, working with Corso. And that is our continued evolution as we work with various partners on the edge. We needed a little bit more of a sandbox for them to play in, and Raleigh was a good market; it has low power costs, there's a lot of enterprise there, and they're working on edge applications.

Speaker Change: Sure, those are two very different projects, so I'll start with the Raleigh, so the Raleigh Data Center is really being done by our U.S. Tower Division, working with CoreSite.

Speaker Change: And that is our continued evolution as we work with various partners on the edge. We needed a little bit more of a sandbox for them to play in. And Raleigh was a good market. It has low power costs. There's a lot of enterprise there that are working on edge applications.

Nicholas Ralph Del Deo: And so we think it's a good place for us to kind of start there. And we are seeing demand in that market. That one's expandable, it's on a tower site, so we were able to get easy access to land, there's power, there's fiber, it was just a great location. And so we'll see how that plays out over time. Again, that's part of our experimentation on the edge. And we do have some clear visibility into monetizing that as well, so that's a benefit. The second one is DE3.

Speaker Change: And so we think it's a good place for us to kind of start there. And we are seeing demand in that market that we think.

Speaker Change: That one's expandable, it's on a tower site, so we were able to get.

Speaker Change: Easy access to land, there's power, there's fiber, it was just a great location for us. And so we'll see how that plays out over time, again, that's part of our experimentation on the edge, and we do have some clear visibility into monetizing that as well, so that's a benefit of having a sandbox that makes money.

Unknown Executive: So this is a little bit different. This is our first purpose-built data center in Denver. And while we do have a small presence in Denver, it's not really a campus effect. And what we've said over time is we're open to structures where we're a minority partner, where it gives us the ability to build a campus. So for that particular reason,

Speaker Change: The second one, DE3, so this is a little bit different. This is our first purpose-built data center in Denver, and while we do have a small presence in Denver, it's not really a campus effect yet.

Speaker Change: And what we've said over, you know, over time is we're open to structures where we're a minority partner, where it gives us the ability to build a campus over time.

Unknown Executive: We're taking advantage of the opportunity that we have to meet the demand for a strategic customer to support the ecosystem in Denver, and we're utilizing our partnership and the capital flexibility that we have with that partnership to not redirect any of our current cash flow that our current CapEx program provides, and our partners are happy to fund that. And the reason we're doing that is to really start building that campus in Denver and to do it.

Speaker Change: So for that particular

Speaker Change: We're taking advantage of the opportunity that we have to meet the demand for a strategic customer to support the ecosystem in Denver, and we're utilizing our partnership and the capital flexibility that we have with that partnership to not redirect any of our current cash flow that our current CapEx program can have.

Speaker Change: and our partners is happy to fund that development.

Speaker Change: The reason we're doing that is to really start building that campus in Denver and to do it in a capital-efficient way for us. We think that's the right structure for that facility. That parcel is large enough to build other buildings. We have retained ownership of those other buildings in Core Site.

Unknown Executive: Capital. We think that's the right structure for that facility. That parcel is large enough to build other buildings. We have retained ownership of those other buildings in Core Site and others, the ability to buy back being built there if we decide that that's the right thing to do, as we build.

Speaker Change: And so, if we build future pieces of campus, that would likely be done in CoreSite, and we do have...

Speaker Change: the ability

Speaker Change: to buy back the one that's being built there if we decide that that's the right thing to do.

Unknown Executive: And that structure today is very similar to what you've seen other data centers do with private capital partners. Core sites can own 15%, and stone people own 85% as we develop that first facility. Okay, that's great.

Speaker Change: as we build that ecosystem over time. And that structure today is, it's very similar to what you've seen other data centers do with private capital partners. Core sites can own 15%, stone people own 85% as we develop that first facility there in Denver.

Unknown Executive: Thanks for those details, Steve. Second, kind of turning back to, you know, emerging markets and towers. In your prepared remarks, you said that scale is the most critical driver of value creation overseas. How do you define and measure scale?

Speaker Change: Okay, that's great. Thanks for those details, Steve. You know, second, kind of turning back to, you know, emerging markets, towers, in your prepared remarks you said that scale is the most critical driver of value creation overseas.

Unknown Executive: Is it just a given number of towers? Is it a share of towers? Is it exposure to top carriers?

Speaker Change: How do you define and measure scale? Is it just a given number of towers? Is it a share of towers? Is it exposure to top carriers? When do you look at scale by region versus country? Just interested in anything you can share on that front so we can better understand what you're looking for.

Unknown Executive: You know, when you look at scale by region versus country? Just interested in anything you can share on that front so we can better understand kind of what you're looking for. Sure, like at a high level, you want to be the number one or number two independent tower company in a market, can't. That's your ideal.

Speaker Change: Sure, at a high level, you want to be the number one or number two independent tower company in a market, if you can. That's your ideal.

Unknown Executive: At a broad level, scale means being... some leverage in the negotiations with the customers. And so that's really how we think about scale. We have some market tourer subscale, but we're able to leverage regional scale in those by using operating leverage. And what I mean by that is we can serve some of those underscale markets with the human capital we have in other parts of those markets. So we might operate a small one from a larger country that's nearby.

Speaker Change: situation to be in.

Speaker Change: At a broad level, scale means being strategically relevant to your customers. So you can have some localized scale without having national scale as long as you're relevant enough to have

Speaker Change: Some leverage in the negotiations with the customer there.

Speaker Change: And so, that's really how we think about scale. We have some markets where we're sub-scale, but we're able to leverage regional scale in those by using operating leverage, and what I mean by that is we can serve some of those under-scale markets with the...

Speaker Change: The Human Capital we have in other parts of those markets. So we might operate a small country from a larger country that's nearby. And that's how we're getting some operational scale that helps us get even better returns in there than you really would naturally get in a subscale market.

Unknown Executive: And that's how we're getting some operational scale that helps us get even better returns than you really would naturally get in a subscale. But at the end of the day, we want to be, kind of, number one or two in the market. In terms of independence, captains are a little bit different because they have different... But that's how we think about it.

Speaker Change: But at the end of the day, we want to be kind of the number one or two.

Speaker Change: In the market, in terms of independence, captains are a little bit different because they have different dynamics with it. But that's how we think about it overall. And we do have, you know, like if you look at Latin America,

Unknown Executive: And we do have, you know, like, if you look at Latin America. About 97% of our sites are in markets where we're the, in Africa, well over half of the sites, the market leader, a little bit lower in Europe today. But overall, we feel like we have adequate scale in all those markets to be strategically relevant to the customers and to get the cost center. That's great. Thanks, Steve. And your final question today comes from the line of Batya Levi from UBS. Please go ahead.

Speaker Change: About 97% of our sites are in markets where we're the leader. You know, in Africa, it's, you know, well over half of the sites that were

Speaker Change: that we're the market leader in. Little bit lower in Europe today, but overall we feel like we have adequate scale in all those markets to be strategically relevant to the customers and to get the cost energy that you get.

Speaker Change: That's great. Thanks, Steve.

Speaker Change: And your final question today comes from the line of Batya Levi from UBS. Please go ahead.

Batya Levi: Great, thank you. Comprehensive MLAs have helped provide visibility for domestic growth. Can you talk about whether you're also seeing opportunities to implement the same strategy internationally, and could that change the growth trajectory? Also wanted to follow up on AFFO growth. With solid revenue growth and good cost control, if you just put effects and fluctuations in rates aside, do you think that we're back on a trend for high single-digit AFFO growth for the next few years? Thank you. Sure, I'll take the part about the MLAs, and Rod can touch on the growth. The comprehensive MLEs that we have in the U.S. are pretty much unique to the U.S. right now.

Batya Levi: Great, thank you. Comprehensive MLAs have helped provide visibility for domestic growth. Can you talk about if you're also seeing opportunities to implement the same strategy internationally and could that change the growth trajectory? Also wanted to follow up on AFFL growth. With solid revenue growth and good cost control, if you just put effects and fluctuations and rates aside, do you think that we're back on a trend for high single-digit AFFL growth for the next few years? Thank you.

Batya Levi: Sure, I'll take the part about the MLAs and Rod can touch on the growth.

Rod: The comprehensive MLEs that we have in the U.S. are pretty much uniquely in the U.S. right now. We've talked to partners internationally about...

Unknown Executive: We've talked to partners internationally about those contract structures, and there's some interest in learning more about them. But because they haven't been used in those markets before, there's some understandable concern on the counterparty side about being the first one to take the leap into that. So we've encouraged them to talk to our U.S. customers to understand the benefits of that. So I'm hopeful that we can export those because, again, they create value for both parties.

Speaker Change: Those contract structures and there's some interest in learning more about them.

Speaker Change: But because they haven't been used in those markets before, there's some understandable concern on the counterparty side about being the first one to take the leap into that. So we've encouraged them to talk to our U.S. customers to understand the benefits of that. So I'm hopeful that we can export those because, again, those create value for both parties.

Unknown Executive: It gives us predictability on the revenue side, it gives the customers predictability on the cost side, and it vastly simplifies the deployment of networks by the customers. So I'm hopeful that our international customers will embrace that, and we'll continue talking with them about it until they do. But none to announce right now. Hey Batya, Rod here.

Speaker Change: It gives us predictability on the revenue side, it gives the customers predictability on their cost side, it vastly simplifies the deployment of networks by the customers. So I'm hopeful that our international customers will embrace that and we'll continue talking with them about it until they do. But none to announce right now, Batya.

Rod: I'll take the AFFOP. I'll start off by saying we believe in the fundamentals of the portfolio that we've built around the globe. Certainly, when you think about our ability to drive AFFO per share growth, it really starts with revenue growth. So I could give you a very short answer to your question. I'll give you the medium, you know, the medium answer here.

Bhatia: Hey Batya, Rod here, I'll take the FFO piece, so I'll start off by saying we believe in the fundamentals of the portfolio that we've built around the globe, certainly when you think about our ability to drive

Speaker Change: AFFO per share growth. It really starts with revenue growth. So I could give you a very short answer to your question. I'll give you the medium, you know, the medium answer here. So the way we think about the

Rod: So the way we think about the bits and pieces that support and drive AFFO per share growth, certainly in the U.S., we're continuing to see demand and activity levels that are in line with our previous long-term guide on OTBG, Organic Tenant Billings Growth, in and around that 5%. You've heard us say it; we continue to see demand for our emerging markets, and in Europe, we're seeing escalating new business growth, which is really good.

Speaker Change: Bits and pieces that support and drive AFFO for share growth, certainly in the U.S., we're continuing to see demand and activity levels that are in line with our previous long-term guide on OTBG, organic tenant buildings growth, in and around that 5%. You've heard us say it, we continue to see demand for our emerging markets, and in Europe we're seeing escalating

Rod: That's all very supportive over the long term for the international towers that we have to deliver higher Organic Tenant Billings Growth than the U.S. does by maybe a couple hundred. That is certainly kind of front and center.

Speaker Change: New business growth, which is really good. That's all very supportive over the long term for the international towers that we have

Speaker Change: to deliver higher organic tenant buildings growth than the U.S. does by maybe a couple hundred.

Rod: CoreSite, as you heard from Steve and see in our numbers, and you have seen for several quarters, is outperforming our expectations and very accretive to overall growth rates, and that's been really nice to see. And we do, we continue to build sites very opportunistically and disciplined. Maybe not as many as we used to, but we build sites that add to that growth rate and revenue.

Speaker Change: Basis Points. That is certainly kind of front and center. CoreSite, as you heard from Steve and you see in our numbers and you have for several quarters, is outperforming our expectations and very accretive to overall growth rates, and that's been really nice to see.

Speaker Change: And we do, we continue to build sites very opportunistically.

Speaker Change: and disciplined, maybe not as many as we used to, but we build sites that adds to that growth rate and revenue. So you put all that together and you're in the upper single digits in terms of revenue growth.

Rod: So you put all that together, and you're in the upper single digits in terms of revenue growth, call it a six or a seven percent, somewhere in that range. And then, you know, we're focused on margin expansion, controlling the direct costs, driving margins up. That means you get into that range around the gross margin point, SG&A. This year alone, SG&A is going down $30 million year over year, and it declined last year as well, so SGA cost control is also, you know, supportive and accretive to those growth rates.

Speaker Change: You know, call it a 6 or 7 percent, somewhere in that range.

Speaker Change: And then, you know, we're focused on margin expansion, controlling.

Speaker Change: The Direct Cost Driving Margins Up, that means you get into that range around the gross margin

Speaker Change: point, SG&A, this year alone SG&A is going down 30 million year over year, it declined last year as well, so SGA cost control is also supportive and accretive to those.

Rod: So when you think about all the things that we've done and everything that we see, the fundamentals in this business for our towers globally are really strong and could potentially deliver upper single-digit AFFO growth on towers around the globe. Now the things that you do need to watch, we certainly watch and pay a lot of attention to. But some of these are not under our control, of course.

Speaker Change: Growth Rate. So when you think about all the things that we've done...

Speaker Change: and everything that we see, the fundamentals in this business for our towers globally is really strong and could potentially deliver upper single digit AFFO growth on the towers around the globe.

Speaker Change: Now, the things that you do need to watch, we certainly watch and pay a lot of attention to. Some of these are not under our control, of course. Interest rates could go up or down, that could be positive or negative.

Speaker Change: from time to time. FX, same thing, could go up, could go down, could be positive, could be negative. And then in particular, very specifically, we have the ATC India sale.

Speaker Change: which we are very confident will close out during the second half of this year just like we previously

Speaker Change: Guided, that will be, you know, slightly dilutive, maybe about eight to nine cents.

Speaker Change: on a per quarter basis. So if we close it early in October , you might see eight or nine cents dilution from that. And then you'll see a, the follow on kind of tail of that.

Speaker Change: But absent interest rates, or assuming interest rates are flat, FX is flat, and eliminating the ATC India, we have a portfolio of assets here that are performing very well operationally with the fundamentals that could deliver upper single digit AFFO per share growth.

Speaker Change: That's very helpful. Thank you. You're welcome.

Unknown Executive: Interest rates could go up or down; that could be positive or negative from time to time. [inaudible] That's very helpful. Thank you. Alright, thanks everyone for joining the call today. Please feel free to reach out to the investor relations team with any questions. Thanks again. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Teleconference. You may now disconnect.

Speaker Change #100: Thanks everyone for joining the call today. Please feel free to reach out to the investor relations team with any questions. Thanks again.

Speaker Change #101: Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Teleconference. You may now disconnect.